----

----

----

| Vancouver, Canada,March 20, 2014.  |   Chartered Accountants |
|-----------------------------------------|-----------------------------------|

----

----

| Vancouver, Canada,March 20, 2014.  |   Chartered Accountants |
|-----------------------------------------|-----------------------------------|

----

|                                             |   | December 31, 2013 |    |   | December 31, 2012 |   |
|--------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                                             |   |              |    |   |              |   |
| ASSETS                                           |   |              |    |   |              |   |
| Current                                          |   |              |    |   |              |   |
| Cash and cash equivalents (Note 4)               |   | $                 | 8,376   |   |              | $      | 224 |   |
| Short-term investments (Note 5)                  |   |              | 2,005   |   |              |   | 5,458 |   |
| Marketable securities (Note 6)                   |   |              | 1,328   |   |              |   | 4,984 |   |
| Other receivables and prepaid expenses           |   |              | 532     |   |              |   | 364 |   |
|                                             |   |              |    |   |              |   |   |   |
| Total Current Assets                             |   |              | 12,241  |   |              |   | 11,030 |   |
|                                             |   |              |    |   |              |   |   |   |
| Other long-term assets (Note 7)                  |   |              | 739     |   |              |   | 739 |   |
| Property, plant and equipment (Note 8)           |   |              | 860     |   |              |   | 911 |   |
| Exploration and evaluation assets (Note 9)       |   |              | 5,432   |   |              |   | 9,268 |   |
|                                             |   |              |    |   |              |   |   |   |
| Total Assets                                     |   | $                 | 19,272  |   |              | $      | 21,948 |   |
|                                             |   |              |    |   |              |   |   |   |
| LIABILITIES                                      |   |              |    |   |              |   |   |   |
| Current                                          |   |              |    |   |              |   |   |   |
| Accounts payable                                 |   | $                 | 917     |   |              | $      | 1,527 |   |
| Accrued and other liabilities                    |   |              | 707     |   |              |   | 461 |   |
|                                             |   |              |    |   |              |   |   |   |
| Total Current Liabilities                        |   |              | 1,624   |   |              |   | 1,988 |   |
|                                             |   |              |    |   |              |   |   |   |
| Decommissioning liability (Note 10)              |   |              | 1,963   |   |              |   | 2,148 |   |
|                                             |   |              |    |   |              |   |   |   |
| Total Liabilities                                |   |              | 3,587   |   |              |   | 4,136 |   |
|                                             |   |              |    |   |              |   |   |   |
| SHAREHOLDERS' EQUITY                             |   |              |    |   |              |   |   |   |
| Share capital (Note 11)                          |   |              | 91,823  |   |              |   | 87,250 |   |
| Reserves (Note 12)                               |   |              | 12,681  |   |              |   | 12,470 |   |
| Deficit                                          |   |              | (88,819 | )      |              |   | (81,908 | ) |
|                                             |   |              |    |   |              |   |   |   |
| Total Shareholders’ Equity                 |   |              | 15,685  |   |              |   | 17,812 |   |
|                                             |   |              |    |   |              |   |   |   |
| Total Liabilities and Shareholders’ Equity |   | $                 | 19,272  |   |              | $      | 21,948 |   |
| Commitments (Note 20)                            |   |              |    |   |              |   |   |   |
|                                             |   |              |    |   |              |   |   |   |
|                                             |   |              |    |   |              |   |   |   |

| Approved by the Board of Directors:  |                          |   |
|-------------------------------------------|-------------------------------|--------|
|                                      | “John F. Kearney” |   | “Brian A. Atkins, CPA, CA” |
|                                      | Director                      |   | Director |

----

|                                                   |   | Year ended December 31, |        |
|--------------------------------------------------------|--------|-------------------------|-------------|
|                                                   |   | 2013                    |        |   | 2012 |   |
|                                                   |   |                    |        |   |   |   |
| Income                                                 |   |                    |        |   |   |   |
| Investment income                                      |   | $                       | 106         |   |   | $ | 164 |   |
|                                                   |   |                    |        |   |   |   |   |   |
| Expenses                                               |   |                    |        |   |   |   |   |   |
| Depreciation                                           |   |                    | 8           |   |   |   | 16 |   |
| Exploration and evaluation (Note 13)                   |   |                    | 6,089       |   |   |   | 9,125 |   |
| Listing and regulatory                                 |   |                    | 65          |   |   |   | 67 |   |
| Management and directors                               |   |                    | 1,278       |   |   |   | 673 |   |
| Office and general                                     |   |                    | 569         |   |   |   | 586 |   |
| Professional                                           |   |                    | 374         |   |   |   | 329 |   |
| Project evaluation                                     |   |                    | 15          |   |   |   | 34 |   |
| Shareholder and investor communications                |   |                    | 440         |   |   |   | 542 |   |
| Share-based compensation (Note 12 (a))                 |   |                    | 120         |   |   |   | 107 |   |
|                                                   |   |                    | 8,958       |   |   |   | 11,479 |   |
|                                                   |   |                    |        |   |   |   |   |   |
| Other income (expenses)                                |   |                    |        |   |   |   |   |   |
| Finance costs (Note 10)                                |   |                    | (49         | ) |   |   | (46 | ) |
| Gain on changes to decommissioning liability (Note 10) |   |                    | 177         |   |   |   | - |   |
| Loss on marketable securities (Note 6)                 |   |                    | (3,626      | ) |   |   | (8,804 | ) |
| Gain on sale of NSR (Note 9)                           |   |                    | 5,439       |   |   |   | - |   |
| Tax deduction recovery (Note 14)                       |   |                    | -           |   |   |   | 295 |   |
|                                                   |   |                    | 1,941       |   |   |   | (8,555 | ) |
|                                                   |   |                    |        |   |   |   |   |   |
| Net loss for the year                                  |   |                    | (6,911      | ) |   |   | (19,870 | ) |
|                                                   |   |                    |        |   |   |   |   |   |
| Other comprehensive income (loss)                      |   |                    | -           |   |   |   | - |   |
|                                                   |   |                    |        |   |   |   |   |   |
| Comprehensive loss for the year                        |   | $                       | (6,911      | ) |   | $ | (19,870 | ) |
|                                                   |   |                    |        |   |   |   |   |   |
|                                                   |   |                    |        |   |   |   |   |   |
| Net loss per share - basic and diluted                 |   | $                       | (0.04       | ) |   | $ | (0.13 | ) |
| Weighted average number of shares outstanding          |   |                    |        |   |   |   |   |   |
|                                                   |   |                    |        |   |   |   |   |   |
| Basic and diluted                                      |   |                    | 166,539,368 |   |   |   | 157,936,692 |   |

----

|                                                   |   | Year ended December 31, |   |
|--------------------------------------------------------|--------|-------------------------|--------|
|                                                   |   | 2013                    |   |   | 2012 |   |
|                                                   |   |                    |   |   |   |   |
| Operating Activities                                   |   |                    |   |   |   |   |
| Net loss for the year                                  |   | $                       | (6,911 | ) |   | $ | (19,870 | ) |
| Adjustment for items not involving cash:               |   |                    |   |   |   |   |   |   |
| Accretion and depreciation                             |   |                    | 173    |   |   |   | 216 |   |
| Loss on marketable securities (Note 6)                 |   |                    | 3,626  |   |   |   | 8,804 |   |
| Tax deduction recovery (Note 14)                       |   |                    | -      |   |   |   | (295 | ) |
| Share-based compensation                               |   |                    | 120    |   |   |   | 107 |   |
| Gain on changes to decommissioning liability (Note 10) |   |                    | (177   | ) |   |   | - |   |
| Gain on sale of NSR (Note 9)                           |   |                    | (5,439 | ) |   |   | - |   |
| Change in non-cash working capital items:              |   |                    |   |   |   |   |   |   |
| Other receivables and prepaid expenses                 |   |                    | (154   | ) |   |   | (233 | ) |
| Accounts payable and accrued liabilities               |   |                    | (128   | ) |   |   | 743 |   |
|                                                   |   |                    | (8,890 | ) |   |   | (10,528 | ) |
|                                                   |   |                    |   |   |   |   |   |   |
| Financing Activities                                   |   |                    |   |   |   |   |   |   |
| Capital stock issued                                   |   |                    | 4,005  |   |   |   | 9,119 |   |
| Issuance costs                                         |   |                    | (304   | ) |   |   | (883 | ) |
| Proceeds on exercise of options or warrants            |   |                    | 46     |   |   |   | 2 |   |
|                                                   |   |                    | 3,747  |   |   |   | 8,238 |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Investing Activities                                   |   |                    |   |   |   |   |   |   |
| Sale of NSR (Note 9)                                   |   |                    | 10,271 |   |   |   | - |   |
| Short-term investments                                 |   |                    | 3,453  |   |   |   | (51 | ) |
| Marketable securities (Note 6)                         |   |                    | -      |   |   |   | 14 |   |
| Property, plant and equipment                          |   |                    | (13    | ) |   |   | (183 | ) |
| Government grants (Note 15)                            |   |                    | -      |   |   |   | 170 |   |
| Exploration and evaluation assets                      |   |                    | (416   | ) |   |   | (411 | ) |
|                                                   |   |                    | 13,295 |   |   |   | (461 | ) |
|                                                   |   |                    |   |   |   |   |   |   |
| Net change in cash and cash equivalents                |   | $                       | 8 ,152 |   |   | $ | (2,751 | ) |
|                                                   |   |                    |   |   |   |   |   |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of year           |   | $                       | 224    |   |   | $ | 2,975 |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Net change in cash and cash equivalents                |   |                    | 8,152  |   |   |   | (2,751 | ) |
|                                                   |   |                    |   |   |   |   |   |   |
| Cash and cash equivalents, end of year                 |   | $                       | 8,376  |   |   | $ | 224 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|                                                   |   |                    |   |   |   |   |   |   |

----

|                                                    |   | Common shares |        |   |   |   |   |     |   |   |    |   |
|---------------------------------------------------------|--------|---------------|-------------|--------|--------|--------|--------|----------|--------|--------|---------|--------|
|                                                    |   | Number        |        |   | Amount |   |   | Reserves |   |   | Deficit |   |   | Total |   |
|                                                    |   |          |        |   |   |   |   |     |   |   |    |   |   |   |   |
| Balance, December 31, 2011                              |   |          | 143,109,112 |   |   | $      | 77,052 |     |   | $      | 10,750  |   |   | $ | (62,038 | ) |   | $ | 25,764 |   |
| Issue of shares at $0.67 per share                      |   |          | 13,610,000  |   |   |   | 9,119  |     |   |   | -       |   |   |   | - |   |   |   | 9,119 |   |
| Share issuance costs                                    |   |          | -           |   |   |   | (761   | )        |   |   | -       |   |   |   | - |   |   |   | (761 | ) |
| Share purchase warrants                                 |   |          | -           |   |   |   | (1,560 | )        |   |   | 1,560   |   |   |   | - |   |   |   | - |   |
| Paragon Minerals Acquisition (Note 3)                   |   |          | 7,299,019   |   |   |   | 3,394  |     |   |   | -       |   |   |   | - |   |   |   | 3,394 |   |
| Options and warrants converted upon Paragon acquisition |   |          | -           |   |   |   | -      |     |   |   | 53      |   |   |   | - |   |   |   | 53 |   |
| Exploration and evaluation asset acquisition (Note 11)  |   |          | 9,520       |   |   |   | 4      |     |   |   | -       |   |   |   | - |   |   |   | 4 |   |
| Exercise of warrants at $0.40 per share                 |   |          | 4,130       |   |   |   | 2      |     |   |   | -       |   |   |   | - |   |   |   | 2 |   |
| Share-based compensation                                |   |          | -           |   |   |   | -      |     |   |   | 107     |   |   |   | - |   |   |   | 107 |   |
| Net loss for the year                                   |   |          | -           |   |   |   | -      |     |   |   | -       |   |   |   | (19,870 | ) |   |   | (19,870 | ) |
| Balance, December 31, 2012                              |   |          | 164,031,781 |   |   |   | 87,250 |     |   |   | 12,470  |   |   |   | (81,908 | ) |   |   | 17,812 |   |
| Issue of shares at $0.62 per share                      |   |          | 6,460,000   |   |   |   | 4,005  |     |   |   | -       |   |   |   | - |   |   |   | 4,005 |   |
| Share issuance costs                                    |   |          | -           |   |   |   | (304   | )        |   |   | -       |   |   |   | - |   |   |   | (304 | ) |
| Share purchase warrants                                 |   |          | -           |   |   |   | (92    | )        |   |   | 92      |   |   |   | - |   |   |   | - |   |
| Exercise of options at $0.23 per share (Note 12)        |   |          | 200,000     |   |   |   | 66     |     |   |   | (20     | )      |   |   | - |   |   |   | 46 |   |
| Messina Minerals Acquisition (Note 3)                   |   |          | 2,132,714   |   |   |   | 896    |     |   |   | -       |   |   |   | - |   |   |   | 896 |   |
| Options and warrants converted upon Messina acquisition |   |          | -           |   |   |   | -      |     |   |   | 19      |   |   |   | - |   |   |   | 19 |   |
| Exploration and evaluation asset acquisition (Note 11)  |   |          | 4,080       |   |   |   | 2      |     |   |   | -       |   |   |   | - |   |   |   | 2 |   |
| Share-based compensation                                |   |          | -           |   |   |   | -      |     |   |   | 120     |   |   |   | - |   |   |   | 120 |   |
| Net loss for the year                                   |   |          | -           |   |   |   | -      |     |   |   | -       |   |   |   | (6,911 | ) |   |   | (6,911 | ) |
| Balance, December 31, 2013                              |   |          | 172,828,575 |   |   | $      | 91,823 |     |   | $      | 12,681  |   |   | $ | (88,819 | ) |   | $ | 15,685 |   |

----

----

| (a)   | Statement of Compliance |
|-----------------|-------------------------|

| (b)   | Basis of Preparation and Consolidation |
|-----------------|----------------------------------------|

| (c)   | Significant Accounting Judgments, Estimates and Assumptions |
|-----------------|-------------------------------------------------------------|

----

----

| (c)   | Significant Accounting Judgments, Estimates and Assumptions (continued) |
|-----------------|-------------------------------------------------------------------------|

| i.   | Company acquisitions: Identifying a purchase transaction as being a business combination or an asset purchase requires judgment regarding whether the set of assets acquired and liabilities assumed constitutes a business based on the particular circumstances (see Note 3). |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii.   | Exploration and evaluation: Significant judgment is required when determining whether facts and circumstances suggest that the carrying amount of exploration and evaluation assets may exceed its recoverable amount. Significant judgment must be exercised in determining when a project of the Company moves from the exploration and evaluation phase and into the development phase. The existence and extent of proven or probable mineral reserves; retention of regulatory permits and licences; the availability of development financing; current and future metal prices; and market sentiment are all factors considered by the Company. Accordingly, the Company having not secured development financing has deemed all projects to be in the exploration and evaluation phase. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iii.   | Decommissioning liability: Decommissioning liabilities are recognized in the period in which they arise and are stated at the best estimate of 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. Recording a provision for security deposits is subject to significant judgment as to the amount and timing of the required posting of security (see Note 10). |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iv.   | Share-based compensation: The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 12. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Financial Assets |
|-----------------|------------------|

----

----

| (e)   | Impairment of Non-Financial Assets |
|-----------------|------------------------------------|

| (f)   | Cash and Cash Equivalents |
|-----------------|---------------------------|

| (g)   | Short-term Investments |
|-----------------|------------------------|

| (h)   | Marketable Securities |
|-----------------|-----------------------|

| (i)   | Foreign Currency Transactions |
|-----------------|-------------------------------|

----

----

| (j)   | Property, Plant and Equipment (“PPE”) |
|-----------------|---------------------------------------------------|

| Mining equipment | 30% |
|------------------|-----|
| Office equipment | 20% |

| (k)   | Exploration and Evaluation Assets |
|-----------------|-----------------------------------|

| (l)   | Financial Liabilities |
|-----------------|-----------------------|

----

----

| (m)   | Decommissioning, Restoration and Similar Liabilities |
|-----------------|------------------------------------------------------|

| (n)   | Flow-Through Shares |
|-----------------|---------------------|

| (o)   | Revenue Recognition |
|-----------------|---------------------|

| (p)   | Exploration and Evaluation Costs |
|-----------------|----------------------------------|

| (q)   | Share-based Compensation |
|-----------------|--------------------------|

----

----

| (r)   | Income Taxes |
|-----------------|--------------|

| (s)   | Earnings (Loss) Per Common Share |
|-----------------|----------------------------------|

| (t)   | Government Grants |
|-----------------|-------------------|

| (u)   | IFRS Standards Adopted |
|-----------------|------------------------|

| IFRS 7 (Amendment) | Financial Instruments: Disclosure                         |
|--------------------|-----------------------------------------------------------|
| IFRS 10            | Consolidated Financial Statements                         |
| IFRS 11            | Joint Arrangements                                        |
| IFRS 12            | Disclosure of Interests in Other Entities                 |
| IFRS 13            | Fair Value Measurement                                    |
| IAS 1 (Amendment)  | Presentation of Financial Statements                      |
| IAS 12 (Amendment) | Income Taxes                                              |
| IAS 19 (Revised)   | Employee Benefits                                         |
| IAS 27 (Revised)   | Separate Financial Statements                             |
| IAS 28 (Revised)   | Investments in Associates and Joint Ventures              |
| IFRIC 20           | Stripping Costs in the Production Phase of a Surface Mine |

----

----

| (v)   | IFRS Standards Issued But Not Yet Effective |
|-----------------|---------------------------------------------|

| IFRS 9 (Amendment)  | Financial Instruments (1)         |
|---------------------|-----------------------------------|
| IFRS 2 (Amendment)  | Share-based Payment (2)           |
| IFRS 3 (Amendment)  | Business Combinations (2)         |
| IFRS 8 (Amendment)  | Operating Segments (2)            |
| IFRS 13 (Amendment) | Fair Value Measurement (2)        |
| IAS 16 (Amendment)  | Property, Plant and Equipment (2) |
| IAS 19 (Amendment)  | Employee Benefits (2)             |
| IAS 24 (Amendment)  | Related Party Disclosures (2)     |
| IAS38 (Amendment)   | Intangible Assets (2)             |
| IAS 40 (Amendment)  | Investment Property (2)           |

| (1)   | To be determined. |
|-----------------|-------------------|

| (2)   | For annual periods beginning on or after July 1, 2014. |
|-----------------|--------------------------------------------------------|

| (a)   | Messina Acquisition |
|-----------------|---------------------|

| Purchase price                                                  |   |   |   |
|-----------------------------------------------------------------|--------|--------|--------|
| Issued 2,132,714 Canadian Zinc common shares at $0.42 per share |   | $      | 896    |   |
| Acquired 3,000,000 Messina shares at $0.06 per share            |   |   | 180    |   |
| Options and warrants converted upon acquisition                 |   |   | 19     |   |
| Transaction costs                                               |   |   | 277    |   |
|                                                            |   | $      | 1,372  |   |
| Fair value of net assets acquired                               |   |   |   |   |
| Cash and cash equivalents                                       |   | $      | 14     |   |
| Other assets                                                    |   |   | 70     |   |
| Accounts payable and accrued liabilities                        |   |   | (36    | ) |
| Exploration and evaluation assets                               |   |   | 1,324  |   |
|                                                            |   | $      | 1,372  |   |

----

----

| (b)   | Paragon Acquisition |
|-----------------|---------------------|

| Purchase price                                                   |   |   |   |
|------------------------------------------------------------------|--------|--------|--------|
| Issued 7,299,019 Canadian Zinc common shares at $0.465 per share |   | $      | 3,394  |   |
| Acquired 7,000,000 Paragon shares at $0.06 per share             |   |   | 420    |   |
| Options and warrants converted upon acquisition                  |   |   | 53     |   |
| Transaction costs                                                |   |   | 213    |   |
|                                                             |   | $      | 4,080  |   |
| Fair value of net assets acquired                                |   |   |   |   |
| Cash and cash equivalents                                        |   | $      | 343    |   |
| Other assets                                                     |   |   | 61     |   |
| Accounts payable and accrued liabilities                         |   |   | (388   | ) |
| Exploration and evaluation assets                                |   |   | 4,064  |   |
|                                                             |   | $      | 4,080  |   |

----

----

|                           |   | December 31, 2013 |       |   | December 31, 2012 |   |
|--------------------------------|--------|-------------------|------------|--------|-------------------|--------|
|                           |   |  # of Shares |       |   | OriginalCost      |   |   | FairValue |   |   |  # of Shares |   |   | OriginalCost |   |   | FairValue |   |
|  Vatukoula Gold Mines plc |   |              | 12,573,380 |   |              | $      | 10,142 |   |   | $ | 1,328 |   |   |   | 12,573,380 |   |   | $ | 10,142 |   |   | $ | 4,984 |   |
|                           |   |              |       |   |              | $      | 10,142 |   |   | $ | 1,328 |   |   |   |   |   |   | $ | 10,142 |   |   | $ | 4,984 |   |

|                     |   | Mining Equipment |   |   | Office Equipment |   |   | Buildings andLeaseholdImprovements |   |   | Land   |   |   | Prairie Creek Plant & Mill |   |   | Total  |   |
|--------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------------------------|--------|--------|--------|--------|--------|--------------------------------|--------|--------|--------|--------|
| Acquisition Cost         |   |             |   |   |             |   |   |                               |   |   |   |   |   |                           |   |   |   |   |
| December 31, 2011        |   | $                | 1,647  |   |             | $      | 159    |                               |   | $      | 60     |   |   | $                              | -      |   |   | $      | 500 |   |   | $ | 2,366 |   |
| Additions                |   |             | 13     |   |             |   | 5      |                               |   |   | -      |   |   |                           | -      |   |   |   | - |   |   |   | 18 |   |
| December 31, 2012        |   |             | 1,660  |   |             |   | 164    |                               |   |   | 60     |   |   |                           | -      |   |   |   | 500 |   |   |   | 2,384 |   |
| Additions                |   |             | 13     |   |             |   | -      |                               |   |   | 20     |   |   |                           | 40     |   |   |   | - |   |   |   | 73 |   |
| December 31, 2013        |   | $                | 1,673  |   |             | $      | 164    |                               |   | $      | 80     |   |   |                           | 40     |   |   | $      | 500 |   |   | $ | 2,457 |   |
|                     |   |             |   |   |             |   |   |                               |   |   |   |   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Accumulated Depreciation |   |             |   |   |             |   |   |                               |   |   |   |   |   |                           |   |   |   |   |   |   |   |   |   |   |
| December 31, 2011        |   | $                | 1,126  |   |             | $      | 124    |                               |   | $      | 53     |   |   | $                              | -      |   |   | $      | - |   |   | $ | 1,303 |   |
| Depreciation charge      |   |             | 154    |   |             |   | 9      |                               |   |   | 7      |   |   |                           | -      |   |   |   | - |   |   |   | 170 |   |
| December 31, 2012        |   |             | 1,280  |   |             |   | 133    |                               |   |   | 60     |   |   |                           | -      |   |   |   | - |   |   |   | 1,473 |   |
| Depreciation charge      |   |             | 116    |   |             |   | 8      |                               |   |   | -      |   |   |                           | -      |   |   |   | - |   |   |   | 124 |   |
| December 31, 2013        |   | $                | 1,396  |   |             | $      | 141    |                               |   | $      | 60     |   |   | $                              | -      |   |   | $      | - |   |   | $ | 1,597 |   |
|                     |   |             |   |   |             |   |   |                               |   |   |   |   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Net Book Value           |   |             |   |   |             |   |   |                               |   |   |   |   |   |                           |   |   |   |   |   |   |   |   |   |   |
| December 31, 2011        |   | $                | 521    |   |             | $      | 35     |                               |   | $      | 7      |   |   | $                              | -      |   |   | $      | 500 |   |   | $ | 1,063 |   |
| December 31, 2012        |   |             | 380    |   |             |   | 31     |                               |   |   | -      |   |   |                           | -      |   |   |   | 500 |   |   |   | 911 |   |
| December 31, 2013        |   |             | 277    |   |             |   | 23     |                               |   |   | 20     |   |   |                           | 40     |   |   |   | 500 |   |   |   | 860 |   |

----

----

|               |   | December 31, 2013 |   |   | December 31, 2012 |   |
|--------------------|--------|-------------------|--------|--------|-------------------|--------|
| Prairie Creek Mine |   | $                 | -      |   |              | $      | 4,889 |   |
| Messina properties |   |              | 1,324  |   |              |   | - |   |
| Paragon properties |   |              | 4,108  |   |              |   | 4,379 |   |
|               |   | $                 | 5,432  |   |              | $      | 9,268 |   |

----

----

|                              |   | December 31, 2013 |   |   | December 31, 2012 |   |
|-----------------------------------|--------|-------------------|--------|--------|-------------------|--------|
| Balance – beginning of year |   | $                 | 2,148  |   |              | $      | 1,907 |   |
| Accretion expense                 |   |              | 49     |   |              |   | 46 |   |
| Change in estimates               |   |              | (234   | )      |              |   | 195 |   |
| Balance – end of year       |   | $                 | 1,963  |   |              | $      | 2,148 |   |

----

----

| (a)   | During the year ended December 31, 2013 |
|-----------------|-----------------------------------------|

| i.   | On August 20, 2013, the Company issued by way of a bought deal private placement 6,460,000 flow-through shares on a brokered basis at $0.62 per share, for aggregate gross proceeds of $4,005,000. The agent to the private placement was paid a commission of 5% of the gross proceeds from the offering and received broker’s warrants to acquire 387,600 non-flow-through shares at any time until February 20, 2015 at a price of $0.63 per share. Net proceeds from the issuance were $3,701,000 after issuance costs comprised of the agent’s commission of $200,000 and other issuance costs of $104,000. The Company also recognized non-cash costs for the fair value of the broker’s warrants granted of $92,000. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii.   | 200,000 stock options were exercised at a price of $0.23 per common share for proceeds of $46,000. |
|-----------------|----------------------------------------------------------------------------------------------------|

| iii.   | On September 16, 2013, the Company issued 4,080 common shares valued at $2,000 and $13,000 in cash pursuant to an agreement by Paragon Minerals Corporation to acquire an exploration property. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iv.   | On December 20, 2013, the Company acquired Messina Minerals Inc. and issued 2,132,714 common shares valued at $896,000 based on the Company’s closing market price on December 31, 2013 of $0.42 per share in exchange for all outstanding Messina shares that the Company did not already own (see Note 3). |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | During the year ended December 31, 2012 |
|-----------------|-----------------------------------------|

| i.   | On January 6, 2012, the Company issued by way of public offering 7,610,000 units (“Units”) on a brokered basis at $0.67 per Unit, for aggregate gross proceeds of $5,099,000. Each Unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the Company at any time until January 6, 2014 at a price of $0.90 per common share. The agent to the private placement was paid a commission of 6.5% of the gross proceeds from the offering and received broker’s warrants to acquire 494,650 common shares at any time until July 6, 2013 at a price of $0.67 per share. Net proceeds from the issuance were $4,609,000 after issuance costs comprised of the agent’s commission of $331,000 and other issuance costs of $159,000. The Company allocated $704,000 of the gross proceeds to the fair value of the share purchase warrants issued and recognized non-cash costs for the fair value of the broker’s warrants granted of $109,000. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii.   | On February 10, 2012, the Company issued by way of non-brokered private placement 6,000,000 units (“Units”) to Zhongrun International Mining Co. Ltd. (“Zhongrun”) at $0.67 per Unit, for aggregate gross proceeds of $4,020,000. Each Unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the Company at any time until February 10, 2014 at a price of $0.90 per common share. In connection with the Zhongrun financing the Company paid a finder’s fee to an arm’s length intermediary. Net proceeds from the issuance were $3,749,000 after issuance costs comprised of the finder’s fee of $201,000 and other issuance costs of $70,000. The Company allocated $747,000 of the gross proceeds to the fair value of the share purchase warrants. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iii.   | 4,130 warrants were exercised at a price of $0.40 per common share for proceeds of $2,000. |
|------------------|--------------------------------------------------------------------------------------------|

| iv.   | On September 24, 2012, the Company acquired Paragon Minerals Corporation and issued 7,299,019 common shares valued at $3,394,000 based on the Company’s closing market price on September 24, 2012 of $0.465 per share in exchange for all outstanding Paragon shares that the Company did not already own (see Note 3). |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| v.   | On December 3, 2012, the Company issued 9,520 common shares valued at $4,000 and $40,000 in cash pursuant to an agreement by Paragon Minerals Corporation to acquire an exploration property. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| (a)   | Stock Options |
|-----------------|---------------|

|                           |   | Year ended December 31, 2013 |      |   | Year ended December 31, 2012   |   |
|--------------------------------|--------|------------------------------|-----------|--------|--------------------------------|--------|
|                           |   | Number of Options            |      |   | Weighted AverageExercise Price |   |   | Number of Options |   |   | Weighted AverageExercise Price |   |
| Outstanding, beginning of year |   |                         | 7,605,533 |   |                           | $      | 0.46 |   |   |   | 6,410,000 |   |   | $ | 0.41 |   |
| Granted                        |   |                         | -         |   |                           |   | - |   |   |   | 960,000 |   |   |   | 0.46 |   |
| Exercised                      |   |                         | (200,000  | )      |                           |   | 0.23 |   |   |   | - |   |   |   | - |   |
| Converted                      |   |                         | 138,134   |   |                           |   | 0.30 |   |   |   | 310,533 |   |   |   | 1.54 |   |
| Expired                        |   |                         | (258,433  | )      |                           |   | 1.62 |   |   |   | (75,000 | ) |   |   | 0.94 |   |
| Forfeited                      |   |                         | (37,500   | )      |                           |   | 0.46 |   |   |   | - |   |   |   | - |   |
| Outstanding, end of year       |   |                         | 7,247,734 |   |                           | $      | 0.42 |   |   |   | 7,605,533 |   |   | $ | 0.46 |   |

----

----

| (a)   | Stock Options (continued) |
|-----------------|---------------------------|

|              |   | Options Outstanding |      |   | Options Exercisable             |   |
|-------------------|--------|---------------------|-----------|--------|---------------------------------|--------|
| Expiry Date       |   | Number of Options   |      |   | Weighted Average Exercise Price |   |   | Number of Options |   |   | Weighted Average Exercise Price |   |
| March 20, 2014    |   |                | 138,134   |   |                            | $      | 0.30 |   |   |   | 138,134 |   |   | $ | 0.30 |   |
| March 27, 2014    |   |                | 1,375,000 |   |                            |   | 0.23 |   |   |   | 1,375,000 |   |   |   | 0.23 |   |
| December 31, 2014 |   |                | 40,800    |   |                            |   | 1.14 |   |   |   | 40,800 |   |   |   | 1.14 |   |
| May 12, 2015      |   |                | 4,460,000 |   |                            |   | 0.45 |   |   |   | 4,460,000 |   |   |   | 0.45 |   |
| January 27, 2016  |   |                | 300,000   |   |                            |   | 0.71 |   |   |   | 300,000 |   |   |   | 0.71 |   |
| July 4, 2016      |   |                | 23,800    |   |                            |   | 0.81 |   |   |   | 23,800 |   |   |   | 0.81 |   |
| October 3, 2017   |   |                | 910,000   |   |                            |   | 0.46 |   |   |   | 455,000 |   |   |   | 0.46 |   |
|              |   |                | 7,247,734 |   |                            | $      | 0.42 |   |   |   | 6,792,734 |   |   | $ | 0.42 |   |

| Period of Grant                                                                                                                                           |   | Year ended December 31, 2013 (2) |   |   | Year ended December 31, 2012 (2) |             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|----------------------------------|------------------|
| Dividend Yield                                                                                                                                            |   |                             | -      |   |                             |             | 0 | % |
| Risk free interest rate                                                                                                                                   |   |                             | -      |   |                             |             | 1.2 | % |
| Expected life                                                                                                                                             |   |                             | -      |   |                             | 2.6 to 3.5 years |   |
| Expected volatility (1)                                                                                                                                   |   |                             | -      |   |                             | 71.4% to 73.1%   |   |
| Weighted average grant date fair value                                                                                                                    |   |                             | -      |   |                             | $                | 0.22 |   |
| Forfeiture rate                                                                                                                                           |   |                             | -      |   |                             |             | 2 | % |
| (1) Determined based on historical volatility of the Company’s share price.(2) Excludes stock options converted upon Messina or Paragon acquisition |

----

----

| (b)   | Warrants |
|-----------------|----------|

| Year ended December 31, 2013   |   |              | Year ended December 31, 2012 |   |
|--------------------------------|--------|-------------------|------------------------------|--------|
|                           |   | Number ofWarrants |                         |   | Weighted AverageExercise Price |   |   | Number ofWarrants |   |   | Weighted AverageExercise Price |   |
| Outstanding, beginning of year |   |              | 13,419,693                   |   |   | $ | 0.95 |   |   |   | 5,054,148 |   |   | $ | 0.88 |   |
| Issued                         |   |              | 387,600                      |   |   |   | 0.63 |   |   |   | 7,299,650 |   |   |   | 0.88 |   |
| Converted                      |   |              | 84,745                       |   |   |   | 3.54 |   |   |   | 1,407,168 |   |   |   | 1.51 |   |
| Exercised                      |   |              | -                            |   |   |   | - |   |   |   | (4,130 | ) |   |   | 0.40 |   |
| Expired                        |   |              | (5,401,838                   | )      |   |   | 0.90 |   |   |   | (337,143 | ) |   |   | 0.70 |   |
| Outstanding, end of year       |   |              | 8,490,200                    |   |   | $ | 1.00 |   |   |   | 13,419,693 |   |   | $ | 0.95 |   |

|              |   | Warrants Outstanding and Exercisable |      |
|-------------------|--------|--------------------------------------|-----------|
| Expiry Date       |   | Number ofWarrants                    |      |   | Weighted AverageExercise Price |   |
| January 6, 2014   |   |                                 | 3,805,000 |   |   | $ | 0.90 |   |
| February 10, 2014 |   |                                 | 3,000,000 |   |   |   | 0.90 |   |
| June 3, 2014      |   |                                 | 1,212,855 |   |   |   | 1.47 |   |
| June 5, 2014      |   |                                 | 84,745    |   |   |   | 3.54 |   |
| February 20, 2015 |   |                                 | 387,600   |   |   |   | 0.63 |   |
|              |   |                                 | 8,490,200 |   |   | $ | 1.00 |   |

| Year of Grant                                                                                                                                         | Year ended December 31, 2013 (2) |       |   | Year ended December 31, 2012 (2) |             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|------------|--------|----------------------------------|------------------|
| Dividend Yield                                                                                                                                        |                             |       | 0      | %                                |             |   | 0 | % |
| Risk free interest rate                                                                                                                               |                             |       | 1.20   | %                                |             |   | 0.95 | % |
| Expected life                                                                                                                                         |                             | 1.46 years |   |                             | 1.4 to 1.9 years |   |
| Expected volatility (1)                                                                                                                               |                             |       | 67.8   | %                                |             | 74.5% to 78.2% |   |
| Weighted average grant date fair value                                                                                                                |                             | $          | 0.24   |                             |             | $ | 0.20 |   |
| (1) Determined based on historical volatility of the Company’s share price.(2) Excludes warrants converted upon Messina or Paragon acquisition. |

----

----

| (c)   | Summary |
|-----------------|---------|

|                                      |   | Options |   |   | Warrants |   |   | UnexercisedOptions andWarrants |   |   | NormalCourseIssuer Bid |   |   | Total  |   |
|-------------------------------------------|--------|---------|--------|--------|----------|--------|--------|--------------------------------|--------|--------|------------------------|--------|--------|--------|--------|
| Balance, December 31, 2011                |   |    | 1,240  |   |     |   | 1,070  |                           |   |   | 7,836                  |   |   |   | 604    |   |   |   | 10,750 |   |
| Share-based compensation                  |   |    | 107    |   |     |   | -      |                           |   |   | -                      |   |   |   | -      |   |   |   | 107 |   |
| Stock options expired                     |   |    | (29    | )      |     |   | -      |                           |   |   | 29                     |   |   |   | -      |   |   |   | - |   |
| Broker and share purchase warrants issued |   |    | -      |   |     |   | 1,560  |                           |   |   | -                      |   |   |   | -      |   |   |   | 1,560 |   |
| Broker warrants expired                   |   |    | -      |   |     |   | (81    | )                              |   |   | 81                     |   |   |   | -      |   |   |   | - |   |
| Paragon acquisition                       |   |    | 8      |   |     |   | 45     |                           |   |   | -                      |   |   |   | -      |   |   |   | 53 |   |
| Balance, December 31, 2012                |   |    | 1,326  |   |     |   | 2,594  |                           |   |   | 7,946                  |   |   |   | 604    |   |   |   | 12,470 |   |
| Share-based compensation                  |   |    | 120    |   |     |   | -      |                           |   |   | -                      |   |   |   | -      |   |   |   | 120 |   |
| Stock options exercised                   |   |    | (20    | )      |     |   | -      |                           |   |   | -                      |   |   |   | -      |   |   |   | (20 | ) |
| Stock options expired                     |   |    | (25    | )      |     |   | -      |                           |   |   | 25                     |   |   |   | -      |   |   |   | - |   |
| Broker warrants issued                    |   |    | -      |   |     |   | 92     |                           |   |   | -                      |   |   |   | -      |   |   |   | 92 |   |
| Warrants expired                          |   |    | -      |   |     |   | (1,104 | )                              |   |   | 1,104                  |   |   |   | -      |   |   |   | - |   |
| Messina acquisition                       |   |    | 19     |   |     |   | -      |                           |   |   | -                      |   |   |   | -      |   |   |   | 19 |   |
| Balance, December 31, 2013                |   | $       | 1,420  |   |     | $      | 1,582  |                           |   | $      | 9,075                  |   |   | $      | 604    |   |   | $ | 12,681 |   |

----

----

|                                            |   | Year ended December 31, 2013 |   |   | Year ended December 31, 2012 |   |
|-------------------------------------------------|--------|------------------------------|--------|--------|------------------------------|--------|
| Prairie Creek Mine                              |   |                         |   |   |                         |   |
| Camp operation and project development          |   | $                            | 1,528  |   |                         | $      | 1,394 |   |
| Diamond drilling                                |   |                         | 331    |   |                         |   | 3,107 |   |
| Feasibility studies and mine planning           |   |                         | 1,611  |   |                         |   | 2,860 |   |
| Permitting and environmental                    |   |                         | 1,342  |   |                         |   | 1,522 |   |
|                                            |   |                         | 4,812  |   |                         |   | 8,883 |   |
|                                            |   |                         |   |   |                         |   |   |   |
| Depreciation – mining plant and equipment |   |                         | 116    |   |                         |   | 154 |   |
| Total exploration and evaluation expenses       |   | $                            | 4,928  |   |                         | $      | 9,037 |   |
|                                            |   |                         |   |   |                         |   |   |   |
| Exploration and evaluation, beginning of year   |   | $                            | 56,424 |   |                         | $      | 47,387 |   |
| Total exploration and evaluation expenses       |   |                         | 4,928  |   |                         |   | 9,037 |   |
| Exploration and evaluation, end of year         |   | $                            | 61,352 |   |                         | $      | 56,424 |   |

|                                          |   | Year ended December 31, 2013 |   |   | Year ended December 31, 2012 |   |
|-----------------------------------------------|--------|------------------------------|--------|--------|------------------------------|--------|
| Paragon Properties                            |   |                         |   |   |                         |   |
| Camp operation and project development        |   | $                            | 163    |   |                         | $      | 54 |   |
| Diamond drilling                              |   |                         | 984    |   |                         |   | 34 |   |
| Permitting and environmental                  |   |                         | 14     |   |                         |   | - |   |
| Total exploration and evaluation expenses     |   | $                            | 1,161  |   |                         | $      | 88 |   |
|                                          |   |                         |   |   |                         |   |   |   |
| Exploration and evaluation, beginning of year |   | $                            | 88     |   |                         | $      | - |   |
| Total exploration and evaluation expenses     |   |                         | 1,161  |   |                         |   | 88 |   |
| Exploration and evaluation, end of year       |   | $                            | 1,249  |   |                         | $      | 88 |   |

----

----

|                                                            |   | 2013   |   |   | 2012   |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Statutory tax rate                                              |   |   | 26.51  | %      |   |   | 25.94 | % |
| Income taxes/(recovery) computed at statutory rates             |   | $      | (1,832 | )      |   | $      | (5,152 | ) |
| Permanent differences                                           |   |   | (34    | )      |   |   | 42 |   |
| Expired losses                                                  |   |   | 60     |   |   |   | - |   |
| Renunciation of resource expenditures                           |   |   | -      |   |   |   | 637 |   |
| Other                                                           |   |   | (14    | )      |   |   | (110 | ) |
| Loss on marketable securities subject to capital gains tax rate |   |   | 465    |   |   |   | 1,126 |   |
| Income tax rate changes                                         |   |   | (518   | )      |   |   | 131 |   |
| Tax benefits not yet recognized                                 |   |   | 1,873  |   |   |   | 3,326 |   |
|                                                            |   |   | -      |   |   |   | - |   |

|                                       |   | 2013   |   |   | 2012   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|
| Non-capital loss carry forwards            |   | $      | 8,467  |   |   | $      | 5,986 |   |
| Plant and equipment                        |   |   | 386    |   |   |   | 315 |   |
| Resource interests                         |   |   | 9,515  |   |   |   | 7,904 |   |
| Other                                      |   |   | 843    |   |   |   | 920 |   |
| Marketable securities                      |   |   | 1,198  |   |   |   | 695 |   |
| Net unrecognized deferred income tax asset |   | $      | 20,409 |   |   | $      | 15,820 |   |

----

----

| Year   |   | Total  |   |
|--------|--------|--------|--------|
| 2014   |   | $      | 886    |   |
| 2015   |   |   | 895    |   |
| 2024   |   |   | 112    |   |
| 2025   |   |   | 374    |   |
| 2026   |   |   | 1,905  |   |
| 2027   |   |   | 3,729  |   |
| 2028   |   |   | 5,112  |   |
| 2029   |   |   | 3,347  |   |
| 2030   |   |   | 3,325  |   |
| 2031   |   |   | 3,701  |   |
| 2032   |   |   | 6,699  |   |
| 2033   |   |   | 1,913  |   |
|   |   | $      | 31,998 |   |

----

----

| (a)   | Categories of financial instruments |
|-----------------|-------------------------------------|

|                          |                        |   | December 31, 2013 |   |   | December 31, 2012 |   |
|-------------------------------|-----------------------------|--------|-------------------|--------|--------|-------------------|--------|
| Cash and cash equivalents     | FVTPL                       |   | $                 | 8,376  |   |              | $      | 224 |   |
| Short-term investments        | FVTPL                       |   |              | 2,005  |   |              |   | 5,458 |   |
| Marketable securities         | FVTPL                       |   |              | 1,328  |   |              |   | 4,984 |   |
| Other receivables             | Loans and receivables       |   |              | 324    |   |              |   | 86 |   |
| Other long-term assets        | FVTPL                       |   |              | 739    |   |              |   | 739 |   |
| Accounts payable              | Other financial liabilities |   |              | (917   | )      |              |   | (1,527 | ) |
| Accrued and other liabilities | Other financial liabilities |   |              | (707   | )      |              |   | (461 | ) |

| (b)   | Market risk |
|-----------------|-------------|

| (c)   | Interest rate risk |
|-----------------|--------------------|

| (d)   | Foreign currency risk |
|-----------------|-----------------------|

| (e)   | Credit risk |
|-----------------|-------------|

| (f)   | Liquidity risk |
|-----------------|----------------|

----

----

| Year ending December 31, |   | Total  |   |
|--------------------------|--------|--------|--------|
| 2014                     |   | $      | 182    |   |
| 2015                     |   |   | 161    |   |
| 2016                     |   |   | 157    |   |
| 2017                     |   |   | 89     |   |
| 2018                     |   |   | -      |   |
|                     |   | $      | 589    |   |

| (a)   | On January 6, 2014, 3,805,000 warrants with a weighted average exercise price of $0.90 expired. |
|-----------------|-------------------------------------------------------------------------------------------------|

| (b)   | On February 10, 2014, 3,000,000 warrants with a weighted average exercise price of $0.90 expired. |
|-----------------|---------------------------------------------------------------------------------------------------|

| (c)   | During January 2014, 42,373 stock options with a weighted average exercise price of $0.30 were exercised. |
|-----------------|-----------------------------------------------------------------------------------------------------------|

| (d)   | During February 2014, 175,000 stock options with a weighted average exercise price of $0.23 were exercised. |
|-----------------|-------------------------------------------------------------------------------------------------------------|

| (e)   | During February 2014, 23,729 stock options with a weighted average exercise price of $0.30 were exercised. |
|-----------------|------------------------------------------------------------------------------------------------------------|

| (f)   | During March 2014, 72,032 stock options with a weighted average exercise price of $0.30 were exercised. |
|-----------------|---------------------------------------------------------------------------------------------------------|