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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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, 2014.
Additional information on the Company, including its Annual Information Form for
the year ended December 31, 2014, which is expected to be filed by March 31,
2015, 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 11, 2015.

EXECUTIVE SUMMARY

Primero is a Canadian-based precious metals producer with
operations in both Mexico and Canada. 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 two producing properties, the San Dimas gold-silver
mine, located in Mexicos San Dimas district, on the border of Durango and
Sinaloa states, and as of March 5, 2014, with the acquisition of Brigus Gold
Corp. (Brigus), the Black Fox mine located in the Township of Black
River - Matheson, Ontario, Canada. The Company owns properties adjacent to the
Black Fox mine - Grey Fox and Pike River, which together with the Black Fox mine
and the Black Fox mill, located on the Stock Mill property, comprise the Black
Fox Complex.

In addition, the Company owns one development-stage project;
the Cerro del Gallo gold-silver-copper project, located in the state of
Guanajuato in central Mexico. Further, the Company has 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. In addition, Primero has common share purchase warrants which
trade on the TSX under the symbol P.WT, as well as convertible debentures
P.DB.V and P.DB.U (former Brigus debentures).

1

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

KEY TERMS IN THE DOCUMENT

Gold equivalent ouncesinclude silver ounces produced
converted to a gold equivalent based on a ratio of the average commodity prices
received for each period. The ratio for 2014 was based on realized prices of
$1,265 per ounce of gold and $7.46 per ounce of silver.

Total cash costs per gold equivalent ounceare defined
as costs of production (including refining costs) divided by the total number of
gold equivalent ounces produced. This is a non-GAAP measure.

Total cash costs per gold ounce on a by-product basisare 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 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).

All-in sustaining cost per ounceis a 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 for a reconciliation of all-in
sustaining costs per gold ounce.

Adjusted net income (loss) and adjusted net income (loss)
per shareare non-GAAP measures. Adjusted net income (loss) is net income
(loss) adjusted for unusual items. These non-GAAP measures have no standardized
meaning and they 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. 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 (loss) for a
reconciliation of adjusted net income (loss) to reported net income (loss).

2

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

SELECTED CONSOLIDATED ANNUAL INFORMATION

Year ended
      December 31,2014
    
    
    2013
    
    
    2012Key Performance DataTonnes of ore milled
    
    1,593,005
    
    
    766,930
    
    
    721,264ProducedGold equivalent (ounces)
    
    225,054
    
    
    143,114
    
    
    111,132Gold (ounces)
    
    189,943
    
    
    111,983
    
    
    87,900Silver (million ounces)
    
    6.15
    
    
    6.05
    
    
    5.13SoldGold equivalent (ounces)
    
    220,067
    
    
    143,972
    
    
    110,078Gold (ounces)
    
    185,286
    
    
    112,846
    
    
    87,384Silver (million ounces)
    
    5.94
    
    
    6.17
    
    
    5.02Average realized pricesGold ($/ounce)2
    $
    1,243
    
    $
    1,394
    
    $
    1,662Silver($/ounce)2
    $
    7.46
    
    $
    6.97
    
    $
    7.52Average gold London PM fix
    $
    1,266
    
    $
    1,411
    
    $
    1,669Total cash costs (per gold
      ounce)Gold equivalent basis
    $
    687
    
    $
    599
    
    $
    636By-product basis
    $
    579
    
    $
    389
    
    $
    366All-in sustaining costs (per gold ounce)
    $
    1,222
    
    $
    1,077
    
    $
    1,134Financial Data(in thousands of US
      dollars except per share amounts)Revenues
    
    274,612
    
    
    200,326
    
    
    182,939Earnings from mine operations
    
    52,663
    
    
    76,004
    
    
    79,389Net (loss) income
    
    (224,384
    )
    
    (4,250
    )
    
    49,553Adjusted net income (loss)
    
    5,365
    
    
    38,668
    
    
    41,292Basic (loss) income per share
    
    (1.48
    )
    
    (0.04
    )
    
    0.54Diluted (loss) income per share
    
    (1.48
    )
    
    (0.04
    )
    
    0.54Adjusted net income (loss) per share
    
    0.04
    
    
    0.36
    
    
    0.45Operating cash flows before
      working capital changes
    
    73,658
    
    
    72,396
    
    
    88,808AssetsMining interests
    
    881,480
    
    
    636,253
    
    
    496,132Total assets
    
    1,002,820
    
    
    800,822
    
    
    670,506LiabilitiesLong-term liabilities
    
    190,213
    
    
    94,039
    
    
    47,253Total liabilities
    
    254,835
    
    
    139,732
    
    
    98,768Equity
    
    747,985
    
    
    661,090
    
    
    574,738Weighted
      average shares outstanding (basic)(000's)
    
    152,064
    
    
    108,528
    
    
    91,469Weighted average shares outstanding
      (diluted)(000's)
    
    152,064
    
    
    108,528
    
    
    91,635


3

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

| | 1 | Includes the results for the period for which the Black
      Fox Complex assets, acquired on March 5, 2014, were owned by Primero
      (March 5, 2014 to December 31, 2014).                                                                                              
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                             
| | 2 | Average realized gold and silver prices reflect the
      impact of the gold purchase agreement with Sandstorm at the Black Fox mine
      and the silver purchase agreement with Silver Wheaton Caymans at the San
      Dimas mine (see OTHER LIQUIDITY
CONSIDERATIONS).

2014HIGHLIGHTS

Developments

| |  | On March 5, 2014, the Company completed the $302 million
      acquisition of Brigus by acquiring all of its outstanding common shares
      pursuant to a plan of arrangement. The Company consolidated its balance
      sheet with Brigus upon closing of the acquisition and began to consolidate
      Brigus results of operations into its financial statements and production
      results into its production statistics from March 5, 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | On March 14, 2014, the Company repaid all of the $20.9
      million of Brigus outstanding senior secured term notes at a price of
      105% of the principal amount of the notes plus accrued and unpaid
      interest.                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | On April 4, 2014, the Company made a change of control
      offer to holders of all $50 million of Brigus 6.5% convertible senior
      unsecured debentures at a price of 100% of the principal amount plus
      accrued and unpaid interest, of which only $1.9 million were tendered.                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | On May 23, 2014, the Company entered into a new $75
      million revolving credit facility (the line of credit) with a syndicate of
      lenders. The line of credit has a three year term and bears interest at a
      floating interest rate.                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | The Company completed phase one of the expansion of San
      Dimas mill to 2,500 tonnes per day (TPD) during the first quarter of 2014
      and in August 2014, announced the decision to proceed with the expansion
      to 3,000 TPD. The expansion is expected to be completed by mid-2016.                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | As a result of current market conditions and the
      Company's focus on free cash flow it has elected not to construct the
      Cerro del Gallo project at this time. The Company still remains
      enthusiastic about the project and will continue to keep the project in
      good standing.                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | On February 9, 2015, the Company issued $75 million in
      5.75% convertible unsecured subordinated debentures maturing on February
      28, 2020.                                                                                                                                                                                                                                                                                                  

4

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Key consolidated financial information

| |  | The Company incurred a net loss of $224.4 million in 2014
      ($1.48 per share) including $209 million in impairment charges, compared
      to a net loss of $4.3 million in 2013 ($0.04 per share).                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Adjusted net income was $5.4 million ($0.04 per share)
      for 2014, compared to adjusted net income of $38.7 million ($0.36 per
      share) in 2013 largely due to lower gold prices in 2014.                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Impairment charges of $209.0 million include:                                                                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |   | o                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Operating cash flows before working capital changes were
      consistent between years at $73.7 million ($0.48 per share) in 2014 and
      $72.4 million ($0.67 per share) in 2013. Working capital outflows in 2014
      were $29.4 million, significantly higher than 2013 outflows of $2.6
      million due to significant trade payables acquired with Brigus that are
      now paid and delayed valued added tax (VAT) refunds in Mexico.

Key consolidated performance measures

| |  | As a result of the completion of the 2,500 TPD mill
      expansion at San Dimas and the acquisition of Brigus on March 5, 2014:                                                                                                  
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                   
| |   | o                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                   
| |   | o                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                   
| |   | o                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                   
| |  | The Company incurred total cash costs per gold equivalent
      ounce of $687 for 2014 compared to $599 for 2013. On a by-product basis,
      total cash costs per gold ounce were $579 for 2014 compared to $389 for
      2013.
| |   |                                                                                                                                                                                                                                   
| |  | All-in sustaining costs per ounce were $1,222 for 2014
      compared to $1,077 in 2013.                                                                                                                                          

5

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

REVIEW OF CONSOLIDATED FINANCIAL INFORMATION

|                                                                              |   | For the year
      ended December 31, |  
|----------------------------------------------------------------------------- | - | ------------------------------------- | -
|                                                                              |   | 2014                                  |  
|                                                                              | $ |                                       |  
|Revenue                                                                       |   | 274,612                               |  
|                                                                              |   |                                       |  
|Operating expenses                                                            |   | (159,280                              | )
|Depreciation and depletion                                                    |   | (62,669                               | )
|Total cost of sales                                                           |   | (221,949                              | )
|                                                                              |   |                                       |  
|Earnings from mine operations                                                 |   | 52,663                                |  
|Mining interests impairment charge                                            |   | (110,000                              | )
|Goodwill impairment charge                                                    |   | (98,961                               | )
|Exploration expenses                                                          |   | (1,816                                | )
|General and administrative expenses                                           |   | (36,806                               | )
|                                                                              |   |                                       |  
|(Loss) earnings from operations                                               |   | (194,920                              | )
|Transaction costs, finance expense, foreign exchange and
      other expenses |   | (11,737                               | )
|(Loss) earnings  before income taxes                                          |   | (206,657                              | )
|                                                                              |   |                                       |  
|Income tax expense                                                            |   | (17,727                               | )
|                                                                              |   |                                       |  
|Net loss for the period                                                       |   | (224,384                              | )

6

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

The table below sets out variances in the key drivers of net
loss for the year ended December 31, 2014 compared with the year ended December
31, 2013:

|                                              |   | 2014 compared to |  
|--------------------------------------------- | - | ---------------- | -
|In thousands of U.S. dollars                  |   | 2013             |  
|                                              | $ |                  |  
|Income from Black Fox mining
      operations |   | 3,469            |  
|San Dim as:                                   |   |                  |  
|Increased gold volumes sold                   |   | 13,154           |  
|Decreased gold price                          |   | (15,885          | )
|Increased silver
      revenue                |   | 1,269            |  
|Higher depletion                              |   | (8,533           | )
|Higher operating expenses                     |   | (16,814          | )
|Lower earnings from mine operations           |   | (23,341          | )
|Impairment charges                            |   | (208,961         | )
|Higher general and administrative expenses    |   | (12,336          | )
|Higher finance expenses                       |   | (6,296           | )
|Gain on derivative liability                  |   | 2,291            |  
|Lower income tax expense                      |   | 27,673           |  
|Other                                         |   | 836              |  
|Increase in net loss                          |   | (220,134         | )

The following information describes the change in the Companys
consolidated annual financial results from 2013 to 2014. More detailed operating
and financial information on the Companys mines is included in REVIEW OF
OPERATIONS.

Year ended December 31, 2014 compared to year ended December
31, 2013

RevenueRevenue was $274.6 million in
2014, $74.3 million higher than 2013 due to the acquisition of the Black Fox
mine on March 5, 2014. At San Dimas, the increased gold sales volumes almost
offset the impact of the lower gold price in 2014. The gold price realized was
slightly lower in 2014 at $1,243 per ounce compared to $1,394 per ounce realized
in 2013. During 2014 the gold price ranged from lows of $1,140 per ounce to
highs of $1,385 per ounce. The precious metal lost all of the gains from the
first half of 2014 in the second half of the year as the US dollar strengthened
and there were heavy redemptions in gold bullion exchange traded products. The
US economic recovery has been a key driver impacting the gold price.

7

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Operating expensesOperating expenses
increased by $71.2 million to $159.3 million in 2014, of which $54.4 million was
due to the acquisition of the Black Fox mine. Operating expenses at San Dimas
increased by $16.8 million in 2014 from 2013 due to increased sales volumes,
labour and security costs, as well as consultant costs related to operational
assessments and business improvement initiatives at San Dimas.

Depreciation and depletionDepreciation and depletion was $62.7 million in 2014, an increase of
$26.5 million from 2013, with Black Fox accounting for $17.8 million of the
increase. Depreciation and depletion expense was $44.8 million at San Dimas in
2014, 24% higher than 2013 due mainly to the increase in gold production.

Impairment chargesAn impairment
charge of $99.0 million, related to goodwill recognized on the acquisition of
Brigus, was recorded in 2014. The goodwill was largely due to the additional
consideration paid as a result of the increase in the Companys share price
between announcement and closing of the acquisition. On December 16, 2013,
Primero announced that it was acquiring all of the issued and outstanding shares
of Brigus Gold Inc. under a share exchange deal. At this time, the share price
of the Company was Cdn$5.22. The acquisition was closed on March 5, 2014 at
which point, the Companys share price had risen to Cdn$7.50. In accordance with
IFRS 3, Business Combinations, the closing share price on the date of the
transaction is used to determine the fair value of the purchase price when
valuing the shares issued by the Company. This increase in the share price of
the Company prior to closing the acquisition resulted in additional purchase
consideration for accounting purposes of $85.0 million from that determined in
December 2013.

All of this goodwill was assigned to the Black Fox Complex cash
generating unit (CGU) as it was the only business unit acquired pursuant to
the acquisition.

Since the acquisition date the Company has followed an
extensive valuation process on the Black Fox Complex and review of the Black Fox
mine plan. In the third quarter of 2014, the Company determined that the March
5, 2014 valuation cannot support the carrying value of the goodwill and
accordingly a goodwill impairment charge was recorded in the third quarter 2014
for the full $99.0 million carrying value of the goodwill.

In addition, through the year, production from the Black Fox
open-pit has systematically remained below the average Mineral Reserve grade.
Mining through the year and the reconciliation of the open-pit highlighted that
the high-grade regions of the pit were not as continuous as predicted by the
current block model. As a result, the Company commenced a close spaced reverse
circulation drilling program for the open-pit to incorporate the results in its
2014 year-end Mineral Reserve estimation. Preliminary results have shown a
decrease in minable ounces and a depletion of the pit in 2015. This was a
substantial decrease from what was expected on acquisition and resulted in a
$75.0 million impairment to the Black Fox mining property value.

A decision to delay the construction at Cerro del Gallo and a
change in a number of economic parameters resulted in an impairment to this
development property of $35.0 million.

General and administrative expensesGeneral and administrative expenses were $36.8 million in 2014, compared
with $24.5 million in 2013, detailed as follows:

8

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

| |                                                                                                 |  | Year ended
      Dec 31, | 
| | ----------------------------------------------------------------------------------------------- |  | ------------------------ | 
| |                                                                                                 |  |                          | 
| | (In thousands of U.S. dollars)                                                                  |  | 2014                     | 
| |                                                                                                 |  |                          | 
| | Share-based payment                                                                             |  | 9,342                    | 
| | Salaries and wages                                                                              |  | 13,168                   | 
| | Rent and office costs                                                                           |  | 2,663                    | 
| | Legal, accounting, consulting, and
      other professional fees                                |  | 4,520                    | 
| | Estimated
      costs of Vancouver office closure and relocation of finance function to Toronto |  | 1,777                    | 
| | Other general and administrative expenses                                                       |  | 5,336                    | 
| | Total                                                                                           |  | 36,806                   | 

The $2.9 million increase in share-based payment expense was
due mainly to the impact of a 4% increase in the Companys share price in 2014
versus a 27% decrease in 2013 on the value of units in the Companys
cash-settled PSU plans, which are marked to market each period. The Brigus
acquisition added $1.4 million of general and administrative expenses in 2014,
comprising $0.7 million in salaries and wages and $0.7 million in consulting
fees. The remaining $4.2 million increase in salaries and wages was due mainly
to new positions hired since 2013 as the Company has grown its business. Other
general and administrative expenses increased $1.2 million in 2014, primarily
due to additional public company costs incurred from the Brigus acquisition. The
Company accrued $1.8 million in 2014 for termination and other payments in
connection with the closure of its Vancouver office in early 2015.

Transaction costs and expensesTransaction costs and other expenses were $9.2 million in 2014,
including $7.5 million of transaction costs related to the acquisition of
Brigus, and $0.9 million related to the newly introduced 0.5% Mexico mining
royalty. In 2013, other expenses were $8.6 million, which included $5.5 million
for retroactive payment of social security premiums in Mexico (see Note 9 to the
December 31, 2014 consolidated financial statements).

Foreign exchange gain (loss)The
Company recorded a foreign exchange gain of $2.7 million in 2014 compared with a
foreign exchange loss of $0.8 million in 2013. The gain in 2014 was mainly due
to unrealized foreign exchange gains on translation of the net monetary
liabilities of Primero Gold Canada (the company which holds the Black Fox
Complex) from the Canadian dollar, which depreciated during the period, to the
U.S. dollar (its functional currency).

9

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Finance expenseFinance expense was
$7.0 million in 2014, compared to $0.7 million in 2013, primarily due to $3.7
million of interest paid and accretion on the Brigus 6.5% convertible senior
unsecured debentures, as well as $1.5 million of interest and amortization of
expenses on the line of credit.

Gain on derivative liabilityThe
derivative liability relates to the conversion option on the Brigus 6.5%
convertible senior unsecured debentures. The conversion option is fair valued
each period and as a result of the reduction in the Companys share price from
March 5, 2014 to December 31, 2014, the value of the conversion option
derivative liability decreased by $2.3 million therefore creating a gain in the
statement of operations and comprehensive loss.

Income tax expense

(In thousands of US dollars)
    
    2014
    
    
    2013Current tax expense:Mining royalty at San Dim as
    
    3,003
    
    
    2,064Other current tax
    
    1,750
    
    
    -Deferred tax expense:Withholding tax on intercompany interest
    
    4,445
    
    
    4,750San Dimas change in tax shelter
    
    17,032
    
    
    2,723Mining royalty at San Dimas
    
    (595
    )
    
    35,863Tax recovery on mining interest impairments
    
    (9,001
    )
    
    -Other deferred tax
    
    1,093
    
    
    -Totaltax expense
    
    17,727
    
    
    45,400


San Dimas pays income taxes based on its Mexican peso financial
statements, which includes foreign exchange and other income items (permanent
differences) different than the US dollar reporting financial statements; in
2014 this increased deferred taxes by $18.6 million. In 2014, the Companys
Mexican operations consumed the remaining tax loss carryforwards resulting in
current tax expense of $1.7 million in 2014 compared to nil in 2013. In
addition, San Dimas income taxes are reduced by the tax effect of intercompany
interest expense. The reduction in San Dimas tax shelters reflects the impact of
foreign exchange and inflation on the San Dimas deferred income tax balances.
The volatility of the exchange rate between the Mexican peso and the US dollar
can result in significant adjustments to deferred tax expense. See Note 10 to
the December 31, 2014 consolidated financial statements for a full
reconciliation of annual income taxes at the statutory rate to the income tax
recovery or expense in the statement of operations and comprehensive loss.

10

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Primero Gold Canada Inc. (the company which owns the Black Fox
mine) is not currently taxable and has $150.5 million in Canadian resource tax
pools which do not expire and can be utilized to shelter future income earned
from the Black Fox Complex.

On December 11, 2013, the Mexican government enacted a tax
reform to introduce a mining royalty effective January 1, 2014. This royalty is
deductible for tax purposes and is calculated as 7.5% of a royalty base. The
royalty base being taxable revenues for income tax purposes (except interest and
inflationary adjustment), less allowable deductions for income tax purposes
(except interest, inflationary adjustment, depreciation and mining fees), less
prospecting and exploration expenses of the year.

The Company has taken the position that the royalty is an
income tax as it is based on a measure of revenue less certain specified costs.
On substantial enactment, a taxable temporary difference arose, as mining assets
and financial assets/liabilities had a book basis but no tax basis for purposes
of the royalty. The Company has recognized a net deferred tax liability of $32.6
million as at December 31, 2014 in respect of this royalty. This deferred tax
liability will be drawn down to $nil as a reduction to tax expense over the life
of mine as the mine and its related assets are depleted/depreciated. In 2014,
the liability was reduced by $3.3 million.

11

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

REVIEW OF OPERATIONSSan Dimas mine

|                                             |   | Year ended |  |   | Three months ended | 
|-------------------------------------------- | - | ---------- |  | - | ------------------ | 
|                                             |   | 31-Dec-14  |  |   | 31-Dec-13          | 
|Key Performance Data                         |   |            |  |   |                    | 
|Tonnes of ore mined                          |   | 897,445    |  |   | 792,239            | 
|Tonnes of ore milled                         |   | 898,915    |  |   | 766,930            | 
|Average millhead grade (grams/tonne)         |   |            |  |   |                    | 
|Gold                                         |   | 4.63       |  |   | 4.67               | 
|Silver                                       |   | 232        |  |   | 258                | 
|Average recovery rate(% )                    |   |            |  |   |                    | 
|Gold                                         |   | 94%        |  |   | 97%                | 
|Silver                                       |   | 92%        |  |   | 95%                | 
|Produced                                     |   |            |  |   |                    | 
|Gold equivalent (ounces)                     |   | 161,170    |  |   | 143,114            | 
|Gold (ounces)                                |   | 126,059    |  |   | 111,983            | 
|Silver (million ounces)                      |   | 6.15       |  |   | 6.05               | 
|Sold                                         |   |            |  |   |                    | 
|Gold equivalent (ounces)                     |   | 157,063    |  |   | 143,972            | 
|Gold (ounces)                                |   | 122,282    |  |   | 112,846            | 
|Silver at fixed price (million
      ounces) |   | 4.70       |  |   | 5.17               | 
|Silver at spot (million ounces)              |   | 1.24       |  |   | 1.00               | 
|Average realized
      price (per ounce)     |   |            |  |   |                    | 
|Gold                                         | $ | 1,265      |  | $ | 1,394              | 
|Silver                                       | $ | 7.46       |  | $ | 6.97               | 
|Total cash costs (per gold ounce)            |   |            |  |   |                    | 
|Gold equivalent basis                        | $ | 628        |  | $ | 599                | 
|By-product basis                             | $ | 448        |  | $ | 389                | 
|All-in sustaining
      costs(perounce)2     | $ | 826        |  | $ | 858                | 
|Revenue($000's)                              | $ | 198,864    |  | $ | 200,326            | 
|Earnings from mine operations ($000's)       | $ | 49,195     |  | $ | 76,004             | 

|1 | For the purposes of calculating all-in sustaining costs
      at individual mine sites, the Company does not include corporate general
      and administrative expenses.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                          
|2 | Average realized silver prices reflect the impact of the
      silver purchase agreement with Silver Wheaton Caymans (see Other
      liquidity considerations).       

12

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

The San Dimas mine produced 126,059 ounces of gold and 6.15
million ounces of silver in 2014, 13% higher and 2% higher, respectively, than
2013. The increase in production was due mainly to higher tonnes of ore milled,
offset by slightly lower grades and recoveries. The gold and silver recoveries
were negatively impacted with the increase in mill tonnage from the 2,500 TPD
expansion. The two leach tanks and a thickener, which were commissioned in the
second quarter, resulted in recoveries improving towards the latter part of the
year. Throughput was higher in 2014 because of the completion of the expansion
of the mill to 2,500 TPD in the first quarter of 2014. Average throughput in
2014 increased by approximately 17% over 2013, averaging 2,463 TPD (based on 365
day availability). The expansion of the mill combined with an increase in
long-hole mining allowed the San Dimas mine and mill to operate more
efficiently. The optimization program at San Dimas was also successful at
further improving mining dilution and reducing process inefficiencies.

Total cash costs on a gold equivalent and by-product basis in
2014 were $628 and $448 per ounce, respectively, compared with $599 and $389 per
ounce, respectively, in 2013. The higher cash costs per ounce was due to a 19%
increase in operating costs compared to a 13% increase in gold equivalent ounces
produced. Most of the increases in operating costs related to labour and
contractors. Labour costs increased due to an increase in pay rates and
headcount and social security payments. Contractor costs increased due mainly to
expanding the contracted security force and higher contract mining and haulage
fees.

The Company incurred all-in sustaining costs per gold ounce for
the San Dimas mine of $826 in 2014, compared with $858 per gold ounce in 2013
due to lower sustaining capital expenditures, partially offset by increased cash
costs, as explained above.

13

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Black Fox mine

In 2014, the Company owned the mine for from March 5, 2014 to
December 31, 2014.

For the
      period
    
    
    Three months ended
    
    
    For the
      periodMarch
      5, 2014 -
    
    
    
    
    
    
    
    
    
    
    
    March
      5, 2014 -**December 31, 2014**
    
    
    31-Dec-14
    
    
    30-Sep-14
    
    
    30-Jun-14
    
    
    March 31, 2014Key Performance DataOpen pit miningTonnes of ore mined
    
    764,234
    
    
    228,798
    
    
    232,985
    
    
    247,029
    
    
    55,422Strip ratio
    
    7.55
    
    
    10.00
    
    
    6.78
    
    
    8.10
    
    
    12.66Average grade (gram s/tonne)Gold
    
    2.13
    
    
    1.91
    
    
    2.61
    
    
    1.85
    
    
    2.17Underground miningTonnes of ore mined
    
    122,434
    
    
    51,719
    
    
    20,880
    
    
    41,739
    
    
    8,096Average grade (gram s/tonne)Gold
    
    4.15
    
    
    5.92
    
    
    5.78
    
    
    4.33
    
    
    5.65Open pit and undergroundTonnes of ore milled
    
    694,090
    
    
    221,063
    
    
    223,083
    
    
    209,948
    
    
    39,996Average millhead grade (gram
      s/tonne)
    
    3.00
    
    
    3.00
    
    
    3.24
    
    
    2.69
    
    
    3.36Average recovery rate(% )Gold
    
    95%
    
    
    96%
    
    
    96%
    
    
    95%
    
    
    95%ProducedGold (ounces)
    
    63,884
    
    
    20,334
    
    
    22,288
    
    
    17,166
    
    
    4,096SoldGold
      at spot price (ounces)
    
    58,651
    
    
    19,491
    
    
    18,432
    
    
    15,720
    
    
    5,008Gold at fixed
      price (ounces)
    
    4,353
    
    
    1,148
    
    
    1,556
    
    
    1,334
    
    
    315Average realized
      price (per ounce)Gold
    $
    1,202
    
    $
    1,157
    
    $
    1,212
    
    $
    1,224
    
    $
    1,272Total cash costs (per gold
      ounce)1
    $
    837
    
    $
    799
    
    $
    688
    
    $
    998
    
    $
    1,154All-in sustaining
      costs (per ounce)2
    $
    1,428
    
    $
    1,374
    
    $
    1,202
    
    $
    1,771
    
    $
    1,480Revenue($000's)
    $
    75,748
    
    $
    23,882
    
    $
    24,230
    
    $
    20,866
    
    $
    6,770Earnings from mine operations($000's)
    $
    3,468
    
    $
    12,060
    
    
    -$4,415
    
    
    -$674
    
    
    -$3,503


|1 | For the purposes of calculating all-in sustaining costs
      at individual mine sites, the Company does not include corporate general
      and administrative expenses.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                          
|2 | Average realized gold prices reflect the impact of the
      gold purchase agreement with Sandstorm (see Other liquidity
      considerations).                        

14

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

The Company acquired the Black Fox Complex in March 2014.
Immediately following the acquisition, an optimization plan was outlined for
Black Fox that included increasing investment in exploration, development and
underground mining equipment. The objective was to increase throughput from the
higher grade underground mine to ultimately replace tonnage from the lower grade
open-pit.

Delineation and definition drilling results through the year
support the Company's plan of ultimately conducting an underground mining
program at Black Fox using a bulk mining method, namely; long hole stoping.
While the Company remains confident that it will be able to increase underground
throughput at Black Fox by adding additional long-hole stopes, it modified its
original short term mine plan in order to build long-hole stope inventory
throughout the remainder of 2014 and early 2015.

In the third quarter, the Company also initiated a technical
review of the Black Fox short term mine plan as part of its ongoing optimization
of the operation. The technical review included an open-pit and underground mine
reconciliation and review of the short-term mine plan to ensure it was aligned
with the Mineral Reserve and Mineral Resource estimation released in July
2014.

Production from the Black Fox open-pit has consistently
remained below the average Mineral Reserve grade. Mining through the year and
the reconciliation of the Black Fox open-pit highlighted that the high-grade
regions of the pit were not as continuous as predicted by the current block
model. As a result, the Company commenced a close spaced reverse circulation
drilling program for the open-pit to incorporate the results in its 2014
year-end Mineral Reserve estimation. Preliminary results have shown a decrease
in minable ounces and a depletion of the pit in 2015. This was a substantial
decrease from what was expected on acquisition and as a result, a $75 million
impairment charge was recorded in 2014 to reduce the value of the Black Fox
Complex.

In comparison to production rates in the first quarter, the
Company was successful in increasing production through the year resulting in
2014 production, from the March 5, 2014 acquisition date, of 63,884 ounces of
gold. The Black Fox mill operated at approximately 2,300 TPD in 2014, with over
70% of the ore coming from the open pit and only 30% coming from the
underground.

During 2014, the Company sold 4,353 ounces of gold under a gold
purchase agreement to Sandstorm Gold Inc. (Sandstorm) at an average price of
$509 per ounce, and 58,651 ounces of gold at an average spot price of $1,254,
resulting in an overall average price for all gold sales from the Black Fox mine
of $1,202. Total cash costs per gold ounce and all-in sustaining costs per gold
ounce were $837 and $1,428 respectively, for the period of ownership of the
Black Fox mine by the Company in 2014, in line with the Companys
expectations.

15

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

OUTLOOK FOR2015OPERATING RESULTS

In 2015 the Company expects to increase production to between
250,000 and 270,000 gold equivalent ounces, up to 20% higher than 2014, due to
increased production from both San Dimas and Black Fox.

Cash costs for 2015 are expected to be in the range of $650 to
$700 per gold equivalent ounce, or between $1,000 and $1,100 per ounce on an
all-in sustaining cost basis. Total capital expenditures during 2015 are
expected to be approximately $66.7 million excluding capitalized exploration
costs of $18.6 million (further details on 2015 capital expenditures are shown
under financial condition review later in the document).

The Company's 2015 production outlook is summarized in the
following table, with a comparison to 2014 actual results:

Black Fox
    San Dimas
    Estimated 2015
    Actual 2014Attributable gold equivalent
      production (gold equivalent ounces)
    75,000-85,000
    175,000-185,000
    250,000-270,000
    225,054Gold Production (ounces)
    75,000-85,000
    145,000-155,000
    220,000-240,000
    189,943Silver Production (million ounces)
    N/A
    6.5-7.5
    6.5-7.5
    6.15Total cash costs (per gold
      equivalent ounce)
    $820-$870
    $590-$640
    $650-$700
    $687All-in Sustaining Costs (per gold
      ounce)
    $1,075-$1,125
    $840-$890
    $1,000-$1,100
    $1,222


Material assumptions used to forecast total cash costs for 2015
include: an average gold price of $1,200 per ounce; an average silver price of
$5.21 per ounce (calculated using the silver purchase agreement contract price
of $4.20 per ounce and assuming excess silver beyond contract requirements is
sold at an average silver price of $18 per ounce); and foreign exchange rates of
1.10 Canadian dollars and 13 Mexican pesos to the US dollar.

The Companys 2015 outlook for revenues and operating expenses
are directly correlated to our production outlook and cash cost outlook with the
assumption that production will match sales quantities. Depreciation and
depletion should increase relative to 2014 depreciation and depletion and the
expected increase in production.

At San Dimas, production is expected to increase in 2015 based
on higher throughput and higher grades. Mined grades at San Dimas are expected
to increase in 2015 as the Company begins to access the higher-grade ore of the
Victoria vein and moves toward mining at its current gold reserve grade of 5.5
grams per tonne.

The first phase of the expansion of the San Dimas mine was
completed in the first quarter of 2014 and it is now operating at beyond its
nameplate capacity of 2,500 TPD. In the fourth quarter of 2014 the mill operated
at in excess of 2,750 TPD giving management confidence that the expansion to
3,000 TPD could be completed earlier than the originally anticipated mid-2016.
The Company's project development team has commenced procurement of the major
equipment required for the expansion to 3,000 TPD.

16

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

At the Black Fox mine, production is expected to increase
slightly in 2015 based on a higher proportion of higher grade underground ore.
The Company will continue producing predominantly from the open-pit until
mid-2015 when production from the underground is expected to increase to
approximately 1,000 TPD. The open-pit is expected to be depleted by September
2015. At this time, the 30,000 ounce stockpile has not been included in the 2015
mine plan.

For the first half of 2015, Black Fox will remain focused on
increasing its inventory of long-hole stopes in the west, central and east
regions of the underground mine. Primero has also implemented a mining
optimization program similar to the one implemented at San Dimas in 2012. This
program is focused on reducing costs and increasing productivity by improving
fleet utilization, overall equipment efficiencies and labour productivity.

The Company will focus on cost reductions at all its sites and
corporately has taken the decision to close its Vancouver and Mexico City
offices. With other cost saving initiatives, it is expected that general and
administrative expenses should decline in 2015 compared to 2014, but this will
depend on the Companys share price and its impact on share based compensation
expenses.

Finance expenses are expected to increase from 2014 as they
will include the expenses relating to the 5.75% convertible unsecured
subordinated debentures. The accounting treatment for these debentures should
result in about $8 million of finance expense annually, of which about $4
million is cash based.

Income tax expenses are mainly attributable to income from the
San Dimas mine. Income taxes are based on 30% of San Dimas net income before
tax but the impacts of foreign exchange can have significant impacts on the
amounts. In addition, San Dimas pays a mining royalty tax and accrues for
withholding tax on intercompany interest.

17

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

REVIEWOFDEVELOPMENTANDEXPLORATIONPROJECTS

CERRO DELGALLO

The Cerro del Gallo project is located on the San Antón
property in the state of Guanajuato in central Mexico, approximately 270
kilometres northwest of Mexico City. The San Antn property fully incorporates
the San Antn de las Minas mining district, centered 23 kilometres east/northeast
of Guanajuato city and the historic Guanajuato Mining District where production
from 1700 to 2004 is reported to be 1.14 billion ounces of silver and 6.5
million ounces of gold. The project was acquired by Primero in May 2013.

Mineral Resources

Cerro del Gallo is an attractive long-life project with
approximately 1.2 million ounces of gold equivalent proven and probable mineral
reserves (with an averge grade of 1.14 grams per tonne gold equivalent) and 1.6
million ounces of gold equivalent measured and indicated mineral resources (with
an average grade of 1.06 grams per tonne gold equivalent) (mineral resources for
Cerro del Gallo are presented exclusive of reserves). The 2012 definitive
feasibility study predicts the project could contribute 95,000 gold equivalent
(silver and copper as by-products) ounces per year. Timing for construction has
been delayed for better market conditions but the Company remains optimistic
about the project and will continue with certain initiatives to keep the
property in good standing so as not to delay the project once the economics
improve.

Development program

The exploration activities at the San Antn property have
consisted of drilling and several sampling programs and the majority of the
exploration work has focused on the Cerro del Gallo deposit. Drilling activity
by previous owners of the property ceased in 2008. Primero resumed the
exploration program in 2013, when approximately $2 million was spent on
geophysical compilation and diamond drilling. In 2013, 15,179 metres were
drilled, including infill, condemnation and regional exploration drilling, as
well as geotechnical drilling for metallurgical and geochemical tests. The
infill drilling program was designed to convert inferred resources into
indicated resources in the central part of the Cerro del Gallo mineralized zone.
The condemnation drilling program was designed to sterilize areas for future
infrastructure, including the waste dumps and leach pads.

The exploration program covering the Cerro del Gallo deposit
and regional epithermal mineralized veins continued at a modest level in 2014.
Further work on optimization of Cerro del Gallo also continued in 2014 with the
near completion of land acquisition, start of process water drilling, continued
work on pre-construction permitting, basic design of the plant and
infrastructure, update of the capital cost estimate, and further metallurgical
testing to improve managements confidence in the metallurgy. The Company spent
$7.4 million on these activities in 2014.

Due to the decision to delay the construction at Cerro del
Gallo and a change in a number of economic parameters an impairment to this
development property of $35.0 million was recorded in 2014.

18

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

GREY FOX ANDPIKERIVER

The Grey Fox property is located four kilometres south-east of
the Black Fox mine and the Pike River property lies between the Black Fox mine
and the Grey Fox gold deposit. Apart from the Black Fox mine deposit
mineralization, the majority of known gold mineralization defined to date at the
Black Fox Complex occurs within the three zones (the Contact Zone, Zone 147 and
Grey Fox South Zone) on the Grey Fox-Pike River properties. The Company's 2014
exploration program included extensive exploration and delineation drilling at
Grey Fox, of which approximately 70,000 metres have been drilled in 2014. Drill
results at the Contact Zone show continuation of the identified hanging wall
zone as drilling is extended to the north and east. The Company also obtained
encouraging drill results in the Grey Fox South zone as they indicate the zone
is wider than previously anticipated with more consistent grade than in earlier
drilling results. The Company raised Cdn$9 million in March 2014 and Cdn$8
million in December 2014 in flow-through financings, in order to carry out its
exploration program at the Grey Fox, Pike River and the Stock Mill properties.
All of the March 2014 financing was spent by December 31, 2014 and the Company
expects to spend all of the December 2014 financing in 2015.

In 2015, the Company plans to drill another 50,000 metres as
part of its exploration program to expand resources for the property. In
addition, an economic assessment is underway and if positive the Company will
proceed with a feasibility study.

VENTANAS

Primero has one exploration property in Mexico  Ventanas,
located in Durango State, approximately 32 kilometres from the San Dimas mine.
The Company re-initiated exploration of the Ventanas property in 2013 (after
last having explored it in 2008) with systematic channel sampling and mapping.
Almost 9,100 metres of drilling took place on the Ventanas property in 2014 at a
cost of $1.7 million.

19

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

FINANCIALCONDITIONREVIEW

A key financial objective is to make sure the Company has
access to funds to achieve its medium term (three year) objectives. The
Companys strategy is to make sure liquidity is available to finance exploration
and development requirements at its mining operations and growth projects as
well as repay financial obligations. The Company manages its liquidity by
ensuring that, even in a low gold price environment, its operations can manage
spending and provide adequate cash flow.

The net assets of the Company are as follows:

|                                                   |  | As at December 31, |  |  | As at December 31, | 
|-------------------------------------------------- |  | ------------------ |  |  | ------------------ | 
|($000'sexceptratiosand share amounts)              |  | 2014               |  |  | 2013               | 
|Cash
      and cash equivalents                    |  | 27,389             |  |  | 110,711            | 
|Other current assets                               |  | 60,330             |  |  | 34,918             | 
|Non-current assets                                 |  | 915,101            |  |  | 655,193            | 
|Total assets                                       |  | 1,002,820          |  |  | 800,822            | 
|                                                   |  |                    |  |  |                    | 
|Current liabilities (excluding short-term debt)    |  | 59,006             |  |  | 40,693             | 
|Non-current liabilities (excluding long-term debt) |  | 100,442            |  |  | 71,825             | 
|Debt                                               |  | 95,387             |  |  | 27,214             | 
|Total liabilities                                  |  | 254,835            |  |  | 139,732            | 
|                                                   |  |                    |  |  |                    | 
|Total shareholders' equity                         |  | 747,985            |  |  | 661,090            | 
|Total equity                                       |  | 747,985            |  |  | 661,090            | 
|                                                   |  |                    |  |  |                    | 
|Total common shares outstanding                    |  | 161,555,875        |  |  | 115,726,035        | 
|Total options outstanding                          |  | 9,254,224          |  |  | 7,963,990          | 
|Total warrants outstanding                         |  | 20,800,000         |  |  | 20,800,000         | 
|                                                   |  |                    |  |  |                    | 
|Key financial ratios                               |  |                    |  |  |                    | 
|Current ratio                                      |  | 1.36               |  |  | 3.19               | 
|Total liabilities-to-equity                        |  | 0.34               |  |  | 0.21               | 
|Debt-total capitalization                          |  | 0.11               |  |  | 0.04               | 

The Companys net assets (equity) as at December 31, 2014 were
$748.0 million compared to $661.1 million as at December 31, 2013. The
acquisition of Brigus in Q1 2014 added $301.6 million to the net assets but
impairments in Q3 and Q4 2014 reduced the net assets by $209.0 million (see
Impairment charges above). The increases to the Companys non-current assets
and current and non-current liabilities (excluding debt) are also a result of
the Brigus acquisition. Other current assets have increased partially due to the
Brigus acquisition but also because of a $14.0 million increase in value added
tax (VAT) receivable in Mexico.VAT has historically been refunded on a
monthly basis, 4 months in arrears, and is currently 10 months outstanding. The
Company has started receiving refunds and it is expected the refunds will arrive
on a more regular basis in 2015, but it is dependent on the Mexican tax
authorities making payment. As at December 31, 2014, the Company was owed $26.1
million for VAT in Mexico, compared with $10.1 million at December 31, 2013.

20

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Cash and cash equivalents

Analysis of cash flows for year ended December 31, 2014 and
2013

|                                              |   | Year ended         |  
|--------------------------------------------- | - | ------------------ | -
|(In thousands of U S dollars)                 |   | December
      31, |  
|                                              |   | 2014               |  
|Cash Flow:                                    | $ |                    |  
|Provided by operating activities              |   | 44,212             |  
|Used in investing activities                  |   | (119,981           | )
|(Used in) provided by financing activities    |   | (1,239             | )
|Effect of exchange rate changes on
      cash |   | (6,314             | )
|Decrease in cash                              |   | (83,322            | )
|Cash, beginning of period                     |   | 110,711            |  
|Cash, end of period                           |   | 27,389             |  

Cash provided by operating activitiesPrimero generated $44.2 million of cash flows from operating activities
in 2014, compared with $69.8 million in 2013. Cash flows from mine operations
were consistent year-on-year resulting in operating cash flow before working
capital changes of $73.7 million in 2014, compared with $72.4 million in 2013.
Changes in non-cash working capital were a cash outflow of $29.4 million in
2014, compared with an outflow of $2.6 million in 2013 due mainly to a $14.4
million increase in taxes receivable and a $6.7 million reduction in trade and
other payables; trade and other receivables and inventories were also outflows
of cash during the year.

Cash used in investing activitiesThe
Company used $120.0 million cash in investing activities in 2014, compared with
$83.8 million in 2013. Capital expenditures were $112.3 million in 2014 compared
to $71.5 million in 2013, the details of which are shown in the table below. The
Company had an extensive capital expenditure and exploration program at the
Black Fox Complex in 2014, designed to compensate for a lack of investment in
prior years spending $46.8 million. The Company also used $7.8 million of cash
for the Brigus acquisition in 2014 and $12.6 million of cash for the acquisition
of Cerro and investment in Santana Minerals in 2013.

21

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

|Capital Expenditures                                           |   | Actual 2013  |  |   | Actual 2014   |  |   | Estimated 2015 | 
|-------------------------------------------------------------- | - | ------------ |  | - | ------------- |  | - | -------------- | 
|San Dimas Underground                                          |   |              |  |   |               |  |   |                | 
|                                                               | $ | 14.3 million |  | $ | 20.0  million |  | $ | 15.2  million  | 
|Development                                                    |   |              |  |   |               |  |   |                | 
|San Dimas Sustaining                                           |   |              |  |   |               |  |   |                | 
|                                                               | $ | 16.5 million |  | $ | 14.4  million |  | $ | 10.8  million  | 
|Capital                                                        |   |              |  |   |               |  |   |                | 
|San Dimas Projects                                             | $ | 21.0 million |  | $ | 11.8  million |  | $ | 15.4  million  | 
|San Dimas Sub Total                                            | $ | 51.8 million |  | $ | 46.2 million  |  | $ | 41.4 million   | 
|Black Fox Underground
      Development                        |   | -            |  | $ | 7.8 million   |  | $ | 13.4 million   | 
|Black Fox open pit
      Capitalized development and stripping |   | -            |  | $ | 7.9  million  |  |   | -              | 
|Black Fox Sustaining
      Capital                             |   | -            |  | $ | 4.5  million  |  | $ | 4.5 million    | 
|Black Fox Projects                                             |   | -            |  | $ | 6.5  million  |  | $ | 3.4 million    | 
|Grey Fox Development Studies                                   |   | -            |  | $ | 0.2  million  |  | $ | 1.3 million    | 
|Black Fox Sub Total                                            |   | -            |  | $ | 26.9 million  |  | $ | 22.6 million   | 
|Cerro del Gallo Development                                    | $ | 9.4  million |  | $ | 7.4  million  |  | $ | 2.7 million    | 
|Total                                                          | $ | 61.2 million |  | $ | 80.5 million  |  | $ | 66.7 million   | 



|Capitalized Exploration Expenditures             |   | Actual 2013  |  |   | Actual 2014   |  |   | Estimated 2015 | 
|------------------------------------------------ | - | ------------ |  | - | ------------- |  | - | -------------- | 
|San Dimas Diamond Drilling                       | $ | 6.8 million  |  | $ | 5.8 million   |  | $ | 3.1million     | 
|San Dimas Drifting                               | $ | 3.9 million  |  | $ | 4.2 million   |  | $ | 1.9 million    | 
|San Dimas Regional Diamond Drilling              | $ | 3.9 million  |  | $ | 2.7 million   |  | $ | 0.9 million    | 
|San Dim as Sub Total                             | $ | 14.6 million |  | $ | 12.7 million  |  | $ | 5.9 million    | 
|Black Fox                                        |   | -            |  | $ | 9.6 million   |  | $ | 5.0 million    | 
|Diamond Drilling Grey Fox & Regional Exploration |   | -            |  | $ | 8.7 million   |  | $ | 7.3 million    | 
|Black Fox Complex Sub Total                      |   | -            |  | $ | 18.3 million  |  | $ | 12.3 million   | 
|Cerro del Gallo Geology Mapping                  | $ | 2.5 million  |  | $ | 1.5 million   |  | $ | 0.4 million    | 
|Total                                            | $ | 17.1million  |  | $ | 32.5 million  |  | $ | 18.6 million   | 
|TOTAL CAPITAL                                    | $ | 78.3 million |  | $ | 113.0 million |  | $ | 85.3 million   | 

Total capital expenditures in the table above varies slightly
from the Expenditures on mining interestsunder investing activities in
the Statement of cash flows due to non-cash items.

22

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

In 2015 the Company has prioritized its expenditures and plans
to reduce exploration across its assets. Inline with the Company's focus on
maximizing cash flow its total capital expenditures for 2015 are expected to
decline to approximately $66.7 million, excluding capitalized exploration costs.
Exploration spending for 2015 is focused on delineation drilling, but the
program may get expanded depending on Company cash flows through the first half
of 2015.

Cash provided by (used in) financing
activities

|(In thousands of US dollars)                               |   | 2014    |   |   | 2013    |  
|---------------------------------------------------------- | - | ------- | - | - | ------- | -
|                                                           | $ |         |   | $ |         |  
|Repayment of
      debt                                    |   | (58,896 | ) |   | (12,786 | )
|Proceeds on exercise of options
      and warrants         |   | 9,944   |   |   | 1,916   |  
|Proceeds on
      issuance off low-through shares (net)    |   | 14,633  |   |   | -       |  
|Interest paid                                              |   | (4,390  | ) |   | (2,057  | )
|Drawdown of line of credit, net of
      transaction costs |   | 37,470  |   |   | -       |  
|Cash
      used in financing activities                    |   | (1,239  | ) |   | (12,927 | )

The Company repaid $58.9 million of debt in 2014, as follows:

| |  | the Company was required to make change of control offers
      for Brigus Cdn$24 million senior secured notes and $50 million unsecured
      convertible debentures at 105% and 100%, respectively, of outstanding
      principal plus accrued interest. The note holders accepted the Companys
      offer and on April 3, 2014 the Company paid Cdn$23.1 million to them (a
      scheduled principal and interest payment of Cdn$2.2 million was made on
      March 31, 2014). Investors holding $1.9 million of the debentures accepted
      the Companys offer, and these debentures were repaid on May 16, 2014
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $27.2 million promissory note with Goldcorp Inc.
      (Goldcorp)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | $6.6 million in finance leases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

In 2013, the Company repaid the third $5 million instalment
under the Goldcorp promissory note and $2.1 million of interest thereon, as well
as a $7.8 million excess free cash flow payment relating to the same promissory
note.

In 2014, the Company drew down $37.5 million (net of
transaction costs) on the line of credit to partially fund the debt
repayments.

The Company received $14.6 million (net of transaction costs)
from the proceeds of two flow-through financings in 2014 to fund exploration
costs at the Grey Fox and Pike River properties. In addition, the Company
received $9.9 million in 2014 related to the exercise of stock options and
warrants as compared to $1.9 million in 2013.

23

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Debt

|(In thousands of US dollars)            |   | 2014   |   |   | 2013   |  
|--------------------------------------- | - | ------ | - | - | ------ | -
|                                        | $ |        |   | $ |        |  
|Promissory note                         |   | -      |   |   | 27,214 |  
|Senior unsecured convertible debentures |   | 46,315 |   |   | -      |  
|Line of credit                          |   | 37,827 |   |   | -      |  
|Finance lease liabilities               |   | 11,245 |   |   | -      |  
|                                        |   | 95,387 |   |   | 27,214 |  
|Less: Current portion of debt           |   | (5,616 | ) |   | (5,000 | )
|Long-term debt                          |   | 89,771 |   |   | 22,214 |  

Upon the acquisition of Brigus, Primero assumed $50 million of
convertible senior unsecured debentures and made a change of control offer to
purchase the debentures at 100% of their principal balance. $1.9 million were
redeemed. The remaining $48.1 million debentures bear interest at a rate of 6.5%
per annum, payable semi-annually on March 31 and September 30, are convertible
by the holders into common shares of the Company at any time at a conversion
price of Cdn$14.00 per common share and mature on March 31, 2016. The debentures
allow for forced conversion by the Company if the market price of the Companys
shares is at least 125% of the conversion price. On September 29, 2014, the
Company paid $1.6 million of accrued interest relating to the convertible
debentures (interest is payable semi-annually in March and September).

On May 23, 2014, the Company closed a 3-year $75.0 million
revolving line of credit. The line of credit has a three-year term and bears
interest at a floating interest rate equal to LIBOR or the the prime rate of
Canada or the bankers acceptance rate (depending on the choice of credit
availment by the Company) plus an applicable margin, which was approximately
4.75% per annum during the year ended December 31, 2014. The line of credit is
secured by substantially all of the Companys assets. In order to provide the
required security to the lenders, coincident with the closing, the Company paid
out the $27.2 million promissory note outstanding to a subsidiary of Goldcorp,
by drawing down $30.0 million of the line of credit. In addition, $10.0 million
was drawn down on the line of credit in Q4 2014, leaving an undrawn balance of
$35.0 million as at December 31, 2014.

On February 9, 2015, the Company issued $75.0 million in 5.75%
convertible unsecured subordinated debentures maturing on February 28, 2020.
Interest is payable semi-annually on February 28 and August 28. The Company
plans to repay its line of credit and use the remaining proceeds as required for
capital at San Dimas and Black Fox.

Off-Balance Sheet Arrangements

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

24

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Shareholders equity

Shares issuedDuring the year ended
December 31, 2014, the Company issued 41,340,347 common shares as consideration
for the acquisition of Brigus; 1,921,744 common shares upon the exercise of
stock options; 2,481,482 common shares pursuant to two flow-through agreements
and 4,790 shares upon the exercise of warrants.

Outstanding Share DataAs at December
31, 2014, the Company had 161,555,875 common shares outstanding (115,726,035 as
at December 31, 2013). As at the date of this MD&A, the Company had
161,555,875 common shares outstanding.

OptionsAs at December 31, 2014, the
Company had 9,254,224 options outstanding with a weighted average exercise price
of Cdn$6.17; of these 8,367,819 were exercisable at a weighted average exercise
price of $6.12. As at the date of this MD&A, the total number of options
outstanding was 9,254,224, of which 8,367,819 are exercisable.

Common Share Purchase WarrantsAs at
December 31, 2014, December 31, 2013 and the date of this MD&A, the Company
had 20.8 million warrants outstanding which were exercisable to purchase 20.8
million common shares at a price of Cdn$8.00 until July 20, 2015.

PSUs exercisable into sharesAs at
December 31, 2014 and the date of this MD&A, the Company had 186,063
Directors PSUs outstanding, which vest and expire between December 1, 2015, and
December 31, 2016. A director 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, (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), or (3) a combination of cash and
shares. If no election is made, the Company will pay out such Directors PSUs in
cash.

As at December 31, 2014 and the date of this MD&A, the
Company had 1,152,464 PSUs outstanding under the 2013 PSU Plan (2013 PSUs),
which vest and expire between February 18, 2015, and December 31, 2017. 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.

25

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Commitments and contingencies

The following table summarizes the contractual maturities of
the Companys financial liabilities and operating and capital commitments as at
December 31, 2014:

December 31December 31,2014
    
    
    
    
    
    2013Within
    
    
    
    
    
    Over1 year
    
    
    2-5 years
    
    
    5 years
    
    
    Total
    
    
    Total$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Trade and other payables and
      accrued liabilities
    
    44,178
    
    
    -
    
    
    -
    
    
    44,178
    
    
    33,958Share based payments
    
    3,718
    
    
    696
    
    
    -
    
    
    4,414
    
    
    8,144Promissory note and interest
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    30,262Convertible debentures and interest
    
    3,128
    
    
    49,684
    
    
    -
    
    
    52,812
    
    
    -Line of credit and interest
    
    1,169
    
    
    41,520
    
    
    -
    
    
    42,689
    
    
    -Finance lease payments
    
    5,616
    
    
    5,629
    
    
    -
    
    
    11,245
    
    
    -Minimum rental and operating
      lease payments
    
    3,859
    
    
    4,080
    
    
    -
    
    
    7,939
    
    
    4,799Reclamation and closure cost obligations
    
    -
    
    
    12,511
    
    
    44,683
    
    
    57,194
    
    
    31,347Commitment to purchase plant and equipment
    
    886
    
    
    -
    
    
    -
    
    
    886
    
    
    6,06262,554
    
    
    114,120
    
    
    44,683
    
    
    221,357
    
    
    114,572


The Company expects to discharge its commitments as they come
due from its existing cash balances, cash flow from operations, collection of
receivables, and credit facilities.

Other liquidity considerations

San Dimas

In 2004, the then 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 Ltd. (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 in 2010. The amendments provided
that for each of the first four years after the acquisition date (i.e., 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.

26

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Black Fox Complex

On November 9, 2010, Brigus entered into an gold purchase
agreement with Sandstorm to sell a portion of future gold production from the
Black Fox mine and the adjoining Pike River property (the Black Fox Extension)
for an upfront cash payment of $56.3 million and ongoing per ounce payments of
the lesser of $500 per ounce of gold (subject to an inflationary adjustment
beginning in 2013, not to exceed 2% per year) and market prices. On November 5,
2012, Brigus elected to repurchase a portion of the stream by paying $24.4
million to Sandstorm, which resulted in Sandstorm being entitled to 8% of the
future production at the Black Fox mine and 6.3% at the Black Fox Extension. The
Company was required to assume the gold purchase agreement when it acquired
Brigus in March 2014.

Cerro del Gallo

The Company has potential future financial commitments related
to its acquisition in December 2013 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 after achieving commercial production on the
      phase I heap leach operation (the First Contingent Payment);                                                                                                                                                                                                                     
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $5 million if the date of the First Contingent Payment
      occurs before December 19, 2018 and the gold price averages $1,500 or more
      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
      (the Second Contingent Payment);  
| |  | $14 million on announcement of a decision by Primero to
      construct a carbon-in-leach mill for Phase II (the Third Contingent
      Payment),                                                                                                                                                                                              
| |  | $5 million if the date of the Second Contingent Payment
      occurs before December 19, 2018 and the gold price averages $1,500 or more
      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).

The Company has decided not to construct the phase 1 heap leach
project for Cerro del Gallo in 2015. The timing of construction will depend on
market conditions and project returns. The estimated capital cost for phase 1 of
this project is over $165 million and construction would take approximately 18
months. Once completed, Cerro del Gallo is expected to produce approximately
95,000 gold equivalent ounces on an annual basis.

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 were 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
revenue from gold, silver and platinum. In addition, the long term corporate tax
rate remains at 30% rather than reducing 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 royalty
payable for 2014 is $3.0 million.

27

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

APA Ruling

On October 4, 2012, the Company received a ruling (the APA
Ruling) from the Mexican tax authorities which confirmed the appropriate price
for sales of silver under the Amended and Restated Silver Purchase Agreement and
the silver pricing for purposes of its 2010 and 2011 income tax returns. Under
Mexican tax law, an APA Ruling is generally applicable for up to a five year
period (the year in which the ruling application is filed, the immediately
preceding year and the three subsequent years) and the Companys APA Ruling
covered the five years ending December 31, 2014. The Company has until the end
of 2016 to file a new APA Ruling application in respect of 2015. In 2015 silver
is expected to continue to be sold under the Amended and Restated Silver
Purchase Agreement on the same terms and there are no known changes in the
application of Mexican tax laws relative to the APA Ruling, so the Company
expects to record revenues and pay taxes based 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 applicable authorities
will issue a renewal or similar ruling or that the authorities will assess the
Companys taxes on the basis of its realized prices for silver. To the extent
the Mexican tax authorities determine that the appropriate price of silver sales
under the Amended and Restated Silver Purchase Agreement is different than the
realized price, it could have a material adverse effect on our results of
operations, financial condition and cash flows.

Dividend Report and Policy

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

Capital management

Key financial ratios the Company uses to assess new growth
opportunities and to determine how much debt the Company can take on are shown
in the table above. The Companys vision is to manage financial risk by
maintaining a conservative balance sheet. Liquidity at December 31, 2014
included cash and cash equivalents of $27.4 million and an undrawn amount on its
line of credit of $35 million. With the closing of the 5.75% convertible
debenture in February, liquidity increases an additional $75.0 million (not
including $3 million in transaction costs). In addition, the Company expects to
be able to meet all of its commitments and fulfill its exploration and capital
program for 2015 and later years from its operating cash flows.

The Company manages its common shares, stock options, warrants
and debt as capital. The Companys objectives in managing capital are to
safeguard its ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders. To meet this objective,
the Company will ensure it has sufficient cash resources to pursue the
exploration and development of its mining properties, to fund future production
at the San Dimas and Black Fox mines, development of the Grey Fox mine and the
Cerro del Gallo project, as well as potential acquisitions.

To support these objectives the Company manages its capital
structure and make adjustments to it in light of changes in economic conditions
and risk characteristics of its underlying assets. To maintain or adjust its
capital structure, the Company may attempt to issue shares, issue debt, acquire
or dispose of assets or adjust the amount of cash held.

The Companys investment policy is to invest its cash in highly
liquid short-term interest-bearing investments with maturities of 90 days or
less from the original date of acquisition, selected with regards to the
expected timing of expenditures from continuing operations. 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 year.

28

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Pursuant to the terms of the line of credit, the Company is
required to maintain the following financial covenants:

| |  | Tangible net worth (being equity less goodwill and other
      intangible assets) of at least $684 million plus 50% of positive net
      income earned after March 31, 2014                                 
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net debt leverage ratio (being total liabilities, less
      trade payables incurred in the ordinary course of business less
      unrestricted cash divided by rolling 4 quarter EBITDA) of less than 3.50:1
| |  | Senior net debt leverage ratio (being that portion of net
      debt that ranks pari passu with or in priority to the line of credit
      divided by rolling 4 quarter EBITDA) less than 2.00:1             
| |  | Interest coverage ratio (being earnings before interest,
      depreciation and amortization divided by interest expense) greater than
      4.50:1                                                          

As at December 31, 2014, the Company was fully compliant with
these covenants.

29

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

SELECTED QUARTERLY INFORMATION

Three
      months endedDecember 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,2014
    
    
    2014
    
    
    2014
    
    
    2014Key Performance DataTonnes of ore milled
    
    482,922
    
    
    442,739
    
    
    428,778
    
    
    238,566ProducedGold equivalent (ounces)
    
    62,209
    
    
    59,673
    
    
    63,414
    
    
    39,758Gold (ounces)
    
    56,140
    
    
    51,464
    
    
    50,061
    
    
    32,278Silver (million ounces)
    
    1.74
    
    
    1.41
    
    
    1.49
    
    
    1.51SoldGold equivalent (ounces)
    
    59,817
    
    
    60,209
    
    
    62,791
    
    
    37,249Gold (ounces)
    
    54,406
    
    
    51,701
    
    
    48,596
    
    
    30,583Silver (million ounces)
    
    1.56
    
    
    1.46
    
    
    1.58
    
    
    1.34Average realized pricesGold ($/ounce)
    $
    1,188
    
    $
    1,251
    
    $
    1,264
    
    $
    1,295Silver($/ounce)
    $
    4.20
    
    $
    7.43
    
    $
    11.56
    
    $
    6.44Average gold London PM fix
    $
    1,201
    
    $
    1,282
    
    $
    1,288
    
    $
    1,293Total cash costs (per gold
      ounce)Gold equivalent basis
    $
    701
    
    $
    689
    
    $
    672
    
    $
    686By-product basis
    $
    657
    
    $
    596
    
    $
    508
    
    $
    543All-in sustaining costs (per gold ounce)
    $
    1,196
    
    $
    1,154
    
    $
    1,228
    
    $
    1,381Financial Data(in thousands of US dollars
      except per share amounts)Revenues
    
    71,171
    
    
    75,503
    
    
    79,669
    
    
    48,269Earnings from mine operations
    
    18,537
    
    
    6,184
    
    
    19,676
    
    
    8,265Net (loss) income
    
    (109,964
    )
    
    (105,904
    )
    
    572
    
    
    (9,087
    )Adjusted net (loss) income
    
    (5,054
    )
    
    259
    
    
    1,052
    
    
    (2,882
    )Basic (loss) income per share
    
    (0.69
    )
    
    (0.66
    )
    
    0.00
    
    
    (0.07
    )Diluted (loss) income per
      share
    
    (0.69
    )
    
    (0.66
    )
    
    0.00
    
    
    (0.07
    )Adjusted net (loss) income per share
    
    (0.03
    )
    
    0.00
    
    
    0.01
    
    
    (0.02
    )Operating cash flows before
      working capital changes
    
    18,209
    
    
    21,704
    
    
    26,431
    
    
    6,509AssetsMining interests
    
    881,480
    
    
    963,944
    
    
    955,587
    
    
    1,067,649Total assets
    
    1,002,820
    
    
    1,092,367
    
    
    1,207,602
    
    
    1,257,431LiabilitiesLong-term liabilities
    
    190,213
    
    
    184,540
    
    
    189,743
    
    
    133,904Total liabilities
    
    254,835
    
    
    240,539
    
    
    249,388
    
    
    303,157Equity
    
    747,985
    
    
    851,828
    
    
    958,214
    
    
    954,274Weighted average shares
      outstanding (basic)(000's)
    
    160,133
    
    
    159,961
    
    
    159,617
    
    
    128,112Weighted average shares outstanding
      (diluted)(000's)
    
    160,133
    
    
    159,961
    
    
    161,321
    
    
    128,112


| | 1 | Includes the results for the period for which the Black
      Fox Complex assets, acquired on March 5, 2014, were owned by Primero
      (March 5, 2014 to September 30, 2014).                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                   
| | 2 | Average realized gold and silver prices reflect the
      impact of the gold purchase agreement with Sandstorm at the Black Fox mine
      and the silver purchase agreement with Silver Wheaton Caymans at the San
      Dimas mine (see Other liquidity considerations
above).

30

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

REVIEW OF CONSOLIDATED QUARTERLY FINANCIAL
INFORMATION

|                                                                              |   | For the
      three months ended December 31, |  
|----------------------------------------------------------------------------- | - | --------------------------------------------- | -
|                                                                              |   | 2014                                          |  
|                                                                              |   |                                               |  
|                                                                              | $ |                                               |  
|Revenue                                                                       |   | 71,171                                        |  
|                                                                              |   |                                               |  
|Operating expenses                                                            |   | (46,709                                       | )
|Depreciation and depletion                                                    |   | (5,925                                        | )
|Total cost of sales                                                           |   | (52,634                                       | )
|Earnings from mine operations                                                 |   | 18,537                                        |  
|Mining interests impairment charge                                            |   | (110,000                                      | )
|Goodwill impairment charge                                                    |   | -                                             |  
|Exploration expenses                                                          |   | (577                                          | )
|General and administrative expenses                                           |   | (7,107                                        | )
|Earnings from operations                                                      |   | (99,147                                       | )
|Transaction costs, finance expense, foreign exchange and other
      expenses |   | (102                                          | )
|Earnings before income taxes                                                  |   | (99,249                                       | )
|Income tax expense                                                            |   | (10,715                                       | )
|Net loss for the period                                                       |   | (109,964                                      | )

31

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

The table below sets out variances in the key drivers of net
loss for the three months ended December 31, 2014 compared with the three months
ended December 31, 2013:

|                                              |   | Q4 2014 compared |  
|--------------------------------------------- | - | ---------------- | -
|In thousands of U.S. dollars                  |   | to Q4 2013       |  
|                                              |   |                  |  
|                                              | $ |                  |  
|Income from Black Fox mining
      operations |   | 12,060           |  
|San Dim as:                                   |   |                  |  
|Increased gold volumes
      sold             |   | 2,037            |  
|Decreased gold price                          |   | (1,960           | )
|Decreased silver
      revenue                |   | (525             | )
|Higher depletion                              |   | (1,637           | )
|Higher operating expenses                     |   | (5,183           | )
|Higher earnings from mine operations          |   | 4,792            |  
|Impairment charges                            |   | (110,000         | )
|Lower general and administrative expenses     |   | 574              |  
|Higher finance expenses                       |   | (2,558           | )
|Loss on derivative liability                  |   | (173             | )
|Lower income tax expense                      |   | 29,059           |  
|Other                                         |   | 4,237            |  
|Increase in net loss                          |   | (74,069          | )

Three months ended December 31, 2014 compared to three
months ended December 31, 2013

| |  | Revenues increased to $71.2 million in Q4 2014 from $47.7
      million in Q4 2013 with Black Fox accounting for $23.9 million of the
      increase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | Operating expenses were $46.7 million in Q4 2014, $23.2
      million more than Q4 2013, $18.0 million of which was due to the
      acquisition of Black Fox. Operating expenses at San Dimas increased by
      $5.2 million, mainly due to higher gold sales volumes and higher
      consulting costs related to operational assessment and business
      improvement initiatives.                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | Depreciation and depletion was $5.9 million in Q4 2014,
      compared to $10.5 million in Q4 2013. Depreciation and depletion was $12.1
      million at San Dimas in Q4 2014, $1.6 million higher than Q4 2013 due
      mainly to increased production. Depreciation and depletion at Black Fox
      for Q4 2014 was $7.0 million. In addition, at Black Fox a $13.2 million
      reduction in depletion relating to the period March 5, 2014 to September
      30, 2014 was recorded in Q4 2014 as a result of the finalization of the
      Black Fox purchase price allocation (see Note 3(i) to the December 31,
      2014 consolidated financial statements).

32

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

| |  | An impairment of $110.0 million was booked to mining
      interests during the fourth quarter 2014. This is discussed above under
      REVIEW OF CONSOLIDATED FINANCIAL INFORMATION.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                         
| |  | General and administrative expenses were $7.1 million in
      Q4 2014, compared with $7.7 million in Q4 2013 due mainly to lower
      share-based payment expense, as shown below:    

| |                                                                                                 |  | Three months ended Dec31, |  
| | ----------------------------------------------------------------------------------------------- |  | ------------------------- | -
| |                                                                                                 |  |                           |  
| | (In thousands of U.S. dollars)                                                                  |  | 2014                      |  
| |                                                                                                 |  |                           |  
| | Share-based payment                                                                             |  | (294                      | )
| | Salaries and wages                                                                              |  | 4,595                     |  
| | Rent and office costs                                                                           |  | 630                       |  
| | Legal, accounting, consulting, and other
      professional fees                                |  | 1,595                     |  
| | Estimated costs of Vancouver
      office closure and relocation of finance function to Toronto |  | (263                      | )
| | Other general and administrative expenses                                                       |  | 844                       |  
| | Total                                                                                           |  | 7,107                     |  

The value of units in the Companys
cash-settled phantom share unit (PSU) plans, are marked to market each period
based on the Companys share price, which decreased 18% in Q4 2014 and 17% in Q4
2013.

| |  | Finance expense was $2.4 million in Q4 2014, compared
      with a recovery of $0.2 million in Q4 2013, primarily due to $1.1 million
      of interest paid and accretion on the 6.5% convertible senior unsecured
      debentures, and $0.7 million of interest and amortization of expenses on
      the line of credit. The recovery in Q4 2013 mainly relates to the
      capitalization of interest to assets under construction.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | The Company recorded an income tax expense of
      $10.7 million in Q4 2014, compared with $40.0 million in Q4 2013. The
      details are as follows:                                                                                                                                                                                                                                                                                  

| | (In thousands of US dollars)                      |  | Q 4 2014 |   |  | Q 4 2013 | 
| | ------------------------------------------------- |  | -------- | - |  | -------- | 
| |                                                   |  |          |   |  |          | 
| | Current tax expense:                              |  |          |   |  |          | 
| | Mining royalty at San Dim as                      |  | 200      |   |  | -        | 
| | Other current tax                                 |  | 1,446    |   |  | 1,704    | 
| |                                                   |  |          |   |  |          | 
| | Deferred tax expense:                             |  |          |   |  |          | 
| | Withholding tax on inter company interest         |  | 1,071    |   |  | 1,161    | 
| | San Dimas change in tax shelter                   |  | 14,801   |   |  | 1,246    | 
| | Mining royalty at San Dim as                      |  | (189     | ) |  | 35,863   | 
| | Tax recovery on mining
      interest impairments |  | (9,001   | ) |  | -        | 
| | Other deferred tax                                |  | 2,387    |   |  | -        | 
| |                                                   |  |          |   |  |          | 
| | Total tax expense                                 |  | 10,715   |   |  | 39,974   | 

33

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

The impact of foreign exchange (Mexico
peso to US dollar changed from Mex$13.45 at September 30, 2014 to Mex$14.72 at
December 31, 2014) and inflation on the San Dimas deferred income tax balances
increased income tax expense by $14.8 million in Q4 2014 as compared to $1.2
million in Q4 2013.

Analysis of cash flows for the three months ended December
31, 2014 and 2013

|                                              |   | Three months ended |  
|--------------------------------------------- | - | ------------------ | -
|(In thousands of US dollars)                  |   | December 31,       |  
|                                              |   | 2014               |  
|Cash Flow:                                    | $ |                    |  
|Provided by operating activities              |   | 23,590             |  
|Used in investing activities                  |   | (30,604            | )
|Provided by (used in) financing activities    |   | 14,367             |  
|Effect of exchange rate
      changes on cash |   | (2,020             | )
|(Decrease) increase in cash                   |   | 5,333              |  
|Cash, beginning of period                     |   | 22,056             |  
|Cash, end of period                           |   | 27,389             |  

Primero generated $23.6 million of cash flows from operating
activities in Q4 2014, compared with $25.4 million in Q4 2013. Operating cash
flow before working capital changes was $18.2 million in Q4 2014, marginally
higher than Q4 2013 at $14.0 million, as a result of consistent cash earnings
from mine operations. Changes in non-cash working capital were a cash inflow of
$5.4 million in Q4 2014 compared with an inflow of $11.4 million in Q4 2013 due
mainly to an increase in trade and other payables of $5.8 million and an
increase in prepaid expenses of $2.1 million, offset by an increase in trade and
other receivables of $4.2 million. Further, the Company started to receive the
outstanding VAT refunds in Q4 2014 which had been outstanding during 2014. A
total of $4.0 million in VAT refunds was collected in 2014.

Cash used in investing activities in Q4 2014 amounted to $30.6
million as compared to $33.1 million in Q4 2013. Capital expenditures in Q4 2014
totaled $30.7 million, up from $25.2 million spent in Q4 2013, with the addition
of the Black Fox mine accounting for $14.5 million.

The Company received $14.4 million of cash in financing
activities in Q4 2014, compared with using $7.1 million of cash in Q4 2013. The
Company received $6.9 million from the issuance of flow-through shares in Q4
2014 and $9.7 million from a draw-down on the line of credit. A total of $2.0
million cash was paid in principal and interest on the Companys debt during Q4
2014. The cash outflow in Q4 2013 was due to payment of the third $5 million
installment of the promissory note and $2.1 million of interest thereon.

34

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA

The following table provides summary unaudited financial data
for the last eight quarters:

|(In thousands of US dollars except for |  |          |   |  |          |   |  |         |   |  |         |   |  |         |   |  |         |   |  |         |   |  |         |  
|-------------------------------------- |  | -------- | - |  | -------- | - |  | ------- | - |  | ------- | - |  | ------- | - |  | ------- | - |  | ------- | - |  | ------- | -
|per share amounts and operating data)  |  |          |   |  | 2014     |   |  |         |   |  |         |   |  |         |   |  | 2013    |   |  |         |   |  |         |  
|                                       |  | Q 4      |   |  | Q 3      |   |  | Q 2     |   |  | Q 1     |   |  | Q 4     |   |  | Q 3     |   |  | Q2      |   |  | Q 1     |  
|Financial Data                         |  |          |   |  |          |   |  |         |   |  |         |   |  |         |   |  |         |   |  |         |   |  |         |  
|Revenue                                |  | 71,171   |   |  | 75,503   |   |  | 79,669  |   |  | 48,269  |   |  | 47,737  |   |  | 53,793  |   |  | 52,475  |   |  | 46,321  |  
|Total cost of sales                    |  | (52,634  | ) |  | (69,319  | ) |  | (59,993 | ) |  | (40,004 | ) |  | (33,992 | ) |  | (30,833 | ) |  | (28,882 | ) |  | (30,615 | )
|Earnings from mine operations          |  | 18,537   |   |  | 6,184    |   |  | 19,676  |   |  | 8,265   |   |  | 13,745  |   |  | 22,960  |   |  | 23,593  |   |  | 15,706  |  
|Impairment charges                     |  | (110,000 | ) |  | (98,961  | ) |  | -       |   |  | -       |   |  | -       |   |  | -       |   |  | -       |   |  | -       |  
|Exploration expenses                   |  | (577     | ) |  | (1,205   | ) |  | -       |   |  | (17     | ) |  | (428    | ) |  | -       |   |  | -       |   |  | -       |  
|General and administrative expenses    |  | (7,107   | ) |  | (5,854   | ) |  | (10,524 | ) |  | (13,335 | ) |  | (7,682  | ) |  | (7,086  | ) |  | (1,907  | ) |  | (7,796  | )
|Earnings (loss) from
      operations  |  | (99,147  | ) |  | (99,836  | ) |  | 9,152   |   |  | (5,087  | ) |  | 5,635   |   |  | 15,874  |   |  | 21,686  |   |  | 7,910   |  
|Other income (expenses)                |  | (102     | ) |  | 1,257    |   |  | (4,259  | ) |  | (8,633  | ) |  | (1,556  | ) |  | (834    | ) |  | (5,479  | ) |  | (2,085  | )
|Income tax (expense) recovery          |  | (10,715  | ) |  | (7,325   | ) |  | (4,321  | ) |  | 4,633   |   |  | (39,974 | ) |  | (4,960  | ) |  | (11,966 | ) |  | 11,500  |  
|Net (loss) income                      |  | (109,964 | ) |  | (105,904 | ) |  | 572     |   |  | (9,087  | ) |  | (35,895 | ) |  | 10,080  |   |  | 4,241   |   |  | 17,325  |  
|Basic income (loss) per share          |  | (0.69    | ) |  | (0.66    | ) |  | 0.00    |   |  | (0.07   | ) |  | (0.31   | ) |  | 0.09    |   |  | 0.04    |   |  | 0.18    |  
|Diluted income (loss) per share        |  | (0.69    | ) |  | (0.66    | ) |  | 0.00    |   |  | (0.07   | ) |  | (0.31   | ) |  | 0.09    |   |  | 0.04    |   |  | 0.18    |  

| |  | Financial data by quarter are significantly impacted by
      the acquisition of Brigus in 2014. Results from the Black Fox mine have
      been consolidated as of March 5, 2014.                                                                                                                                                                                                                                    
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | When the Company reaches its annual threshold for
      deliveries under the silver purchase agreement, the Company realizes
      silver sales at spot prices, increasing both revenue and net income.
      Revenue in Q3 2014, Q2 2014, Q1 2014, Q3 2013 and Q2 2013 included $5.9
      million, $14.8 million, $3.9 million, $8.4 million, and $13.2 million,
      respectively, of silver sales at spot prices.
| |  | In Q3 2014, an impairment of $99.0 million for goodwill
      was recorded (see Impairment charges above).                                                                                                                                                                                                                                                                                                          
| |  | In Q4 2014, an impairment of $110.0 million was recorded
      against mining interests (see Impairment charges above).                                                                                                                                                                                                                                                                                             
| |  | General and administrative expenses include share-based
      compensation which fluctuates based on the share price of the Company. In
      Q1 and Q2 2014 the share price was rising resulting in higher share-based
      compensation, whereas in Q2 2013 a sharp drop in share price decreased
      share-based compensation significantly.                                                                    
| |  | In Q1 2014 the Company incurred $6.7 million of
      transaction costs related to the acquisition of Brigus.                                                                                                                                                                                                                                                                                                         
| |  | The income tax expense 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.                                                                                                                                                                                                             
| |  | Income tax expense is impacted by the effects of foreign
      exchange fluctuations on its Mexico peso denominated deferred income
      taxes, which can be quite significant in certain periods, such as Q1 and
      Q2 2013, and Q4 2014.                                                                                                                                                                        

35

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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 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 December 31, |   |   | Year ended
    December 31, |  
|--------------------------------------------------------- | - | ------------------------------- | - | - | --------------------------- | -
|                                                          |   | 2014                            |   |   | 2013                        |  
|Operating expenses per the
      consolidated             |   |                                 |   |   |                             |  
|financial statements ($000's)                             |   | 46,708                          |   |   | 23,494                      |  
|Share-based payment included
      in                     |   |                                 |   |   |                             |  
|operating expenses($000's)                                |   | (333                            | ) |   | (106                        | )
|Process improvement project
      costs($000's)           |   | (2,602                          | ) |   | -                           |  
|Inventory movements and adjustments ($000's)              |   | (149                            | ) |   | (712                        | )
|Total ash operating
      costs($000's)                   |   | 43,624                          |   |   | 22,676                      |  
|Ounces of gold produced                                   |   | 56,140                          |   |   | 29,097                      |  
|Gold equivalent ounces of
      silver produced           |   | 6,069                           |   |   | 5,274                       |  
|Gold equivalent ounces produced                           |   | 62,209                          |   |   | 34,371                      |  
|Total cash costs per gold
      equivalent ounce          | $ | 701                             |   | $ | 660                         |  
|                                                          |   |                                 |   |   |                             |  
|Total cash operating
      costs($000's)                  |   | 43,624                          |   |   | 22,676                      |  
|By-product silver credits($000's)                         |   | (6,760                          | ) |   | (6,672                      | )
|Cash costs, net of by-product
      credits($000's)       |   | 36,864                          |   |   | 16,004                      |  
|Ounces of gold produced                                   |   | 56,140                          |   |   | 29,097                      |  
|Total by-product cash
      costs per gold ounce produced | $ | 657                             |   | $ | 550                         |  

36

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Gold equivalent ounces of silver produced for the San Dimas
mine 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. The computations are shown below.

|                                               |   | Three
      months ended |  |   | Year ended   | 
|---------------------------------------------- | - | ------------------------ |  | - | ------------ | 
|                                               |   | December 31,             |  |   | December 31, | 
|                                               |   | 2014                     |  |   | 2013         | 
|                                               |   |                          |  |   |              | 
|Silver ounces produced
      (millions) (A)    |   | 1.74                     |  |   | 1.60         | 
|Average realized silver price (B)              | $ | 4.20                     |  | $ | 4.16         | 
|Average realized gold price (C
      )         | $ | 1,207                    |  | $ | 1,265        | 
|Gold equivalent ounces of silver (A) x (B)/(C) |   | 6,069                    |  |   | 5,274        | 

The Company produces one by-product metal, being silver at San
Dimas. By-product silver credits are computed as silver ounces produced during a
period multiplied by the average realized silver price during that same period.
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 in 2010.
The fixed price approximated the cost of producing an ounce of 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 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.

37

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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.

38

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

The following table provides a reconciliation of all-in
sustaining costs per gold ounce to the consolidated financial statements for the
three months and years ended December 31, 2014 and 2013:

|                                                                                  |   | Three
      months ended |   |   | Year ended   | 
|--------------------------------------------------------------------------------- | - | ------------------------ | - | - | ------------ | 
|                                                                                  |   | December 31,             |   |   | December 31, | 
|                                                                                  |   | 2014                     |   |   | 2013         | 
|Cash costs, net of by-product
      credits($000's)                               |   | 36,864                   |   |   | 16,004       | 
|Corporate general and administrative expenses
      Share-based payments ($000's) |   | (293                     | ) |   | 514          | 
|Other general and
      administrative expenses ($000's)                          |   | 7,400                    |   |   | 7,168        | 
|Reclamation cost accretion ($000's)                                               |   | 274                      |   |   | 160          | 
|Sustaining capital expenditures ($000's)                                          |   | 22,914                   |   |   | 17,328       | 
|All-in sustaining costs($000's)                                                   |   | 67,159                   |   |   | 41,174       | 
|                                                                                  |   |                          |   |   |              | 
|Ounces of gold produced                                                           |   | 56,140                   |   |   | 29,097       | 
|                                                                                  |   |                          |   |   |              | 
|All-in sustaining costs per gold ounce                                            | $ | 1,196                    |   | $ | 1,415        | 

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 exclude all expenditures at the Companys projects and certain expenditures
at the Companys operating sites which are deemed expansionary in nature.

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
discounted cash flow models of the estimated costs to remediate its operating
mine sites at the end of the estimated mine life. Reclamation cost accretion for
San Dimas was calculated based on a discount rate of 7.75% and estimated
remediation costs of $31.1 million, which are generally expected to be incurred
in 2034 to 2036. Reclamation cost accretion for Black Fox was calculated based
on a discount rate of 2% and estimated remediation costs of $26.1 million, which
are generally expected to be incurred in 2018 and 2023. Reclamation cost
accretion is included in finance expense in the Companys consolidated
statements of operations and comprehensive income.

The following table reconciles sustaining capital expenditures
to the Companys total capital expenditures, which are disclosed in the
consolidated statements of cash flows:

39

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

|                                                                                                                                             |  | Three
      months ended |   |  | Year ended         |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | - |  | ------------------ | -
|(In thousands of US dollars)                                                                                                                 |  | December
      31,       |   |  | December
      31, |  
|                                                                                                                                             |  | 2014                     |   |  | 2013               |  
|Capital expenditures
      per consolidated statements of cash flows                                                                         |  | 30,771                   |   |  | 25,277             |  
|Less: San Dimas non-sustaining capital
      expenditures                                                                                    |  | (2,173                   | ) |  | (4,128             | )
|Less: capital expenditures
      attributable to Cerro del Gallo                                                                             |  | (2,015                   | ) |  | (1,228             | )
|Less: capital expenditures attributable to
      Grey Fox                                                                                    |  | (2,944                   | ) |  | -                  |  
|Add: Black Fox capital
      expenditures financed through leases                                                                            |  | -                        |   |  | -                  |  
|Less: capital expenditures attributable to
      other projects and corporate, including San Dimas regional exploration and
      Pike River |  | (725                     | ) |  | (2,593             | )
|Total sustaining capital
      expenditures                                                                                                  |  | 22,914                   |   |  | 17,328             |  
|Sustaining capital expenditures
      attributable to San Dimas                                                                              |  | 11,345                   |   |  | 17,328             |  
|Sustaining capital
      expenditures attributable to Black Fox                                                                              |  | 11,569                   |   |  | -                  |  

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.

40

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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. All adjustments are shown net of tax.

|                                                                                        |  | Three
      months ended |   |  | Year ended         |  
|--------------------------------------------------------------------------------------- |  | ------------------------ | - |  | ------------------ | -
|(In thousands of US dollars except per
      share amounts)                             |  | December
      31,       |   |  | December
      31, |  
|                                                                                        |  | 2014                     |   |  | 2013               |  
|                                                                                        |  |                          |   |  |                    |  
|Net (loss) income                                                                       |  | (109,964                 | ) |  | (35,895            | )
|Mining interests impairment charge                                                      |  | 101,010                  |   |  |                    |  
|Good will impairment charge                                                             |  | -                        |   |  | -                  |  
|Impact of foreign exchange on deferred income tax assets and liabilities                |  | 15,746                   |   |  | 712                |  
|Prior quarter depletion adjustment related to finalization of purchase price allocation |  | (11,991                  | ) |  | -                  |  
|Liability for social security payments                                                  |  | -                        |   |  | -                  |  
|Office closure costs                                                                    |  | (263                     | ) |  | -                  |  
|Transaction costs                                                                       |  | 408                      |   |  | 889                |  
|Deferred tax recorded on
      enactment of Mexican royalty tax                         |  | -                        |   |  | 35,864             |  
|Adjusted net income                                                                     |  | (5,054                   | ) |  | 1,570              |  
|                                                                                        |  |                          |   |  |                    |  
|Adjusted net income per share                                                           |  | (0.03                    | ) |  | 0.01               |  
|                                                                                        |  |                          |   |  |                    |  
|Weighted average number of common shares
      outstanding (basic)                      |  | 160,133,070              |   |  | 115,691,337        |  

41

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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 condensed consolidated interim
financial statements.

|                                                                     |  | Threem
      onths ended |   |  | Year ended         |  
|-------------------------------------------------------------------- |  | ------------------------ | - |  | ------------------ | -
|(In thousands of US dollars)                                         |  | December
      31,       |   |  | December
      31, |  
|                                                                     |  | 2014                     |   |  | 2013               |  
|Cash provided by operating
      activities                          |  | 23,590                   |   |  | 25,446             |  
|Change in non-cash operating working capital                         |  | (5,381                   | ) |  | (11,408            | )
|Operating cash flows before
      working capital changes            |  | 18,209                   |   |  | 14,038             |  
|                                                                     |  |                          |   |  |                    |  
|Operating cash flows per
      share before working capital changes  |  | 0.11                     |   |  | 0.12               |  
|                                                                     |  |                          |   |  |                    |  
|Weighted average number of
      com m on shares outstanding (basic) |  | 160,133,070              |   |  | 115,691,337        |  

42

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Related party transactions

As at December 31, 2014, the Companys related parties include
its subsidiaries, associates over which it exercises significant influence, and
key management personnel. During its normal course of operation, the Company
enters into transactions with its related parties for goods and services.

As at December 31, 2013, Goldcorp owned 31,151,200 of the
Companys common shares, approximately 27% of the Companys total shares. On
March 26, 2014 Goldcorp sold all these shares and as such as at December 31,
2014, Goldcorp no longer held an equity interest in Primero and was no longer a
related party.

During the year ended December 31, 2014 $nil (2013 - $0.9
million) was paid to DMSL (a subsidiary of Goldcorp) for the purchase of
equipment, equipment leasing fees and services received under a transition
services agreement between the Company and DMSL.

During the year ended December 31, 2014 the Company paid $0.4
million to maintain its 19.99% ownership percentage in Santana as the result of
a rights issue.

There were no further related party transactions for the years
ended December 31, 2014 and 2013 that have not been disclosed in the
consolidated financial statements.

ADOPTION OF NEW ACCOUNTING POLICIES

The Company applied the following new interpretation and
amendment to existing IFRSs, which was effective January 1, 2014:

IFRIC 21  Levies (IFRIC 21), an interpretation of IAS 37 
Provisions, Contingent Liabilities and Contingent Assets ("IAS 37"), clarifies
that the obligating event, as defined by IAS 37, that gives rise to a liability
to pay a levy is the activity described in the relevant legislation that
triggers the payment of the levy. The Company has applied IFRIC 21 on a
retrospective basis in compliance with the transitional requirements of IFRIC
21. The application of IFRIC 21 did not result in an adjustment to the Company's
unaudited condensed interim consolidated financial statements.

The following accounting policy was adopted upon the
acquisition of Brigus (in the December 31, 2014 consolidated financial
statements) which resulted in the Company owning open pit operations for the
first time.

Stripping costs

In open pit mining operations, it is necessary to incur costs
to remove overburden and other mine waste materials in order to access the ore
body. Pre-production stripping costs are capitalized as incurred. Stripping
costs incurred during the production stage of an open pit mine are accounted for
as costs of the inventory produced during the period that the stripping costs
were incurred, unless these costs provide a future economic benefit. Production
phase stripping costs are considered to generate a future economic benefit when
the related stripping activity: (i) provides access to ore to be mined in the
future; (ii) increases the fair value of the mine as access to future mineral
reserves becomes less costly; (iii) increases the productive capacity; or (iv)
extends the productive life of the mine. Production phase stripping costs that
generate a future economic benefit are capitalized as mine development costs.
Stripping costs incurred and capitalized during the production phase are
depleted using the units-of-production method over the reserves and resources
(where relevant as part of the depletion policy) that directly benefit from the
specific stripping activity.

43

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

The following accounting policy was adopted upon the issuance
of flow-through shares during the first quarter 2014.

Flow-through Shares

The Company may, from time to time, issue flow-through shares
to finance a portion of its Canadian exploration program. Pursuant to the terms
of the flow-through share agreements, the Company agrees to incur qualifying
expenditures and renounce the tax deductions associated with these qualifying
expenditures to the subscribers by an agreed upon date. The excess of cash
consideration received over the market price of the Companys shares at the date
of the announcement of the flow-through share financing is recorded as a
liability. This liability is extinguished and recognized in the statement of
operations and comprehensive income (loss) when the renunciation of the tax
benefit by the Company, is recorded.

A deferred tax liability is recognized for the taxable
temporary difference that arises from the difference between the carrying amount
of eligible expenditures that are capitalized to exploration and evaluation
assets and their tax basis. If the Company has sufficient tax assets to offset
the deferred tax liability, the liability will be offset by use of the deferred
tax asset.

The following policy was adopted upon the preliminary
recognition of goodwill during the year ended December 31, 2014.

Goodwill

Goodwill may arise on the Companys acquisitions due to: (i)
the ability of the Company to capture certain synergies through management of
the acquired operation within the Company; (ii) the potential to increase
reserves and resources through exploration activities; and (iii) the requirement
to record a deferred tax liability for the difference between the assigned fair
values and the tax bases of assets acquired and liabilities assumed.

Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those cash generating units or
groups of CGUs that are expected to benefit from the synergies of the business
combination. If the composition of one or more cash generating units to which
goodwill has been allocated changes due to a re-organization, the goodwill is
re-allocated to the units affected.

Goodwill is not amortized. The Company performs an annual
impairment test for goodwill and when events or changes in circumstances
indicate that the related carrying amount may not be recoverable. If the
carrying amount of a CGU to which goodwill has been allocated exceeds the
recoverable amount, an impairment loss is recognized for the amount in excess.
The impairment loss is allocated first to reduce the carrying amount of goodwill
allocated to the CGU to nil and then to the other assets of the CGU based on the
relative carrying amounts of those assets. Impairment losses recognized for
goodwill are not reversed in subsequent periods should the value of goodwill
recover.

44

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Recent pronouncements issued

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:

In May 2014, the IASB issued IFRS 15 - Revenue from Contracts
with Customers ("IFRS 15") which supersedes existing standards and
interpretations including IAS 18, Revenue. IFRS 15 establishes a single
five-step model framework for determining the nature, amount, timing and
uncertainty of revenue and cash flows arising from a contract with a customer.
The standard is effective for annual periods beginning on or after January 1,
2017, with early adoption permitted. The Company is currently evaluating the
impact the standard is expected to have on its consolidated financial
statements.

Primero will be required to adopt IFRS 9, Financial
Instruments on January 1, 2018. IFRS 9 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 the units-of-production
method 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. If a mine has
significant components with differing useful lives, depletion is calculated
based on the useful life of each component.

Mineralization at the Companys mine sites is segregated into
reserves (including proven and probable), resources (including measured,
indicated and inferred) and exploration potential. The definitions applied by
the Company are based on those in National Instrument 43-101  Standards of
Disclosure for Mineral Projects (NI 43-101); in addition, the Company also
applies the following definition:

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.

The Companys depletion estimation methodology divides the
total mining property capitalized in respect of a mining asset into a depletable
component and a non-depletable component. The value assigned to the depletable
component is equal to the value assigned to the proven and probable reserves and
a portion of resources of the asset. The value assigned to the non-depletable
component is the value assigned to the exploration potential of the asset and
the remaining resources not included in the depletable component. The allocation
of values to the proven and probable reserves, resources and exploration
potential of the asset are based on the discounted cash flow analysis of the
Companys future expected cash flows to be derived from the mine in question.
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
discounted cash flow analysis. 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.

Each year, coincident with the updated reserve and resource
estimates, 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 over
the life of mine.

45

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

When considering the portion of resources to include in the
depletion base of the depletable component, management considers which of the
Companys resources are believed to eventually be classified as proven and
probable reserves. In assessing which resources to include so as to best reflect
the useful life of the mine, management considers resources that have been
included in the discounted cash flow analysis. To be included in the analysis,
resources need 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 analysis takes into
account managements view of the gold price and exchange rates. In addition, in
order to determine the proportion of resources to include in the depletion base,
management considers 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.

Development costs incurred during a period are added to the
total mining property capitalized at the commencement of the period in
calculating the depletion expense. Future development costs necessary to access
inferred resources, have been taken into account when determining the pattern of
depletion for the Companys mining properties; such costs are included in the
discounted cash flow analysis and are determined by the Companys geologists and
engineers based on an in-depth knowledge of the mine and planned development
work to access resources.

Total depletion expense for the Company in respect of the year
ended December 31, 2014 was $41.3 million (2013 - $25.6 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 $60.3 million (2013 - $65.0 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.

46

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

San Dimas

The value assigned to the depletable and non-depletable pools
of San Dimas were $342.7 million and $57.8 million respectively for 2014. The
depletable component is depleted over 100% of reserves and 75% of resources for
the year ended December 31, 2014. The non-depletable component is not depleted.

The Company has risk-weighted the resources included in the San
Dimas depletion calculation considering the following factors:

| | i.   | Both historic and recent rates of conversion of 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 resources and exploration potential
      will convert to reserves as development progresses;
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 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 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
      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 part of future
  production.                                                                                                                            

The Company has determined to include 100% of reserves and 75%
of resources in the depletion calculation for year ended December 31, 2014 as
the Company believes this is supported by the long mining history at the San
Dimas mine with an average historical conversion rate of approximately 90% of
resources into reserves.

Future capital expenditures necessary to access these resources
have been taken into account when determining the pattern of depletion charge
for the San Dimas operations. These costs are included in the life-of-mine cash
flows and are determined by the Companys geologists and engineers based on an
in-depth knowledge of the mine and planned development work. For the year ended
December 31, 2014, $77.0 million of future development costs were included in
the calculation of depletion expense for San Dimas.

For the year ended December 31, 2014, the depletable pool was
depleted on a units-of-production basis based on inclusion of 100% of reserves
and 75% of resources, which represented 1.5 million ounces.

47

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Black Fox

The value assigned to the depletable and non-depletable pools
of Black Fox were $79.9 million and $90.5 million respectively for the period
March 5, 2014 to December 31, 2014. The depletable component is depleted over
100% of reserves and 0% of resources for the period of ownership ended December
31, 2014. The non-depletable component is not depleted.

When considering the percentage of resources to include in the
depletion base of the depletable component, management considered the existence,
commercial viability and potential economic recovery of the Black Fox 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. Given the relative lack of history
of the mine and inability to demonstrate the economic recovery of such resources
with a high level of confidence, it was determined that none of the resources
should be included in the calculation of depletion for the Black Fox mine.

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.

48

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Deferred stripping

The Company defers stripping costs incurred during the
production stage of its open pit operations when these costs are considered to
generate a future benefit. The determination of these amounts requires the use
of judgements and estimates such as estimates of tonnes of waste to be removed
over the life of the mining area and economically recoverable reserves extracted
as a result. Changes in a mines life and design may result in changes to the
expected stripping ratio. Any changes in these estimates are accounted for
prospectively.

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 work-in-process inventories 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.

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 and Black Fox mines, the Company may segregate the recognized
value of the mine between its depletable and non-depletable parts. 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 its operating mines 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 from the San Dimas mine and that 100% of proven and probable reserves
and 0% of inferred resources will be recovered from the Black Fox mine. 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.

49

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

The Company reviews and evaluates its goodwill and mining
interests for impairment when events and changes in circumstances indicate that
the related carrying amounts may not be recoverable, and in the case of
goodwill, annually. Goodwill is allocated to cash-generating units for the
purposes of impairment testing. The allocation is made to those CGUs that are
expected to benefit from the business combination in which the goodwill arose.
The carrying amounts of the CGUs are compared to their recoverable amount. 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 CGU
for which the estimates of future cash flows have not been adjusted.

The Company bases its impairment calculation on detailed
budgets and forecasts which are prepared separately for each of the Companys
CGUs to which the individual assets are allocated. The Company currently has
three CGUs, the San Dimas mine, the Black Fox Complex 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. Impairment is assessed at
the CGU level.

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.

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.

50

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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, 2014.

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 condensed
consolidated interim 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 could be
a material change in the Companys results of operations, financial condition
and cash flows.

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

Liability to sell silver to Silver Wheaton Caymans and
gold to Sandstorm Gold Ltd

The Company has accounted for and presented the liability to
sell silver to Silver Wheaton Caymans and gold to Sandstorm Gold Ltd 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.

Financial instruments

The Companys financial instruments at December 31, 2014
consist of cash and cash equivalents, trade and other receivables, restricted
cash, an equity investment in Fortune Bay, trade and other payables, the
convertible debentures and the line of credit.

At December 31, 2014, the carrying amounts of cash and cash
equivalents, trade and other receivables, restricted cash and trade and other
payables are considered to be a reasonable approximation of their fair values
due to their short-term nature.

The Companys equity investment in Fortune Bay is designated as
available for sale and is held at fair value. Any unrealized gains or losses on
available for sale assets are recognized in other comprehensive income (OCI).
During the period from March 5 to December 31, 2014, the Company recorded an
unrealized loss of $0.5 million in OCI relating to its investment in Fortune
Bay. Fortune Bay is a publicly-listed company and the fair value is based on the
trading price its shares as at the date of the condensed consolidated interim
statement of financial position.

The fair value of the convertible debentures upon initial
recognition was based on the present value of the future cash flows to be paid
under the terms of the debentures. Subsequently, the convertible debentures are
being carried at amortized cost. The fair value of the line of credit upon
initial recognition was considered to be its face value and is subsequently
being carried at amortized cost.

52

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

| |                              |   | Fair value (i)   |  |   | Carrying value   | 
| | ---------------------------- | - | ---------------- |  | - | ---------------- | 
| | (In thousands of US dollars) |   | December 31,2014 |  |   | December 31,2014 | 
| |                              | $ |                  |  | $ |                  | 
| | Convertible debentures       |   | 48,954           |  |   | 46,315           | 
| | Line
      of credit         |   | 37,786           |  |   | 37,827           | 

(i) Calculated using a discounted cash
flow analysis

Derivative instruments - Embedded derivatives

Financial instruments and non-financial contracts may contain
embedded derivatives, which are required to be accounted for separately at fair
value as derivatives when the risks and characteristics of the embedded
derivatives are not closely related to those of their host contract and the host
contract is not carried at fair value. The Company regularly assesses its
financial instruments and non-financial contracts to ensure that any embedded
derivatives are accounted for in accordance with its policy. There were no
material embedded derivatives requiring separate accounting at December 31, 2014
or December 31, 2013, other than those discussed below.

The convertible debentures assumed with the acquisition of
Brigus are considered to contain an embedded derivative liability which was
initially recognized at fair value using an option pricing model, and is
subsequently measured at fair value each period during the term of the
debentures. During the year ended December 31, 2014 an unrealized derivative
gain of $2.3 million was recognized in relation to this derivative liability.

53

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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 ensures non-related counterparties
demonstrate minimum acceptable credit worthiness and ensures liquidity of
available funds.

The Company closely monitors its financial assets and does not
have any significant concentration of credit risk with non-related parties. The
Company 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, 2014 is considered to be
negligible.

The Companys maximum exposure to credit risk at December 31,
2014 and 2013 is as follows:

| | (In thousands of US dollars) |   | 2014   |  |   | 2013    | 
| | ---------------------------- | - | ------ |  | - | ------- | 
| |                              | $ |        |  | $ |         | 
| |                              |   |        |  |   |         | 
| | Cash                         |   | 45,035 |  |   | 110,711 | 
| | Trade and other receivables  |   | 7,607  |  |   | 4,794   | 
| | Taxes receivable             |   | 25,724 |  |   | 10,224  | 

The Company has no concentrations of credit risk. There is 10
months of VAT outstanding from the Mexican tax authorities (included in taxes
receivable), which the Company expects to be refunded in due course.

|(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.

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 Company expects to discharge its commitments as they come
due from its existing cash balances, cash flow from operations and collection of
receivables. The Company has no concentrations of liquidity risk.

The Company has entered into commercial leases on certain types
of equipment and office space which have been classified as operating leases.
These leases have lives of between 1 and 6 years. There are no restrictions
placed on the Company as a result of entering into these leases. Some of the
leases contain renewal or purchase options at the end of the lease. The total
operating lease expense during the year ended December 31, 2014 was $2.2 million
(2013 - $0.8 million).

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

|(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, Canadian dollars and Mexican
pesos. The appreciation of the Mexican peso or the Canadian dollar 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
is further exposed to currency risk through non-monetary assets and liabilities
of its Mexican and Canadian entities 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 (Note 2(ii)). 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.

During the year ended December 31, 2014, the Company recognized
a gain of $2.7 million on foreign exchange (2013 - loss of $0.8 million). Based
on the above net exposures at December 31, 2014, a 10% depreciation or
appreciation of the Mexican peso against the U.S. dollar would result in a $2.2
million increase or decrease in the Companys after-tax net earnings (loss)
(2013 - $8.2 million); and a 10% depreciation or appreciation of the Canadian
dollar against the U.S. dollar would result in a $9.4 million increase or
decrease in the Companys after-tax net earnings (loss) (2013 - $2.1 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s exposure to interest rate risk is limited to the line of credit which
is subject to a floating interest rate. An increase or decrease of 100 basis
points in the interest rate would result in a decrease or increase in profit
after tax of $0.4 million (assuming $40.0 million drawn on the line of
credit).

|(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.

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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.

| |               |  |  |         |   | For the year
      ended |       
| | ------------- |  |  | ------- | - | ------------------------ | ------
| |               |  |  |         |   | December 31, 2014        |       
| |               |  |  |         | $ | 000s                     |       
| | Gold prices   |  |  |         |   |                          |       
| | 10% increase  |  |  | 16,880  |   |                          | 9,993 
| | 10% decrease  |  |  | (16,880 | ) |                          | (9,993
| |               |  |  |         |   |                          |       
| | Silver prices |  |  |         |   |                          |       
| | 10% increase  |  |  | 1,823   |   |                          | 1,511 
| | 10% decrease  |  |  | (1,823  | ) |                          | (1,511

The Company has no concentrations of market risk.

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, 2013, 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, 2014,
which is expected to be filed by March 31, 2015 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.

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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.

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. 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

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

| |  | 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 condensed consolidated interim financial statements.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management assessed the effectiveness of Primeros internal
control over financial reporting as at December 31, 2014, based on the criteria
set forth in Internal Control  Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In
connection with the assessment, management identified a material weakness solely
relating to the valuation of business combinations with respect to the
acquisition of Brigus. A material weakness is a control deficiency that could
result in a material misstatement of the financial statements if it were not
prevented or detected on a timely basis. No material changes were made to the
allocation of the fair value of assets and liabilities for Brigus since the
allocation in its June 30, 2014 financial statements. The financial statements
for the Company are fairly presented at December 31, 2014 and for its previous
interim periods in 2014.

Because of the inherent complexities in valuing business
combinations relating to mergers and acquisitions, the Company will enhance its
internal control system by consulting with a professional valuation company with
experience and knowledge in valuing assets in accordance with applicable
accounting standards for its next material business combination.

The effectiveness of Primeros internal control over financial
reporting as at December 31, 2014 has been audited by Deloitte LLP, Primeros
independent auditors.

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

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.

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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 and Black Fox mines,                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 and the Black Fox Complex,
| |  | actual results of reclamation activities at the San Dimas
      and Black Fox mines,                                                                                                                                                                                                            
| |  | the estimation or realization of Mineral Reserves and
      Resources,                                                                                                                                                                                                                          
| |  | the timing and amount of estimated future production,
      capital expenditures and costs, including forecasted cash costs,                                                                                                                                                                    
| |  | 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,                                                                                                                                                                                         
| |  | the ability of the Company to obtain governmental
      approvals or permits in connection with the continued operation and
      development of the San Dimas mine, the Black Fox Complex and the Cerro del
      Gallo project,                                                               
| |  | 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 and Black
Fox proceeds on a basis consistent with current expectations and the Company
does not change its development and exploration plans; that the Cerro del Gallo
and Grey Fox projects 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 proposed tunnels
and access routes; 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.

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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.

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 development and exploration plans; risks
associated with developing the Cerro del Gallo and Grey Fox projects; currency
fluctuations; financing of additional capital requirements; cost of exploration
and development programs; inability to complete proposed tunnels and access
routes 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, 2013 as filed on SEDAR as well as the Companys Annual
Information Form for the year ended December 31, 2014 which is expected to be
filed by March 31, 2015, 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.

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PRIMERO MINING CORP.MANAGEMENTSDISCUSSIONANDANALYSISFORTHEYEARSENDEDDECEMBER31,2014AND2013

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.

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

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