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|                                     
|-------------------------------------
|                                     
|                                     
|                                     
|                                     
|ANNUAL INFORMATION FORM              
|                                     
|FOR THE YEAR-ENDED DECEMBER 31, 2016 
|                                     
|                                     
|                                     
|                                     
|MARCH 31, 2017                       
|                                     
|                                     
|                                     
|                                     
|PRIMERO MINING CORP.                 
|Suite 2100, 79 Wellington Street West
|TD South Tower                       
|Toronto, Ontario, Canada M5K 1H1     

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TABLE OF CONTENTS

|INTRODUCTORY
      NOTES                                                                                                    | 2 
|--------------------------------------------------------------------------------------------------------------------------- | --
|CAUTIONARYNOTEREGARDINGFORWARD-LOOKINGSTATEMENTS                                                                            | 2 
|*CAUTIONARY
      NOTES TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF MEASURED,
      INDICATED AND* INFERREDRESOURCES | 4 
|CURRENCY                                                                                                                    | 5 
|GOLD
      AND SILVER PRICES                                                                                                | 5 
|CORPORATE
      STRUCTURE                                                                                                   | 6 
|GENERAL
      DEVELOPMENT OF THE BUSINESS                                                                                   | 8 
|CORPORATESTRATEGY                                                                                                           | 8 
|BUSINESS
      OF PRIMERO                                                                                                   | 12
|OVERVIEW                                                                                                                    | 12
|PRODUCT
      ANDECONOMICDEPENDENCE                                                                                         | 13
|COMPETITIVECONDITIONS                                                                                                       | 13
|CHANGES
      TOCONTRACTS                                                                                                   | 13
|EMPLOYEES                                                                                                                   | 13
|FOREIGNOPERATIONS                                                                                                           | 14
|ENVIRONMENTALPROTECTION                                                                                                     | 14
|SOCIAL
      ANDENVIRONMENTALPOLICIES                                                                                       | 14
|SAN
      DIMAS MINE                                                                                                        | 17
|BLACK
      FOX MINE                                                                                                        | 25
|CERRO
      DEL GALLO PROJECT                                                                                               | 30
|RESERVES
      ANDRESOURCES                                                                                                 | 32
|GREY
      FOX PROJECT                                                                                                      | 34
|RISK
      FACTORS                                                                                                          | 36
|DIVIDENDS                                                                                                                   | 51
|CAPITAL
      STRUCTURE                                                                                                     | 51
|COMMONSHARES                                                                                                                | 51
|PREFERREDSHARES                                                                                                             | 51
|OPTIONS,
      WARRANTS ANDDEBENTURES                                                                                       | 52
|DIRECTORSPHANTOMSHAREUNITS                                                                                                  | 52
|EMPLOYEEPHANTOMSHAREUNITS                                                                                                   | 52
|MARKET
      FOR SECURITIES                                                                                                 | 53
|COMMONSHARES                                                                                                                | 53
|WARRANTS                                                                                                                    | 54
|CONVERTIBLEDEBENTURES                                                                                                       | 54
|DIRECTORS
      AND OFFICERS                                                                                                | 56
|PRINCIPAL
      OCCUPATIONS AND OTHER INFORMATION ABOUT PRIMEROS DIRECTORS AND EXECUTIVE
      OFFICERS                    | 58
|CONFLICTS
      OF INTEREST                                                                                                 | 62
|LEGAL
      PROCEEDINGS AND REGULATORY ACTIONS                                                                              | 63
|TRANSFER
      AGENT AND REGISTRAR                                                                                          | 63
|MATERIAL
      CONTRACTS                                                                                                    | 64
|INTERESTS
      OF EXPERTS                                                                                                  | 64
|AUDIT
      COMMITTEE                                                                                                       | 66
|SCHEDULE
      A TECHNICAL DEFINITIONS                                                                                    | 68
|SCHEDULE
      B MATERIAL MINERAL PROJECTS                                                                                | 70

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INTRODUCTORY NOTES

Cautionary Note Regarding Forward-Looking Statements

Capitalized terms used in this
section are as defined in the following sections of this annual information form
(Annual Information Form or AIF): Corporate Structure and General
Development of the Business and Mining Activities.

This AIF contains
forward-looking information and forward-looking statements within the meaning
of applicable United States and Canadian securities laws. Generally, these
forward-looking statements can be identified by the use of forward-looking
terminology such as believes, intends, may, will, should, plans,
anticipates, potential, expects, estimates, forecasts, budget,
likely, goal and similar expressions or statements that certain actions,
events or results may or may not be achieved or occur in the future. In some
cases, forward-looking information may be stated in the present tense, such as
in respect of current matters that may be continuing, or that may have a future
impact or effect. Forward-looking statements reflect our current expectations
and assumptions, and are subject to a number of known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any anticipated future results,
performance or achievements expressed or implied by the forward-looking
statements.

Forward-looking statements in
this AIF include those that relate to: the ability of the Company to operate and
expand production at its existing mines; the effect of mining techniques and
methods such as long-hole mining or changing labour shifts; the ability of the
Company to grow through acquisition; the ability to identify new Mineral
Resources and convert Mineral Resources into Mineral Reserves; the Advance
Pricing Agreement (APA) and the Companys ability to defend its validity
against the legal claim from the Mexican Tax authorities seeking to nullify the
APA; the Companys ability to pay taxes in Mexico on realized silver prices; the
Companys intentions to become an intermediate gold producer; the impact of
estimation methodologies on mine and production planning; the ability to
generate cash flows that exceed requirements; the timing and amount of capital
expenditures and costs; the development of new mineral deposits; the Companys
ability to replace the credit facility with
a longer-dated loan; the Companys ability to meet its financial obligations and
to return the San Dimas mine to profitability; the Companys intentions to
complete future financings to raise additional capital as needed; expected ore
grades, recovery rates and through-put; the ability of the Company to comply
with environmental, safety and other regulatory requirements as well as the
Companys policies in respect thereof; expected or proposed development or
construction activities, and the expected costs thereof; expectations regarding
currency fluctuations; the timing and results of union contract negotiations;
title disputes relating to the Companys properties; the timing and possible
outcome of pending litigation including securities class actions initiated
against the Company in California; the Companys issuance of a Notice of Intent
to submit a claim to international arbitration pursuant to NAFTA; the ability of
the company to meet all NYSE listing requirements; future prices of precious and
base metals; the ability of the Company to obtain and maintain government
approvals or permits in connection with the continued operation and development
of its operations, development project and exploration properties; the impact of
the acquisitions on the business and operations of the Company; and the ability
of the Company to maintain effective internal control over financial reporting.

Such forward-looking information
is based upon factors and assumptions that, while considered reasonable by the
Company as of the date of such statements, are inherently subject to
uncertainties and contingencies, and, if incorrect, could cause actual future
results to be materially different than expressed in the forward-looking
statements. The assumptions and factors which may prove to be incorrect,
include, but are not limited to: the specific assumptions set forth in
this AIF; the expectations and beliefs of management; assumptions relating to
the availability of suitable mining assets for acquisition on reasonable terms;
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, environmental
concerns or otherwise; that development and expansion at the Companys
operations and project proceeds on a basis consistent with current expectations
and the Company does not change its development and exploration plans; that the
exchange rate between the Canadian dollar, the Mexican peso and the United
States dollar remain consistent with current levels or as set out in this AIF;
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 and is consistent with estimates; that plant,
equipment and processes will operate as anticipated; that there are no material
variations in the current tax and regulatory environment or the tax positions
taken by the Company; that the Company will maintain access to surface rights;
that the Company will be able to obtain and maintain government approvals or
permits in connection with the continued operation and development of its
existing operations, development and exploration activities; that the Company
will be able to replace the
credit facility with a longer dated loan; that the Company will be able to meet
its financial obligations; that the Company will be able to renegotiate the
collective bargaining agreement with its unionized employees at the San Dimas
mine; that the Company will be able to return the San Dimas mine to
profitability; that the Company will be able to meet all NYSE listing
requirements; and that the Company can access adequate financing, appropriate
equipment and sufficient labour, all at acceptable rates. No assurance can be
given that these assumptions will prove to be correct. These assumptions should
be considered carefully by readers. Readers 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.

2

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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,
  silver and other metals; uncertainty of Mineral Reserves, Mineral Resources,
  Inferred Mineral Resources, the inability to realize exploration potential,
  mineral grades and mineral recovery estimates; uncertainty of future production,
  delays in completion of expansion, exploration and development plans for any
  reason including insufficient capital, delays in permitting, and labour issues;
  our ability to defend the validity of the APA and defend against related
  securities litigation; inability to maintain or acquire attractive mining
  properties on terms it considers acceptable or at all; other risks inherent with
  acquisitions including integration inefficiencies and potential unknown
  liabilities associated therewith; the ability of the Company to comply with its
  obligations under material agreements including financing agreements; the
  inability of the Company to replace the existing credit facility with a longer dated loan; the inability of
  the Company to meet all NYSE listing requirements; the inability of the Company
  to renegotiate its collective bargaining agreement with its unionized employees
  at the San Dimas mine; the inability of the Company to return the San Dimas mine
  to profitability; the ability of the Company to achieve projected gold and
  silver production, and gold and silver grades; projected cash costs of
  production, development and exploration, and capital expenditures may be greater
  than anticipated; currency fluctuations beyond those that are typical or
  anticipated; limitations on insurance coverage; commercial viability of mineral
  deposits; inability to complete any development projects for any reason; risks
  associated with the adequacy of infrastructure, including interruptions in power
  supply; mining risks, including unexpected formations, cave-ins and voids, which
  delay operations or prevent extraction of material; risks associated with
  competition in the mining industry; risks associated with the ability to retain
  key executives and key operating personnel; risks associated with conflicting
  legal obligations of directors and officers of the Company who are directors
  and/or officers of other companies; risks associated with foreign operations;
  adverse changes in labour laws or in the Companys labour relations, or labour
  disputes, accidents or other adverse safety incidents; title disputes or claims;
changes in other regulations that result in increased costs; cost of
environmental expenditures and potential environmental liabilities;
dissatisfaction or disputes with local communities or first nations; and failure
of plant, equipment or processes to operate as anticipated. Should one or more
of these risks and uncertainties materialize, or should any underlying
assumptions prove incorrect, actual results may vary materially from those
described in forward-looking statements.

3

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Readers are advised to carefully
  review and consider the risk factors identified in this AIF under the heading
  Risk Factors 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. Readers 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 AIF. The
  forward-looking information and statements contained in this AIF are made as of
  the date hereof and, accordingly, are subject to change after such date. The
  Company does not undertake any obligation 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 Notes to United States Investors Concerning
Estimates of Measured, Indicated and Inferred Resources

The disclosure in this AIF uses
terms that comply with reporting standards in Canada and certain estimates are
made in accordance with National Instrument 43-101 - Standards of Disclosure
for Mineral Projects (NI 43-101). NI 43-101 is a rule developed by the
Canadian Securities Administrators that establishes standards for all public
disclosure an issuer makes of scientific and technical information concerning
mineral projects. Unless otherwise indicated, all mineral reserve and mineral
resource estimates contained in or incorporated by reference in this AIF have
been prepared in accordance with NI 43-101. These standards differ significantly
from the requirements of the United States Securities and Exchange Commission
(the SEC), SEC Industry Guide 7 under the United States Securities and
Exchange Act of 1934, as amended (Guide 7) and mineral reserve and mineral
resource information contained herein and incorporated by reference herein may
not be comparable to similar information disclosed by U.S. companies.

This AIF uses the terms Mineral
Reserve, Proven Mineral Reserve and Probable Mineral Reserve which are
terms defined in the Canadian Institute of Mining, Metallurgy and Petroleum
which were adopted by the Canadian Securities Administrators NI 43-101 (see
Schedule A Technical Definitions). Under SEC-Guide 7, mineralization may not
be classified as a reserve unless the determination has been made that the
mineralization could be economically and legally produced or extracted at the
time the reserve determination is made. Among other things, all necessary
permits would be required to be in hand or issuance imminent in order to
classify mineralized material as reserves under the SEC standards. Accordingly,
Mineral Reserve estimates contained in this AIF may not qualify as reserves
under SEC standards. In addition, disclosure of contained ounces is permitted
disclosure under Canadian regulations; however, the SEC only permits issuers to
report mineralization as in place tonnage and grade without reference to unit
measures.

This AIF also uses the terms
Mineral Resources, Indicated Mineral Resources and Inferred Mineral
Resources. We advise investors that while such terms are recognized and
required by Canadian securities laws, the SEC does not recognize them. Inferred
Mineral Resources have a great amount of uncertainty as to their existence, and
great uncertainty as to their economic and legal feasibility. It cannot be
assumed that all or any part of an Inferred Mineral Resource will ever be
upgraded to a higher category. Under Canadian securities laws, estimates of
Inferred Mineral Resources may not form the basis of feasibility or other
economic studies, except in limited circumstances. Mineral Resources that are
not Mineral Reserves do not have demonstrated economic viability.
None of the following mineralization has been demonstrated to be ore nor is
considered to be a Mineral Reserve. Investors are cautioned not to assume that
all or any part of Measured Mineral Resources or Indicated Mineral Resources
will ever be converted into Mineral Reserves. Investors are also cautioned not
to assume that any part or all of an Inferred Mineral Resource exists, or is
economically or legally mineable. See Risk Factors.

4

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NI 43-101 also permits the
  inclusion of disclosure regarding the potential quantity and grade, expressed as
  ranges, of a target for further exploration provided that the disclosure (i)
  states with equal prominence that the potential quantity and grade is conceptual
  in nature, that there has been insufficient exploration to define a Mineral
  Resource and that it is uncertain if further exploration will result in the
  target being delineated as a Mineral Resource, and (ii) states the basis on
  which the disclosed potential quantity and grade has been determined. Disclosure
  regarding exploration potential has been included in this AIF. United States
  investors are cautioned that disclosure of such 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 Mineral
Resources being identified.

For the above reasons,
information contained in this Annual Information Form may not be comparable to
similar information disclosed by U.S. companies subject to the reporting and
disclosure requirements under the United States federal securities laws and the
rules and regulations promulgated thereunder.

Currency

Unless otherwise stated,
references herein to $ are to the United States dollar. References to CDN$
are to the Canadian dollar. References to - [amount] pesos or to pesos are
to the Mexican peso. The following table reflects the low and high rates of
exchange for one United States dollar, expressed in Canadian dollars, during the
periods noted, the rates of exchange at the end of such periods and the average
rates of exchange during such periods, based on the Bank of Canada noon spot
rate of exchange.

|                                      |   | Year ended
      December 31 | 
|------------------------------------- | - | ---------------------------- | 
|                                      |   | 2016                         | 
|Low for the period                    | $ | 1.2544                       | 
|High for the period                   |   | 1.4589                       | 
|Rate at the end of the period         |   | 1.3427                       | 
|Average noon spot rate for the period |   | 1.3248                       | 

On March 30, 2017, the Bank of
Canada noon spot rate of exchange was $1.00  CDN$1.3279.

Gold and Silver Prices

Gold Prices

The low, high, average and
closing afternoon fixing gold prices in United States dollars per troy ounce for
each of the three years ended December 31, as quoted by the London Bullion
Market Association, were as follows:

5

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|                       |   | Year ended
      December 31 | 
|---------------------- | - | ---------------------------- | 
|                       |   | 2016                         | 
|Low for the period     | $ | 1,077                        | 
|High for the period    |   | 1,366                        | 
|Average for the period |   | 1,251                        | 
|Closing for the period |   | 1,146                        | 

On March 30, 2017, the closing
afternoon fixing gold price in United States dollars per troy ounce, as quoted
by the London Bullion Market Association, was $1,249.

Silver Prices

The low, high, average and
closing afternoon fixing silver prices in United States dollars per troy ounce
for each of the three years ended December 31, as quoted by the London Bullion
Market Association, were as follows:

|                       |   | Year ended
      December 31 | 
|---------------------- | - | ---------------------------- | 
|                       |   | 2016                         | 
|Low for the period     | $ | 13.58                        | 
|High for the period    |   | 20.71                        | 
|Average for the period |   | 17.14                        | 
|Closing for the period |   | 16.24                        | 

On March 30, 2017, the
closing afternoon fixing silver price in United States dollars per troy ounce,
as quoted by the London Bullion Market Association, was $18.10.

CORPORATE STRUCTURE

Primero Mining Corp. is
incorporated under the British Columbia Business Corporations Act (the
Act). On August 6, 2010, the Company acquired the San Dimas Mine (the San
Dimas Mine), mill and related assets (collectively the San Dimas Assets) from
Desarrollos Mineros San Luis, S.A. de C.V. (DMSL) and the shares of Silver
Trading (Barbados) Limited (Silver Trading) from Goldcorp Silver (Barbados)
Ltd. (GSBL), each indirect, wholly-owned subsidiaries of Goldcorp Inc.
(Goldcorp). On May 22, 2013, Primero acquired a 69.2% interest in the Cerro
del Gallo project (Cerro del Gallo Project) by acquiring all of the shares of
Cerro Resources NL (Cerro), a mining company listed on Australian Securities
Exchange (ASX). On December 19, 2013, the Company acquired the remaining 30.8%
interest in the Cerro del Gallo Project from a subsidiary of Goldcorp. See
General Development of the Business  Three Year History  Acquisition of Cerro
del Gallo.

On March 5, 2014, the Company
acquired all of the shares of Brigus Gold Corp. (Brigus) which owned a 100%
interest in the Black Fox mine, mill and related assets (collectively the Black
Fox Complex). See General Development of the Business  Three Year History 
Acquisition of Black Fox Complex. Brigus was renamed Primero Gold Canada Inc.
on March 28, 2014.

Effective January 1, 2015,
Primero Mining Corp. and Primero Gold Canada Inc. amalgamated under the name of
Primero Mining Corp.

6

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In this AIF, the terms Company
or Primero refer to Primero Mining Corp. and all its subsidiaries together
unless the context otherwise clearly requires. Certain terms used herein are
defined in the disclosure to which the term relates.

Primero has four principal,
wholly-owned subsidiaries: Primero Empresa Minera, S.A. de C.V. (Primero
Empresa), which is incorporated under the laws of Mexico; Silver Trading, which
is incorporated under the laws of Barbados; Primero Mining Luxembourg s.à.r.l.,
which is incorporated under the laws of Luxembourg; and San Anton Resource
Corporation, which is incorporated under the laws of Canada. The following chart
shows the organization of Primero and the ownership of its mineral
properties.



|(1) | Martin Aguilar, the General Manager of the Company and a
      Mexican resident, holds one share to meet Mexican corporate legal
      requirements.                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Primero Mining Luxembourg s.à.r.l. is a holding company
      used by the Company to finance its operations.                                                                           
|(3) | Primero Empresa Minera, S.A. de C.V. is the owner and
      operator of the San Dimas Mine.                                                                                            
|(4) | Silver Trading (Barbados) Limited is a trading and
      holding company.                                                                                                              
|(5) | Primero Compañía Minera, S.A. de C.V. is a service
      company.                                                                                                                      
|(6) | Primero Servicios Mineros, S.A. de C.V. is a service
      company.                                                                                                                    
|(7) | Primero Transportes Aéreos, S.A. de C.V. is an air taxi
      service company. The remaining 11.25% of shares are held by a nominee to
      meet Mexican corporate legal requirements.
|(8) | Primero Auxiliares de Administración, S.A. de C.V. is a
      service company.                                                                                                         

The head office of Primero is
located at Suite 2100, 79 Wellington Street West, TD South Tower, Toronto,
Ontario, Canada, M5K 1H1, telephone (416) 814-3160, facsimile (416) 814-3170.
The Companys registered office is located at Suite 1500, 1055 West Georgia
Street, Vancouver, British Columbia, Canada, V6E 4N7, telephone (604) 689-9111, facsimile
(604) 685-7084. The Companys website address is www.primeromining.com.

7

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GENERAL DEVELOPMENT OF THE BUSINESS

Corporate Strategy

Over the past few years, Primero
has evolved from a single-asset gold and silver producer listed on the Toronto
Stock Exchange (the TSX) and the New York Stock Exchange (NYSE) into a
multi-asset, multi-jurisdiction gold and silver producer with two producing
mines and significant exploration potential.

Prior to 2012, Primero had only
one producing asset and one exploration property, both in Mexico, the San Dimas
Mine and the Ventanas property. Since then, Primero has grown in size and
diversity through several acquisitions. In 2013, Primero acquired an advanced
stage development property in Mexico, the Cerro del Gallo Project in Guanajuato,
Mexico. In March 2014, Primero acquired a second producing asset and exploration
property in Canada, the Black Fox Complex.

Since 2013, the Company has
focused on optimizing its foundation asset by implementing initiatives to
increase production, reduce costs and expand Mineral Reserves and Mineral
Resources at the San Dimas mine. In 2014, the Company undertook and completed
the expansion of the San Dimas mine and mill from 2,150 tonnes per day (TPD)
to 2,500 TPD. During 2015 the Company further optimized the San Dimas mill to
enable it to operate at higher rates.

Upon acquiring the Black Fox
Complex in 2014, the Company embarked upon similar optimization initiatives
focusing on reducing costs and increasing productivity as well as an evaluation
of the assets near term potential, increasing underground exploration and
development throughout the year. The Company depleted the Black Fox open pit
during the third quarter of 2015. Primero continues to believe that there is
significant exploration upside at across the Black Fox Complex.

During 2015 the Company acquired
approximately 10,000 hectares of new concessions from the Mexican Mining
registry in the vicinity of the San Dimas and Ventanas concessions and in 2016
it further acquired a significant mineral concession area of approximately
30,192 hectaresbetween the San Dimas mine and the Ventanas exploration
property, thereby closing the gaps between these concessions (the Southern
Concessions).

8

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THREE YEAR HISTORY

Recent Developments

2017

Work Stoppage at San Dimas

On February 15, 2017, the Company
announced that unionized employees at its San Dimas mine in Mexico had initiated
a strike action which resulted in the complete stoppage of mining and milling
activities at the site. The stoppage comes as a result of the failure to reach
an agreement during the negotiation of the Collective Bargaining Agreement
(CBA).

Executive Leadership Change

On February 23, 2017, the Company
announced the appointment of Mr. Joseph Conway as Interim President and Chief
Executive Officer upon the departure of Mr. Ernest Mast as President and Chief
Executive Officer.

Strategic Review Process

On February 27, 2017, the Company
announced that the Board of Directors had commenced a strategic review process
to explore alternatives to improve shareholder value. The alternatives could
include such things as strategic investments, joint ventures or asset sales.

Extension of existing Revolving Credit Facility

On March 24, 2017, the Company
announced that it had agreed in principle with its lenders to an extension of
its existing RCF (as defined below) previously maturing in May 23, 2017. Upon completion of the
amending agreement, the maturity of the RCF will be extended by six months to
November 23, 2017. The amending agreement would exclude financial covenants in
the amended RCF during the six month period to support the San Dimas restart
plan. Silver Wheaton Corp. will guarantee amounts payable under the RFC to
assist the Company to meet its financial obligations and return the San Dimas
mine to profitability.

Closing of Extension of existing Revolving Credit  Facility

On March 31, 2017, the Company announced that it has  closed the extension of the maturity of its $75 million RCF with its syndicate  of lenders. The RCF will now mature on  November 23, 2017 and will exclude financial covenants until the extended  maturity date. The RCF continues to be secured by a charge over substantially  all of the Company’s assets and is now guaranteed by Silver Wheaton for a fee  of $2.6 million payable at maturity. On  this same date, Primero drew down $10 million from the RCF which then has $60  million drawn. An additional $15 million  remains available for drawdown subject to Silver Wheaton’s consent unless the  proceeds are used solely in connection with the restart of the San Dimas  operations.

2016

Operational Challenges

The Company began 2016 with
efforts to create and sustain a safety-first culture at its operations.
Consequently, the Company implemented enhanced ground support standards at its
San Dimas mine which directly impacted operations for the first quarter of 2016.
During the second quarter of 2016, production at San Dimas was impacted by
unexpected labor disruptions along with lower than planned grades which resulted
in a further update to the Companys production guidance. During the third
quarter of 2016, production at San Dimas was affected by unplanned workers
absences and lack of achievement of mine plans, which resulted in reduced
underground development rates and delayed certain ventilation improvement
projects, all of which resulted in a reduction of the Companys 2016 production
guidance.

9

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Legal Claims

On February 3, 2016, the
Company announced that it had received a legal claim from the SAT, seeking to
nullify the APA issued by the SAT (defined below) in 2012. The APA confirmed the
Company's basis for paying taxes on realized silver prices for the years 2010 to
2014 and represented the SAT's agreement to accept that basis for those years.
The legal claim initiated does not identify any different basis for paying
taxes. The Company believes this legal claim is without merit and it intends to
vigorously defend the validity of its APA. See Risk Factors.

In addition, a class action
lawsuit was filed in February 2016 against the Company in the State of
California seeking to recover damages for investors in the Companys common
shares under the U.S. federal securities laws. The Company filed a motion to
dismiss which was granted on January 30, 2017. The Plaintiffs claims were
dismissed without prejudice and the plaintiffs filed an amended complaint on
February 27, 2017. The Company will vigorously defend this class action lawsuit
if it proceeds.

Announcement of intentions to repay the Brigus Debentures

On February 10, 2016, the Company
announced its intention to redeem with cash its outstanding $48.1 million 6.5%
senior unsecured convertible debentures due March 31, 2016 (the Brigus
Debentures) and further announced that it had drawn $50 million under its
Revolving Credit Facility to satisfy the repayment of the Brigus Debentures. The
Brigus Debentures were paid on March 30, 2016.

NAFTA Dispute

On June 2, 2016, the Company
issued a Notice of Intent to submit a claim to international arbitration against
the government of Mexico pursuant to Article 1119 of the North American Free
Trade Agreement (NAFTA). The Notice of Intent highlights the improper actions
taken by the Mexican tax authority, Servicio de Administración Tributaria
(SAT). These actions have the intent of revoking legal rights previously
granted to Primero and upon which Primero relied to expand its investment in
Mexico.

Acquisition of Mineral Concessions

On June 14, 2016, the Company
acquired a large concession area adjacent to its San Dimas mine in Durango,
adding 30,192 hectares substantially covering the area between the San Dimas
mine and the Ventanas exploration property. These new concessions are not
covered by the San Dimas Silver Purchase Agreement.

Prospectus Offering

On June 24, 2016, the Company
closed a bought deal underwritten prospectus financing with a syndicate of
underwriters, pursuant to which the Company issued 22,022,500 units of the
Company at a price of C$2.35 per unit for aggregate gross proceeds of
C$51,752,872. Each unit consisted of one Common Share of the Company and
one-half of one Common Share purchase warrant of the Company. Each whole warrant
entitles the holder to acquire one Common Share of the Company at a price of
C$3.35 per Common Share until June 25, 2018.

Executive Changes

On October 6, 2016, the
Company appointed Mr. Damien Marantelli as Chief Operating Officer. Mr.
Marantelli is the successor to Mr. Guillermo Adrian who was the Companys
Vice-President of Operations and was killed in the plane crash reported on April
2, 2016. On September 1, 2016, the Company appointed Mr. Kevin Jennings as Chief
Financial Officer (CFO) replacing Ms. Wendy Kaufman.

10

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On January 31, 2016, Mr. Ernest
Mast assumed the role of President and Chief Executive Officer of the Company
and Director of the Board in replacement of Mr. Joseph Conway who assumed the
role of Executive Vice Chairman of the Company.

NYSE Notice

On December 27, 2016, the
Company announced that it had received formal notification from the New York
Stock Exchange (NYSE) of its non-compliance with the exchanges continued
listing standards for minimum trading price.

2015

Amalgamation

Effective January 1, 2015,
Primero Mining Corp. and Primero Gold Canada Inc. (formerly Brigus) amalgamated
under the name of Primero Mining Corp. under the Act

Convertible Debenture Prospectus Offering

On February 9, 2015, the Company
announced the closing of an underwritten prospectus offering of $75 million
aggregate principal amount of 5.75% convertible unsecured subordinated
debentures (the 2015 Debentures), maturing on February 28, 2020. The 2015
Debentures are convertible into Common Shares at a conversion price of
approximately $6.55 per share, representing a conversion rate of 152.6718 Common
Shares per $1,000 principal amount of 2015 Debentures. Upon conversion, holders
will be entitled to receive accrued and unpaid interest up to, but excluding,
the date of conversion.

Executive Changes; Head Office Consolidation

As part of the Companys
evolution and focus on maintaining efficiency as it continues to grow, the
Company made the decision mid-2014 to consolidate its functions in a
Toronto-based head office, initiating the closure of its Vancouver office where
the corporate accounting and reporting team had previously been located. The
Company appointed Ms. Wendy Kaufman to the role of CFO based in Toronto in
September 2014. Further, on February 2, 2015, the Company announced the
appointment of Mr. Ernest Mast, as President and Chief Operating Officer to fill
the position that had been vacant since mid-October 2014 when the prior Chief
Operating Officer resigned to pursue another opportunity.

2014

Acquisition of the Black Fox Complex

On March 5, 2014, Primero
completed the acquisition of Brigus whereby Primero acquired all of the issued
and outstanding common shares of Brigus by way of a plan of arrangement under
the Canada Business Corporations Act (the Brigus Acquisition).
Brigus owned 100% of the Black Fox Complex, an open pit and underground mine and
nearby mill, as well as associated exploration properties (Grey Fox and Pike
River). The Black Fox Complex is located in the Timmins mining district in the
Province of Ontario. See Mining Activities  Black Fox Complex. Brigus also
owned certain other properties which were spun into a new company Fortune Bay
Corp. (Fortune Bay).

11

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Under the plan of arrangement,
former shareholders of Brigus received 0.175 of a Common Share, $0.000001 in
cash and 0.1 of a common share of Fortune Bay, for each common share of Brigus
held. In addition, Primero also assumed Brigus outstanding TSX-listed
convertible unsecured subordinated debentures due March 31, 2016 and certain
TSX-listed common share purchase warrants. The legacy Brigus common share
purchase warrants subsequently expired and were delisted from the TSX. Following
completion of the plan of arrangement, Brigus was delisted from the TSX and
ceased to be a reporting issuer on March 28, 2014. On the same date, Brigus
changed its name to Primero Gold Canada Inc.

For further details regarding the
Brigus Acquisition please refer to the Amended and Restated Business Acquisition
report dated February 3, 2014, filed under the Companys profile on the System
for Electronic Document Analysis and Retrieval (SEDAR) at
www.sedar.com.

Secondary Offering of Goldcorp-held Common Shares

On March 5, 2014, Primero
announced that it had entered into an agreement with its shareholder Goldcorp
and a syndicate of underwriters to sell, on a bought deal basis, Goldcorps
31,151,200 Common Shares, then representing approximately 19.8% of the issued
and outstanding Common Shares. The closing occurred on March 26, 2014 whereupon
Goldcorp ceased to be a shareholder of the Company. The Company did not receive
any proceeds of the offering.

Revolving Credit Facility

On May 23, 2014, the Company
closed a $75 million revolving credit facility with a syndicate of lenders led
by Bank of Montreal, acting as administrative agent (the Revolving Credit
Facility or RCF). The Revolving Credit Facility has a three-year term and
bears interest at a floating interest rate equal to LIBOR or the prime lending
rate of Canada or the bankers acceptance rate (depending on the Companys
choice) plus an applicable margin, which was approximately 4.75% per annum
during the year ended December 31, 2014. The Revolving Credit Facility is
secured by substantially all of the Companys assets. The Company used funds
from the Revolving Credit Facility to repay an outstanding $27 million
promissory note held by Goldcorp bearing interest at a rate of 6% per annum and
originally due December 31, 2015. The Revolving Credit Facility was repaid from
the proceeds of the 2015 Debentures. As at December 31, 2016, $50 million had
been drawn under the Revolving Credit Facility and $25 million remained
available to the Company.

BUSINESS OF PRIMERO

Overview

Primero is a Canadian-based
precious metals producer with operations in Canada and Mexico. The Company is
focused on becoming an intermediate gold producer by building a portfolio of
high quality, low cost precious metals assets in the Americas. Primero currently
has two producing properties, the San Dimas Mine, located in Mexicos San Dimas
district on the border of Durango and Sinaloa states, and the Black Fox Complex
which is located in the Timmins mining district in Ontario, Canada. In addition,
Primero has numerous exploration properties in Mexico around the San Dimas Mine
(principally, the Lechuguilla and Ventanas properties, located in Durango state,
Mexico and the Cerro del Gallo Project located in Guanajuato state, Mexico and
exploration properties associated with the Black Fox Complex (known as Grey Fox
and Pike River).

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Product and Economic Dependence

The Companys principal products
are gold and silver. There are worldwide gold and silver markets into which the
Company can sell its products. The Company is not dependent on a particular
purchaser with regard to the sale of gold. A significant portion of its silver
produced at the San Dimas Mine is sold to Silver Wheaton (Caymans) Ltd. (SW
Caymans) under the Amended and Restated Silver Purchase Agreement. In addition,
8% of the gold produced at the Black Fox mine is sold to Sandstorm Resources
Ltd. (Sandstorm) under a gold streaming agreement. See Mining Activities 
San Dimas Mine - Amended and Restated Silver Purchase Agreement and Mining
Activities  Black Fox Complex  Sandstorm Goldstream Agreement.

Specialized Skills and Knowledge

Various aspects of the business
of the Company require specialized skills and knowledge in the areas of
international business, geology, engineering, exploration and development,
environmental, and corporate social responsibility. The Company has adequate
employees with extensive experience in these specialized areas, both in Mexico
and Canada to support the conduct of its business.

Competitive Conditions

The mining industry is
competitive in all of its aspects. Primero faces strong competition from other
mining companies in connection with the acquisition of properties producing, or
capable of producing, precious and base metals. Many of these companies have
greater financial resources, operational experience or technical capabilities
than Primero. In addition, the Company also competes with its competitors over
sourcing raw materials and supplies used in connection with its mining
operations, as well as for skilled experience workers and executives. See Risk
Factors  Operational Risks  Competition.

Changes to Contracts

As at December 31, 2016, Primero
had 823unionized employees at the San Dimas Mine who are members
of two sections of one union: Sindicato Nacional de Trabajadores Mineros and
Metalúrgicos, Siderúrgicos y Similares de la República Mexicana. The union
contracts are renegotiated every two years, except for the compensation aspects,
which are reviewed every year. See Business of Primero  Employees and
Risk Factors  Labour and Employment Matters.

Employees

As at December 31, 2016, the
Company had the following employees and contractors:

|                                   |  | Full-Time |  |  | Hourly  |  |  |             |  |  |       | 
|---------------------------------- |  | --------- |  |  | ------- |  |  | ----------- |  |  | ----- | 
|Location                           |  | Salaried  |  |  | (Union) |  |  | Contractors |  |  | Total | 
|Durango Office                     |  | 25        |  |  | Nil     |  |  | Nil         |  |  | 25    | 
|San Dimas Mine (including Truchas) |  | 462       |  |  | 823     |  |  | 570         |  |  | 1,855 | 
|Black Fox Complex                  |  | 272       |  |  | Nil     |  |  | 52          |  |  | 324   | 
|Cerro del Gallo Project            |  | 11        |  |  | Nil     |  |  | nil         |  |  | 11    | 
|Toronto Office                     |  | 31        |  |  | Nil     |  |  | 5           |  |  | 36    | 
|Total                              |  | 801       |  |  | 823     |  |  | 627         |  |  | 2,251 | 

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Foreign Operations

A significant portion of the
Companys mining and mineral exploration operations are conducted in Mexico, and
as such, Primeros operations are exposed to various levels of foreign
political, economic and other risks and uncertainties. See Risk Factors  Use
of Ejido-owned Land and Risk Factors  Foreign Operations Risks  Mexico.

Environmental Protection

The activities of the Company are
subject to environmental laws and regulations. Environmental laws and
regulations are evolving in a manner that will require stricter standards and
enforcement, increased fines and penalties for non-compliance, more stringent
environmental assessment of proposed projects and an increased degree of
responsibility for companies and their officers, directors and employees.

In particular, the Companys
mining, exploration and development activities are subject to various levels of
Mexican and Canadian federal and state/provincial laws and regulations relating
to the protection of the environment, including requirements for closure and
reclamation of mining properties, with which the Company is currently in
material compliance. During the year ended December 31, 2016, the Company spent
at San Dimas $0.5 million on capital projects related to environmental
protection, and $2.5 million at the Black Fox Complex. Additionally, the Company
accounted for its asset retirement obligations, consisting of reclamation and
closure costs of its mining properties in its financial statements. See Mining
Activities  San Dimas Mine  Environmental Matters, Mining Activities  Black
Fox Complex  Environmental Matters and Risk Factors  Environmental Risks and
Hazards.

Social and Environmental Policies

Primeros operating practices are
governed by the principles set out in its Health and Safety Policy, Environment
and Social Responsibility Policy and Code of Business Conduct and Ethics. The
Corporate Responsibility Committee of the Companys board of directors (the
Board) provides oversight in occupational health and safety, community
relations, and environmental management. Internal weekly and quarterly reporting
tracks performance indicators including human resources metrics, health and
safety, environmental monitoring, compliance with permits, materials inputs and
outputs, and community relations activities. Primeros Board and senior
management team have committed to the sustainability reporting process and
report publicly on performance through the Annual Sustainability Report and the
Companys website.

The Company plans to continue to
implement and expand the corporate responsibility programs and stakeholder
engagement activities that have been initiated. In Tayoltita the Activa
Tayoltita year-long cultural and recreational activities included educational
and sporting events and regular use of the newly constructed recreational parks.
The ongoing implementation of written agreements with local Ejidos in Mexico and
Impact Benefit Agreement (IBA) with our Wahgoshig First Nation neighbour in
Canada have generated new employment and business opportunities in their
respective communities. In 2016, the Companys commitment to its diverse
stakeholder base was reflected in the adoption of a Diversity Policy, which can
be found on the Companys website www.primeromining.com, under Board and
Committee Guidelines in the Corporate Governance section.

In March2016, for the
fifth consecutive year, the Company was awarded the Distintivo ESR
(designation as a Socially Responsible Business) by the Mexican Center for
Philanthropy. The award is given to companies operating in Mexico that are
committed to sustainable economic, social and environmental operations in all
areas of corporate life, including business ethics, involvement with the
community and preservation of the environment.

14

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In November 2015, the Company
received confirmation of The Clean Industry certificate renewal from the Federal
Environmental Protection Agency (PROFEPA). The clean industry initiative is a
voluntary program that assesses regulatory compliance and best practices in
environmental performance and which is granted every two years. As part of the
2016annual environmental awareness programs at San Dimas, this years
initiatives focused on refining the Environmental Management System (EMS) and
increased analysis of the environmental aspects identified in the EMS.

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MINERAL RESERVES AND MINERAL RESOURCES

Primeros total Mineral Reserves
and Mineral Resources at December 31, 2016, is shown in the tables below, and is
qualified by the more detailed disclosure set out in the following sections.

|Total Mineral Reserves and Mineral Resources as at December
      31, 2016. |          
|--------------------------------------------------------------------------- | ---------
|Classification                                                              | Property 
|Mineral Reserves                                                            |          
|Proven & Probable                                                           | San Dimas
|Proven & Probable                                                           | Black Fox
|Proven & Probable                                                           | Cerro    
|Total Proven &                                                              |          
|Probable                                                                    |          
|Mineral                                                                     |          
|Resources                                                                   |          
|Measured &                                                                  | San Dimas
|Indicated                                                                  
|Measured &                                                                  | Black Fox
|Indicated                                                                   |          
|Measured &                                                                  | Grey Fox 
|Indicated                                                                   |          
|Measured &                                                                  | Cerro    
|Indicated                                                                  
|Measured &                                                                  | Ventanas 
|Indicated                                                                  
|Total Measured                                                              |          
|& Indicated                                                                 |          
|Inferred Resources                                                          | San Dimas
|Inferred Resources                                                          | Black Fox
|Inferred Resources                                                          | Grey Fox 
|Inferred Resources                                                          | Ventanas 
|Total Inferred                                                              |          
|Resources                                                                   |          

See  Notes to Mineral  Reserves  and Mineral Resources on pages 24, 30, 33-35.

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MINING ACTIVITIES

SAN DIMAS MINE

Except as indicated below, the
following description of the San Dimas Mine has been summarized from the
technical report entitled San Dimas Property, San Dimas District, Durango and
Sinaloa State, Mexico, Technical Report for Primero Mining Corp. dated April
18, 2014 (the San Dimas Technical Report), prepared in accordance with NI
43-101 by J. Morton Shannon, P. Geo., Rodney Webster, M.AIG, and Gabriel Voicu,
P. Geo, each a Qualified Person for the purposes of NI 43-101. Readers should
consult the San Dimas Technical Report to obtain further particulars regarding
the San Dimas Mine. The San Dimas Technical Report is available for review under
the Companys profile on SEDAR at www.sedar.com.

The scientific and technical
information after April 18, 2014 under the heading Mining Activities  San
Dimas Mine is based on information reviewed and approved by Dave Laudrum,
P.Geo., Senior Resource Manager for Primero.

Amended and Restated Silver Purchase Agreement

As part of the San Dimas
Acquisition, Primero assumed the Amended and Restated Silver Purchase Agreement
among Silver Trading, SW Caymans, DMSL and Silver Wheaton, originally dated as
of October 15, 2004, restated as of March 30, 2006, amended and restated as of
August 6, 2010 (the Amended and Restated Silver Purchase Agreement). The
Amended and Restated Silver Purchase Agreement governs purchases of silver
produced from the San Dimas Mine by SW Caymans. After meeting its contractual
obligations to SW Caymans, Primero is free to sell all other produced silver at
market prices. The following is a summary of the material terms of the Amended
and Restated Silver Purchase Agreement:

| | - | The term of the Amended and Restated Silver Purchase
      Agreement is for the life of the San Dimas Mine, with an initial term
      expiring October 15, 2029, and automatic renewals for additional terms of
      ten years each, subject to SW Caymans right to terminate;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                  
| | - | Silver Trading sells annually (in a Contract Year) to
      SW Caymans an amount of refined silver (the Refined Silver) equal to:                                                                                                                                            

| | o | all ounces produced of payable silver ( Payable Silver)
      from the San Dimas mine up to 6,000,000 ounces (the Threshold Number),
      and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                   
| | o | 50% of any additional ounces of Payable Silver in excess
      of the Threshold Number of ounces of Refined Silver for such Contract
      Year.  

| | - | The purchase price for the Refined Silver is equal to the
      lesser of (a) a fixed price of $4.04 plus an increase of one percent
      annually ($4.28 for 2016) and (b) the market price of Refined Silver at
      the time of sale;                                                                                                                                                                                                                                                          
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | If, by October 15, 2031, 215 million ounces of Refined
      Silver (the Minimum Silver Amount) have not been sold and delivered to
      SW Caymans by Silver Trading under the Amended and Restated Silver
      Purchase Agreement (including amounts produced under predecessor
      agreements equal to approximately 37.25 million ounces as at April 30,
      2010), then Silver Trading will be obligated to pay to SW Caymans an
      amount (the Minimum Silver Payment), equal to:

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| | o | Minimum Silver Amount, less the number of ounces of
      Refined Silver actually sold and delivered to SW Caymans by October 15,
      2031;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |   | Multiplied by                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | o | $0.50 per ounce;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |   | Provided that (a) default in payment of the Minimum
      Silver Payment will not constitute an Event in Default under the
      Amended and Restated Silver Purchase Agreement, and (b) Goldcorp will
      indemnify Silver Trading for, and accordingly will be ultimately
      responsible for, any amount paid in respect of the Minimum Silver Payment
      under an indemnity agreement executed between Primero and Goldcorp, except
      to the extent that the deficiency payment arises because Silver Trading
      did not comply with its obligations to sell and deliver to SW Caymans
      silver required to be sold and delivered under the Amended and Restated
      Silver Purchase Agreement (other than with respect to the failure of
      Silver Trading to sell and deliver the Minimum Silver Amount).

For additional information about
the Amended and Restated Silver Purchase Agreement, go to the Companys profile
on SEDAR at www.sedar.com.

Historical Production

Historical mill production for
the San Dimas Mine from 2003 to 2016 is summarized in the following table:

|San Dimas Mine Production |  |        |  |  | Grade |  |  | Contained Ounces | 
|------------------------- |  | ------ |  |  | ----- |  |  | ---------------- | 
|                          |  | Tonnes |  |  | Gold  |  |  | Silver           | 
|Year                      |  | (Mt)   |  |  | (g/t) |  |  | (g/t)            | 
|2003                      |  | 0.424  |  |  | 5.3   |  |  | 428              | 
|2004                      |  | 0.398  |  |  | 6.9   |  |  | 525              | 
|2005                      |  | 0.508  |  |  | 7.4   |  |  | 497              | 
|2006                      |  | 0.689  |  |  | 7.8   |  |  | 438              | 
|2007                      |  | 0.685  |  |  | 6.3   |  |  | 341              | 
|2008                      |  | 0.657  |  |  | 4.3   |  |  | 259              | 
|2009                      |  | 0.673  |  |  | 5.4   |  |  | 247              | 
|2010(1)                   |  | 0.612  |  |  | 4.5   |  |  | 244              | 
|2011                      |  | 0.663  |  |  | 3.9   |  |  | 226              | 
|2012                      |  | 0.721  |  |  | 3.9   |  |  | 234              | 
|2013                      |  | 0.767  |  |  | 4.7   |  |  | 258              | 
|2014                      |  | 0.898  |  |  | 4.7   |  |  | 232              | 
|2015                      |  | 0.993  |  |  | 4.9   |  |  | 274              | 
|2016                      |  | 0.759  |  |  | 3.9   |  |  | 228              | 

|(1) | Primero acquired the San Dimas Mine on August 6,
    2010.
|--- | ----------------------------------------------------------

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Drilling

Prior to Primeros acquisition of
the San Dimas Mine, all drilling was previously termed exploration drilling and
was intended to collect data well away from the underground development that was
intensively tested by channel sampling. Commencing in 2011 definition drilling
campaigns were designed to convert Inferred Mineral Resources to Indicated
Mineral Resources, and only drilling designed to test new targets was designated
as exploration drilling. The total drilling conducted in 2016 is shown in the
following table.

|               |  | Number of   |  |  |        | 
|-------------- |  | ----------- |  |  | ------ | 
|Area           |  | Drill Holes |  |  | Metres | 
|Central Block  |  | 101         |  |  | 24,705 | 
|Sinaloa Graben |  | 64          |  |  | 17,455 | 
|Tayoltita      |  | 5           |  |  | 1,104  | 
|Santa Rita     |  | 0           |  |  | 0      | 
|West Block     |  | 12          |  |  | 3,485  | 
|El Cristo      |  | 7           |  |  | 539    | 
|Mala Noche     |  | 6           |  |  | 2,532  | 
|Total          |  | 195         |  |  | 49,820 | 

Drill holes are typically drilled
to get the best intersection possible such that the intersected width is as
close as possible to the true width, while giving vertical coverage. Drilling
underground is achieved by drilling from one vein development to another, or
from specific drill stations established on development headings driven to
access the vein. Holes are typically 200 to 250 metres long and generally
between +/- 50o in dip, while surface drilling can be up to 700
metres deep. Generally, fans are drilled on multiple sections from one set up.
Since October 2011, samples have been sent for analysis to the SGS laboratory in
Durango and bulk density measurements have been systematically taken on core
samples.

Mr. Dave Laudrum, P.Geo., Senior
Resource Manager, Primero and a Qualified Person for the purposes of NI 43-101
has reviewed the appropriate reports, and is of the opinion that the data
verification programs undertaken on the data collected from the San Dimas Mine
adequately support the geological interpretations, the analytical and database
quality, and therefore support the use of the data in Mineral Resource and
Mineral Reserve estimation, and in mine planning.

2017 Exploration Program

The San Dimas delineation and
mine exploration program for 2017 will target 8 main areas and has the goal of
finding and delineating extensions of known veins in areas close to existing
mine infrastructure.

The program includes delineation
and exploration drilling as well as underground development related to
exploration cross-cuts and establishing underground drill bays.

The proposed program includes
work in each of the West Block, Sinaloa Graben, and the Central Block.

Mining Operations

The San Dimas Mine operation
includes four underground gold and silver mining areas: the West Block (San
Antonio mine); the Sinaloa Graben Block; the Central Block and the Arana Block
(the Santa Rita mine). Vein thickness varies from 0.1 metres to 8 metres
with the average approximately 1.9 metres. Some veins have a strike length of
more than 1,500 metres. Vein dips vary from about 35o to
sub-vertical, the latter being decidedly more prevalent. The general mining
recovery factor is about 95%, while that for sill mining is about 75%.

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Typical mining of the vein
  systems is by mechanized cut-and-fill and long-hole, using drill jumbos or
  jacklegs, pneumatic long-hole drills and load-haul-dump machines, with primary
  access provided by adits and internal ramps from an extensive tunnel system
under the steep, mountainous terrain.

The basis for ore haulage at San
Dimas is load-haul-dump (LHD) equipment feeding either truck or rail haulage to
the mill at Tayoltita. Development waste is generally moved to stopes as fill.

There is one milling facility at
Tayoltita to process the production from the active mining areas in San Dimas.
The Tayoltita mill has a conventional Merrill Crowe process flowsheet that
employs crushing and grinding followed by cyanidation and zinc precipitation for
recovery of gold and silver. San Dimas operates a dry stack tailings deposition
facility, which has a minimum of 9 year life at the current processing rate.

Recent Operating History for the San Dimas Mine

In 2016 Primero implemented a
major safety initiative which required that all workers in the underground mine
would only work under supported ground, and the systematic installation of
ground support is now a requirement in all active workplaces. This initiative
reduced production rates due to the time involved in installing the ground
support.

During the year ended December
31, 2016, San Dimas produced 113,968 gold equivalent ounces within the Companys
revised guidance range of 110,000 to 120,000 gold equivalent ounces. The San
Dimas mine produced 93,881 ounces of gold and 5.3 million ounces of silver, 38%
and 36% lower, respectively, than 2015. Production at San Dimas in 2016 was
lower than 2015 due mainly to lower throughput resulting from the additional
time required to install ground support in all active workplaces, and due to
logistical and labour issues which resulted in underground development rates
which were lower than planned. Average throughput in 2016 decreased by
approximately 24% over 2015, averaging 2,079 TPD (based on 366 day
availability).

2017 Development Plans

Environmental Matters

During the year ended December
31, 2016, the Company spent $0.5 million on capital projects related to
environmental protection, being the continued improvements to the tailings
storage areas and some surface water management structures. Ultragen,
engineering consultants specialized in mechanical and piping designs, reviewed
the tailings pipelines condition and original design and recommended a series of
modifications in order to improve the safety and durability of the pipelines.
The implementation of these measures was started in late 2014 and was completed
in the third quarter of 2016 (with the exception to modifications to the
tailings pipelines suspension bridge which will be completed in the second
quarter of 2017). In 2015 a Technical Review and Risk Assessment of the Cupias
tailing storage facility was performed by Amec Foster Wheeler. The stability
evaluation of the storage facility currently in use shows that the facility
exceeds the minimum factors of safety criteria for static and seismic loading
conditions for both the current and ultimate storage configurations. Preliminary
evaluations of the current surface water management facilities shows that the
ditches, diversion dam and other structures require modifications to accommodate storm events. The engineering of
these improvements was completed in late 2015 with construction planned to start
in the first quarter of 2017.

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The San Dimas property is subject
  to a full closure plan and reclamation of the site upon cessation of operations,
  which would involve all facilities currently being used (mill, hydro plant,
  mines, surface infrastructure, power line, roads, dry tailings). The Company has
  accrued a decommissioning liability consisting of reclamation and closure costs
  for the San Dimas Mine. The undiscounted cash flow amount of the obligation was
  $28.0 million at December 31, 2016 and the present value of the obligation was
  estimated at $9.9 million, calculated using a discount rate of 7.75% and
  reflecting payments made during and at the end of the mine life, which for the
  purpose of this calculation, the Company has assumed is 17 years. In
  respect of the decommissioning liability, San Dimas Mine expects to incur $2.2
  million in 2018 and $2.0 million in 2019 to remediate the historical San Antonio
  tailings, with the remainder of the expenditures to be incurred mainly at the
end of the mine life.

On May 4, 2015, a weld on the
tailings pipeline transporting materials to the Cupias tailings storage facility
failed, spilling approximately 7 cubic metres of tailings into the Piaxtla
river. The Companys emergency response plans addressed the spill and
authorities were promptly notified. In September, 2015 the Federal environmental
authorities (PROFEPA) fined the Company 315,450 pesos which was promptly paid.
In December the National water commission, CONAGUA, fined the Company 455,650
pesos in regard to the same spill and other infractions. Following this incident
XPS Consulting & Testwork Services visited the San Dimas site in June 2015
to confirm the root cause of the spill and audited the design and improvements
of the ongoing tailings handling system improvements. Their observations and
recommendations have been applied to the system.

In addition, Primero is also
dealing with two past environmental liabilities: reclamation of old San Antonio
milling facilities and closure/reclamation of old San Antonio (Contraestacas)
tailings facilities. All work is expected to be completed in 2019.

San Antonio Tailings

Due primarily to the exhausted
capacity of the tailings dam, the San Antonio mill was closed in 2003. The
tailings dam site is located in a sharp curve in a steep walled river canyon
downstream of the mill operation. The river was diverted through two tunnels
which were excavated in the canyon wall on the inside of the river bend. A third
tunnel for road access was excavated and also serves as an additional channel
for the river in high flow periods. In 2002, the then owner of the mine (Wheaton
River Minerals Ltd.) identified the San Antonio tailings dam as a risk to
failure due to a low safety factor in the dam, risk associated with an unknown
hydrostatic head in the active tailings deposition area and possible erosion due
to a flood event in the adjacent river.

Since the shutdown of the San
Antonio mill operations, some of the risk has been removed by elimination of the
hydrostatic head in the dam and diversion of a local drainage channel. It has
been proposed that the dam safety factor be increased by extending the concrete
wall on the upstream side of the dam and protection of the downstream side by
covering it with mine waste rock. These measures would also decrease the erosion
potential of the tailings. Some of this work was initiated while options to
close and reclaim the tailings dam were studied. DMSL received approval to
reclaim the San Antonio dam by stabilizing the tailings in their current
location after the submission of an environmental assessment, which demonstrated
the validity of the plan. A scale model was developed that through a series of
tests, determined the best design from the hydraulic aspect and to determine if
some of the design features needed to be augmented. During 2007, in agreement
with the design by Knight Piésold (international geotechnical consultant), the
emplacement of a rock filled berm began with about 60% completed; however, the
rains and lack of an access road significantly affected progress. Further work
was done in 2008 and subsequent years. Full closure of the San Antonio old
tailings facilities, which consists of completing a downstream berm and spillway, is
planned to be completed in 2019. See Risk Factors  San Dimas Tailings
Management Risks.

21

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Reserves and Resources

The San Dimas Mine is an
established property with a long operating history and a record of Mineral
Reserve replacement, Mineral Resource conversion and exploration success.

At San Dimas the Mineral Reserves
and associated Mineral Resources were constrained in 62 individual geological
models (57 individual geological models in 2014). Mineral Resources were
estimated using GEMS software with ordinary kriging interpolation applied to
major veins and inverse distance squared interpolation applied to minor veins.
Resources in some additional minor veins were estimated using a polygonal method
and included in Inferred Resources. Leapfrog geological models were created
which honor the vein contacts, the gold and silver grades, structural geology,
quartz veining and mineral alteration. Grade estimation was performed on 3 metre
long by 3 metre high by 0.5 metre wide blocks. Variable grade capping was
applied to veins supported by statistical analysis and visual checks.

To convert Mineral Resources to
Mineral Reserves, mining dilution was added and mining recovery factors were
applied on an individual vein basis and respecting mining methodology. For the
block-modelled veins, Measured and Indicated Mineral Resources were defined by
combining several criteria such as a minimum of four drill holes within 15
metres and 30 metres respectively, whereas Inferred Mineral Resources were
estimated with a minimum of 2 drill holes within 30 to 45 metres. The Company
continues to utilize an external laboratory for all drill samples at San
Dimas.

Primero used a constant bulk
density of 2.7 t/ m3 for the estimation of the tonnes for all veins
in the December 2014 estimate.

Primero used a constant bulk
density of 2.6 t/m3 for the estimation of the tonnes for all veins in
the December 2015 and December 2016 estimates.

Due to the poor Quality
Assurance/Quality Control (QA/QC) results in 2011 and 2012, AMC was unable to
classify any of the Mineral Resources as a Measured Mineral Resource, but
improved QA/QC methods and practices commenced in 2012 and continued into 2013
and 2014 have allowed for Measured Mineral Resources commencing with the 2013
Mineral Resources estimate. The Company utilizes an external laboratory for all
drill samples and the channel samples that are used in Mineral Resources and
Reserve estimates. For the block-modelled veins in 2015, Measured and Indicated
Mineral Resources were defined by combining several criteria such as a minimum
of four drill holes within 15 metres and 30 metres respectively, whereas
Inferred Mineral Resources were estimated with a minimum of 2 drill holes within
45 metres.

The QA/QC process for diamond
drill core involves assaying in an external laboratory (SGS in Durango), the
regular insertion of standard reference materials and the regular insertion of
blank materials. Diamond drill core of BTW, BQ and NQ diameter is cut in half
and one half is submitted to SGS, which is an ISO certified independent
laboratory. Sample intervals have an average length of 0.7 metres and, in
general, they are no longer than 1.5 metres, although occasionally slightly
longer intervals were used. In the laboratory, the samples are dried, crushed
and pulverized to 85% of the sample passing a 75 μm sieve. Gold is analyzed by
30g fire assay with atomic absorption finish. Above 10g/t gold fire assay the
gold is analyzed with gravimetric finished. Silver is analyzed by atomic
absorption. Above 300g/t fire assay Ag is analyzed with gravimetric finish. For
exploration drilling an extra assay of ICP-OES 34 elements aqua regia digestion
is done.

22

---

Primero has assumed that the
current drill-jumbo and jackleg cut and fill mining methods continue to be
practised at San Dimas, with respective minimum mining widths of 3 metres and 1
metre. San Dimas has introduced the use of long-hole mining method rather than
cut and fill on an increasing scale, with a minimum mining width of 1.5 metres.
For the purposes of Mineral Reserve estimation unplanned mining dilution on each
side of the planned mining width is assumed to be 0.2 metres for cut and fill
and 0.3 metres for long-hole mining. For each mining method, 0.2 metres of fill
floor dilution has been assumed. Overall average dilution, planned and
unplanned, is estimated at 40%. For the veins upon which the year-end 2016
Mineral Reserve estimate is based, the respective mined tonnes from jumbo,
jackleg and long-hole mining are estimated at 14%, 45% and 41%, respectively.
Other than for sill mining, average recovery throughout each mining block for
both cut and fill and long-hole mining has been assumed to be 95%. For sill
pillars, which in the modelling process have been assumed to be the 3 metres
thickness at the top of the mining block and immediately below the sill drive, a
factor of 75% has been used.

Commencing in 2016 the Company
has applied a two-pass cut-off grade at San Dimas. Firstly an all-in sustaining
cost cut-off grade was applied to highlight areas for inclusion in the Mineral
Reserve, followed by the application of an operating cost cut-off grade to
highlight additional incremental material for potential inclusion. The all-in
sustaining cost cut-off grade applied was 3.22 g/t gold equivalent ("AuEq") and
considers direct operating costs and sustaining capital costs. The operating
cut-off grade next applied was 2.22 g/t AuEq and considers direct operating
costs only. Additional factors affecting the cut-off grade include reduced
expected throughput rates following the deferral of the 3,000 tonnes per day
expansion plan, and lower expected metallurgical recoveries of 95% for gold and
92% for silver. The Company believes that these are more appropriate recovery
rates to use due to improved metallurgical accounting practices implemented as
the mill processes lower grade ore.

San Dimas Proven and Probable
Mineral Reserves at December 31, 2016 decreased 292,000 ounces of gold and 14.0
million ounces of silver from year-end 2015. The decrease is primarily
attributable to 2016 mining depletion of 94,000 gold ounces and 5.3 million
silver ounces, updated geological modeling and lower than planned conversion
rates. The Company also applied a two-pass cutoff grade methodology with
decreased metallurgical recoveries, tighter structure control based on observed
geology and conservative dilution factors. The Company has also removed certain
areas of veins and certain remnant pillars in high-grade veins from the Mineral
Reserves. The Mineral Reserve decrease due to model adjustments with increased
geological constraints totalled 231,000 ounces of gold and 9.6 million ounces of
silver.

The results of the estimation
work are shown in the table below, which shows a summary of the Mineral
Resources and Mineral Reserves at December 31, 2016. As noted above, the
Inferred Mineral Resource is a mix of block modeled and polygonal estimates. The
relevant cut-off and price data are shown in the footnotes.

|Classification       | Tonnage
      (Mt) | Gold Grade
      (g/t) | Silver
      Grade (g/t) | Contained
      Gold (koz) | Contained Silver
      (koz)
|-------------------- | ------------------ | ---------------------- | ------------------------ | -------------------------- | ----------------------------
|Mineral Reserves     |                    |                        |                          |                            |                             
|Proven               | 1.0                | 4.6                    | 361                      | 146                        | 11,514                      
|Probable             | 3.0                | 3.9                    | 308                      | 371                        | 29,705                      
|Proven & Probable    | 4.0                | 4.0                    | 322                      | 517                        | 41,220                      
|Mineral Resources    |                    |                        |                          |                            |                             
|Measured & Indicated | 5.0                | 5.2                    | 387                      | 832                        | 61,879                      
|Inferred             | 7.2                | 3.7                    | 317                      | 860                        | 73,452                      

23

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Notes to Mineral Reserve Statement:

1. Assumed gold price of US$1,200 per troy ounce and silver
price of US$17 per troy ounce. 2. A two-pass cut-off grade was applied at
San Dimas; first-pass of 3.22 g/t gold equivalent based on total all-in costs of
$118.00/t ($81/t direct costs and $37/t sustaining capital), and second-pass of
2.22 g/t gold equivalent based on direct operating costs only. Metal supply
contract obligations have been referenced in determining overall vein reserve
estimate viability. 3. Assumed processing recovery factors at San Dimas for
gold of 95% and silver of 92%. 4. Exchange rate assumed is MXN$18.00/US$
1.00. 5. The Mineral Reserve estimates for San Dimas Mine set out in the
table above have been reviewed and approved by Mr. Patrick McCann, P.Eng.,
Principal Engineer, Primero and a Qualified Person ("QP") for the purposes of
National Instrument 43-101 ("NI 43-101"). 6. Mineral Reserves do not
consider the silver purchase agreement which exists with Silver Wheaton Corp.
such that the first 6.0 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 $4.28 per ounce (adjusted by 1% per
year) and market prices.

Notes to Mineral Resource Statement:

|1. | Mineral Resources are total and include those resources
      converted to Mineral Reserves.                                                                                                                                     
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Assumed gold price of US$1,200 per troy ounce and silver
      price of US$17 per troy ounce.                                                                                                                                    
|3. | San Dimas cut-off grade of 2.0 g/t AuEq was
    applied.                                                                                                                                                                         
|4. | The Mineral Resource estimates for San Dimas Mine set out
      in the table above have been reviewed and approved by Dave Laudrum,
      P.Geo., Senior Resource Manager for Primero and QP for the purposes of NI
      43-101.

Other than as described herein,
Primero is not aware of any known environmental, permitting, legal, title,
taxation, socio-economic, marketing, political or other relevant factors that
may materially affect the Mineral Resources.

24

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BLACK FOX MINE

The following description of the
Black Fox Complex has been summarized from the technical report entitled
Technical Report on the Mineral Resource and Mineral Reserve Estimates for the
Black Fox Complex (compliant with National Instrument 43-101 and Form 43-101F1)
dated June 30, 2014 (the Black Fox Complex Technical Report). Harold Brisson,
PhD, Eng. (OIQ), Former Resources Manager for Primero, supervised, and took
overall responsibility as QP for the entire Black Fox Complex Technical Report.
Readers should consult the Black Fox Complex Technical Report to obtain further
particulars regarding the Black Fox Complex. The Black Fox Complex Technical
Report is available for review under the Companys profile on SEDAR at
www.sedar.com.

The scientific and technical
information after June 30, 2014 under the heading Mining Activities  Black Fox
Complex has been reviewed and approved by Dave Laudrum, P. Geo, Senior Resource
Manager for Primero.

Sandstorm Goldstream Agreement

On November 9, 2010, the then
owner of the Black Fox mine, Brigus entered into the Goldstream Agreement with
Sandstorm pursuant to which Sandstorm agreed to purchase 12% of the gold
production from the Black Fox mine beginning in January 2011 and 10% of future
production from the Black Fox extension covering a portion of the adjoining Pike
River property. Sandstorm made an upfront payment of $56.3 million of which
Brigus used a portion to effectively settle the balance of its forward gold
sales contracts eliminating the obligation to deliver 99,409 ounces from October
2011 to March 2013. Sandstorm also committed to pay Brigus (now Primero) ongoing
per ounce payments of $500 subject to an inflationary adjustment beginning in
2013, not to exceed 2% per annum. Brigus had the option, for a 24 month period,
to reduce the Goldstream Agreement to a minimum of 6% of production from the
Black Fox mine and 4.5% of production from the Black Fox Extension for a payment
of US$36.6 million. On November 5, 2012, Brigus elected to exercise the option
and repurchased 4% of the Goldstream for $24.4 million. This reduced Sandstorms
portion of future production at Black Fox to 8% and the Black Fox extension to
6.3% .

Historical Production

The former Glimmer underground
gold mine operated on the Black Fox property over the period 1997-2001, and
produced approximately 211,000 ounce of gold by contract milling. Underground
mining extended to depths of approximately 200 to 215 metres below the surface
before operations were suspended due to low gold prices in May of 2001.

25

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Black Fox Mill Production

|        |  |        |  |  |       |  |  | Contained | 
|------- |  | ------ |  |  | ----- |  |  | --------- | 
|        |  |        |  |  | Grade |  |  | Ounces    | 
|        |  | Tonnes |  |  | Gold  |  |  | Gold      | 
|Year    |  | (Mt)   |  |  | (g/t) |  |  | (koz)     | 
|2010    |  | 0.721  |  |  | 3.16  |  |  | 73        | 
|2011    |  | 0.725  |  |  | 2.54  |  |  | 59        | 
|2012    |  | 0.735  |  |  | 3.43  |  |  | 81        | 
|2013    |  | 0.752  |  |  | 4.34  |  |  | 105       | 
|2014(1) |  | 0.803  |  |  | 3.00  |  |  | 77        | 
|2015    |  | 0.876  |  |  | 2.60  |  |  | 73        | 
|2016    |  | 0.913  |  |  | 2.22  |  |  | 65        | 

(1)Primero acquired the Black Fox Complex on March
5, 2014.

2017 Exploration Program

The 2017 Black Fox Mine
exploration program will focus on delineation and exploration drilling. The
majority of the drilling will be collared with three rigs from the 520
Exploration drift, which extended 200 m west in Q1, 2016.

The goal for 2017 exploration is
100% replacement of expected mining depletion. It is anticipated this will be
achieved through a combination of discovery and delineation of a second
significant mining horizon to the west, and the down plunge extension of the
Central Zone (CZ) to the 700 m Level and the Deep Central Zone (DCZ) below the
810 m Level. First pass exploration drilling at 50 m centers reaching to the
1000 m level will be followed-up where successful with infill, 25 m spaced
delineation drilling, more heavily weighted in the second half of 2017.

The remainder of the Black Fox
property surface exploration effort in 2017 will be conditional on the Company
obtaining required financing. Based on the successful discovery and delineation
of the Froome mineralization in 2015-2016, an extended drilling campaign of
20,000 m, for an estimated $2.5 million budget is warranted within a 2 km radius
of the Black Fox mine. The Froome discovery is largely characterized by magnetic
and chargeability geophysical anomalies within the Porcupine- Destor Break,
structural corridor which hosts the Black Fox mine and Froome deposit. Surface
drilling in 2017 will target gold mineralization associated with disseminate
pyrite, structurally controlled within interleaved ultramafic, mafic, and
sedimentary domains which have already proven favorable for gold
mineralization.

Mining Operations

The Black Fox mine is an
underground (and former open pit) mining operation with significant exploration
upside.

Underground ore is mined using
long-hole and narrow vein mining methods. The ore is accessed from a series of
declines off of the main ramp and hauled to surface using articulated dump
trucks. The maximum depth of mining is currently approximately 720 metres below
surface in the Eastern zone, 380 metres in the Western zone and 560 metres in
the Central zone; however the ore body is open along strike and at depth. Other
third party underground mines in the Timmins vicinity typically extend more than
1,000 metres below surface.

26

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Ore from the low grade stockpile
and underground mine is crushed at the mine site and is transported to the Black
Fox mill by a fleet of highway haulage trucks. The mill uses grinding circuit
and conventional leaching to recover approximately 95% of gold feed.

The Black Fox operations are
fully permitted. The Black Fox mine and the Black Fox mill were previously held
under separate ownership and, therefore, the facilities were permitted
separately. The permits for these facilities were acquired with the properties
and have been amended as the operations have evolved, maintaining the separate
permitting for the sites.

Recent Operating History for the Black Fox Mine

During the year ended December
31, 2016, the Black Fox Mine produced 62,171 ounces of gold, 678,919 tonnes of
ore were mined from the low grade stockpile at an average grade of 1.24 g/t. and
234,518 tonnes were mined from underground at an average grade of 4.98g/t. At
December 31, 2016 the low grade stockpile inventory was at 370,714 tonnes.

A total of 6,452 metres of
underground development was completed in 2016 and underground ore production
averaged 641 TPD (based on 366 day operation).

In 2016, the Company continued to
invest in the Black Fox Complex with capital and exploration expenditures during
2016 of approximately $30.3 million, including $9.6 million on exploration, $1.1
million on equipment, $2.1 million on tailings lifts, and $15.1 million for
underground development capital.

2017 Development Plans

Primero plans to process the ore
from the surface stockpile along with underground ore in 2017 while it continues
to develop known underground Mineral Reserves identified during the 2016
drilling campaign. The processing of the surface stockpile ore is planned to be
completed in 2017. Stockpile ore will supplement underground production to
maintain mill throughput at 2,400 TPD until the end of July 2017. It is planned
that 100% of underground mine production will come from long-hole stopes in
2017.

Capital expenditures during 2017
for the Black Fox mine and mill are principally related to the development of
drifts and necessary infrastructure to ramp-up mining rates from the Deep
Central Zone.

Environmental Matters

During the year ended December
31, 2016, the Company spent $2.4 million on capital projects related to
environmental protection, being the phase 8B1tailings dam construction,
water management pond expansions at the mill site and waste rock water
management structures at the mine.

As at December 31, 2016, the
undiscounted obligations, adjusted for inflation, associated with the site
closure costs related to the Black Fox mine and mill and Grey Fox exploration
project were $22.2 million and the present value of these obligations was
estimated at $19.9 million, using a discount rate 1.16% . Primero holds $4.6
million of cash held for letters of credit securing $15.3 million of closure
bonds held with the Ontario Ministry of Northern Development to secure these
site closure cost obligations.

Primero expects to make
significant expenditures to comply with such laws and regulations in the future.
Changes to current local, provincial or federal laws and regulations could
require additional capital expenditures and result in an increase in Primeros
operating and/or reclamation and closure costs. Although Primero is unable to
predict what additional legislation, if any, might be proposed or enacted,
additional regulatory requirements could impact the economics of Black Fox
Complex.

27

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At the Black Fox mine and mill,
the primary enabling environmental permits necessary for the continuing
development and operation of the mine and mill include:

| | 1. | Permit to Take Water  for the withdrawal of surface or
      ground water quantities in excess of 50 m3/day  including mine
      underground or open pit dewatering.          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                  
| | 2. | Environmental Compliance Approval/Certificate of
      Approval/Air  for treatment and discharge of emissions to air, including
      management of dust and noise in emissions.
| |    |                                                                                                                                                                                  
| | 3. | Environmental Compliance Approval/Certificate of
      Approval/Industrial Sewage Works  for collection, treatment, and
      discharge of wastewaters.                         
| |    |                                                                                                                                                                                  
| | 4. | Filed Closure Plan including posting of financial
      assurance for closure.                                                                                                   

The existing tailings impoundment
facility has been developed in phases since initial start-up in 1989. The
construction of Phase 8B-1 was completed in December 2016. The Phase 8B-2 raise
is scheduled for the summer 2017 and will include the raising of the west, south
and east perimeter dams from elevation 278 metres to 279 metres, by constructing
a tailings berm along the existing dam alignment The Phase 8B-2 will extend the
life on the impoundment by a year. The detail design of additional phases 8-C
thru 8-E is complete and planned for construction in 2018 and will continue over
several years.

To the knowledge of Primero,
neither the Black Fox mine nor the mill has any known legacy environmental
liabilities.

First Nations Considerations

Primero is committed to
maintaining a positive, cooperative and a mutually beneficial relationship with
the local First Nations community and all of its neighbours in the community
around the Black Fox Complex.

On June 3, 2011, the Company
signed an IBA with the Wahgoshig First Nation of Ontario. There is a Wahgoshig
Community Liaison on full time staff at site and a Joint Implementation
Committee exists as a forum for communication and cooperation to address
provisions relating to employment, training, workplace conditions and business
and contracting opportunities, among others. The IBA provides a framework for
how the parties work together during the construction, development and
operations of the Black Fox Complex.

Reserves and Resources

Open pit and underground Mineral
Resources are classified as Indicated or Inferred Resources, based on the
density of the processed data, the search ellipse criteria, and the specific
interpolation parameters. The stockpiles are classified as Measured Resources.
The open pit Mineral Resources are constrained to the final Phase 3 pit design
for the main zone and a satellite pit at the Base metals zone which was
constrained to a pit optimization shell. A minimum mining width of 3 metres
(true width) and cut-off grades of 0.9 g/t (open pit potential) and 3.4 g/t gold
(underground potential) were used in the Mineral Resource estimation.

28

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The Black Fox Mineral Reserves
and associated Mineral Resources were estimated using a block modelling approach
with inverse distance squared interpolation. Grade estimation was performed on 3
metre long by 3 metre high by 3 metre wide blocks. Grade capping was applied
supported by statistical analysis. Indicated Mineral Resources were defined by
combining several criteria such as a minimum of 2 drill holes within 20 metres.
Primero estimates that the Black Fox mine has a Measured and Indicated Mineral
Resource of 2.9 million tonnes grading 6.0 g/t gold (554,000 ounces of gold) and
an Inferred Mineral Resource of 0.3 million tonnes grading 6.9 g/t gold (57,000
ounces of gold). The Mineral Resource is presented inclusive of Mineral
Reserves.

Mineral Resources are converted
to Mineral Reserves by applying mining cut-off grades, mining dilution, and
mining recovery factors. Indicated Resources have been converted to Probable
Reserves and stockpile Measured Resources have been converted to Proven
Reserves.

The Company has applied a
two-pass cut-off grade at Black Fox. Firstly an all-in sustaining cost cut-off
grade was applied to highlight areas for inclusion in the Mineral Reserve,
followed by the application of an operating cost cut-off grade to highlight
additional incremental material for potential inclusion. The all-in sustaining
cost cut-off grade applied was 4.74 g/t gold and considers direct operating
costs and sustaining capital costs. The operating cut-off grade next applied was
3.47 g/t and considers direct operating costs only.

For underground Mineral Reserves
stope outlines were created on north-south sections at 3 metres intervals. In
the creation of the outlines, Primeros engineers took into account the mining
method, existing level development and access, minimum pillar requirements
between adjacent lenses, minimum mining widths, minimum footwall dip, and
continuity of the ore along strike. The outlines for each lens and each level
were then linked into separate wireframes and evaluated against the resource
model to determine insitu mined tonnes and grade. An external dilution of 22%
was applied to the in situ tonnes and grade to determine a mined tonnes and
grade. This grade was compared against the cut-off grade from inclusion in the
Mineral Reserve.

At December 31, 2016, Black Fox
had approximately 111,000 ounces of gold contained within 0.8 million tonnes at
an average gold grade of 4.1 g/t in Proven and Probable Reserves.

29

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Black Fox Mine Mineral Reserves and Mineral Resources as at
December 31, 2016.



Notes to Mineral Reserve Statement:

|1. | Assumed gold price of US$1,200 per troy ounce.                                                                                                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | A two-pass cut-off grade was applied at Black Fox
      underground; first-pass of 4.74 g/t gold based on total all-in costs of
      C$214.00/t (C$166/t direct costs and C$48/t sustaining capital), and
      second-pass of 3.47 g/t gold based on direct operating costs
  only.                         
|3. | Assumed processing recovery factors at Black Fox for gold
      of 95%.                                                                                                                                                                                                                                       
|4. | Exchange rate assumed is CDN$1.30/US$1.00.                                                                                                                                                                                                                                                                    
|5. | The Mineral Reserve estimates for Black Fox Mine set out
      in the table above havee been reviewed and approved by Mr. Patrick McCann,
      P.Eng., Principal Engineer, Primero and a QP for the purposes of NI
      43-101.                                                                             
|6. | A gold purchase agreement exists with Sandstorm Inc. such
      that 8% of the gold produced by the Black Fox mine must be sold to
      Sandstorm at 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.

Notes to Mineral Resource Statement:

|7.  | Mineral Resources are total and include those resources
      converted to Mineral Reserves.                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8.  | Assumed gold price of US$1,200 per troy ounce.                                                                                                                                                                                
|9.  | Black Fox cut-off grades of 0.9 g/t gold for Open Pit and
      3.4 g/t gold for Underground was applied.                                                                                                                     
|10. | At Black Fox a constant bulk density of 2.84
      tonnes/m3has been used.                                                                                                                                                    
|11. | The Mineral Resource estimates for Black Fox Mine set out
      in the table above have been reviewed and approved by Dave Laudrum,
      P.Geo., Senior Resource Manager, Primero and QP for the purposes of NI
      43-101.

CERRO DEL GALLO PROJECT

Except as indicated below, the
following description of the Cerro del Gallo Project is taken from the summary
contained in the technical report entitled Technical Report, First Stage Heap
Leach Feasibility Study, Cerro del Gallo Gold Silver Project, Guanajuato,
Mexico dated May 11, 2012 (the CDG Technical Report) prepared in accordance
with NI 43-101 by Timothy Carew, P.Geo., formerly of Reserva International LLC, Thomas Dyer, P.E. of Mine
Development Associates, Peter Hayward, F.AusIMM of Sedgman Ltd., and John Skeet,
F.AusIMM, former Chief Operating Officer of Cerro, which summary has been
updated and conformed to be consistent with other disclosure in this AIF.

30

---

Reference should be made to the
  full text of the CDG Technical Report, which is available for review under the
Companys profile on SEDAR at www.sedar.com.

The scientific and technical
information under the heading Exploration and Development  Cerro Del Gallo
Project after May 11, 2012, is based on information reviewed and approved by
Dave Laudrum, P. Geo., Senior Resource Manager and under the supervision of
Louis Toner, Vice President, Project Development and Construction, both of
Primero.

Cerro del Gallo is an attractive
long-life project that significantly increases Primeros Mineral Reserves and
Measured and Indicated Resources and could diversify the Companys future
production profile with an anticipated additional 95,000 gold equivalent (silver
and copper as by-products) ounces per year.

The May 2012 CDG Technical Report
on the project contemplated only a phase one ("Phase I") heap leach of 4.5
million tonnes per year of weathered and partially oxidized ore for 7.2 years of
production. The May 2012 DFS superseded an earlier preliminary assessment in May
2011, that identified a potential phase two addition of CIL processing of fresh
rock commencing in the fifth year.

The development of the Phase I
consists of cyanide heap leaching of approximately 32 million tonnes of
weathered and partially oxidized ore from open pit mining. The processing design
for a 4.5 Mt/a facility will consist of the following:

| |  | Crushing, screening and conveying, using conventional
      crushing and HPGR technology to produce an 8 millimetre fine product;                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                            
| |  | Agglomeration and leaching of the stacked ore
      using a cyanide solution;                                                                                                                              
| |   |                                                                                                                                                                                                            
| |  | Use of Sulphidization, acidification, recycling and
      thickening technology (SART) for the recovery of the copper and silver
      from pregnant solution, and recycling of cyanide to leaching pads;
| |   |                                                                                                                                                                                                            
| |  | Elution of the loaded carbon with
      electrowinning and gold recovery in a gold room facility.                                                                                                          

Recent Development Activities

In 2016 Primero continued its
project development plans in order to advance the project to a decision and to
optimize the mining and milling processes. The main activities in 2016 were
focused on closing the remaining land deals, continuing the permitting efforts
and continuing the transfer of water titles acquired up to 2015 to the Company.
Specifically, the Companys land ownership increased from 89% to 100% of the
total site land requirements, and the preparation of the environmental impact
assessment (IA) and the change in land use (ET) permits by PH Consultores of
Durango, Mexico were completed.

2017 Development Plans

Activities planned for 2017 on
the Cerro del Gallo Phase I project will be reduced further as the Company
continues to defer the construction decision due to current economic conditions.
This decision resulted in the Company recording a non-cash impairment charge
of $35 million in 2014 further to the $22 million impairment charge in 2015. The
activities in 2017 will focus on obtaining titles on the land acquired by the
Company and submitting the permit applications for the construction of the mine.
The community outreach programs that began in late 2015 will continue. (The
Companys 2017 budget for Cerro del Gallo is $1.8 million, including
approximately $0.1 million to continue geological surface mapping and sampling.)

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Recent Exploration Activities

Primero resumed the exploration
program in 2013. 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 tests and AMD assessment. The infill drilling program was
designed to convert inferred resources into indicated resources in the central
part of the CDG mineralized zone. The condemnation drilling program was designed
to sterilize areas for future infrastructure, including the waste dumps and
leach pads.

The 2014 exploration program was
focused on mapping and drilling the Carmen-Providencia epithermal vein system
located near the main Cerro del Gallo deposit.

The 2015 and 2016 exploration
program consisted of mapping, soil and stream sediment geochemistry and rock
sampling on other prospective areas of the 25,000 hectare property. The program
identified various targets that will be considered for future drilling.

2017 Exploration Program

The exploration program including
Cerro del Gallo deposit and regional exploration targets will continue in 2017.
Approximately $0.1 million is budgeted for surface mapping, sampling and soil
geochemistry.

For more information about the
Cerro del Gallo Project, refer to the Cerro del Gallo section in Schedule B
of this AIF.

Reserves and Resources

Timothy Carew, P.Geo., formerly
of Reserva International LLC; Thomas Dyer, P.E. of Mine Development Associates;
Peter Hayward, F.AusIMM of Sedgman Ltd. and John Skeet, F.AusIMM, Chief
Operating Officer of Cerro, are the Qualified Persons who prepared the Cerro Del
Gallo Mineral Reserve and Mineral Resource estimates and Gabriel Voicu, P. Geo.,
former Vice President, Geology and Exploration of Primero,reviewed and
approved the CDG Technical Report on behalf of Primero as a Qualified Person.

Measured Mineral Resources and
Indicated Mineral Resources, excluding Proven Mineral Reserves and Probable
Mineral Reserves, are shown below in Table 1-1 at December 31, 2016.

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Table 1-1 First Stage Heap Leach Mineral Resources
(Excluding Proven Mineral Reserves and Probable Mineral Reserves),
December 31, 2016

|Category                                                 | Tonnage
      (Mt) | Gold  | Contained | Silver | Contained | Copper | Contained
|-------------------------------------------------------- | ------------------ | ----- | --------- | ------ | --------- | ------ | ---------
|Grade                                                    | Gold               | Grade | Silver    | Grade  | Copper   
|(g/t)                                                    | (koz)              | (g/t) | (koz)     | (%)    | (klbs)   
|Measured Mineral Resources                               | 39.9               | 0.61  | 781       | 13.8   | 17,714    | 0.10   | 88,790   
|Indicated Mineral Resources                              | 8.0                | 0.55  | 142       | 11.0   | 2,832     | 0.08   | 14,608   
|Measured Mineral Resources & Indicated Mineral Resources | 47.9               | 0.60  | 923       | 13.3   | 20,546    | 0.10   | 103,398  

|1. | Based on gold price of US$1,020 per ounce and silver
      price of US$16.40 per ounce.                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|2. | These resources are reported using internal cut-off
      grades of 0.24 and 0.29 gAuEq/t for weathered and partially oxidized,
      respectively.

The Proven Mineral Reserve and
Probable Mineral Reserve estimates for Cerro del Gallo Stage 1 Heap Leach are
summarized below in Table 1-2.

Table 1-2 First Stage Heap Leach Proven Mineral Reserve and
Probable Mineral Reserve Estimate, December 31, 2016

|Category                                          | Tonnage
      (Mt) | Gold  | Contained | Silver | Contained | Copper | Contained
|------------------------------------------------- | ------------------ | ----- | --------- | ------ | --------- | ------ | ---------
|Grade                                             | Gold               | Grade | Silver    | Grade  | Copper   
|(g/t)                                             | (koz)              | (g/t) | (koz)     | (%)    | (klbs)   
|Proven Mineral Reserve                            | 28.2               | 0.71  | 643       | 15.05  | 13,655    | 0.08   | 50,247   
|Probable Mineral Reserve                          | 4.0                | 0.54  | 69        | 13.20  | 1,679     | 0.07   | 6,197    
|Proven Mineral Reserve & Probable Mineral Reserve | 32.2               | 0.69  | 712       | 14.82  | 15,335    | 0.08   | 56,443   

|1. | Based on gold price of US$1,020 per ounce and silver
      price of US$16.40 per ounce.                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Proven and probable reserves are reported using gold
      equivalent cut-off grades of 0.24 and 0.29 for weathered and partially
      oxidized material respectively. Cut-off grades were applied to gold
      equivalent grades which include both gold:silver price and recovery
      ratios.

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GREY FOX PROJECT

The Independent and Qualified
Person for the Mineral Resource Estimate i s Rodney Webster MAusIMM, MAIG of AMC
Consultants Pty Ltd., and a QP for the purposes of NI 43-101. The result of the
study is a single Mineral Resource Estimate for all mineralized zones at Grey
Fox, with Indicated and Inferred Resources, for both a Whittle-optimized in-pit
volume and a complementary underground volume.

In early 2015, the Company
initiated a long range study of the Black Fox Complex which recommended further
development of the Grey Fox deposit located to the south of the Black Fox mine.
The Grey Fox project was identified as a possible replacement (to feed the mill)
of the depleted Black Fox open pit once the surface stockpile is exhausted in
2017.

The Company hired Golder
Associates and AMC Consultants to assist with the project scoping and permitting
activities required to advance the project to a construction decision. At the
end of 2015 project engineering, baseline studies, geotechnical evaluations,
permitting activities, closure plan preparation, and development of mine shells
and mine plans as well as cost estimates had advanced sufficiently to initiate
consultation with the First Nations, the Metis of Ontario and local communities.
However, given the low commodity price environment, the Company decided to
postpone the project and has temporarily stopped development work on the
project.

For more information about the
Grey Fox project, refer to the Black Fox Complex section in Schedule B of
this AIF.

The Companys Grey Fox Mineral Resources were estimated using a
block modelling approach with ordinary kriging interpolation. Grade estimation
was performed on 5 metre long by 5 metre high by 5 metre wide blocks and a bulk
density of 2.87 tonnes/m3. Grade capping was applied supported by
statistical analysis. Indicated Mineral Resources were defined by combining
several criteria such as continuation drill-hole locations and continuation of
geology and mineralization and location of drilling. The database used for the
estimate contained data as of December 15, 2014 and consisted of 1,149 diamond
drill holes for 404,318 m of drilling.

Mineral Resource Estimate results for the Grey Fox project

|Classification            | Cut-off Grade
      (g/t Au) | Potential
      Material | Tonnage
      (kt) | Gold Grade
      (g/t) | Contained
      Gold (koz)
|------------------------- | ---------------------------- | ------------------------ | ------------------ | ---------------------- | --------------------------
|Indicated                 | >3.00                        | Underground              | 1,715              | 5.9                    | 323                       
|Indicated                 | >0.90                        | Open Pit                 | 2,966              | 3.6                    | 345                       
|Total Indicated Resources |                              |                          | 4,681              | 4.4                    | 668                       
|Inferred                  | >3.00                        | Underground              | 1,009              | 4.6                    | 148                       
|Inferred                  | >0.90                        | Open Pit                 | 280                | 2.9                    | 26                        
|Total Inferred Resources  |                              |                          | 1,289              | 4.2                    | 174                       

|1. | The Independent and Qualified Person for the Mineral
      Resource Estimate, as defined by NI 43-101, is Rodney Webster BAppSc.
      MAusIMM, MAIG (Principal Geologist of AMC Consultants Pty Ltd., and the
      effective date of the estimate is December 31, 2015.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | CIM definitions and guidelines were followed for Mineral
      Resources.                                                                                                                                                                                                

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|3.  | The quantity and grade of the reported Inferred Resources
      in this estimate are uncertain in nature. There has been insufficient
      exploration to define these resources as Indicated or Measured and it is
      uncertain whether further exploration would result in upgrading any of the
      Inferred resource to an Indicated or Measured category.                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.  | The Indicated category is defined by combination of
      drill-hole locations and continuity of the gold grades and the
    geology.                                                                                                                                                                                                                                                                                          
|5.  | While the results are presented undiluted and in situ,
      the reported mineral resources are considered to have reasonable prospects
      for economic extraction.                                                                                                                                                                                                                                                         
|6.  | The resource was estimated using Datamine CAE Mining
      Software. The database used for the estimate contained diamond drill core
      composites and assays. The estimate is based on 999 diamond drill holes
      (351,789 metres) drilled from 1993 to 2015. A minimum true thickness of
      5.0 metres was applied, using the grade of the adjacent material when
      assayed or a value of zero when not assayed.
|7.  | Supported by statistical analysis the high grade
      distribution within the deposit was top-capped for gold grades ranging
      from 10 g/t to 200 g/t after compositing for interpolation into model
      blocks using Ordinary Kriging based on 1m composites within a 5m East x 5m
      North x 5m Vertical block model.                                                                                              
|8.  | Ounce (troy) = metric tons x grade / 31.10348.
      Calculations used metric units (metres, tonnes and g/t).                                                                                                                                                                                                                                                                                                                  
|9.  | The number of metric tons was rounded to the nearest ten
      thousand. Any discrepancies in the totals are due to rounding
    effects.                                                                                                                                                                                                                                                                                      
|10. | AMC is not aware of any environmental, permitting, legal,
      title-related, taxation, socio-political or marketing issues or any other
      relevant issue that could materially affect the mineral resource
      estimate.                                                                                                                                                                                               

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RISK FACTORS

The operations of the Company are
speculative due to the high-risk nature of its business which is the
acquisition, financing, exploration, development and operation of precious
metals properties. The risk factors below, as well as other risks discussed in
this annual information form, could materially affect the Companys future
operating results and could cause actual events to differ materially from those
described in forward-looking statements relating to the Company. These risks are
broadly classified into these categories, financial and operational risks and
are not the only ones faced by the Company. Additional risks and uncertainties
not presently known to us or that we currently consider immaterial may also
impair our business operations. If any of these events actually occur, our
business, prospects, financial condition, cash flows and operating results could
be materially harmed.

While the Company has developed
an enterprise risk management policy and procedures to maintain risks within an
acceptable range and the Board maintains direct oversight of the enterprise risk
management process, there is no assurance that such measures will prevent risks
from adversely affecting the Companys business. Before deciding to invest in
securities of the Company, investors should consider carefully such risks and
uncertainties.

Financial Risks

Indebtedness

As at December 31, 2016,
Primeros aggregate indebtedness was comprised of $50 million on its Revolving
Credit Facility, the 5.75% of Convertible Debentures (Debentures) with a fair
value of $52.5 million an $1.6 million of finance lease liabilities.

On February 10, 2016 the Company drew down  $50 million on its Revolving Credit Facility (“RCF”) to satisfy its obligation  to pay the Brigus Debentures. The Revolving Credit Facility has a three year  term and bears interest at a floating interest rate equal to LIBOR or the prime  rate of Canada or the bankers’ acceptance rate (depending on the choice of  credit available by the Company) plus an applicable margin. On March 31 2017, the Company announced that  it had closed with its lenders an extension of its RCF for six months  from May 23, 2017 to November 23, 2017,  which would provide the Company with greater flexibility to replace the RCF  with a longer-dated term loan. Under the agreed amendments to the RCF, there  will be an exclusion of financial covenants and Silver Wheaton Corp. will  guarantee amounts payable under the RCF.

On January 20, 2015 the Company
entered into an agreement with a syndicate of underwriters pursuant to which the
underwriters agreed to purchase $75 million of Debentures, which offering closed
on February 9, 2015.

As a result of this indebtedness,
Primero is required to use a portion of its cash flow to service principal and
interest on its debt, which limits the cash flow available for other business
opportunities. The Companys exposure to interest rate risk is limited to the
credit facility, which is subject to a floating interest rate. There can also be
no assurance that Primero will generate cash flow in amounts sufficient to pay
outstanding indebtedness or to fund any other liquidity needs. If any
indebtedness becomes repayable due to an inability to comply with covenants, or
if Primero is unable to extend the terms of any of its indebtedness at time of
maturity or renewal, such failure or failures could have an adverse effect on
Primeros financial position.

Primeros indebtedness could
limit its ability to borrow additional amounts for working capital, capital
expenditures, debt service requirements, execution of Primeros growth strategy
or other purposes or to capitalize on business opportunities and to react to
competitive pressures and adverse changes in government regulation. The
Companys ability to incur additional indebtedness is limited under the
Revolving Credit Facility and the Amended and Restated Silver Purchase Agreement
and depends on the satisfaction of certain financial tests, which are typical for
a company such as Primero. These limitations restrict the additional
indebtedness that the Company may incur, with the result that the Company may
not be able to pursue capital expansions, additional exploration programs,
acquisitions, or other components of its future business plans.

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Commodity Prices

The price of the Common Shares,
Primeros financial results and its exploration, development and mining
activities are significantly adversely affected by declines in the price of gold
and, to a lesser extent, silver. Gold and silver prices fluctuate widely and are
affected by numerous factors beyond Primeros control such as the sale or
purchase of metals by various central banks and financial institutions, interest
rates, exchange rates, inflation or deflation, fluctuations in the value of the
United States dollar and foreign currencies, global and regional supply and
demand, and the political and economic conditions of major metals-producing
countries throughout the world. The price of gold and silver has fluctuated
widely in recent years, and future significant price declines could cause
continued development of, and commercial production from, Primeros properties
to be uneconomic. Depending on the price of gold and silver, cash flow from
mining operations may not be sufficient and Primero could be forced to
discontinue production and may lose its interest in, or may be forced to sell,
some of its properties. Future production from Primeros properties is dependent
on gold and silver prices that are adequate to make these properties economic.

In addition, Mineral Reserve
calculations and life-of-mine plans using significantly lower gold and silver
prices could result in material write-downs of Primeros investments in its
mining properties and increased amortization, reclamation and closure charges.

Challenge to the 2012 APA

Overview

The Mexican tax authority, the
SAT, has initiated a proceeding seeking to nullify the APA which it issued to
the Company in 2012. The APA confirmed the Companys basis for paying taxes on
the price it realized for certain silver sales between 2010 to 2014. If the
SATs challenge is successful it is likely to have a material adverse effect on
the Companys business, financial condition and results of operations.

Background

In 2004, affiliates of Goldcorp
Inc. (Goldcorp) entered into a Silver Purchase Agreement with Silver Wheaton
Corp. (Silver Wheaton) in connection with the San Dimas mine and two other
mines in Mexico. Under the Silver Purchase Agreement, Goldcorp received cash and
securities in exchange for an obligation to sell the amount of silver extracted
from the mines at a price set forth in the Silver Purchase Agreement. In order
to satisfy its obligations under the Silver Purchase Agreement, sales were made
by Goldcorp through a non-Mexican subsidiary to a Silver Wheaton company in the
Caymans (SWC). Upon Primeros acquisition of the San Dimas Mine, the Silver
Purchase Agreement was amended and restated and Primero assumed all of
Goldcorps obligations with respect to the San Dimas concession under the Silver
Purchase Agreement. Primero did not receive any of the initial consideration
that was paid to Goldcorp under the Silver Purchase Agreement.

As amended and restated, the
provisions of the Silver Purchase Agreement require that, on a consolidated
basis, the Company sell to Silver Wheaton during a contract year (August 6th to
the following August 5th), 100% of the amount of silver produced from the San
Dimas concessions up to 6 million ounces and 50% of silver produced thereafter,
at the lower of (i) the current market price and (ii) $4.04 per ounce plus an
annual increase of 1% (the PEM Realized Price). In 2016, the contract price
was $4.26. The price paid by Silver Wheaton under the Silver Purchase Agreement
represents the total value that the Company and its affiliates receive for the sale
of silver to Silver Wheaton. The Silver Purchase Agreement continues
indefinitely in respect of any silver produced from the San Dimas concessions.

37

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The specific terms of the Silver
  Purchase Agreement require that the Company sell the silver through one of its
  non-Mexican subsidiaries, Silver Trading Barbados (STB), to Silver Wheatons
  Cayman subsidiary, Silver Wheaton Caymans. As a result, the Companys Mexican
  subsidiary that holds the San Dimas concessions, Primero Empresa Minera (PEM),
  sells the required amount of silver produced from the San Dimas concessions to
  STB to allow it to fulfill its obligations under the Silver Purchase Agreement.

When the Company initially
acquired the San Dimas mine, the sales from PEM to STB were made at the spot
market price while the sales by STB to Silver Wheaton Caymans were at the
contracted PEM Realized Price, which at that time was $4.04 per ounce. In order
to reflect commercial realities and the effects of the Silver Purchase Agreement
on the Company on a consolidated basis, PEM amended the terms of sales of silver
between itself and STB and commenced to sell the amount of silver due under the
Silver Purchase Agreement to STB at the PEM Realized Price. For Mexican income
tax purposes PEM then recognized the revenue on these silver sales on the basis
of its actual realized revenue, which was the PEM Realized Price.

APA

In order to provide the Company
with stability and assurances that the SAT would accept the PEM Realized Price
(and not the spot market silver price) as the proper price to use to calculate
Mexican income taxes, the Company applied for and received the APA from the SAT.
The APA confirmed the PEM Realized Price would be used as the Companys basis
for calculating taxes owed by the Company on the silver sold under the Silver
Purchase Agreement. The Company believed that the function of an APA was to
provide tax certainty and as a result made significant investments in Mexico
based on that certainty. Under Mexican law, an advanced pricing agreement is
valid for five years and therefore the APA represented the SATs agreement to
accept the PEM Realized Price as the basis for calculating taxes for the tax
years 2010 through 2014.

38

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Challenge to APA for 2010  2014 tax years

The SAT has initiated a legal
proceeding seeking to nullify the APA, however, the SAT has not identified an
alternative basis in the legal claim for calculating taxes on the silver sold by
PEM for which it receives the PEM Realized Price. If the SAT is successful in
retroactively nullifying the APA, the SAT may seek to audit and reassess PEM in
respect of its sales of silver in connection with the Silver Purchase Agreement
for 2010 through 2014. The Company is an interested party in this proceeding.
While PEM would have rights of appeal in connection with any reassessments, if
the legal proceeding is finally concluded in favour of the SAT, the amount of
additional taxes that the SAT could charge PEM for the tax years 2010 through
2014 on the silver sold in connection with the Silver Purchase Agreement would
likely have a material adverse effect on the Companys results of operations,
financial condition and cash flows.

The Company intends to vigorously
defend the validity of the APA. In addition, the Company intends to explore
opportunities to minimize the potential impact on the Company in the event that
the SAT is successful in its legal claim to nullify the APA, but there is no
assurance that the Company will find or be able to implement a reasonable
solution.

Uncertain tax treatment for tax years following 2014

For the 2015 and 2016 tax year,
the Company continued to record its revenue from sales of silver for purposes of
Mexican tax accounting in a manner consistent with the APA on the basis that the
applicable facts and laws have not changed. The Companys legal and financial
advisors continue to believe that the Company has filed its tax returns
compliant with applicable Mexican law. Given the legal challenge by the SAT
against the APA for the 2010-2014 tax years and the Company belief that it is
unlikely that the SAT will agree to an Advance Pricing Agreement for the
2015-2019 tax years on terms similar to the challenged APA, it decided not to
file an application for a renewed APA in respect of 2015 and the four subsequent
years. To the extent the SAT determines that the appropriate price of silver
sales under the Silver Purchase Agreement is significantly different from the
PEM Realized Price and while PEM would have rights of appeal in connection with
any reassessments, it is likely to have a material adverse effect on the
Companys business, financial condition and results of operations.

Additional Capital

The mining, processing,
development and exploration of Primeros properties, including the Cerro del
Gallo Project and the Black Fox Complex, may require substantial additional
financing. Failure to obtain sufficient financing may result in the delay or
indefinite postponement of exploration, development or production on any or all
of Primeros properties or even a loss of property interest. There can be no
assurance that additional capital or other types of financing will be available
if needed or that, if available, the terms of such financing will be attractive
to Primero. Restrictions on incurring additional indebtedness in the Amended and
Restated Silver Purchase Agreement, and in other agreements with existing or
future lenders including the Revolving Credit Facility, may limit the ability of
the Company to borrow to finance acquisitions. Declines in gold and silver
prices could have the result of making additional capital unavailable to
Primero.

Exchange Rate Fluctuations

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.

39

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Capital Cost and Operational Cost Estimates

The Company prepares budgets and
estimates of cash costs and capital costs of production for its operations and
its main costs relating to material costs, personnel and contractor costs, and
energy costs. However, despite the Companys efforts to budget and estimate such
costs, as a result of the substantial expenditures involved in the development
of mineral projects and the fluctuation of costs over time, development projects
may be prone to material cost overruns. The Companys actual costs may vary from
estimates for a variety of reasons, including: short-term operating factors;
revisions to mine plans; risks and hazards associated with mining; natural
phenomena, such as inclement weather conditions, water availability, floods, and
earthquakes; and unexpected labour shortages or strikes. Operational costs may
also be affected by a variety of factors, including: changing waste-to-ore
ratios, ore grade metallurgy, labour costs, the cost of commodities, general
inflationary pressures and currency exchange rates. Many of these factors are
beyond the Companys control. Failure to achieve estimates or material increases
in costs could have an adverse impact on the Companys future cash flows,
business, results of operations and financial condition.

Furthermore, delays in the
construction and commissioning of mining projects or other technical
difficulties may result in additional capital expenditures being required. Any
delay in the development of a project or cost overruns or operational
difficulties once the project is fully developed may have a material adverse
effect on the Companys business, results of operations and financial condition.

Current Global Financial Condition

After a period of lower
volatility, following stabilization after the 2008-2009 global financial crisis,
several disruptions to the international equities markets, credit markets, and
other financial systems caused renewed volatility in 2015. Recent events, such
as the collapse in global oil prices, ongoing geopolitical turmoil in the Middle
East and Eastern Europe, softer Chinese economic growth outlook, and weak growth
and deflationary pressures in the euro zone, have perpetuated significant
instability in commodity prices.

Despite a recently strengthening
U.S. economy, the extent of recovery remains uncertain. In addition, uncertainty
related to the timing of impending interest rate increases by the U.S. Federal
Reserve continues to cause waves in the financial markets, in turn, putting
significant pressure on gold as an inflationary hedge, and by extension
gold-focused equities.

This seeks to illustrate the
degree to which events outside of the Companys control may affect commodity
prices, demand for metals, including gold, silver, copper, lead and zinc,
availability of credit, investor confidence, and general financial market
liquidity, all of which may impact the Companys business.

The Company is also exposed to
liquidity and various counterparty risks including, but not limited to: (i)
financial institutions that hold the Companys cash; (ii) the Companys
insurance providers; (iii) the Companys lenders; (iv) the Companys other
banking counterparties and (v) the Companys Value Added Tax (VAT) refund, as
to when or whether the VAT arrears is eventually reimbursed. The Company is also
exposed to liquidity risks in meeting its capital expenditure requirements in
instances where cash positions are unable to be maintained or appropriate
financing is unavailable. These factors may impact the ability of the Company to
obtain loans and other credit facilities in the future and, if obtained, on
terms attractive to the Company. As a result of this and the uncertainty of the
recent market volatility, the Companys planned growth and the trading price
of the Companys securities could either be adversely or positively impacted.

40

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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  Certification of Disclosure in
Issuers Annual and Interim Filings in Canada and under the Exchange Act 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. In 2016, the Company documented and tested
its internal control procedures in order to satisfy the requirements of the
Sarbanes-Oxley Act, Primeros auditor delivered an attestation report on
managements assessment of the effectiveness of Primeros internal control over
financial reporting as at December 31, 2016.

Insurance and Uninsured Risks

Mining operations are subject to
a number of risks and hazards generally, including adverse environmental
conditions, industrial accidents, labour disputes, unusual or unexpected
geological conditions, ground or slope failures, cave-ins, changes in the
regulatory environment and natural phenomena such as inclement weather
conditions, floods, hurricanes and earthquakes. Such occurrences could result in
damage to mineral properties or production facilities, personal injury or death,
environmental damage to Primeros properties or the properties of others, delays
in mining, monetary losses and possible legal liability.

Although Primero plans to
maintain insurance to protect against certain risks in such amounts as it
considers reasonable, its insurance will not cover all the potential risks
associated with a mining Companys operations. Primero may also be unable to
maintain insurance to cover these risks at economically feasible premiums.
Insurance coverage may not continue to be available or may not be adequate to
cover any resulting liability. Moreover, insurance against risks such as loss of
title to mineral property, environmental pollution, or other hazards as a result
of exploration and production is not generally available to Primero or to other
companies in the mining industry on acceptable terms. Primero might also become
subject to liability for pollution or other hazards for which it may not be able
or, due to the high cost of premiums, desirable to buy insurance. Losses from
these events may cause Primero to incur significant costs that could have a
material adverse effect on its financial performance and results of
operations.

Operational Risks

Exploration, Development and Operating Risk

Primeros current activities are
primarily directed towards mining operations and exploration projects at the San
Dimas Mine, the Black Fox Complex, the Ventanas property and the Cerro Del Gallo
Project. Mining operations generally involve a high degree of
risk. Primeros operations are subject to all the hazards and risks normally
encountered in the exploration, development and production of gold and silver
including unusual and unexpected geologic formations, seismic activity, rock
bursts, cave-ins, flooding and other conditions involved in the drilling and
removal of material, any of which could result in damage to, or destruction of,
mines and other producing facilities, causing delay or indefinite postponement
of exploration, development or production, damage to life or property,
environmental damage and possible legal liability. Although appropriate
precautions to mitigate these risks are taken, mining operations are subject to
hazards such as equipment failure or failure of retaining dams around tailings
disposal areas which may result in environmental pollution and consequent
liability.

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The exploration for and
  development of mineral deposits involves significant risks which even a
  combination of careful evaluation, experience and knowledge may not eliminate.
  While the discovery of an ore body may result in substantial rewards, few
  properties which are explored are ultimately developed into producing mines.
  Major expenses may be required to locate and establish Mineral Resources and
  Mineral Reserves, to develop metallurgical processes and to construct mining and
  processing facilities at a particular site. It is difficult to ensure that the
  exploration or development programs planned by Primero will ultimately result in
  a profitable commercial mining operation. Whether a mineral deposit will be
  commercially viable depends on a number of factors, some of which are: the
  particular attributes of the deposit, such as size, grade, metallurgy and
  proximity to infrastructure; metal prices which are highly cyclical; and
  government regulations, including regulations relating to prices, taxes,
  royalties, land tenure, land use, importing and exporting of minerals and
environmental protection.

The exact effect of these factors
cannot be accurately predicted, but the combination of any of these factors may
result in Primero not receiving an adequate return on invested capital. There is
no certainty that the expenditures made by Primero towards the search and
evaluation of mineral deposits will result in discoveries of commercial
quantities of ore.

Uncertainty in the Estimation of Mineral Reserves and
Mineral Resources

The figures for Mineral Reserves
and Mineral Resources contained in this Annual Information Form and used in the
Companys mine models and as presented for the San Dimas Mine, Cerro del Gallo
Project and the Black Fox Complex are the product of a mathematical model and no
assurance can be given that the anticipated tonnages and grades will be
achieved, that the indicated level of recovery will be realized or that Mineral
Reserves can be mined or processed profitably. There are numerous uncertainties
inherent in estimating Mineral Reserves and Mineral Resources. Such estimation
is a subjective process, and the accuracy of any Mineral Reserve or Mineral
Resource estimate is a function of the quantity and quality of available data
and tools, and of the assumptions made and judgments used in engineering and
geological interpretation. Short-term operating factors relating to the Mineral
Reserves, such as the need for orderly development of the ore bodies or the
processing of new or different ore grades, may cause the mining operation to be
unprofitable in any particular period. In addition, there can be no assurance
that gold or silver recoveries in small scale laboratory tests will be
duplicated in larger scale tests under on-site conditions or during production.
Fluctuation in gold and, to a lesser extent, silver prices, results of drilling,
metallurgical testing and production and the evaluation of mine plans subsequent
to the date of any estimate may require revision of such estimate. The volume
and grade of Mineral Reserves mined and processed and recovery rates may not be
the same as currently anticipated. Any material reductions in estimates of
Mineral Reserves and Mineral Resources, or of Primeros ability to extract these
Mineral Reserves, could have a material adverse effect on Primeros results of
operations and financial condition including, without limitation, an impairment
loss and a write down of Primeros mining properties, discontinuance of
production, and loss of interest in, or sale of, some of Primeros properties.
In addition to other adverse consequences, recording an impairment loss and a
write-down may result in Primero breaching certain tangible net worth financial
covenants under the Revolving Credit Facility that could constitute an event of
default. See Introductory Notes  Cautionary Notes to United States Investors.

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Uncertainty Relating to Inferred Mineral Resources and
Exploration Potential

Inferred Mineral Resources that
are not Mineral Reserves do not have demonstrated economic viability. Due to the
uncertainty which may attach to Inferred Mineral Resources, there is no
assurance that Inferred Mineral Resources will be upgraded to Mineral Resources
with sufficient geological continuity to constitute Proven Mineral Reserves as a
result of continued exploration. 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 Mineral Resources being
identified.

Fluctuations in the prices of
gold and silver, results of drilling, metallurgical testing and production, and
the evaluation of studies, reports and plans subsequent to the date of any
estimate may require revision of such estimate. Any material reductions in
estimates of Mineral Resources or Mineral Reserves could have a material adverse
effect on the results of the Companys operations and financial condition.

Need for Additional Mineral Reserves

Since all mines have limited
lives based on Mineral Reserves, Primero will be required to continually replace
and expand its Mineral Reserves as its mines produce gold and silver. Primeros
ability to maintain or increase its annual production of gold and silver will be
dependent in significant part on its ability to expand Mineral Reserves at
existing mines, to bring new mines into production and to complete acquisitions.

Title to Property

Title to mineral properties
involves certain inherent risks due to the difficulties of determining the
validity of certain claims, as well as the potential for problems arising from
the frequently ambiguous conveyance history characteristic of many mineral
properties. There is no guarantee that title to Primeros properties will not be
challenged or impugned. Mineral property interests may be subject to prior
unrecorded agreements or transfers or the claims of local people and title may
be affected by undetected defects. There may be valid challenges to the title of
these properties which, if successful, could require the Company to modify its
operations and/or plans for development.

There can be no assurance that
the Company will be able to secure the grant or the renewal of mining
concessions on terms satisfactory to it, or that governments in the
jurisdictions in which Primeros properties are situated will not revoke or
significantly alter such permits or other tenures or that such mining
concessions will not be challenged or impugned. Third parties may have valid
claims underlying portions of the Companys interests and the mining concessions
may be subject to prior unregistered agreements or transfers and title may be
affected by undetected defects. If a title defect exists, it is possible that
the Company may lose all or part of its interest in the properties.

Use of Ejido-owned Land

An Ejido is a communal ownership
of land recognized by the federal laws in Mexico. While mineral rights are
administered by the federal government through federally issued mining
concessions, access to surface rights is also required for mining operations. An
Ejido controls surface rights over its communal property through a board of
directors. An Ejido may sell or lease lands directly to a private entity and it
may also allow individual members of the Ejido to obtain title to specific
parcels of land and thus the right to sell or lease the land.

The San Dimas Mine uses Ejidos
lands pursuant to written agreements with local Ejidos. Some of these agreements
may be subject to renegotiation and changes to the existing agreements may
increase operating costs or have an impact on operations. In cases where access
to land is required for operations and an agreement cannot be reached with the Ejido or land
owner, Primero may seek access under Mexican law which provides for priority
rights for mining activities.

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Three of the properties included
  in the San Dimas Mine and for which Primero holds legal title are subject to
  legal proceedings commenced by Ejidos seeking title to the property. None of the
  proceedings name Primero as a party and Primero therefore has no standing to
  participate in them. In all cases, the defendants are previous owners of the
  properties, either deceased individuals who, according to certain public deeds,
  owned the properties more than 80 years ago, corporate entities that are no
  longer in existence, or Goldcorp companies. The proceedings also name the
Tayoltita Property Public Registry as co-defendant.

Two of the legal proceedings were
decided in favour of the Ejidos in 2015, resulting in Primeros gaining standing
rights as an affected third party. Upon becoming aware of the decisions, the
Company obtained injunctions to suspend any legal effect of the decisions while
the Company proceeds with a legal process to nullify the Ejidos claim by
submitting evidence of Primeros legal title. In February 2017, one of the two
legal processes to nullify the Ejidos claim was decided in favour of Primero
and was later appealed by the Ejido, and the decision on the appeal is still
pending. The second proceeding is ongoing. The third outstanding legal
proceeding commenced by the Ejidos has not been decided and the Company remains
without standing to participate therein because it was not named as a party. In
the event a final decision is rendered in favour of the Ejido in that
proceeding, Primero will seek to annul such decision by defending its position
as the legitimate owner. If Primero is not successful in these challenges, the
San Dimas Mine could face higher costs associated with agreed or mandated
payments that would be payable to the Ejidos for use of the properties.

Indigenous Peoples and Local Communities

There are numerous international
and national laws, codes, resolutions, conventions, guidelines, policies and
other statements addressing the rights of indigenous peoples. The Company
currently operates in certain areas presently or previously used by indigenous
peoples. Many of the laws or statements impose obligations on government in
respect of the rights of indigenous people and some mandate or suggest
consultation with indigenous people regarding government actions which may
affect them, including the approval or grant of mining rights or permits. The
obligations of government and private parties to indigenous people continue to
evolve. The Companys current and future operations are subject to a risk that
one or more groups of indigenous people may oppose continued operation, further
development, or new development of the Companys projects or operations.

Surrounding communities and
landowners are also stakeholders who may seek to interfere with the Companys
operations and development activities. Such opposition may be directed through
legal or administrative proceedings, or expressed in manifestations such as
protests, roadblocks or other forms of public expression against the Companys
activities.

Government Regulations, Consents and Approvals

Exploration and development
activities and mining operations are subject to laws and regulations governing
health and work safety, employment standards, environmental matters, mine
development, prospecting, mineral production, exports, taxes, labour standards,
reclamation obligations and other matters. It is possible that future changes in
applicable laws, regulations, agreements or changes in their enforcement or
regulatory interpretation could result in changes in legal requirements or in
the terms of permits and agreements applicable to the Company or its properties
which could have a material adverse impact on the Companys operations and
exploration program and future development projects. Where required, obtaining
necessary permits and licences can be a complex, time consuming process and
there can be no assurance that required permits will be obtainable on acceptable
terms, in a timely manner or at all. The costs and delays associated with
obtaining permits and complying with these permits and applicable laws and regulations could stop or materially delay
or restrict the Company from proceeding with the development of an exploration
project or the operation or further development of a mine. Any failure to comply
with applicable laws and regulations or permits, even if inadvertent, could
result in interruption or closure of exploration, development or mining
operations or material fines, penalties or other liabilities, which could have
an adverse effect on the business, financial condition or results of operation
of the Company. Due to stringent government regulation, the Company may
experience difficulties in obtaining permits for the use of explosives in Mexico
and these difficulties could interrupt its operations.

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Health and Safety Hazards

The personnel involved in
Primeros mining operations are subject to many inherent health and safety risks
and hazards which could result in occupational illness or health issues,
personal injury and loss of life. Primero strives to advance safety performance
across all regions of its operations and projects to identify, minimize and
manage health and safety risks. Although precautions to mitigate these risks
have been taken, these risks cannot be eliminated and may adversely affect the
Companys business and operations.

Environmental Permitting Risks and Environmental Hazards

Government approvals and permits
are currently, and may in the future be, required in connection with the
Companys mining operations. To the extent such approvals are required and not
obtained, Primero may be curtailed or prohibited from continuing its mining
operations or from proceeding with planned exploration or development of mineral
properties.

Failure to comply with applicable
laws, regulations and permitting requirements may result in enforcement actions
thereunder, including orders issued by regulatory or judicial authorities
causing operations to cease or be curtailed, and may include corrective measures
requiring capital expenditures, installation of additional equipment, or
remedial actions. Parties engaged in mining operations or in the exploration or
development of mineral properties may be required to compensate those suffering
loss or damage by reason of the mining activities and may have civil or criminal
fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws,
regulations and permits governing operations and activities of mining and
exploration companies, or more stringent implementation thereof, could have a
material adverse impact on Primero and its results of operations and cause
increases in exploration expenses, capital expenditures or production costs or
reduction in levels of production at producing properties or require abandonment
or delays in development of new mining properties.

Primeros operations may cause
damage to the environment, which could lead to government environmental
authorities imposing fines, total or partial closures, compensatory measures or
mandated investment in infrastructure. Examples of environmental damage that
could result from operations include, but are not limited to, industrial fires,
forest fires, oil spills, tailings dam spills, unforeseen emissions to the
atmosphere and hazardous material soil filtrations.

The potential exposure to
environmental risks may be significant and could have a material adverse effect
on the Company. Primero has $25 million of sudden and accidental pollution
coverage in its commercial general liability program. The policy can be
activated if the pollution is discovered and reported within 10 days. The policy
provides protection for third party bodily injury and/or property damage but not
first party losses. In addition, the policy does not cover any fines or
penalties or any costs of government mandated clean-up. All of the Company's
exploration, development and production activities are subject to regulation
under one or more of the various federal and provincial environmental laws and
regulations in Canada. Many of the regulations require the Company to obtain
permits for its activities. The Company must update and review its permits from
time to time, and is subject to environmental impact analyses and public review
processes prior to approval of the additional activities. It is possible that
future changes in applicable laws, regulations and permits or changes in their
enforcement or regulatory interpretation could have a significant impact on some
portion of its business, causing those activities to be economically
re-evaluated at that time. Those risks include, but are not limited to, the risk
that regulatory authorities may increase bonding requirements beyond the
Company's financial capabilities. See Risk Factors- Financial Risks  Insurance
and Uninsured Risks.

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*Environmental Permitting
Risks and Environmental Hazards  Mexico*

Primeros mining operations are
subject to Mexican and applicable state environmental regulations. These
regulations mandate, among other things, the maintenance of air and water
quality standards and land reclamation. They also establish limitations on the
generation, transportation, storage and disposal of solid and hazardous waste.
Environmental legislation is evolving in a manner which will likely require
stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and a heightened degree of responsibility for companies and their officers,
directors and employees. There is no assurance that future changes in
environmental regulation, if any, will not adversely affect Primeros results of
operations. Environmental hazards may exist at the Companys properties which
are unknown to Primero at present and which have been caused by previous or
existing owners or operators of the properties. Primero did not complete an
environmental audit or other comparable environmental due diligence in
connection with the acquisition of the San Dimas Mine.

*Environmental Permitting
Risks and Environmental Hazards - Canada*

The Canadian mining industry is
subject to federal and provincial environmental protection legislation. This
legislation imposes strict standards on the mining industry in order to reduce
or eliminate the effects of waste generated by extraction and processing
operations and subsequently emitted into the air or water. Consequently,
drilling, refining, extracting and milling are all subject to the restrictions
imposed by this legislation. In addition, the construction and commercial
operation of a mine typically entail compliance with applicable environmental
legislation and review processes, as well as the obtaining of permits,
particularly for the use of the land, permits for the use of water, and similar
authorizations from various government bodies. Canadian federal, provincial, and
local laws and regulations relating to the exploration for and development,
production and marketing of mineral production, as well as environmental and
safety matters have generally become more stringent in recent years, often
imposing greater liability on a larger number of potentially responsible
parties. Because the requirements imposed by such laws and regulations are
frequently changed, the Company is unable to predict the ultimate cost of
compliance with such requirements. There is no assurance that environmental laws
and regulations enacted in the future will not adversely affect the Company's
financial condition and results of operations.

The Company is subject to
potential risks and liabilities associated with environmental compliance and the
disposal of waste rock and materials that could occur as a result of the
Company's mineral exploration and production. In certain circumstances, the
potential liabilities can include liability for costs of remediation and cleanup
of mines which the Company owned or operated in the past, but no longer owns or
operates. To the extent that the Company is subject to environmental
liabilities, the payment of such liabilities or the costs that the Company may
incur to remedy any non-compliance with environmental laws would reduce funds
otherwise available to it and could have a material adverse effect on the
Company's financial condition or results of operations. If the Company is unable
to fully remedy an environmental problem, it might be required to suspend
operations or enter into interim compliance measures pending completion of the
required remedy.

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San Dimas Tailings Management Risks

Tailings containment sites which
existed at the time of DMSLs acquisition of the San Dimas Mine were not
subjected to comprehensive geotechnical investigation before construction,
normal safety factors in dam design, seepage monitoring or control, or controls
on public or wildlife access to cyanide solution ponds or pumping installations.
Work was undertaken to address the deficiencies with the tailings management
aspect of the operations and capital investments were carried out to upgrade the
containment structures and tailings operations and to remediate the Tayoltita
tailings dam. In 2014 a Technical Review and Risk Assessment of the Cupias
tailing storage facility was performed by Amec Foster Wheeler. The final
assessment delivered in early 2015 shows that the facility exceeds the minimum
factors of safety criteria for static and seismic loading conditions for both
the current and ultimate storage configurations. Preliminary evaluations of the
current surface water management facilities shows that the ditches, diversion
dam and other structures require modifications to accommodate storm events. The
engineering of these improvements was completed in 2015 with construction
planned for 2017.

The Company anticipates that
further expenditures will be required to maintain compliance with applicable
environmental regulations, which are becoming more stringent and can be expected
to become more aligned with international guidelines in the future. The Company
will incur environmental liability for mining activities conducted both before
and after it acquired ownership of the San Dimas Mine. To the extent that the
Company is subject to unfunded or uninsured environmental liabilities, the
payment for such liabilities would reduce funds otherwise available and could
have a material adverse effect on the Company. Should the Company be unable to
fund fully the cost of remedying an environmental problem, the Company may be
required to suspend operations or enter into interim compliance measures pending
completion of required remediation, which could have a material adverse effect
on the Company.

The asset purchase agreement
entered into in connection with the acquisition of the San Dimas Mine does not
provide for any indemnities from DMSL against any potential environmental
liabilities, including, but not limited to, those that may arise from possible
failure of the San Antonio tailings dam. Primero has indemnified DMSL for any
future environmental claims or liabilities. See Mining Activities  San Dimas
Mine  Environmental Matters.

Labour and Employment Matters

Union contracts for the San Dimas
Mine are renegotiated every two years, except for the compensation aspects,
which are reviewed annually. See Business of Primero  Changes to Contracts.
Production at the Companys properties will continue to be dependent upon the
ability of Primero to continue to maintain good relations with its employees and
the unions. In addition, relations between Primero and its employees may be
impacted by changes in the scheme of labour relations which may be introduced by
the relevant governmental authorities. Adverse changes in such legislation or in
the relationship between Primero with its employees and unions may have a
material adverse effect on Primeros business, results of operations and
financial condition.

Foreign Operations Risks  Mexico

A portion of the Companys mining
and mineral exploration operations are currently conducted in Mexico, and as
such Primeros operations are exposed to various levels of political, economic
and other risks and uncertainties. These risks and uncertainties include, but
are not limited to, terrorism; organized crime; kidnapping and hostage taking;
extortion; military repression; theft; expropriation; extreme fluctuations in
currency exchange rates; high rates of inflation; labour unrest; the risks of
war or civil unrest; renegotiation or nullification of existing concessions,
licenses, permits and contracts; delays in obtaining or the inability to obtain
or maintain necessary governmental permits, opposition to mining from
environmental or other non-governmental organizations (whether or not grounded
in law, rule or non-binding statement of principles) in the form of legal
challenges, protest or activity targeted against the Company; illegal mining,
trespass and associated security threats and unsafe activities; changes in
royalty and taxation regimes; restrictions on foreign exchange and repatriation;
and changing political conditions, currency controls and governmental
regulations that favour or require the awarding of contracts to local
contractors or require foreign contractors to employ citizens of, or purchase
supplies from, a particular jurisdiction.

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The Company has taken a variety
  of measures to protect its employees, contractors, property and facilities
  against safety and security risks such as crime, illegal mining, kidnapping,
  theft, vandalism and trespass. However, there can be no assurance that such
  measures will be effective or that incidents of criminal activity, illegal
  mining, theft, vandalism or trespass will not have an adverse impact on the
  Companys operations, property or facilities, including the potential for harm
  to people or property, increased costs, and disruptions to production and the
Companys ability to meet production goals.

Changes, if any, in mining,
taxation or investment policies, or shifts in political attitude in Mexico may
adversely affect Primeros operations or profitability. Operations may be
affected in varying degrees by government regulations with respect to, but not
limited to, restrictions on production, price controls, export controls,
currency remittance, income taxes, royalties, expropriation of property, foreign
investment, maintenance of claims, environmental legislation, land use, land
claims of local people, water use and mine safety.

Failure to comply strictly with
applicable laws, regulations and local practices relating to mineral right
applications and tenure, could result in loss, reduction or expropriation of
entitlements, or the imposition of additional local or foreign parties as joint
venture partners with carried or other interests. The occurrence of these
various factors and uncertainties cannot be accurately predicted and could have
an adverse effect on Primeros operations or profitability.

Following Enrique Peña Nietos
election as President in 2012, the Congreso General de los Estados Unidos
Mexicanos(Mexican Congress) has functioned without the ruling party
having a majority. This could result in a deadlock and prevent the timely
implementation of political and economic reforms, which in turn could have a
material adverse effect on Mexican economic policy.

The San Dimas Mine is in a remote
location and obtaining financing or finding or hiring qualified people or
obtaining all necessary services for the Companys operations in Mexico may be
difficult. It may be difficult to find or hire qualified people in the mining
industry to work at San Dimas or to obtain all the necessary services or
expertise in Mexico or to conduct operations on its projects at reasonable
rates. If qualified people and services or expertise cannot be obtained in
Mexico, the Company may need to seek and obtain those services from people
located outside Mexico, which will require work permits and compliance with
applicable laws and could result in delays and higher costs to the Company to
conduct its operations in Mexico.

Infrastructure

Mining, processing, development
and exploration activities depend, to one degree or another, on adequate
infrastructure. Reliable roads, bridges, power sources and water supply are
important determinants which affect capital and operating costs. Unusual or
infrequent weather phenomena, terrorism, sabotage, government or other
interference in the maintenance or provision of such infrastructure could
adversely affect the Companys operations, financial condition and results of
operations. Any interruption in power supply or any interruption in water supply
due to, inter alia, periods of drought or low rainfall could adversely
impact the Companys operations. As part of the ongoing effort to optimize the
design of the proposed Cerro del Gallo installations, particular attention has
been given to locating a reliable water source for operations and to install a
reliable electrical connection to the national grid.

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Competition

The mining industry is
competitive in all of its phases. Primero faces strong competition from other
mining companies in connection with the acquisition of properties producing, or
capable of producing, precious and base metals. Many of these companies have
greater financial resources, operational experience and technical capabilities
than Primero. The ability of the Company to acquire mineral properties in the
future will depend not only on its ability to develop its present properties,
but also on its ability to select and acquire suitable producing properties or
prospects for development or mineral exploration. In addition, the Company also
competes with its competitors over sourcing raw materials, supplies and services
used in connection with its mining operations, including skilled experience
workers and management.

Acquisitions

The Company might pursue the
acquisition of exploration, development and production assets consistent with
its acquisition and growth strategy. There is no assurance, however, that the
Company will be able to identify projects or companies that are suitable or that
are available for sale at reasonable prices or that it will be able to
consummate any acquisition, or integrate any acquired business into its
operations successfully. Acquisition transactions and the operation of acquired
properties, involve inherent risks, including but not limited to: accurately
assessing the value, strengths, weaknesses, contingent and other liabilities and
potential profitability of acquisition candidates; ability to achieve identified
and anticipated operating and financial synergies; unanticipated costs;
diversion of management attention from existing business; potential loss of the
Companys key employees or key employees of any business acquired; unanticipated
changes in business, industry or general economic conditions that affect the
assumptions underlying the acquisition; and decline in the value of acquired
properties, companies or securities. Any one or more of these factors or other
risks could cause the Company not to realize the anticipated benefits of an
acquisition of properties or companies, and could have a material adverse effect
on the Companys financial condition.

To acquire properties and
companies, the Company may be required to use available cash, incur debt, issue
additional Common Shares or other securities, or a combination of any one or
more of these. This could affect the Companys future flexibility and ability to
raise capital, to operate, explore and develop its properties and could dilute
existing shareholders and decrease the trading price of the Common Shares. There
is no assurance that the Company will be able to raise additional capital if
necessary to complete an acquisition or to develop or operate the acquired asset
thereafter (see Risk Factors  Operational Risks  Additional Capital). There
is no assurance that when evaluating a possible acquisition, the Company will
correctly identify and manage the risks and costs inherent in the business to be
acquired. Restrictions on incurring additional indebtedness in the Amended and
Restated Silver Purchase Agreement may limit the ability of the Company to
borrow to finance acquisitions.

The San Dimas Assets and the
shares of Silver Trading acquired on August 6, 2010, were acquired on an as is,
where is basis and the representations and warranties and indemnities provided
by DMSL and GSBL (together the San Dimas Vendors) in respect of the San Dimas
Assets are limited. Consequently, the recourse the Company may have against the
San Dimas Vendors is limited. Further, there may be liabilities that the Company
failed to discover or was unable to quantify in its due diligence. The Company
may not be indemnified for some or all of these liabilities.

Permitting

The Companys operations are
subject to receiving and maintaining permits (including environmental permits)
from appropriate governmental authorities. Although the Companys mining
operations currently have all required permits for their operations as currently
conducted, there is no assurance that delays will not occur in connection with
obtaining all necessary renewals of such permits for the existing operations, additional permits for any
possible future changes to operations, or additional permits associated with new
legislation. Furthermore, prior to any development on any of its properties, the
Company must receive permits from appropriate governmental authorities. There
can be no assurance that the Company will continue to hold or obtain, if
required to, all permits necessary to develop or continue operating at any
particular property.

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Development of New Projects

The Company has projects at
various stages of evaluation and development. There are inherent development,
construction and permitting-related risks to the development of all new mining
projects. These risks include the ability to assemble all required land and
other usage rights in a cost effective manner; availability and delivery of
critical equipment; the hiring of key personnel (including outside consultants)
for construction, commissioning and operations and the supervision of that
personnel; delays associated with the work of third-party contractors; and
budget overruns and currency fluctuations. The Company will be required to rely
upon outside consultants, engineers and others for additional construction
expertise in respect of its development projects. In addition, delays in the
commencement of mineral production often occur. Accordingly, there can be no
assurance that the Companys activities will result in profitable mining
operations at its development projects.

Key Personnel

The Companys ability to
successfully operate its mining properties and execute on its business strategy
depends on its key executives and on certain operating personnel in Canada and
Mexico. The Companys ability to manage administration, production, exploration
and development activities and acquisition strategies, and hence its success,
will depend in large part on the efforts of these individuals. The Company
cannot be certain that it will be able to retain such personnel or attract a
high calibre of personnel in the future. As such, the loss of any key officer of
the Company could have an adverse impact on the Company, its business and its
financial position. The Company has not purchased any key-man insurance with
respect to any of its directors or officers as of the date hereof. The Company
faces intense competition for qualified personnel, and the loss of the services
of one or more of such key personnel could have a material adverse effect on the
Companys business or operations.

Subsidiaries

Primero conducts operations
through Canadian and foreign (Barbadian, Luxembourger and Mexican) subsidiaries,
and a significant portion of its assets are held in such entities. Accordingly,
any limitation on the transfer of cash or other assets between the parent
corporation and such entities, or among such entities, could restrict Primeros
ability to fund its operations efficiently. Any such limitations, or the
perception that such limitations may exist now or in the future, could have an
adverse impact on Primeros valuation and stock price.

Litigation

The Company is aware of class
action lawsuits having been filed in February 2016 against the Company in the
State of California seeking to recover damages for investors in the Companys
common shares under the U.S. federal securities laws. The Company filed a motion
to dismiss which was granted on January 30, 2017. The plaintiffs claims were
dismissed without prejudice and the plaintiffs filed an amended complaint on
February 28, 2017. The Company will vigorously defend these class action
lawsuits if they proceed. The Company may also be, from time to time, involved
in various claims, legal proceedings and complaints arising in the ordinary
course of business. The Company cannot reasonably predict the likelihood or
outcome of these actions. If the Company is unable to resolve these disputes
favourably, it may have a material adverse impact on the Companys financial
performance, cash flow and results of operations. See Risk Factors  Operational Risks
 Use of Ejido Owned Land and Risk Factors  Financial Risks  Challenge to the
2012 APA.

50

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Reputational Risk

Damage to Primeros reputation
can be the result of the actual or perceived occurrence of any number of events,
and could include any negative publicity, whether true or not. Companies are at
greater risk of losing control over how they are perceived in the marketplace
due to increased usage of social media and other web- based tools used to
generate, publish and discuss user-generated content and to connect with other
users. Although Primero believes that it operates in a manner that is respectful
to all stakeholders and that it places a great emphasis on protecting its image
and reputation, the Company does not ultimately have direct control over how it
is perceived by others. An impaired reputation may lead to increased challenges
in developing and maintaining community relations, decreased investor confidence
and an impediment to the Companys overall ability to advance its projects
thereby having a material adverse impact on the Companys results of operations,
financial condition and growth prospectus.

DIVIDENDS

The Company has not paid
dividends since its incorporation. The future payment of dividends or
distributions will be dependent upon the financial requirements to fund future
growth, the financial condition of the Company and other factors the Board may
consider appropriate in the circumstances. The Company is not aware of any
restrictions that could prevent the paying of dividends or distributions.

CAPITAL STRUCTURE

Primeros authorized share
capital consists of an unlimited number of common shares without par value
(Common Shares) and an unlimited number of preferred shares without par value.
As of December 31, 2016, there were 189,508,365 Common Shares issued and
outstanding as fully paid and non-assessable and no preferred shares issued and
outstanding. As of the date of this AIF, 191,318,899Common Shares are issued and
outstanding and no preferred shares are issued and outstanding.

Common Shares

Subject to the rights of the
holders of the preferred shares of the Company, holders of Common Shares of the
Company are entitled to dividends if, as and when declared by the directors.
Holders of Common Shares of the Company are entitled to one vote per Common
Share at meetings of shareholders except at meetings at which only holders of a
specified class of shares are entitled to vote. Upon liquidation, dissolution or
winding-up of the Company, subject to the rights of holders of preferred shares,
holders of Common Shares of the Company are to share rateably in the remaining
assets of the Company as are distributable to holders of Common Shares. The
Common Shares are not subject to call or assessment rights, redemption rights,
rights regarding purchase for cancellation or surrender, or any preemptive or
conversion rights.

Preferred Shares

Preferred shares may be issued
from time to time in one or more series, ranking equally on winding-up, to
repayment of the amount paid up on such shares, and to carry and be subject to,
as a class, the following special rights and restrictions pertaining to (but not
limited to) dividends, redemption or purchase rights, rights of retraction,
rights of conversion, terms and conditions of any share purchase plan or sinking
fund, rights upon dissolution of the Company, and voting, as the directors of
the Company may, from time to time, determine by resolution. Currently the
preferred shares rank in priority over Common Shares as to dividends and return
of paid up capital upon dissolution or winding up of the Company. Holders of preferred shares are not entitled to notice
or to vote at meetings of shareholders (except where holders of a specified
class or series are entitled to a separate vote in accordance with the
Act. The Company may at any time purchase for cancellation or redeem the
preferred shares that may be issued and holders of preferred shares may require
the Company to retract such shares in accordance with the terms upon which such
have been issued.

51

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Options, Warrants and Debentures

As of the date of this AIF, the
Company also had outstanding obligations to issue up toan aggregate
of19,131,684  Common Shares in respect of options and warrants as follows:

| |  | stock  options to purchase  8,120,434 Common Shares at a price  ranging from CDN$0.75  to  USD$15.09expiring between March 31, 2017 and  March 24,  2022; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                              
| |  | warrants to purchase an aggregate of 11,011,250 Common
      Shares at a price of CDN$3.35, expiring on June 28, 2018.                                       

In addition, as of the date of this AIF, the Company also had
outstanding obligations to issue up to 11,450,385 Common Shares in respect of
convertible debentures.

Directors Phantom Share Units

On March  27, 2012, the Board approved the adoption of a director’s phantom share unit  plan (the “Directors’ PSU Plan”), which subsequently received shareholder  approval on May 28, 2012. Shareholders of the Company did not approve the  renewal of the Directors’ PSU Plan at its annual general and special meeting  held on May 6, 2015. Members of the Board, other than a member who is an  officer or employee of Primero or Primero’s subsidiaries, are eligible to  participate in the Directors’ PSU Plan. A person holding a phantom share unit  (a “Director PSU”) under the Directors’ PSU Plan is entitled to elect to  receive, at vesting (subject to blackout periods), either (a) cash in an amount  equal to the volume weighted average trading price per Common Share over the  five preceding trading days, or (b) Common shares in number equal to the number  of Directors’ PSUs. If no election is made, the Company will pay out such  Directors’ PSUs in cash. All outstanding Director PSUs previously issued under  the Directors’ PSU Plan are unaffected and remain outstanding; however, the  Company is not able to make any new grants of Directors PSUs under the  Directors’ PSU Plan. As of the date of this AIF, the Company had outstanding  74,627  Director PSUs, vesting  December 1, 2017 and expiring  December  31, 2017.

Employee Phantom Share Units

On March 28, 2013, the Board approved the adoption of an employee  phantom share unit plan (the “2013 PSU Plan”), which subsequently received  shareholder approval on May 8, 2013. Employees and officers of Primero, or  Primero’s subsidiaries, are eligible to participate in the 2013 PSU Plan. The  Company can elect to pay a person holding a phantom share unit (a “2013 PSU”)  under the 2013 PSU Plan, at vesting (subject to blackout periods), either (a)  cash in an amount equal to the volume weighted average trading price per Common  Share over the five preceding trading days, or (b) Common shares in number  equal to the number of 2013 PSUs. As of the date of this AIF, the Company had  outstanding 5,740,986Employee PSUs, vesting between  March 31,  2017 and March  24, 2020and expiring between December 31,  2017  and December 31,  2020.

Deferred Share Units

On March 23, 2015, the Board
approved the adoption of a deferred share unit plan (the DSU Plan), which
subsequently received shareholder approval on May 6, 2015. The DSU Plan permits
Key Officers to receive deferred share units (DSUs) as part of
the Companys succession planning, as well as to allow them to participate in
the long-term success of the Company and to promote a greater alignment of their
interests with shareholders. A DSU is a unit equivalent in value to a share. Key
Officer is defined in the DSU Plan as the Companys Chairman of the Board,
Vice-Chairman of the Board, or any officer who, in the opinion of the Human
Resources Committee, has demonstrated a capacity for contributing in a
substantial measure to the successful performance of the Company or a related
entity. As of the date of this AIF, the maximum number of shares that may be
issued under the DSU Plan is 316,000, representing approximately 0.165% of the outstanding shares, and the Company had outstanding
315,790 DSUs.

52

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MARKET FOR SECURITIES

Common Shares

The Companys Common Shares are
traded on the TSX under the symbol P. Commencing on August 15, 2011, the
Companys Common Shares began trading on the NYSE under the symbol PPP. The
following table shows the high and low trading prices and monthly trading volume
of the Common Shares of Primero on the TSX for the periods listed:

|             |  |   | High   |  |   |            |  |  |            | 
|------------ |  | - | ------ |  | - | ---------- |  |  | ---------- | 
|Period       |  |   | (CDN$) |  |   | Low (CDN$) |  |  | Volume     | 
|2016         |  |   |        |  |   |            |  |  |            | 
|January      |  | $ | 3.78   |  | $ | 2.66       |  |  | 12,987,703 | 
|February     |  |   | 3.78   |  |   | 1.935      |  |  | 31,048,113 | 
|March        |  |   | 2.82   |  |   | 2.02       |  |  | 39,942,193 | 
|April        |  |   | 2.68   |  |   | 1.94       |  |  | 32,516,087 | 
|May          |  |   | 2.69   |  |   | 2.11       |  |  | 21,003,701 | 
|June         |  |   | 2.74   |  |   | 2.14       |  |  | 31,716,977 | 
|July         |  |   | 3.42   |  |   | 2.72       |  |  | 18,010,678 | 
|August       |  |   | 3.06   |  |   | 1.96       |  |  | 18,811,320 | 
|September    |  |   | 2.33   |  |   | 1.97       |  |  | 17,322,750 | 
|October      |  |   | 2.22   |  |   | 1.79       |  |  | 17,152,607 | 
|November     |  |   | 1.98   |  |   | 1.01       |  |  | 26,859,829 | 
|December     |  |   | 1.28   |  |   | 0.94       |  |  | 15,120,127 | 
|2017         |  |   |        |  |   |            |  |  |            | 
|January      |  | $ | 1.14   |  | $ | 0.98       |  |  | 8,981,772  | 
|February     |  |   | 1.21   |  |   | 0.82       |  |  | 11,877,972 | 
|March 1 – 30 |  |   | 0.86   |  |   | 0.70       |  |  | 10,583,973 | 

53

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Warrants

The Companys Warrants are traded
on the TSX under the symbol P.WT.C. The warrants commenced trading on June 24,
2016. The following table shows the high and low trading prices and monthly
trading volume of the warrants of Primero on the TSX for the periods listed:

P.WT.C

|             |  |   | High   |  |   |            |  |  |           | 
|------------ |  | - | ------ |  | - | ---------- |  |  | --------- | 
|Period       |  |   | (CDN$) |  |   | Low (CDN$) |  |  | Volume    | 
|2016         |  |   |        |  |   |            |  |  |           | 
|June         |  | $ | 0.60   |  | $ | 0.36       |  |  | 1,366,737 | 
|July         |  |   | 1.05   |  |   | 0.68       |  |  | 1,009,050 | 
|August       |  |   | 0.98   |  |   | 0.41       |  |  | 362,150   | 
|September    |  |   | 0.51   |  |   | 0.45       |  |  | 24,213    | 
|October      |  |   | 0.55   |  |   | 0.45       |  |  | 115,050   | 
|November     |  |   | 0.49   |  |   | 0.10       |  |  | 362,300   | 
|December     |  |   | 0.25   |  |   | 0.12       |  |  | 448,662   | 
|2017         |  |   |        |  |   |            |  |  |           | 
|January      |  | $ | 0.20   |  | $ | 0.14       |  |  | 197,350   | 
|February     |  |   | 0.18   |  |   | 0.08       |  |  | 632,500   | 
|March 1 – 30 |  |   | 0.09   |  |   | 0.05       |  |  | 638,750   | 

Convertible Debentures

The Companys 2015 Debentures are
traded on the TSX under the symbol P.DB.V. The following table shows the high
and low trading prices and monthly trading volume of the convertible debentures
of Primero on the TSX for the periods listed:

P.DB.V

|             |  |   | High   |  |   |            |  |  |           | 
|------------ |  | - | ------ |  | - | ---------- |  |  | --------- | 
|Period       |  |   | (CDN$) |  |   | Low (CDN$) |  |  | Volume    | 
|2016         |  |   |        |  |   |            |  |  |           | 
|January      |  | $ | 85.00  |  | $ | 75.02      |  |  | 384,000   | 
|February     |  |   | 82.00  |  |   | 75.00      |  |  | 1,365,000 | 
|March        |  |   | 86.00  |  |   | 82.00      |  |  | 3,294,000 | 
|April        |  |   | 85.00  |  |   | 80.00      |  |  | 2,215,000 | 
|May          |  |   | 83.00  |  |   | 80.00      |  |  | 3,597,000 | 
|June         |  |   | 86.13  |  |   | 78.01      |  |  | 2,212,000 | 
|July         |  |   | 92.00  |  |   | 88.00      |  |  | 2,834,000 | 
|August       |  |   | 91.00  |  |   | 83.54      |  |  | 3,360,000 | 
|September    |  |   | 84.00  |  |   | 81.00      |  |  | 4,552,000 | 
|October      |  |   | 85.00  |  |   | 81.02      |  |  | 177,000   | 
|November     |  |   | 82.25  |  |   | 61.00      |  |  | 3,890,000 | 
|December     |  |   | 70.00  |  |   | 65.00      |  |  | 97,000    | 
|2017         |  |   |        |  |   |            |  |  |           | 
|January      |  | $ | 68.00  |  | $ | 65.00      |  |  | 65,000    | 
|February     |  |   | 70.00  |  |   | 57.01      |  |  | 5,215,000 | 
|March 1 – 30 |  |   | 60.00  |  |   | 55.00      |  |  | 2,937,000 | 

54

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PRIOR SALES

During the financial year ended
December 31, 2016, Primero issued or granted the following Common Shares or
securities convertible into Common Shares:

|                   |                                                    | Issue or Exercise       
|------------------ | -------------------------------------------------- | ------------------------
|                   | Number and Type                                    | Price Per
      Security
|Date of Issuance   | of Securities Issued                               | (CDN$)                  
|December 16, 2016  | 11,871 Common
      Shares(2)                      | $1.08                   
|December 14, 2016  | 30,098 Common
      Shares(1)                      | $1.21                   
|December 13, 2016  | 15,049 Common
      Shares(1)                      | $1.21                   
|December 12, 2016  | 33,476 Common
      Shares(1)                      | $1.21                   
|December 9, 2016   | 974,874 Common
      Shares(5)                     | $1.91                   
|December 7, 2016   | 38,788 Common
      Shares(2)                      | $1.24                   
|December 2, 2016   | 43,072 Common
      Shares(1)                      | $1.21                   
|November 21, 2016  | 40,670 Common
      Shares(2)                      | $1.04                   
|November 21, 2016  | 260,415 2013
      PSUs(3)                         | $1.36                   
|November 21, 2016  | 347,938 stock options                              | $1.36                   
|November 16, 2016  | 33,136 Common
      Shares(2)                      | $1.10                   
|October 7, 2016    | 35,665 Common
      Shares(2)                      | $1.98                   
|September 23, 2016 | 178,681 2013
      PSUs(3)                         | $2.16                   
|September 23, 2016 | 256,410 stock options                              | $2.20                   
|September 14, 2016 | 186,054 Common
      Shares(2)                     | $2.20                   
|August 16, 2016    | 331,729 Common
      Shares(2)                     | $2.34                   
|August 9, 2016     | 6,293 2013
      PSUs(3)                           | $2.38                   
|June 27, 2016      | 8,981 Common
      Shares(2)                       | $2.56                   
|June 24, 2016      | 22,022,500
      Common Shares(4)                  | $2.08                   
|June 24, 2016      | 11,011,250 Common Share
      Purchase Warrants(4) | $3.35                   
|June 17, 2016      | 15,380 Common
      Shares(2)                      | $2.58                   
|June 9, 2016       | 879,397 Common
      Shares(5)                     | $1.91                   
|May 30, 2016       | 12,231 Common
      Shares(2)                      | $2.16                   
|May 17, 2016       | 10,955 Common
      Shares(2)                      | $2.60                   
|May 13, 2016       | 9,363 Common
      Shares(2)                       | $2.39                   
|May 12, 2016       | 8,592 Common
      Shares(2)                       | $2.33                   
|May 11, 2016       | 50,354 Common
      Shares(2)                      | $2.29                   
|May 9, 2016        | 21,892 Common Shares(2)                            | $2.24                   
|May 6, 2016        | 734,801 2013
      PSUs(3)                         | $2.34                   
|April 1, 2016      | 46,148 Common Shares(2)                            | $2.27                   
|March 18, 2016     | 2,865,949 2013
      PSUs(3)                       | $2.54                   
|March 4, 2016      | 462,283 Common Shares(2)                           | $2.08                   
|February 23, 2016  | 2,177,969 stock
      options                      | $2.95                   

55

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Notes:

| | (1) | Issued as consideration for awards under the Directors
      PSU Plan.                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Common shares issued as settlement for vested phantom
      share units under the 2013 PSU Plan.                                                                                                                                                                                                     
| | (3) | Units issued to employees and officers for which the
      Company may elect to make the applicable payout under the 2013 PSU Plan in
      the form of cash or Common Shares. Each 2013 PSU was priced based on the
      closing price of the Common Shares on the TSX on the date of
    issuance.
| | (4) | Common shares and common share purchase warrants issued
      pursuant to the equity offering completed on June 24, 2016.                                                                                                                                                                            
| | (5) | Common shares issued as consideration for the purchase of
      Coral Silvers mining concessions.                                                                                                                                                                                                   

DIRECTORS AND OFFICERS

The following table is as at the
date of the AIF and sets out the name, province/state of residence, positions
and/or offices held with the Company, and principal occupations of each person
who is a director and/or an executive officer of the Company, as well as the
period during which each person, if applicable, has been a director of the
Company.

The term of office of each
director of the Company ends immediately before the election of directors at the
annual meeting of shareholders each year.

|                             |  | Position(s) with the   |  |  |                       |  |  |                  | 
|---------------------------- |  | ---------------------- |  |  | --------------------- |  |  | ---------------- | 
|Name and
      Residence     |  | Company                |  |  | Principal Occupation  |  |  | Director Since   | 
|                             |  |                        |  |  |                       |  |  |                  | 
|                             |  |                        |  |  |                       |  |  |                  | 
|JOSEPH CONWAY(1)(2)          |  | Vice Chairman, Interim |  |  | Vice Chairman,        |  |  | June 28, 2010    | 
|Ontario, Canada              |  | President and Chief    |  |  | Interim President and |  |  |                  | 
|                             |  | Executive Officer      |  |  | Chief Executive       |  |  |                  | 
|                             |  |                        |  |  | Officer               |  |  |                  | 
|                             |  |                        |  |  |                       |  |  |                  | 
|DAVID DEMERS(3)(4)           |  | Director               |  |  | Consultant, Crocus    |  |  | October 29, 2008 | 
|British Columbia, Canada     |  |                        |  |  | Advisors Ltd.         |  |  |                  | 
|                             |  |                        |  |  |                       |  |  |                  | 
|GRANT EDEY(2) (4) (5)        |  | Director               |  |  | President and Chief   |  |  | June 28, 2010    | 
|Ontario, Canada              |  |                        |  |  | Executive Officer of  |  |  |                  | 
|                             |  |                        |  |  | Khan Resources Inc.   |  |  |                  | 
|                             |  |                        |  |  |                       |  |  |                  | 
|PATRICIA A. FORTIER(2)(4)(6) |  | Director               |  |  | Former Canadian       |  |  | November 1, 2016 | 
|Ontario, Canada              |  |                        |  |  | diplomat              |  |  |                  | 
|                             |  |                        |  |  | Corporate Director    |  |  |                  | 
|                             |  |                        |  |  |                       |  |  |                  | 
|BRAD MARCHANT(2)(5)          |  | Director               |  |  |                       |  |  | June 26, 2013    | 
|British Columbia, Canada     |  |                        |  |  |                       |  |  |                  | 
|                             |  |                        |  |  |                       |  |  |                  | 
|WADE NESMITH                 |  | Chairman and Director  |  |  | Chairman of the       |  |  | October 29, 2008 | 
|British Columbia, Canada     |  |                        |  |  | Company               |  |  |                  | 

56

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|                         |  | Position(s) with the    |  |  |                         |  |  |                | 
|------------------------ |  | ----------------------- |  |  | ----------------------- |  |  | -------------- | 
|Name and
      Residence |  | Company                 |  |  | Principal Occupation    |  |  | Director Since | 
|                         |  |                         |  |  |                         |  |  |                | 
|ROBERT A.                |  | Director                |  |  | Executive Chairman      |  |  | June 28, 2010  | 
|QUARTERMAIN(2)(3)        |  |                         |  |  | and Director of         |  |  |                | 
|British Columbia, Canada |  |                         |  |  | Pretium Resources Inc.  |  |  |                | 
|                         |  |                         |  |  |                         |  |  |                | 
|MICHAEL RILEY(3)(5)      |  | Director                |  |  | Corporate Director      |  |  | April 22, 2010 | 
|British Columbia, Canada |  |                         |  |  |                         |  |  |                | 
|                         |  |                         |  |  |                         |  |  |                | 
|TAMARA BROWN(1)          |  | Vice President,         |  |  | Vice President,         |  |  | N/A            | 
|Ontario, Canada          |  | Corporate Development   |  |  | Corporate               |  |  |                | 
|                         |  |                         |  |  | Development of the      |  |  |                | 
|                         |  |                         |  |  | Company                 |  |  |                | 
|                         |  |                         |  |  |                         |  |  |                | 
|KEVIN JENNINGS(1)        |  | Chief Financial Officer |  |  | Chief Financial Officer |  |  | N/A            | 
|Ontario, Canada          |  |                         |  |  | of the Company          |  |  |                | 
|                         |  |                         |  |  |                         |  |  |                | 
|H. MAURA LENDON(1)       |  | Chief General Counsel   |  |  | Chief General Counsel   |  |  | N/A            | 
|Ontario, Canada          |  | and Corporate Secretary |  |  | and Corporate           |  |  |                | 
|                         |  |                         |  |  | Secretary of the        |  |  |                | 
|                         |  |                         |  |  | Company                 |  |  |                | 
|                         |  |                         |  |  |                         |  |  |                | 
|JAMES MALLORY,           |  | Vice President,         |  |  | Vice President,         |  |  | N/A            | 
|Ontario, Canada          |  | Corporate               |  |  | Corporate               |  |  |                | 
|                         |  | Responsibility          |  |  | Responsibility          |  |  |                | 
|                         |  |                         |  |  |                         |  |  |                | 
|DAMIEN MARANTELLI(1)     |  |                         |  |  |                         |  |  |                | 
|Ontario, Canada          |  | Chief Operating Officer |  |  | Chief Operating         |  |  | N/A            | 
|                         |  |                         |  |  | Officer of the          |  |  |                | 
|                         |  |                         |  |  | Company                 |  |  |                | 
|                         |  |                         |  |  |                         |  |  |                | 
|LOUIS TONER              |  | Vice President, Project |  |  | Vice President, Project |  |  | N/A            | 
|Quebec, Canada           |  | Development and         |  |  | Development and         |  |  |                | 
|                         |  | Construction            |  |  | Construction            |  |  |                | 

| | (1) | Member of the Disclosure Committee.                                                                                                                                                                                                                                                                                                    
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Member of the Technical and Corporate Responsibility
      Committee, formerly known as the Corporate Responsibility Committee. Mr.
      Conway was appointed to the Technical Corporate Responsibility Committee
      on February 17, 2016. Mr. Marchant is the Chair of the Technical and
      Corporate Responsibility Committee.
| | (3) | Member of the Human Resources Committee. Mr. Quartermain
      is the Chair of the Human Resources Committee.                                                                                                                                                                                                                          
| | (4) | Member of the Governance and Nominating Committee. Mr.
      Demers is the Chair of the Governance and Nominating Committee.                                                                                                                                                                                                           
| | (5) | Member of the Audit Committee. Mr. Riley is the Chair of
      the Audit Committee.                                                                                                                                                                                                                                                    
| | (6) | Ms. Fortier was appointed to the Governance &
      Nominating Committee and the Technical and Corporate Responsibility
      Committee, effective November 1 and ratified by the Board on November 8,
      2016.                                                                                                                     

As of  the date of this AIF, the directors and executive officers of the Company, as a  group, beneficially own, directly or indirectly, or exercise control or direction  over 2,231,037 Common  Shares, being 1.17% of the  issued Common Shares on a non-diluted basis. The statement as to the number of  Common Shares beneficially owned, directly or indirectly, or over which control  or direction is exercised by the directors and executive officers of the  Company, as a group, is based upon information furnished by the directors and  executive officers.

57

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Principal Occupations and Other Information about Primeros
Directors and Executive Officers

The principal occupations of each
of the Companys directors and executive officers within the past five years are
disclosed in the biographies set forth below.

Joseph Conway  Vice Chairman, Interim President and
Chief Executive Officer

Joseph Conway was appointed
Interim President and Chief Executive Officer upon the departure of Mr. Ernest
Mast as President and Chief Executive Officer effective March 6, 2017. Mr.
Conway was appointed President and Chief Executive Officer of the Company on
June 1, 2010, and has been a director of the Company since June 28, 2010. Mr.
Conway ceased to be President of Primero on February 2, 2015, and retired from
his position as Chief Executive Officer on January 31, 2016. Effective February
1, 2016, he became Executive Vice Chairman of the Company. He has also been a
director of Orezone Gold Corporation since October 2014. Mr. Conway was a
non-executive director of Santana Mineral Limited from June 2013 to November
2015. Mr. Conway was a director of Dalradian Resources Inc. from June 2010 to
May 2013. He served as President and Chief Executive Officer and a director of
IAMGOLD Corporation (IAMGOLD) from January 2003 until January 2010 and was a
director of IAMGOLD from January 2004 until December 2009. Mr. Conway was
President, Chief Executive Officer and a director of Repadre Capital Corporation
from September 1995 until January 2003. From 1989 until 1995, he was Vice
President and a director of Nesbitt Burns, a Canadian investment dealer. He was
a stock analyst with Walwyn Stodgell Cochran and Murray from 1987 to 1989, and a
mine and exploration geologist from 1981 to 1985. Mr. Conway has a Bachelor of
Science degree from Memorial University and a Master of Business Administration
degree from Dalhousie University.

David Demers  Director

David R. Demers has been a
director of the Company since October 28, 2008. He was one of the founding
members of Westport Fuel Systems, a University of British Columbia spinoff
company that has grown into the worlds leading alternative fuels automotive
systems company, supplying CNG and LNG systems to many of the worlds leading
manufacturers of cars and commercial vehicles. Mr. Demers served as CEO and a
director of Westport from 1996 until July 2016, when it merged with Fuel Systems
Solutions of New York. Mr. Demers has worked as a Director of a number of
technology start-ups, including EnWave (TSX:ENW) as it was spun out of the
University of British Columbia until it completed its initial public offering,
and was Chair of BrightSide which was sold to Dolby. He also served as a
Director of Clean Energy Fuels (CLNE) through its NASDAQ listing. Mr. Demers
obtained a Bachelor of Science (Physics) in 1976 and a Juris Doctor in 1978,
both from the University of Saskatchewan.

Grant Edey  Director

Mr. Edey has been a director of
the Company since June 28, 2010. He has been the President and Chief Executive
Officer of Khan Resources Inc., since July 2010 and a director of Khan Resources
Inc. since February 2007. Mr. Edey was Chief Financial Officer of IAMGOLD from
2002 until August 2007. From 1996 until 2002, he was the Vice President,
Finance, Chief Financial Officer and Corporate Secretary of Repadre Capital
Corporation. Before joining Repadre Capital Corporation, Mr. Edey held senior
positions with Strathcona Mineral Services Limited, TransCanada Pipelines
Limited, Eldorado Nuclear Limited, Rio Algom Limited and INCO Limited. Mr. Edey
has a Master of Business Administration from the University of Western Ontario
and a Bachelor of Science (Mining Engineering) degree from Queens University.

58

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Patricia A. Fortier - Director

Patricia A Fortier
has been a director of the Company since November 1, 2016. Ms. Fortier is a
former Canadian diplomat whose career has focused on political relations,
governance, international security, and trade and investment  notably involved
with the extractive and defence industries abroad. She most recently acted in
the role of Assistant Deputy Minister responsible for Security, Consular, and
Emergency Management in Global Affairs Canada. Ms. Fortier was the past Canadian
Ambassador to Peru and Bolivia and the Canadian Ambassador to the Dominican
Republic. She was also the Minister-Counsellor (Political) at the Canadian
Embassy in Washington, D.C. Ms. Fortiers past work abroad includes being Senior
Advisor to the OAS Electoral Observation Mission to Peru and Chief Advisor to
the High Level Mission to Peru. In Costa Rica, she worked with international
NGOs on climate change (Earth Council) and human rights/democracy (Instituto
Interamericano de los Derechos Humanos). Other diplomatic postings included
Chile, Canadian mission to the United Nations in New York, India, Kenya and
Zambia. She was also a member of the board of the Pearson Peacekeeping Centre.
Ms. Fortier has a Master's degree in Public Administration and a BA (Honours)
from Queen's University and was a Weatherhead Fellow at Harvard University. She
is fluent in English, Spanish and French.

Brad Marchant  Director

Mr. Marchant has been a director
of the Company since June 2013. He is co-founder of Triton Mining Corporation
and successfully took the Limon mine in Nicaragua from exploration through to
production and expansion. Mr. Marchant has over 30 years of experience in the
mining and environmental industry both in management and as a director. He has
worked with numerous mining and technology companies including Coastech Research
Inc., Triton Mining Corporation, Placer Dome Ltd., Equity Silver Mines Ltd.,
Enterra Feed Corporation and Wabush Mines Ltd. He also founded a new water
treatment company, BioteQ Environmental Technologies Inc., which is focused on
finding water treatment solutions for mining companies experiencing
metallurgical and environmental challenges. Mr. Marchant has a B.Sc. in
Biochemistry from the University of New Brunswick and a M.A.Sc. in Mining and
Mineral Process Engineering from the University of British Columbia. Mr.
Marchants extensive industry experience and operations expertise make him a
valued member of the Companys Audit Committee and also the chair of the
Technical and Corporate Responsibility Committee.

Wade Nesmith  Director and Chairman of the Board

Mr. Nesmith is the founder of the
Company, Chairman of the Board, and a director of Primero. He acted as President
from October 29, 2008 to September 28, 2009, and Chief Executive Officer from
October 29, 2008 to June 1, 2010, at which time he was appointed Executive
Chairman of the Board. On March 15, 2012, Mr. Nesmith resigned as Executive
Chairman of the Board and was appointed Chairman of the Board. He was the
President, Chief Executive Officer, Chief Financial Officer and a director of
0777551 B.C. Ltd., a private company that was a predecessor to the Company, from
December 2006 to December 2009. Mr. Nesmith obtained his Bachelor of Law degree
from York University  Osgoode Hall, Ontario in 1977. He is the former
Superintendent of Brokers for the Province of British Columbia from 1989 until
1992. He was a senior partner, specializing in securities law, with Lang
Michener LLP (now McMillan LLP) from 1993 until 1998, and an Associate Counsel
at Lang Michener LLP (now McMillan LLP) from January 2004 to December 2007. He
was an executive with Westport Innovations Inc. (Westport Innovations) from
1998 until 2003, helping to lead their public markets activities and retiring as
President, Westport Europe. He was a founding director of Silver Wheaton Corp.
(TSX, NYSE), serving from 2004 to 2016.

Robert A. Quartermain  Director

Dr. Robert
Quartermain, D.Sc., has been a director of the Company since June 28, 2010 and
has worked in the resource industry since 1976. He is Executive Chairman and a
director of Pretium Resources Inc. since October 2010. He served as President and
Chief Executive Officer of Silver Standard Resources Inc. from January 1985
until January 2010 and worked for Teck Corp. from 1981 to 1984. Dr. Quartermain
has a Bachelor of Science degree in geology from the University of New
Brunswick, and a Master of Science degree in mineral exploration from Queens
University. He was awarded an honorary Doctor of Science degree from the
University of New Brunswick in May 2009.

59

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Michael Riley  Director

Mr. Riley has been a director
since April 2010. He retired as a senior auditor partner from Ernst & Young
LLP in September 2006 after more than 25 years with the firm. He became a
partner in the firms Montreal office in 1985, where he worked with clients in
the retail, pharmaceutical, manufacturing and resource industries. He relocated
to the firms Vancouver office in 1995, where his responsibilities included
serving as the lead audit engagement partner for the offices largest Canadian
and US listed public company clients in mining, transportation and banking.
During that time, he also lead the offices M&A due diligence practice for 2
years. Prior to Ernst & Young, Mr. Riley's professional background also
included working for Bell Canada (now BCE), and his early years as an articling
student and Chartered Accountant with Peat, Marwick, Mitchell & Co (now KPMG
LLP). He has previously been a director for several organizations, including the
British Columbia Lottery Corporation, CanAlaska Uranium Ltd., Seacliff
Construction Corp., the Vancouver Symphony Society, The Heart & Stroke
Foundation of British Columbia & Yukon and the BCAA Road Safety Foundation.
Mr. Riley graduated with a Bachelor of Commerce Degree from Concordia University
in 1975 majoring in operations research and quantitative methods. He also holds
a graduate diploma in public accounting from McGill University attained in 1977
and continues to hold the Canadian CPA CA designation as a member of both the BC
and Quebec CPA professional bodies. Mr. Rileys accounting background, financial
sophistication and auditing expertise are valuable assets to the Companys Audit
Committee.

|                                                          
|----------------------------------------------------------
|Tamara Brown  Vice President, Corporate
      Development

Ms. Brown has been Vice
President, Investor Relations of the Company since June 1, 2010. Ms. Brown was
later appointed Vice President of Corporate Development of the Company on
October 16, 2015. From April 2009 to April 2010, Ms. Brown was Director of
Investor Relations for IAMGOLD where she was responsible for all aspects of
investor relations including being a member of its disclosure committee.
Previously, Ms. Brown was an investor relations consultant for several junior
exploration companies, partner of a boutique investment banking firm and a
professional engineer in the mining industry. She graduated with a Bachelor of
Engineering degree from Curtin University in Australia and has completed the
Chartered Business Valuator course at York University.

Kevin Jennings, Chief Financial Officer

Kevin Jennings was appointed
Chief Financial Officer in September 2016. Mr. Jennings is an experienced
international mining finance executive with an extensive background in financial
management and reporting, international corporate transactions, strategy
development, restructuring and turnarounds. He successfully led the African
Barrick Gold initial public offering as C.F.O. and has held senior financial
executive roles with Barrick Gold (Vice President, Corporate Development),
Xstrata Nickel (Director, Business Optimization), Falconbridge (Director,
Business Development), American Racing Equipment (C.F.O.), Sun Gold (C.F.O.) and
most recently Banro Corporation (C.F.O.). Kevin is a Chartered Professional
Accountant with a BA in Administrative Studies (Honours Accounting) from York
University and a BA in Economics from the University of Western Ontario.

60

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H. Maura Lendon Chief General Counsel and Corporate
Secretary

Ms. Lendon has been Chief General
Counsel and Corporate Secretary of the Company since March 29, 2012. From May
2011 until March 2012, Ms. Lendon was President of Aurah Advisory Services Inc.,
during which time she provided strategic and governance advisory services to
diverse businesses. From April 2008 to May 2011 she was Senior Vice President,
Corporate Services, Chief Legal Officer and Corporate Secretary of HudBay
Minerals Inc. From 2004 to April 2008, she was Chief Counsel, Canada and Chief
Privacy Officer Canada of AT&T. Ms. Lendon holds a Master of Laws from
Osgoode Hall Law School, a Master of Business Administration from the Richard
Ivey School of Business and a Bachelor of Laws from University of Western
Ontario. She has been a member of the Ontario Bar since 1990.

James Mallory  Vice President, Corporate Responsibility

Mr. Mallory was appointed Vice
President Corporate Responsibility of the Company on March 1, 2014. From April
2011 to July 2013, Mr. Mallory was Vice-President, Operations & Social
Responsibility at South American Silver, during which time he was responsible
for social responsibility programs in Bolivia and Chile. From May 2009 to March
2011 he was Vice President Sustainability for Silver Standard Resources
overseeing environmental and community relations initiatives for projects in
Mexico, Argentina and Peru. Previously from June 2006 to January 2009 Mr.
Mallory was General Manager with Nova Gold Resources responsible for relations
with the BC First Nations (2006-2007) and later as General Manager of Operations
in Nome, Alaska. Mr. Mallory started his career with Placer Dome and has more
than 35 years of mining industry experience including 13 years of international
service in Chile.

Damian Marantelli  Chief Operating Officer

Damien Marantelli was appointed
Chief Operating Officer in October 2016. Mr. Marantelli, an experienced mining
engineer, brings over 35 years of international experience in the mining
industry where he has successfully managed development, construction and
operations across a variety of commodities. Previously, Mr. Marantelli held the
roles of General Manager of the Sentinel copper mine in development by First
Quantum Minerals, Managing Director of First Quantums (previously Inmets) Las
Cruces copper mine, and the Managing Director of the Çayeli underground copper
and zinc mine. Prior to his experiences with First Quantum/Inmet, Mr. Marantelli
was the General Manager of BHP Billitons (previously WMC Resources) Mount Keith
operations and General Manager with Leinster Underground. Mr. Marantelli
received a Diploma of Engineering (Mining) from the Royal Melbourne Institute of
Technology, and a Diploma of Business (Frontline Management) from Excel
Consulting Australia. He is a long standing member of the Australian Institute
of Mining & Metallurgical Engineers.

Louis Toner  Vice President, Project Development and
Construction

Mr. Toner was appointed Vice
President, Project Development and Construction of the Company on July 29, 2013.
He brings over 30 years of engineering and construction management experience
ranging from small and medium sized brownfield projects to large-scale
greenfield projects. Previously, Mr. Toner worked with BBA Inc., Lafarge Canada
Inc., and SNC-Lavalin International Inc. Mr. Toner holds a B.Eng. Civil
Engineering from McGill University and is fluent in French, English and Spanish.
He is a member of the Ordre des ingénieurs du Québec (OIQ) and the Association
of Professional Engineers and Geoscientists of New Brunswick.

61

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Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Cease Trade Orders

No director or executive officer
of Primero is, as at the date of this AIF, or has been, within the last ten
years before the date of this AIF, a director, chief executive officer, or chief
financial officer of any company (including Primero) that was:

| | (a) | subject to an order that was issued while the director or
      executive officer was acting in the capacity as director, chief executive
      officer or chief financial officer; or                                                                                                                                                      
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                             
| | (b) | subject to an order that was issued after the director or
      executive officer ceased to be a director, chief executive officer or
      chief financial officer and which resulted from an event that occurred
      while that person was acting in the capacity as director, chief executive
      officer or chief financial officer.

For the purpose of the above
paragraph, order means (a) a cease trade order, (b) an order similar to a
cease trade order, or (c) an order that denied the relevant company access to
any exemption under securities legislation, that was in effect for a period of
more than 30 days.

Bankruptcy

No director or executive officer
of Primero, or a shareholder holding a sufficient number of securities of
Primero to affect materially the control of Primero is, as at the date of this
AIF, or has been, within ten years before the date of this AIF, a director or
executive officer of any company (including Primero) that:

| | (a) | while that person was acting in that capacity, or within
      a year of ceasing to act in that capacity, became bankrupt, made a
      proposal under any legislation relating to bankruptcy or insolvency, or
      was subject to or instituted any proceedings, arrangement or compromise
      with creditors, or had a receiver, receiver manager or trustee appointed
      to hold its assets; or
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                          
| | (b) | became bankrupt, made a proposal under any legislation
      relating to bankruptcy or insolvency, or become subject to or instituted
      any proceedings, arrangement or compromise with creditors, or had a
      receiver, receiver manager, or trustee appointed to hold the assets of the
      director, executive officer or shareholder.                                                       

Sanctions

No director or executive officer
of Primero, or a shareholder holding a sufficient number of securities of
Primero to affect materially the control of Primero has been subject to:

| | (a) | any penalties or sanctions imposed by a court relating to
      securities legislation or by a securities regulatory authority or has
      entered into a settlement agreement with a securities regulatory
      authority; or
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                 
| | (b) | any other penalties or sanctions imposed by a court or
      regulatory body that would likely be considered important to a reasonable
      investor in making an investment decision.                                         

Conflicts of Interest

Several directors of Primero also
serve as directors of one or more other resource companies involved in mineral
exploration and/or development. It may occur from time to time that as a consequence of his activity in the mineral industry and serving
on such other boards that a director may become aware of potential resource
property opportunities which are of interest to more than one of the companies
on whose boards that person serves. Accordingly, situations may arise in the
ordinary course that involve a director in an actual or potential conflict of
interest as well as issues in connection with the general obligation of a
director to make corporate opportunities available to the company on which the
director serves. In all such events, any director who might have a disclosable
financial interest in a contract or transaction by virtue of office, employment
or security holdings or other such interest in another company or in a property
interest under consideration by the Primero Board, would be obliged to abstain
from voting as a Primero director in respect of any transaction involving that
other company(s) or in respect of any property in which an interest is held by
him. The directors will use their best business judgment to help avoid
situations where conflicts or corporate opportunity issues might arise and they
must at all times fulfill their duties to act honestly and in the best interests
of Primero. At this time the Board is not aware of any existing or potential
material conflict of interest between the Company or a subsidiary of the Company
and any director. See Risk Factors  Conflicts of Interest.

62

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LEGAL PROCEEDINGS AND REGULATORY ACTIONS

Ejidos

An Ejido is a communal ownership
of land recognized by the federal laws in Mexico. While mineral rights are
administered by the federal government through federally issued mining
concessions, access to surface rights is also required for mining operations. An
Ejido controls surface rights over its communal property through a board of
directors. An Ejido may sell or lease lands directly to a private entity and it
may also allow individual members of the Ejido to obtain title to specific
parcels of land and thus the right to sell or lease the land.

The San Dimas Mine uses Ejidos
lands pursuant to written agreements with Ejidos. Some of these agreements may
be subject to renegotiation and changes to the existing agreements may increase
operating costs or have an impact on operations. In cases where access to land
is required for operations and an agreement cannot be reached with the land
owner, Primero may seek access under Mexican law which provides for priority
rights for mining activities.

Three of the properties included
in the San Dimas Mine and for which Primero holds legal title are subject to
legal proceedings commenced by Ejidos seeking title to the property. None of the
proceedings name Primero as a party and Primero therefore has no standing to
participate in them. In all cases, the defendants are previous owners of the
properties, either deceased individuals who, according to certain public deeds,
owned the properties more than 80 years ago, corporate entities that are no
longer in existence, or Goldcorp companies. The proceedings also name the
Tayoltita Property Public Registry as co-defendant.

Two of  the legal proceedings were decided in favour of the Ejidos in 2015, resulting  in Primero’s gaining standing rights as an affected third party.  Upon becoming aware of the  decisions, the Company obtained injunctions to suspend any legal effect of the  decisions while the Company proceeds with a legal process to nullify the  Ejido’s claim by submitting evidence of Primero’s legal title. In February 2017, one of the two legal  processes to nullify the Ejidos’ claim was decided in favour of Primero and was  later appealed by the Ejido, and the decision on the appeal is still  pending. The second proceeding is  ongoing. The third outstanding legal  proceeding commenced by the Ejidos has not been decided and the Company remains  without standing to participate therein because it was not named as a  party. In the event a final decision is  rendered in favour of the Ejido in that proceeding, Primero will seek to annul  such decision by defending its position as the legitimate owner. If Primero is not successful in these challenges,  the San Dimas Mine could face higher costs associated with agreed or mandated  payments that would be payable to the Ejidos for use of the properties.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar
for the Common Shares in Canada is Computershare Investor Services Inc. at its
principal office in Toronto, Ontario. The transfer agent and registrar for the
Common Shares in the United States is Computershare Trust Company,
Inc. at its principal office in Canton, Massachusetts.

63

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MATERIAL CONTRACTS

The material contracts entered
into by the Company within the financial year ended December 31, 2016 or before
such time that are still in effect, other than in the ordinary course of
business, are the following:

| | (a) | Credit  Agreement, dated May 23, 2014, between the Company and a syndicate of lenders  led by Bank of Montreal as Administrative Agent, (as amended pursuant to a  first amending agreement dated December 22, 2014, a second amending agreement  dated February 5, 2015, a third amending agreement dated December 31, 2015, and a  fourth amending agreement dated December 28, 2016;                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                          
| | (b) | Trust Indenture, dated February 9, 2015, between the
      Company and Computershare Trust Company of Canada;                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                          
| | (c) | Purchase agreement between Brigus and Sandstorm (the
      Sandstorm Agreement), dated November 9, 2010, for the sale of a
      percentage of the gold produced from the Black Fox mine. The term of the
      agreement is 80 years, renewable for subsequent 10 year terms unless
      terminated by Sandstorm. See Mining Activities  Black Fox Complex 
      Sandstorm Goldstream Agreement;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                          
| | (d) | Second amended and restated silver purchase agreement
      among Silver Trading, SW Caymans, the Company and Silver Wheaton,
      originally dated as of October 15, 2004, restated as of March 30, 2006,
      amended and restated as of August 6, 2010. See Mining Activities  San
      Dimas Mine  Amended and Restated Silver Purchase Agreement;
and                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                          
| | (e) | Deed of indemnity among Silver Trading, the Company and
      Goldcorp, made as of August 6, 2010. See Mining Activities  San Dimas
      Mine  Amended and Restated Silver Purchase
Agreement                                                                                                                                                                                                       

INTERESTS OF EXPERTS

The following is a list of the
persons or companies named as having prepared or certified a report, valuation,
statement or opinion described or included in a filing, or referred to in a
filing, made under National Instrument 51-102 - Continuous Disclosure
Obligations by Primero during, or relating to, Primeros most recently
completed financial year, and whose profession or business gives authority to
the report, valuation, statement or opinion made by the person or company:

J. Morton Shannon, P.
Geo. and Rodney Webster, M.AIG, of AMC Consultants Pty Ltd. and Gabriel Voicu,
P.Geo., former Vice President, Geology and Exploration of Primero authored the
San Dimas Technical Report, and each a Qualified Person for the purposes of NI
43-101.

Dave Laudrum, P. Geo., Senior Resource
Manager of Primero and a Qualified Person for purposes of NI 43-101, reviewed
and approved:

| |  | the scientific and technical information after
      April 18, 2014 for San Dimas Mine;
| | - | ---------------------------------------------------------------------------------------
| |   |                                                                                        
| |  | the Mineral Resource Estimates for San Dimas
      Mine;                               

64

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| |  | the scientific and technical information after
      June 30, 2014 for the Black Fox Complex.     
| | - | --------------------------------------------------------------------------------------------------
| |   |                                                                                                   
| |  | the Mineral Resource estimates for Black Fox
      Mine; and                                      
| |   |                                                                                                   
| |  | the scientific and technical information after
      May 11, 2012 for the Cerro Del Gallo Project.

Harold Brisson, PhD, Eng. (OIQ), former
Resource Manager of Primero, who authored the Black Fox Complex Technical
Report, and a Qualified Person for the purposes of NI 43-101.

Patrick McCann, P.Eng., Principal
Engineer of Primero and a Qualified Person for the purposes of NI 43-101,
reviewed and approved:

| |  | the Mineral Reserve estimates for San Dimas
      Mine; and
| | - | -----------------------------------------------------------
| |   |                                                            
| |  | the Mineral Reserve estimates for Black Fox
      Mine     

Rodney Webster, M.AIG, of AMC
Consultants Pty Ltd., has acted as a Qualified Person for the Mineral Resource
estimate for Grey Fox.

Timothy Carew, P. Geo formerly of
Reserva International LLC, Thomas Dyer, P.E. of Mine Development Associates,
Peter Hayward, F.AusIMM of Sedgman Ltd., and John Skeet, F.AudIMM, who authored
the CDG Technical Report, and each a Qualified Person for the purposes of NI
43-101.

Gabriel Voicu, P.Geo, former Vice
President, Geology and Exploration of Primero reviewed the CDG Technical Report
on behalf of Primero.

To the Companys knowledge, each
of the aforementioned firms or persons held less than 1% of the outstanding
securities of the Company or of any associate or affiliate of the Company when
they prepared the reports referred to above or following the preparation of such
reports. None of the aforementioned firms or persons received any direct or
indirect interest in any securities of the Company or of any associate or
affiliate of the Company in connection with the preparation of such reports.

Based on information provided by
the relevant persons, none of the aforementioned firms or persons, nor any
directors, officers or employees of such firms, is currently expected to be
elected, appointed or employed as a director, officer or employee of the Company
or of any associate or affiliate of the Company except for Patrick McCann,
Principal Engineer and Dave Landrum, Senior Resource Manager of the Company.

KPMG LLP are the auditors of the
Company and have confirmed that they are independent with respect to the Company
within the meaning of the relevant rules and related interpretations prescribed
by the relevant professional bodies in Canada and any applicable legislation or
regulations and also that they are independent accountants with respect to the
Company under all relevant US professional and regulatory standards.

ADDITIONAL INFORMATION

Additional information relating
to the Company may be found on SEDAR at www.sedar.com and on the United
States Securities and Exchange Commissions website at www.sec.gov.

65

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Additional information, including
directors and officers remuneration and indebtedness, principal holders of the
Companys securities, and securities authorized for issuance under equity
compensation plans is contained in the Information Circular for Primeros
Shareholders Meeting, which is available on SEDAR at www.sedar.com.

Additional financial information
is also provided in Primeros audited consolidated financial statements and
Managements Discussion and Analysis for the year ended December 31, 2015, which
may also be found on SEDAR at www.sedar.com and on the United States
Securities and Exchange Commissions website at www.sec.gov.

AUDIT COMMITTEE

Audit Committee Charter

The Audit Committee is ultimately
responsible for the policies and practices relating to integrity of financial
and regulatory reporting, as well as internal controls to achieve the objectives
of safeguarding of corporate assets; reliability of information; and compliance
with policies and laws.

The Audit Committees charter
sets out its mandate and responsibilities, and can be found in the Companys
management information circular or on the Companys website
www.primeromining.com.

Composition of Audit Committee

The Audit Committee is currently
comprised of three directors, Michael Riley, Grant Edey and Brad Marchant, all
of whom are both independent and financially literate according to the Boards
independence standards as set out in the Companys Board Guidelines and
applicable Canadian and US securities laws and regulations. Michael Riley, the
Chair of the Audit Committee, is also an audit committee financial expert
under the U.S. Securities and Exchange Act regulations.

Relevant Education and Experience

For a description of the
education and experience of each audit committee member that is relevant to the
performance of his responsibilities as an audit committee member, see Directors
and Officers  Principal Occupations and Other Information about Primeros
Directors and Executive Officers. Such education and experience provides each
member with:

| |  | an understanding of the accounting principles used by the
      Company to prepare its financial statements;                                                                                                                                                                                                                          
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                       
| |  | the ability to assess the general application of such
      accounting principles in connection with the accounting for estimates,
      accruals and reserves;                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                       
| |  | experience preparing, auditing, analyzing or evaluating
      financial statements that present a breadth and level of complexity of
      accounting issues that are generally comparable to the breadth and
      complexity of issues that can reasonably be expected to be raised by the
      Companys financial statements, and
| |   |                                                                                                                                                                                                                                                                                                                                       
| |  | an understanding of internal controls and procedures for
      financial reporting.                                                                                                                                                                                                                                                   

Pre-Approval Policies and Procedures

The Audit Committees charter
sets out responsibilities regarding the provision of non-audit services by the
Companys external auditor. This policy encourages consideration of whether the
provision of services other than audit services is compatible
with maintaining the auditors independence and requires Audit Committee
pre-approval of permitted audit and audit-related services.

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External Auditor Service Fees

For the financial years ended
December 31, 2016 and 2015, the Company paid the external auditor, CDN$839,575
and CDN$874,634, respectively, as detailed below:

|                      |   | Year Ended
      December 31 | 
|--------------------- | - | ---------------------------- | 
|                      |   |                              | 
|Nature of Services    |   | **2016(1)**                  | 
|Audit Fees(2)         | $ | 761,142                      | 
|Audit-Related Fees(3) |   | 0                            | 
|Tax Fees(4)           |   | 78,433                       | 
|All Other Fees(5)     |   | 0                            | 
|Total                 | $ | 839,575                      | 

Notes:

| | (1) | All amounts in Canadian dollars.                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Audit fees represent the aggregate fees billed for each
      of the last two fiscal years for professional services rendered by the
      principal accountant for the review and audit of the Companys interim and
      annual financial statements or services that are normally provided by the
      accountant in connection with statutory and regulatory filings or
      engagements for those fiscal years.
| | (3) | Audit-related fees represent the aggregate fees billed in
      each of the last two fiscal years for assurance and related services by
      the principal accountant that are reasonably related to the performance of
      the audit or review of the Companys financial statements and are not
      reported under Audit Fees above.                                                                          
| | (4) | Tax fees represent the aggregate fees billed in each of
      the last two fiscal years for professional services rendered by the
      principal accountant for tax compliance, tax advice, and tax
    planning.                                                                                                                                                                                                     
| | (5) | Other fees would include transaction related
    services.                                                                                                                                                                                                                                                                                                                                                             

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SCHEDULE A TECHNICAL DEFINITIONS

The estimated Mineral Reserves
and Mineral Resources for the Companys properties have been prepared in
accordance with the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM)  Definitions (the CIM Standards) adopted by the Canadian Securities
Administrators in National Instrument 43-101 - Standards of Disclosure for
Mineral Projects(NI 43-101). The following definitions are reproduced
from the CIM Standards: The term Preliminary Feasibility Study means a
comprehensive study of the viability of a mineral project that has advanced to a
stage where the mining method, in the case of underground mining, or the pit
configuration, in the case of an open pit, has been established and an effective
method of mineral processing has been determined, and includes a financial
analysis based on reasonable assumptions of technical, engineering, legal,
operating, economic, social, and environmental factors and the evaluation of
other relevant factors which are sufficient for a Qualified Person, acting
reasonably, to determine if all or part of the Mineral Resource may be
classified as a Mineral Reserve.

The term Mineral
Resourcemeans a concentration or occurrence of diamonds, natural
solid inorganic material, or natural solid fossilized organic material including
base and precious metals, coal, and industrial minerals in or on the Earths
crust in such form and quantity and of such a grade or quality that it has
reasonable prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and knowledge.
Mineral Resources are sub-divided, in order of increasing geological confidence,
into Inferred, Indicated and Measured categories.

The term Inferred Mineral
Resourcemeans that part of a Mineral Resource for which quantity
and grade or quality can be estimated on the basis of geological evidence and
limited sampling and reasonably assumed, but not verified, geological and grade
continuity. The estimate is based on limited information and sampling gathered
through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes.

The term Indicated Mineral
Resourcemeans that part of a Mineral Resource for which quantity,
grade or quality, densities, shape and physical characteristics, can be
estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough for geological and grade
continuity to be reasonably assumed.

The term Measured
Mineral Resourcemeans that part of a Mineral Resource for which
quantity, grade or quality, densities, shape, physical characteristics are so
well established that they can be estimated with confidence sufficient to allow
the appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely
enough to confirm both geological and grade continuity.

The term Mineral
Reservemeans the economically mineable part of a Measured or
Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility
Study. This study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the time
of reporting, that economic extraction can be justified. A Mineral Reserve
includes diluting materials and allowances for losses that may occur when the
material is mined.

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The term Probable
Mineral Reservemeans the economically mineable part of an Indicated
Mineral Resource and, in some circumstances, a Measured Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This study must
include adequate information on mining, processing, metallurgical, economic and
other relevant factors that demonstrate, at the time of reporting, that economic
extraction can be justified.

The term Proven
Mineral Reservemeans the economically mineable part of a Measured
Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
study must include adequate information on mining, processing, metallurgical,
economic and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified.

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SCHEDULE B MATERIAL MINERAL PROJECTS

SAN DIMAS

Property Description and Location

The San Dimas Mine is located on
the borders of the Durango and Sinaloa states, approximately 125 km north-east
of Mazatlán, Sinaloa and 150 kilometres (km) west of the city of Durango,
Durango, in Mexico. The property is centered on latitude 24°06N and longitude
105°56W.

The San Dimas property consists
of 93 contiguous concessions covering approximately 28,423 hectares, having
expiry dates ranging from 2019 to 2055. As per Mexican requirements for grant of
tenure, the concessions comprising the San Dimas Mine have been surveyed on the
ground by a licensed surveyor. All appropriate payments have been made to the
relevant authorities and the licenses are in good standing. Primero has secured
surface rights by either acquisition of private and public land or by entering
into temporary occupation agreements with surrounding communities.

In 2013, the Mexican federal
government introduced a mining royalty, effective January 1, 2014, based on 7.5%
of taxable earnings before interest and depreciation. In addition, precious
metals mining companies must pay a 0.5% royalty on revenues from gold, silver
and platinum.

Primero holds the appropriate
permits under local, State and Federal laws to allow mining operations at the
San Dimas Mine. The main environmental permit is the Licencia Ambiental Única
under which the mine operates its industrial facilities. The mine and mill
expansion of the San Dimas Mine is also covered by this permit. Other
significant permits are those related to water supply and water discharge
rights. A waste pad project was commenced in 2013 for which both the
environmental impact study and the technical justification were approved by the
Secretaría de Medio Ambiente y Recursos Naturales and the Mexican environmental
protection agency. In addition, permits were received from the Comisión Nacional
de Agua regarding the Piaxtla River diversion that is part of this waste pad
project. As of March 2014 the rivers course has been diverted through the new
canal and the aquatic life recovery had been achieved. The new waste pad
construction was completed in May 2014.

Access, Climate, Local Resources, Infrastructure and
Physiography

Access

Access to the San Dimas area is
by air or road from the city of Durango. By road the trip requires approximately
10 hours. Primero maintains a de Havilland Twin Otter aircraft and a helicopter,
both of which are based at Tayoltita. Travel from either Mazatlán or Durango to
Tayoltita requires an approximate half hour flight in the Twin Otter aircraft.
Most of the personnel and light supplies for the San Dimas Mine arrive on
Primeros regular flights from Mazatlán and Durango. Heavy equipment and
supplies are brought in by road from Durango.

Climate

The climate of the San Dimas area
is semi-tropical, characterized by relatively high temperatures and humidity,
with hot summers (maximum about 35° C) and mild winters. At higher elevations in
the Sierra, frosty nights occur in the winter (November to March). The majority
of the precipitation occurs in the summer (June through September); however,
tropical rainstorms during October to January can result in considerable
additional rainfall. The total average annual rainfall varies from about 66 to
108 cm. Weather does not affect the operations and mining is carried out
throughout the year.

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Local Resources and Infrastructure

Mining at the San Dimas Mine is
done by a mixture of contract mining and Primero personnel. Tayoltita is the
most important population centre in the region with approximately 8,000
inhabitants, including mining personnel, and the population outside of this
centre is sparse. Subsistence farming, ranching, mining and timber cutting are
the predominant activities of the regions population.

Water for the mining operations
is obtained from wells and from the Piaxtla River. Water is also supplied by
Primero to the town of Tayoltita from an underground thermal spring at the Santa
Rita mine.

Electrical power is provided by a
combination of Primeros own hydro generation system  Las Truchas  and the
Mexican Federal Electricity Commission (CFE). Primero operates hydroelectric
and back-up diesel generators, which are interconnected with the MFPA. Since the
completion of the Las Truchas phase 2A expansion in August 2014, the
hydroelectric facility provides about 95% of the total requirement of the San
Dimas Mine during four months of the year. During the remaining eight months of
the year, corresponding to the dry season, the hydroelectric facility provides
approximately 50% of the San Dimas power requirements for operations and the
rest is supplied by the utility (CFE) and by diesel generators at the mine site.
The recent Las Truchas phase 2A expansion has increased the power generation of
the Las Truchas facility from 50 GW to 75 GW per year.

The main infrastructure of the
San Dimas district consists of roads, a townsite, an airport, the crushing and
processing facilities of the Tayoltita mill, the old San Antonio mill, the
Tayoltita/Cupias and San Antonio tailings facilities, the Las Truchas hydro
generation facilities, a diesel power plant and the San Dimas Mine, which is
divided into five blocks: West Block (San Antonio Mine), Sinaloa Graben Block,
Central Block, the Tayoltita and Arana Blocks (Santa Rita Mine). The San Antonio
mill and tailings facilities are currently under reclamation. Primero holds
sufficient surface rights to support the San Dimas mine operations, and
associated infrastructure. Environmental permits are required from various
federal, provincial, and municipal agencies, and are in place for all current
operations. No new permits are currently required for current exploration
activity and mining operations, but existing permit amendments are required from
time to time.

Physiography and Vegetation

The San Dimas district is located
in the central part of the Sierra Madre Occidental, a mountain range
characterized by very rugged topography with steep, often vertical walled
valleys and narrow canyons. Elevations vary from 2,400 metres above mean sea
level (amsl) on the high peaks to elevations of 400 metres amsl in the valley
floor of the Piaxtla River. Vegetation is dominated by pines, junipers and, to a
lesser extent, oaks at higher elevations while lower slopes and valleys are
covered with thick brush, cacti and grass.

History

Prior Ownership

The San Dimas property contains a
series of epithermal gold silver veins that have been mined intermittently since
1757. Modern mining began in the 1880s, when the American San Luis Mining
Company acquired the Tayoltita mine and American Colonel Daniel Burns took
control of the Candelaria mine and began working in the area, and has continued
under different owners to the present. By 1940, the San Luis Mining Company had
acquired the Candelaria and the Contraestaca mines.

A mining law introduced in 1959
in Mexico required the majority of a Mexican mining company to be held by a
Mexican entity and forced the sale of 51% of the shares of the San Luis Mining
Company to Mexicans. In 1961, the Minas de San Luis S.A. de C.V. was
formed and assumed operations of the mine. In 1978, the remaining 49% interest
was obtained by Luismin S.A. de C.V (Luismin).

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In 2002, Wheaton River Minerals
  Ltd. (Wheaton River) acquired the property and, in 2005, Wheaton River merged
  with Goldcorp. Through its wholly-owned subsidiary, Primero Empresa, Primero
  acquired the San Dimas Mine from subsidiaries of Goldcorp in August 2010. See
  General Development of the Business  Three Year History  Acquisition of San
Dimas Mine.

Historical Exploration and Development Work

In the San Dimas mining district
there are historical records that mention workings since 1757, but it was not
until 1890 that there were formal operations by the San Luis Mining Company and
Mexican Candelaria Company. In 1904, the first cyanide mill in Mexico was built
at Tayoltita. By 1940, the Candelaria mine had been mined out.

In the 1960s, higher grade
discoveries led to the first deep drilling campaigns and to the initial long
tunnels. In 1975, the first 4.5 kilometre tunnel (deepest in the district) was
completed in the Tayoltita mine, this being an area where ore discoveries such
as the San Luis vein had taken place following the Favourable Zone concept
described under Deposits and Mineralization below, aided by field geology. In
the 1980s, American and Mexican groups commenced operations that led to the
first geophysical and geochemical exploration in the east Tayoltita-Santa Rita
block.

By the late 1980s and early
1990s, the Favourable Zone concept and Ag/Au ratios supported by fluid
inclusion and thermal fusion studies led to discovery of the San Antonio and
Santa Rita deposits. After acquisition of the whole property by the Mexican
group there was a significant reduction in exploration activities throughout the
whole mining district.

In 2002, foreign investment
(mainly Canadian) returned and the operation was acquired as a whole, which
resulted in a substantial increase in drilling long drill-holes combined with
the development of long tunnels perpendicular to the general trend of veins.
Examples of these tunnels include San Luis, Santa Anita and Sinaloa Graben,
where significant intersections and new high grade veins, such as the Elia,
Aranza, Victoria and Alexa, were discovered.

Geological Setting

Regional Geology

The general geological setting of
the San Dimas district includes two major volcanic successions totalling
approximately 3,500 metres in thickness, which have been described the Lower
Volcanic Group (LVG) and the Upper Volcanic Group (UVG) and are separated by
an erosional and depositional unconformity.

The LVG is of Eocene age
predominantly composed of andesites and rhyolitic flows and tuffs and has been
locally divided into six units. The LVG outcrops along the canyons formed by
major westward drainage systems and has been intruded by younger members of the
batholith complex of granitic to granodioritic composition.

The Socavón rhyolite is the
oldest volcanic unit in the district, its lower contact destroyed by the
intrusion of the Piaxtla granite.

The overlying Productive Andesite
is more than 750 metres in thickness and has been divided into two varieties
based on grain size, but of identical mineralogy. One variety is fragmental
(varying from a lapilli tuff to coarse agglomerate), and the other has a
porphyritic texture (1 to 2 millimetres plagioclase phenocrysts).

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Above the Productive Andesite,
  the overlying Camichin unit, composed of purple to red interbedded rhyolitic and
  andesite tuffs and flows, is more than 300 metres thick. It is the host rock of
  most of the productive ore shoots of Patricia, Patricia 2, Santa Rita and other
lesser veins in the Santa Rita mine.

The Las Palmas Formation, at the
top of the LVG, consists of green conglomerates at the base and red arkoses and
shales at the top, with a total thickness of approximately 300 metres. This unit
outcrops extensively in the Tayoltita area. The lower contact between the LVG
and the underlying Productive Andesite is unconformable.

The predominant plutonic events
in the district resulted in intrusion of the LVG by granitic to granodioritic
intrusives, part of the Sinaloa composite batholith.

Other intrusives cutting the LVG
include the Intrusive Andesite, the Elena aplite and the Santa Rita dacitic
dikes. The even younger Bolaños rhyolite dike and the basic dikes intrude both
the LVG and UVG. Intrusive activity in the western portion of the Sierra Madre
Occidental has been dated continuously from 102 to 43 million years. The UVG
overlies the eroded surface of the LVG unconformably.

Local and Property Geology

In the San Dimas district, the
UVG is divided into a subordinate lower unit composed mainly of lavas of
intermediate composition called Guarisamey Andesite and an upper unit called the
Capping Rhyolite. The Capping Rhyolite is mainly composed of rhyolitic ash flows
and air-fall tuffs and is up to 1,500 metres thick in the eastern part of the
district; however, within most of the district it is about 1,000 metres thick.
The San Dimas district lies within an area of complex normal faulting along the
western edge of the Sierra Madre Occidental. Compressive forces first formed
predominantly east-west and east-northeast tension gashes that were later cut by
transgressive north-northwest striking slip faults. The strike-slip movements
caused the development of secondary north-northeast faults, with right lateral
displacement.

Deposits and Mineralization

Deposits

The deposits of the San Dimas
district are high grade, silver-gold-epithermal vein deposits characterized by
low sulphidation and adularia-sericitic alteration. They were formed during the
final stages of igneous and hydrothermal activity from quartz-monzonitic and
andesitic intrusions.

Typical of epithermal systems,
the gold and silver mineralization at the San Dimas Mine exhibits a vertical
zonation with a distinct top and bottom that the prior owner of the mine termed
the Favourable Zone. At the time of deposition, this Favourable Zone was
deposited in a horizontal position paralleling the erosional surface of the LVG
on which the UVG was extruded.

This favourable, or productive,
zone at San Dimas Mine is some 300 metres to 600 metres in vertical extent and
can be correlated, based both on stratigraphic and geochronologic relationships,
from vein system to vein system and from fault block to fault block.

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Mineralization

The mineralization is typical of
epithermal vein structures with banded and drusy textures. Within the San Dimas
district, the veins occupy east-west trending fractures except in the southern
part of Tayoltita where they strike mainly northeast and in the Santa Rita mine
where they strike north-northwest. The veins were formed in two different
systems. The east-west striking veins were the first system developed, followed
by a second system of north-northeast striking veins. Veins pinch and swell and
commonly exhibit bifurcation, horse-tailing and sigmoidal structures. The veins
vary from a fraction of a centimetre in width to 8 metres, but average 1.5
metres. They have been followed underground from a few metres in strike length
to more than 1,500 metres.

Three major stages of
mineralization have been recognized in the district: (1) early stage; (2) ore
forming stage; and (3) late stage quartz. Three distinct sub-stages of the ore
forming stage also have been identified, each characterized by distinctive
mineral assemblages with ore grade mineralization always occurring in the three
sub-stages: (1) quartz-chlorite-adularia; (2) quartz-rhodonite; and (3)
quartz-calcite.

The minerals characteristic of
the ore forming stage are composed mainly of white, to light grey, medium to
coarse grained crystalline quartz with intergrowths of base metal sulphides
(sphalerite, chalcopyrite and galena) as well as pyrite, argentite, polybasite,
stromeyerite, native silver and electrum.

The ore shoots within the veins
have variable strike lengths (5 to 600 metres); however, most average 150 metres
in strike length. Down-dip extensions of ore shoots are up to 200 metres but are
generally less than the strike length.

Exploration and Drilling

Historically, exploration of the
Favourable Zone at San Dimas Mine has been done both by diamond drilling and by
underground development work. Diamond drilling is predominantly done from
underground stations as both the rugged topography (i.e. access to surface drill
stations) and the great drilling distance from the surface locations to the
target(s) makes surface drilling both challenging and expensive. All exploration
drilling and the exploration underground development work are done both in-house
and by use of contractors.

Channel Sampling

While drilling and drifting are
now the predominant methods of exploration, underground channel sampling plays a
large role in the estimation of current Mineral Resources.

Channel samples are routinely
taken every three metres in all development in vein, and stoping is sampled
every two rounds (6 metres). Sample limits within the vein are based on texture
and mineralogy changes. No sample is more than 1.2 metres in length and the
minimum sample width is 0.2 metres. A second cut is taken across the vein as a
validation and the results averaged for grade control purposes. A tarpaulin is
laid down below the sample line. The samples are taken as a rough channel along
the marked line, ensuring that the unit is sampled in a representative fashion,
with large slabs being broken and sub-sampled. The total sample which has
collected on the tarpaulin is broken with a hammer, mixed and quartered such
that a 2 kilogram sample is bagged and labelled with sample number and location
details. Samples are dispatched to the Primero Tayoltita Mine Laboratory (the
TAY Lab) and samples received by 1:00 p.m. are reported that day. Sketches of
the face sampled are filed, showing samples physical locations from surveying
and the measured width of each sample. Since January 2012, approximately 1/3 of
all channel samples and 100% of drillcore samples were sent to the independent
SGS laboratory in Durango. These samples had QA/QC procedures applied and were
of a standard that can be reliably used for estimation of Mineral Resources. The
vein mapping and channel sampling is continually plotted on plans and both used
for grade control and for Mineral Resource estimation. In 2013 all channel samples collected and sent to SGS laboratory in
Durango (approximately 1/3) were subjected to QA/QC procedures.

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In the opinion of Gabriel Voicu,
  the sampling methods are acceptable, meet industry-standard practice, and are
  acceptable for Mineral Resource and Mineral Reserve estimation and mine planning
purposes.

BLACK FOX COMPLEX

Property Description and Location

The Black Fox Complex is located
in the Timmins Mining District in the Province of Ontario. The Black Fox Complex
is situated 11 kilometres (km) east of Matheson, Ontario and the Black Fox
Mill is 20 km west of Matheson, Ontario. The Black Fox open pit mine and the
Black Fox Mill have been in operation since May 2009 and commercial production
from the underground mine commenced in October 2011.

The Black Fox mine and the two
adjacent exploration properties, Grey Fox and Pike River, comprise the Black Fox
Complex. The Black Fox Complex has a contiguous land package of 1,750.27 ha
extending over a 6.5 km strike of the Destor-Porcupine Fault Zone. The Black Fox
Mill property, which hosts the historic Stock Mine deposit, covers 24.7 square
km and is located 31 km west of the Black Fox mine. The mill property extends
over 6.0 km of the Destor-Porcupine Fault Zone.

Access, Climate, Local Resources, Infrastructure and
Physiography

Access

Access to the Black Fox Complex
is via Highway 101 East. The Black Fox mine and its facilities and the Grey Fox
exploration project are located on the south side of Highway 101 East 11 km east
of Matheson and the Black Fox Mill is located on the North side of Highway 101
20 km west of Matheson.

Climate

The minimum and maximum mean
annual temperatures in the region are -4.8°C and +7°C. July and January average
temperatures are 17.3°C and -17.3°C, respectively. The mean annual rainfall for
the region is 857 mm (www.worldclimate.com). Rapid melting of accumulated
snowfall can produce local flooding on the property for short periods during the
spring months. Average monthly wind speeds for the region are 11 to 15 km/h
(Dyck, 2007). It is possible to conduct exploration activities year round.

Local Resources and Infrastructure

Much of the old mine
infrastructure was upgraded in 2010 to facilitate mine development. New
infrastructure to support open pit and underground mine operations include a
truck shop, laboratory, administration building, the firewater/ freshwater pump
house, and ancillary buildings.

The Black Fox Mill is fed from an
existing 27 kilovolt (kV) power line to the mill site. Power is distributed at
the plant site from this 27 kV power line, a 5 mega volt ampere (MVA), 4,160
volt (V), 3 phase, 60 hertz (Hz) distribution transformer.

The Black Fox mine is being
supplied with fresh water from a well. Water from dewatering of the mine site is
channelled to the mines holding pond for recycling and /or discharge through
the Black Fox water treatment facility. Excess water is treated during the
spring and summer months for discharge to the environment through the water
treatment system.

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Supplies and services are
available in Matheson or Timmins and can be delivered with a 12-hour turnaround.
Primero holds sufficient rights to support the Black Fox Complex operations, and
associated infrastructure. Environmental permits are required by various
federal, provincial, and municipal agencies, and are in place for all current
operations. No new permits are currently required for current exploration
activity and mining operations, but existing permits amendments are required
from time to time.

Physiography and Vegetation

The property is located in a
Boreal Shield ecosystem. The topography is moderate and averages about 280 metre
amsl. Secondary-growth forest covers about 75% of the property and rock outcrops
are sparse, comprising only 5% of the property physiography. The thick clay-rich
overburden found across the property is typically 20 to 30 metres thick.

History

The property was first explored
by Dominion Gulf in 1952 and then by Hollinger in 1962. In 1988, Glimmer Mine
Inc. put together the property package using a combination of crown and private
lands. In 1989, Noranda Exploration Company Ltd. (Noranda) entered into a joint
venture agreement with Glimmer. As a result of this agreement, Noranda held a
60% interest in the property. During their ownership, Noranda merged with Hemlo
Gold Mines Inc. (Hemlo). Exall purchased the property from Hemlo in April 1996,
obtaining approximately 60% interest in the property with Glimmer retaining 40%.
Apollo Gold acquired a 100% ownership in the fall of 2002 and renamed the
property Black Fox (Prenn, 2006). In June 2010 Apollo and Linear Gold
Corporation (Linear) merged to form Brigus.

Historical Exploration and Development Work

Beyond the known Mineral Reserves
and Mineral Resources, upside potential exists for resource additions from
ongoing exploration drilling at the Black Fox Complex and Black Fox Mill
property. The Black Fox Complex ore bodies remain open at depth and along
strike.

Apollo Gold began exploration of
the Black Fox mine site in 2003. From 2003 to 2013, Apollo and Brigus conducted
several drilling programs, during which 504 surface core drill holes totalling
149,548 metres and 396 underground holes totalling 78,644 metres were
completed.

In 2008 and 2009, Apollo drilled
69 holes for a total of 13,651 metres on the Grey Fox and Pike River properties,
which are adjacent to the Black Fox mine site. The 2008 drilling program of 16
core holes was successful in intersecting gold mineralization in rocks similar
to the host rocks of the Black Fox ore on the Destor-Porcupine Fault Zone.
Apollo called this north-south mineral structure the Contact Zone. The 2008
drilling program also hit very high grade gold mineralization in a silicified
breccia within the Contact Zone.

The 2009 drilling program
completed 53 holes at the Contact Zone and the Grey Fox and Pike River
properties. Drilling results continued to show gold mineralization continuity in
multiple shallow, mineralized zones.

In 2010, an IP ground-based
geophysical program was completed over the Black Fox Complex with a total of
38.9 line-kilometres, including the Grey Fox property. The survey, which is
designed to detect conductive mineralization, disseminated mineralization,
alteration, structure and geology, generated 12 high-priority drill targets and
14 secondary targets. The 2010 drilling program of Brigus (formed by Apollo and
Linear Gold merger) followed-up on historical data and also tested new gold
occurrences on the project. Three drill rigs were used to explore the Contact
Zone and the Gibson, Grey Fox South, Hislop North and 147 Zone targets. Drilling
was performed by Norex Drilling and the core was of NQ diameter. The 2010
exploration drilling program completed 69 drill holes (26,805 metres) at the Grey Fox and Pike River properties that included 34 drill
holes (12,703 metres) on the Contact Zone, 14 drill holes (5,123 metres) on the
Gibson deposit/shear, 3 drill holes (1,503 metres) on the Grey Fox South Zone,
11 drill holes (4,336 metres) on the Hislop North target, and 7 drill holes
(3,139 metres) on the future 147 Zone. Drilling results continued to show gold
mineralization continuity in multiple mineralized zones on the Contact Zone. In
September 2010, Scott Hogg & Associates Ltd. was commissioned by Brigus to
perform a helicopter-borne aeromagnetic gradient survey over the Black Fox mine
block, which included the project area and the Black Fox Mill block. The survey
was performed using a Wisk Air Bell 206 LR helicopter and a total of 1,074
line-kilometres of data was collected. Of this, 490 kilometres were from the
Black Fox mine block, and 584 kilometres were from the Black Fox Mill block.
Final geophysical survey reports were delivered in December 2010.

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In January 2011, Brigus
  discovered the 147 gold zone located approximately 400 metres to the south of
  the Contact Zone on the Grey Fox property. During Brigus 2011 drill program,
  two drill rigs were used for infill drilling and testing along strike and
  down-dip on the Contact Zone. Two or three other drill rigs were used to expand
  the 147 Zone, and one drill rig was used to test other known gold-bearing
  structures and targets that were identified from the induced polarization and
  magnetic geophysical survey. Drilling was conducted by Norex Drilling and
  Laframboise Drilling Inc. All core samples were of NQ diameter. The 2011
  exploration drilling program completed 247 drill holes (92,273 metres) at the
  Grey Fox and Pike River properties that included 79 drill holes (27,881 metres)
  on the Contact Zone, 28 drill holes (8,798 metres) on the Gibson deposit/shear,
  2 drill holes (883 metres) on the Grey Fox South Zone and 138 drill holes
  (54,710 metres) on the 147 Zone. Drilling results continued to show gold
  mineralization continuity in multiple shallow, mineralized zones on the Contact
Zone and the newly discovered 147 Zone.

The 2012 exploration drilling
program completed 261 drill holes (76,566 metres) at the Grey Fox and Pike River
properties that included 64 drill holes (20,285 metres) on the Contact Zone, 140
drill holes (33,902 metres) on the 147 Zone, 1 drill hole (260 metres) on the
new Whiskey Jack Zone and 56 drill holes (22,119 metres) on the newly discovered
Grey Fox South. The bulk of the Contact and 147 Zone drilling program was
focused on converting the inferred resources to the indicated category. Drilling
results continued to show gold mineralization continuity in multiple mineralized
zones on the Contact, 147 and Grey Fox South zones.

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 Contact Zone and 147 Zone on the
Grey Fox-Pike River properties. Previous drilling by Apollo and Brigus on the
Contact Zone and 147 Zone highlighted the potential for significant gold
resources with the possibility of underground mining. Following drilling
completed in 2012, the Contact Zone has been extended for at least 1,200 m,
however the core zone of gold mineralization of interest is approximately 450
metres in strike length and remains open to the north and at depth. Most of the
2009 to 2012 drilling was relatively shallow, concentrated within 200m of
bedrock.

The 2013 Brigus Gold drilling
program focused on expanding and infill-drilling the 147, Contact and Grey Fox
South zones. A total of 139 drill holes for 62,918 metres were drilled on the
Grey Fox deposit area in 2013.

No hole was drilled between
January 1 and March 5, 2014. From March 5 to December 31, 2014, Primero drilled,
logged and sampled 90,084 metres on Grey Fox, Pike River and Stock Projects.

Geological Setting

The Black Fox Complex lies within
the Abitibi Subprovince (Abitibi Greenstone Belt) of the Archean Superior
craton, in eastern Canada along the northern margin of the Destor-Porcupine Deformation Zone. The Destor-Porcupine Zone is the known host
structure of the Black Fox Complex and many other occurrences of gold and gold
mines in the Timmins Mining District. The system regionally strikes east-west
and dips variably to the south. Black Fox lies on the southern limb of a large
scale fold on a flexure in the Destor-Porcupine Fault where the strike changes
from east-west to southeast. Folded and altered ultramafic and mafic are the
host rocks for mineralization. Gold occurs as free gold in quartz veining and
stockworks in altered ultramafics and in gold associated with pyrite in altered
tholeiitic basalts. The Timmins Mining District was first discovered in the
early 1900s and has been a prolific producer of gold and other metals.

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Deposits and Mineralization

Deposits

The Black Fox Complex is located
with other gold deposits near the Destor-Porcupine Deformation Zone. The
auriferous zones seem to be associated with an orogenic gold occurrence related
to longitudinal shear zones (greenstone-hosted quartz-carbonate vein deposit).
They correspond to structurally controlled, complex epigenetic deposits hosted
in deformed metamorphosed terranes. Black Fox is being mined as an open pit and
underground mining operation. Black Fox commenced mining from the open pit in
May 2009 and achieved commercial production from the underground operations in
October 2011.

Although the gold zones of Grey
Fox are readily integrated in an orogenic model, they could also be associated
with a low sulphidation epithermal gold model. Extensional, pull-apart basins
formed between regional strike-slip faults, or at transitions between these
faults, provide favourable sites for intrusions and epithermal deposits.

Mineralization

Gold mineralization at the Black
Fox mine occurs in several different geological environments within the main
ankerite alteration zone, which has a strike length of over 1000 metres and a
variable true width ranging from 20 metres to over 100 metres. This mineralized
envelope occurs primarily within komatiitic ultramafics and lesser mafic
volcanics within the outer boundaries of the PDDZ. The auriferous zones have
several modes of occurrence, from concordant zones that follow lithological
contacts and have been subsequently deformed, to slightly discordant zones
associated with syenitic sills and quartz veins or stockworks.

Work carried out to date has
identified four different styles of mineralization within the mineralized
envelope at the Black Fox mine. These are:

| |  | Free gold associated with shallow dipping (20-50°) quartz
      veins and stockworks in green carbonate and ankerite altered ultramafic
      rocks (U0, BO, B2, and Al structures);
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                     
| |  | Gold-bearing pyrite associated with syenitic sill-like
      bodies (JO, RO/Ri structures);                                                                                         
| |   |                                                                                                                                                                                     
| |  | Gold associated with fine-grained pyrite within bleached
      ankerite-sericite altered mafic volcanic rocks (CO structure);                                                       
| |   |                                                                                                                                                                                     
| |  | Free gold in steeply dipping sigmoidal quartz veins
      associated with shear zones within green carbonate alteration zones (SO/S1
      structures) (Hoxha and James, 1998).     

More than 15 separate mineralized
structures have been identified to date within the ankerite envelope. The two
main auriferous zones are the Al at the hanging wall contact and the CO located
at the footwall contact. The many other smaller zones between them generally
have less continuity and width and represent parallel mineralized shears and
faults. From previous underground work, it appears that the subhorizontal zones
along the structure often have the greatest thickness, on the order of 10 to 15
metres (33-49 ft), and the highest grades. This subhorizontal zones are
interpreted as dilation zones formed during episodes of folding and structural
movements. The majority of other mineralized zones and quartz veins range in
width from 1 to 5 metres (3-16 ft).

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More than three generations of
quartz veining have been identified in the Black Fox mine workings. Shear/fault
zones paralleling the main mineralized envelope are responsible for the
localized formation of these quartz vein and stockwork zones. The presence of
sigmoidal vein structures, multiple quartz injections and re-sheared vein
material with chloritic slips indicate complex and repeated structural movements
at the time of formation. Visible gold commonly occurs as fracture-fillings
within the veined zones associated with chloritic slips. Gold mineralization is
erratic in places within the quartz stockwork zones, probably due to the fact
that only certain vein sets carry gold while others are barren.

Mineralized zones at the Grey Fox
deposit occur along and adjacent to the eastern end of the Timiskaming lens,
which in the area of the mineralized zones trends northerly and dips steeply to
the east. Drilling suggests that east of the mafic-sedimentary contact, the
stratigraphy in the mafic volcanic sequence also trends north and dips steeply
east. The sequence comprises alternating massive, pillowed and variolitic mafic
units, and local thin volcano sedimentary horizons. Drill core observations show
that the sequence is generally weakly foliated, despite proximity to the intense
ductile strands of the PDDZ fault system to the north, although some lithologies
including sedimentary horizons and contacts may have localized displacement, as
suggested by cataclastic breccias and narrow semi-brittle shear zones associated
with mineralization.

Sample Preparation, Analyses and QA/QC

Black Fox Mine

The drill core was boxed, covered
and sealed at the drill rigs, and transported by drilling employees to the
logging facility where Brigus Gold personnel would take over the core handling.
The core was logged and sampled by or under the supervision of Brigus Gold
geologists at the core shack of the Black Fox mine. Each sample was tagged.

Drill core samples were bagged by
technicians and then grouped in batches. The sample batches were shipped to one
of the five following laboratories in Ontario during the period of reference:
Black Fox Mill Laboratory located between Matheson and Timmins; Cattarello
Assayers (Cattarello) in Timmins; Accurassay Laboratories (Accurassay) in
Thunder Bay; ALS Laboratory (ALS) in Thunder Bay; and PolyMet Labs (PolyMet)
in Cobalt. They were prepared according to each laboratorys sample preparation
protocol for the given analytical procedure. The decision of where to send a
batch was based on several reasons, including pickup schedules and turnaround
time.

The sampling and assay QA/QC
protocol consisted of an in-field component managed by Brigus Gold logging and
sampling personnel and an in-laboratory component managed by the laboratories.
The in-field QA/QC consisted of inserting blanks and certified reference
standards. Reject and pulp duplicates (prep duplicates) were also inserted by
Brigus Gold staff, but no field duplicates were prepared before September 2013.
Core samples were placed in sealed bags and sent for analysis.

Grey Fox Deposit

The drill core was boxed, covered
and sealed at the drill rigs, and transported by drilling employees to the
logging facility where Brigus Gold personnel would take over the core handling.
The core was logged and sampled by or under the supervision of Brigus Gold
geologists at the Grey Fox core shack. Each sample was tagged with a unique
number.

Drill core samples were cut by
technicians and then bagged and sealed before being grouped in batches. The
sample batches were shipped to PolyMet Labs (PolyMet) in Cobalt, SGS Canada
Laboratory (SGS) in Cochrane, or AGAT Laboratory (AGAT) in Mississauga where
they were prepared according to each laboratorys sample preparation protocol
for the given analytical procedure. The decision of where to send a batch was
based on pickup schedules and turnaround time.

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The sampling and assay QA/QC
protocol consisted of an in-field component managed by Brigus Gold logging and
sampling personnel and an in-laboratory component managed by Polymet, SGS and
AGAT. The in-field QA/QC consisted of inserting blanks, certified reference
standards, and field duplicates consisting of the second half of core samples.

CERRO DEL GALLO PROJECT

Property Description and Location

The Cerro del Gallo Project (San
Antón Property) is located in the state of Guanajuato in central Mexico,
approximately 270 kilometres northwest of Mexico City. The San Antón Property
fully incorporates the San Antón de las Minas mining district, centred 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. Although the Guanajuato Mining
District has a long history of silver and gold mining and production extending
back to 1558, production records at San Antón only date back to the 1860s,
however mining is reported from Spanish colonial times. San Antón lies within
the central-southern segment of the world-class Mexican Gold-Silver Belt.

The San Antón Property covers an
area of 25,269 hectares (approximately 15 kilometres north-south by 16
kilometres east-west) and consists of a total of twelve granted, contiguous
mining concessions all owned by San Antón de las Minas S.A. de C.V. (SAM). The
concessions entirely cover the San Antón de las Minas mining district, including
the old mines formerly worked for high grade vein-hosted gold-silver
mineralization. The Company holds sufficient exploration rights to support the
Cerro Del Gallo Project exploration activities. Environmental permits are
required by various federal, state, and municipal agencies, and are in place for
current exploration activities. For future exploration activities, existing
permit amendments may be required from time to time.

The San Antón Property is wholly
owned by SAM, a resident Mexican company wholly-owned by the Company, after it
completed its acquisition of the remaining 30.8% interest from a subsidiary of
Goldcorp, effective December 19, 2013.

Access, Climate, Local Resources, Infrastructure and
Physiography

Access

The principal access route to the
area is by sealed Federal Highway 110, then 14 km on a well maintained
all-weather good quality gravel road. The journey by road takes approximately 20
minutes to complete from Dolores Hidalgo and approximately 1 hour and 15 minutes
from Guanajuato. There is an international airport at Leon, 30 minutes from
Guanajuato along a four lane toll freeway. An inland port facility has
integrated the international airport with an industrial park, inland customs,
railway facilities etc. and is being promoted by the state government. In
addition to the international airport at Leon there are five local airports and
one interstate airport within a 3 hour drive of the property area. Rail services
are available within 20 km of Cerro del Gallo.

Climate

The municipality of Dolores
Hidalgo is classified as semi-arid. The climate is generally dry with sporadic,
often violent rainstorms in the hot, summer months. Average annual precipitation
is 564 mm mainly from May to September. The winter months are cool and dry.
Temperatures range from a maximum of 36.5°C in summer to a minimum of 3.8°C in
winter. The average yearly temperature is 17.4°C

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Local Resources and Infrastructure

The San Antón Property is located
within a region of well-established infrastructure. The property area is well
serviced by road, rail, and air services, power and water supplies, and skilled
and semiskilled local labor. Surrounding cities are capable of providing most of
the services required for supporting a major mining operation. Guanajuato
municipality has a population of 153,364 inhabitants (official Instituto
Nacional de Estadistica y Geografia (INEGI) projection, 2008) while Dolores
Hidalgo C.N.I. has a population of 134,641 inhabitants (official INEGI
projection, 2007). The community of San Antón de las Minas covers an area of
2,167 hectares. From 2005 INEGI records, the San Antón de las Minas community
has a population of 473 inhabitants living in 78 dwellings at an occupancy rate
of 6.1 people per house. San Antón de las Minas community facilities consist of
a public primary school, a public secondary school, health center, a Catholic
church, and four small general stores that satisfy local consumption. A
plentiful supply of semi-skilled and unskilled labor is available in the local
community. Subsistence agriculture is the principal activity of adults in the
property area with the main crops being maize, beans and chilies. Electricity is
supplied to the San Antón de las Minas community through a 13.8 kV, three phase
power line operated by the Comisión Federal de Electricidad (Mexican Federal
Power Authority), which passes over the southern flank of the Cerro del Gallo
deposit and can be easily upgraded. Power supply is generally reliable and comes
from the main Dolores Hidalgo to Guanajuato power line.

There are a number of potential
sources of water in the area, including groundwater from aquifers and local
streams that drain the property area. Several large dams have been constructed
in the surrounding area; including the Peñuelitas Dam that has a capacity of
23.8 Mm3 located 15 km from Cerro del Gallo near the city of Dolores
Hidalgo. Since acquiring the Cerro del Gallo property in 2013, the Company has
drilled for water in two locations and has acquired a 22 hectare property with
an operating water well located approximately 5 km to the east of the proposed
mine site.

Physiography and Vegetation

Property is situated in the
physiographic region known as the Sierra Madre Oriental. Elevations in the area
range from 1,800 metres to 2,670 metres, with the top of Cerro del Gallo having
an elevation of 2,310 m. Cerro del Gallo is located along the flank of the San
Antonio Mountain Range which trends generally 20° NW. Along the western side of
the property spurs from the rugged Guanajuato Mountain Range extend into the
property area.

History

The Consejo de Recursos
Minerales, the Mexican equivalent of a Department of Mines, commenced an
assessment of the San Antón de las Minas area in March 1977 as part of a
combined federal and state government program to encourage new investment in the
mining industry. Work by the Consejo de Recursos Minerales consisted mainly of
regional geological mapping and stream sediment geochemistry, prospect
evaluation, and airborne magnetics. The Consejo de Recursos Minerales reported
disseminated copper mineralization averaging 0.4% in a quartz monzonite stock at
Cerro del Gallo. SAM was formed with the signing of a joint venture agreement
between Kings Minerals and Luismin on July 22, 2004.

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

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Historical Exploration and Development Work

The Cooperative was the first
company to explore the area in recent times with work commencing in 1982. The
company held an interest in the area until 2004 when it sold the project to
Luismin S.A. de C.V. (Luismin), however no work was completed in their last 4
years of ownership. The Cooperativa concentrated their work on the
Carmen-Providencia vein system where they rehabilitated the Dolores shaft to the
90m level, re-opened the La Mora adit, and commenced development of the Carmen
adit along a section of the Carmen vein near the Dolores shaft. Only 2
truckloads of ore totaling 20.9 tons and estimated to average 82g/t Ag and
2.15g/t gold were mined from the Dolores underground workings. The company also
completed a regional geological mapping program covering the Carmen-Providencia
vein system and Cerro del Gallo. Trenching was completed along the
Carmen-Providencia vein system and at Cerro del Gallo. The Cooperative drilled 6
diamond core holes for a total of 1,571.10m and excavated 2 shallow trenches at
Cerro del Gallo.

Luismin commenced exploration at
San Antón in about 1994 on 2 small contiguous claim blocks totaling 110ha
surrounded entirely by tenure owned by the Cooperative. The claims covered half
of Cerro del Gallo and the Ave de Gracia epithermal vein system. Most of their
work was completed between 1996 and 2000 and all work was focused on Cerro del
Gallo. Luismin completed a program of rock chip sampling (616 samples),
trenching (10 trenches), 3 lines of dipole-dipole IP surveying (70.6km), and
drilling (15 holes for 3,551.3 metres). Declining metal prices from 2000 and
subsequent years resulted in exploration budget constraints and the demise of
work at Cerro del Gallo.

The metallurgical test work that
was carried out for the feasibility study commenced in 2006 and was performed on
drill core samples and RC chip samples, by three Australian metallurgical
laboratories. Phase 1 was conducted by Independent Metallurgical Laboratories,
Welshpool, Western Australia, Phases 2, 3 and 5 were conducted by SGS Lakefield
Oretest Pty Ltd, Malaga, Western Australia and phase 4 was conducted by ALS
AMMTEC, Balcatta, Western Australia. JKTech of Brisbane Queensland was also used
to determine comminution characteristics. Polysius Australia Pty Ltd of
Henderson, Western Australia was used to evaluate the suitability of high
pressure grinding rolls (HPGR) for the crushing of the Cerro del Gallo ores.

Following the acquisition of the
property in 2013, Primero embarked on a drilling program (described below) for
infilling of the main Cerro del Gallo ore body, condemnation and for regional
exploration. In early 2014, approximately 40 tons of core were shipped the SGS
laboratory in Lakefield, Ontario to conduct an advanced metallurgical and
geochemistry testing program. The goals of this program are to close the gaps
identified in the due diligence effort at the acquisition and to improve
management confidence in the metallurgical recovery of the ore, particularly in
the transition ores which vary in levels of oxidation; to provide a more
accurate cyanide consumptions value, to do additional percolation tests, to
optimize cement additions during agglomerations, to establish stacking loading
capacity, to evaluate leach pad stability, to improve understanding of the
geochemical characteristics of the leached ores and the waste rock and to
conduct further SART process tests. Testing was started in late Q2, 2014 and
continued into mid-2015.The metallurgical testing program is being
coordinated by BBA with support from BIOTEQ for the SART process. The
metallurgical testing program was put on hold in 2015 with the completion of the
humidity cell tests on ore and waste rock. Remaining work consists of column
test work, SART process tests and the leach pad stability tests and these will
resume once improved market conditions return. In the meantime the remaining 62
pallets of core have been put into storage at a SGS freezer storage facility in
Ontario.

Geological Setting

The San Antón Property is located
within the Mesozoic Sierra Madre Oriental terrane and 80 km north of the west
northwest trending Trans-Mexico Neovolcanic Belt. The Sierra Madre Oriental
terrane is a thin skinned fold-thrust belt of Laramide age (Late
Cretaceous-Early Tertiary). High level felsic intrusions emplaced into the western two thirds of the terrane
provided the mechanism for hydrothermal activity and mineral deposition.

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The oldest rocks in the Cerro del
  Gallo area are a deformed and regionally metamorphosed volcano-sedimentary
  sequence of Triassic to Cretaceous age referred to as the Esperanza Formation.
  Around Cerro del Gallo the Esperanza Formation consists of layered sediments of
  argillaceous, silty argillaceous and arenaceous composition, and fragmental
  volcanic rocks of broadly intermediate composition. These sedimentary and
  volcanic rocks form an inlier referred to in this report as the Esperanza Inlier
  which is surrounded by Tertiary age fragmental volcanic rocks of rhyolitic
  composition. The Esperanza Formation has been affected by lower greenschist
  facies regional metamorphism. A crenulation cleavage overprinting an earlier
  cleavage in phyllite confirms the stratigraphic sequence has been subjected to
at least two periods of regional deformation.

Deposits and Mineralization

The San Antón Property is known
to host a variety of styles of mineral deposits, including porphyry copper-gold
deposits, intrusion-related gold deposits, epithermal silver-gold deposits, and
gold-copper skarn deposits. All of these styles of mineralization are known to
occur within the property concessions held by SAM. Historic mining within the
San Antón de las Minas area was concentrated on epithermal veins, however, the
main area of present interest is the large low grade bulk mineable
copper-gold-silver deposit at Cerro del Gallo where a significant mineral
resource has been identified. The Cerro del Gallo copper-gold-silver deposit
lies within an inlier of a conformable sequence of siliclastic sediments and
fragmental volcanogenic rocks. At Cerro del Gallo a sequence of fragmental
volcanogenic rocks of intermediate bulk composition has been intruded by a small
elongated upright felsic stock of granodioritic to monzogranitic
composition.

The Cerro del Gallo
copper-gold-silver deposit can be considered to be a member of a distinct
subclass of reduced porphyry-style copper-gold mineralization. These reduced
porphyry copper-gold deposits lack primary hematite, magnetite and sulphate
minerals, but contain abundant hypogene pyrrhotite, commonly have carbonic ore
fluids, and are associated with ilmenite-bearing, reduced I-type granitoids.

Hydrothermalalteration is zoned
concentrically around the main felsic intrusive and intensity decreases outwards
from the central intrusive. Potassic alteration is the dominant style of
alteration in the core of the hydrothermal system which centered on the main
felsic intrusive. Hydrothermal propylitic alteration overprints potassic
alteration within both the felsic intrusives and wallrocks, and extends
laterally beyond the zone of potassic alteration surrounding Cerro del Gallo.
Propylitic alteration extends over a radius of up to 1km from the peak of Cerro
del Gallo. It is more extensive on the western side of Cerro del Gallo.

Environmental Matters

As part of the development plan
for the San Antón Property, a surface water baseline study commenced in October
2005 and was updated in August 2006. This study conforms to federal government
standard NOM-127- SSAL1-1994; which is the most comprehensive national standard,
and has the most stringent limits. Sampling points were selected across an area
ranging from upstream of the San Antón Project to downstream at the Peñuelitas
dam near the city of Dolores Hidalgo. The primary objective of the study was to
record the physio-chemical characteristics of the quality of surface water at
the commencement of exploration in the area and prior to potential development
of the property.

Subsequent to the first surface
water sampling program a surface water monitoring program has been developed to
Mexican national standards in order to monitor seasonal water flow and water
quality at strategic points throughout the property area. Additional baseline
environmental studies included air quality dust monitoring which commenced in February 2008 and
with the installation of a weather station (VAISALA WXT510) in January 2008.
Further to the earlier water sampling and monitoring programs, an additional
surface water sampling monitoring program was initiated in 2013 in order to add
to the existing body of data and to meet specific permitting requirements. This
monitoring program will continue into 2017 and 2018.

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Exploration and Drilling

The exploration activities at the
San Antón property have consisted of drilling (reverse circulation and diamond
core) and several sampling programs; including stream sediment, BLEG, Niton®
soil and conventional soil sampling. The majority of the exploration work has
focussed on the Cerro del Gallo deposit.

San Anton de las Minas (SAM)
completed a limited RC drilling program in December 2004. The main objective of
this drill program was to validate and verify previous exploration results and
concurrently evaluate the postulated optimum drill direction at the Cerro del
Gallo deposit.

SAM commenced resource definition
drilling at Cerro del Gallo in April 2005 with the objective of testing
coincident multi-element geochemical and geophysical anomalies extending beyond
the boundaries of the initial Inferred Mineral Resource estimate. In June 2005
SAM commenced diamond orientated core drilling twinning reverse circulation
drill holes from surface.

SAM continued resource definition
drilling and commenced metallurgical test work drilling at Cerro del Gallo
during 2006 through May 2008. The objective of this program was to test and
define the higher gold grade annulus associated with the coincident
multi-element geochemical and geophysical anomalies surrounding Cerro del Gallo
and to undertake detailed geotechnical and metallurgical test work diamond core
drilling.

Drilling at the Cerro del Gallo
deposit by SAM between 2004 and 2008 consists of 280 holes of RC drilling for a
total of 59,595 metres and 74 holes of diamond drilling for a total of 36,384 m.

Sampling

All RC and DDH samples collected
are immediately bagged, tied and placed collectively in larger polyweave bags
and then sealed prior to collection. These samples are then securely stored
until collected by SGS personnel. Samples collected at the RC drill rig are
under constant surveillance around the clock until collected by SGS personnel.
Samples collected from DDH core are stored at the secure coreyard facility under
constant surveillance until collected by SGS personnel.

RC samples were collected by
three samplers under direct supervision of a geologist experienced with RC
drilling and sampling techniques who was on-site at all times while drilling and
sampling was in progress. Samples were collected continuously at 5 foot (1.52
metres) intervals from the drill collar at surface to the bottom of the hole.
The 5 foot sample interval is based on an imperial rod string used by the
drilling contractor. Sample collection is systematic and precise in accordance
with strict procedural protocols. The splitter and all sampling equipment are
cleaned with compressed air after each sample is collected. The laboratory
sample is bagged from a single catch tray (1/8 sample) at the base of the
splitter while the bulk reject sample is collected from three additional catch
trays that were emptied into a UV stabilized large plastic bag. The geochemical
sample is placed directly into a pre-addressed polyweave sack for dispatch to
the SGS sample preparation laboratory in Durango. Each geochemical sample is
weighed on-site at the time of collection to provide a record of sample recovery
and consistently average between 2.5 4 kg in mass throughout the program. Holes
are terminated when the sample becomes wet and can easily become
contaminated.

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Core drilling is HQ (63.5 mm)
size and on rare occasions when a size reduction is required due to fractured
ground conditions NQ (47.6 mm) is recovered. When possible, the core is
re-configured to its original in-situ state to form a continuous cylinder. The
core is firstly marked longitudinally with a felt tipped pen and then marked at
1.0 metres intervals for sampling for assay. Since 2013, the sampling intervals
were not restricted to 1 m, but were based on geological and structural
criteria. The sampling intervals were between 0.5 and 1.5 metres for Cerro del
Gallo deposit (infill, delineation, metallurgical and condemnation drilling
programs) and between 0.5 and 1.0 metres for the epithermal veins.

SGS Canada Inc. Minerals Services
in Toronto, Ontario, Canada and SGS Durango, Mexico were the primary
laboratories used for routine element analysis of drill, rock-chip, soil, and
stream sediment samples from the San Antón Property. SGS has a sample
preparation facility in Durango and since November 2007 the Durango facility
commenced fire assay for gold. SGS collect drill, rock-chip, soil, and stream
sediment samples from the San Antón Property and transport them to Durango by
vehicle. At the laboratory, samples are sorted and routinely oven dried at
105oC, if necessary (SGS Code DRY 10). After drying, RC and core samples are
crushed to 90% passing 2 mm (10#) prior to riffle splitting a sub-sample of
~1,000g for pulverizing (SGS code CRU25). The sample is riffle split using a
stainless steel splitter The 1,000g sub-sample is pulverized to 90% passing 75
μm (200#) (SGS code PUL47) using a Labtech ESSA LM2 ring mill with a standard
bowl. A subsample of approximately 200-250 g is then sent to SGS Toronto for
analysis.

Drill samples were initially
routinely assayed for gold, silver, copper, lead, zinc, molybdenum and bismuth
up until October 2005. Gold values are routinely determined by fire assay using
a 30 g sample pulp with instrumental Atomic Absorption Spectrometry (AAS)
finish. Since October 2005 drill samples also have been routinely assayed for a
standard suite of 32 elements using SGS Method ICP40B.

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