---

|PRIMERO MINING CORP.                            
|------------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS            
|OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012  

This managements discussion and analysis (MD&A) of the
financial condition and results of operations of Primero Mining Corp. (Primero
or the Company) should be read in conjunction with the consolidated financial
statements of the Company as at and for the year ended December 31, 2013.
Additional information on the Company, including its Annual Information Form for
the year ended December 31, 2013, which is expected to be filed by March 31,
2014, can be found under Primeros profile at www.sedar.com.

Management is responsible for the preparation of the financial
statements and MD&A. The financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board. All dollar figures in this
MD&A are expressed in US dollars, unless stated otherwise.

This MD&A contains forward-looking statements and should be
read in conjunction with the risk factors described in the Risks and
uncertainties and Cautionary statement on forward-looking information
sections at the end of this MD&A.

This MD&A has been prepared as of February 12, 2014.

2013HIGHLIGHTS

2013 was a turbulent year for precious metals mining companies.
The price of gold, which had increased more than 500% during the 12 years ended
in 2012, declined by 28% in 2013, the largest annual decline since 1981.
Notwithstanding these market conditions, 2013 was a successful year for Primero,
with gold equivalent production up 29% from 2012, resulting in a 10% increase in
revenue in 2013 compared with 2012. In 2013, the Company also acquired 100% of
the Cerro del Gallo project and announced the acquisition of Brigus Gold Corp.
(Brigus), which is expected to close in March 2014, diversifying its asset
portfolio and moving towards its goal to become a mid-tier producer. The
specific highlights for the 2013 fourth quarter and year are:

- Produced 34,371 gold equivalent ounces1 in the fourth quarter and 143,114
  gold equivalent ounces in 2013, compared to 26,310 and 111,132 gold equivalent
  ounces, respectively, in 2012.
- Produced 29,097 ounces of gold in the fourth quarter and 111,983 ounces of
  gold in 2013, compared to 23,143 ounces and 87,900 ounces, respectively, in
  2012.
- Produced 1.6 million ounces of silver in the fourth quarter and 6.05
  million ounces in 2013, compared to 1.32 million ounces and 5.13 million
  ounces, respectively, in 2012.
- Sold 999,162 ounces of silver at spot prices in 2013 before reaching the
  end of the third year of the silver purchase agreement, compared to 716,229
  ounces in 2012.
- Incurred total cash costs per gold equivalent ounce2 of $660 for the fourth
  quarter and $599 for 2013 compared to $677 and $636, respectively, in 2012. On
  a by-product basis, total cash costs per gold ounce were $550 for the fourth
  quarter and $389 for 2013, compared to $535 and $366 per gold ounce,
  respectively, for 2012.
- Incurred all-in sustaining costs per ounce3 of $1,415 for the fourth
  quarter and $1,077 for 2013, compared to $1,644 and $1,134 respectively in
  2012.

1

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|PRIMERO MINING CORP.                            
|------------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS            
|OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012  

- Earned adjusted net income4 of $1.6 million ($0.01 per share) for the
  fourth quarter and $38.7 million ($0.36 per share) for 2013, compared to $4.5
  million ($0.05 per share) and $41.3 million ($0.45 per share), respectively,
  in 2012. A significant one-time, non-cash deferred tax charge of $35.9 million
  in the fourth quarter of 2013, due to the introduction of a mining royalty in
  Mexico, resulted in net losses of $35.9 million ($0.31 per share) for the
  fourth quarter and $4.3 million ($0.04 per share) for 2013, compared to net
  income of $1.2 million ($0.01 per share) and $49.6 million ($0.54 per share),
  respectively, in 2012.
- Generated operating cash flows before working capital changes of $14.0
  million in the fourth quarter, and $72.4 million in 2013, compared to $17.8
  million and $88.8 million, respectively, in 2012;
- Acquired 100% of the Cerro del Gallo gold-silver-copper development stage
  project in Guanajuato, Mexico.
- Entered into a definitive agreement to acquire Brigus in December 2013,
  which after spinning out various exploration assets, will result in the
  Company owning 100% of the producing Black Fox mine and adjacent Grey Fox
  development project in Ontario, Canada. The acquisition is expected to close
  in March 2014.

|1 | Gold equivalent ounces includes silver ounces produced,
      and converted to a gold equivalent based on a ratio of the average
      commodity prices received for each period. The ratio for 2013 was based on
      realized prices of $1,394 per ounce of gold and $6.97 per ounce of
      silver.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2 | Total cash costs per gold equivalent ounce and total cash
      costs per gold ounce on a by-product basis are non-GAAP measures. Total
      cash costs per gold equivalent ounce are defined as costs of production
      (including refining costs) divided by the total number of gold equivalent
      ounces produced. Total cash costs per gold ounce on a by-product basis are
      calculated by deducting the by-product silver credits from operating costs
      and dividing by the total number of gold ounces produced. The Company
      reports total cash costs on a production basis. In the gold mining
      industry, these are common performance measures but do not have any
      standardized meaning, and are non-GAAP measures. As such, they are
      unlikely to be comparable to similar measures presented by other issuers.
      In reporting total cash costs per gold equivalent and total cash costs per
      gold ounce on a by-product basis, the Company follows the recommendations
      of the Gold Institute standard. The Company believes that, in addition to
      conventional measures, prepared in accordance with GAAP, certain investors
      use this information to evaluate the Companys performance and ability to
      generate cash flow. Accordingly, it is intended to provide additional
      information and should not be considered in isolation or as a substitute
      for measures of performance prepared in accordance with GAAP. Refer to
      Non-GAAP measure  Total cash costs per gold ounce below for a
      reconciliation of cash costs per gold ounce on both a by-product and gold
      equivalent basis to reported operating expenses (the most directly
      comparable GAAP measure).
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3 | The Company, in conjunction with an initiative undertaken
      within the gold mining industry, has adopted an all-in sustaining cost
      non- GAAP performance measure that the Company believes more fully defines
      the total cost associated with producing gold; however, this performance
      measure has no standardized meaning. Accordingly, it is intended to
      provide additional information and should not be considered in isolation
      or as a substitute for measures of performance prepared in accordance with
      GAAP. The Company reports this measure on a gold ounces produced basis.
      Refer to Non-GAAP measure  All-in sustaining costs per gold
      ounce below for a reconciliation of all-in sustaining costs per gold
      ounce.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4 | Adjusted net income and adjusted net income per share are
      non-GAAP measures. Adjusted net income is net income adjusted for unusual
      items. Neither of these non-GAAP performance measures has any standardized
      meaning and is therefore unlikely to be comparable to other measures
      presented by other issuers. The Company believes that, in addition to
      conventional measures prepared in accordance with GAAP, certain investors
      use this information to evaluate the Companys performance. Accordingly,
      it is intended to provide additional information and should not be
      considered in isolation or as a substitute for measures of performance
      prepared in accordance with GAAP. Refer to Non-GAAP measure  Adjusted
      net incomebelow for a reconciliation of adjusted net income to
      reported net income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

2

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

OVERVIEW

Primero is a Canadian-based precious metals producer with
operations in Mexico. The Company is focused on building a portfolio of high
quality, low cost precious metals assets in the Americas through acquiring,
exploring, developing and operating mineral resource properties. The Company
owns one producing property, the San Dimas gold-silver mine, located in Mexicos
San Dimas district, on the border of Durango and Sinaloa states, one
gold-silver-copper project in the development stage, Cerro del Gallo, located in
the state of Guanajuato in central Mexico and one exploration property,
Ventanas, located in Durango state, Mexico.

The Companys shares are listed on the Toronto Stock Exchange
(TSX) under the symbol P and on the New York Stock Exchange (NYSE) under
the symbol PPP. After the acquisition of Cerro Resources NL in May 2013 until
December 30, 2013, the Companys shares were also listed on the Australian
Securities Exchange (ASX) under the symbol PPM. In addition, Primero has
common share purchase warrants which trade on the TSX under the symbol
P.WT.

With the recent addition of the Cerro del Gallo development
project and the announcement of its intention to acquire Brigus, Primero is well
positioned as an emerging mid-tier gold producer with a diversified production
base in geo-politically stable jurisdictions. The Company believes that the San
Dimas mine provides a solid production base with short-term opportunities to
optimize mine capacity, increase mill throughput and expand production. The
Cerro del Gallo project increased the Company's reserves and resources and,
assuming the Company makes a construction decision and builds the processing
facilities, will deliver an additional 95,000 gold equivalent ounces per year of
production. The potential acquisition of Brigus is expected to add over 100,000
gold equivalent ounces of annual production at below market average cash costs.
With all these assets, Primero expects its production could grow to 400,000 gold
equivalent ounces by the end of 2016. The Company also continues to consider
other precious metal asset acquisitions in low risk regions of the Americas to
grow this production base further.

RECENT CORPORATE DEVELOPMENTS

Agreement to acquire Brigus

On December 16, 2013, the Company announced that it had entered
into an arrangement agreement whereby Primero will acquire all outstanding
common shares of Brigus pursuant to a plan of arrangement (the Arrangement) to
create a diversified, Americas based mid-tier gold producer. Brigus main asset
is the producing Black Fox mine and the adjacent Grey Fox development project,
located in the Timmons Gold District of Ontario, Canada. During 2013, the Black
Fox mine produced 98,710 ounces of gold through a combination of underground and
open pit mining. Refer to the information circular dated January 27, 2014 filed
under the Companys profile at www.sedar.com.

Under the Arrangement, the Company will acquire each
outstanding Brigus common share for 0.175 of a Primero common share (the
Exchange Ratio). In addition, Brigus shareholders will receive 0.1 of a common
share in a newly incorporated company Fortune Bay Corp. (Fortune Bay) for each
Brigus common share as part of the Arrangement. Fortune Bay will hold Brigus
interests in the Goldfields project in Saskatchewan and the Ixhuatán and Huizopa
projects in Mexico and will be capitalized with approximately Cdn$10 million in
cash. Upon completion of the Arrangement, Brigus shareholders will hold, in
aggregate, a 90.1% interest in Fortune Bay and Primero will hold the remaining
9.9% interest. All outstanding options to purchase Brigus common shares will be
exchanged for options to purchase Primero common shares based upon the Exchange
Ratio and each outstanding warrant to purchase a Brigus common share will be exercisable to purchase 0.175 of a
Primero common share and 0.1 of a Fortune Bay common share.

3

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The main benefits of the transaction to the Company are:

- Adds a high quality producing gold mine in a proven and mining friendly
  jurisdiction
- Diversifies production with approximately 100,000 gold equivalent ounces
  per year, at below industry average cash costs
- Significantly increases reserves and measured and indicated resources
- Leverages Primeros underground mining technical expertise
- Provides accretive production and cash flow, and
- Improves market profile and provides a multiple re-rating opportunity as a
  mid-tier producer with a proven operating team, a superior growth profile and
  significant exploration upside.

The proposed transaction will be completed by a court-approved
plan of arrangement and will require approval by at least 66[ x ]% of the votes
cast by the shareholders of Brigus at a special meeting. The issuance of Primero
common shares in connection with the proposed transaction will require the
approval of a majority of the shareholders of Primero voting at a special
meeting. The shareholder meetings will be held on February 27, 2014. In addition
to shareholder and court approvals, the proposed transaction will be subject to
applicable regulatory approvals and the satisfaction of certain other customary
conditions.

After closing of the transaction, the Company will be required
to make change of control offers for Brigus outstanding $50 million 6.5%
convertible senior unsecured debentures and Cdn$24 million senior secured term
notes at 100% and 105%, respectively, of their outstanding principal amount plus
accrued interest.

Acquisition of Cerro del Gallo

On May 22, 2013, the Company acquired all of the issued and
outstanding common shares of Cerro Resources NL (Cerro) by way of a scheme of
arrangement under the Australian Corporations Act 2001. Cerro was an exploration
and development company whose principal asset was 69.2% of the feasibility stage
Cerro Del Gallo project, a gold-silver-copper deposit located in the province of
Guanajuato, Mexico. On December 19, 2013, the Company acquired the remaining
30.8% interest in the Cerro del Gallo project from a subsidiary of Goldcorp Inc.

Under the terms of the scheme of arrangement, each Cerro
shareholder received 0.023 of a Primero common share for each Cerro common share
held, and each Cerro option holder received 0.023 of a Primero option for each
Cerro option held. Additionally, Cerro shareholders received 80.01% of the
common shares of a newly incorporated company, Santana Minerals Limited
("Santana"). Santana assumed Cerro's interests in the Namiquipa, Espiritu Santo,
Mt Philp and Kalman projects, shares in Syndicated Metals Limited and
approximately $4 million in cash. The Company subscribed for a 19.99% interest
in Santana, whose shares are listed on the ASX under the symbol SMI. The total
purchase price of Cerro was $97.8 million, which was substantially funded by the
issue of 18 million Primero common shares. The consideration for the remaining
30.8% interest in the Cerro del Gallo project comprised an upfront cash payment
of $8 million, plus contingent payments based on meeting certain milestones or
market conditions (see Liquidity outlook - Cerro del Gallo liquidity
considerationsbelow).

4

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Cerro del Gallo is an attractive long-life project that
significantly increased Primeros reserves and measured and indicated resources
and will diversify the Companys near-term production with an anticipated
additional 95,000 gold equivalent ounces per year. In May 2013, the Company
commenced an assessment of the alternatives for the long term development of the
project. The May 2012 Definitive Feasibility Study ("DFS")1 on the
project contemplated only a phase one ("Phase I") heap leach of 4.5 million
tonnes per year of oxidized and partially oxidized ore for 7.2 years of
production. The May 2012 DFS superseded an earlier preliminary assessment in May
2011, that identified a potential phase two ("Phase II") addition of
carbon-in-leach ("CIL") processing of fresh rock commencing in the fifth year.
This assessment was completed in the fourth quarter of 2013 and concluded that
no significant changes should be made to the Phase I operation as it was defined
in the DFS and that further evaluation of the Phase II addition is required,
particularly in light to the recent exploration success of a high grade
epithermal vein system located near the main ore body. The discovery of this
vein system has led management to reconsider the original Phase II scoping and
to continue the regional exploration program in 2014 in order to assess the high
grade mineralization around the Cerro del Gallo project. As stated in the
January 13, 2014 press release, work at Cerro del Gallo will continue in 2014 on
land acquisition, water drilling, permitting and engineering efforts (including
mine plan optimization, process optimization to improve recovery, reduce capital
and operating expenditures) in order to advance the project to a construction
decision by the end of the second quarter in 2014. The Companys 2014 budget for
Cerro del Gallo is $12.9 million including $2.5 million for exploration and
condemnation drilling. This spending is expected to be sufficient to complete
all outstanding permitting, land acquisition, basic engineering of the mine
processing facilities and a preliminary exploration program.

________________________________1 Refer to
Technical Report, First Stage Heap Leach Feasibility Study, Cerro del Gallo
Gold Silver Project, Guanajuato, Mexico, Effective Date: 11th May 2012, Report
Date: 29th June 2012 filed on www.sedar.com.

5

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

SELECTED ANNUAL INFORMATION

|                                                           |   | Year ended December 31, |  
|---------------------------------------------------------- | - | ----------------------- | -
|                                                           |   | 2013                    |  
|Key Performance Data                                       |   |                         |  
|Tonnes of ore milled                                       |   | 766,930                 |  
|Produced                                                   |   |                         |  
|Gold equivalent (ounces)                                   |   | 143,114                 |  
|Gold (ounces)                                              |   | 111,983                 |  
|Silver (million ounces)                                    |   | 6.05                    |  
|Sold                                                       |   |                         |  
|Gold equivalent (ounces)                                   |   | 143,972                 |  
|Gold (ounces)                                              |   | 112,846                 |  
|Silver (million ounces)                                    |   | 6.17                    |  
|Average realized prices                                    |   |                         |  
|Gold ($/ounce)                                             | $ | 1,394                   |  
|Silver ($/ounce)1                                          | $ | 6.97                    |  
|Average gold London PM fix                                 | $ | 1,411                   |  
|Total cash costs (per gold ounce)                          |   |                         |  
|Gold equivalent basis                                      | $ | 599                     |  
|By-product basis                                           | $ | 389                     |  
|All-in sustaining costs (per gold ounce)                   | $ | 1,077                   |  
|                                                           |   |                         |  
|Financial Data                                             |   |                         |  
|(in thousands of US dollars except per share amounts)      |   |                         |  
|Revenues                                                   |   | 200,326                 |  
|Earnings from mine operations                              |   | 76,004                  |  
|Net (loss) income                                          |   | (4,250                  | )
|Adjusted net income                                        |   | 38,668                  |  
|Basic (loss) income per share                              |   | (0.04                   | )
|Diluted (loss) income per share                            |   | (0.04                   | )
|Adjusted net income per share                              |   | 0.36                    |  
|Operating cash flows before working capital changes        |   | 72,396                  |  
|Assets                                                     |   |                         |  
|Mining interests                                           |   | 636,253                 |  
|Total assets                                               |   | 782,924                 |  
|Liabilities                                                |   |                         |  
|Long-term liabilities                                      |   | 76,141                  |  
|Total liabilities                                          |   | 121,834                 |  
|Equity                                                     |   | 661,090                 |  
|Weighted average shares outstanding (basic)(000's)         |   | 108,528                 |  
|Weighted average shares outstanding
      (diluted)(000's) |   | 108,904                 |  

| | 1 | Due to a silver purchase agreement originally entered
      into in 2004, Primero sells the majority of silver produced at the San
      Dimas mine at a fixed price (see RESULTS OF OPERATIONS -Silver
      purchase agreement below).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

SELECTED QUARTERLY INFORMATION

|                                                           |   | Three Months Ended |  
|---------------------------------------------------------- | - | ------------------ | -
|                                                           |   | December 31,       |  
|                                                           |   | 2013               |  
|Key Performance Data                                       |   |                    |  
|Tonnes of ore milled                                       |   | 181,626            |  
|Produced                                                   |   |                    |  
|Gold equivalent (ounces)                                   |   | 34,371             |  
|Gold (ounces)                                              |   | 29,097             |  
|Silver (million ounces)                                    |   | 1.60               |  
|Sold:                                                      |   |                    |  
|Gold equivalent (ounces)                                   |   | 37,733             |  
|Gold (ounces)                                              |   | 32,157             |  
|Silver (million ounces)                                    |   | 1.69               |  
|Average realized prices                                    |   |                    |  
|Gold ($/ounce)                                             | $ | 1,265              |  
|Silver ($/ounce)                                           | $ | 4.16               |  
|Total cash costs (per gold ounce)                          |   |                    |  
|Gold equivalent basis                                      | $ | 660                |  
|By-product basis                                           | $ | 550                |  
|All-in sustaining costs (per gold ounce)                   | $ | 1,415              |  
|                                                           |   |                    |  
|Financial Data1                                            |   |                    |  
|(in thousands of US dollars except per share amounts)      |   |                    |  
|Revenues                                                   |   | 47,737             |  
|Earnings from mine operations                              |   | 13,745             |  
|Net (loss) income                                          |   | (35,895            | )
|Adjusted net income                                        |   | 1,570              |  
|Basic (loss) income per share                              |   | (0.31              | )
|Diluted (loss) income per share                            |   | (0.31              | )
|Adjusted net income per share                              |   | 0.01               |  
|Operating cash flows before working capital changes        |   | 14,038             |  
|Assets                                                     |   |                    |  
|Mining interests                                           |   | 636,253            |  
|Total assets                                               |   | 782,924            |  
|Liabilities                                                |   |                    |  
|Long-term liabilities                                      |   | 76,141             |  
|Total liabilities                                          |   | 121,834            |  
|Equity                                                     |   | 661,090            |  
|Weighted average shares outstanding (basic)(000's)         |   | 115,691            |  
|Weighted average shares outstanding
      (diluted)(000's) |   | 115,972            |  

7

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

OUTLOOK FOR2014

In 2014 Primero expects to increase production from San Dimas
to between 155,000 and 165,000 gold equivalent ounces, up to 15% higher than
2013, due to operating at the expanded mill throughput rate of 2,500 tonnes per
day (TPD) by the end of the first quarter.

Cash costs for 2014 are expected to be in the range of $575 to
$600 per gold equivalent ounce, or between $340 and $360 per gold ounce on a
by-product basis. Primeros 2014 outlook and 2013 actual performance is
summarized in the following table:

|                                                                       | Outlook 2014        | 2013 Actuals
|---------------------------------------------------------------------- | ------------------- | ------------
|Attributable gold equivalent
      production1(gold equivalent ounces) | 155,000-165,000     | 143,114     
|Gold production (ounces)                                               | 115,000-125,000     | 111,983     
|Silver production5(ounces)                                             | 6,250,000-6,500,000 | 6,054,360   
|Total cash costs2,3(per gold
      equivalent ounce)                   | $575 - $600         | $599        
|Total cash costs2,3- by-product (per gold ounce)                       | $340 - $360         | $389        
|All-in Sustaining Costs2,3(per gold ounce)                             | $950-$1,050         | $1,077      

Material assumptions used to forecast total cash costs for 2014
include: an average gold price of $1,200 per ounce; an average silver price of
$7.96 per ounce (calculated using the silver purchase agreement contract price
of $4.16 per ounce and assuming excess silver beyond contract requirements is
sold at an average silver price of $21 per ounce); and foreign exchange rates of
1.05 Canadian dollars and 13 Mexican pesos to the US dollar.

Capital expenditures during 2014 are expected to be
approximately $48.7 million excluding capitalized exploration costs of $18.2
million. San Dimas underground development capital and sustaining capital remain
at similar levels to 2013, with approximately 69% of 2014 San Dimas capital
expenditures allocated to operations and 31% to projects.

Underground development at the San Dimas mine in 2014 will
again be focused in the main mining blocks (Central Block and Sinaloa Graben).
In 2014 the majority of the ore is anticipated to come from the Central Block
with approximately 25% from the higher-grade Sinaloa Graben block.

The Companys 2014 $18.2 million exploration program includes
94,000 metres of drilling in near mine and regional exploration at San Dimas,
regional exploration at Ventanas and near mine and regional exploration at Cerro
del Gallo. The San Dimas near mine exploration program includes approximately
35,000 metres of delineation drilling, 25,000 metres of exploration drilling
plus 2,500 metres of exploration drifting. The near mine exploration program
will focus mainly on reserve and resource development. The 32,000 meter regional
exploration program is targeting the possible extensions of the known
underground veins. The majority of the delineation drilling is planned for the
Roberta/Robertita and Marina 1/Marina 2 vein systems in the Central Block and
the Victoria/Alexa and Elia/Aranza vein systems in the Sinaloa Graben.

8

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The Cerro del Gallo exploration program includes approximately
10,000 metres of drilling. Approximately 80% of the 25,269 hectare San Anton
property remains unexplored. Results of the 2014 exploration program are
expected to be an important contributor to a Cerro del Gallo construction
decision.

9

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

REVIEW OF OPERATIONS

San Dimas mine

The following table discloses operating data for the San Dimas
mine for the years ended December 31, 2013 and 2012, as well as the fourth
quarter 2013 and the preceding four quarters.

|                                       |   | Year ended December 31, |  |   | Three months ended | 
|-------------------------------------- | - | ----------------------- |  | - | ------------------ | 
|                                       |   | 2013                    |  |   | 2012               | 
|Key Performance Data                   |   |                         |  |   |                    | 
|Tonnes of ore mined                    |   | 792,239                 |  |   | 731,310            | 
|Tonnes of ore milled                   |   | 766,930                 |  |   | 721,264            | 
|Average mined grade ( grams/tonne)     |   |                         |  |   |                    | 
|Gold                                   |   | 4.86                    |  |   | 3.90               | 
|Silver                                 |   | 270                     |  |   | 234                | 
|Average mill head grade (grams/tonne)  |   |                         |  |   |                    | 
|Gold                                   |   | 4.67                    |  |   | 3.90               | 
|Silver                                 |   | 258                     |  |   | 234                | 
|Average recovery rate (%)              |   |                         |  |   |                    | 
|Gold                                   |   | 97%                     |  |   | 97%                | 
|Silver                                 |   | 95%                     |  |   | 95%                | 
|Produced                               |   |                         |  |   |                    | 
|Gold equivalent (ounces)               |   | 143,114                 |  |   | 111,132            | 
|Gold (ounces)                          |   | 111,983                 |  |   | 87,900             | 
|Silver (million ounces)                |   | 6.05                    |  |   | 5.13               | 
|Sold                                   |   |                         |  |   |                    | 
|Gold equivalent (ounces)               |   | 143,972                 |  |   | 110,078            | 
|Gold (ounces)                          |   | 112,846                 |  |   | 87,384             | 
|Silver at fixed price (million ounces) |   | 5.17                    |  |   | 4.30               | 
|Silver at spot (million ounces)        |   | 1.00                    |  |   | 0.72               | 
|Average realized price (per ounce)     |   |                         |  |   |                    | 
|Gold                                   | $ | 1,394                   |  | $ | 1,662              | 
|Silver                                 | $ | 6.97                    |  | $ | 7.52               | 
|Total cash operating costs ($000s)     | $ | 85,739                  |  | $ | 70,716             | 
|Total cash costs (per gold ounce)      |   |                         |  |   |                    | 
|Gold equivalent basis                  | $ | 599                     |  | $ | 636                | 
|By-product basis                       | $ | 389                     |  | $ | 366                | 
|All-in sustaining costs (per ounce)    | $ | 1,077                   |  | $ | 1,134              | 

The San Dimas mine produced 111,983 ounces of gold and 6.05
million ounces of silver in 2013, 27% more and 18% more, respectively, than
2012. The increase in gold production was due mainly to 6% higher throughput
from 721,264 tonnes in 2012 to 766,930 tonnes in 2013, and a 20% and 10%
increase, respectively, in gold and silver grade. The throughput increase was
due in part to a mine and mill optimization initiative that the Company started
in Q3 2012 and completed in Q1 2013. The increase in grade was due to reduced mining dilution as well as the mining
of high grade pillars. The mill is currently undergoing an expansion to 2,500
TPD that is expected to be completed by the end of Q1 2014.

10

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Quarterly production increased each quarter from Q4 2012 to Q3
2013. The decline in Q4 2013 was due to the planned mill shutdown, which began
on December 21 and ended on January 7, 2014, in order to carry out maintenance,
equipment tie-ins and testing of components associated with the mill expansion.

Total cash costs on a gold equivalent and by-product basis in
2013 were $599 and $389 per ounce, respectively, compared with $636 and $366 per
ounce, respectively, in 2012. Operating costs were 21% ($15.0 million) higher in
2013 than 2012 and were offset by a 29% increase in gold equivalent ounces
produced. Most of the increases in input costs related to labour, contractors
and mine and mill maintenance. Labour costs increased by $8.6 million, including
$3.2 million for social security payments as a result of registering all the
workers in the federal social security system (see ANNUAL RESULTS OF OPERATIONS
- Other expensebelow), $3.9 million for annual pay rate and
productivity bonus increases and $0.9 million for organizational restructuring
and training. Contractor costs increased by $3.9 million, including $2.7 million
for long hole mining and $0.7 million for upgrading and expanding the external
security force. Maintenance costs increased $1.1 million due mainly to equipment
parts replacement and the higher tonnage processed.

The Company incurred all-in sustaining costs of $1,077 per gold
ounce in 2013, compared with $1,134 per gold ounce in 2012. All-in sustaining
costs increased to $120.6 million in 2013 from $99.6 million in 2012 due to the
operating cost increases described above as well as higher sustaining capital
expenditures, partly offset by $5.5 million lower corporate general and
administrative costs.

The 3.5 million ounce annual threshold under the silver
purchase agreement was met in early April 2013, approximately half a month
before 2012. The Company sold 999,162 ounces at market prices in 2013, 40% more
than 2012. The Company realizes silver spot sales in its second and third
quarters, hence total cash costs per ounce and all-in sustaining cash costs are
lower in these quarters than the first and fourth quarters.

11

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

ANNUAL RESULTS OF OPERATIONS

|                                                                     |  | For the year ended |   |  |          |   |  |                        |  
|-------------------------------------------------------------------- |  | ------------------ | - |  | -------- | - |  | ---------------------- | -
|In thousands of US dollars except per share amounts                  |  | December 31        |   |  |          |   |  |                        |  
|                                                                     |  | 2013               |   |  | 2012     |   |  | Change from prior year |  
|                                                                     |  | $                  |   |  | $        |   |  | $                      |  
|Revenue                                                              |  | 200,326            |   |  | 182,939  |   |  | 17,387                 |  
|Operating expenses                                                   |  | (88,086            | ) |  | (75,495  | ) |  | (12,591                | )
|Depreciation and depletion                                           |  | (36,236            | ) |  | (28,055  | ) |  | (8,181                 | )
|Total cost of sales                                                  |  | (124,322           | ) |  | (103,550 | ) |  | (20,772                | )
|Earnings from mine operations                                        |  | 76,004             |   |  | 79,389   |   |  | (3,385                 | )
|Exploration expenses                                                 |  | (431               | ) |  | -        |   |  | (431                   | )
|General and administrative                                           |  | (24,470            | ) |  | (30,003  | ) |  | 5,533                  |  
|Finance, foreign exchange, and other expense                         |  | (9,953             | ) |  | (4,711   | ) |  | (5,242                 | )
|Earnings before income taxes                                         |  | 41,150             |   |  | 44,675   |   |  | (3,525                 | )
|Income tax (expense) recovery                                        |  | (45,400            | ) |  | 4,878    |   |  | (50,278                | )
|Net (loss) income for the period                                     |  | (4,250             | ) |  | 49,553   |   |  | (53,803                | )
|                                                                     |  |                    |   |  |          |   |  |                        |  
|Adjusted net income for the period                                   |  | 38,668             |   |  | 41,292   |   |  | (2,624                 | )
|                                                                     |  |                    |   |  |          |   |  |                        |  
|Basic (loss) income per share                                        |  | (0.04              | ) |  | 0.54     |   |  | (0.58                  | )
|Diluted (loss) income per share                                      |  | (0.04              | ) |  | 0.54     |   |  | (0.58                  | )
|Weighted average number of common shares
      outstanding - basic   |  | 108,528            |   |  | 91,469   |   |  | 17,059                 |  
|Weighted average number of common shares outstanding -
      diluted |  | 108,904            |   |  | 91,635   |   |  | 17,269                 |  

The Company recorded a net loss of $4.3 million ($0.04 per
share) in 2013 compared with net income of $49.6 million ($0.54 per share) in
2012 due mainly to recording a significant deferred tax liability related to a
new Mexican mining royalty (see ANNUAL RESULTS OF OPERATIONS  Income
taxes below). Earnings before income taxes were $41.2 million in 2013, $3.5
million lower than 2012, (primarily due to commodity price declines), however,
income tax expense of $45.4 million in 2013 (of which $43.3 million was deferred
taxes) resulted in the net loss.

Adjusted net income, which primarily excludes deferred taxes
resulting from the introduction of the new royalty in Mexico in 2013 and the
impact of foreign exchange rate changes on deferred tax balances in both
periods, was $38.7 million ($0.36 per share) for 2013, compared to $41.3 million
($0.45 per share) for 2012. Higher revenue in 2013 was offset by higher
operating expenses and higher depreciation and depletion expenses, resulting in
earnings from mine operations of $76.0 million in 2013, compared with $79.4
million in 2012.

Revenue

Revenue was $200.3 million in 2013, 10% higher than 2012.
Revenue from gold increased 8% to $157.3 million in 2013 from $145.2 million in
2012. Gold sales increased 29% to 112,846 ounces in 2013 from 87,384 ounces in
2012, while the average realized gold price declined 16% to $1,394 per ounce in
2013 from $1,662 per ounce in 2012. Gold and other commodity prices
declined significantly in 2013, mainly due to the improving global (and
particularly US economy), concerns over the cessation of quantitative easing in
the U.S., generally strong overall equity markets and a rising US dollar.

12

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Revenue from silver increased 14% to $43.0 million in 2013 from
$37.7 million in 2012. Silver sales increased 23% to 6.17 million ounces in 2013
from 5.02 million ounces in 2012, while the average realized silver price
decreased 7% to $6.97 per ounce in 2013 from $7.52 per ounce in 2012. The
Company sold 5.17 million ounces at an average price of $4.14 per ounce in 2013
under the silver purchase agreement (see Silver purchase agreementbelow),compared with 4.3 million ounces at $4.10 per ounce in 2012.
In addition, the Company sold 999,162 ounces of silver at an average price of
$21.60 in 2013, compared with 716,229 ounces at an average price of $28.03 in
2012.

Silver purchase agreement

In 2004, the owner of the San Dimas mine entered into an
agreement to sell all the silver produced at the San Dimas mine for a term of 25
years to Silver Wheaton Caymans in return for an upfront payment comprising cash
and shares of Silver Wheaton Corp. and a per ounce payment of the lesser of
$3.90 (adjusted for annual inflation), or the market price. The Company was
required to assume this agreement, with amendments, when it acquired the San
Dimas mine. The amendments provided that for each of the first four years after
the acquisition date (until August 5, 2014), the first 3.5 million ounces per
annum of silver produced by the San Dimas mine, plus 50% of the excess silver
above this amount, must be sold to Silver Wheaton Caymans at the lesser of $4.04
per ounce (adjusted by 1% per year) and market prices. From August 6, 2014 and
for the life of the mine, the first 6 million ounces per annum of silver
produced by the San Dimas mine, plus 50% of the excess silver above this amount,
must be sold to Silver Wheaton Caymans at the lesser of $4.20 per ounce
(adjusted by 1% per year) and market prices. All silver not sold to Silver
Wheaton Caymans is available to be sold by the Company at market prices.

The expected cash flows associated with the sale of the silver
to Silver Wheaton Caymans at a price lower than the market price have been
reflected in the fair value of the mining interests recorded upon acquisition of
the San Dimas mine. The Company has presented the obligation to sell any silver
production to Silver Wheaton Caymans as part of the mining interests, as the
Company did not receive any of the upfront payment which was made by Silver
Wheaton to acquire its interest in the silver production of the San Dimas mine.
Further, the Company does not believe that the obligation meets the definition
of a liability as the obligation to sell silver to Silver Wheaton Caymans only
arises upon production of the silver.

Operating expenses

Operating expenses of the San Dimas mine were $88.1 million in
2013 compared to $75.5 million in 2012 due to the increase in production, sales
and costs. Gold equivalent and by-product cash costs per ounce were $599 and
$389, respectively, for 2013, compared with $636 and $366, respectively, for
2012. A 21% increase in total cash operating costs was offset by a 29% increase
in gold equivalent ounces in 2013, resulting in a 6% decrease in cash costs per
gold equivalent ounce. Cash operating costs increased to $85.7 million in 2013
from $70.7 million in 2012 mainly due to higher labour, contractor and
maintenance costs (see REVIEW OF OPERATIONS - San Dimas mine above for
details). Operating expenses include $0.3 million and $1.2 million of
share-based payments expense related to personnel at the mine for 2013 and 2012,
respectively.

13

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Depreciation and depletion expense

Depreciation and depletion expense increased by 29% in 2013 to
$36.2 million from $28.1 million in 2012, which was in line with the increase in
gold production. Depletion cost is initially charged to inventory during the
production process and then transferred to cost of sales when the inventory is
sold. The San Dimas mining properties are depleted using a units-of-production
basis and hence depletion increases as production increases.

General and administrative expenses

General and administrative expenses were $24.5 million in 2013,
compared to $30.0 million in 2012, broken down as follows:

Year endedDecember 31,(In thousands of
      U.S. dollars)
    
    2013
    
    
    2012Share-based payments
    
    6,441
    
    
    15,049Salaries and wages
    
    8,257
    
    
    5,761Rent and office costs
    
    1,904
    
    
    1,402Legal, accounting, consulting, and other professional fees
    
    3,753
    
    
    4,628Other general and administrative expenses
    
    4,115
    
    
    3,163Total
    
    24,470
    
    
    30,003


The significantly higher share-based payments charge in 2012
was primarily due to an increase in the value of units in the Companys phantom
share unit plan as a result of a 97% increase in the price of the Companys
common shares in 2012, compared to a 27% decline in 2013. Equity values of most
precious metals mining companies declined significantly during 2013 as a result
of the drop in metals prices and other factors and the Companys share price
performance was superior to most of its peers and industry indices. The increase
in salaries and wages was due mainly to the hiring of additional management and
technical personnel in 2012 after the start of the year and in 2013. The
decrease in legal, accounting, consulting, and other professional fees in 2013
was due largely to costs incurred related to the Advanced Pricing Agreement
(APA) filing in Mexico and the reserves and resources review in 2012. Other
general and administrative expenses were higher in 2013 partly due to increased
spending on regulatory matters resulting from the Companys acquisition of Cerro
and ASX listing and later delisting, as well as increased travel expenses
related to higher staffing levels and increased travel.

Other expense

Other expense was $8.6 million for 2013, compared to $1.8
million for 2012. The amount in 2013 includes $5.5 million in respect of social
security premiums in Mexico for the period from the acquisition of the San Dimas
mine in August 2010 to the end of 2012. When Primero acquired the San Dimas mine
in August 2010, a potential liability was known to exist related to the
registration of employees at San Dimas under the Mexican social security system
(IMSS). Mexico has a legal requirement that employees are registered for IMSS
and that their employers pay premiums under the IMSS. The employees were not
registered because government provided social security benefits were not
available in the vicinity of the mine due to the remoteness of the location.
Instead benefits were provided by the employer, DMSL. After the acquisition of the mine Primero
continued to provide social security benefits to its Mexican employees.

14

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The Company was in talks with the IMSS authority for about two
years before a resolution was reached in July 2013. Effective June 1, 2013 all
of the Mexican employees were registered for IMSS and the Company began paying
social security premiums on their behalf. In addition, the IMSS authority
assessed the Company $6.9 million in respect of past amounts due (including
penalties and interest), dating back to August 2010, which the Company paid in
August 2013. The amount that related to 2013 ($1.4 million) was charged to
operating expenses and $5.5 million, being the amount that related to 2012 and
earlier years, was charged to other expenses in the statement of operations.

Finance income

The Company earned finance income of $0.3 million in 2013
compared with $1.2 million in 2012. The amount in 2012 primarily comprised
interest income from the Mexican tax authorities on tax refunds received. The
Companys main cash investment objective is to preserve its capital at all costs
and hence cash is held in low-risk, low-interest bearing vehicles.

Finance expense

Finance expense was $0.7 million in 2013, compared to $2.9
million in 2012 due to lower debt levels. The acquisition of the San Dimas mine
was funded in part by a convertible note and a promissory note issued to
subsidiaries of Goldcorp. The Company settled the $30 million convertible note
balance in August 2012 and the average monthly balance outstanding on the
promissory note was $34 million in 2013 compared with $47 million in 2012 on
account of principal repayments (see LIQUIDITY AND CAPITAL RESOURCES below).

Foreign exchange

The Company recorded a foreign exchange loss of $0.8 million in
2013, compared with a $0.9 million loss in 2012. The losses in 2013 and 2012
were mainly due to realized foreign exchange losses on peso-denominated
liabilities as a result of the appreciation of the Mexican peso relative to the
US dollar during the year.

Income taxes

The Company recorded an income tax expense of $45.4 million in
2013, compared with an income tax recovery of $4.9 million in 2012. The tax
expense in 2013 includes $35.9 million of deferred taxes related to the
introduction of a mining royalty in Mexico. On October 31, 2013, the Mexican
Congress approved an extensive tax reform bill that has far reaching
implications to the mining sector and taxpayers generally. The reforms included
a tax-deductible mining royalty of 7.5% on taxable earnings before the deduction
of interest, taxes, depreciation and amortization, with precious metals mining
companies paying an additional 0.5% on gold and silver revenue. The tax reforms
are effective from January 1, 2014.

Under IFRS, the 7.5% royalty is treated as an income tax
subject to IAS 12 and therefore deferred taxes must be considered. On enactment,
a taxable temporary difference arises, as mining assets and financial assets and
liabilities have a book basis but no tax basis for purposes of the royalty. The
enactment date is when all steps in the process for legislation to become law
have been completed. Since the final step in enacting a tax law in Mexico is for
the president to publish the law in the Official Gazette, the enactment date of
the reforms was the publication date - December 11, 2013. The amount of deferred
tax liability and expense related to the royalty was computed mainly as 7.5% of
the book value of the San Dimas and Cerro del Gallo mining properties. This deferred tax liability
will be drawn down to nil as a reduction in income tax expense over the life of
the mining properties as they are depreciated / depleted.

15

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The impact of foreign exchange on deferred tax assets and
liabilities produced a deferred tax expense of $1.2 million in 2013, and
deferred tax recovery of $9.8 million in 2012. These adjustments arise because
the Companys Mexican subsidiary measures its non-monetary assets and
liabilities in its functional currency (the US dollar) for book purposes but it
computes its taxes (and, hence, the tax base of its non-monetary assets and
liabilities) in pesos and under IFRS. Changes in the exchange rate give rise to
temporary differences that result in a recognized deferred tax liability or
asset, with an offsetting charge or credit to profit or loss. Excluding the
impact of the mining royalty and foreign exchange rate changes on deferred
taxes, the Company incurred an income tax expense of $8.4 million in 2013,
compared with $4.9 million in 2012. A breakdown of income taxes for 2013 and
2012 and a reconciliation of actual income taxes to income taxes calculated at
the statutory rate are disclosed in Note 9 of the consolidated financial
statements for the year ended December 31, 2013.

THREE MONTHS ENDED DECEMBER31,2013COMPARED WITH THREE MONTHS ENDED DECEMBER31,2012

|                                                                     |  | For the three months ended |   |  |         |   |  |                        |  
|-------------------------------------------------------------------- |  | -------------------------- | - |  | ------- | - |  | ---------------------- | -
|In thousands of US dollars except per share amounts                  |  | December 31,               |   |  |         |   |  |                        |  
|                                                                     |  | 2013                       |   |  | 2012    |   |  |                        |  
|                                                                     |  |                            |   |  |         |   |  | Change from prior year |  
|                                                                     |  | $                          |   |  | $       |   |  | $                      |  
|Revenue                                                              |  | 47,737                     |   |  | 43,597  |   |  | 4,140                  |  
|Operating expenses                                                   |  | (23,494                    | ) |  | (19,328 | ) |  | (4,166                 | )
|Depreciation and depletion                                           |  | (10,498                    | ) |  | (6,798  | ) |  | (3,700                 | )
|Total cost of sales                                                  |  | (33,992                    | ) |  | (26,126 | ) |  | (7,866                 | )
|Earnings from mine operations                                        |  | 13,745                     |   |  | 17,471  |   |  | (3,726                 | )
|Exploration expenses                                                 |  | (428                       | ) |  | -       |   |  | (428                   | )
|General and administrative                                           |  | (7,682                     | ) |  | (11,064 | ) |  | 3,382                  |  
|Finance, foreign exchange, and other expense                         |  | (1,556                     | ) |  | (3,726  | ) |  | 2,170                  |  
|Earnings before income taxes                                         |  | 4,079                      |   |  | 2,681   |   |  | 1,398                  |  
|Income tax (expense) recovery                                        |  | (39,974                    | ) |  | (1,436  | ) |  | (38,538                | )
|Net (loss) income for the period                                     |  | (35,895                    | ) |  | 1,245   |   |  | (37,140                | )
|                                                                     |  |                            |   |  |         |   |  |                        |  
|Adjusted net income for the period                                   |  | 1,570                      |   |  | 4,528   |   |  | (2,958                 | )
|                                                                     |  |                            |   |  |         |   |  |                        |  
|Basic (loss) income per share                                        |  | (0.31                      | ) |  | 0.01    |   |  | (0                     | )
|Diluted (loss) income per share                                      |  | (0.31                      | ) |  | 0.01    |   |  | (0                     | )
|                                                                     |  |                            |   |  |         |   |  |                        |  
|Weighted average number of common shares outstanding -
      basic   |  | 115,691                    |   |  | 93,406  |   |  | 22,285                 |  
|Weighted average number of common shares
      outstanding - diluted |  | 115,972                    |   |  | 94,785  |   |  | 21,187                 |  

16

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The Company recorded a net loss of $35.9 million ($0.31 per
share) for the three months ended December 31, 2013 (Q4 2013) compared with
net income of $1.2 million ($0.01 per share) for the three months ended December
31, 2012 (Q4 2012), mainly due to a deferred tax expense of $35.9 million in
Q4 2013 related to the recently introduced mining royalty tax in Mexico (see
ANNUAL RESULTS OF OPERATIONS  Income taxes above). Adjusted net
income, which primarily excludes the impact of deferred taxes due to the mining
royalty in Q4 2013 and foreign exchange rate changes on deferred tax balances in
both periods, was $1.6 million ($0.01 per share) in Q4 2013, compared with $4.5
million ($0.05 per share) for Q4 2012. Earnings before taxes were $4.1 million
in Q4 2013, compared with $2.7 million in Q4 2012 as lower earnings from mine
operations in Q4 2013 were offset by lower general and administrative expenses
and reduced losses due to foreign exchange and financing items. In the
computation of adjusted net income, the Company recorded income tax expense of
$3.4 million in Q4 2013, versus an income tax recovery of $0.4 million in Q4
2012 due mainly to higher pre-tax income in Q4 2013 and the impact of foreign
exchange which increased tax expense in Q4 2013 and reduced it in Q4 2012.

Revenue

Revenue was $47.7 million in Q4 2013, 10% higher than Q4 2012.
Revenue from gold increased 6% to $40.7 million in Q4 2013 from $38.4 million in
Q4 2012. Gold sales increased 44% to 32,157 ounces in Q4 2013 from 22,404 ounces
in Q4 2012, while the average realized gold price decreased 26% to $1,265 per
ounce in Q4 2013 from $1,715 per ounce in Q4 2012. Gold and other commodity
prices declined sharply in 2013, particularly in the second quarter.

Revenue from silver increased 37% to $7.1 million in Q4 2013
from $5.2 million in Q4 2012. Silver sales increased 35% to 1.69 million ounces
in Q4 2013 from 1.25 million ounces in Q4 2012, while the price of silver was 1%
higher in Q4 2013 at $4.16 as all the silver production in both periods was sold
to Silver Wheaton Caymans under the silver purchase agreement (see ANNUAL
RESULTS OF OPERATIONS - Silver purchase agreementabove).

Operating expenses

Operating expenses of the San Dimas mine were $23.5 million in
Q4 2013 compared to $19.3 million in Q4 2012. Operating expenses in Q4 2012
included $2.7 million related to the Companys optimization project designed to
operate the mill at 2,150 TPD. Excluding this amount, operating expenses
increased 38% in Q4 2013, in line with the increase in sales volumes. Cash
production costs per gold ounce were $660 and $550, respectively, on a gold
equivalent and by-product basis for Q4 2013, compared with $677 and $535,
respectively, for Q4 2012. Cash operating costs were 27% higher in Q4 2013 than
Q4 2012, however, these increased cash costs were offset by a 31% increase in
gold equivalent ounces produced and a 23% increase in by-product silver credits.

Depreciation and depletion expense

Depreciation and depletion expense was $10.5 million in Q4 2013
compared to $6.8 million in Q4 2012 due to the increase in production and a
non-material change in estimation method for depletion. The San Dimas mining
properties are depleted on a units-of-production basis and hence depletion
increases as production increases.

General and administrative expenses

General and administrative expenses were $7.7 million in Q4
2013, compared to $11.1 million in Q4 2012, broken down as follows:

17

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Three months endedDecember 31(In thousands of
      U.S. dollars)
    
    2013
    
    
    2012Share-based payments
    
    514
    
    
    6,145Salaries and wages
    
    3,676
    
    
    1,895Rent and office costs
    
    609
    
    
    546Legal, accounting, consulting, and other professional fees
    
    1,193
    
    
    1,078Other general and administrative expenses
    
    1,690
    
    
    1,400Total
    
    7,682
    
    
    11,064


The reduction in share-based payments expense in Q4 2013
relative to Q4 2012 was due to a 17% decrease in the Companys share price
during Q4 2013, compared to a 25% increase during Q4 2012, which impacted the
carrying value of units in the Companys cash-settled Phantom Share Unit Plans
(PSUP). The carrying value of PSUs in these plans is marked-to-market each
quarter based on the Companys share price and the resulting adjustment is
credited or charged to the statement of operations over the remaining vesting
period of the PSUs. The increase in salaries and wages in Q4 2013 was due mainly
to new hires during 2013 and bonus accruals, which were under accrued in Q4
2012.

Other expense

Other expense was $1.9 million in Q4 2013, compared to $1.1
million in Q4 2012 due mainly to historical adjustments to the Companys Mexican
pension plan resulting from changes to the accounting rules in IAS 19
Employee Benefits.

Finance expense

Finance expense was a recovery of $0.2 million in Q4 2013,
compared to $0.8 million expense in Q4 2012. The recovery in Q4 2013 mainly
relates to the capitalization of interest to assets under construction, which
was $0.7 million higher in Q4, 2013 than Q4 2012. In addition, the average
monthly balance outstanding on the promissory note was $32 million in Q4 2013
compared with $40 million in Q4 2012 on account of principal repayments.

Foreign exchange

The Company recorded a foreign exchange gain of $0.2 million in
Q4 2013, compared with a foreign exchange loss of $1.3 million in Q4 2012. The
Mexican peso appreciated against the US dollar in Q4 2013 and depreciated
against the US dollar in Q4 2012 resulting in unrealized foreign exchange gains
in 2013 and losses in 2012 on peso-denominated assets net of liabilities.

Income taxes

The Company recorded an income tax expense of $40.0 million in
Q4 2013, compared with $1.4 million in Q4 2012. The tax expense in Q4 2013
includes $35.9 million of deferred taxes related to the introduction of a mining
royalty tax in Mexico (see ANNUAL RESULTS OF OPERATIONS  Income taxes
above).

18

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Dividend Report and Policy

The Company has not paid any dividends since incorporation and
currently has no plans to pay dividends.

SELECTED QUARTERLY FINANCIAL DATA

The following table provides summary unaudited financial and
operating data for the last eight quarters.

|(In thousands of US$ except for per share                 |   |         |   |   |         | 
|--------------------------------------------------------- | - | ------- | - | - | ------- | 
|amounts and operating data)                               |   | 2013    |   |   | 2012    | 
|                                                          |   | Q4      |   |   | Q3      | 
|                                                          |   |         |   |   |         | 
|Revenue                                                   |   | 47,737  |   |   | 53,793  | 
|Net (loss) income                                         |   | (35,895 | ) |   | 10,080  | 
|Basic (loss) income per share                             |   | (0.31   | ) |   | 0.09    | 
|Diluted (loss) income per share                           |   | (0.31   | ) |   | 0.09    | 
|Adjusted net income                                       |   | 1,570   |   |   | 10,959  | 
|Adjusted net income per share                             |   | 0.01    |   |   | 0.09    | 
|Operating cash flow before
      working capital changes  |   | 14,038  |   |   | 20,926  | 
|Cash                                                      |   | 110,711 |   |   | 125,709 | 
|Total assets                                              |   | 782,924 |   |   | 783,883 | 
|Long-term liabilities                                     |   | 76,141  |   |   | 49,392  | 
|Equity                                                    |   | 661,090 |   |   | 696,159 | 
|Gold produced (ounces)                                    |   | 29,097  |   |   | 31,791  | 
|Gold equivalent ounces
      produced                     |   | 34,371  |   |   | 41,998  | 
|Gold sold (ounces)                                        |   | 32,157  |   |   | 30,261  | 
|Average price realized per
      gold ounce               | $ | 1,265   |   | $ | 1,338   | 
|Cash cost per gold equivalent ounce                       | $ | 660     |   | $ | 516     | 
|Cash cost per gold ounce, net
      of silver by-products | $ | 550     |   | $ | 252     | 
|All-in sustaining costs ( per gold ounce)                 | $ | 1,415   |   | $ | 974     | 
|Silver produced (million
      ounces)                    |   | 1.60    |   |   | 1.62    | 
|Silver sold at fixed price (million ounces)               |   | 1.69    |   |   | 1.18    | 
|Silver sold at spot (million
      ounces)                |   | -       |   |   | 0.40    | 

Gold production, and accordingly sales, were higher in each of
the quarters in 2013 than the quarters in 2012 mainly due to the Companys
optimization project, which was started in Q3 2012 and finished in Q1 2013, and
resulted in increases in tonnes milled. In addition, gold grades were higher in
each quarter of 2013 than the quarters of 2012 and silver grades were higher in
2013 except for Q2. Production was lower in Q3 2012 than Q1, Q2 and Q4 2012
partly as expected given the sequencing of the mine plan and also because of
power interruptions which impacted the Companys ability to complete the planned underground development for the quarter and,
resultantly, production tonnage for the same period.

19

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Revenue was higher in each quarter of 2013 over the
corresponding quarter in 2012, except for Q2. The growth in production and sales
in 2013 over 2012 was partly offset by significant decreases in gold and silver
prices in 2013, compared with 2012. Revenue in Q3 2013, Q2 2013, Q3 2012 and Q2
2012 included $8.4 million, $13.2 million, $6.8 million and $13.3 million,
respectively, of silver sales at spot prices, after the Company reached the
annual threshold for deliveries under the silver purchase agreement. These
silver spot sales also reduced cash costs per ounce and particularly by-product
cash costs per ounce, as well as all-in sustaining costs per ounce in the second
and third quarters of each year.

The net loss in Q4 2013 was mainly due to the introduction of a
mining royalty in Mexico that resulted in the Company recording a $35.9 million
deferred tax liability and expense (see ANNUAL RESULTS OF OPERATIONS 
Income taxes above). Quarterly net income fluctuates in part as a result
of items which are adjusted out in the calculation of adjusted net income. The
decrease in adjusted net income in Q4 2013 compared with the other quarters in
2013 was due mainly to the realization of silver spot sales in Q2 and Q3 and
higher realized gold prices in Q1. The reduction in adjusted net income in Q4
and Q3 2012 compared with Q2 and Q1 2012 was due mainly to lower sales volumes
and higher stock-based compensation, resulting from the increase in the value of
issued phantom share units as a result of the increase in the price of the
Companys common shares.

The Companys cash balance increased each quarter in 2012,
fuelled by robust and generally rising metals prices. The large increase in cash
in Q2 2012 reflects the receipt of a refund of $20.1 million in taxes after the
Company filed its APA ruling. Cash balances decreased in each quarter of 2013
due mainly to the decline in metals prices, coupled with higher investments both
in capital expenditures at San Dimas as well as the acquisition of Cerro del
Gallo and expenditures to develop the project. Cash in Q4 2013, Q1 2013 and Q1
2012 includes principal and interest payments on the promissory note of $7.1
million, $7.8 million and $9.4 million, respectively.

The significant increases in total assets and equity in Q2 2013
was due mainly to the closing of the acquisition of Cerro for a purchase price
of $97.8 million, funded through the issuance of 18 million common shares.

20

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

NON-GAAP MEASURES

The Company has included certain non-GAAP performance measures
throughout this document. These performance measures are employed by management
to assess the Companys operating and financial performance and to assist in
business decision-making. The Company believes that, in addition to conventional
measures prepared in accordance with GAAP, certain investors and other
stakeholders also use this information to evaluate the Companys operating and
financial performance; however, these non-GAAP performance measures do not have
any standardized meaning. Accordingly, these performance measures are intended
to provide additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance with GAAP.

Non  GAAP measure  Cash costs per gold ounce

The Company has included the non-GAAP performance measures of
total cash costs per gold ounce on a gold equivalent ounce and by-product basis,
throughout this document. The Company reports total cash costs on a production
basis. In the gold mining industry, this is a common performance measure but
does not have any standardized meaning. In presenting cash costs on a production
basis, the Company follows the recommendations of the Gold Institute Production
Cost Standard. The Company believes that, in addition to conventional measures
prepared in accordance with GAAP, certain investors use this information to
evaluate the Companys performance and ability to generate cash flow.
Accordingly, it is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with GAAP. The following table provides a reconciliation of total
cash costs per gold equivalent ounce and total cash costs per gold ounce on a
byproduct basis to operating expenses (the nearest GAAP measure) per the
consolidated financial statements.

|                                                                            |   | Three months ended |   |   | Year ended   |  
|--------------------------------------------------------------------------- | - | ------------------ | - | - | ------------ | -
|                                                                            |   | December 31,       |   |   | December 31, |  
|                                                                            |   | 2013               |   |   | 2012         |  
|                                                                            |   |                    |   |   |              |  
|Operating expenses per the consolidated
      financial statements ($000's) |   | 23,494             |   |   | 19,328       |  
|Share-based payment included in operating expenses($000's)                  |   | (106               | ) |   | (360         | )
|Inventory movements and adjustments
      ($000's)                          |   | (712               | ) |   | (1,150       | )
|Total cash operating costs ($000's)                                         |   | 22,676             |   |   | 17,818       |  
|Ounces of gold produced                                                     |   | 29,097             |   |   | 23,143       |  
|Gold equivalent ounces of silver produced                                   |   | 5,274              |   |   | 3,167        |  
|Gold equivalent ounces produced                                             |   | 34,371             |   |   | 26,310       |  
|Total cash costs per gold equivalent ounce                                  | $ | 660                |   | $ | 677          |  
|                                                                            |   |                    |   |   |              |  
|Total cash operating costs ($000's)                                         |   | 22,676             |   |   | 17,818       |  
|By-product silver credits ($000's)                                          |   | (6,672             | ) |   | (5,434       | )
|Cash costs, net of by-product credits ($000's)                              |   | 16,004             |   |   | 12,384       |  
|Ounces of gold produced                                                     |   | 29,097             |   |   | 23,143       |  
|Total by-product cash costs per gold ounce produced                         | $ | 550                |   | $ | 535          |  

21

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Gold equivalent ounces of silver produced are computed as
silver ounces produced multiplied by the ratio of the average realized silver
price to the average realized gold price during each quarter. For the
year-to-date periods, the computation is the aggregation of each quarters gold
equivalent ounces of silver included in the year-to-date period. The
computations are shown below.

|                                              |   | Three months ended |  |   | Year ended   | 
|--------------------------------------------- | - | ------------------ |  | - | ------------ | 
|                                              |   | December 31,       |  |   | December 31, | 
|                                              |   | 2013               |  |   | 2012         | 
|Silver ounces produced (millions) (A)         |   | 1.60               |  |   | 1.32         | 
|Average realized silver price (B)             | $ | 4.16               |  | $ | 4.12         | 
|Average realized gold price (C)               | $ | 1,265              |  | $ | 1,715        | 
|Gold equivalent ounces of silver (A)x (B)/(C) |   | 5,274              |  |   | 3,167        | 

The Company produces one by-product metal, being silver.
By-product silver credits are computed as silver ounces produced multiplied by
the average realized silver price during a quarter. Cash costs without adjusting
for by-product credits would be computed on a co-product basis, whereby total
cash operating costs would be allocated separately to production of gold and
silver. The basis for the allocation of costs is typically relative realized
sales prices, which results in co-product cash costs being exactly the same as
cash costs on a gold equivalent ounce basis. Hence cash costs without adjusting
for by-product credits are equal to cash costs per gold equivalent ounce.

The Company sells the majority of its silver production at a
fixed price of approximately $4 per ounce pursuant to a silver purchase
agreement that the Company assumed when it acquired the San Dimas mine. The
fixed price approximated the cost of producing silver at the time the silver
purchase agreement was entered into by the previous mine owner. The fixed price
is reflected in the calculation of by-product silver credits.

Management uses total cash costs per gold equivalent ounce and
by-product cash costs per gold ounce to monitor the operating performance of its
mines and to assess the attractiveness of potential acquisition targets.
Management also believes these measures provide investors and analysts with
useful information about the Companys underlying cash costs of operations and
the impact of by-product credits on the Companys cost structure and is a
relevant metric used to understand the Companys operating profitability and
ability to generate cash flow. When deriving the production costs associated
with an ounce of gold, the Company includes by-product credits as the Company
considers that the cost to produce the gold is reduced as a result of the
by-product sales supplementary to the gold production process, thereby allowing
management and the Companys other stakeholders to assess the net costs of gold
production.

22

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Non  GAAP measure  All-in sustaining costs per gold ounce

In June 2013, the World Gold Council (WGC) published a
guidance note on non-GAAP metrics available to companies in the gold industry to
use to report their costs in an effort to encourage improved understanding of
the total costs associated with mining an ounce of gold. The WGC is a market
development organization for the gold industry and is an association whose
membership comprises leading gold mining companies, including Primero. The WGC
is not a regulatory industry organization. The WGC worked with its member
companies to develop the definition all-in sustaining costs per gold ounce,
which it believes to be helpful to investors, governments, local communities and
other stakeholders in understanding the economics of gold mining.

The Company has adopted the reporting of all-in sustaining
costs per gold ounce. This metric is a non-GAAP performance measure and has no
standardized meaning throughout the industry. Accordingly, it is intended to
provide additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP. The
Company reports this measure on a gold ounces produced basis.

The Company presents all-in sustaining costs because it
believes that it more fully defines the total current cost associated with
producing gold. The Company also believes that this measure allows investors and
other stakeholders of the Company to better understand its costs of producing
gold and better assess the Companys ability to generate cash flow from current
operations. Management also uses all-in sustaining costs in evaluating the
efficiency of its operations because it believes that IFRS measures, such as
operating expenses, do not capture all of the costs incurred to discover,
develop, and sustain gold production. As the measure seeks to reflect the full
cost of gold production from current operations, it does not include capital
expenditures attributable to development projects or mine expansions,
exploration and evaluation costs attributable to growth projects, income tax
payments and financing costs. In addition, the calculation of all-in sustaining
costs does not include depreciation and depletion expense as it does not reflect
the impact of expenditures incurred in prior periods. Even though, this measure
is not representative of all of the Companys cash expenditures management
believes that it is a useful measure in allowing it to analyze the efficiency of
its current gold mining operations.

23

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The following table provides a reconciliation of all-in
sustaining costs per gold ounce to consolidated financial statements for the
three months and years ended December 31, 2013 and 2012:

|                                                          |   | Three months ended |  |   | Year ended   | 
|--------------------------------------------------------- | - | ------------------ |  | - | ------------ | 
|                                                          |   | December 31,       |  |   | December 31, | 
|                                                          |   | 2013               |  |   | 2012         | 
|                                                          |   |                    |  |   |              | 
|Cash costs, net of by-product credits
      ($000's)      |   | 16,004             |  |   | 12,384       | 
|Corporate general and administrative expenses             |   |                    |  |   |              | 
|Share-based payments ($000's)                             |   | 514                |  |   | 6,145        | 
|Other general and administrative expenses (
      $000's) |   | 7,168              |  |   | 4,919        | 
|Reclamation cost accretion ($000's)                       |   | 160                |  |   | 182          | 
|Sustaining capital expenditures ($000's)                  |   | 17,328             |  |   | 14,414       | 
|All-in sustaining costs ($000's)                          |   | 41,174             |  |   | 38,044       | 
|                                                          |   |                    |  |   |              | 
|Ounces of gold produced                                   |   | 29,097             |  |   | 23,143       | 
|                                                          |   |                    |  |   |              | 
|All-in sustaining costs per gold ounce                    | $ | 1,415              |  | $ | 1,644        | 

Adjustments

All-in sustaining costs adjust cash costs, net of by-product
credits, for corporate general and administrative expenses, reclamation cost
accretion and sustaining capital expenditures. Corporate general and
administrative expenses are included as a line item on the Companys statement
of operations. Sustaining capital expenditures and reclamation cost accretion
are not line items on the Companys financial statements.

Sustaining capital expenditures are defined as those capital
expenditures which do not increase annual gold ounce production at a mine site
and excludes all expenditures at the Companys projects and certain expenditures
at the Companys operating sites which are deemed expansionary in nature. The
following table reconciles sustaining capital expenditures to the Companys
total capital expenditures, which are disclosed in the consolidated statements
of cash flows:

|                                                                               |  | Three months ended |   |  | Year ended   |  
|------------------------------------------------------------------------------ |  | ------------------ | - |  | ------------ | -
|                                                                               |  | December 31,       |   |  | December 31, |  
|                                                                               |  | 2013               |   |  | 2012         |  
|Capital expenditures per consolidated
      statements of cash flows           |  | 25,227             |   |  | 17,087       |  
|Less: San Dimas non-sustaining capital expenditures                            |  | (4,128             | ) |  | (2,660       | )
|Less: capital expenditures attributable to
      Cerro del Gallo and Corporate |  | (3,771             | ) |  | (13          | )
|Sustaining capital expenditures attributable to San Dimas                      |  | 17,328             |   |  | 14,414       |  

24

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The Companys exploration program comprises delineation
drilling, exploration drilling, exploration drifting and regional exploration.
The costs related to delineation drilling, exploration drilling and exploration
drifting are included in all-in sustaining costs. The regional exploration
program is designed to identify new mineral targets on the Companys extensive
land holdings in order to grow production rather than sustain production.

Reclamation cost accretion represents the growth in the
Companys decommissioning liability due to the passage of time. This amount does
not reflect cash outflows but it is considered to be representative of the
periodic costs of reclamation and remediation. The Company has prepared a
discounted cash flow model of the estimated costs to remediate the San Dimas
site at the end of the estimated mine life. Reclamation cost accretion was
calculated based on a discount rate of 7.75% and estimated remediation costs of
$31.3 million, which are generally expected to be incurred in 2035 and 2036.
Reclamation cost accretion is included in finance expense in the Companys
consolidated statements of operations and comprehensive income.

25

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Non  GAAP measure  Adjusted net income

The Company has included the non-GAAP performance measures of
adjusted net income and adjusted net income per share, throughout this document.
Items are adjusted where considered to be unusual or non-recurring based on the
historical and expected future performance of the Company. Neither of these
non-GAAP performance measures has any standardized meaning and is therefore
unlikely to be comparable to other measures presented by other issuers. The
Company believes that, in addition to conventional measures prepared in
accordance with GAAP, certain investors use this information to evaluate the
Companys performance and ability to generate cash flow. Accordingly, it is
intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP. The following table provides a reconciliation of adjusted net income
to net income (the nearest GAAP measure) per the consolidated financial
statements.

|                                                                               |  | Three months ended |   |  | Year ended   | 
|------------------------------------------------------------------------------ |  | ------------------ | - |  | ------------ | 
|(In thousands of US dollars except per share amounts)                          |  | December 31,       |   |  | December 31, | 
|                                                                               |  | 2013               |   |  | 2012         | 
|                                                                               |  |                    |   |  |              | 
|Net (loss) income                                                              |  | (35,895            | ) |  | 1,245        | 
|Loss on derivative contracts                                                   |  | -                  |   |  | 750          | 
|Impact of foreign exchange on deferred
      income tax assets and liabilities |  | 712                |   |  | 1,844        | 
|Liability for social security payments net of tax                              |  | -                  |   |  | -            | 
|Third party transaction costs                                                  |  | 889                |   |  | 689          | 
|Deferred tax recorded on enactment of Mexican royalty tax                      |  | 35,864             |   |  | -            | 
|Adjusted net income                                                            |  | 1,570              |   |  | 4,528        | 
|                                                                               |  |                    |   |  |              | 
|Adjusted net income per share                                                  |  | 0.01               |   |  | 0.05         | 
|                                                                               |  |                    |   |  |              | 
|Weighted average number of common shares
      outstanding (basic)             |  | 115,691,337        |   |  | 93,406,583   | 

26

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Non  GAAP measure - Operating cash flows before working
capital changes

The Company has included the non-GAAP performance measure
operating cash flows before working capital changes in this MD&A. Non-GAAP
performance measures do not have any standardized meaning and are therefore
unlikely to be comparable to other measures presented by other issuers. The
Company believes that, in addition to conventional measures, prepared in
accordance with GAAP, certain investors use this information to evaluate the
Companys performance and ability to generate cash flow. Accordingly, it is
intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP. The following table provides a reconciliation of operating cash flows
before working capital changes to cash (used in) provided by operating
activities (the nearest GAAP measure) per the consolidated financial statements.

|                                                          |  | Three months ended |   |  | Year ended   |  
|--------------------------------------------------------- |  | ------------------ | - |  | ------------ | -
|(In thousands of US dollars)                              |  | December 31,       |   |  | December 31, |  
|                                                          |  | 2013               |   |  | 2012         |  
|Cash provided by operating activities                     |  | 25,446             |   |  | 28,509       |  
|Change in non-cash operating working capital              |  | (11,408            | ) |  | (10,734      | )
|Operating cash flows before working capital
      changes |  | 14,038             |   |  | 17,775       |  

27

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

LIQUIDITY AND CAPITAL RESOURCES

YEAR ENDED DECEMBER31,2013COMPARED WITH YEAR ENDED DECEMBER31,2012

As at December 31, 2013, the Company had cash of $110.7 million
(December 31, 2012 - $139.2 million), and working capital of $100.0 million
(December 31, 2012  $113.1 million).

Net cash flows for 2013 and 2012 were as follows:

|(In thousands of US dollars)            |  | Year ended December 31, |  
|--------------------------------------- |  | ----------------------- | -
|                                        |  | 2013                    |  
|Cash Flow:                              |  | **$**                   |  
|Provided by operating activities        |  | 69,805                  |  
|Used in investing activities            |  | (83,812                 | )
|Used in financing activities            |  | (12,927                 | )
|Effect of exchange rate changes on cash |  | (1,599                  | )
|Increase in cash                        |  | (28,533                 | )
|Cash, beginning of period               |  | 139,244                 |  
|Cash, end of period                     |  | 110,711                 |  

Operating activities

In 2013, the Company generated net cash flows from operating
activities of $69.8 million, being cash flows before changes in working capital
of $72.4 million and outflows for non-cash working capital of $2.6 million. The
cash flows before changes in working capital primarily comprised cash earnings
from mine operations of $112.6 million, offset by cash general and
administrative costs of $18.0 million, $13.5 million in PSU payments, $6.9
million for social security premiums assessed under the Mexican social security
system (most of which relates to the period before 2013) and income taxes paid
of $1.3 million. The cash outflows for non-cash working capital of $2.6 million
resulted primarily from an increase in trade receivables and prepaid expenses,
partly offset by an increase in trade payables.

During 2012, the Company generated net cash flows from
operating activities of $114.2 million, being cash flows before changes in
working capital of $88.8 million and inflows from non-cash working capital of
$25.4 million. The cash flows before changes in working capital primarily
comprised cash earnings from mine operations of $108.6 million, offset by cash
general and administrative costs of $14.9 million, income taxes paid of $2.0
million and $0.9 million in PSU payments. The inflows from non-cash working
capital of $25.4 million resulted primarily from collecting net taxes receivable
of $14.6 million after filing the APA application in October 2011, as well as an
increase of $7.6 million in payables.

28

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Investing activities

Cash flows used in investing activities were $83.8 million in
2013, compared with $38.5 million in 2012. Capital expenditures at San Dimas
increased to $67.7 million in 2013 from $39.7 million in 2012, broken down as
follows:

2013
    
    
    2012$ millions
    
    
    $ millionsProjectsMill expansion to 2,500
      TPD
    
    8.2
    
    
    2.4New waste
      pad
    
    6.2
    
    
    0.6Expansion of
      hydro-electric facility
    
    3.7
    
    
    0.4Tailings
      pumps
    
    0.4
    
    
    2.0Others
    
    2.5
    
    
    2.3Project
      sub-total
    
    21.0
    
    
    7.7Sustaining capital
    
    16.5
    
    
    7.1Mine development and raise boring
    
    15.6
    
    
    12.6ExplorationDelineation and exploration drilling
    
    6.8
    
    
    10.6Exploration drifting
    
    3.9
    
    
    1.7Regional
      exploration
    
    3.9
    
    
    -Exploration sub-total
    
    14.6
    
    
    12.367.7
    
    
    39.7


Project and sustaining capital expenditures were higher than
normal in 2013 because the Company is ramping up production and requires
expanded facilities and the lack of historical investment to update plant and
equipment. The mill expansion, new waste pad and hydro-electric plant expansion
are expected to be completed in 2014 for an aggregate incremental cost of $10.5
million.

In 2013, the Company also invested $15.1 million of cash in the
acquisition of the Cerro del Gallo project and capital expenditures to develop
the project as well as $1.3 million to acquire its interest in Santana (see
Recent corporate developmentsabove).

Interest received in 2013 was $0.3 million, compared with $1.2
million in 2012, mainly related to interest earned on tax refunds in Mexico.

Financing activities

The Company used $12.9 million of cash for financing activities
in 2013, being the repayment of the third $5 million instalment under the
promissory note and $2.1 million of interest thereon, as well as the $7.8
million excess free cash flow payment relating to the promissory note (see
Debt below). These payments were offset by cash inflows of $1.9 million
from the exercise of stock options. The Company used $16.5 million of cash for
financing activities in 2012, being the repayment of the first and second $5
million instalments under the promissory note and $7.2 million of interest
thereon, as well as $1.9 million of interest paid on the convertible note prior
to conversion (see Debt below). These payments were offset by cash
inflows of $2.5 million in 2012 from the exercise of stock options.

29

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

THREE MONTHS ENDED DECEMBER31,2013COMPARED WITH THREE MONTHS ENDED DECEMBER31,2012

Net cash flows for Q4 2013 and Q4 2012 were as follows:

Three months ended(In thousands of US dollars)
    
    December 312013
    
    
    2012Cash Flow:
    
    **$**
    
    
    $Provided by operating activities
    
    25,446
    
    
    28,509Used in investing activities
    
    (33,144
    )
    
    (16,915
    )Used in financing activities
    
    (7,057
    )
    
    (5,228
    )Effect of exchange rate changes on cash
    
    (243
    )
    
    (252
    )Increase in cash
    
    (14,998
    )
    
    6,114Cash, beginning of period
    
    125,709
    
    
    133,130Cash, end of period
    
    110,711
    
    
    139,244


Operating activities

During Q4 2013, the Company generated net cash flows from
operating activities of $25.4 million, being cash flows before changes in
working capital of $14.0 million and inflows from non-cash working capital of
$11.4 million. The cash flows before working capital changes primarily comprised
cash earnings from mine operations of $24.2 million, offset by cash general and
administrative costs of $7.1 million, PSU payments of $0.6 million and income
taxes paid of $0.5 million. Non-cash working capital inflows of $11.4 million
mainly relate to an increase in trade and other payables and taxes payable.

During Q4 2012, the Company generated net cash flows from
operating activities of $28.5 million, being cash flows before changes in
working capital of $17.8 million and inflows from non-cash working capital of
$10.7 million. The cash flows before working capital changes primarily comprised
cash earnings from mine operations of $24.7 million, offset by cash general and
administrative costs of $4.9 million and income taxes paid of $0.5 million.
Non-cash working capital inflows of $10.7 million mainly relate to an increase
in payables.

Investing activities

Cash flows used in investing activities were $33.1 million for
Q4 2013, compared with $16.9 million for Q4 2012. Capital expenditures at San
Dimas were $22.3 million in Q4 2013, up from $17.1 million in Q4 2012 due mainly
to aggregate costs of $6.7 million towards the mill expansion, the new waste pad
and the expansion of the hydro-electric facility. In Q4 2013, the Company also
used $8 million of cash to acquire the 30.8% interest of the Cerro del Gallo
project that it did not already own (see Recent corporate developmentsabove).

Financing activities

The Company used $7.1 million of cash for financing activities
in Q4 2013, comprising the third $5 million installment of the promissory note
and $2.1 million of interest thereon (see Debt below). In Q4 2012, the
Company used $5.2 million of cash for financing activities, comprising the
second $5 million installment of the promissory note and $2.8 million of interest
thereon (see Debt below), offset by $2.5 million of cash inflows from
the exercise of stock options during the quarter.

30

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Debt

On August 6, 2010, in connection with the acquisition of the
San Dimas mine, the Company issued a promissory note for $50 million and a
convertible note for $60 million to Desarrolos Mineros San Luis, S.A. de C.V.
(DMSL), a subsidiary of Goldcorp Inc. (Goldcorp). The Company repaid $30
million of the convertible note in cash in October 2011 and the balance in
August 2012 through the issuance of 8,422,460 common shares.

The promissory note bears interest at 6% per annum and is
repayable in four annual installments of $5 million, starting on December 31,
2011, with the balance of principal due on December 31, 2015. On January 3,
2012, the Company repaid the first $5 million annual installment plus accrued
interest of $4.4 million. The second annual installment of $5 million plus
accrued interest of $2.8 million was paid on December 31, 2012. In addition to
the annual installments, the Company is required to pay 50% of annual excess
free cash flow (as defined in the promissory note) against the principal
balance. The Company generated excess free cash flow of $15.6 million during the
year ended December 31, 2012 and accordingly paid $7.8 million to the note
holder in February 2013. The third annual installment of $5 million plus accrued
interest of $2.1 million was paid on December 31, 2013. The Company did not
generate excess free cash flow (as defined in the promissory note) during the
year ended December 31, 2013.

The Company is subject to a number of externally imposed
capital requirements relating to its debt. The requirements are both financial
and operational in nature; the Company has complied with all such requirements
during the period.

Pursuant to the terms of the promissory note the Company is
required to maintain the following financial covenants:

- Tangible net worth as at the end of each fiscal quarter of at least $400
  million, and
- Free cash flow of at least $10 million, calculated on a rolling four
  fiscal quarter basis.

Tangible net worth means equity less intangible assets. Free
cash flow means cash flow from operating activities as reported in the
consolidated statement of cash flows, less the aggregate of capital expenditures
at the San Dimas mine, principal and interest on the promissory note and
convertible debt and up to $5 million per year on account of acquisition
opportunities.

Liquidity Outlook

Managements most important financial objective is to maintain
a strong balance sheet and have sufficient liquidity to fund the Companys
ongoing operations and growth plans, regardless of the level of precious metals
prices. Gold and silver prices declined significantly during 2013; in the fourth
quarter, for example, the Company realized an average price of $1,265 per ounce,
$450 per ounce less than the fourth quarter of 2012. Precious metals prices have
been extremely volatile recently and there is considerable uncertainty as to
where they will go in the future. The Company has planned for prices to remain
at current levels for the short and medium term; its budget for 2014 is based on
a gold price of $1,200 per ounce. Management has developed contingency plans in the event
that the gold price drops to $1,100 or lower.

31

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

As at December, 2013, the Company had cash of $110.7 million
and working capital of $100.0 million. Management estimates that based on spot
metal prices as at the date of this MD&A, San Dimas will generate average
annual after-tax operating cash flows of approximately $90 million (including
the tax reform changes discussed below). In order to provide greater financial
flexibility, the Company is in the final stages of arranging a $75 million
revolving line of credit, which it expects to close in Q1 2014.

San Dimas liquidity considerations

When the Company purchased the San Dimas mine it assumed a
silver purchase agreement under which the majority of silver produced at the
mine was sold at a fixed price of approximately $4 per ounce. On October 4,
2012, the Company received a ruling from the Mexican tax authorities that
confirmed that the Company's Mexican subsidiary appropriately records revenue
and taxes from sales under the silver purchase agreement at realized prices
rather than spot prices effective from August 6, 2010. This ruling significantly
improves the Companys cash flow over the five-year duration of the ruling
(which expires at the end of 2014). Assuming the Company continues to sell
silver from its San Dimas mine on the same terms and there are no changes in the
application of Mexican tax laws relative to the ruling, the Company expects to
pay taxes on realized prices for the life of the San Dimas mine.

The Company expects to spend approximately $38.3 million on
capital expenditures at the San Dimas mine in 2014, with approximately $14.7
million allocated underground development, $11.8 million being sustaining
capital and the remainder being allocated to projects. The 2014 project capital
includes completing the mill expansion to 2,500 TPD ($3.3 million), the second
phase of a two-year waste rock pad project ($3.3 million) designed to support
the long-term waste disposal at San Dimas and the completion of project to
increase the capacity of the Companys hydro-electric facility ($3.9 million).
In addition to these expenditures, the Company plans to spend $15.7 million on
capitalized exploration costs at San Dimas. After 2014, the Company expects to
spend approximately $40 million per year on capital expenditures (including
capitalized exploration costs) at San Dimas.

Cerro del Gallo liquidity considerations

As described under RECENT CORPORATE DEVELOPMENTS
Acquisition of Cerro del Galloabove, the Company now owns 100% of the
Cerro del Gallo project in Mexico. The Company has budgeted $12.9 million of
capital spending in 2014 on this project in order to advance the project to a
construction decision. This spending is expected to be sufficient to complete
all permitting required to initiate construction, land and water rights
acquisition, basic engineering of the mine processing facilities, metallurgical
testing and a $2.5 million exploration program, including condemnation drilling.
Given the significant decline in the gold price in 2013 the Company is committed
to advancing the project to a construction decision with a limited investment
and will make a construction decision based on the market conditions and the
return expected from the project in mid-2014.

The May 2012 Definitive Feasibility Study (DFS)2
on the Cerro del Gallo project contemplated only a phase one (Phase I) heap
leach of 4.5 million tonnes per year of oxidized and partially oxidized ore for
7.2 years of production. In March 2011, a preliminary assessment identified a
potential phase two (Phase II) addition of carbon-in-leach (CIL) processing
of fresh rock commencing in year 5.

____________________________________2 Refer to
Technical Report, First Stage Heap Leach Feasibility Study, Cerro del Gallo
Gold Silver Project, Guanajuato, Mexico, Effective Date: 11th May 2012, Report
Date: 29th June 2012 filed on www.sedar.com.

32

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Following its acquisition of the Cerro del Gallo project,
Primero commenced an assessment of the alternatives to the long term development
of the project which include a heap leach only operation (Phase I), an
accelerated timetable for the CIL processing facility (Phase II) and a CIL only
operation (see RECENT CORPORATE DEVELOPMENTS  Acquisition of Cerro del
Gallo above). This assessment was completed in Q4 2013 and concluded that
the Phase I as defined in the DFS would be retained. The DFS estimated capital
expenditures of $154 million for the Phase 1 heap leach. The Company is
currently completing permitting, land acquisition, engineering optimization and
costing studies to bring the Phase 1 project to a construction decision by the
end of Q2 2014.

The Company has potential future financial commitments related
to its acquisition of Goldcorps 30.8% interest in the Cerro del Gallo project.
These commitments are contingent payments based on meeting certain milestones or
market conditions. The contingent payments include $8 million (the First
Contingent Payment) after achieving commercial production on the phase I heap
leach operation; $5 million if the date of the First Contingent Payment occurs
before December 19, 2018 and the gold price averages $1,500 per ounce for a
consecutive 30 day period within one year following the date of the First
Contingent Payment, and not later than December 19, 2018; $14 million (the
Second Contingent Payment) on announcement of a decision by Primero to
construct the CIL mill for Phase II (the Third Contingent Payment), and $5
million if the date of the Second Contingent Payment occurs before December 19,
2018 and the gold price averages $1,500 per ounce for a consecutive 30 day
period within one year following the date of the Second Contingent Payment, and
not later than December 19, 2018 (the Fourth Contingent Payment). If all the
contingencies are satisfied, the Company would be required to pay $32 million.

Recent Mexican tax reforms

On December 11, 2013, the Mexican President approved an
extensive tax reform bill that has far reaching implications to the mining
sector and taxpayers generally. The tax reforms are effective starting on
January 1, 2014. The reforms include a tax-deductible mining royalty of 7.5% on
taxable earnings before the deduction of interest, taxes, depreciation and
amortization, with precious metals mining companies paying an additional 0.5% on
precious metals revenue. In addition, the long term corporate tax rate remains
at 30% rather than reduce to 28% as originally planned and deductions for
accelerated depreciation of exploration costs and certain other capital
expenditures are no longer allowed. Mining companies may be able to undertake
community development projects that would be allowed as credits against the
royalty, however this will require extensive consultation with federal, state
and municipal governments and native communities.

The impact of the tax reforms on the Company is significant and
is estimated to be approximately $14 million in 2014 assuming a $1,200 per ounce
gold price. Everything else being equal, the impact reduces somewhat in later
years due to higher deductions for depreciation and exploration costs resulting
from the elimination of accelerated deductions for these items.

Proposed acquisition of Brigus

On December 16, 2013, the Company announced that it had entered
into an arrangement agreement whereby Primero will acquire all outstanding
common shares of Brigus pursuant to a plan of arrangement (see RECENT CORPORATE
DEVELOPMENTS - Agreement to acquire Brigusabove). The acquisition is
expected to be funded through the issuance of approximately 41.2 million of the
Companys common shares based on an exchange ratio of 0.175 of a Primero common
share for each outstanding Brigus common share. In addition, as part of the
arrangement, Primero will lend Cdn$10 million to Brigus to capitalize a new
company, Fortune Bay Corp. (which will own all of Brigus non-Ontario asset),
and Brigus will complete a reorganization prior to consummation of the
arrangement, which will result in each existing Brigus shareholder receiving 0.1 of a common
share of Fortune Bay, and Primero indirectly acquiring 9.9% of the common shares
of Fortune Bay.

33

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

After closing of the transaction, the Company will be required
to make a change of control offers for Brigus outstanding $50 million 6.5%
convertible senior unsecured debentures and Cdn$24 million senior secured term
notes at 100% and 105%, respectively, of their outstanding principal plus
accrued interest. Assuming the debenture holders and note holders accept the
offers (which is highly likely), the Company will be required to repay the
debentures and notes, plus accrued interest within 60 days of completion of the
arrangement. After such repayment, Brigus only outstanding debt will be
approximately $18 million of capital leases. The Company expects that after
repayment of Brigus debentures and secured notes, the Brigus assets will have
additional borrowing capacity, which could potentially allow the Company to
increase the impending line of credit or arrange other financing.

Brigus principal asset is the Black Fox mine, which produced
98,710 ounces of gold during 2013. For the nine months ended September 30, 2013
(the most recent period for which Brigus has publicly released financial
statements), Brigus generated $45.9 million of cash flow from operations. The
Company plans to review Brigus operating and capital budgets with a view to
expanding production and increasing cash flow from operations.

Related party transactions

At December 31, 2013, Goldcorp owned approximately 27% of the
Companys common shares. The Company has a promissory note outstanding to a
wholly-owned subsidiary of Goldcorp. Interest accrues on the promissory note and
is recorded within trade and other payables. A payment of $5 million plus
accrued interest of $4.4 million was paid under the terms of the Promissory note
on January 3, 2012. The second annual installment of $5 million plus accrued
interest of $2.8 million was paid on December 31, 2012. In addition to the
annual installments, the Company paid $7.8 million against the principal balance
on February 21, 2013, in compliance with the free cash flow covenant contained
in the promissory note. The third annual installment of $5 million plus accrued
interest of $2.1 million was paid on December 31, 2013. The Company did not
generate excess free cash flow (as defined in the promissory note) during the
year ended December 31, 2013.

On December 19, 2013, the Company paid $8 million to a
subsidiary of Goldcorp to acquire its 30.8 % interest in the Cerro del Gallo
project, which increased the Companys interest to 100%. On August 7, 2012, the
Company repaid the $30 million convertible note due to Goldcorp by issuing
8,422,460 common shares and paying accrued interest of $1.9 million in cash.

During the year ended December 31, 2013, $0.9 million (2012 -
$2.5 million) was paid to DMSL for the purchase of equipment, equipment leasing
fees and services received under a transition services agreement between the
Company and DMSL. These amounts are considered to be at fair value. As at
December 31, 2013, the Company had an amount payable of $2.8 million outstanding
to DMSL (2012 - $2.3 million). As at December 31, 2013, the Company had an
amount owing from Goldcorp Inc. of $nil (2012 - $0.3).

Shares issued

On May 22, 2013, the Company issued 17,983,956 common shares as
consideration for the acquisition of all issued and outstanding common shares of
Cerro (see RECENT CORPORATE DEVELOPMENTS - Acquisition of Cerro del
Gallo above). On December 16, 2013, the Company issued 41,457 common shares
as consideration for awards issued under the Directors PSU plan. In addition,
during the year ended December 31 2013, the Company issued 495,000 common shares
upon the exercise of stock options.

34

---

|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

During the year ended December 31, 2012, the Company issued
8,422,460 shares to Goldcorp upon the conversion of the $30 million convertible
note and 523,331 shares upon the exercise of stock options

Outstanding Share Data

Shareholders equity as at December 31, 2013 was $661.1 million
compared to $571.7 million as at December 31, 2012.

Share Capital

As at December 31, 2013, the Company had 115,726,035 common
shares outstanding (97,205,622 as at December 31, 2012). As at the date of this
MD&A, the Company had 115,826,035 common shares outstanding.

Options

As at December 31, 2013, the Company had 7,963,990 options
outstanding with a weighted average exercise price of Cdn$5.85; of these
7,773,990 were exercisable at a weighted average exercise price of $5.90. As at
the date of this MD&A, the total number of options outstanding was
7,863,990, of which 7,673,990 are exercisable.

Common Share Purchase Warrants

As at December 31, 2013, the Company had a total of 20,800,000
common share purchase warrants outstanding with a weighted average exercise
price of Cdn$8.00 per share. As at the date of this MD&A, the total number
of common share purchase warrants outstanding was 20,800,000, all of which are
exercisable. On February 6, 2012, 476,980 brokers warrants with an exercise
price of Cdn$6.00 expired.PSUs exercisable into shares

As at December 31, 2013 and the date of this MD&A, the
Company had 162,118 Directors PSUs outstanding, which vest and expire between
December 1, 2014, and December 31, 2015. A person holding Director PSUs is
entitled to elect to receive, at vesting either (1) a cash amount equal to the
number of Director PSUs that vest multiplied by the volume weighted average
trading price per common share over the five preceding trading days, or (2) the
number of common shares equal to the number of Directors PSUs (subject to the
total number of common shares issuable at any time under the Directors PSU
Plan, combined with all other common shares issuable under any other equity
compensation arrangements then in place, not exceeding 10% of the total number
of issued and outstanding common shares of the Company). If no election is made,
the Company will pay out such Directors PSUs in cash. As at December 31, 2013
and the date of this MD&A, the Company had 412,094 PSUs outstanding under
the 2013 PSU Plan (2013 PSUs), which vest and expire between May 10, 2014, and
December 31, 2016. A person holding 2013 PSUs is entitled to receive at vesting,
at the Companys option, either (1) a cash amount equal to the number of 2013
PSUs that vest multiplied by the volume weighted average trading price per
common share over the five preceding trading days, (2) the number of common
shares equal to the number of 2013 PSUs (subject to the total number of common
shares issuable at any time under the 2013 PSU Plan, combined with all other
common shares issuable under any other equity compensation arrangements then in
place, not exceeding 10% of the total number of issued and outstanding common
shares of the Company) or (3) a combination of cash and shares.

Off-Balance Sheet Arrangements

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

35

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

ADOPTION OF NEW ACCOUNTING POLICIES

Changes in accounting policies

The Company has made no changes to its accounting policies
during the year ended December 31, 2013.

Recent pronouncements issued

The Company has adopted the following new and revised
standards, along with any consequential amendments, effective January 1, 2013.
These changes were made in accordance with the applicable transitional
provisions.

In June 2011, the IASB issued amendments to IAS 1 
Presentation of Financial Statements (IAS 1). The amendments are effective for
annual periods beginning on or after July 1, 2012. The amendments to IAS 1
require companies preparing financial statements in accordance with IFRS to
group together items within OCI that may be reclassified to the profit or loss
section of the Consolidated Statement of Operations from those that will not be
reclassified. The amendments also reaffirm existing requirements that items in
OCI and profit or loss should be presented as either a single statement or two
consecutive statements.

The Company applied the amendments to IAS 1 effective January
1, 2013 and accordingly has grouped OCI items as required for both the current
and comparative period.

In May 2011, the IASB issued IFRS 10 - Consolidated
Financial Statements (IFRS 10), which supersedes SIC 12 -
Consolidation- Special Purpose Entities and the requirements relating to
consolidated financial statements in IAS 27 - Consolidated and Separate
Financial Statements. IFRS 10 changes the definition of control so that the
same criteria apply to all entities, both operating and special purpose
entities, to determine control. The revised definition focuses on the need to
have both power over the investee to direct relevant activities and exposure to
variable returns before control is present. The Company adopted IFRS 10 on
January 1, 2013 on a retrospective basis; there has been no impact upon the
Companys financial statements as a result of the adoption.

IFRS 11, Joint Arrangements, supersedes IAS 31,
Interests in Joint Ventures,and requires joint arrangements to be
classified either as joint operations or joint ventures depending on the
contractual rights and obligations of each investor that jointly controls the
arrangement. For joint operations, a company recognizes its share of assets,
liabilities, revenues and expenses of the joint operation. An investment in a
joint venture is accounted for using the equity method as set out in IAS 28,
Investments in Associates and Joint Ventures (amended in
2011).

The Company adopted IFRS 11 on January 1, 2013 on a
retrospective basis. There was no impact on the Companys financial statements
in the prior period. The Company accounted for its investment in the entity
which owns the Cerro del Gallo project as a joint operation until December 19,
2013 when it purchased the remaining 30.8% of the Cerro del Gallo project from
Goldcorp Inc. The Company now consolidates 100% of the subsidiary which owns the
Cerro del Gallo project.

IFRS 13 Fair Value Measurement (IFRS 13) was issued by the
IASB in May 2011, and is effective for annual periods beginning on or after
January 1, 2013. IFRS 13 was issued to remedy the inconsistencies in the
requirements for measuring fair value and for disclosing information about fair
value measurement in various current IFRSs. IFRS 13 defines fair value as the
price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date.

36

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

IFRS 13 relates to how to measure fair value, not what should
be measured at fair value. 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.

In October 2011, the IASB issued IFRIC 20 - Stripping Costs
in the Production Phase of a Mine (IFRIC 20). IFRIC 20 clarifies the
requirements for accounting for the costs of stripping activities in the
production phase of an open-pit mine when two benefits accrue: (i) usable ore
that can be used to produce inventory and (ii) improved access to further
quantities of material that will be mined in future periods. The IFRIC allows a
company to determine a measure to allocate costs between inventory produced and
the stripping activity asset; the IFRIC provides examples of measures.

IFRIC 20 is effective for annual periods beginning on or after
January 1, 2013. The Cerro del Gallo project is planned to be an open pit mine.
The Company will apply the provisions of IFRIC 20 to the Cerro del Gallo project
and develop a policy for allocation of costs once stripping activity begins.

The Company has reviewed new and revised accounting
pronouncements that have been issued but are not yet effective and determined
that the following may have an impact in the future on the Company: As of
January 1, 2015, Primero will be required to adopt IFRS 9, Financial
Instruments, which is the result of the first phase of the IASBs project
to replace IAS 39, Financial Instruments: Recognition and Measurement.
The new standard replaces the current multiple classification and measurement
models for financial assets and liabilities with a single model that has only
two classification categories: amortized cost and fair value. The Company is
currently assessing the impact that IFRS 9 will have on its financial
statements.

CRITICAL ACCOUNTING POLICYDEPLETION OF MINING PROPERTIES

Mining properties are depleted using a units-of-production
basis over the mines estimated and economically proven and probable reserves
and an estimate of the portion of resources expected to be classified as
reserves. Depletion is calculated on a mine-by-mine basis. During the year ended
December 31, 2013 and prior periods, the Company had one operating mine, San
Dimas, which contains mineralization that is segregated into reserves (including
proven and probable), resources (including measured, indicated and inferred) and
exploration potential.

The definitions applied by the Company in respect of the
various categories of mineralization are as follows:

| | a) | Mineral Reserve -the economically mineable part
      of a measured or indicated mineral resource demonstrated by at least a
      preliminary feasibility study. This study must include adequate
      information on mining, processing, metallurgical, economic and other
      relevant factors that demonstrate, at the time of reporting, that economic
      extraction can be justified. A mineral reserve includes diluting materials
      and allowances for losses that may occur when the material is
  mined.                                                                                                                                                                                                                     
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | b) | Measured mineral resource- that part of a mineral
      resource for which quantity, grade or quality, densities, shape, and
      physical characteristics are so well established that they can be
      estimated with confidence sufficient to allow the appropriate application
      of technical and economic parameters, to support production planning and
      evaluation of the economic viability of the deposit. The estimate is based
      on detailed and reliable exploration, sampling and testing information
      gathered through appropriate techniques from locations such as outcrops,
      trenches, pits, workings and drill holes that are spaced closely
  enough to confirm both geological and grade continuity.

37

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

| | c) | Indicated mineral resource- that part of a
      mineral resource for which quantity, grade or quality, densities, shape
      and physical characteristics, can be estimated with a level of confidence
      sufficient to allow the appropriate application of technical and economic
      parameters, to support mine planning and evaluation of the economic
      viability of the deposit. The estimate is based on detailed and reliable
      exploration and testing information gathered through appropriate
      techniques from locations such as outcrops, trenches, pits, workings and
      drill holes that are spaced closely enough for geological and grade
      continuity to be reasonably assumed.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d) | Inferred mineral resource- that part of a mineral
      resource for which quantity and grade or quality can be estimated on the
      basis of geological evidence and limited sampling and reasonably assumed,
      but not verified, geological and grade continuity. The estimate is based
      on limited information and sampling gathered through appropriate
      techniques from locations such as outcrops, trenches, pits, workings and
      drill holes.                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | e) | Exploration potential mineralization quantified
      by the Companys geologists with a sufficient degree of confidence to
      include in the Companys acquisition fair value determination, but without
      the necessary level of measurement precision to enable it to be classified
      as a mineral reserve or resource as defined by NI
43-101.                                                                                                                                                                                                                                                                                                                                                              

During the year ended December 31, 2013, the Company changed
the depletion estimation methodology for the San Dimas mine. This change in
methodology is considered a change in estimate and has been accounted for
prospectively from October 1, 2013. Prior to the change in estimate, the total
mining property capitalized in respect of the San Dimas asset was depleted on a
units-of-production basis over 100% of reserves (which includes measured and
indicated resources) and 75% of each of inferred resources and exploration
potential. The depletion estimation methodology was revised in order to divide
the capitalized total mining property in respect of the San Dimas asset into a
depletable component and a non-depletable component. The value assigned to the
depletable component is equal to the value assigned to reserves and inferred
resources of the San Dimas asset. The value assigned to the non-depletable
component is the value assigned to the exploration potential of the San Dimas
asset. The allocation of values to the reserves, inferred resources and
exploration potential of the San Dimas asset is based on the discounted cash
flow analysis of the Companys life-of-mine plan. The depletable component of
the capitalized total mining property is depleted over 100% of reserves and a
portion of resources included in the Companys life-of-mine plan. The
non-depletable component is not depleted but, in combination with the depletable
component, is evaluated for impairment when events and changes in circumstances
indicate that the carrying amount may not be recoverable. This change in
estimate did not have a material impact on the Companys depletion expense in
the current period and is not expected to have a material impact in future
periods.

Values attributable to the reserves, resources and exploration
potential of the San Dimas asset were originally assigned to each of these three
categories of mineralization based on the Companys purchase price allocation on
the date of acquisition of the San Dimas mine. The purchase price allocation was
based on a discounted cash flow analysis based on the Companys life-of
mine-plan. At least annually, the Company updates its reserve and resource
statement which is used, in combination with other technical and operating data,
to update its life-of-mine plan. As at December 31, 2011, the Company changed
its reserve and resource estimation methodology from a polygonal approach to a
geostatistical approach, which resulted in reclassifications of a portion of
reserves to inferred resources and a significant amount of inferred resources to
exploration potential. Amounts were reallocated to the three categories of mineralization based on the Companys updated
life-of-mine plan, which reflected the reclassifications resulting from the
change in estimation methodology. Since December 31, 2011, the recognized values
(before accounting for depletion) of reserves, inferred resources and
exploration potential have changed due to capital expenditures incurred and
transfers resulting from reserve and resource statement updates.

38

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Prior to the change in depletion estimation methodology, the
Company included 100% of the value of the San Dimas mining property in the
depletion calculation. As a result of the change in depletion estimation
methodology for the San Dimas mine, the Company assigned a value of $282.2
million to the depletable component as at October 1, 2013, which value is
attributable to the mines reserves and resources, and $106.8 million to the
non-depletable component as at October 1, 2013, which value is attributable to
the mines exploration potential. The depletable component is depleted over 100%
of reserves and 75% of resources for the three-months ended December 31, 2013.
The non-depletable component is not depleted.

Each year, coincident with the updated reserve and resource
statement and preparation of the updated life-of-mine plan, the Company expects
that a portion of resources will be transferred to reserves and a portion of
exploration potential will be transferred to resources. As a result, the
category of non-depletable mineralization is expected to reduce and, in the
absence of further additions to exploration potential, eventually be fully
classified within the depletable component.

When considering the percentage of inferred resources to
include in the depletion base of the depletable component, management considered
what portion of the Companys inferred resources are expected to be classified
as measured and indicated resources, and if economically recoverable, are
expected to be included in proved and probable reserves. In completing its
assessment as to which resources to include so as to best reflect the useful
life of the mine, management considered resources that have been included in the
life-of-mine plan. To be included in the life-of-mine plan, resources needed to
be above the cut-off grade set by management, which means that the resource can
be economically mined and is therefore commercially viable. This consistent
systematic method for inclusion in the life-of-mine plan takes into account
managements view of the gold price and exchange rates.

In addition, in order to determine which proportion of
resources should be included in the depletion base, management considered the
existence, commercial viability and potential economic recovery of such
resources based on historical experience and available geological and drilling
information of the area under consideration and other operations/parts of the
mine, that are contiguous to the area under consideration. In instances where
management is able to demonstrate the economic recovery of such resources with a
high level of confidence, such additional resources, which may also include
certain of the inferred resources, are included in the calculation of
depletion.

Inferred resources are established based on more limited
information than measured or indicated resources and reserves. The Company has
risk-weighted the inferred resources included in the San Dimas depletion
calculation considering the following factors:

| | i.  | Both historic and recent rates of conversion of inferred
      resources to reserves at the San Dimas mine;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ii. | The nature of the ore deposit and the physical
      characteristics of the mine site. Exploration from the surface at San
      Dimas is challenging due to topographical challenges and accordingly the
      definition drilling required to establish resources is delayed due to the
      time required to develop access to underground drilling stations. This
      delay has historically limited the quantity of reserves that can be identified for future mining at San
      Dimas at any point in time. Accordingly, the San Dimas mine has
      historically had a short reserve life, however, management is confident
      that inferred resources and exploration potential will convert to reserves
  as development progresses;

39

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

| | iii. | Management is required under IFRS to assess the useful
      life of the San Dimas mine and management believes that inclusion of a
      portion of inferred resources provides a more accurate estimate as the
      useful life of the San Dimas mine for calculation of depletion expense.
      Estimating the useful life of the San Dimas mine without inclusion of a
      portion of inferred resources would, in managements opinion, result in an
      inappropriately short estimate of the life of the San Dimas
mine;                                                                                
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | iv.  | The change in reserve and resource estimation methodology
      as at December 31, 2011 from a polygonal approach to a geostatistical
      approach, which resulted in a transfer of estimated mineral reserves to
      inferred resources and the reclassification of a substantial portion of
      inferred resources to exploration potential. Given the high proportion of
      inferred resources previously classified as proven and probable reserves
      under the polygonal method, management has a high level of confidence that
      these inferred resources will be converted into
  production.

Based on these factors, the Company determined for periods
prior to the adoption of the component methodology discussed above to include
100% of probable reserves and 75% of each of inferred resources and exploration
potential in the depletion calculation for the year ended December 31, 2012 and
the nine months ended September 30, 2013. For periods following the change in
depletion estimation methodology, the Company has determined to include 100% of
probable reserves and 75% of inferred resources in the depletion calculation for
the three months ended December 31, 2013. The Company believes that inclusion of
both probable reserves and 75% of inferred resources and, where applicable,
exploration potential, in the depletion calculation is supported by the long
mining history at the San Dimas mine with an average historical conversion rate
of approximately 90% of inferred resources into reserves.

Future capital expenditures necessary to access these inferred
resources have been taken into account when determining the pattern of depletion
charge for these operations. These costs are included in the life-of-mine plan
and are determined by the Companys geologists and engineers based on an
in-depth knowledge of the mine and planned development work.

Depletion expense is calculated on a units-of-production basis
over the estimated useful life of each mining property, being the number of
production units expected to be obtained from the property. From January 1, 2012
to September 30, 2013, the entire mining property capitalized for the San Dimas
asset was depleted on a units-of-production basis that included 100% of reserves
(which includes measured and indicated resources) and 75% of inferred resources
and exploration potential. Commencing as of October 1, 2013, the San Dimas asset
is divided into a depletable pool, attributable to reserves (which includes
measured and indicated resources) and inferred resources, and a non-depletable
pool, attributable to exploration potential. For the three months ended December
31, 2013, the value assigned to the depletable component was $282.3 million and
the value assigned to the non-depletable component was $106.8 million.

For the year ended December 31, 2012 and the nine months ended
September 30, 2013, the San Dimas asset was depleted based on inclusion of 100%
of reserves and 75% of inferred resources and exploration potential. For the
year ended December 31, 2012, this represented an average of 0.6 million ounces
of reserves, 0.6 million ounces of inferred resources and 0.8 million ounces of
exploration potential. For the nine months ended September 30, 2013, this represented an
average of 0.7 million ounces of reserves, 0.6 million ounces of inferred
resources and 0.8 million ounces of exploration potential. For the three months
ended December 31, 2013, the depletable pool was depleted on a
units-of-production basis based on inclusion of 100% of reserves and 75% of
inferred resources. For the three months ended December 31, 2013, this
represented an average of 0.7 million ounces of reserves and 0.6 million ounces
of inferred resources.

40

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

For the years ended December 31, 2013 and 2012, $14.3 million
and $11.6 million , respectively, of development costs were included in the
recognized value of mining properties of which $12.4 million and $10.0 million,
respectively, were included in the depletable component. For the year ended
December 31, 2013, $55.0 million of future development costs were included in
the calculation of depletion expense. Depletion expense for the year ended
December 31, 2013 was $25.6 million (2012 - $18.9 million). Had the depletion
expense been calculated without inclusion of inferred resources and, where
applicable, exploration potential, and related future development costs, the
depletion expense would have been $65.0 million (2012 - $70.5 million).

Due to the fact that the economic assumptions used to estimate
the proved and probable reserves and resources change from year to year, and
because additional geological data is generated during the course of operations,
estimates of the resources and proved and probable reserves may change from year
to year. Changes in the proved and probable reserves and inferred resources used
in the life-of -mine plan may affect the depletion calculation and such changes
are recognized prospectively.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in conformity with IFRS
requires management to make estimates, judgements and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Management has identified the
following critical accounting policies and estimates.

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

The Company has determined that exploration drilling,
evaluation, development and related costs incurred which have been capitalized
are economically recoverable. Management uses several criteria in its
assessments of economic recoverability and probability of future economic
benefits including geological and metallurgical information, history of
conversion of mineral deposits to proven and probable reserves, scoping and
feasibility studies, accessible facilities, and existing permits for the life of
mine plan. The estimates contained within these criteria could change over time
which could affect the economic recoverability of capitalized costs.

Determination of useful lives of property, plant and
equipment

Assets other than mining interests are depreciated using the
straight-line method. Should the actual useful life of the property, plant or
equipment vary future depreciation charges may change.

41

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Inventories

Finished goods, work-in-process and stockpiled ore are valued
at the lower of average production cost and net realizable value.

The Company records the costs of mining ore in process as
work-in-process inventories measured at the lower of cost and estimated net
realizable value. These costs are charged to income and included in operating
expenses on the basis of ounces of gold recovered. The estimates and assumptions
include surveyed quantities of stockpiled ore, in-circuit process volumes, gold
and silver contents of both, costs to recover saleable ounces, recoverable
ounces once processed and the price per ounce of gold or silver when ounces of
gold and silver are expected to be recovered and sold. If these estimates or
assumptions prove to be inaccurate, the Company could be required to write down
the carrying amounts of its work-in-process inventories, which would reduce the
Companys income and working capital. At December 31, 2013, the average costs of
inventories are significantly below their net realizable values.

Mining interests and impairment testing

The Company records mining interests at cost. Exploration costs
are capitalized where they meet the Companys criteria for capitalization.

Mining properties are depleted using a units-of-production
basis over a mines estimated and economically proven and probable reserves and
an estimate of the portion of resources expected to be classified as reserves.
If a mine has significant parts with differing useful lives, depletion is
calculated based on the useful life of each part. For certain mines, including
the San Dimas mine, the Company may segregate the recognized value of the mine
between its depletable and non-depletable parts. For the San Dimas mine, the
value assigned to the depletable component is that which is recognized in
respect of the mines reserves and resources, while the value assigned to the
non-depletable component is that which relates to exploration potential. If
estimates of the value of the depletable and non-depletable parts of a
mining property prove to be inaccurate, this could increase the amount of future
depletion expense which would reduce the Companys net income and net assets.

The Company depletes the San Dimas mine based on estimates of
the production to be derived over the life of the mine that are attributable to
proven and probable reserves and inferred resources. The Company has estimated
that 100% of proven and probable reserves and 75% of inferred resources will be
recovered. If these estimates of reserves and resources expected to be recovered
prove to be inaccurate, or if the Company revises its mining plan for a
location, due to reductions in the metal price forecasts or otherwise, to reduce
the amount of reserves and resources expected to be recovered, the Company could
be required to write down the carrying amounts of its mining properties, or to
increase the amount of future depletion expense, both of which would reduce the
Companys income and net assets.

The Company reviews and evaluates its mining interests for
impairment when events and changes in circumstances indicate that the related
carrying amounts may not be recoverable. The carrying amounts of the assets are
compared to the recoverable amount of the assets whenever events or changes in
circumstances indicate that the net book value may not be recoverable. The
recoverable amount is the higher of value in use and fair value less costs to
sell. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.

42

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

The Company bases its impairment calculation on detailed
budgets and forecasts which are prepared separately for each of the Companys
Cash Generating Units (CGU) to which the individual assets are allocated. The
Company currently has two CGUs, the San Dimas mine and the Cerro del Gallo
project. These budgets and forecasts generally cover the life of the mine. If
the recoverable amount of an asset (or CGU) is estimated to be less than its
carrying amount, an impairment is recognized immediately as an expense and the
carrying amount is reduced to its recoverable amount. There has been no change
to this policy as a result of the change in depletion estimate. The depletable
and the non-depletable components of a mine together constitute one CGU.
Impairment is assessed at the CGU level.

For the year ended December 31, 2013, due to the continued
decline of consensus future gold and silver prices which are used to estimate
the value in use, the Company performed impairment reviews of both the San Dimas
mine and the Cerro del Gallo project. As a result of these reviews, the Company
determined that neither property was impaired. In the future, if the Company
determines there has been an impairment because its prior estimates of future
net cash flows have proven to be inaccurate, due, in the case of the San Dimas
CGU, to the Mexican tax authorities changing their position with respect to
their views on the appropriate price for the sale of silver under the silver
purchase agreement, or in the case of either CGU to reductions in the metal
price forecasts, increases in the costs of production, reductions in the amount
of reserves or mineralization expected to be recovered or otherwise, or because
the Company has determined that the deferred costs may not be recovered based on
current economics or permitting considerations, the Company would be required to
write down the carrying amounts of its mining properties, which would reduce the
Companys income and net assets.

Plant and equipment are depreciated over their estimated useful
lives. If estimates of useful lives including the economic lives of mines prove
to be inaccurate, the Company could be required to write down the carrying
amounts of its plant and equipment, or increase the amount of future
depreciation expense, both of which would reduce the Companys income and net
assets.

Fair value of assets purchased in a business
combination

The Companys business combinations are accounted for using the
acquisition method of accounting whereby assets acquired and liabilities assumed
are recorded at their fair values as of the date of acquisition and any excess
of the purchase price over such fair values is recorded as goodwill. No goodwill
has been recorded to date.

Assumptions underlying fair value estimates are subject to
significant risks and uncertainties, which if incorrect could lead to an
overstatement of the mineral properties of the Company which would then be
subject to an impairment test as described above.

Reclamation and closure cost obligations

The Company has an obligation to reclaim its mining properties
after the minerals have been mined from the site, and has estimated the costs
necessary to comply with existing reclamation standards. IFRS requires the
Company to recognize the fair value of a decommissioning liability, such as site
closure and reclamation costs, in the period in which it is incurred if a
reasonable estimate of fair value can be made. The Company records the estimated
present value of future cash flows associated with site closure and reclamation
as liabilities when the liabilities are incurred and increases the carrying
values of the related assets by the same amount. At the end of each reporting
period, the liabilities are increased to reflect the passage of time (accretion
expense). Adjustments to the liabilities are also made for changes in the
estimated future cash outflows underlying the initial fair value measurements,
and changes to the discount rate used to present value the cash flows, both of which may
result in a corresponding change to the carrying values of the related assets.
Should the estimation of the reclamation and closure cost obligations be
incorrect, additional amounts may need to be provided for in future which could
lead to an increase in both the liability and associated asset. Should the
reported asset and liability increase, the amortization expense in the statement
of operations of the capitalized asset retirement cost would increase.

43

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Taxation

The Company recognizes the future tax benefit related to
deferred tax assets to the extent that it is probable that future taxable
profits will be available against which they can be utilized. Assessing the
recoverability of deferred tax assets requires management to make significant
estimates related to expectations of future taxable income, applicable tax
strategies and the expected timing of the reversals of existing temporary
differences. In making its assessments, management gives additional weight to
positive and negative evidence that can be objectively verified. Estimates of
future taxable income are based on forecasted cash flows from operations and the
application of existing tax laws in each jurisdiction. Forecasted cash flows
from operations are based on life of mine projections internally developed and
reviewed by management.

The Company recognizes current income tax benefits when it is
more likely than not, based on technical merits, that the relevant tax position
will be sustained upon examination by applicable tax authorities. The more
likely than not criteria is a matter of judgment based on the individual facts
and circumstances of the relevant tax position evaluated in light of all
available evidence.

The recoverability of deferred tax assets and the recognition
and measurement of uncertain tax positions are subject to various assumptions
and management judgment. Actual results may differ from these estimates. In
circumstances where the applicable tax laws and regulations are either unclear
or subject to ongoing varying interpretations, it is reasonably possible that
changes in these estimates could occur that materially affect the amounts of
current and deferred income taxes recognized by the Company, as well as deferred
tax assets and liabilities recorded at December 31, 2013.

Share-based payments

For equity-settled awards, the fair value of the award is
charged to the statement of operations and credited to the share-based payment
reserve rateably over the vesting period, after adjusting for the number of
awards that are expected to vest. The significant estimations and assumptions
included in the calculation of the fair value of the award are expected
volatility, expected life, expected dividend rate and expected risk-free rate of
return. Changes in these assumptions may result in a material change to the
expense recorded for the issuance of share-based compensation.

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

Tax ruling in Mexico

The Company has taken the position that if the Mexican tax laws
relative to the APA ruling do not change and the Company does not change the
structure of the silver purchase agreement, the ability of the Company to
continue to pay taxes in Mexico based on realized prices of silver will continue
for the life of the San Dimas mine. Should this judgment change, there would be
a material change in both the income and deferred tax position recognized by the
Company.

44

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Liability to sell silver to Silver Wheaton Caymans

The Company has accounted for and presented the liability to
sell silver to Silver Wheaton Caymans net within the mining interests rather
than as a separate liability in the Companys statement of financial position.

Componentization of property, plant and equipment

Assets are componentized for the purposes of depreciation.
Should the componentization of assets change, depreciation charges may vary
materially in the future.

Asset acquisitions

The Company has determined that the acquisition of Cerro was an
asset acquisition rather than a business combination. This is considered a
significant judgment that could have a material impact on the assets and
liabilities recognized as well as any future depletion expense.

Functional currency

The determination of a subsidiarys functional currency often
requires significant judgment where the primary economic environment in which
the subsidiary operates may not be clear. This can have a significant impact on
the consolidated results of the Company.

Capital management

There have been no significant changes in the Companys
objectives, policies and processes for managing its capital, including items the
Company regards as capital, during the year ended December 31, 2013. At December
31, 2013, the Company expects its capital resources and projected cash flows
from continuing operations to support its normal operating requirements on an
ongoing basis, planned development and exploration of its mineral properties,
and other expansionary plans. At December 31, 2013, there were no externally
imposed capital requirements to which the Company is subject and with which the
Company had not complied.

Financial instruments

The Companys financial instruments at December 31, 2013
consist of cash, trade and other receivables, trade and other payables, and
debt.

At December 31, 2013, the carrying amounts of cash, trade and
other receivables, and trade and other payables are considered to be reasonable
approximation of their fair values due to their short-term nature.

The fair
  value of the promissory note upon initial recognition was considered to be its
  face value and the promissory note has subsequently been carried at amortized
  cost. At December 31, 2013, the fair value of the promissory note was $27.3
  million using a discounted future cash-flow analysis. At December 31, 2012 the
  fair value of the promissory note was $39.3 million.

45

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

RISKS AND UNCERTAINTIES

Financial instrument risk exposure

The following describes the types of financial instrument risks
to which the Company is exposed and its objectives and policies for managing
those risk exposures:

|(a) | Credit risk
|--- | -----------

Credit risk is the risk that the counterparty to a financial
instrument will cause a financial loss for the Company by failing to discharge
its obligations. Credit risk is primarily associated with trade and other
receivables; however, it also arises on cash. To mitigate exposure to credit
risk on financial assets, the Company limits the concentration of credit risk,
ensures non-related counterparties demonstrate minimum acceptable credit
worthiness and ensures liquidity of available funds.

The Company closely monitors its financial assets, invests its
cash in highly rated financial institutions and sells its products exclusively
to organizations with strong credit ratings. The credit risk associated with
trade receivables at December 31, 2013 is considered to be negligible.

The Companys maximum exposure to credit risk at December 31,
2013 and 2012 was as follows:

2013
    
    
    2012**$**
    
    
    $Cash and cash equivalents
    
    110,711
    
    
    139,244Trade and other receivables
    
    4,794
    
    
    3,792Taxes receivable
    
    10,224
    
    
    5,914


|(b) | Liquidity risk
|--- | --------------

Liquidity risk is the risk that the Company will encounter
difficulty in meeting obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Company has
developed a planning, budgeting and forecasting process to help determine the
funds required to support its normal operating requirements on an ongoing basis
and its expansionary plans.

46

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

In the normal course of business, the Company enters into
contracts and performs business activities that give rise to commitments for
future minimum payments. The following table summarizes the contractual
maturities of the Companys financial liabilities and operating and capital
commitments at December 31, 2013:

|                                                       |  |                   |  |  | December 31     | 
|------------------------------------------------------ |  | ----------------- |  |  | --------------- | 
|                                                       |  | December 31, 2013 |  |  | 2012            | 
|                                                       |  | Within            |  |  |                 | 
|                                                       |  | 1 year            |  |  | 2-5
      years | 
|                                                       |  | $                 |  |  | $               | 
|Trade and other payables and accrued
      liabilities |  | 33,958            |  |  | -               | 
|Share based payments                                   |  | 5,054             |  |  | 3,090           | 
|Promissory note and interest                           |  | 6,678             |  |  | 23,584          | 
|Minimum rental and operating lease payments            |  | 2,530             |  |  | 2,269           | 
|Reclamation and closure cost obligations               |  | -                 |  |  | 4,790           | 
|Commitment to
      purchase plant and equipment       |  | 6,062             |  |  | -               | 
|                                                       |  | 54,282            |  |  | 33,733          | 

The Company expects to discharge its commitments as they come
due from its existing cash balances, cash flow from operations and collection of
receivables. Substantially all of the Companys cash balances are held with
Canadian-based financial institutions.

The total operating lease expense during the year ended
December 31, 2013 was $0.8 million (2012 - $0.6 million).

|(c) | Market risk  
|--- | -------------
|    |              
|(i) | Currency risk

Currency risk is the risk that the fair values or future cash
flows of the Companys financial instruments will fluctuate because of changes
in foreign currency exchange rates. Exchange rate fluctuations may affect the
costs incurred in the Companys operations. Gold is sold in U.S. dollars and
costs are incurred principally in U.S. dollars and Mexican pesos. The
appreciation of the Mexican peso against the U.S. dollar can increase the costs
of gold production and capital expenditures in U.S. dollar terms. The Company
also holds cash that is denominated in Canadian dollars and Mexican pesos which
are subject to currency risk. The Companys head office general and
administrative expenses are mainly denominated in Canadian dollars and are
translated to US dollars at the average rate during the period, as such if the
US dollar appreciates as compared to the Canadian dollar, the costs of the
Company would decrease in US dollar terms. The Companys equity is denominated
in Canadian dollars and as such the Company is subject to currency risk if the
Canadian dollar depreciates against the U.S. dollar. The Company is further
exposed to currency risk through non-monetary assets and liabilities of its
Mexican entity whose taxable profit or loss is denominated in a non-US dollar
currency. A small amount of expenses were also incurred in Australian dollars
during the year ended December 31, 2013 in relation to the acquisition of Cerro.
Changes in exchange rates give rise to temporary differences resulting in a
deferred tax liability or asset with the resulting deferred tax charged or
credited to income tax expense.

47

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

During the year ended December 31, 2013, the Company recognized
a loss of $0.8 million on foreign exchange (2012 - loss of $0.9 million). Based
on the above net exposures at December 31, 2013, a 10% depreciation or
appreciation of the Mexican peso against the U.S. dollar would result in a $8.2
million increase or decrease in the Companys after-tax net earnings (loss)
(2012 - $4.5 million); and a 10% depreciation or appreciation of the Canadian
dollar against the U.S. dollar would result in a $2.1 million increase or
decrease in the Companys after-tax net earnings (loss) (2012 - $2.7 million).

The Company does not currently use derivative instruments to
reduce its exposure to currency risk, however, management monitors its differing
currency needs and tries to reduce its exposure to currency risks through
exchanging currencies at what are considered to be optimal times.

|(ii) | Interest rate risk
|---- | ------------------

Interest rate risk is the risk that the fair values and future
cash flows of the financial instruments will fluctuate because of changes in
market interest rates. The exposure to interest rates is monitored. The Company
has very limited interest rate risk as the net exposure of financial instruments
subject to floating interest rates is not material.

|(iii) | Price risk
|----- | ----------

Price risk is the risk that the fair value or future cash flows
of the Companys financial instruments will fluctuate because of changes in
commodity prices. Profitability depends on sales prices for gold and silver.
Metal prices are affected by numerous factors such as the sale or purchase of
gold and silver by various central banks and financial institutions, interest
rates, exchange rates, inflation or deflation, fluctuations in the value of the
U.S. dollar and foreign currencies, global and regional supply and demand, and
the political and economic conditions of major producing countries throughout
the world.

The table below summarizes the impact on profit after tax for a
10% change in the average commodity price achieved by the Company during the
year. The analysis is based on the assumption that the gold and silver prices
move 10% with all other variables held constant.

Increase (decrease) in
      income after taxesfor the year endedDecember 31, 2013
    
    
    December 31, 2012$
    000s
    
    $
    000sGold prices10% increase
    
    9,993
    
    
    10,16610% decrease
    
    (9,993
    )
    
    (10,166
    )Silver prices10% increase
    
    1,511
    
    
    1,40510% decrease
    
    (1,511
    )
    
    (1,405
    )


48

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Other risks and uncertainties

The Companys business contains significant risk due to the
nature of mining, exploration, and development activities. For additional
discussion of these and other risk factors, please refer to the Companys Annual
Information Form for the year ended December 31, 2012, which is available on the
Companys website at www.primeromining.com or on SEDAR at www.sedar.com,
or to the Companys Annual Information Form for the year ended December 31,
2013, which is expected to be filed by March 31, 2013 and will be found under
the Companys profile at www.sedar.com.

APA ruling

In October 2012 the Company received an APA ruling on the
appropriate price of silver sales under the silver purchase agreement. Under
Mexican tax law, an APA ruling is generally applicable for up to a five year
period. For Primero this applies to the fiscal years 2010 to 2014. Assuming
Primero continues to sell silver under the silver purchase agreement on the same
terms and there are no changes in the application of Mexican tax laws relative
to the APA ruling, the Company expects to record revenues and pay taxes on
realized prices for the life of the San Dimas mine. There can be no assurance
that Mexican tax laws applicable to the APA ruling will not change or that the
Mexican tax authorities will not change their views on the appropriate price for
the sale of silver under the silver purchase agreement. If the Mexican tax
authorities determine that the appropriate price of silver sales under the
silver purchase agreement is different than the realized price, Primeros cash
flows and earnings could be significantly adversely impacted.

Risks related to Brigus

On December 16, 2013, the Company announced that it has entered
into an arrangement agreement with Brigus whereby Primero will acquire all
outstanding common shares of Brigus pursuant to a plan of arrangement. The
transaction will be carried out by way of a court-approved plan of arrangement
and will require approval by at least 66 2/3% of the votes cast by the
shareholders of Brigus at a special meeting. The issuance of the Companys
common shares in connection with the proposed transaction will require the
approval of a majority of the shareholders of Primero voting at a special
meeting. In addition to shareholder and court approvals, the proposed
transaction will be subject to applicable regulatory approvals and the
satisfaction of certain other conditions customary in transactions of this
nature. The shareholder meetings are scheduled to be held on February 27, 2014.
There can be no assurance the shareholders will approve the transaction or
issuance of shares or that the applicable regulatory approvals will be attained
or the necessary closing conditions will be satisfied.

Assuming the Brigus acquisition is completed as planned, there
can be no assurance that the assumptions underlying the acquisition will not be
impacted by unanticipated changes in the business, industry or general economic
conditions.

Effectiveness of internal control over financial
reporting

The Company is required to maintain and evaluate the
effectiveness of its internal control over financial reporting under National
Instrument 52-109 in Canada (NI 52-109) and under the Securities Exchange Act
of 1934, as amended, in the United States. There is no assurance that the
Company will be able to achieve and maintain the adequacy of its internal
control over financial reporting as such standards are modified, supplemented,
or amended from time to time, and the Company may not be able to ensure that it
can conclude on an ongoing basis that its internal control over financial
reporting is effective. The Companys failure to establish and maintain
effective internal control over financial reporting could result in the loss of investor confidence in the reliability of its
financial statements. In addition, any failure to implement required new or
improved controls, or difficulties encountered in their implementation, could
result in the Companys inability to meet its reporting obligations. There can
be no assurance that the Company will be able to remediate material weaknesses,
if any, identified in future periods, or maintain all of the controls necessary
for continued compliance, and there can be no assurance that the Company will be
able to retain sufficient skilled finance and accounting personnel. No
evaluation can provide complete assurance that the Companys internal control
over financial reporting will detect or uncover all failures of persons within
the Company to disclose material information otherwise required to be
reported.

49

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Disclosure controls and procedures

Disclosure controls and procedures form a framework designed to
provide reasonable assurance that information disclosed publicly fairly presents
in all material respects the financial condition, results of operations and cash
flows of the Company for the periods presented in this MD&A. The Companys
disclosure controls and procedures framework includes processes designed to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to management by others within those
entities to allow timely decisions regarding required disclosure.

The Companys management, with the participation of its CEO and
CFO, has evaluated the design, operation and effectiveness of the Companys
disclosure controls and procedures as at December 31, 2013. Based on the results
of that evaluation, the Companys CEO and CFO have concluded that, as of the end
of the period covered by this report, the Companys disclosure controls and
procedures were effective to provide reasonable assurance that the information
required to be disclosed by the Company in its annual filings, interim filings
or other reports filed or submitted by it under securities legislation is
recorded, processed, summarized and reported, within the time periods specified
in the securities legislation, and is accumulated and communicated to the
Companys management, including the CEO and CFO, as appropriate to allow timely
decisions regarding required disclosure.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Companys management, with the participation of its CEO and
CFO is responsible for establishing and maintaining adequate internal control
over financial reporting. The Companys internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with IFRS. The Companys internal control
over financial reporting includes policies and procedures that:

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

50

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

There has been no material change in internal controls of the
Company during year ended December 31, 2013 that has materially affected, or is
likely to materially affect, the Companys internal control over financial
reporting.

As of December 31, 2013, an evaluation was carried out, under
the supervision of the CEO and CFO, of the design and operating effectiveness of
the Companys internal controls over financial reporting. Based on this
evaluation, the CEO and CFO concluded that the internal controls over financial
reporting are designed and were operating effectively as at December 31, 2013 to
provide reasonable assurance that the Companys financial reporting is reliable
and that the preparation of the Companys financial statements for external
purposes were prepared in accordance with IFRS.

Readers are cautioned that any controls and procedures, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Due to
the inherent limitations in all controls systems, they cannot provide absolute
assurance that all control issues and instances of fraud, if any, within the
Company have been prevented or detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by unauthorized override of the control. The design of any control
system also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Accordingly,
because of the inherent limitations in a cost effective control system,
misstatements due to error or fraud may occur and not be detected.

Cautionary Statement on Forward-Looking Statement
Information

Certain statements made and information contained in this
MD&A constitute forward-looking information within the meaning of Canadian
securities laws, for example, references to the possibility of acquiring
producing or near-term producing precious metals assets and future gold and
silver production. Forward looking information and statements in this MD&A
include those that relate to:

- the ability of the Company to expand production at the San Dimas mine,
- the ability of the Company to complete the acquisition of Brigus,
- the ability of the Company to identify appropriate future acquisition
  opportunities, or if an opportunity is identified, to conclude a transaction
  on satisfactory terms,
- the actual results of exploration activities, including the ability of the
  Company to continue the historical conversion of resources to reserves at the
  San Dimas mine, and the anticipated results of the exploration programs at
  Cerro del Gallo,
- actual results of reclamation activities at the San Dimas mine,
- the estimation or realization of Mineral Reserves and Resources,
- the timing and amount of estimated future production (including from
  properties to be acquired from Brigus), capital expenditures and costs,
  including forecasted cash costs (including from properties to be acquired from
  Brigus),
- the timing of the development of new mineral deposits,
- the Companys requirements for additional capital and ability to complete
  future financings,
- future prices of precious and base metals,
- expected ore grades, recovery rates, and throughput,
- that plant, equipment or processes will operate as anticipated,
- the occurrence of accidents, labour disputes, road blocks and other risks
  of the mining industry,

51

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

- the ability of the Company to obtain governmental approvals or permits in
  connection with the continued operation and development of the San Dimas mine
  and the Cerro del Gallo project and projects which the Company intends to
  acquire from Brigus,
- the continuation of Mexican tax laws relative to the APA ruling,
- the ability of the Company to continue to pay taxes in Mexico based on
  realized prices of silver,
- the ability of the Company to comply with environmental, safety and other
  regulatory requirements,
- expectations for the Cerro del Gallo project including the timing of
  activities to lead to a construction decision,
- the completion of development or construction activities, including the
  construction of the Cerro del Gallo mine,
- expectations regarding currency fluctuations,
- title disputes relating to the Companys properties,
- the timing and possible outcome of pending litigation, and
- the ability of the Company to maintain effective control over financial
  reporting.

Such forward-looking information is necessarily based upon a
number of factors and assumptions that, while considered reasonable by the
Company as of the date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. The
assumptions made by the Company in preparing the forward looking information
contained in this MD&A, which may prove to be incorrect, include, but are
not limited to: the expectations and beliefs of management; the specific
assumptions set forth above in this MD&A; assumptions relating to the
existence of companies that may wish to dispose of producing or near-term
producing precious metals assets; that there are no significant disruptions
affecting operations, whether due to labour disruptions, supply disruptions,
damage to or loss of equipment, whether as a result of natural occurrences
including flooding, political changes, title issues, intervention by local
landowners, loss of permits, or environmental concerns or otherwise; that there
are no disruptions in the supply of power from the Las Truchas power generation
facility, whether as a result of damage to the facility or unusually limited
amounts of precipitation; that development and expansion at San Dimas proceeds
on a basis consistent with current expectations and the Company does not change
its development and exploration plans; that the Cerro del Gallo project will be
developed in accordance with the Companys plans; that the exchange rate between
the Canadian dollar, Mexican peso and the United States dollar remains
consistent with current levels; that prices for gold and silver remain
consistent with the Company's expectations; that prices for key mining supplies,
including labour costs and consumables, remain consistent with the Company's
current expectations; that production meets expectations; that the Companys
current estimates of mineral reserves, mineral resources, exploration potential,
mineral grades and mineral recovery are accurate; that the Company identifies
higher grade veins in sufficient quantities of minable ore in the Central Block
and Sinaloa Graben; that the geology and vein structures in the Sinaloa Graben
are as expected; that the Company completes the Sinaloa Graben/Central Block
tunnel; that the ratio of gold to silver price is maintained in accordance with
the Companys expectations; that there are no material variations in the current
tax and regulatory environment; that Mexican tax laws relative to the APA ruling
remain unchanged; that the Company will continue to pay taxes in Mexico based on
realized prices of silver; that the Company will receive required permits and
access to surface rights; that the Company can access financing, appropriate
equipment and sufficient labour and that the political environment within Mexico
will continue to support the development of environmentally safe mining
projects.

No assurance can be given as to whether these assumptions will
prove to be correct. These assumptions should be considered carefully by
investors. Investors are cautioned not to place undue reliance on the forward-looking information and statements or the assumptions
on which the Companys forward-looking information and statements are based.

52

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Forward-looking information is subject to a variety of risks
and uncertainties which could cause actual events or results to differ from
those reflected in the forward-looking statements. Such risks include, but are
not limited to: the volatility of prices of gold and other metals; uncertainty
of mineral reserves, mineral resources, exploration potential, mineral grades
and mineral recovery estimates; uncertainty of future production, delays in
completion of the mill expansion at San Dimas, exploration and development
plans; insufficient capital to complete mill expansion at San Dimas, development
and exploration plans; risks associated with developing the Cerro del Gallo
project; currency fluctuations; financing of additional capital requirements;
cost of exploration and development programs; inability to complete the Sinaloa
Graben/Central Block tunnel or other development; mining risks, including
unexpected formations and cave-ins, which delay operations or prevent extraction
of material; risks associated with foreign operations; governmental and
environmental regulation; tax law changes; the ability of the Company to
continue to pay taxes based on the realized price of silver; the volatility of
the Company's stock price; landowner dissatisfaction and disputes; delays in
permitting; damage to equipment; labour disruptions; interruptions. Should one
or more of these risks and uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in forward-looking statements.

Investors are advised to carefully review and consider the risk
factors identified in this MD&A under the heading Risk and
uncertainties, and in the Companys Annual Information Form for the year
ended December 31, 2012 as filed on SEDAR ,as well as the Companys Annual
Information Form for the year ended December 31, 2013, which is expected to be
filed by March 31, 2014, for a discussion of the factors that could cause the
Companys actual results, performance and achievements to be materially
different from any anticipated future results, performance or achievements
expressed or implied by the forward-looking statements. Investors are further
cautioned that the foregoing list of assumptions and risk factors is not
exhaustive and it is recommended that prospective investors consult the more
complete discussion of the Companys business, financial condition and prospects
that is included in this MD&A. The forward-looking information and
statements contained in this MD&A are made as of the date hereof and,
accordingly, are subject to change after such date.

The Company does not undertake to update any forward-looking
information, except as, and to the extent, required by applicable securities
laws. The forward-looking statements contained herein are expressly qualified by
this cautionary statement.

53

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|PRIMERO MINING CORP.                          
|----------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS          
|FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Cautionary Note for United States Investors

As a British Columbia corporation and a reporting issuer
  under Canadian securities laws, the Company is subject to certain rules and
  regulations issued by Canadian Securities Administrators. The Company is
  required to provide detailed information regarding its properties including
  mineralization, drilling, sampling and analysis, on security of samples and
  mineral reserve estimates under Canadian National Instrument 43-101 (NI
  43-101). The United States Securities and Exchange Commission applies different
  standards than the standards under NI 43-101 in order to classify mineralization
  as a reserve. Accordingly, mineral reserve estimates contained in this MD&A
  may not qualify as reserves under SEC standards. Further, the Company
  describes any mineral resources associated with its properties utilizing
  terminology such as measured resources, indicated resources or inferred
  resources which are terms recognized by Canadian regulators under NI 43-101 but
  not recognized by the United States Securities and Exchange Commission. United
  States investors are cautioned not to assume that any part or all of the mineral
  deposits in these categories will ever be converted into mineral reserves. These
  terms have a greater amount of uncertainty as to their existence and
  feasibility than reserves recognized by the United States Securities and
  Exchange Commission. Further, inferred resources have a great amount of
  uncertainty as to their existence and as to whether they can be mined legally or
  economically. Therefore, United States investors are also cautioned not to
  assume that all or any part of the inferred resources exist. United States
  investors are also cautioned that disclosure of exploration potential is
  conceptual in nature by definition and there is no assurance that exploration of
  the mineral potential identified will result in any category of NI 43-101
  mineral resources being identified.

On behalf of the Board

|                            | 
|--------------------------- | 
|Joseph F. Conway            | 
|President, CEO and Director | 

54

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