| “Michael A. Lalonde”                                                      Michael A. LalondePresident and Chief Executive Officer | “Nicholas J. Nikolakakis”                                           Nicholas J. NikolakakisVice President and Chief Financial Officer |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| “Michael A. Lalonde”                                                      Michael A. LalondePresident and Chief Executive Officer | “Nicholas J. Nikolakakis”                                           Nicholas J. NikolakakisVice President and Chief Financial Officer |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

----

|                                                                                |   |              |    |   |              |   |
|-------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                                                                                |   | December 31, 2013 |    |   | December 31, 2012 |   |
| Assets                                                                              |   |              |    |   |              |   |
| Current assets                                                                      |   |              |    |   |              |   |
|      Cash and cash equivalents (note 21)                   |   | $                 | 67,828  |   |              | $      | 50,789 |   |
|      Temporary investments (note 6)                        |   |              | 10,036  |   |              |   | 120,491 |   |
|      Marketable securities (note 7)                        |   |              | 467     |   |              |   | 712 |   |
|      Accounts receivable                                   |   |              | 1,414   |   |              |   | 1,981 |   |
|      Prepaid expenses and supplier advances                |   |              | 923     |   |              |   | 543 |   |
|                                                                                |   |              | 80,668  |   |              |   | 174,516 |   |
| Restricted cash and deposits (note 8)                                               |   |              | 7,407   |   |              |   | 7,398 |   |
| Property, plant and equipment (note 9)                                              |   |              | 87,486  |   |              |   | 44,516 |   |
| Exploration and evaluation assets (note 10)                                         |   |              | 304,702 |   |              |   | 253,542 |   |
|                                                                                |   | $                 | 480,263 |   |              | $      | 479,972 |   |
|                                                                                |   |              |    |   |              |   |   |   |
| Liabilities and Equity                                                              |   |              |    |   |              |   |   |   |
| Current liabilities                                                                 |   |              |    |   |              |   |   |   |
|      Accounts payable and accrued liabilities (note 11)    |   | $                 | 22,008  |   |              | $      | 16,673 |   |
|      Current portion of finance lease obligation (note 12) |   |              | 203     |   |              |   | 237 |   |
|                                                                                |   |              | 22,211  |   |              |   | 16,910 |   |
|                                                                                |   |              |    |   |              |   |   |   |
| Non-current liabilities                                                             |   |              |    |   |              |   |   |   |
|      Deferred income taxes (note 15)                       |   |              | 25      |   |              |   | 186 |   |
|      Finance lease obligation (note 12)                    |   |              | -       |   |              |   | 203 |   |
|      Provision for closure and reclamation (note 13)       |   |              | 2,794   |   |              |   | 3,357 |   |
|                                                                                |   |              | 25,030  |   |              |   | 20,656 |   |
|                                                                                |   |              |    |   |              |   |   |   |
| Equity                                                                              |   |              |    |   |              |   |   |   |
|      Share capital (note 14)                               |   |              | 523,043 |   |              |   | 520,917 |   |
|      Share-based payment reserve                           |   |              | 25,377  |   |              |   | 23,472 |   |
|      Accumulated other comprehensive loss                  |   |              | (115    | )      |              |   | (184 | ) |
|      Deficit                                               |   |              | (93,072 | )      |              |   | (84,889 | ) |
|                                                                                |   |              | 455,233 |   |              |   | 459,316 |   |
|                                                                                |   | $                 | 480,263 |   |              | $      | 479,972 |   |

| Commitments and Contingency (note 19)Subsequent Events (note 22) |   |                      |
|------------------------------------------------------------------|--------|---------------------------|
|                                                             |   |                      |
| Approved by the Board of Directors:                              |   |                      |
| “David Adamson”                                      |   | “Julian Kemp” |
| David Adamson, Director                                          |   | Julian Kemp, Director     |

----

|                                                                                                                       |   | For the years ended December 31 |        |
|----------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|-------------|
|                                                                                                                       |   | 2013                            |        |   | 2012 |   |
|                                                                                                                       |   |                            |        |   |   |   |
| Expenses                                                                                                                   |   |                            |        |   |   |   |
| Consulting and professional fees                                                                                           |   | $                               | 1,688       |   |   | $ | 1,748 |   |
| Depreciation                                                                                                               |   |                            | 81          |   |   |   | 67 |   |
| General and administrative (note 17)                                                                                       |   |                            | 1,772       |   |   |   | 1,507 |   |
| Investor Relations (note 18)                                                                                               |   |                            | 717         |   |   |   | 1,210 |   |
| Salaries and Benefits                                                                                                      |   |                            | 3,663       |   |   |   | 3,929 |   |
| Share based compensation (note 14(b,c))                                                                                    |   |                            | 2,095       |   |   |   | 4,063 |   |
| Loss before other items                                                                                                    |   |                            | (10,016     | ) |   |   | (12,524 | ) |
| Interest and other income                                                                                                  |   |                            | 1,763       |   |   |   | 2,234 |   |
| Foreign exchange gains (losses)                                                                                            |   |                            | 34          |   |   |   | 10 |   |
| Option payments received in excess of property costs (note 10)                                                             |   |                            | 390         |   |   |   | 892 |   |
| (Loss) gain on sale of assets                                                                                              |   |                            | (72         | ) |   |   | 13 |   |
| Impairment of marketable securities                                                                                        |   |                            | (438        | ) |   |   | (799 | ) |
| Loss on sale of investments                                                                                                |   |                            | (5          | ) |   |   | (146 | ) |
| Loss before income taxes                                                                                                   |   |                            | (8,344      | ) |   |   | (10,320 | ) |
| Deferred income tax recovery (expense) (note 15)                                                                           |   |                            | 161         |   |   |   | (47 | ) |
| Net loss for the year                                                                                                      |   | $                               | (8,183      | ) |   | $ | (10,367 | ) |
|                                                                                                                       |   |                            |        |   |   |   |   |   |
| Other comprehensive income (loss), that may be reclassified subsequently to net income, net of tax                         |   |                            |        |   |   |   |   |   |
| Fair value adjustment on available for sale financial instruments (net of tax):                                            |   |                            |        |   |   |   |   |   |
| Marketable securities and other investments                                                                                |   |                            | (374        | ) |   |   | 17 |   |
| Realized loss on sales of marketable securities and impairment loss on marketable securities, recycled to net income  |   |                            | 443         |   |   |   | 945 |   |
| Other comprehensive income for the year                                                                                    |   |                            | 69          |   |   |   | 962 |   |
| Comprehensive loss                                                                                                         |   | $                               | (8,114      | ) |   | $ | (9,405 | ) |
| Basic and diluted loss per common share                                                                                    |   | $                               | (0.03       | ) |   | $ | (0.04 | ) |
| Weighted average number of common shares outstanding                                                                       |   |                            | 288,531,489 |   |   |   | 279,402,156 |   |

----

|                                                                                                                 |   | Number of Shares |        |   | Share Capital |   |    | Share-based Payments Reserve |   |   | Accumulated OtherComprehensiveIncome/(Loss)1 |   |   | Deficit |   |   | Total Equity |   |
|----------------------------------------------------------------------------------------------------------------------|--------|------------------|-------------|--------|---------------|--------|---------|------------------------------|--------|--------|----------------------------------------------|--------|--------|---------|--------|--------|--------------|--------|
| January 1, 2012                                                                                                      |   |             | 237,954,669 |   |          | $      | 327,311 |                         |   | $      | 17,098                                       |   |   | $       | (1,146 | )      |         | $      | (74,522 | ) |   | $ | 268,741 |   |
|                                                                                                                 |   |             |        |   |          |   |    |                         |   |   |                                         |   |   |    |   |   |         |   |   |   |   |   |   |   |
| Public offering (note 14 (a))                                                                                        |   |             | 49,000,000  |   |          |   | 200,900 |                         |   |   | -                                            |   |   |    | -      |   |         |   | - |   |   |   | 200,900 |   |
| Public offering – share issuance costs                                                                         |   |             | -           |   |          |   | (9,027  | )                            |   |   | -                                            |   |   |    | -      |   |         |   | - |   |   |   | (9,027 | ) |
| Exercise of options                                                                                                  |   |             | 572,500     |   |          |   | 861     |                         |   |   | -                                            |   |   |    | -      |   |         |   | - |   |   |   | 861 |   |
| Transfer to share capital on exercise of options                                                                     |   |             | -           |   |          |   | 572     |                         |   |   | (572                                         | )      |   |    | -      |   |         |   | - |   |   |   | - |   |
| Share-based payments - administration                                                                                |   |             | -           |   |          |   | -       |                         |   |   | 4,105                                        |   |   |    | -      |   |         |   | - |   |   |   | 4,105 |   |
| Share-based payments – property                                                                                |   |             | -           |   |          |   | -       |                         |   |   | 2,841                                        |   |   |    | -      |   |         |   | - |   |   |   | 2,841 |   |
| Shares issued to settle obligation                                                                                   |   |             | 78,813      |   |          |   | 300     |                         |   |   | -                                            |   |   |    | -      |   |         |   | - |   |   |   | 300 |   |
| Unrealized net gain on available-for-sale investments                                                                |   |             | -           |   |          |   | -       |                         |   |   | -                                            |   |   |    | 17     |   |         |   | - |   |   |   | 17 |   |
| Realized loss on sales of marketable securities and impairment loss on marketable securities, recycled to net income |   |             | -           |   |          |   | -       |                         |   |   | -                                            |   |   |    | 945    |   |         |   | - |   |   |   | 945 |   |
| Net loss for the year                                                                                                |   |             | -           |   |          |   | -       |                         |   |   | -                                            |   |   |    | -      |   |         |   | (10,367 | ) |   |   | (10,367 | ) |
| December 31, 2012                                                                                                    |   |             | 287,605,982 |   |          | $      | 520,917 |                         |   | $      | 23,472                                       |   |   | $       | (184   | )      |         | $      | (84,889 | ) |   | $ | 459,316 |   |

|                                                                                                                                  | Number of Shares | Share Capital | Share-based Payments Reserve    | Accumulated Other Comprehensive Income (Loss)1               | Deficit   | Total Equity |
|---------------------------------------------------------------------------------------------------------------------------------------|------------------|---------------|---------------------------------|--------------------------------------------------------------|-----------|--------------|
| January 1, 2013                                                                                                                       | 287,605,982      | $520,917      | $ 23,472                   | $         (184) | $(84,889) | $459,316     |
|                                                                                                                                  |             |          |                            |                                                         |      |         |
| Exercise of options                                                                                                                   | 1,092,500        | 1,176         | -                               | -                                                            | -         | 1,176        |
| Transfer to share capital on exercise of options                                                                                      | -                | 650           | (650)                           | -                                                            | -         | -            |
| Share-based payments – administration                                                                                           | -                | -             | 2,336                           | -                                                            | -         | 2,336        |
| Share-based payments – property                                                                                                 | -                | -             | 219                             | -                                                            | -         | 219          |
| Shares issued to settle obligation                                                                                                    | 115,621          | 300           | -                               | -                                                            | -         | 300          |
| Unrealized net loss on available-for-sale investments                                                                                 | -                | -             | -                               | (374)                                                        | -         | (374)        |
| Realized loss on sales of   marketable securities and impairment loss on marketable securities, recycled to net income | -                | -             | -                               | 443                                                          | -         | 443          |
| Net loss for the year                                                                                                                 | -                | -             | -                               | -                                                            | (8,183)   | (8,183)      |
| December 31, 2013                                                                                                                     | 288,814,103      | $523,043      | $    25,377 | $         (115) | $(93,072) | $455,233     |

|   | 1    Pertains to accumulated fair value adjustments on Available for Sale investments |
|--------|-----------------------------------------------------------------------------------------------------------|

----

|                                                     |   | For the years ended December 31 |    |
|----------------------------------------------------------|--------|---------------------------------|---------|
|                                                     |   | 2013                            |    |   | 2012 |   |
| Operating activities                                     |   |                            |    |   |   |   |
| Net loss for the year                                    |   | $                               | (8,183  | ) |   | $ | (10,367 | ) |
| Items not involving cash:                                |   |                            |    |   |   |   |   |   |
| Accretion                                                |   |                            | 76      |   |   |   | 37 |   |
| Depreciation                                             |   |                            | 81      |   |   |   | 67 |   |
| Impairment loss on marketable securities                 |   |                            | 438     |   |   |   | 799 |   |
| Share-based compensation                                 |   |                            | 2,095   |   |   |   | 4,063 |   |
| Option share receipts in excess of property costs        |   |                            | (237    | ) |   |   | (519 | ) |
| Interest and other income                                |   |                            | (1,772  | ) |   |   | (2,251 | ) |
| Loss on sale of investments                              |   |                            | 5       |   |   |   | 146 |   |
| Loss on sale of assets                                   |   |                            | 72      |   |   |   | 75 |   |
| Deferred income tax                                      |   |                            | (161    | ) |   |   | 47 |   |
| Changes in non-cash working capital:                     |   |                            |    |   |   |   |   |   |
| Accounts receivable and prepaid expenses                 |   |                            | (366    | ) |   |   | (408 | ) |
| Accounts payable and accrued liabilities                 |   |                            | (1,359  | ) |   |   | 640 |   |
| Interest received                                        |   |                            | 2,755   |   |   |   | 1,174 |   |
| Net cash used in operating activities                    |   |                            | (6,556  | ) |   |   | (6,497 | ) |
|                                                     |   |                            |    |   |   |   |   |   |
| Investing activities                                     |   |                            |    |   |   |   |   |   |
| Temporary investments                                    |   |                            | 109,463 |   |   |   | (119,410 | ) |
| Expenditures on exploration and evaluation               |   |                            | (43,694 | ) |   |   | (55,362 | ) |
| Expenditures on property, plant and equipment            |   |                            | (43,221 | ) |   |   | (24,676 | ) |
| Proceeds on sale of marketable securities                |   |                            | 109     |   |   |   | 3,843 |   |
| Restricted cash                                          |   |                            | -       |   |   |   | (5,712 | ) |
| Net cash from (used in) investing activities             |   |                            | 22,657  |   |   |   | (201,317 | ) |
|                                                     |   |                            |    |   |   |   |   |   |
| Financing activities                                     |   |                            |    |   |   |   |   |   |
| Issuance of  common shares, net of issue costs |   |                            | 1,176   |   |   |   | 201,760 |   |
| Repayment of finance lease obligation                    |   |                            | (238    | ) |   |   | (9,027 | ) |
| Net cash from financing activities                       |   |                            | 938     |   |   |   | 192,733 |   |
|                                                     |   |                            |    |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents         |   |                            | 17,039  |   |   |   | (15,081 | ) |
| Cash and cash equivalents, beginning of the year         |   |                            | 50,789  |   |   |   | 65,870 |   |
| Cash and cash equivalents, end of the year               |   | $                               | 67,828  |   |   | $ | 50,789 |   |

----

| 1. | NATURE OF OPERATIONS |
|----|----------------------|

| 2. | SIGNIFICANT ACCOUNTING POLICIES |
|----|---------------------------------|

| a) | Statement of compliance |
|----|-------------------------|

| b) | Basis of consolidation |
|----|------------------------|

| Name of Subsidiary           |  Place of Operation |   | Ownership Interest |   | Principal Activity |
|------------------------------|--------------------------|--------|--------------------|--------|--------------------|
|                         |                     |   |               |   |               |
| 0691403 B.C. Ltd.            | British Columbia, Canada |   |               | 100%   |               | Holding company |
| 1304850 Ontario Inc.         | Ontario, Canada          |   |               | 100%   |               | Mineral property staking and sale |
| Rubicon Minerals Nevada Inc. | British Columbia, Canada |   |               | 100%   |               | Holding company |
| Rubicon Nevada Corp.         | Nevada, United States    |   |               | 100%   |               | Mineral exploration |
| Rubicon Alaska Holdings Inc. | Alaska, United States    |   |               | 100%   |               | Inactive |
| Rubicon Alaska Corp.         | Alaska, United States    |   |               | 100%   |               | Inactive |

----

| 2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
|----|---------------------------------------------|

| c) | Foreign currency translation |
|----|------------------------------|

| d) | Significant accounting judgments and sources of estimation uncertainty |
|----|------------------------------------------------------------------------|

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

| f) | Temporary investments |
|----|-----------------------|

| g) | Property plant and equipment |
|----|------------------------------|

----

| 2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
|----|---------------------------------------------|

| Underground operating equipment |   |   | 20 | % |
|---------------------------------|--------|--------|----|---|
| Trucks                          |   |   | 30 | % |
| Buildings/Hoist/Powerlines      |   |   | 5  | % |

| Furniture, fixtures and office equipment |   |   | 20 | % |
|------------------------------------------|--------|--------|----|---|
| Computers                                |   |   | 30 | % |
| Software                                 |   |   | 50 | % |

| h) | Exploration and Evaluation |
|----|----------------------------|

| i) | Impairment |
|----|------------|

----

| 2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
|----|---------------------------------------------|

| j) | Reclamation deposits |
|----|----------------------|

----

| k) | Provision for closure and reclamation |
|----|---------------------------------------|

| l) | Income taxes |
|----|--------------|

| m) | Share capital |
|----|---------------|

| n) | Financial instruments |
|----|-----------------------|

|   | i. | Financial assets at fair value through profit or loss |
|--------|----|-------------------------------------------------------|

----

|   | ii. | Loans and receivables |
|--------|-----|-----------------------|

|   | iii. | Available-for-sale financial assets |
|--------|------|-------------------------------------|

| o) | Share-based payments |
|----|----------------------|

| p) | Loss per share |
|----|----------------|

----

| 3. |     ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS |
|----|-------------------------------------------------------------------------------------------------|

|   | · | IFRS 10, “Consolidated Financial Statements”, replaces the guidance on control and consolidation in IAS 27, Consolidated and Separate Financial Statements, and SIC-12, Consolidation – Special Purpose Entities. IFRS 10 requires consolidation of an investee only if the investor possesses power over the investee, has exposure to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect its returns. Detailed guidance is provided on applying the definition of control. The accounting requirements for consolidation have remained largely consistent with IAS 27. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | IFRS 12, “Disclosure of Interests in Other Entities”, requires the disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, its interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. The disclosure requirements are applicable to all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The adoption of this standard, commencing January 1, 2013, did not result in additional disclosures in the consolidated financial statements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | IFRS 13, “Fair value measurement”, provides a single framework for measuring fair value. The measurement of the fair value of an asset or liability is based on assumptions that market participants would use when pricing the asset or liability under current market conditions, including assumptions about risk. The Company adopted IFRS 13 on January 1, 2013 on a prospective basis. The adoption of IFRS 13 did not require any adjustments to the valuation techniques used by the Company to measure fair value and did not result in any measurement adjustments as at January 1, 2013. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | IFRS 9, “Financial instruments” (Revised), was issued by the IASB in October 2010.  It incorporates revised requirements for the classification and measurement of financial liabilities, and carrying over the existing derecognition requirements from IAS 39 Financial Instruments: Recognition and Measurement. The revised financial liability provisions maintain the existing amortised cost measurement basis for most liabilities.  New requirements apply where an entity chooses to measure a liability at fair value through profit or loss – in these cases, the portion of the change in fair value related to changes in the entity’s own credit risk is presented in other comprehensive income rather than within profit or loss. The Company is currently evaluating the impact this standard may have on its consolidated financial statements. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3. |     ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued) |
|----|-------------------------------------------------------------------------------------------------------------|

|   | · | Amendment to IAS 32 “Financial Instruments: Presentation”, clarifies some of the requirement for offsetting financial assets and financial liabilities on the Balance Sheet.  The Company is currently evaluating the impact this standard may have on its consolidated financial statements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Amendment to IAS 36 “Impairment of Assets”, addresses the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. The Company is currently evaluating the impact this standard may have on its consolidated financial statements. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. |     CAPITAL MANAGEMENT |
|----|--------------------------------------------|

| 5. |     FINANCIAL INSTRUMENTS |
|----|-----------------------------------------------|

----

| 6. |     TEMPORARY INVESTMENTS |
|----|-----------------------------------------------|

| 7. |     MARKETABLE SECURITIES |
|----|-----------------------------------------------|

| 8. |     RESTRICTED CASH AND DEPOSITS |
|----|------------------------------------------------------|

----

| 9. |     PROPERTY, PLANT AND EQUIPMENT |
|----|-------------------------------------------------------|

|                       |   | Assets under Construction |   |   | Office Equipment |   |   | Mine-site Equipment |   |   | Mine-site Buildings |   |   | Total  |   |
|----------------------------|--------|---------------------------|--------|--------|------------------|--------|--------|---------------------|--------|--------|---------------------|--------|--------|--------|--------|
|                       |   | $                         |   |   |             | $      |   |                |   | $      |                |   |   | $      |   |   |   | $ |   |   |
| Cost                       |   |                      |   |   |             |   |   |                |   |   |                |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2012   |   |                      | 1,521  |   |             |   | 1,133  |                |   |   | 9,355               |   |   |   | 7,050  |   |   |   | 19,059 |   |
| Additions                  |   |                      | 23,680 |   |             |   | 257    |                |   |   | 1,138               |   |   |   | 3,231  |   |   |   | 28,306 |   |
| Transfers                  |   |                      | (3,241 | )      |             |   | -      |                |   |   | 1,878               |   |   |   | 1,363  |   |   |   | - |   |
| Disposals                  |   |                      | -      |   |             |   | (3     | )                   |   |   | (138                | )      |   |   | -      |   |   |   | (141 | ) |
| Balance, December 31, 2012 |   |                      | 21,960 |   |             |   | 1,387  |                |   |   | 12,233              |   |   |   | 11,644 |   |   |   | 47,224 |   |
| Additions                  |   |                      | 42,656 |   |             |   | 210    |                |   |   | 1,278               |   |   |   | 733    |   |   |   | 44,877 |   |
| Transfers                  |   |                      | (720   | )      |             |   | 150    |                |   |   | 61                  |   |   |   | 509    |   |   |   | - |   |
| Disposals                  |   |                      | -      |   |             |   | (520   | )                   |   |   | -                   |   |   |   | -      |   |   |   | (520 | ) |
| Balance, December 31, 2013 |   |                      | 63,896 |   |             |   | 1,227  |                |   |   | 13,572              |   |   |   | 12,886 |   |   |   | 91,581 |   |
| Accumulated depreciation   |   |                      |   |   |             |   |   |                |   |   |                |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2012   |   |                      | -      |   |             |   | 593    |                |   |   | 528                 |   |   |   | 90     |   |   |   | 1,211 |   |
| Depreciation for the year  |   |                      | -      |   |             |   | 263    |                |   |   | 824                 |   |   |   | 476    |   |   |   | 1,563 |   |
| Disposals                  |   |                      | -      |   |             |   | (1     | )                   |   |   | (65                 | )      |   |   | -      |   |   |   | (66 | ) |
| Balance, December 31, 2012 |   |                      | -      |   |             |   | 855    |                |   |   | 1,287               |   |   |   | 566    |   |   |   | 2,708 |   |
| Depreciation for the year  |   |                      | -      |   |             |   | 289    |                |   |   | 939                 |   |   |   | 607    |   |   |   | 1,835 |   |
| Disposals                  |   |                      | -      |   |             |   | (448   | )                   |   |   | -                   |   |   |   | -      |   |   |   | (448 | ) |
| Balance, December 31, 2013 |   |                      | -      |   |             |   | 696    |                |   |   | 2,226               |   |   |   | 1,173  |   |   |   | 4,095 |   |
| Carrying amounts           |   |                      |   |   |             |   |   |                |   |   |                |   |   |   |   |   |   |   |   |   |
| December 31, 2012          |   |                      | 21,960 |   |             |   | 532    |                |   |   | 10,946              |   |   |   | 11,078 |   |   |   | 44,516 |   |
| December 31, 2013          |   |                      | 63,896 |   |             |   | 531    |                |   |   | 11,346              |   |   |   | 11,713 |   |   |   | 87,486 |   |

| 10. |     EXPLORATION AND EVALUATION ASSETS |
|-----|-----------------------------------------------------------|

|                                  |   | Phoenix Gold ProjectRed Lake Ontario |    |   | Other Red Lake Properties Ontario |   |   | Alaska Properties USA |   |   | Nevada-Utah Properties USA |   |   | Total  |   |
|---------------------------------------|--------|--------------------------------------|---------|--------|-----------------------------------|--------|--------|-----------------------|--------|--------|----------------------------|--------|--------|--------|--------|
|                                  |   | $                                    |    |   |                              | $      |   |                  |   | $      |                       |   |   | $      |   |   |   | $ |   |   |
| Balance,  January 1, 2012   |   |                                 | 172,720 |   |                              |   | 8,754  |                  |   |   | -                          |   |   |   | 7,117  |   |   |   | 188,591 |   |
| Costs incurred in the year            |   |                                 | 64,890  |   |                              |   | 61     |                  |   |   | -                          |   |   |   | -      |   |   |   | 64,951 |   |
| Balance,  December 31, 2012 |   |                                 | 237,610 |   |                              |   | 8,815  |                  |   |   | -                          |   |   |   | 7,117  |   |   |   | 253,542 |   |
| Costs incurred in the year            |   |                                 | 50,982  |   |                              |   | 178    |                  |   |   | -                          |   |   |   | -      |   |   |   | 51,160 |   |
| Balance, December 31, 2013            |   |                                 | 288,592 |   |                              |   | 8,993  |                  |   |   | -                          |   |   |   | 7,117  |   |   |   | 304,702 |   |

----

|   | (i) | Water Claims Agreement |
|--------|-----|------------------------|

|   | (ii) | Land Claims Agreement |
|--------|------|-----------------------|

|   | (iii) | Unpatented Claim |
|--------|-------|------------------|

| Property              | Interest | Description                  | Location in Ontario                                         |
|-----------------------|----------|------------------------------|-------------------------------------------------------------|
| Adams Lake            | 100%     | 37 unpatented mining claims  | Balmer and Bateman townships                                |
| Advance               | 100%     | 13 patented mining claims    | Todd township                                               |
| Brodie                | 100%     | 2 patented mining claims     | Bateman township                                            |
| DMC                   | 100%     | 130 unpatented mining claims | Dome, McDonough, Bateman and Fairlie townships              |
| East Bay              | 100%     | 43 unpatented mining claims  | Bateman and Black Bear townships                            |
| Humlin                | 100%     | 31 unpatented mining claims  | Fairlie township                                            |
| McCuaig Joint Venture | 60%      | 3 unpatented mining claims   | Dome township                                               |
| Red Lake North        | 100%     | 57 unpatented mining claims  | Bateman, Black Bear Lake, McDonough and Coli Lake townships |
| Schlasinger           | 100%     | 4 patented mining claims     | Bateman township                                            |
| Slate Bay             | 100%     | 30 unpatented mining claims  | McDonough, Dome and Graves townships                        |
| West End              | 100%     | 3 unpatented claims          | Todd township                                               |
| Wolf Bay              | 50-100%  | 21 unpatented mining claims  | Todd township                                               |

----

| Property            | Interest                        | Description                                   | Location                                       |
|---------------------|---------------------------------|-----------------------------------------------|------------------------------------------------|
| Nevada – Utah | Majority 100% owned (see below) | Approximately 225,000 acres (91,054 hectares) | Elko County, Nevada and Box Elder County, Utah |

----

| 11. |     TRADE AND OTHER PAYABLES |
|-----|--------------------------------------------------|

|                                |   | December 31 2013 |   |   | December 31 2012 |   |
|-------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                |   | $                |   |   |             | $      |   |   |
| Trade payables                      |   |             | 4,842  |   |             |   | 3,858 |   |
| Construction holdbacks              |   |             | 1,308  |   |             |   | 2,157 |   |
| Payables to related party (note 16) |   |             | 65     |   |             |   | 100 |   |
| Compensation payable                |   |             | 547    |   |             |   | 1,923 |   |
| Accrued liabilities                 |   |             | 15,246 |   |             |   | 8,630 |   |
| Other                               |   |             | -      |   |             |   | 5 |   |
| Total                               |   |             | 22,008 |   |             |   | 16,673 |   |

| 12. |     FINANCE LEASE OBLIGATION |
|-----|--------------------------------------------------|

|                                |   | Less than 1 year |   |   | More than 1 year |   |   | Total  |   |
|-------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|--------|--------|
|                                |   | $                |   |   |             | $      |   |   |   | $ |   |   |
| Total future minimum lease payments |   |             | 214    |   |             |   | -      |   |   |   | 214 |   |
| Less amount representing interest   |   |             | (11    | )      |             |   | -      |   |   |   | (11 | ) |
| Finance lease obligation            |   |             | 203    |   |             |   | -      |   |   |   | 203 |   |

| 13. |     PROVISION FOR CLOSURE AND RECLAMATION |
|-----|---------------------------------------------------------------|

|                       |   | $      |   |   |
|----------------------------|--------|--------|--------|--------|
| Balance January 1, 2012    |   |   | 1,923  |   |
| Accretion                  |   |   | 37     |   |
| Revision of estimate       |   |   | 1,397  |   |
| Balance December, 31, 2012 |   |   | 3,357  |   |
| Accretion                  |   |   | 76     |   |
| Revision of estimate       |   |   | (639   | )      |
| Balance December 31, 2013  |   |   | 2,794  |   |

----

| 14. |     SHARE CAPITAL |
|-----|---------------------------------------|

| (a) | Share capital |
|-----|---------------|

| (b) |   | Stock Options |
|-----|--------|---------------|

|                         |   | 2013             |       |   | 2012                            |   |
|------------------------------|--------|------------------|------------|--------|---------------------------------|--------|
|                         |   | Number of Shares |       |   | Weighted Average Exercise Price |   |   | Number of Shares |   |   | Weighted Average Exercise Price |   |
|                         |   |             |       |   |                            |   |   | $ |   |   |   | $ |   |   |
| Balance at beginning of year |   |             | 13,815,826 |   |                            |   | 3.80 |   |   |   | 9,895,996 |   |   |   | 3.84 |   |
| Granted                      |   |             | 3,041,100  |   |                            |   | 1.87 |   |   |   | 5,272,230 |   |   |   | 3.61 |   |
| Exercised(1)                 |   |             | (1,092,500 | )      |                            |   | 1.08 |   |   |   | (572,500 | ) |   |   | 1.50 |   |
| Forfeited/expired            |   |             | (444,196   | )      |                            |   | 4.52 |   |   |   | (779,900 | ) |   |   | 4.78 |   |
| Outstanding at end of year   |   |             | 15,320,230 |   |                            |   | 3.59 |   |   |   | 13,815,826 |   |   |   | 3.80 |   |
| Exercisable at end of year   |   |             | 11,839,130 |   |                            |   | 4.05 |   |   |   | 9,725,211 |   |   |   | 3.87 |   |

| December 31, 2013   |         |   |               |       |      |                   |   |   |                  |   |
|---------------------|--------------|--------|--------------------|------------|-----------|------------------------|--------|--------|-----------------------|--------|
| Option Price Range  |         |   | Number Outstanding |       |      | Weighted Average Price |   |   | Weighted Average Life |   |
|                |         |   |               |       |      | $                      |   |   |                  | Years  |   |
| $                   | 1.28 - $1.46 |   |               |       | 2,155,000 |                   |   |   | 1.30                  |   |   |   | 0.96 |   |
| $                   | 1.47 - $3.63 |   |               |       | 4,951,100 |                   |   |   | 2.43                  |   |   |   | 3.73 |   |
| $                   | 3.64 - $4.53 |   |               |       | 3,451,830 |                   |   |   | 4.02                  |   |   |   | 2.55 |   |
| $                   | 4.54 - $5.22 |   |               |       | 2,310,000 |                   |   |   | 5.22                  |   |   |   | 1.04 |   |
| $                   | 5.23 - $5.80 |   |               |       | 2,452,300 |                   |   |   | 5.80                  |   |   |   | 2.04 |   |
| Total Stock Options |         |   |               | 15,320,230 |      |                   |   | 3.59   |                  |   |   | 2.40 |   |

----

|                            |   | 2013      |   |   | 2012      |   |
|---------------------------------|--------|-----------|--------|--------|-----------|--------|
| Weighted average share price    |   | $         | 1.87   |   |      | $      | 3.61 |   |
| Weighted average exercise price |   | $         | 1.87   |   |      | $      | 3.61 |   |
| Risk-free interest rate         |   |      | 1.3    | %      |      |   | 1.08 | % |
| Expected life                   |   | 3.4 Years |   |   | 3.6 Years |   |
| Expected volatility             |   |      | 59     | %      |      |   | 60 | % |
| Expected dividend yield         |   |      | 0      | %      |      |   | 0 | % |

|   | Performance Stock Options |
|--------|---------------------------|

----

| (c) | Stock Appreciation Rights |
|-----|---------------------------|

|                                 |   | Year EndedDecember 31, 2013 |    |   | Year EndedDecember 31, 2012    |   |
|--------------------------------------|--------|-----------------------------|---------|--------|--------------------------------|--------|
|                                 |   | Number of SARS              |    |   | Weighted AverageExercise Price |   |   | Number ofSARS |   |   | Weighted AverageExercise Price |   |
|                                 |   |                        |    |   |                           |   |   | $ |   |   |   | $ |   |   |
| Balance at the beginning of the year |   |                        | 400,000 |   |                           |   | 3.71 |   |   |   | 290,000 |   |   |   | 4.09 |   |
| Granted                              |   |                        | -       |   |                           |   | 3.23 |   |   |   | 200,000 |   |   |   | 3.23 |   |
| Exercised                            |   |                        | -       |   |                           |   | 3.88 |   |   |   | (50,000 | ) |   |   | 3.88 |   |
| Converted to stock options           |   |                        | -       |   |                           |   | 3.88 |   |   |   | (40,000 | ) |   |   | 3.88 |   |
| Outstanding, end of the year         |   |                        | 400,000 |   |                           |   | 3.71 |   |   |   | 400,000 |   |   |   | 3.71 |   |
| Exercisable, end of the year         |   |                        | 400,000 |   |                           |   | 3.71 |   |   |   | 200,000 |   |   |   | 4.18 |   |

| 15. |     INCOME TAXES |
|-----|--------------------------------------|

|                                                               |   | 2013   |   |   | 2012   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                               |   | $      |   |   |   | $      |   |   |
| Net loss for the year, before taxes                                |   |   | (8,344 | )      |   |   | (10,320 | ) |
| Blended statutory tax rate                                         |   |   | 26.5   | %      |   |   | 26.5 | % |
| Expected income tax recovery                                       |   |   | 2,211  |   |   |   | 2,735 |   |
| Net adjustment for current, deductible and non-deductible amounts: |   |   |   |   |   |   |   |   |
| Non-deductible amounts                                             |   |   | (566   | )      |   |   | (1,102 | ) |
| Adjustment to prior years                                          |   |   | 2,272  |   |   |   | 813 |   |
| Change in unrecognized tax assets                                  |   |   | (3,756 | )      |   |   | (4,014 | ) |
| Share issue costs                                                  |   |   | 1      |   |   |   | 1,505 |   |
| Other                                                              |   |   | (1     | )      |   |   | 16 |   |
| Income tax recovery (expense), net                                 |   |   | 161    |   |   |   | (47 | ) |

----

|                                                           |   | 2013   |   |   | 2012   |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                           |   | $      |   |   |   | $      |   |   |
| Deferred income tax assets recognized:                         |   |   |   |   |   |   |   |   |
| Tax loss Carry-forwards                                        |   |   | -      |   |   |   | 1,719 |   |
| Equipment and intangible tax pools in excess of carrying value |   |   | 1,268  |   |   |   | 780 |   |
| Share issue costs and other                                    |   |   | 1,941  |   |   |   | 3,581 |   |
| Deferred income tax assets recognized                          |   |   | 3,209  |   |   |   | 6,080 |   |
|                                                           |   |   |   |   |   |   |   |   |
| Deferred income tax liabilities recognized:                    |   |   |   |   |   |   |   |   |
| Net mineral property carrying amounts in excess of tax pools   |   |   | (3,234 | )      |   |   | (6,266 | ) |
| Deferred income tax liabilities recognized                     |   |   | (3,234 | )      |   |   | (6,266 | ) |
|                                                           |   |   |   |   |   |   |   |   |
| Net deferred income tax liability recognized                   |   |   | (25    | )      |   |   | (186 | ) |
|                                                           |   |   |   |   |   |   |   |   |
| Deferred income tax assets not recognized:                     |   |   |   |   |   |   |   |   |
| Equipment and intangible tax pools in excess of carrying value |   |   | 703    |   |   |   | - |   |
| Tax loss carry-forwards                                        |   |   | 10,706 |   |   |   | 7,266 |   |
| Total unrecognized deferred income tax asset                   |   |   | 11,409 |   |   |   | 7,266 |   |

| 16. |     RELATED PARTY TRANSACTIONS |
|-----|----------------------------------------------------|

| Compensation                 |   | 2013   |   |   | 2012   |   |
|------------------------------|--------|--------|--------|--------|--------|--------|
|                         |   | $      |   |   |   | $      |   |   |
| Short-term employee benefits |   |   | 3,000  |   |   |   | 3,643 |   |
| Termination benefits         |   |   | 2,025  |   |   |   | - |   |
| Share-based payments         |   |   | 1,793  |   |   |   | 4,406 |   |
|                         |   |   | 6,818  |   |   |   | 8,049 |   |

----

| 17. |     GENERAL AND ADMINISTRATIVE |
|-----|----------------------------------------------------|

|                                      |   | 2013   |   |   | 2012   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                      |   | $      |   |   |   | $      |   |   |
| Insurance                                 |   |   | 412    |   |   |   | 433 |   |
| Office and rent                           |   |   | 537    |   |   |   | 368 |   |
| Transfer agent and regulatory filing fees |   |   | 354    |   |   |   | 383 |   |
| Travel and accommodation                  |   |   | 461    |   |   |   | 307 |   |
| Other                                     |   |   | 8      |   |   |   | 16 |   |
| Total                                     |   |   | 1,772  |   |   |   | 1,507 |   |

| 18. |     INVESTOR RELATIONS |
|-----|--------------------------------------------|

|                       |   | 2013   |   |   | 2012   |   |
|----------------------------|--------|--------|--------|--------|--------|--------|
|                       |   | $      |   |   |   | $      |   |   |
| Salaries & benefits    |   |   | 434    |   |   |   | 850 |   |
| Travel & accommodation |   |   | 79     |   |   |   | 106 |   |
| Shareholder communication  |   |   | 156    |   |   |   | 130 |   |
| Other                      |   |   | 48     |   |   |   | 124 |   |
| Total                      |   |   | 717    |   |   |   | 1,210 |   |

| 19. |     COMMITMENTS AND CONTINGENCY |
|-----|-----------------------------------------------------|

|   | (a) | At December 31, 2013, the Company has the following lease, rental and contractual commitments, made for the Company’s office premises, staff accommodations and various contractual obligations made for the acquisition of equipment and to further develop the Company’s Phoenix Gold Project: |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                  |   | December 31 2013 |   |   | December 31 2012 |   |
|-----------------------|--------|------------------|--------|--------|------------------|--------|
|                  |   | $                |   |   |             | $      |   |   |
| Less than 1 year      |   |             | 6,361  |   |             |   | 12,049 |   |
| Between 1 and 2 years |   |             | 256    |   |             |   | 73 |   |
| Total                 |   |             | 6,617  |   |             |   | 12,122 |   |

|   | (b) | The Company is required to make certain cash payments, incur exploration costs and pay certain advance royalty amounts (note 10) to maintain its mineral properties in good standing.  These payments and costs are at the Company’s discretion and are based upon available financial resources and the exploration merits of the mineral properties which are evaluated on a periodic basis. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | On December 12, 2012, the Company noted that it had been named in a petition brought by Wabauskang First Nation for judicial review focused on the Province of Ontario’s authority to approve a production closure plan and challenging the discharge of the duty to consult.  A three way hearing has been scheduled with the Ontario Divisional Court to hear the application for judicial review in mid-April 2014.  The Company intends to vigorously defend its consultation record and the petition which it believes to be without merit. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20. |     SEGMENTED INFORMATION |
|-----|-----------------------------------------------|

----

| 21. |     SUPPLEMENTAL CASH FLOW AND NON-CASH ACTIVITIES |
|-----|------------------------------------------------------------------------|

|                                                                                                                                                    |   | December 31 2013 |   |   | December 31 2012 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                                                                                                                                    |   | $                     |   |   |                  | $      |   |   |
| Cash                                                                                                                                                    |   |                  | 7,501  |   |                  |   | 6,806 |   |
| Government of Canada treasury bills, provincial government promissory notes, bank guaranteed investment certificates and high interest savings accounts |   |                  | 60,327 |   |                  |   | 43,983 |   |
|                                                                                                                                                    |   |                  | 67,828 |   |                  |   | 50,789 |   |

| 22. |     SUBSEQUENT EVENTS |
|-----|-------------------------------------------|

|   | (a) | Royal Gold Inc. Gold Stream Agreement |
|--------|-----|---------------------------------------|

----

| 22. | SUBSEQUENT EVENTS (continued) |
|-----|-------------------------------|

|   | (b) | Public Offering |
|--------|-----|-----------------|