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ANNUAL INFORMATION FORM

FOR THE YEAR-ENDED DECEMBER 31, 2013

MARCH 31, 2014



|PRIMERO MINING CORP.                        
|--------------------------------------------
|Suite 1640, 505 Burrard Street              
|Vancouver, British Columbia, Canada, V7X 1M6

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TABLE OF CONTENTS

|INTRODUCTORY
      NOTES                                                                                 | **1** 
|-------------------------------------------------------------------------------------------------------- | ------
|CAUTIONARY
      NOTE REGARDING FORWARD LOOKING STATEMENTS                                               | 1     
|TECHNICAL
      INFORMATION                                                                              | 3     
|CAUTIONARY
      NOTES TO UNITED STATES INVESTORS                                                        | 5     
|CURRENCY                                                                                                 | 6     
|GOLD
      AND SILVER PRICES                                                                             | 6     
|CORPORATE
      STRUCTURE                                                                                | **7** 
|GENERAL
      DEVELOPMENT OF THE BUSINESS                                                                | **8** 
|THREE
      YEAR HISTORY                                                                                 | 8     
|BUSINESS
      OF PRIMERO                                                                                | **12**
|OVERVIEW                                                                                                 | 12    
|COMPETITIVE
      CONDITIONS                                                                             | 12    
|CHANGES
      TO CONTRACTS                                                                               | 12    
|EMPLOYEES                                                                                                | 13    
|FOREIGN
      OPERATIONS                                                                                 | 13    
|ENVIRONMENTAL,
      SOCIAL AND GOVERNANCE POLICIES                                                      | 13    
|MINING
      ACTIVITIES                                                                                  | **14**
|SAN
      DIMAS MINE                                                                                     | 14    
|BLACK
      FOX COMPLEX                                                                                  | 28    
|PRODUCT
      SUMMARY                                                                                    | 37    
|EXPLORATION
      AND DEVELOPMENT                                                                        | **37**
|CERRO
      DEL GALLO PROJECT                                                                            | 37    
|MINERAL
      RESERVES AND RESOURCES                                                                     | 44    
|SUMMARY                                                                                                  | 44    
|NOTES
      TO MINERAL RESOURCES STATEMENT:                                                              | 45    
|SAN
      DIMAS MINE                                                                                     | 45    
|BLACK
      FOX MINE                                                                                     | 48    
|GREY
      FOX PROJECT                                                                                   | 49    
|CERRO
      DEL GALLO PROJECT                                                                            | 51    
|RISK
      FACTORS                                                                                       | 52    
|DIVIDENDS                                                                                                | 64    
|CAPITAL
      STRUCTURE                                                                                  | 65    
|COMMON
      SHARES                                                                                      | 65    
|PREFERRED
      SHARES                                                                                   | 65    
|OPTIONS
      AND WARRANTS                                                                               | 65    
|DIRECTORS
      PHANTOM SHARE UNITS                                                                      | 66    
|EMPLOYEE
      PHANTOM SHARE UNITS                                                                       | 66    
|MARKET
      FOR SECURITIES                                                                              | 66    
|COMMON
      SHARES                                                                                      | 66    
|COMMON
      SHARE WARRANTS                                                                              | 67    
|PRIOR
      SALES                                                                                        | 68    
|SECURITIES
      SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER                                         | **68**
|CONTRACTUAL
      RESTRICTIONS ON TRANSFER                                                               | 68    
|DIRECTORS
      AND OFFICERS                                                                             | 68    
|PRINCIPAL
      OCCUPATIONS AND OTHER INFORMATION ABOUT PRIMEROS DIRECTORS AND EXECUTIVE
      OFFICERS | 70    
|CEASE
      TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS                                           | 75    

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- 2 -

|CONFLICTS OF INTEREST                          | 76
|---------------------------------------------- | --
|LEGAL PROCEEDINGS AND REGULATORY
      ACTIONS | 76
|TRANSFER AGENT AND
      REGISTRAR             | 77
|MATERIAL CONTRACTS                             | 77
|INTERESTS OF
      EXPERTS                     | 78
|ADDITIONAL INFORMATION                         | 79
|AUDIT COMMITTEE                                | 79

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INTRODUCTORY NOTES

Cautionary Note Regarding Forward Looking Statements

This annual information form for
the year ended December 31, 2013 and dated March 31, 2014 (the Annual
Information Form or AIF) contains forward-looking information under the
provisions of Canadian provincial securities laws. When used in this AIF, words
such as believe, intend, may, will, should, plans, anticipates,
believes, potential, intends, expects, estimates, forecasts,
likely, goal and similar expressions are intended to identify such
forward-looking statements. 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 Annual Information Form include those that relate to: the ability of the
Company (as defined under Corporate Structure) to expand production at the San
Dimas Mine (as defined under General Development of the Business  Three Year
History  Acquisition of San Dimas Mine); the ability of the Company to
successfully operate the San Dimas Mine; the ability of the Company to mine at
the San Dimas Mine by long-hole mining; the ability of the Company to identify
appropriate acquisition opportunities, or if an opportunity is identified, to
conclude a transaction on satisfactory terms; the expected results of
exploration activities; the recording of revenue under the Amended and Restated
Silver Purchase Agreement (as defined under Mining Activities  San Dimas Mine
 Amended and Restated Silver Purchase Agreement) at the fixed price realized
and the recording of taxes on this basis; increased delineation at the San Dimas
Mine that will lead to better grade control and the attainment of more
consistent production targets in the future; expected results of reclamation
activities at the San Dimas Mine; the timing and ability to upgrade the
Tayoltita Mine Laboratory; the estimation of Mineral Reserves (as defined under
Introductory Notes  Technical Information) and Mineral Resources (as defined
under Introductory Notes  Technical Information) and the realization of
Mineral Reserve estimates (including all assumptions); the ability to identify
new Mineral Resources and convert Mineral Resources into Mineral Reserves; the
impact of new estimation methodologies on mine and production planning; the
timing and success of exploration activities; the timing and the ability to
expand the mill; the timing and amount of estimated future production; the
ability to generate cash flows that exceed capital requirements; intentions to
become an intermediate gold producer; the timing and amount of capital
expenditures and costs, including forecasted cash costs; the timing of the
development of new mineral deposits; the sufficiency of future cash flows; the
Companys requirements for additional capital and ability to complete future
financings to raise additional capital for exploration, development and
operational activities and for acquisitions; projected gold and silver
production; expected ore grades, recovery rates and through-put; the ability of
the Company to comply with environmental, safety and other regulatory
requirements; expected or proposed development or construction activities,
including additional tunnels, plant expansion, tailings improvements and
hydro-electric improvements, and the expected costs thereof; expected
environmental capital expenditures; expectations regarding the Companys safety
processes; expectations regarding currency fluctuations; the timing and results
of union contract negotiations; the resolution of title disputes relating to the
Companys properties; the timing and possible outcome of pending litigation;
future prices of precious and base metals; the ability of the Company to obtain
government approvals or permits in connection with the continued operation and
development of the San Dimas Mines; the Cerro del Gallo Project (as defined
under General Development of the Business  Acquisition of Cerro del Gallo)
and the Black Fox Complex (as defined under General Development of the Business
 Acquisition of Black Fox Complex) and, the impact of the completion 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.

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Such forward-looking information
is necessarily based upon a number of factors and assumptions that, while
considered reasonable by the Company as of the date of such statements, are
inherently subject to significant business, economic and competitive uncertainties
and contingencies. The assumptions made by the Company in preparing the forward
looking information contained in this AIF, 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
existence of companies that may wish to dispose of producing or near-term
producing precious metals assets are correct; that Mexican tax laws with respect
to the advance pricing agreement ruling will not be changed and there will be no
change to the favourable advance ruling of Mexican tax authorities supporting
the Companys advance pricing agreement; that there are no significant
disruptions affecting operations, whether due to labour disruptions, supply
disruptions, damage to or loss of equipment, whether as a result of natural
occurrences including flooding, political changes, title issues, intervention by
local landowners, loss of permits, or environmental concerns or otherwise; that
there are no disruptions in the supply of power from the Las Truchas power
generation facility, whether as a result of damage to the facility or unusually
limited amounts of precipitation; that development and expansion at the San
Dimas Mine 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, Mexican peso and the United States dollar
remains consistent with current levels or as set out in this AIF; that prices
for gold and silver remains 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 the Company identifies higher grade
veins in sufficient quantities of minable ore in the Central Block and Sinaloa
Graben and is consistent with estimations; that the Companys current estimates
of Mineral Reserves, Mineral Resources, mineral grades and mineral recovery are
accurate; that the geology and vein structures in the Sinaloa Graben are as
expected; that the Company completes the proposed tunnels and access routes;
that the ratio of gold to silver price is maintained in accordance with the
Companys expectations; that there are no material variations in the current tax
and regulatory environment 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 the San Dimas Mine; that the Company will
be able to repay its indebtedness under the Promissory Note (as defined under
General Development of the Business  Three Year History  Acquisition of San
Dimas Mine); that the Company can access financing, appropriate equipment and
sufficient labour; that the political environment within Mexico will continue to
support the development of environmentally safe mining projects; and that the
changes to the Companys internal control over financial reporting undertaken in
2012 will enable the Company to continue to maintain effective internal control
over financial reporting. 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.

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; the ratio between the market prices of gold and silver;
uncertainty of Mineral Reserves, Mineral Resources, Inferred Mineral Resources
(as defined under Introductory Notes  Technical Information), exploration
potential, mineral grades and mineral recovery estimates; uncertainty of future
production, delays in completion of the mill expansion, exploration and
development plans; insufficient capital to complete mill expansion, development
and exploration plans; inability to maintain or acquire attractive mining
properties on terms it considers acceptable or at all; other risks inherent with
acquisitions; potentially unknown liabilities associated with the acquisition of
the San Dimas Assets (as defined under Corporate Structure) and the shares of
Silver Trading (as defined under Corporate Structure), the acquisition of the
Cerro del Gallo Project (as defined under Corporate Structure) and the
acquisition of the Black Fox Complex (as defined under Corporate Structure);
delays in obtaining governmental approvals, permits or financing or in the
completion of development or construction activities; the Companys ability to
repay its indebtedness under the Promissory Note and the Companys limited
ability to incur additional indebtedness; if changes to Mexican tax laws or a reversal by
Mexican tax authorities of their favourable ruling supporting the Companys
advance pricing agreement require the Company to revert to paying taxes based on
the market price of silver for all sales under the Amended and Restated Silver
Purchase Agreement to SW Caymans (as defined under Mining Activities  San
Dimas Mine  Amended and Restated Silver Purchase Agreement), the Company will
be required to pay higher taxes associated with silver sales, which adverse tax
consequences will increase in severity with increased silver production and
increased silver prices and will adversely impact the Companys results of
operations and cash flows from operations; the ability of the Company to achieve
projected gold and silver production and, gold and silver grades; projected cash
costs of production and capital expenditures may be greater than anticipated;
currency fluctuations; limitations on insurance coverage; financing of
additional capital requirements; commercial viability of mineral deposits; cost
of exploration and development programs; inability to complete the proposed
tunnels, access routes or other development, for whatever reason; risks
associated with having adequate infrastructure, including unexpected
interruptions in power supply from the hydroelectric project; mining risks,
including unexpected formations and cave-ins, 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 certain
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 to in
labour relations legislation or in the relationship between the Company with its
employees and unions at the San Dimas Mine; title disputes or claims; changes in
governmental and environmental regulation that result in increased costs; cost
of environmental expenditures and potential environmental liabilities; landowner
dissatisfaction and disputes; failure of plant, equipment or processes to
operate as anticipated; accidents, labour disputes and road blocks; the
acquisition of Cerro and the risks associated with the business and properties
of Cerro; and changes undertaken to the Companys internal control over
financial reporting in 2012 will not result in our ability to maintain effective
internal control over financial reporting. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in forward-looking
statements.

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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 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.

Technical Information

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 adopted by CIM Council on December 11, 2005 (the CIM
Standards), which were adopted by the Canadian Securities Administrators
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.

3

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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.

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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Cautionary Notes to United States Investors

The disclosure in this Annual
Information Form uses terms that comply with reporting standards in Canada and
certain estimates are made in accordance with 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 reserve
and resource estimates contained in or incorporated by reference in this Annual
Information Form 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), and reserve and resource
information contained herein and incorporated by reference herein may not be
comparable to similar information disclosed by U.S. companies.

Cautionary Note to Investors Concerning Mineral Reserve
Estimates

This AIF contains Mineral Reserve
estimates which have been calculated in accordance with NI 43-101, as required
by Canadian securities regulatory authorities. For United States reporting
purposes, SEC Industry Guide 7 under the United States Securities and
Exchange Act of 1934, as amended (the Exchange Act), as interpreted by
Staff of the SEC, applies different standards in order to classify
mineralization as a reserve. As a result, the definitions of Proven Mineral
Reserves and Probable Mineral Reserves used in NI 43-101 differ from the
definitions in the SEC Industry Guide 7. Under SEC standards, 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.

Cautionary Note to Investors Concerning Estimates of
Measured Mineral Resources, Indicated Mineral Resources and Inferred Mineral
Resources

This AIF uses the terms Measured
Mineral Resources, Indicated Mineral Resources and Inferred Mineral
Resources. We advise investors that while such terms are recognized and
required by Canadian regulations, 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 rules, 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.

Cautionary Note to Investors Concerning Exploration
Potential

NI 43-101 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 NI 43-101 Mineral Resources
being identified.

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For the above reasons,
information contained in this Annual Information Form may not be comparable to
similar information made public by U.S. companies subject to the reporting and
disclosure requirements under the United States federal securities laws and the
rules and regulations 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
Mexican pesos. 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 | 
|------------------------------------- | - | ---------------------- | 
|                                      |   | 2013                   | 
|Low for the period                    | $ | 0.9839                 | 
|High for the period                   |   | 1.0697                 | 
|Rate at the end of the period         |   | 1.0636                 | 
|Average noon spot rate for the period |   | 1.0299                 | 

On March 31, 2014, the Bank of Canada noon spot rate of
exchange was $1.00  CDN$ 1.1053.

Gold and Silver Prices

Gold Prices

The high, low, average and
closing afternoon fixing gold prices in United States dollars per troy ounce for
each of the three years in the period ended December 31, 2013, as quoted by the
London Bullion Market Association, were as follows:

|                       |   | Year ended December 31 | 
|---------------------- | - | ---------------------- | 
|                       |   | 2013                   | 
|Low for the period     | $ | 1,192                  | 
|High for the period    |   | 1,694                  | 
|Average for the period |   | 1,410                  | 
|Closing for the period |   | 1,204                  | 

On March 28, 2014, the closing
afternoon fixing gold price in United States dollars per troy ounce, as quoted
by the London Bullion Market Association, was $1294.30.

Silver Prices

The high, low, average and
closing afternoon fixing silver prices in United States dollars per troy ounce
for each of the three years in the period ended December 31, 2013, as quoted by
the London Bullion Market Association, were as follows:

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|                       |   | Year ended December 31 | 
|---------------------- | - | ---------------------- | 
|                       |   | 2013                   | 
|Low for the period     | $ | 18.61                  | 
|High for the period    |   | 32.23                  | 
|Average for the period |   | 23.79                  | 
|Closing for the period |   | 19.50                  | 

On March 28, 2014, the closing
afternoon fixing silver price in United States dollars per troy ounce, as quoted
by the London Bullion Market Association, was $19.79.

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, mill and
related assets (the San Dimas Assets) from Desarrollos Mineros San Luis, S.A.
de C.V. (DMSL) and the shares of Silver Trading (Barbados) Ltd. (Silver
Trading) from Goldcorp Silver (Barbados) Ltd. (GSBL), each indirect,
wholly-owned subsidiaries of Goldcorp Inc. (Goldcorp). See General
Development of the Business  Three Year History  Acquisition of San Dimas
Mine.

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). 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 the shares of Brigus Gold Corp. (Brigus) and a 100% interest in the
Black Fox Complex, mill and related assets (Black Fox Complex). See General
Development of the Business  Three Year History  Acquisition of Black Fox
Complex.

In this Annual Information Form,
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 five 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, San Anton Resources
Corporation, which is incorporated under the laws of Canada and Primero Gold
Canada Inc. (formerly Brigus) (Primero Gold), which is incorporated under the
laws of Canada. The following chart shows the organization of Primero and the
ownership of its mineral properties.

7

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|(1) | Eduardo Luna, a director 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) Ltd. 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 Aereos, 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 1640, 505 Burrard Street, Vancouver, British Columbia, Canada,
V7X 1M6, telephone (604) 669-0040, facsimile (604) 669-0014. Primeros primary
corporate office is located at Suite 2301, 20 Queen Street West, Toronto,
Ontario, Canada, M5H 3R3, 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.

GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

In the past few years, Primero
has transformed itself from a single-asset gold and silver producer listed on
the Toronto Stock Exchange (the TSX) and the New York Stock Exchange (NYSE)
(since August 2011) into a multi-asset, multi-jurisdiction gold and silver
producer with two producing mines, one advanced development property and
attractive exploration potential. Effective June 24, 2011, Primero was added to
the Russell Global Index, effective September 16, 2011, Primero was added to the
S&P/TSX SmallCap Index, effective December 24, 2012, Primero was added to
the S&P/TSX Global Gold Index, effective May 23, 2013, upon the acquisition
of Cerro, Primero was added to the Australian Securities Exchange (ASX), and
delisted from the ASX on December 30, 2013, and most recently Primero was added to the NYSE Arca Gold Miners Index (GDM)
and the S&P/TSX Equal Weight Global Gold Index, effective March 21, 2014.

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Before 2011, Primero had only one
producing asset and one exploration property, the San Dimas Mine and the
Ventanas property, respectively. In 2013 Primero acquired a development
property, the Cerro del Gallo Project. In March 2014, Primero acquired a second
mine, the Black Fox Complex.

Since 2012 the Company has
implemented a number of initiatives at San Dimas to increase production, reduce
costs and expand Mineral Reserves and Mineral Resources. Initiatives designed to
increase production include ensuring daily throughput at mill capacity of 2,150
tonnes TPD, which was achieved by end of first quarter 2013. In October 2012 the
Company initiated a mine and mill expansion of the San Dimas Mine. The Company
has taken a staged approach, initially optimizing existing operations before
undertaking expansion of the San Dimas Mine and mill to 912,500 tonnes per year
(TPY) or 2,500 TPD. Construction of the mine and mill expansion was nearly
completed during the first quarter of 2014, with the remaining work to be
completed during second quarter of 2014. With the expansion of its San Dimas
Mine, the acquisition of the Black Fox Complex, and the Cerro del Gallo Project,
the Company has created a diversified, high growth, competitive-cost precious
metals producer with further growth opportunities. These acquisitions and
productivity enhancements have diversified Primero from a single asset company
to a multi-mine producer and delivers on the Companys strategy of growth in low
risk regions of the Americas.

As at December 31, 2013, the
Companys only debt was a $27 million promissory note payable to Goldcorp. The
promissory note, which bears interest at 6% per annum, is due to be repaid in
two instalments: $5 million on December 31, 2014 and $22 million on December 31,
2015. The Company has also assumed certain debt on the acquisition of the Black
Fox Complex that it expects to retire in the second quarter of 2014.

The Companys cash position was
$110.7 million at December 31, 2013, somewhat lower than the December 31, 2012
balance of $125.7 million.

The Company is in the final
stages of arranging a $75 million revolving line of credit, which it expects to
close in April 2014, in order to improve financial flexibility. With its cash
balance, anticipated cash flows and the availability of a line of credit,
management believes the Company is well positioned to execute on its strategy.

Significant Shareholder

On March 5, 2014, Goldcorp
announced that it had entered into an agreement to sell, on a bought deal basis,
its 31,151,200 common shares of Primero, representing approximately 19.8% of the
issued and outstanding common shares of the Company. The closing of the offering
occurred on March 26, 2014 whereupon Goldcorp ceased to be a shareholder of the
Company.

Acquisition of Black Fox Complex

On March 5, 2014, Primero
completed the acquisition of Brigus (the Brigus Acquisition) whereby Primero
acquired all of the issued and outstanding common shares of Brigus by way of a
plan of arrangement (the Brigus Arrangement) under the Canada
Business Corporations Act(the CBCA). Under the Brigus Arrangement,
shareholders of Brigus received 0.175 of a Primero Common Share (the Brigus
Exchange Ratio), $0.000001 in cash and 0.1 of a common share of Fortune Bay
Corp. (Fortune Bay), for each common share of Brigus held. Following
completion of the arrangement, Brigus was delisted from the TSX and ceased to be
a reporting issuer on March 28, 2014. On March 28, 2014, Brigus changed its name
to Primero Gold.

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Brigus was a Canadian-based
mining company which was principally engaged in the extraction, processing, and
refining of gold deposits as well as related activities including the
acquisition, exploration and development of mineral properties principally
located in North America. Brigus owned all of the Black Fox Complex, an open pit
and underground mine and associated exploration property, and the Black Fox
mill. The Black Fox Complex is located in the Timmins Mining District in the
Province of Ontario. See Mining Activities  Black Fox Complex.

All outstanding options to
purchase Brigus common shares were exchanged for options to purchase Primero
Common Shares based upon the Brigus Exchange Ratio. Following completion of the
Brigus Arrangement, each outstanding warrant to purchase a Brigus common share
is exercisable to purchase 0.175 of a Primero Common Share and 0.1 of a Fortune
Bay common share.

As part of the Brigus
Arrangement, (a) the interest of Brigus in three exploration properties - the
Goldfields development project in the Lake Athabasca region of Saskatchewan,
Canada and a 100 % interest in the Ixhuatán and Huizopa properties located in
Chiapas, Mexico - were transferred to Fortune Bay, and (b) Fortune Bay was
capitalized with approximately CDN$10 million in cash from Primero. On the
closing of the Brigus Arrangement, former Brigus shareholders held an aggregate
90.1% interest in Fortune Bay and Primero held the remaining 9.9%
interest.

Brigus (now Primero Gold) has
debt comprising of $50 million 6.5% convertible senior unsecured debentures,
CDN$24 million senior secured term notes and CDN$17 million capital leases. The
Company is required to make change of control offers for Brigus unsecured
debentures and senior term notes at 100% and 105%, respectively, of their
outstanding principal plus accrued interest.

On March 14, 2014, Primero, on
behalf of Brigus, made an offer to acquire all of outstanding senior secured
term notes (the Brigus Notes) at 105% of the principal amount plus accrued and
unpaid interest. Primero, on behalf of Brigus, also intends to make a change of
control offer for Brigus outstanding 6.5% convertible senior unsecured
debentures (the Brigus Debentures) at 100% of the principal amount plus
accrued and unpaid interest in accordance with the terms of the debenture
indenture. Assuming the debenture holders and note holders accept the offers,
the Company will be required to repay the debentures and notes, plus accrued
interest by May 4, 2014 and April 4, 2014, respectively.

Acquisition of Cerro Del Gallo

On May 22, 2013, the Company
completed the acquisition of Cerro whereby Primero acquired 100% of the issued
and outstanding common shares of Cerro (Cerro Acquisition) by way of a scheme
of arrangement (the Cerro Arrangement) under the Australian Corporations
Act 2001. Cerros principal asset was a 69.2% interest in the Cerro del
Gallo Project. On December 19, 2013, Primero acquired the remaining 30.8%
interest in the Cerro del Gallo Project from a subsidiary of Goldcorp for an
initial payment of $8 million and future contingent payments based on meeting
certain milestones and market conditions relating to the price of gold. The
milestones include achieving commercial production on the phase I heap leach
operation and the announcement of a decision to construct the CIL mill for phase
II. If all of the contingencies are satisfied, the Company would be required to
pay $32 million.

In 2013, through an internal
reorganization, Company subsidiaries that were previously held through Cerro
were restructured to be held directly by the Company, and Cerro no longer holds
any material assets of the Company.

The Cerro del Gallo Project is a
gold-silver deposit with over 0.9 million ounces of gold equivalent Proven
Mineral Reserves and Probable Mineral Reserves and over 2 million ounces of gold
equivalent Measured Mineral Resources and Indicated Mineral Resources (inclusive
of Mineral Reserves), located in the province of Guanajuato, Mexico. See
Exploration and Development  Cerro del Gallo Project.

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Under the terms of the Cerro
Arrangement, each Cerro shareholder received 0.023 of a Primero Common Share for
each Cerro common share held (the Cerro Exchange Ratio). Additionally, Cerro
shareholders received 80.01% of the common shares of a newly incorporated
company Santana Minerals Limited (Santana Minerals), which assumed Cerros
interests in the Namiquipa, Espiritu Santo, Mt Philp and Kalman projects and
shares in Syndicated Metals Limited (all Cerros assets other than the Cerro del
Gallo Project). Primero purchased a 19.99% interest in Santana Minerals for a
subscription price of $4.0 million, with anti-dilution rights for two years.
Primero is also entitled to appoint a director to the Santana Minerals board of
directors. Cerros outstanding options and its option plan were substantially
assumed by Primero, subject to adjustment to reflect the Cerro Exchange Ratio
and a corresponding upward adjustment in the exercise price.

Advance Pricing Agreement Ruling

On October 17, 2011, Primero
Empresa filed a formal application to the Mexican tax authorities for an advance
pricing agreement (APA) on the appropriate price for sales of silver under the
Amended and Restated Silver Purchase Agreement. In its 2010 and 2011 financial
statements and income tax returns, Primero Empresa had recorded revenue at the
fixed price realized from Silver Wheaton Caymans (SW Caymans) and computed
income taxes on the same basis. On October 4, 2012, the Company received a
ruling from the Mexican tax authorities that confirmed the silver pricing in
Primero Empresas 2010 and 2011 income tax returns. Under Mexican tax law, an
APA ruling is generally applicable for up to a five year period. For Primero
this applies to the fiscal years 2010 to 2014. Assuming Primero Empresa
continues to sell silver under the silver purchase agreement on the same terms
and there are no changes in the application of Mexican tax laws relative to the
APA ruling, Primero Empresa expects to record revenues and pay taxes based on
realized prices for the life of the San Dimas Mine. See Risk Factors  APA
Ruling.

Proposed Business Combination with Northgate

On July 12, 2011, the Company
entered into a definitive arrangement agreement to combine its business with
Northgate Minerals Corporation (Northgate). On August 29, 2011, this agreement
was terminated as Northgate had received a superior proposal from another
company. As a result, as provided for in the arrangement agreement, Northgate
paid the Company a termination fee of CDN$25 million.

Acquisition of San Dimas Mine

On August 6, 2010, Primero
completed the acquisition (the Acquisition) of the San Dimas gold-silver
mining operations (the San Dimas Mine), pursuant to an asset purchase
agreement (Asset Purchase Agreement), and the shares of Silver Trading,
pursuant to a share purchase agreement, from wholly-owned subsidiaries of
Goldcorp for an aggregate purchase price of of $489 million (the Purchase
Price), and assumed all liabilities associated with the San Dimas Mine,
including environmental and labour liabilities and the Amended and Restated
Silver Purchase Agreement. See Mining Activities  San Dimas Mine  Amended and
Restated Silver Purchase Agreement.

As part of the Acquisition,
Primero also acquired the mill at San Dimas, all facilities and equipment
attached and related to the San Dimas Mine, a plane and helicopter used to
support the San Dimas operations, a hydroelectric generation project that
provides power to the San Dimas Mine and the Ventanas exploration properties on
which the Company held an option. The Purchase Price was paid as to (a) $220
million in cash, (b) the issuance and delivery of 31,151,200 Common Shares with
a value of $159 million, (c) the issuance of the $50 million promissory note
(the Promissory Note) and (d) the issuance of the $60 million convertible
promissory note (the Convertible Promissory Note) (of which $30 million was repaid in cash on October 19, 2011 and the
remaining $30 million was repaid on August 7, 2012 through a conversion to
shares).

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Currently, there are two
directors of the Company (the Board), who are nominees of Goldcorp  Mr. Timo
Jauristo and Mr. Rohan Hazelton, the Executive Vice President, Corporate
Developmentand Vice President, Strategy, respectively, of Goldcorp.
Goldcorp was entitled to nominate directors pursuant to the Participation
Agreement (see Material Contracts) until it ceased to be a shareholder in the
Company on March 26, 2014.

Ventanas Property Exploration

Prior to August 6, 2010, Primero
(then Mala Noche Resources Corp.) held an option to acquire the Ventanas
property. The Company last drilled on the Ventanas property in 2008 and since
then the property has been on care and maintenance. However, exploration of the
Ventanas property was reinitiated in 2013 with systematic channel sampling and
mapping.

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 recently acquired
Black Fox Complex which is located in the Timmins Mining District in Ontario,
Canada. In addition, Primero has one exploration property in Mexico  Ventanas,
located in Durango state, Mexico  and an advance stage development property,
the Cerro del Gallo Project located in Guanajuato state, Mexico.

Competitive Conditions

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. As a result of this competition, Primero may be unable to maintain
or acquire attractive mining properties on terms it considers acceptable or at
all. Consequently, Primeros revenues, operations and financial condition could
be materially adversely affected.

Changes to Contracts

As at December 31, 2013, Primero
had 694unionized 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. The full contracts will be negotiated in February
2015. Primero believes that its current relations with its employees and the
union are good and that the effects of the contract negotiations in 2014 were in
line with its budgets. See Business of Primero  Employees and Risk Factors 
Labour and Employment Matters.

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Employees

As March 31, 2014, the Company had the
following employees and contractors:

|                                          |  | Full-    |  |  |         |  |  |             |  |  |       | 
|----------------------------------------- |  | -------- |  |  | ------- |  |  | ----------- |  |  | ----- | 
|                                          |  | Time     |  |  | Hourly  |  |  |             |  |  |       | 
|Location                                  |  | Salaried |  |  | (Union) |  |  | Contractors |  |  | Total | 
|Mexico City Office                        |  | 13       |  |  | Nil     |  |  | Nil         |  |  | 13    | 
|San Dimas Mine (including Durango office) |  | 534      |  |  | 694     |  |  | 92          |  |  | 1,320 | 
|Black Fox                                 |  |          |  |  |         |  |  |             |  |  |       | 
|Complex                                   |  | 342      |  |  | Nil     |  |  | 120         |  |  | 462   | 
|Cerro del Gallo                           |  |          |  |  |         |  |  |             |  |  |       | 
|Project                                   |  | 17       |  |  | Nil     |  |  | 2           |  |  | 19    | 
|Vancouver Office                          |  | 5        |  |  | Nil     |  |  | 3           |  |  | 8     | 
|Toronto Office                            |  | 20       |  |  | Nil     |  |  | 2           |  |  | 22    | 
|Total                                     |  | 931      |  |  | 694     |  |  | 219         |  |  | 1,844 | 

Foreign Operations

A 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. These risks and uncertainties
include, but are not limited to, terrorism; organized crime; hostage taking;
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 nongovernmental organizations; illegal mining; trespass and associated
security threats and unsafe activities; changes in royalty and taxation regimes;
restrictions on foreign exchange and repatriation; 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. Future development and operations may be affected in varying
degrees by such factors as government regulations (or changes thereto) with
respect to the restrictions on production, export controls, income taxes,
expropriation of property, repatriation of profits, environmental legislation,
land use, water use, land claims of local people and mine safety. Any changes in
regulations or shifts in political attitudes in Mexico are beyond the control of
the Company and may adversely affect its business. The effect of these factors
cannot be accurately predicted. See Risk Factors  Use of Ejido-owned Land and
Risk Factors  Foreign Operations Risks  Mexico.

Environmental, Social and Governance Policies

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, all of which the Company is currently in material compliance. The
financial and operational effects of environmental protection requirements on
capital expenditures, earnings and the Companys competitive position during the
fiscal year ended December 31, 2013 were not material.

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.

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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 (formerly Environmental, Health and Safety
Committee) of 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, health and
safety performance, 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.

During 2013, Primero completed an
internal assessment of materiality in sustainable development reporting. The
process involved identifying the issues of highest impact or most importance to
the Companys stakeholders and prioritizing those considering internal and
external perspectives. Workplace health and safety, social license to operate,
value creation and wealth distribution, regulatory compliance and water
management were identified as issues with the highest impact on Primeros
business over the next several years. The process will continue to consider all
issues identified in the assessment and broaden to include external verification
with employees and other stakeholder groups.

The Company is pleased with its
year on year reduction in overall accident frequency and is striving to achieve
a zero-incident work environment with a strong safety culture. The Company plans
to continue to promote and expand the CSR programs and stakeholder engagement
that have been implemented in 2013. The Company is committed to the safety,
health and welfare of its employees, contractors and visitors to its mines. The
mines where we operate are the economic and social driving force of the
community and Primero will continue to strengthen its involvement in the
community.

Primero supports community
education and provides a 75% tuition subsidy to all students who attend the
school in Tayoltita. In 2013, 260 students were enrolled at the school. Primero
continued to work closely with the College of Professional Technical Education
(CONALEP) campus in Tayoltita where students participate in classroom activities
as well as hands on practical experience in Primeros laboratories and
workshops. Over the 7 years since the program started, more than 60% of the 156
graduates have been employees of the San Dimas Mine. In 2013 The Mexican
Ministries of Education and Labor recognized Primero's ongoing support to this
program with a 1st place distinction for practices in education and employment
at the College.

In 2013 Primero received the
Clean Industry Certification for improvements to its management practices at the
San Dimas operations. The voluntary program is coordinated by the Mexican
environmental authority and reviews regulatory compliance together with the
Company's best practices and continuous improvement in environmental
performance.

In February 2014, for the third
consecutive year, the Company was awarded the Socially Responsible Company
(ESR) designation by CEMEFI, the Mexican Center for Philanthropy. The ESR 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.

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 States, Mexico, Technical Report for Primero Mining Corp. dated April
16, 2012 (the Technical Report), prepared in accordance with NI 43-101 by
Mr. J. Morton Shannon, P. Geo., Mr. Rodney Webster, M.AIG, Mr. Herbert A. Smith,
P.Eng, and Mr. Alan Riles, M.AIG, all of AMC Mining Consultants (Canada) Ltd.
(AMC), each a Qualified Person for the purposes of NI 43-101, and each
independent of the Company. Readers should consult the Technical Report to
obtain further particulars regarding the San Dimas Mine. The Technical Report is
available for review under the Companys profile on the SEDAR website located at
www.sedar.com.

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The scientific and technical
information after April 16, 2012 under the heading Mining Activities San Dimas
Mine is based on information prepared by or under the supervision Mr. Gabriel
Voicu, P. Geo., Vice President, Geology and Exploration for Primero.

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 Mazatlan, Sinaloa and 150 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 66 contiguous concessions covering 24,966 hectares, having expiry dates
ranging from 2019 to 2060. 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 Unica
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
Secretaria de Medio Ambiente y Recursos Naturales and the Mexican environmental
protection agency. In addition, permits were received from the Commssión
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
is not operational yet but will be activated later on in 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 Mazatlan 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 Mazatlan and Durango. Heavy equipment and
supplies are brought in by road from Durango.

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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.

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
Federal Power Commission Supply System (the FPCSS). Primero operates
hydroelectric and back-up diesel generators, which are interconnected with the
FPCSS. Las Truchas provides about 75% of the total requirement of the San Dimas
Mine during nine months of the year. During the remaining three months of the
year, corresponding to the dry season, the power for operations at San Dimas is
mainly supplied by the FPCSS. Primero is currently expending the power
generation of the Las Truchas facility from 50 GW to 75 GW.

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.

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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).

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 drillholes 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.

Historical Production

Historical production for the San
Dimas Mine from 2003 to 2013 is summarized in the following table:

San Dimas Mine Production

|     |  |             |  |  | Grade        |  |  | Contained Ounces | 
|---- |  | ----------- |  |  | ------------ |  |  | ---------------- | 
|     |  | Tonnes      |  |  | Au           |  |  | Ag               | 
|Year |  | (M
      t) |  |  | **(g/t)(1)** |  |  | (g/t)            | 
|2003 |  | 0.424       |  |  | 5.3          |  |  | 428              | 
|2004 |  | 0.398       |  |  | 6.9          |  |  | 525              | 
|2005 |  | 0.508       |  |  | 7.4          |  |  | 497              | 

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|        |  |             |  |  | Grade        |  |  | Contained Ounces | 
|------- |  | ----------- |  |  | ------------ |  |  | ---------------- | 
|        |  | Tonnes      |  |  | Au           |  |  | Ag               | 
|Year    |  | (M
      t) |  |  | **(g/t)(1)** |  |  | (g/t)            | 
|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(2) |  | 0.612       |  |  | 4.5          |  |  | 244              | 
|2011    |  | 0.663       |  |  | 3.9          |  |  | 226              | 
|2012    |  | 0.721       |  |  | 3.9          |  |  | 234              | 
|2013    |  | 0.767       |  |  | 4.7          |  |  | 258              | 

(1) Grams per tonne. (2) Primero acquired the San Dimas
Mine on August 6, 2010.

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).

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.

18

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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.

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.

19

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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 is now the current
method 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, 15% 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.

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

Drilling

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 drilling campaigns were designed to convert Inferred Mineral
Resources to Indicated Mineral Resources with new test targets designated as
exploration drilling. The drilling conducted in 2013 is shown in the following
table.

20

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Number ofArea
    
    Drill Holes
    
    
    MetresCentral Block
    
    236
    
    
    52,238Sinaloa Graben
    
    136
    
    
    34,513Tayoltita
    
    22
    
    
    2,283El Cristo
    
    12
    
    
    5,699West Block
    
    26
    
    
    7,076Total
    
    422
    
    
    101,809


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. 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. Voicu 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.

Contemplated Exploration

The San Dimas $11.3 million 2014
delineation and mine exploration program targets 28 veins and consists of 215
DDHs for 60,000 metres of diamond drilling, with approximately 26,750 metres
allocated for delineation and 33,200 metres allocated for mine exploration, as
well as 2,500 metres of exploration drifting. The San Dimas 2014 regional
exploration program includes approximately 20,000 metres of diamond drilling
targeting 17 veins over 1.5 metres wide.

The current main production area
is located in a prolific central corridor that runs south-west to north-east
across the property. This central corridor historically contains vein systems
that are noted for their high-grade nature, above average thickness and
significant lateral extensions, although it is expected that by the end of 2014
a percentage of production will come from Alexa and Victoria in the Sinaloa
Graben.

The main target of the 2014
underground mine delineation and exploration program was to replace the depleted
Mineral Reserves. The largest portion of the delineation drilling was planned
for the Roberta-Robertita and Marina1- Marina2 vein systems in the Central
Block, approximately 23,000 (67%) and the Victoria-Alexa and Elia-Aranza vein
systems in the Sinaloa Graben, approximately 3,500 metres (10%). A further 3,621
metres and 4,198 metres are planned for delineation in the Santa Rita and
Tayoltita areas, respectively. The objective is to delineate accurately already
known historical Mineral Resources in former producing veins.

Mining Operations

The San Dimas Mine operation
includes five underground gold and silver mining areas: the West Block (San
Antonio mine); the Sinaloa Graben Block; the Central Block, the Tayoltita mine
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%.

21

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Typical mining of the vein
systems is by mechanized cut-and-fill & 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
through the steep, mountainous terrain.

Ground conditions throughout most
of the San Dimas operations are good. The need for installation of ground
support is assessed on an on-going basis as development and stoping progresses.
In flatter-dip vein areas where the stopes tend to be wider, rock bolts and
screen may be installed and low-grade pillars left for support.

The basis for ore haulage at San
Dimas is 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 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 17 year life at current processing rate.

Recent Operating History for the San Dimas Mine

Since 2012 the Company has
implemented a number of initiatives at San Dimas to increase production, reduce
costs and expand Mineral Reserves and Mineral Resources. Initiatives designed to
increase production include ensuring daily throughput at mill capacity of 2,150
tonnes TPD, which was achieved by end of first quarter 2013, introduction of
long hole mining method, improving productivity per man shift, controlling
mining dilution, accelerating mine development to increase the number of working
faces, completing strategic tunnel connections and enhancing mine planning.

In October 2012 the Company
initiated a mine and mill expansion of the San Dimas Mine. The Company has taken
a staged approach, initially optimizing existing operations before undertaking
expansion of the San Dimas Mine and mill to 912,500 tonnes per year (TPY) or
2,500 TPD with an approved expenditure of $16.5 million. Construction of the
mine and mill expansion was nearly completed during the first quarter of 2014,
with the remaining work to be completed during second quarter of 2014.

During the year ended December
31, 2013, San Dimas produced 143,114 gold equivalent ounces, exceeding the
Companys increased guidance range of 135,000 to 140,000 gold equivalent ounces.
The Company produced 111,983 ounces of gold and 6.05 million ounces of silver,
27% and 18% higher, respectively, than 2012. Production at San Dimas in 2013 was
higher than 2012 primarily as a result of mining more ore at higher grades.
Throughput in 2013 increased by approximately 6% over 2012, averaging 2,101 TPD
(based on 365 day availability), as a result of implementing long-hole mining
combined with the Companys mining optimization program that was initiated in
the 2012. The optimization program has been successful at reducing process
inefficiencies, increasing throughput and improving mining dilution. In 2012 San
Dimas was operating two long-hole drills to test the mining method in several of
the San Dimas veins with varying widths and dip. In 2013 San Dimas formally
included long-hole mining in its mine plans, whereby approximately 15% of total
tonnes of mining was achieved by long-hole mining, with the objective to mine
about 30% of the deposit by this method by the end of 2014.

The Company generated strong
operating cash flow and continued to invest in San Dimas Mine with capital
expenditures during 2013 of approximately $68 million, including
exploration activities

22

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2014 Development Plans

The Company is currently
commissioning the newly expanded milling facilities to 2,500 TPD. The Company
has designed the mill expansion project such that a potential further expansion
to 3,000 TPD can be achieved with minimal capital and no down-time to
operations. The Company will continue detailed engineering in 2014 for a
potential expansion decision to 3,000 TPD by Q3 2014.

The San Dimas underground
development plan for 2014 envisages a similar development rate and number of
metres of advance as was achieved in 2013, being about 20 kilometres of
drifting.

In 2014, San Dimas expects to
produce between 155,000 and 165,000 gold equivalent ounces up to 15% higher than
2013, based mainly on higher throughput. Production is expected to ramp-up at
the end of the first quarter when the milling capacity of 2,500 TPD is
achieved.

Capital expenditures during 2014
are expected to total approximately $38 million excluding capitalized
exploration costs. Underground development capital and sustaining capital remain
at similar levels to 2013 at nearly $15 million. The 2014 project capital
includes the remaining expenditure for the mill expansion to 2,500 TPD ($3.3
million), and the second phase of a two-year waste rock pad project ($3.3
million) designed to support the long-term waste disposal at San Dimas, and the
San Dimas Hydro power expansion and other projects ($5.2 million).

Environmental Matters

During the year ended December
31, 2013, the Company spent $0.82 million on capital projects related to
environmental protection, being the purchase of a third tailings pump at the San
Dimas mine and the implementation of a containment system for the tailings
pipeline.

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
$31.3 million at December 31, 2013 and the present value of the obligation was
estimated at $8.7 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 in 22 years. In
respect of the decommissioning liability, the Company expects to incur $2.2
million in 2015 and $2.0 million in 2016 to remediate the historical San Antonio
tailings, with the remainder of the expenditures to be incurred mainly at the
end of the mine life.

Primero continued with its annual
environmental awareness campaign reaching out to approximately 1,000 students
from 10 different educational institutes. Students from pre-school through to
high school participated in discussions relating to environmental education,
energy and water conservation, waste classification, and regional flora and
wildlife.

In 2013 Primero received the
Clean Industry Certification for improvements to its environmental management
practices at the San Dimas operations. The voluntary program is coordinated by
the Mexican environmental authority and reviews regulatory compliance together
with the Company's best practices and continuous improvement in environmental
performance.

In February 2014, for the third
consecutive year, the Company was awarded the Socially Responsible Company
(ESR) designation by CEMEFI, the Mexican Center for Philanthropy. The ESR 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.

23

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On January 3, 2012, tailings
containing 5 ppm cyanide were spilled into the Piaxtla River, impacting a total
area of 2.5 kilometres. The spillage was the result of a hole that developed in
a tailings pipe. The Company notified Mexican governmental authorities of the
incident. PROFEPA and CNA visited the site in January 2012. The Company
understands that both the PROFEPA and the CNA considered the spillage to be
localized. On January 5, 2012, the municipality of San Dimas confirmed in a
letter to the Company that they considered the incident as localized and under
control. Following the spill, the Company took a number of corrective actions
including design and building of a containment structure for the tailings pipe,
which is now fully operational. All PROFEPAs requests were implemented and on
September 3, 2012, Primero received final resolution from CNA specifying a fine
of $93,500 pesos, which the Company paid on September 20, 2012. On September 17,
2012, following the final resolution from CNA, the Company was notified by
PROFEPA that it was fined $31,200 pesos. The resolution notification referred to
non-compliance to a hazardous waste regulation. In March 2013, the Company
expressed its position to PROFEPA that the tailings are not subject to the
hazardous waste regulation. The Company and PROFEPA came to terms that the
tailings are not considered hazardous waste, at which point the Company
accepted to pay the nominal fine shortly thereafter in the first quarter of
2013. Following the corrective actions implemented by the Company, an external
consulting firm completed an on-site inspection and concluded that the actions
taken by the Company were sufficient and no long term damage to the aquatic life
was concluded. See Risk Factors  San Dimas Tailings Management Risks.

Primero is currently dealing with
two past environmental liabilities: reclamation of old San Antonio milling
facilities and closure/reclamation of old San Antonio (Contraestaca) tailings
facilities. All work is expected to be completed in 2016.

San Antonio Tailings

Due primarily to the exhausted
capacity of the tailings dam, the San Antonio mill was shutdown in 2003. The
tailings dam site is located in a turn in a steep walled river canyon downstream
of the mill operation. The river has been diverted through two tunnels which
have been excavated in the canyon wall on the inside of the river bend. A third
tunnel for road access has been excavated and also serves as an additional
channel for the river in high flow periods. In the 2002 due diligence by Wheaton
River, the San Antonio tailings dam was identified 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 an environmental assessment, which demonstrated the validity of
the plan, was submitted. 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 Piesold (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, will be completed in 2016 as per Primero asset retirement obligations.

See Risk Factors  San Dimas Tailings
Management Risks.

24

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Amended and Restated Silver Purchase Agreement

As part of the Acquisition,
Primero assumed the second 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
  Caymans right to terminate;
- Silver Trading sells annually (a Contract Year) to SW Caymans an amount
  of refined silver (Refined Silver) determined as follows:

- number of ounces of Refined Silver equal to all
  silver in respect of which Primero Empresa or any of its affiliates receives
  payment from any offtaker in each Contract Year (the Payable Silver) until a
  threshold amount of ounces of Refined Silver for such Contract Year (the
  Threshold Amount) has been sold and delivered to SW Caymans for the Contract
  Year. The Threshold Amount is 3.5 million ounces until the fourth anniversary
  of the completion of the Acquisition and 6.0 million ounces thereafter;
- after the Threshold Amount has been delivered for a
  Contract Year, an amount of Refined Silver equal to 50% of any additional
  ounces of Payable Silver over the Threshold Amount. For the Contract Year
  commencing August 5, 2013, the Company had delivered the Threshold Amount in
  March 2014;

- 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 ($4.20
  commencing in August 2014 plus an annual one percent increase) 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:

- Minimum Silver Amount, less the number of ounces of
  Refined Silver actually sold and delivered to SW Caymans by October 15, 2031;

multiplied by

- $0.50 per ounce;

25

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| |  | provided that (a) a default in
      payment of the Minimum Silver Payment will not constitute an Event of
      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 the Indemnity Agreement (as defined in Mining
      Activities  San Dimas Mine  Agreements in Support of the Silver Purchase
      Agreement), 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);
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | until the third anniversary of the Acquisition and the
      satisfaction of certain financial covenants, the Company and its
      affiliates are prohibited from incurring financial indebtedness in excess
      of $50 million, excluding the Promissory Note and the Convertible
      Promissory Note issued to DMSL in partial payment of the Purchase Price,
      without the prior written consent of SW Caymans, such consent not to be
      unreasonably withheld, provided that such consent is not required after
      the third anniversary of the completion of the Acquisition for any
      additional proposed financial indebtedness in excess of $50 million in the
      event that:                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | the Company and Silver Trading will cause all silver
      produced by Primero Empresa to be sold, on standard commercial terms, to a
      third party, or offtaker, that purchases or takes delivery of the silver
      for the purpose of smelting, refining or other beneficiation of the silver
      for the benefit of Primero Empresa and its affiliates;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | the Company and Silver Trading will cause Primero Empresa
      to operate the San Dimas Mine in a commercially prudent manner and in
      accordance with good mining, processing, engineering and environmental
      practices prevailing in the mining industry, and in particular all short
      and long term mine planning, processing decisions and production decisions
      must include silver prices typical of normal industry practice and be made
      on the basis that Primero Empresa is receiving all of the silver
      production;                                                                                                                                                                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | the Company and Silver Trading will cause Primero Empresa
      not to abandon any of the mineral properties that constitute the San Dimas
      Mine, allow or permit any of them to lapse or cease conducting mining
      operations or activities on them, unless reasonable evidence can be
      provided to SW Caymans showing that it is not economical to mine minerals
      from the mineral properties that Primero Empresa proposes to abandon or
      let lapse;                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | the Company has granted a right of first refusal to SW
      Caymans to meet any offer of a third party to enter into an agreement
      similar (in structure or economic impact) to the Amended and Restated
      Silver Purchase Agreement with respect to any metal produced from any
      other mining properties or projects owned by the Company or any of its
      affiliates or in which any of them have a right, title or interest;
    and                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | the mineral properties that form the San Dimas Mine may
      not be sold without the consent of SW Caymans, such consent not to be
      unreasonably withheld.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Silver Trading is currently
entitled to purchase from Primero Empresa silver produced from the San Dimas
Mine under a silver purchase agreement that provides that:

- Primero Empresa will sell to Silver Trading an amount of Refined Silver
  equal to the amount of Refined Silver to be sold by Silver Trading to SW
  Caymans under the Amended and Restated Silver Purchase Agreement; and

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- Silver Trading will pay to Primero Empresa a price for all Refined Silver
  equal to the lesser of approximately $4 per ounce (adjusted for inflation) and
  the prevailing market price of Refined Silver at the time of sale.

See Risk Factors 
Indebtedness, Risk Factors  Risks Inherent in Acquisitions and Risk Factors
 Conflicts of Interest.

Agreements in Support of the Silver Purchase Agreement

Primero Empresa has granted to SW
Caymans first ranking security interests, subject only to certain permitted
encumbrances, in all of its present and after acquired personal property related
to the San Dimas Mine as security for its obligations under the Amended and
Restated Silver Purchase Agreement. In addition, the Company and Primero Empresa
have guaranteed the obligations of Silver Trading under the Amended and Restated
Silver Purchase Agreement. The security granted or to be granted is subject to
the following qualifications:

- the security will exclude mining properties and concessions, real property,
  contracts and tangible personal property not related to the San Dimas Mine,
  and any shares or other equity interest in a company that does not own any
  interest in Primero Empresa or the collateral granted by Primero Empresa; and
- the security granted may be subordinated, other than with respect to the
  first mortgage against the San Dimas mining concessions based on the value of
  the silver to be delivered to SW Caymans under the Amended and Restated Silver
  Purchase Agreement, with respect to financial indebtedness permitted under the
  Amended and Restated Silver Purchase Agreement, as described above and subject
  to the execution of an inter-creditor agreement between SW Caymans and the
  applicable lender.

Concurrent with the entering into
of the Amended and Restated Silver Purchase Agreement, Goldcorp delivered to SW
Caymans a guarantee (the Guarantee) and Primero and certain of its affiliates
entered into an indemnity agreement (the Indemnity Agreement) with Goldcorp
and an affiliate of Goldcorp. The Guarantee and the Indemnity Agreement provide
that:

- Goldcorp guarantees to SW Caymans the performance of the obligations of
  Silver Trading under the Amended and Restated Silver Purchase Agreement with
  respect to (a) delivery and sale of refined silver to SW Caymans and (b)
  payment of any deficiency payment resulting from failure of Silver Trading to
  deliver and sell the Minimum Silver Amount;
- the Company and its affiliates have agreed to indemnify Goldcorp for any
  payments that Goldcorp is required to make under the Guarantee, other than in
  respect of any deficiency payment resulting from the failure to deliver and
  sell the Minimum Silver Amount (except to the extent that a deficiency payment
  with respect to the Minimum Silver Amount arises as a result of Silver
  Tradings failure to sell and deliver produced silver to SW Caymans under the
  Amended and Restated Silver Purchase Agreement);
- Goldcorp has agreed to indemnify the Company and its affiliates for any
  deficiency payments payable by the Company or Silver Trading to SW Caymans
  under the Amended and Restated Silver Purchase Agreement if the Minimum Silver
  Amount is not sold and delivered to SW Caymans (except to the extent that a
  deficiency payment with respect to the Minimum Silver Amount arises as a
  result of Silver Tradings failure to sell and deliver produced silver to SW
  Caymans under the Amended and Restated Silver Purchase Agreement); and

27

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- the Company and its affiliates have provided security to Goldcorp to
  support their indemnity, on substantially the same terms as, and ranking in
  priority immediately after, the security granted and to be granted to SW
  Caymans and such security is subject to substantially the same restrictions on
  indebtedness and other covenants as are provided for in the Amended and
  Restated Silver Purchase Agreement (other than the right of first refusal and
  the incurring of additional indebtedness).

Taxes

Corporate profits in Mexico are
taxed only by the Federal Government. Through 2008, there were two federal taxes
in Mexico that applied to mining company operations; a Flat Rate Business Tax
(FRBT) and a corporate income tax. Mexican corporate income tax is calculated
based on gross revenue less deductions for all refining and smelting charges,
direct operating costs, all head office general and administrative costs, and
depreciation deductions. During 2008 and 2009, the corporate income tax rate in
Mexico was 28%, it was 30% from 2010 to 2013, and it is planned to be 30% during
2014 and subsequent taxation years. On October 17, 2011, the Company filed a
formal application to the Mexican tax authorities for an advance pricing
agreement on the appropriate price of silver sales under the silver purchase
agreement. On October 4, 2012, the Company received a ruling from the Mexican
tax authorities that the appropriate price was the approximate $4 per ounce
received from SW Caymans. This confirmed the silver pricing in Primero Empresas
2010 and 2011 income tax returns See General Development of the Business 
Three Year History  Advance Pricing Agreement Ruling.

On October 31, 2013, the Mexican
Congress approved an extensive tax reform bill that has far reaching
implications to the mining sector and taxpayers generally. The reforms included
a tax-deductible mining royalty of 7.5% on taxable earnings before the deduction
of interest, taxes, depreciation and amortization, with precious metals mining
companies paying an additional 0.5% on gold and silver revenue. The tax reforms
are effective from January 1, 2014 and as such the Company is subject to the
mining royalty as of this date. As part of the reform, the FRBT was
repealed.

BLACK FOX COMPLEX

The following description of the
Black Fox Complex has been summarized from two technical reports entitled
Brigus Gold Corp. Black Fox Project National Instrument 43-101 Technical
Report dated January 6, 2011 (the Black Fox Technical Report), prepared in
accordance with NI 43-101 by Tetra Tech WEI Inc., and Technical Report and
Mineral Resource Estimate for the Grey Fox Project dated June 21, 2013 (the
Grey Fox Technical Report), prepared by Pierre-Luc Richard, MSc, P.Geo., Bruno
Turcotte, MSc, P.Geo., and Carl Pelletier, BSc, P.Geo., all of InnovExplo Inc.,
for the Grey Fox Technical Report, each a Qualified Person for the purposes of
NI 43-101, and each independent of the Company. Readers should consult the
Technical Report to obtain further particulars regarding the Black Fox Property.
The Black Fox Technical Report and the Grey Fox Technical Report are available
for review under the Companys profile on the SEDAR website located at
www.sedar.com.

The scientific and technical
information after January 6, 2011 and June 21, 2013, respectively, under the
heading Mining Activities Black Fox Complex is based on information prepared
by or under the supervision Mr. Howard Bird, Senior Vice President, Exploration
for Brigus. The description of the Black Fox Complex included in this Annual
Information Form has been approved by Mr. Gabriel Voicu, P. Geo., Vice
President, Geology and Exploration for Primero.

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.

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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 18 square km
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.

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.

29

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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.

Sandstorm Goldstream Agreement

On November 9, 2010, 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
will also pay Brigus 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 Exploration and Development Work

Beyond the known mineral reserves
and 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.

Brigus began exploration of the
Black Fox mine site in 2003. From 2003 to 2007, Brigus conducted a drilling
program, during which 504 surface core drill holes totalling 149,548 metres and
396 underground holes totalling 78,644 metres were completed. Brigus drilling
supplemented the data from the 286 surface and 707 underground drill holes
drilled by the previous owners. In 2008 and 2009, Brigus 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.
Brigus 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 December 2010, Brigus
discovered the 147 gold zone located approximately 400 metres to the south of
the Contact Zone on the Grey Fox property. 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 147 Zone. Drilling results continued to show gold
mineralization continuity in multiple mineralized zones on the Contact Zone and
the newly discovered 147 Zone. A helicopter, high-resolution, magnetic
geophysical survey was completed during September 2010 covering the 17-square km
Black Fox Complex. In addition, line cutting at the Black Fox Complex was
completed in September 2010 in preparation for the advanced Quantec Titan 24 IP
geophysical system survey. The Titan survey was completed in October 2010. The
purpose of the two surveys is to detect conductive mineralization, disseminated
mineralization, alteration, structure and geology resulting in the
identification of prospective drill targets. Final geophysical survey reports
were delivered in December 2010.

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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 m) 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 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 2011, the
Contact Zone has been extended for at least 1,200 m, however the core zone of
gold mineralization of interest is approximately 450 m 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.

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.

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 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. A total of 69 drill holes, amounting to 26,805.49
metres, were drilled on the property in 2010.

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.

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Historical Production

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

Black Fox Mill ProductionTonnes
    
    
    Au
    
    
    AuYear
    
    (M t)
    
    
    (g/t)
    
    
    (K oz)2010
    
    0.721
    
    
    3.16
    
    
    67.52011
    
    0.726
    
    
    2.54
    
    
    55.82012
    
    0.736
    
    
    3.43
    
    
    77.42013
    
    0.753
    
    
    4.34
    
    
    98.7


Geological Setting

The Destor-Porcupine Fault 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 Destor-Porcupine
Fault Zone is a deep break in the Precambrian rocks of the Abitibi Greenstone
Belt. 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.

Deposits and Mineralization

Deposits

The Black Fox deposit sits
astride the Destor-Porcupine Fault Zone and is open at depth and along strike to
the southeast. 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. The Grey
Fox deposit is located 4 km south-east of Black Fox deposit.

Mineralization

The Black Fox mineralization is
subdivided into three main domains based on the continuity and style of the
mineralization. The first is called the Main Zone and is delineated by the
primary domain of shearing and mineralization. It is broader near surface
reaching a maximum true width of 150 m normal to strike and dip and narrows at
depth. It averages approximately 80 m normal to strike and dip and has currently
been drill tested to 600 m below surface. Within the Main Zone, the
mineralization occurs along both a foliated fabric cut by discrete shear zones
and as stockwork carbonate veining.

The second mineralization domain
is called the Flow Zones. This mineralization occurs as numerous sigmoid and
lens shaped bodies completely hosted within or adjacent to the Main Zone. The
gold mineralization within these bodies has good geologic and grade continuity.
The rock is distinctive with strong foliation, pervasive shearing and can be correlated
reasonably well between adjacent drill holes.

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The third mineralization domain
is High Grade (HG) Indicator Zone. This was a probabilistic approach to define
the zones of mineralization over an average gold grade of 2 grams per tonne
(gpt). This HG Indicator Zone was constrained within the Main Zone and
overlapped at times on the Flow Zone.

Grey Fox mineralized zones 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 suggest that the
sequence is generally weakly foliated, despite proximity to the intense ductile
strands of the Destor-Porcupine 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

Exploration and Drilling

Sampling

The sampling procedure begins
with the geologist defining each sample interval and designating such with a
sample tag documented in a sample book. They next mark the core with a center
line cut mark and replace the core box lids for transfer to the sawing station.
In the sawing room technicians saw the core sample in half with a diamond saw
and place one half in a bag which is marked with the sample number and includes
a sample tag. The half core that remains in the core box has the lid replaced
and is placed back in the rack by the technician. Blank and standard samples are
inserted approximately every twenty samples and are numbered in sequence with
the core samples. The samples are then stored inside the core facility until
they are picked up by Swastika Laboratories, located in Swastika, Ontario,
Canada. The samples are placed into their truck, with each sample being checked
off a list as it is being loaded and then taken directly to the laboratory where
they are unloaded into a secure facility. At the logging area, once a truck load
of split core has accumulated, the boxes are labelled with hole number and
footage on stainless steel tags and then moved to covered storage racks located
outdoors.

Brigus sawed the core and shipped
1⁄2 of the drill core to either Swastika or SGS Laboratories. The labs prepared a
30 g sample for fire assay with a gravimetric finish. The core was first crushed
-10 mesh and a 400 g split then pulverized. As a quality check, the coarse
reject sample material from each mineralized zone, over 1.0 g/t Au is sent to
the other lab. The rejects are re-split, pulverized and re-assayed using a 30g
fire assay with a gravimetric finish. This procedure provided a check on the
entire assay process, from sample preparation through to the gravimetric finish.
Many of the higher grade samples were run with a screened metallic fire assay.
All check data was subjected to a standard quality assurance/quality control
(QA/QC) analysis.

Swastika sent certificates of
Analysis and electronic data files directly to the Brigus office in Matheson,
Ontario. Hard copy results and assay certificate were also faxed to Brigus. The
faxed certificates, were marked up with specific hole intervals and cross
checked to the digital file for errors. After confirmed to be correct, the faxed
copies were stamped complete, and added to the audit file for back referencing.
The digital assay file was cut and pasted directly into the electronic core
logs. Once the results were pasted in, the sample numbers were cross-referenced
to ensure no pasting errors occurred. The completed drilling logs were then
saved into a separate file. Once the logs are complete with all assays, they
were saved as a DC file. The DC files were put into a locked folder on the
Black Fox database, which can only be accessed as a read-only file. All
editing of these files must be done through the Administrator (Project
Manager).

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All reported assays are final
assays, and original certificates of analysis are stored in a separate binder
and stored in a fire proof safe at the Black Fox mine site. All assay reporting
goes through the Black Fox Project Manager.

Drilling

The 2013 Brigus exploration
program at the Black Fox mine focused on expanding the resource as well as
targeting new areas to discover new gold mineralized zones along strike and at
depth. A total of 75 drill holes, amounting to 15,119 metres, were drilled in
2013.

At the Grey fox property the 2013
drilling program of Brigus was focused on expanding and infill drilling the
resource on the 147, Contact and Grey Fox South Zones. Up to six drill rigs were
used drilling NQ diameter core and was performed by Norex Drilling. A total of
139 drill holes, amounting to 62,918 metres, were drilled at the Grey Fox in
2013. A total of $12 million was spent on Grey Fox exploration and development.

Contemplated Exploration

The 2014 Primero exploration plan
at the Black Fox mine is to expand the known resources along strike and down dip
at depth. Drilling will be conducted both from surface and from an underground
exploration drift located 500 metres below surface. Approximately 45,000 metres
of delineation and exploration drilling is planned. A total budget of
approximately CDN$8 million is contemplated for the 2014 Black Fox mine
exploration activities.

At the Grey Fox property,
approximately 61,000 metres of surface exploration drilling is planned in 2014
to further expand and infill drill the resource on the 147, Contact and Grey Fox
South gold deposits. In addition, as part of a regional exploration program, the
Company will conduct a 7,770 metre drill program to test geophysical targets to
discover new gold zones and test historical surface gold showings on the Pike
River property that is located between the Black Fox mine and the Grey Fox gold
deposits. An additional 7,770 metres will be drilled in the Stock mine area. A
total budget of approximately CDN$9 million is contemplated for the 2014
regional exploration activities, including Grey Fox.

Mining Operations

The Black Fox Complex is an open
pit and underground mining operation with significant exploration upside. Open
pit mining of ore and waste at Black Fox is conducted 24 hours a day, seven days
a week, subject to weather conditions, and scheduled maintenance.

Underground ore is mined using
long hole, mechanized cut-and-fill, 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 500m below surface in the Eastern zone and approximately 350m in
the Western zone however the ore body is open along strike and at depth and
other underground mines in the Timmins camp typically extend more than 1,000m
below surface.

The mining of ore, waste and
overburden from the open pit is performed by three excavators, six CAT 777
90-tonne haul trucks and three drills in addition to ancillary equipment. The
mining of ore is only done during daylight hours. Phase 3 of overburden removal
was completed in April 2013. Mining of Phase 2 and 3 of the open pit will
continue up until the end of 2016.

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Ore from the open pit 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 90% to 95% of gold fed.

The Black Fox operations are
fully permitted. The mine and mill were previously 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, 2013, Black Fox produced 98,710 ounces of gold, within the increased
guidance range of 95,000 to 105,000 gold ounces. This was a record production
for the mine and represented a 28% increase compared to 2012. Average mill
throughput increased to 2,063 TPD in 2013, a 3% increase compared to 2012
despite a 20-day mill shutdown in May. However, the main reason for higher gold
production in 2013 was due to the increased underground production, which is
higher grade ore than ore from the open pit. This resulted in a mill feed gold
grade of 4.34 g/t, compared to 3.43 g/t for the year ended December 31, 2012.

During the year ended December
31, 2013, 10,817,495 tonnes of material were mined from the open pit of which
663,428 tonnes were ore tonnes, 4,922,613 tonnes were waste rock, 3,055,989
tonnes were related to production stripping and 2,175,465 tonnes were related to
Phase 3 overburden removal. This resulted in an operating strip ratio of 7:4:1.

A total of 5,553 metres of
underground development was completed in 2013. Underground ore production
averaged 814 TPD (based on 365 day operation), an 81% increase over 2012. This
increase was the result of increased long hole mining from larger, wider stoping
blocks in the east and west zones.

During 2013, $31 million was
spent on sustaining capital, $13 million was spent on the open pit for capital
stripping and overburden removal, $13 million for underground sustaining capital
and $5 million on other equipment and projects.

2014 Development Plans

Primero acquired Black Fox in
March 2014 and currently is undergoing a detailed evaluation for short term
operational planning.

Capital expenditures during 2014,
excluding capitalized exploration costs, are expected to total approximately $35
million or $31 million from date of acquisition by Primero. Underground capital
requirement for development, mining equipment and sustaining projects will
increase in 2014 to a total of nearly $18.5 million. Total sustaining capital
requirement for open pit activities, including dewatering & pumping
improvement is estimated at $9 million. Other sustaining capital requirement for
milling, tailings, water management and general infrastructures is estimated at
$6.0 million while $1.5 million will be invested in the development of Grey Fox
Project.

Environmental Matters

During the year ended December
31, 2013, the Company spent $2 million on capital projects related to
environmental protection, being the phase 5 and 6 tailings dam expansions at the
mill site.

As at December 31, 2013, 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 $28.4 million and the present value of these obligations was
estimated at $24 million, using a discount rate of 2%. Primero Gold holds $19 million of cash in favour of the
Ontario Ministry of Northern Development to secure these site closure cost
obligations.

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Primeros mining, exploration,
development and production activities in Ontario are subject to extensive
regulation at the federal, provincial and local levels. These regulations relate
to, among other things, prospecting, development, mining, production, exports,
taxes, labour standards, occupational health, waste disposal, protection of the
environment, mine safety, hazardous substances and other matters. These laws are
continually changing and, in general, are becoming more restrictive.

Brigus has made, and Primero Gold
expects to make in the future, significant expenditures to comply with such laws
and regulations. 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 Gold 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.

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. | Certificate of Approval/Air  for treatment and discharge
      of emissions to air, including management of dust and noise in
      emissions.                        
| |    |                                                                                                                                                                        
| | 3. | Certificate of Approval/Industrial Sewage Works  for
      collection, treatment, and discharge of wastewaters.                                                       
| |    |                                                                                                                                                                        
| | 4. | Approved Closure Plan including posting of financial
      assurance for closure.                                                                                      

The existing tailings impoundment
facility has been developed in phases starting in 1989. The construction of
Phase 6 was completed in December 2013. The Phase 7 raise is scheduled for the
summer 2014 and will include the raising of the west, south and east perimeter
dams from elevation 275 to 276 m, by constructing a tailings berm along the
existing dam alignment. The Phase 7 will extend the life on the impoundment by
another year. The design of a further Phase 8 will be completed in 2014 for
potential construction later in the year.

The water management pond (WMP),
located to the north of the tailings impoundment area was built in 2010. The WMP
will be raised in 2014 in order to allow for a larger volume of water available
for processing during winter time.

To the best 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 and mill. The local First Nations community
comprises the Wahgoshig First Nations of Ontario (Wahgoshig).

Brigus recognized the unique
cultural, developmental, educational, training and employment needs, land use
and environmental interests of the Wahgoshig. On June 3, 2011, Brigus signed an
Impact Benefit Agreement (IBA) with the Wahgoshig. The IBA provides
a framework for how the parties work together during the construction,
development and operations of the Black Fox Complex and mill.

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Taxes

Corporate profits in Ontario,
Canada are taxed by the Federal Government and the Provincial Government. In
2014, the combined federal and provincial corporate tax rate is 25% and is
planned to be 25% for subsequent taxation years. The Company is also subject to
Ontario Mining Taxes on its Black Fox mine operations. The Ontario mining tax
rate is 10% on annual taxable mining profits in excess of $500,000 from all
mines. The determination of Ontario mining taxable profit is based on gross
mining revenues less expenses directly attributable to the production of output
from the mine, exploration and development expenses, allowances for depreciation
and processing, as well as certain administrative and overhead expenses that are
attributable to the production or sale of the mine output.

Based on the current Canadian tax
pools available as at the date of this report, the Company does not expect to
pay cash taxes in Canada during 2014. The Company will not be cash taxable until
all tax pools have been used.

PRODUCT SUMMARY

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 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 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. The following table sets out the Companys revenue, which was
exclusively derived from the San Dimas mine, by product for each of the last two
financial years:

|       |  | Financial year ended December 31 | 
|------ |  | -------------------------------- | 
|       |  | 2013                             | 
|       |  | $                                | 
|       |  |                                  | 
|Gold   |  | 157,304,000                      | 
|Silver |  | 43,022,000                       | 
|Total  |  | 200,326,000                      | 

EXPLORATION AND DEVELOPMENT

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. 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, which summary
has been updated and conformed to be consistent with other disclosure in this
AIF.

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

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The scientific and technical
information under the heading Exploration and Development  Cerro Del Gallo
Project after May 11, 2012, is based on information prepared by or under the
supervision of Mr. Gabriel Voicu, P. Geo., Vice President, Geology and
Exploration for Primero and Louis Toner, Vice President, Project Development and
Construction.

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 from
Guanajuato. There is an international airport at Leon, 30 minutes from
Guanajuato along a four lane toll freeway. An inland port facility will
integrate the international airport and is currently under construction 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.

Physiography and Vegetation

Property is situated in the
physiographic region known as the Sierra Madre Oriental. Elevations in the area
range from 1,800 m to 2,670 m, 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 22 July 2004.

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

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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 Au 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 3,551.3m). 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.

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.

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.

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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.

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. Drilling activity ceased on the
property in 2008 and additional core logging work was completed as part of the
program of work to develop the gold domain within the Cerro del Gallo deposit.

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 m)
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 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 and consistently average between 2.5 4 kg in mass
throughout the program.

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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. The core is firstly marked
longitudinally with a felt tipped pen and then marked at 1.0 m intervals for
sampling for assay.

SGS Canada Inc. Minerals Services
in Toronto, Ontario, Canada was the primary laboratory 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. 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 prior to riffle splitting a
sub-sample of ~1,000g for pulverizing. The sample is riffle split using a
stainless steel splitter The 1,000g sub-sample is pulverized to 90% passing 75
μm 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 have been routinely assayed for a
standard suite of 32 elements using SGS Method ICP40B.

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 meters 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.

Contemplated Exploration

The exploration program including
Cerro del Gallo deposit and regional epithermal mineralized veins will continue
in 2014. More than $2.5 million are budgeted for exploration drilling and
surface mapping and sampling.

Project Development

Cerro del Gallo is an attractive
long-life project that significantly increases Primeros reserves and measured
and indicated resources and will diversify the Companys near-term production
with an anticipated additional 95,000 gold equivalent (silver and copper as
by-products) ounces per year.

In May 2011, the Technical Report
Feasibility Study and Preliminary Assessment, Cerro del Gallo Project,
Guanajuato, Mexico presented the development of the Cerro del Gallo deposit in
two stages. Phase 1 is the heap leach development and Phase 2, the addition of a
carbon-in-leach (CIL) to process the fresh ore, not suitable for heap leaching.
As referenced in the May 2011 Technical Report, the potential phase two ("Phase
II") addition of CIL processing of fresh rock would commence in the fifth year
of heap leach operation. The Phase 1 heap leach study was completed to
feasibility study level and Phase 2 development was completed to a Preliminary
Assessment level. This CDG Technical Report focuses on the feasibility study for
the Stage 1 Heap Leach.

The May 2012 CDG Definitive
Feasibility Study ("DFS") 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 ("Phase II")
addition of carbon-in-leach ("CIL") processing of fresh rock commencing in the
fifth year.

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The development of the Phase 1
consists of cyanide heap leaching of approximately 35Mt of weathered and
partially oxidized ore from open cut 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 a 8 mm fine product;
- Agglomeration and leaching of the stacked ore using a cyanide solution;
- Use of SART (Sulphidization, acidification, recycling and thickening)
  technology 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 2013 Primero initiated a full
review of its Cerro del Gallo  Phase 1 project in order to optimize the overall
outcome of the May 2012 DFS. Main activities realized in 2013 were:

- Land purchased increased from approximately 40% to 60% of the total site
  requirements.
- A new permitting consultant took over the preparation of the environmental
  impact assessment (MIA) and change in land use (ETJ) permits in October.
  Furthermore SRK Consulting was hired in May 2013 to assist with ground water
  monitoring, geochemical analysis of the waste rock as well as providing
  direction in the search for ground water for the process.
- Sedgman S.A. of Santiago Chile completed the Front End Engineering Study in
  August 2013 which was followed by basic engineering focused on a cost
  reduction and process optimization evaluation; detailed site survey and leach
  pad design optimization; primary power supply and routing study as well as a
  process water borefield analysis and pipeline routing
- An initial high level stakeholder mapping exercise was completed in late
  2013. This will be followed by a much more detailed 360 mapping exercise which
  will be conducted once most of the required land purchases are completed.

During 2013 Primero spent
approximately $7.4 million, including exploration and technical drilling, of the
originally allocated $15 million 2013 budget for the Cerro del Gallo
Project.

2014 Development Plans

Work on optimization of Cerro del
Gallo  Phase 1 will continue in 2014 with completion of land acquisition,
process water drilling, permitting and engineering efforts (including mine plan
optimization, process optimization to improve recovery, optimization of initial
and sustaining capital investment and operating costs) in order to advance the
project to a construction decision by Q3 2014.

The Companys 2014 budget for
Cerro del Gallo is $10.4 million, including approximately $850,000 to perform
metallurgical and geochemical (AMD assessment) test work in order to confirm and
address the CDG Technical Report test work summary and recommendations, to
optimize the plant process, and to provide additional data required for
permitting. This test work will be done using approximately 45 tons of new core
drilled in 2013.

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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 2014 and 2015.

Taxes

As discussed above with respect
to the San Dimas Mine, corporate profits in Mexico are taxed only by the Federal
Government. Mexican corporate income tax is calculated based on gross revenue
less deductions for all refining and smelting charges, direct operating costs,
all head office general and administrative costs, and depreciation deductions;
the corporate income tax rate in Mexico is 30%. In addition, a tax deductible
mining royalty of 7.5% is charged on taxable earnings before the deduction of
interest, taxes, depreciation and amortization and precious metals mining
companies pay a further 0.5% on gold and silver revenue. The Company expects
that no cash taxes will be paid by the Company with respect to the Cerro del
Gallo Project until the project commences production and becomes profitable for
corporation tax purposes.

MINERAL RESERVES AND RESOURCES SUMMARY

Primeros total Mineral Resources
and Mineral Reserves at December 31, 2013, is shown in the tables below, and is
qualified by the more detailed disclosure set out in the following sections.

|Primeros Total Mineral
      Reserves, December 31, 2013
|---------------------------------------------------------
|Classification                                           
|P&P                                                      
|P&P                                                      
|P&P                                                      
|Total P&P                                                

44

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Primeros Total Mineral Resources, December 31, 2013

|Classification       | Property    | Tonnes (Million) | Au g/t | Ag g/t | Au koz | Ag koz | Cu % | Cu klbs
|-------------------- | ----------- | ---------------- | ------ | ------ | ------ | ------ | ---- | -------
|Measured & Indicated | San Dimas   | 4,282            | 7.2    | 419    | 997    | 57,713 |      |        
|Measured & Indicated | Black Fox   | 4,942            | 5.2    |        | 823    |        |      |        
|Measured & Indicated | Grey Fox(1) | 4,300            | 3.7    |        | 507    |        |      |        
|Measured & Indicated | Cerro       | 47,878           | 0.6    | 13     | 923    | 20,546 | 0.10 | 103,398
|Total M&I            |             | 61,402           | 1.65   | 47     | 3,250  | 78,259 | 0.10 | 103,398
|Inferred             | San Dimas   | 7,333            | 4.2    | 310    | 998    | 72,647 |      |        
|Inferred             | Black Fox   | 271              | 3.9    |        | 44     |        |      |        
|Inferred             | Grey Fox(1) | 1,500            | 4.7    |        | 229    |        |      |        
|Total Inferred       |             | 9,104            | 4.27   | 310    | 1,271  | 72,647 |      |        

Notes to Mineral Resources Statement:(1) As at June 21, 2013.

SAN DIMAS MINE

J. Morton Shannon, P. Geo. and
Rodney Webster, M.AIG, both of AMC Mining Consultants (Canada) Ltd., are the
Qualified Persons who prepared the San Dimas Mine Mineral Resource estimates and
Gabriel Voicu, P. Geo., Vice President, Geology and Exploration of Primero, is
the Qualified Person who supervised the preparation of the San Dimas Mine
Mineral Reserve estimates in this AIF.

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.

As part of the Mineral Resource
and Mineral Reserve estimation review, AMC assisted Primero in its consideration
of the most appropriate estimation method currently applicable at San Dimas and
completed an independent Mineral Resource estimate for the veins that make up
the current Mineral Resources and Mineral Reserves based on vein wireframes
built by Primero site geologists under AMCs initial guidance. In addition,
Primero provided an access database containing the sample data, and wireframe
outline of the mined areas and of the development. The vein wireframes were
modeled along the vein contacts, and were defined by structural geology, quartz
veining mineral alteration and channel and drillhole samples.

Prior to year-end 2011, Primero
and the previous owners of the San Dimas Mine had estimated all Mineral
Resources and Mineral Reserves by polygonal methods, which were then listed into
a resource database. Many of these entries had not been critically reviewed
for some time and were not easily manipulated or tracked for mining
purposes.

In the first quarter of 2012, the
Company completed a review of the Mineral Reserve and Mineral Resource
estimation methodology used at San Dimas in order to assess whether the use of
other estimation methodologies might allow Primero to improve mine planning and
more accurately predict actual grade and, therefore, production. As a result of
this review, the Company changed its estimation methodology from a polygonal to
a block modeling approach for the main producing veins, resulting in a reduction of the estimated Mineral Reserves and Mineral
Resources and reclassifying a substantial portion of Inferred Mineral Resources
to exploration potential.

45

---

To better assist mine planning,
Primero utilized the block modeling approach for the main producing and newly
discovered veins (18 veins in total at end-2012). These veins, located in the
Central Block and Sinaloa Graben, were removed from the resource database for
block modeling, which at end-2012 results in a total of 236 entries remaining in
the database. These remaining entries, comprised of polygonal estimates and
broad extrapolations, were initially reviewed by Primero and sorted by data
support, and then reviewed by AMC and Primero, jointly, and now make up a
portion of the Inferred Mineral Resources. As of end of 2013 there were 39 veins
modelled into block models.

The block modeling approach,
which Primero and AMC selected in early 2012 for the 18 producing veins, was
carried out using a 2D accumulation method with ordinary kriging for
interpolation, resulting in 18 separate vein models that had a parent block size
of 9 metres by 9 metres by vein thickness. The vein wireframes were modeled
along the vein contacts, and were defined by structural geology, quartz veining,
mineral alteration and channel and drillhole samples. Based on log probability
plots of the composited gold and silver for each of the veins, various levels of
capping of gold and silver grades were used on the data for the Resource
estimation. AMC used a constant bulk density of 2.7 t/m3 for the
estimation of the tonnes for all veins.

The Company retained AMC for its
year-end 2013 Mineral Resource update and completed its year-end 2013 Mineral
Reserve estimation in-house. The Company's Mineral Reserves and associated
Mineral Resources were estimated using a block modelling approach with ordinary
kriging interpolation. The remaining veins outside of Mineral Reserves were
estimated using a polygonal method and included in Inferred Resources. The
Mineral Reserves and associated Mineral Resources were constrained in 39
individual geological models (18 individual geological models in 2012) based on
wireframes of the various veins. These wireframes were modelled along the vein
contacts, and were defined by gold and silver grades, structural geology, quartz
veining and mineral alteration. Block dimensions were based on grade estimation
blocks of 9 metres by 9 metres by vein width. Grade capping was applied for some
veins based on the results of log probability plots of the accumulated gold and
silver grades.

Due to the poor 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 have allowed for Measured Mineral Resources on the
2013 Mineral Resources estimate. For the block-modelled veins, Measured and
Indicated Mineral Resources were estimated using a search ellipsoid of between
15 metres and 30 metres and Inferred Mineral Resources were estimated with a
search ellipsoid of between 30 metres and 45 metres. The Company continues to
utilize an external laboratory for all drill samples.

To convert Mineral Resources to
Mineral Reserves, mining cut-off grades are employed, mining dilution was added
and mining recovery factors applied on an individual vein basis. Only Measured
and Indicated Mineral Resources have been used for Mineral Reserves estimation.
Primero has assumed that the current drill-jumbo and jackleg cut and fill mining
methods would continue to be practised at San Dimas, with respective minimum
mining widths of 3 metres and 1 metre. San Dimas is introducing the use of
longhole mining method rather than cut and fill on an increasing scale, with a
minimum mining width of 1.5 metres. On a general basis, vein widths up to 2.2
metres have been assumed to be mined by jackleg or longhole and those over 2.2
metres by drill-jumbo. 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
longhole mining. For each mining method, 0.2 metres of fill floor dilution has
been assumed. Overall average dilution, planned and unplanned, is estimated at
50%. For the 39 veins upon which the year-end 2013 Mineral Reserve estimate is
based, the respective mined tonnes from jumbo, jackleg and longhole mining are
estimated at 32%, 28% and 40%, respectively. Other than for sill mining, average
recovery throughout each mining block for both cut and fill and longhole 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.

46

---

A mine cut-off grade of 2.69 g/t
gold equivalent (AuEq) was calculated based on total operating cost of
$104.97, silver recovery factor of 94%, gold recovery factor of 97%, silver
price of $20 per troy ounce, gold price of $1,250 per troy ounce and exchange
rate of 13 Pesos per $1.00. This cut-off grade requires that the material in
question carry all mine operating and selling costs.

The average Mineral Reserve
grades of gold and silver are approximately 20% higher than reported mined
grades for 2012.

Reserve tonnes are 14% higher
than Measured and Indicated Resource tonnes, and Reserve grades of gold and
silver are 24% lower than Resource grades, largely due to mining dilution.
Reserve ounces of gold and silver are 13% less than Resource ounces; this is
mainly a reflection of stope design and areas that are not economically viable
under the Reserve cost and price parameters because of grade and/or location.

The 2013 year-end Mineral
Reserves and Mineral Resources estimates for San Dimas mine show that Proven and
Probable Gold Mineral Reserves increased 32% over year-end 2012, to 870,000
ounces, at a 23% higher grade. Measured and Indicated Gold Mineral Resources
increased 28% over year-end 2012 to 997,000 ounces (inclusive of Mineral
Reserves).

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, 2013. 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.

San Dimas Mine Mineral Reserves and Mineral Resources as at
December 31, 2013.

|Classification       | Tonnage
      (million tonnes) | Gold Grade
      (g/t) | Silver
      Grade (g/t) | Contained
      Gold (000 ounces) | Contained
      Silver (000 ounces)
|-------------------- | ------------------------------ | ---------------------- | ------------------------ | --------------------------------- | -----------------------------------
|Mineral Reserves    
|Proven               | 0.924                          | 5.6                    | 345                      | 166                               | 10,256                             
|Probable             | 3.970                          | 5.5                    | 307                      | 704                               | 39,223                             
|Proven & Probable    | 4.893                          | 5.5                    | 315                      | 870                               | 49,479                             
|Mineral Resources   
|Measured             | 0.768                          | 7.4                    | 457                      | 182                               | 11,284                             
|Indicated            | 3.514                          | 7.2                    | 411                      | 814                               | 46,429                             
|Measured & Indicated | 4.282                          | 7.2                    | 419                      | 997                               | 57,713                             
|Inferred             | 7.333                          | 4.2                    | 310                      | 998                               | 72,647                             

|Notes to Mineral Reserve Statement:
|-----------------------------------
|1.                                 
|2.                                 
|3.                                 
|4.                                 

47

---

|Notes to Mineral Resource Statement:
|------------------------------------
|1.                                  
|2.                                  
|3.                                  
|4.                                  

Primero is not aware of any known
environmental, permitting, legal, title, taxation, socioeconomic, marketing,
political or other relevant factors that may materially affect the Mineral
Resources.

BLACK FOX MINE

The 2011 Black Fox Technical
Report included the estimated reserves and resources statement for Black Fox at
October 31, 2010, which was since updated to reflect depletion from production
from the end of October to December 31, 2010 and from December 31, 2010 to
December 31, 2011, December 31, 2011 to December 31, 2012, and December 31, 2012
to December 31, 2013. The year-end 2013 reserves and resources for Black Fox are
shown in the tables below. Paul Daigle, P.Geo of Tetra Tech is the Qualified
Person who updated the Black Fox Mine Mineral Resource estimates in the Black
Fox Technical Report and Dan Sweeney, P.Eng., of Tetra Tech is the Qualified
Person who reviewed the Black Fox Mineral Reserves estimates in the Black Fox
Technical Report.

At December 31, 2013, Black Fox
had approximately 0.661 million ounces of gold contained within 4,469 million
tonnes at an average gold grade of 4.6 gpt in Proven and Probable Reserves.

Estimated Gold Mineral Proven and Probable Reserves, as of
December 31, 2013

Black Fox Mine
    Proven
      Reserves
    Probable
      Reserves
    Proven &
      Probable ReservesTonnes
    Gold Grade
      (g/t)
    Gold (oz)
    Tonnes
    Gold Grade
      (g/t)
    Gold (oz)
    Tonnes
    Gold Grade
      (g/t)
    Gold (oz)Open Pit Underground
      Stockpile
    
    
    
    1,457,000
    3.9
    182,000
    1,457,000
    3.9
    182,0002,305,000
    6.1
    452,900
    2,305,000
    6.1
    452,900707,449
    1.1
    25,900
    
    
    
    707,449
    1.1
    25,900Total
    707,449
    1.1
    25,900
    3,762,000
    5.2
    634,900
    4,469,000
    4.6
    660,800


Estimated Gold Measured and Indicated Mineral Resources,
Including Reserves, as of December 31, 2013

Black Fox Mine
    Measured
      Resource
    Indicated
      Resource
    Measured &
      Indicated Resources, IncludingTonnes
    Gold Grade
      (g/t)
    Gold (oz)
    Tonnes
    Gold Grade
      (g/t)
    Gold (oz)
    Tonnes
    Reserves Gold
      Grade (g/t)
    Gold (oz)Open Pit Underground
      Stockpile
    
    
    
    1,838,500
    4.3
    252,383
    1,838,500
    4.3
    252,3832,396,200
    7.1
    544,259
    2,396,200
    7.1
    544,259707,449
    1.1
    25,900
    
    
    
    707,449
    1.1
    25,900Total
    707,449
    1.1
    25,900
    4,234,673
    5.9
    796,642
    4,942,149
    5.2
    822,542


48

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Estimated Gold Inferred Mineral Resource as of December 31,
2013

Black Fox Mine
    Inferred
      ResourcesTonnes
    Gold Grade (g/t)
    Gold (oz)Open Pit Underground
    105,180 165,808
    4.0 5.7
    13,672 30,500Total
    270,988
    5.1
    44,172


|1. | The average gold grade for Proven and Probable Reserves
      is adjusted for dilution while Measured and Indicated Resources is not.
      Contained metal in estimated reserves remains subject to metallurgical
      recovery losses.                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Black Fox reserves and resources are based on US$1,150/oz
      Au for 88% of production and US$500/oz Au for gold sold through the gold
      stream agreement from the Black Fox Technical Report prepared by Tetra
      Tech dated January 2011. The Black Fox open pit reserves and resources are
      reported at a 0.88 gpt cutoff and the underground reserves and resources
      are reported at a 2.54 gpt cutoff. Estimated Black Fox reserves and
      resources are shown as at December 31, 2013, net of mining depletion from
      the January, 2011 independent Technical Report.

GREY FOX PROJECT

The Independent and Qualified
Persons for the Mineral Resource Estimate, as defined by NI 43-101, are
Pierre-Luc Richard, MSc, PGeo and Carl Pelletier, BSc, PGeo. of InnovExplo Inc.
(InnovExplo), and the effective date of the estimate is June 21, 2013.

On January 4 2013, InnovExplo was
contracted to complete a Mineral Resource Estimate and a Technical Report for
the Grey Fox project (the project or the property) in compliance with
Regulation 43-101 and Form 43-101F1. InnovExplo is an independent mining and
exploration consulting firm based in Val-dOr (Québec).

The 2013 Mineral Resource
Estimate herein was performed by Pierre-Luc Richard, MSc, PGeo, under the
supervision of Carl Pelletier, BSc, PGeo, using all available results. The main
objectives of InnovExplos work were to: 1) update the interpretation; and 2)
publish the results of an updated Mineral Resource Estimate for the Grey Fox
Project. The mineral resources presented herein are not mineral reserves since
they have no demonstrable economic viability. The result of the study is a
single Mineral Resource Estimate for all mineralized zones, with Indicated and
Inferred Resources, for both a Whittle-optimized in-pit volume and a
complementary underground volume. The effective date of this Mineral Resource
Estimate is June 21, 2013.

The Mineral Resource Estimate
detailed in this report was made using 3D block modelling. Krigging and the
inverse distance square interpolation (ID2) methods were used for an area of the
Grey Fox Project with a strike-length of 1.3 kilometres and a width of up to
approximately 1.0 kilometres, down to a vertical depth of 600 metres below
surface. In order to conduct accurate resource modeling of the Grey Fox Project,
InnovExplo, in close collaboration with Brigus geologists, updated a
geological-zone solid model delimiting the geologically defined extent of the
mineralized zones using a 1.3 kilometres strike-length corridor measuring 1.0
kilometre wide and extending down to 600 metres below surface. The
geological-zone model was constructed to outline zones of geological continuity.
Overall, fifteen geological zones have been interpreted along a steep, roughly
north-northwest trend.

Given the density of the
processed data, the search ellipse criteria, and the specific interpolation
parameters, InnovExplo is of the opinion that the current Mineral Resource
Estimate can be classified as Indicated and Inferred Resources. The estimate is
compliant with CIM standards and guidelines for reporting mineral resources and
reserves. Table 14.8 presents the combined resources by category for the overall
Grey Fox project.

49

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Mineral Resource Estimate results for the Grey Fox project

Grey Fox- 2013 Mineral Resource
      EstimateResource Class
    Cut-off
      Grade (g/t
    Potential Material
    Tonnes
    **Capped Au**
      **(g/t)**
    Contained
      Au (oz)Indicated
    >2.84
    Underground
    1 275 000
    
    255 000>0.72
    Open Pit
    3 041 500
    
    252 400Total
      Indicated
    4 316 500
    
    507 400Inferred
    >2.84
    Underground
    1 025 100
    
    184 800>0.72
    Open Pit
    488 900
    
    43 800Total
      Inferred
    1 514 000
    
    228 600


| | 1.  | The quantity and grade of reported Inferred resources in
      this estimation are uncertain in nature and there has been insufficient
      exploration to define these Inferred resources as an Indicated or Measured
      mineral resource and it is uncertain if further exploration will result in
      upgrading them to an Indicated or Measured mineral resource
    category.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.  | These Mineral Resources are not Mineral Reserves as they
      do not have demonstrated economic viability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 3.  | While the results are presented undiluted and in situ,
      the reported mineral resources are considered to have reasonable prospects
      for economic extraction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 4.  | CIM definitions and guidelines were followed for Mineral
      Resources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 5.  | The resource was estimated using Gemcom GEMS 6.5. The
      database used for the estimate contained diamond drill core composites and
      assays. All samples were collected by Brigus personnel. The estimate is
      based on 724 diamond drill holes (246,191m) drilled from 1993 to 2013, of
      which the vast majority (>95%) were drilled between 2008 and 2013. A
      minimum true thickness of 5.0 m was applied, using the grade of the
      adjacent material when assayed or a value of zero when not
  assayed.                                                                                                                                                                                                                                                                                                                                                                           
| | 6.  | Supported by statistical analysis and the high grade
      distribution within the deposit, a top cut varying from 50 g/t and 100 g/t
      was applied to assay grades prior to compositing grades for interpolation
      into model blocks using Ordinary Kriging and Inverse Distance Weighting
      Squared methods, and was based on 1.5 m composites within a 3m long x 3m
      wide x 3m high block model. The ordinary kriged grade model for part of
      the 147 and Contact zones and ID2 for the rest of the deposit was felt to
      best represent the continuity and distribution of the gold grade based on
      the current geological models.                                                                                                                                                                                                                                           
| | 7.  | Two passes for each of the geological zones were used for
      interpolation. Based on geostatistics, the ellipse maximum ranges for
      interpolation were 102m x 38m x 10m for the 147 Main geological zone, 76m
      x 42m x 10m for the Contact Main geological zone and 60m x 30m x 10m for
      remaining zones.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 8.  | Bulk densities were calculated for individual interpreted
      lithological domains based on 638 density measurements. The calculated
      bulk densities vary from 2.76 g/cm3 to 2.96 g/cm3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | 9.  | A Whittle optimized constraining shell was generated to
      constrain the potential open pit material for the 147 and Contact Zone.
      The potential underground material for the 147 and Contact zones is based
      on the remaining resource outside of the pit shells. No open pit
      constraining shell was run for the Grey Fox South zone and all of the
      resource is classified as underground potential material. In-Pit and
      Underground resources were compiled at cut-off grades from 0.40 to 5.00
      g/t Au (for sensitivity characterization). A cut-off grade of 0.72 g/t Au
      was selected as the official in-pit cut-off grade and a cut-off grade of
      2.84 g/t Au was selected as the official underground cut-off grade.
      Cut-off grades must be re-evaluated in light of prevailing market
      conditions (gold price, exchange rate and mining cost).
| | 10. | A gold price of US$1,400/oz and an exchange rate of
      US$1.00=C$1.01 was used in the gold cut-off grade calculations of 2.84 g/t
      for potential underground and 0.72 g/t for potential open-pit Mineral
      Resources. Underground and open- pit mining costs, process costs and
      G&A costs were estimated using experience gained from Brigus Black
      Fox mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 11. | The Indicated category is defined by combining various
      statistical criteria, such as a minimum of three drill holes within the
      search area, a maximum distance of 15m to the closest composite, and a
      maximum average distance of 25m to composites. Finally, a clipping
      boundary was interpreted to either upgrade or downgrade some of the
      resource based on confidence and geological continuity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 12. | The pit shell used for the resource estimate extends
      slightly beyond the property limits in its southern portion of the 147
      Zone. Although the entire resource lies within the property limits, some
      material outside the property limits will need to be removed to access
      some of the resource. Consequently, this portion of the pit may need to be
      re- considered in a future economic study. For the purpose of this study,
      such material outside the property limits was attributed a grade of 0 g/t
      Au.                                                                                                                                                                                                                                                                                                                                                        
| | 13. | Ounce (troy) = metric tons x grade / 31.10348.
      Calculations used metric units (metres, tonnes and
g/t).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

50

---

| | 14. | The number of metric tons was rounded to the nearest
      thousand. Any discrepancies in the totals are due to rounding effects;
      rounding followed the recommendations in Regulation 43-101.                                          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 15. | InnovExplo is not aware of any known environmental,
      permitting, legal, title-related, taxation, socio-political or marketing
      issues or any other relevant issue that could materially affect the
      Mineral Resource Estimate.

CERRO DEL GALLO PROJECT

Timothy Carew, P.Geo. 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., 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.

Table 1-1 First Stage Heap Leach Mineral Resources(Excluding Proven Mineral Reserves and Probable Mineral Reserves),
December 31, 2013

|                                                               | Total 
|-------------------------------------------------------------- | ------
|                                                               | K     
|Category                                                       | Tonnes
|Measured Mineral Resources                                     | 39,863
|Indicated Mineral Resources                                    | 8,015 
|Measured Mineral Resources & Indicated
      Mineral Resources | 47,878

|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
given below in Table 1-2.

51

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Table 1-2 First Stage Heap Leach Proven Mineral Reserve and
Probable Mineral Reserve Estimate, December 31, 2013

|                                                        |        | Total  |      
|------------------------------------------------------- | ------ | ------ | -----
|                                                        | K      | g Au/t | K Ozs
|Category                                                | Tonnes |        | Au   
|Proven
    Mineral Reserve.                             | 28,223 | 0.71   | 643  
|Provable Mineral Reserve                                | 3,956  | 0.54   | 69   
|Proven Mineral Reserve & Probable Mineral
      Reserve | 32,219 | 0.69   | 712  

|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.

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 below risk factors, 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 and
uncertainties 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.

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 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.

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 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 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.

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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.

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 impracticable. 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.

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

Uncertainty in the Estimation of 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 estimates only 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, including many factors beyond
Primeros control. 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 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 Promissory Note held by Goldcorps Luxembourg subsidiary
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 and Probable 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.

Need for Additional Mineral Reserves

Since all mines have limited
lives based on Probable 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.

APA Ruling

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

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 delaying 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 favourable
to Primero. 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 that Primero incurs in its operations. Revenues from sales of
gold and silver are in United States dollars, whereas the Companys expenses
associated with gold and silver production are incurred principally in United
States dollars, Canadian dollars and Mexican pesos. In the recent past, the Mexican peso has
experienced high volatility which has affected the results of operations of the
San Dimas operations. The appreciation of non-United States dollar currencies
against the United States dollar can increase the cost of gold and silver
production and capital expenditures in United States dollar terms, with the
result that the Companys profitability would decrease.

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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 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 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.

While Primero cannot intervene in
these proceedings, in the event that a final decision is rendered in favour of
the Ejido, Primero may seek to annul the decision or commence an action as an
affected third party on the basis that it is the legitimate owner and is in
possession of the property. If Primero is not successful in its challenge, 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.

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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
operates in some 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.

Environmental Risks and 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.

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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. See Risk Factors  San
Dimas Tailings Management Risks.

The Company is presently involved
in an environmental certification process at the San Dimas Mine and at Cerro del
Gallo. As part of this process, the Company may be required to invest in new
facilities, systems, infrastructure or buildings or undertake compensatory
measures such as reforestation, dam dredging, soil cleansing, and flora and
wildlife preservation measures.

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 clean
up 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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The potential exposure to
environmental risks may be significant and could have a material adverse effect
on the Company. Primero has $30 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.

San Dimas Tailings Management Risks

On January 3, 2012, tailings
containing 5 ppm cyanide were spilled into the Piaxtla River, impacting a total
area of 2.5 kilometres. See Mining Activities  San Dimas Mine  Environmental
Matters. 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.

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 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 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.

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Labour and Employment Matters

The Company believes that its
current relations with employees and the unions are good. 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; hostage taking; 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.

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, 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 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, 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.

As Mexico is a developing country
and obtaining financing or finding or hiring qualified people or obtaining all
necessary services for the Companys operations in Mexico may be difficult.
Mexicos status as a developing country may make it more difficult for the
Company to attract investors or obtain any required financing for its mining
projects. The Company also hires some of its employees or consultants in Mexico to assist it in conducting its operations
in accordance with Mexican laws and purchases certain supplies and retains the
services of various companies in Mexico to meet its business plans. It may be
difficult to find or hire qualified people in the mining industry who are
situated in Mexico 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.

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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

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. As a result of this competition, Primero may be unable to maintain
or acquire attractive mining properties on terms it considers acceptable or at
all. Consequently, Primeros revenues, operations and financial condition could
be materially adversely affected.

Risks Inherent in Acquisitions

The Company is actively pursuing
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 of the Company 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 of the Company. 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.

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There may be no right for the
Company shareholders to evaluate the merits or risks of any future acquisition
undertaken by the Company, except as required by applicable laws and
regulations.

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

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 even further 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.

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 in a cost effective manner assembly
all required land and other usage

61

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rights; 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.

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 upon its financial performance and results of
operations.

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.

Conflicts of Interest

The directors and officers of the
Company are directors and officers of other companies, some of which are in the
same business as the Company. In particular, Mr. Wade Nesmith and Mr. Eduardo
Luna are each directors of Silver Wheaton, with which the Company has entered
into the Amended and Restated Silver Purchase Agreement, and Mr. Timo
Jauristoand Mr. Rohan Hazelton are each officers of Goldcorp, from which
the Company acquired the San Dimas Mine. The directors and officers of the
Company are required by law to act in the best interests of the Company. They
have the same obligations to the other companies in respect of which they act as
directors and officers. Discharge by the directors and officers of their
obligations to the Company may result in a breach of their obligations to the
other companies and, in certain circumstances, this could expose the
Company to liability to those companies. Similarly, discharge by the directors
and officers of their obligations to the other companies could result in a
breach of their obligation to act in the best interests of the Company. Such
conflicting legal obligations may expose the Company to liability to others and
impair its ability to achieve its business objectives.

62

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Indebtedness

As at December 31, 2013,
Primeros only indebtedness was $27 million owing to a wholly-owned Luxembourg
subsidiary of Goldcorp under the Promissory Note. With the acquisition of
Brigus, the Company assumed Brigus debt comprising of $50 million 6.5%
convertible senior unsecured debentures, CDN$24 million senior secured term
notes and CDN$17 million of capital leases. The Company is required to make
change of control offers for Brigus unsecured debentures and senior secured
term notes at 100% and 105%, respectively, of their outstanding principal plus
accrued interest. Assuming the debenture holders and note holders accept the
offers (which is highly likely), the Company will be required to repay the
debentures and notes, plus accrued interest by May 4, 2014 and April 4, 2014,
respectively.

The Company is in the final
stages of arranging a $75 million revolving line of credit, which it expects to
close in April 2014.

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.

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
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.

Current Global Financial Condition

Market events and conditions,
including the disruptions in the international credit markets and other
financial systems, the deterioration of global economic conditions in 2008 and
2009 and, more recently, in Europe, along with political instability in the
Middle East and political inertia in the United States, have caused significant
volatility to commodity prices. These conditions have also caused a loss of
confidence in the broader United States, European and global credit and
financial markets and resulting in the collapse of and government intervention
in, major banks, financial institutions and insurers and creating a climate of
greater volatility, less liquidity, widening credit spreads, less price
transparency, increased credit losses and tighter credit conditions.
Notwithstanding various actions by governments, concerns about the general
condition of the capital markets, financial instruments, banks, investment
banks, insurers and other financial institutions caused the broader credit
markets to further deteriorate and stock markets to decline substantially. These
events are illustrative of the effect that events beyond the Companys control
may have on 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 affect 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; and (iv) the Companys other
banking counterparties. 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 favourable to the Company.
Furthermore, repercussions from the 2008-2009 economic crisis continue to be
felt, as reflected in increased levels of volatility and market turmoil. As a
result of this uncertainty, the Companys planned growth could either be
adversely or positively impacted and the trading price of the Companys
securities could either be adversely or positively affected.

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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 reliance on an exemption for emerging
growth companies under the United States Jumpstart Our Business Startups Act,
Primeros auditor has not delivered an attestation report on managements
assessment of the effectiveness of Primeros internal control over financial
reporting as at December 31, 2013.

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 may 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.

DIVIDENDS

The Company has paid no dividends
since its incorporation and currently has no plans to do so in the foreseeable
future.

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CAPITAL STRUCTURE

Primeros authorized share
capital consists of an unlimited number of Common Shares without par value and
an unlimited number of preferred shares without par value. As of December 31,
2013, there were 115,726,035 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, 158,159,153 Common Shares of the Company 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 ratably 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.

Options and Warrants

As of the date of this AIF, the
Company also had outstanding obligations to issue up to 33,506,421 Common
Shares, as follows:

- stock options to purchase 7,213,822 Common Shares at a price ranging from
  $2.60 to $6.74 expiring between July 9, 2014 and November 12, 2017, all of
  which are governed by the Companys amended and restated 10% rolling stock
  option plan, which was approved by shareholders on June 28, 2010 and became
  effective on August 19, 2010, amended and restated May 8, 2013;
- stock options issued to former stock option holders of Cerro to purchase an
  aggregate of 672,750 Common Shares at a price ranging from $5.22 to $8.70
  expiring between September 10, 2013 and November 3, 2015, all which are
  governed by the terms of the Cerro stock option plan as assumed by Primero
  following the acquisition.
- stock options issued to former stock option holders of Brigus to purchase
  2,039,743 Common Shares at a price ranging from $3.94 to $21.71 expiring
  between May 29, 2014 and May 29, 2020, all of which are governed by the terms
  of the Brigus stock option plan as assumed by the Company following the
  acquisition.

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- warrants to purchase an aggregate of 20,800,000 Common Shares at a price of
  $8.00, expiring on July 20, 2015.
- warrants issued to former warrant holders of Brigus to purchase an
  aggregate of 2,780,106 Common Shares at a price ranging from $12.51 to $12.53,
  expiring on November 19, 2014.

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.
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. As of
the date of this AIF, the Company had outstanding 334,414 Director PSUs, vesting
between December 1, 2014 and December 1, 2016 and expiring between December 31,
2014 and December 31, 2016.

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 3,102,038 Employee PSUs, vesting between
May 10, 2014 and February 18, 2017 and expiring between December 31, 2014 and
December 31, 2017.

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    | 
|2013     |  |        |  |  |            |  |  |           | 
|January  |  | 6.80   |  |  | 6.04       |  |  | 6,067,640 | 
|February |  | 6.56   |  |  | 5.50       |  |  | 4,986,399 | 
|March    |  | 6.89   |  |  | 5.30       |  |  | 5,892,037 | 
|April    |  | 6.89   |  |  | 5.01       |  |  | 4,449,948 | 
|May      |  | 6.00   |  |  | 5.09       |  |  | 3,737,925 | 

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|              |  | High   |  |  |            |  |  |            | 
|------------- |  | ------ |  |  | ---------- |  |  | ---------- | 
|Period        |  | (CDN$) |  |  | Low (CDN$) |  |  | Volume     | 
|June          |  | 5.66   |  |  | 4.26       |  |  | 3,920,231  | 
|July          |  | 5.25   |  |  | 4.37       |  |  | 3,388,450  | 
|August        |  | 6.37   |  |  | 4.45       |  |  | 7,467,915  | 
|September     |  | 6.09   |  |  | 5.13       |  |  | 4,917,101  | 
|October       |  | 6.17   |  |  | 5.18       |  |  | 7,078,588  | 
|November      |  | 6.09   |  |  | 5.25       |  |  | 7,973,792  | 
|December      |  | 5.45   |  |  | 4.54       |  |  | 10,641,790 | 
|2014          |  |        |  |  |            |  |  |            | 
|January       |  | 6.39   |  |  | 4.80       |  |  | 11,003,955 | 
|February      |  | 7.61   |  |  | 6.09       |  |  | 14,553,332 | 
|March 1 to 28 |  | 9.04   |  |  | 6.93       |  |  | 38,126,918 | 

Common Share Warrants

The Companys common share
warrants are traded on the TSX under the symbol P.WT. The following table
shows the high and low trading prices and monthly trading volume of the common
share warrants of Primero on the TSX for the periods listed:

|Period        |  | High   |  |  | Low (CDN$) |  |  | Volume    | 
|------------- |  | ------ |  |  | ---------- |  |  | --------- | 
|              |  | (CDN$) |  |  |            |  |  |           | 
|2013          |  |        |  |  |            |  |  |           | 
|January       |  | 1.49   |  |  | 1.18       |  |  | 1,345,201 | 
|February      |  | 1.48   |  |  | 0.98       |  |  | 645,563   | 
|March         |  | 1.35   |  |  | 0.91       |  |  | 881,845   | 
|April         |  | 1.26   |  |  | 0.65       |  |  | 466,810   | 
|May           |  | 1.04   |  |  | 0.68       |  |  | 269,977   | 
|June          |  | 0.92   |  |  | 0.45       |  |  | 410,730   | 
|July          |  | 0.70   |  |  | 0.53       |  |  | 264,141   | 
|August        |  | 1.10   |  |  | 0.50       |  |  | 1,146,969 | 
|September     |  | 1.08   |  |  | 0.65       |  |  | 725,810   | 
|October       |  | 1.00   |  |  | 0.70       |  |  | 123,225   | 
|November      |  | 0.93   |  |  | 0.62       |  |  | 173,056   | 
|December      |  | 0.72   |  |  | 0.50       |  |  | 181,320   | 
|2014          |  |        |  |  |            |  |  |           | 
|January       |  | 0.99   |  |  | 0.64       |  |  | 295,210   | 
|February      |  | 1.42   |  |  | 0.79       |  |  | 888,469   | 
|March 1 to 28 |  | 1.85   |  |  | 1.04       |  |  | 2,013,494 | 

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Prior Sales

During the financial year ended
December 31, 2013, Primero issued or granted the following Common Shares or
securities convertible into Common Shares:

|                       | Number and Type                 | Issue or Exercise 
|---------------------- | ------------------------------- | ------------------
|Date of
      Issuance | of Securities Issued            | Price Per Security
|                       |                                 | CDN$              
|March 1, 2013          | 100,000 Common
      Shares (1) | 2.70              
|March 22, 2013         | 130,000 Common Shares (1)       | 5.26              
|March 28, 2013         | 168,667 Directors PSUs         | 6.67 (2)          
|May 10, 2013           | 249,582 Employee PSUs           | 5.85 (3)          
|May 21, 2013           | 17,983,956 Common Shares (4)    | 5.36              
|June 5, 2013           | 15,000 Common Shares (1)        | 2.70              
|June 26, 2013          | 61,590 Employee PSUs            | 4.46 (3)          
|June 26, 2013          | 16,816 Directors PSUs          | 4.46 (2)          
|July 23, 2013          | 10,000 Common Shares (1)        | 4.20              
|August 12, 2013        | 89,845 Employee PSUs            | 5.00 (3)          
|August 12, 2013        | 60,000 Common Shares (1)        | 4.20              
|August 13, 2013        | 20,000 Common Shares (1)        | 4.20              
|August 19, 2013        | 45,000 Common Shares (1)        | 4.20              
|August 28, 2013        | 80,000 Common Shares (1)        | 5.26              
|August 29, 2013        | 35,000 Common Shares (1)        | 5.26              
|November 8, 2013       | 17,559 Employee PSUs            | 5.98 (3)          
|December 16, 2013      | 41,457 Common Shares
      (5)  | 5.50              

|(1) | Reflects the exercise price of stock options.                                                          
|--- | -------------------------------------------------------------------------------------------------------
|(2) | Reflects the conversion rate used for the Directors PSUs
      grant.                                 
|(3) | Reflects the conversion rate used for the Employee PSUs
      grant.                                   
|(4) | Issued as consideration for the acquisition of all issued
      and outstanding common shares of Cerro.
|(5) | Issued as consideration for awards issued under the
      Directors PSU plan.                         

SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON
TRANSFER

Contractual Restrictions on Transfer

To date, there are no securities subject to contractual
restrictions on transfer.

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. Mr. Timo Jauristo and Mr. Rohan Hazelton, the Executive Vice President,
Corporate Development and Vice President, Strategy, respectively, of Goldcorp were nominated as directors by Goldcorp, pursuant to
DMSLs former rights under the Participation Agreement.

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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  
|                                                    |                                                               |                                                                              |                 
|RENAUD ADAMS Ontario, Canada                        | Chief Operating Officer                                       | Chief Operating Officer of
      the Company                                 | N/A             
|DAVID BLAIKLOCK(1)British Columbia, Canada          | Chief Financial Officer                                       | Chief Financial Officer of the Company                                       | N/A             
|TAMARA BROWN(1)Ontario,
      Canada                | Vice-President, Investor
      Relations                      | Vice-President, Investor
      Relations of the Company                      | N/A             
|JOSEPH CONWAY(1)(2)Ontario, Canada                  | President and Chief Executive Officer and
      Director      | President and Chief Executive Officer of
      the Company                   | June 28, 2010   
|H. MAURA LENDON(1)Ontario,
      Canada             | Vice-President, General
      Counsel and Corporate Secretary | Vice-President, General
      Counsel and Corporate Secretary of the Company | N/A             
|JAMES MALLORY, Vancouver, Canada                    | Vice-President, Corporate Responsibility                      | Vice-President, Corporate Responsibility                                     | N/A             
|DAVID SANDISON Ontario, Canada                      | Vice-President, Corporate
      Development                   | Vice-President, Corporate
      Development of the Company                   | N/A             
|LOUIS TONER Quebec, Canada                          | Vice-President, Project Development and
      Construction    | Vice-President, Project Development and
      Construction                   | N/A             
|GABRIEL VOICU Ontario, Canada                       | Vice-President, Geology and
      Exploration                 | Vice President, Geology and
      Exploration of the Company                 | N/A             
|DAVID DEMERS(3)(4)(5)British Columbia,
      Canada | Director                                                      | Chief Executive Officer of Westport
      Innovations Inc.                   | October 29, 2008
|GRANT EDEY(4)(5)Ontario,
      Canada               | Director                                                      | President and Chief
      Executive Officer of Khan Resources Inc.           | June 28, 2010   
|ROHAN HAZELTON(2)(5)British Columbia,
      Canada  | Director                                                      | Vice President, Strategy of Goldcorp                                         | August 25, 2010 
|TIMO JAURISTO(3)British
      Columbia, Canada      | Director                                                      | Executive Vice President,
      Corporate Development of Goldcorp            | August 25, 2010 
|EDUARDO LUNA(2)Mexico State, Mexico                 | Director                                                      | Director of the Company                                                      | October 29, 2008

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|                                                 | Position(s) with the  |                                                                       |                 
|------------------------------------------------ | --------------------- | --------------------------------------------------------------------- | ----------------
|Name and
      Residence                         | Company               | Principal Occupation                                                  | Director Since  
|                                                 |                       |                                                                       |                 
|BRAD MARCHANT(2)British
      Columbia, Canada   | Director              | President and CEO of
      Enterra Feed Corporation                   | June 26, 2013   
|WADE NESMITH British Columbia, Canada            | Chairman and Director | Chairman of the Company                                               | October 29, 2008
|ROBERT QUARTERMAIN(3)(4)British Columbia, Canada | Director              | President and Chief
      Executive Officer of Pretium Resources Inc. | June 28, 2010   
|MICHAEL RILEY(5)British Columbia, Canada         | Director              | Director of the Company                                               | April 22, 2010  

|(1) | Member of the Disclosure Committee. Mr. Blaiklock is the
      Chair of the Disclosure Committee.                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Member of the Corporate Responsibility Committee.
      Effective June 26, 2013, Mr. Hazelton was appointed Chair of the Corporate
      Responsibility Committee, Mr. Marchant was appointed as a member, and Mr.
      Conway was not re-appointed as a member of the Corporate Responsibility
      Committee.
|(3) | Member of the Human Resources Committee. Mr. Demers is
      the Chair of the Human Resources Committee.                                                                                                                                                                                                         
|(4) | Member of the Governance and Nominating Committee. Mr.
      Edey is the Chair of the Governance and Nominating Committee.                                                                                                                                                                                       
|(5) | Member of the Audit Committee. Mr. Riley is the Chair of
      the Audit Committee.                                                                                                                                                                                                                              

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 1,295,190 Common
Shares, being 0.82% 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.

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.

Renaud Adams  Chief Operating Officer

Mr. Adams has been Chief
Operating Officer of the Company since November 1, 2011. Mr. Adams has nearly 20
years of mining industry experience, and currently sits on the Board of
Directors of Klondex Mines Ltd. From February 2010 to October 2011, Mr. Adams
was Senior Vice-President, Operations Americas of IAMGOLD Corporation
(IAMGOLD), during which time he was responsible for the operations and organic
growth of IAMGOLD within the Americas. From May 2007 to February 2010, he was
Vice President and General Manager of the Rosebel Gold Mine in Suriname for
IAMGOLD, which saw him responsible for administration, operations and near-mine
exploration, as well as social and legal aspects of the mines business.
Previously, from January 2005 to May 2007, he was Vice President and General
Manager of the El Mochito Mine in Honduras for Breakwater Resources Ltd. and,
from August 2000 to December 2004, he was Mine Manager and Mill Superintendent
of El Toqui Mine in Southern Chile. Mr. Adams holds actuarial and engineering
degrees from Laval University.

David Blaiklock  Chief Financial Officer

Mr. Blaiklock has been Chief
Financial Officer of the Company since July 6, 2009. Mr. Blaiklock is a
Chartered Accountant with over 20 years public company experience in a senior
financial role. From March 1997 to December 2008 he was Vice President and Corporate
Controller of Intrawest Corporation, a large multinational owner, developer and
operator of mountain destination resorts. During his years with Intrawest, Mr.
Blaiklock was involved with all aspects of running the financial operations of a
growth-oriented and acquisition-focused public company. Previously, he was
Corporate Controller of a number of public and private companies, primarily
involved in real estate development. He graduated with a B.A. (Honours) degree
from the University of Sheffield and received his designation as a Chartered
Accountant (England & Wales) in 1979 and British Columbia in 1981 while with
the international accounting firm of Deloitte & Touche.

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Tamara Brown  Vice President, Investor Relations

Ms. Brown has been Vice
President, Investor Relations of the Company since June 1, 2010. 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.

Joseph Conway  President, Chief Executive Officer and
Director

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 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 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.

H. Maura Lendon  Vice President, Chief General Counsel
and Corporate Secretary

Ms. Lendon has been Vice
President, 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.

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David Sandison  Vice President, Corporate Development

Mr. Sandison has been
Vice-President, Corporate Development of the Company since October 18, 2010.
From January 2010 to September 2010, he was Vice-President, Corporate
Development of Clarity Minerals, a private company with investments in Canadian
and African gold mining and exploration. From February 2009 to December 2009, he
was a mining consultant. From June 1984 to January 2009, he worked in senior
management capacities with the Noranda Group of Companies (subsequently
Falconbridge and Xstrata plc). From September 2006 to January 2009, he was
Director Corporate Development of Xstrata Zinc Canada. From February 2005
through September 2006, he was Vice-President of Novicourt Inc., a public
Noranda subsidiary. From July 2001 through August 2006, he was Director
Corporate Development for Noranda Inc. Before this he held senior management
positions with Noranda subsidiaries in Chile and the United States. Mr. Sandison
has a Bachelor of Applied Science (Geological Engineering  1982) degree from
The University of Toronto and a Master of Business Administration (1984) degree
from Queens University.

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 $10 million projects to $1 billion large-scale 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 and is
a member of the Ordre des ingénieurs du Québec (OIQ) and the Association of
Professional Engineers and Geoscientists of New Brunswick.

Gabriel Voicu  Vice President, Geology and Exploration

Mr. Voicu was appointed Vice
President, Geology and Exploration in November 2012. Mr. Voicu brings 25 years
of mineral deposit exploration and mining experience, including holding senior
technical and exploration positions with a number of intermediate gold
producers. Much of his experience was gained in the Americas in such countries
as Suriname, Guyana and Canada and he also worked for 9 years in Romania.
Between 2009 and 2012, he was the Technical Services Manager at the IAMGOLDs
Rosebel Gold Mine in Suriname. Previously, he worked as a Scientific Researcher
with CONSOREM, a Quebec-based research group in mineral exploration, and at
Cambior Inc.s Omai Gold Mine in Guyana. He was also consultant for several
junior exploration companies. Mr. Voicu holds a PhD in Mineral Resources from
the Université du Québec à Montréal, and a BSc (Geological Engineering) from the
University of Bucharest, Romania. Mr. Voicu is also an Adjunct Professor of
Economic Geology with the Université du Québec à Montréal.

David Demers  Director

Mr. Demers has been a director of
the Company since October 28, 2008. He was one of the founding members behind
Westport Innovations, a University of British Columbia spinoff company that has
grown into a world leader as the transportation industry shifts from oil-based
fuels like gasoline and diesel fuel to natural gas. Mr. Demers has been Chief
Executive Officer and a Director of Westport since it was formed. Westport was
listed on the TSX in 1999 and on NASDAQ in 2008. Mr. Demers has worked as a
Director of a number of technology startups, including EnWave (TSX:ENW) as it
was spun out of the University of British Columbia until it completed its IPO,
and was Chair of BrightSide when it was sold to Dolby. He also served as a
Director of Clean Energy Fuels 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. He started his career as a midnight
shift computer systems operator at IBMs state of the art (at the time) System
360/65 data centre in Calgary and joined IBM Canada in 1979 as a Systems
Engineer. While at IBM he worked with the first time sharing and email systems,
with the first relational database products, the IBM PC, laser printing
technology and the first voice/data networking systems.

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Grant Edey  Director

Mr. Edey has been a director of
the Company since June 28, 2010, and 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 Masters degree in Business Administration from the Ivey School of
Business, University of Western Ontario and a Bachelor of Science (Mining
Engineering) degree from Queens University.

Rohan Hazelton  Director

Mr. Hazelton has been a director
of the Company since August 25, 2010. Mr. Hazelton is a Chartered Accountant
with over 15 years of finance experience, ten of those years at senior positions
within the mining industry. Mr. Hazelton has been the Vice President, Strategy
at Goldcorp since July 2012. From March 2006 to July 2012, he was the Vice
President, Finance at Goldcorp, where he is responsible for, amongst other
duties, Goldcorps sales programs. He was formerly Corporate Controller for
Goldcorp and, before Goldcorps merger with Wheaton River, he was a key member
of Wheatons management team. Mr. Hazelton was a director of Gryphon Gold Corp.
from July 2005 to December 2008, and he was the director of Terrane Metals
Corporation from August 2008 to October 2010. Mr. Hazelton worked for Deloitte
& Touche LLP and Arthur Andersen LLP from September 1999 to November 2002 as
a senior auditor. From October 1996 to January 1998, he was a commercial loans
officer for Dialog Bank in Moscow, Russia. Mr. Hazelton has a B.A. in Math and
Economics from Harvard University.

Timo Jauristo  Director

Mr. Jauristo has been a director
of the Company since August 25, 2010. Mr. Jauristo is a geologist with over 30
years of international experience in the mining industry in gold, base metals
and uranium. Mr. Jauristo is now the Executive Vice President of Corporate
Development for Goldcorp, and joined Goldcorp in June 2009. Mr. Jauristo was
with Placer Dome Inc. from January 1990 to June 2005, as General Manager of
Corporate Development from June 2000 to June 2005. Mr. Jauristo was the Chief
Executive Officer of Zincore Metals Inc. (Zincore) from October 2006 to May
2009. He was the interim Chief Executive Officer of Southwestern Resources Inc.
(Southwestern Resources) from June 2005 to May 2009. Both Zincore and
Southwestern Resources are junior mining companies with exploration and
development assets mostly in Peru. With Placer Dome, he was involved in numerous
merger and acquisition transactions in many of the major gold producing regions
of the world. Mr. Jauristo was also part of the team that discovered the Osborne
copper-gold deposit in Queensland, Australia.

Eduardo Luna  Director

Mr. Luna has been a director of
the Company since October 29, 2008 and was Executive Vice President and
President (Mexico) of the Company from June 1, 2010 to November 30, 2011. He was
Co-Chair of the Company from November 2008 until June 1, 2010, and President and
Chief Operating Officer of the Company from September 28, 2009 until June 1,
2010. From July 2008 until December 2009, he was a director of 0777551 B.C.
Ltd., a private company that was a predecessor to the Company. Mr. Luna was
Chairman of Silver Wheaton Corp. from October 2004 to April 2009 and its Chief
Executive Officer from October 2004 to April 2006; Executive Vice President of
Wheaton River from June 2002 to April 2005, Executive Vice President of Goldcorp
from March 2005 to September 2007, and President of Luismin, S.A. de C.V. from
1991 until 2007. He is a director of Rochester Resources Ltd. He holds a degree
in Advanced Management from Harvard University, a Master of Business
Administration degree from Instituto Tecnólogico de Estudios Superiores de
Monterrey and a Bachelor of Science degree in Mining Engineering from
Universidad de Guanajuato. He held various executive positions with Minera
Autlan for seven years and with Industrias Penoles for five years. He was on two
occasions President of the Mexican Mining Chamber and he was also a former
President of the Silver Institute. He serves as Chairman of the Advisory Board
of the Faculty of Mines at the University of Guanajuato and of the Mineral
Resources Council in Mexico.

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Brad Marchant  Director

Mr. Marchant was appointed
director in 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.

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 is a founding director and remains a director of
Silver Wheaton Corp. (TSX, NYSE).

Robert Quartermain  Director

Dr. Quartermain, D.Sc., has been
a director of the Company since June 28, 2010. He has been the President and
Chief Executive Officer 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. Dr. Quartermain worked for
the Geological Survey of Canada and in private industry on mapping and
exploration programs from 1976 until 1981. He also worked for Teck Corp. from
1981 to 1984 before becoming President of Silver Standard Resources Inc. in
1985. 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.

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Michael Riley  Director

Michael Riley was appointed
director in 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). Mr. Riley is also a director and chair of the audit committee for the
British Columbia Lottery Corporation. He has previously been a director for
several organizations, including 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 has
been a Chartered Accountant (recently changed to Chartered Professional
Accountant) since 1978 and is a member of both CPA Bodies in British Columbia
and Quebec. He 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.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Cease Trade Order

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

Except as set out below, 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
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (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.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In December 2003, Wade Nesmith
was appointed to the board of Oxford Automotive Inc. (Oxford), a private
company based in Michigan. In December 2004, with the support of its secured
creditors, Oxford filed a plan of bankruptcy for certain of its North American
subsidiaries under U.S. Chapter 11 bankruptcy legislation. It emerged from
bankruptcy protection in March, 2005. Mr. Nesmith is the Chairman and a director
of Primero.

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.
See Risk Factors  Conflicts of Interest.

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.

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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.

Four 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. Three of the proceedings also name
the Tayoltita Property Public Registry as co-defendant.

While Primero cannot intervene in
these proceedings, in the event that a final decision is rendered in favour of
the Ejido, Primero may seek to annul the decision or commence an action as an
affected third party on the basis that it is the legitimate owner and is in
possession of the property. If Primero is not successful in its challenge, 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 Vancouver, British Columbia. The transfer agent and
registrar for the Common Shares in the United States is Computershare Trust
Company, Inc. at its principal office in Golden, Colorado.

MATERIAL CONTRACTS

The material contracts entered
into by the Company within the financial year ended December 31, 2013 or before
such time that is still in effect, other than in the ordinary course of
business, are the following:

| | (a) | Arrangement agreement between the Company, Brigus and
      8724385 Canada Limited, dated December 16, 2013. See General Development
      of the Business  Three Year History  Acquisition of Black Fox
      Complex;                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (b) | Supplemental Warrant Indentures, dated March 5, 2014, and
      Supplemental Convertible Debenture Indenture, dated March 5, 2014, between
      the Company, Brigus, Fortune Bay, and Computershare Trust Company of
      Canada.                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (c) | Purchase agreement between Brigus and Sandstorm dated
      November 9, 2010;                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (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 General Development of the
      Business  Three Year History  Acquisition of San Dimas Mine and Mining
      Activities  San Dimas Mine  Amended and Restated Silver Purchase
      Agreement;

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| | (e) | Promissory note issued by Primero Mexico to DMSL on
      August 6, 2010, as assigned to a wholly-owned Luxembourg subsidiary of
      Goldcorp on August 6, 2010, and amended on July 12, 2011. See General
      Development of the Business  Three Year History  Acquisition of San
      Dimas Mine;                                                        
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                     
| | (f) | Participation agreement between DMSL and the Company,
      made as of August 6, 2010. The Participation agreement ceases to have
      effect on March 26, 2014 upon the sale of Goldcorps interest in Primeros
      shares. See General Development of the Business  Three Year History 
      Acquisition of San Dimas Mine, and Directors and Officers;
| |     |                                                                                                                                                                                                                                                                                                                                                                     
| | (g) | Deed of indemnity among Silver Trading, the Company and
      Goldcorp, made as of August 6, 2010. See Mining Activities  San Dimas
      Mine  Agreements in Support of the Silver Purchase Agreement;
  and                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                     
| | (h) | Common share purchase warrant indenture, dated July 20,
      2010, and supplemental warrant indenture, dated July 28, 2010, between the
      Company and Computershare Trust Company of Canada. See General
      Development of the Business  Three Year History  Acquisition of San
      Dimas Mine.                                                       

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:

| |  | Tetra Tech WEI Inc., who authored the Black Fox Technical
      Report.                                                                                                                                                                                                             
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                     
| |  | Mr. Paul Daigle, P.Geo, of Tetra Tech WEI Inc., who
      prepared the Black Fox Mineral Resources estimates.                                                                                                                                                                       
| |  |                                                                                                                                                                                                                                                                                     
| |  | Mr. Dan Sweeney, P.Eng, of Tetra Tech WEI Inc., who
      reviewed the Black Fox Mineral Reserves estimates.                                                                                                                                                                        
| |  |                                                                                                                                                                                                                                                                                     
| |  | Pierre-Luc Richard, MSc, P. Geo, Bruno Turcotte, MSc, P.
      Geo, and Carl Pelletier, BSc, P. Geo, all of InnovExplo Inc. who authored
      the Grey Fox Technical Report.                                                                                                       
| |  |                                                                                                                                                                                                                                                                                     
| |  | J. Morton Shannon, P. Geo., Rodney Webster, M.AIG,
      Herbert A. Smith, P.Eng and Alan Riles, M. AIG, all of AMC Mining
      Consultants (Canada) Ltd. who authored the Technical Report.                                                                                       
| |  |                                                                                                                                                                                                                                                                                     
| |  | Mr. Timothy Carew, P. Geo of Reserva International LLC,
      Mr. Thomas Dyer, P.E. of Mine Development Associates, Mr. Peter Hayward,
      F.AusIMM of Sedgman Ltd., and Mr. John Skeet, F. AudIMM, Chief Operating
      Officer of Cerro, who authored the CDG Technical Report.
| |  |                                                                                                                                                                                                                                                                                     
| |  | Mr. Howard Bird, Senior Vice President, Exploration for
      Brigus.                                                                                                                                                                                                               
| |  |                                                                                                                                                                                                                                                                                     
| |  | Mr. Gabriel Voicu, P.Geo, 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.

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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 Mr. Voicu, who is the
Vice President, Geology and Exploration of the Company.

The Companys auditors, Deloitte
LLP, are independent within the meaning of the Rules of Professional Conduct of
the Institute of Chartered Accountants of British Columbia.

ADDITIONAL INFORMATION

Additional information relating to the Company may be found on
SEDAR at www.sedar.com.

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 management information circular for Primeros annual
  general meeting of shareholdersto be held on May 8, 2014, 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, 2013, which
may be found on SEDAR at www.sedar.com.

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 is attached to this AIF as
Schedule A.

Composition of Audit Committee

Michael Riley (Chair), Grant
Edey, David Demers and Rohan Hazelton are the members of Primeros Audit
Committee. Each of Messrs. Riley, Edey, Demers and Hazelton are independent and
financially literate within the meaning of National Instrument 52-110 Audit
Committees.

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;

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- 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.

External Auditor Service Fees

For the financial years ended
December 31, 2013 and 2012, the Company paid the external auditor, Deloitte LLP,
CDN$443,635 and CDN$416,914, respectively, as detailed below:

|                         |   | Year Ended December 31 | 
|------------------------ | - | ---------------------- | 
|                         |   |                        | 
|Nature of
      Services |   | **2013(1)**            | 
|Audit Fees(2)            |   | 330,500                | 
|Audit-Related Fees(3)    |   | 63,200                 | 
|Tax Fees(4)              |   | 935                    | 
|All Other Fees(5)        |   | 49,000                 | 
|Total                    | $ | 443,635                | 

| | (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 audit of the Companys 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.These audit-related services
      include review of opinions relating to requests for rulings or technical
      advice from tax and regulatory authorities, regulatory fees billed by the
      external auditor to the Company, accounting consultations on proposed
      transactions, and services provided on the completion of the Cerro
      acquisition.
| | (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.
      These professional services included tax compliance assistance in 2013,
      and preparation of Canadian federal and provincial income tax returns in
      2012.                                                                                                                                                                                                                                                                                                                         
| | (5) | Other fees in 2013 related to transaction related
      services. Other fees in 2012 related to services in connection with the
      review, consent and comfort with respect to the Companys preliminary
      and final prospectuses filed in September
and October 2012. These fees were reimbursed by Goldcorp, Inc. pursuant to an
agreement between the Company and Goldcorp, Inc.                                                                                                                                                                                                                                                                                                                      

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SCHEDULE AAUDIT COMMITTEE CHARTER

|I. | PURPOSE AND PRIMARY
  RESPONSIBILITY
|-- | ------------------------------------

| | A. | Purpose
| | -- | -------

The purpose of this Audit Committee
charter is to clearly set out the Audit Committees purpose, composition, member
qualification, member appointment and removal, responsibilities, operations,
manner of reporting to the Board of Directors (the Board), annual evaluation
and compliance with this charter.

| | B. | Primary responsibility
| | -- | ----------------------

The primary responsibility of the Audit
Committee is that of oversight of the financial reporting process on behalf of
the Board. This includes oversight responsibility for financial reporting and
continuous disclosure, oversight of external audit activities, oversight of
financial risk and financial management control, and oversight responsibility
for compliance with tax and securities laws and regulations as well as whistle
blowing procedures. The Audit Committee is also responsible for other matters as
set out in this charter and/or as may be directed by the Board from time to
time. The Audit Committee should exercise continuous oversight of developments
in these areas.

|II. | MEMBERSHIP
|--- | ----------

A. Each member of the Audit Committee
must be an independent director of the Company in accordance with the Companys
Board Manual.

B. The Audit Committee will consist of
at least three members, all of whom shall be financially literate. An Audit
Committee member who is not financially literate may be appointed to the Audit
Committee provided that the member becomes financially literate within a
reasonable period of time following his or her appointment.

C. The members of the Audit Committee
will be appointed annually (and from time to time thereafter to fill vacancies
on the Audit Committee) by the Board. An Audit Committee member may be removed
or replaced at any time at the discretion of the Board and will cease to be a
member of the Audit Committee on ceasing to be an independent director.

D. For so long as the common shares of
the Company are registered under Section 12(b) of the United States Securities
and Exchange Act of 1934, as amended (the Exchange Act), at least one member
of the Audit Committee must meet and satisfy the qualifications, as determined
by the board of directors of the Company, of an audit committee financial
expert, as such term is defined in Item 407 of Regulation S-K under the
Exchange Act, or in any rule adopted by the United States Securities and
Exchange Commission that supercedes such definition.

|III. | AUTHORITY
|---- | ---------

In addition to all authority required
to carry out the duties and responsibilities included in this charter, the Audit
Committee has specific authority to:

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A. engage, and set and pay the
compensation for, independent counsel and other advisors as it determines
necessary to carry out its duties and responsibilities and any such consultants
or professional advisors retained by the Audit Committee will report directly to
the Audit Committee;

B. communicate directly with management
and any internal auditor, and with the external auditor without management
involvement; and

C. to incur ordinary administrative
expenses that are necessary or appropriate in carrying out its duties, such
expenses to be paid for by the Company.

|IV. | DUTIES AND
RESPONSIBILITIES
|--- | ---------------------------

The duties and responsibilities of the
Audit Committee include:

A. recommending to the Board the
external auditor to be nominated by the Board;

B. recommending to the Board the
compensation of the external auditor, to be paid by the Company, in connection
with (i) preparing and issuing the audit report on the Companys financial
statements, and (ii) performing other audit, review or attestation services;

C. reviewing the external auditors
annual audit plan, fee schedule and any related services proposals (including
meeting with the external auditor to discuss any deviations from or changes to
the original audit plan, as well as to ensure that no management restrictions
have been placed on the scope and extent of the audit examinations by the
external auditor or the reporting of their findings to the Audit Committee);

D. overseeing the work of the external
auditor;

E. ensuring that the external auditor
is independent by receiving a report annually from the external auditors with
respect to their independence, such report to include a disclosure of all
engagements (and fees related thereto) for non-audit services provided to
Company;

F. ensuring that the external auditor
is in good standing with the Canadian Public Accountability Board by receiving,
at least annually, a report by the external auditor on the audit firms internal
quality control processes and procedures, such report to include any material
issues raised by the most recent internal quality control review, or peer
review, of the firm, or any governmental or professional authorities of the firm
within the preceding five years, and any steps taken to deal with such issues;

G. ensuring that the external auditor
meets the rotation requirements for partners and staff assigned to the Companys
annual audit by receiving a report annually from the external auditors setting
out the status of each professional with respect to the appropriate regulatory
rotation requirements and plans to transition new partners and staff onto the
audit engagement as various audit team members rotation periods expire;

H. reviewing and discussing with
management and the external auditor the annual audited and quarterly unaudited
financial statements and related Management Discussion and Analysis
(MD&A), including the appropriateness of the Companys accounting
policies, disclosures (including material transactions with related parties),
reserves, key estimates and judgements (including changes or variations thereto)
and obtaining reasonable assurance that the financial statements are presented fairly in
accordance with GAAP and the MD&A is in compliance with appropriate
regulatory requirements;

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I. reviewing and discussing with
management and the external auditor major issues regarding accounting principles
and financial statement presentation including any significant changes in the
selection or application of accounting principles to be observed in the
preparation of the financial statements of the Company and its subsidiaries;

J. reviewing and discussing with
management and the external auditor the external auditors written
communications to the Audit Committee in accordance with generally accepted
auditing standards and other applicable regulatory requirements arising from the
annual audit and quarterly review engagements;

K. reviewing the external auditors
report to the shareholders on the Companys annual financial statements;

L. reporting on and recommending to the
Board the approval of the annual financial statements and the external auditors
report on those financial statements, the quarterly unaudited financial
statements, and the related MD&A and press releases for such financial
statements, before the dissemination of these documents to shareholders,
regulators, analysts and the public;

M. satisfying itself on a regular basis
through reports from management and related reports, if any, from the external
auditors, that adequate procedures are in place for the review of the Companys
disclosure of financial information extracted or derived from the Companys
financial statements that such information is fairly presented;

N. overseeing the adequacy of the
Companys system of internal accounting controls and obtaining from management
and the external auditor summaries and recommendations for improvement of such
internal controls and processes, together with reviewing managements
remediation of identified weaknesses;

O. reviewing with management and the
external auditors the integrity of disclosure controls and internal controls
over financial reporting;

P. reviewing, monitoring, discussing
and assessing the processes in place to identify and manage the principal risks
that could impact the financial reporting of the Company and discussing policies
with respect to risk assessment and risk management, which discussions will
include (i) the Companys major financial risk exposures and the steps
management has taken to monitor and control such exposures, and (ii) guidelines
and policies to govern the process by which risk assessment and management is
undertaken;

Q. satisfying itself that management
has developed and implemented a system to ensure that the Company meets its
continuous disclosure obligations through the receipt of regular reports from
management and the Companys legal advisors on the functioning of the disclosure
compliance system, (including any significant instances of non-compliance with
such system) in order to satisfy itself that such system may be reasonably
relied upon.;

R. resolving disputes between
management and the external auditor regarding financial reporting;

S. establishing procedures for:

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i. the receipt, retention and
treatment of complaints received by the Company from employees and others
regarding accounting, internal accounting controls or auditing matters and
questionable practises relating thereto; and

ii. the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.

T. reviewing and approving the
Companys hiring policies with respect to partners or employees (or former
partners or employees) of either a former or the present external auditor;

U. pre-approving all non-audit services
to be provided to the Company or any subsidiaries by the Companys external
auditor (The Chair of the Audit Committee has the authority to pre-approve in
between regularly scheduled Audit Committee meetings any non-audit service of
less than $25,000, however such approval will be presented to the Audit
Committee at the next scheduled meeting for formal approval);

V. overseeing compliance with
regulatory authority requirements for disclosure of external auditor services
and Audit Committee activities; and

W. establishing procedures for:

i. reviewing the expenses of the Chair
of the Board, and the Chief Executive Officer (the CEO)

ii. reviewing the adequacy of the
Companys insurance coverage (excluding Directors and Officers insurance
coverage, which is reviewed by Governance and Nominating Committee)

iii. reviewing activities,
organizational structure, and qualifications of the Chief Financial Officer
(CFO) and the staff in the financial reporting area and ensuring that matters
related to succession planning within the Company are raised for consideration
at the Board

iv. obtaining reasonable assurance as
to the integrity of the CEO and other senior management and that the CEO and
other senior management strive to create a culture of integrity throughout the
Company

v. reviewing fraud prevention policies
and programs, and monitoring their implementation

vi. reviewing regular reports from
management and others (e.g., external auditors, legal counsel) with respect to
the Companys compliance with laws and regulations having a material impact on
the financial statements including:

| | a) | tax and financial reporting laws and
  regulations;
| | -- | ---------------------------------------------------
| |    |                                                    
| | b) | legal withholding requirements;                    
| |    |                                                    
| | c) | environmental protection laws and
  regulations.   

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X. A regular part of Audit Committee
meetings involves the appropriate orientation of new members as well as the
continuous education of all members. Items to be discussed include specific
business issues as well as new accounting and securities legislation that may
impact the organization. The Chair of the Audit Committee will regularly canvass
the Audit Committee members for continuous education needs and in conjunction
with the Board education program, arrange for such education to be provided to
the Audit Committee on a timely basis.

Y. On an annual basis the Audit
Committee shall review and assess the adequacy of this charter taking into
account all applicable legislative and regulatory requirements as well as any
best practice guidelines recommended by regulators or stock exchanges with whom
the Company has a reporting relationship and, if appropriate, recommend changes
to the Audit Committee charter to the Board for its approval.

|V. | MEETINGS
|-- | --------

A. The quorum for a meeting of the
Audit Committee is a majority of the members of the Audit Committee.

B. The Board of Directors will appoint
the Chair of the Audit Committee. The Chair of the Audit Committee shall be
responsible for leadership of the Audit Committee, including scheduling and
presiding over meetings, preparing agendas, overseeing the preparation of
briefing documents to circulate during the meetings as well as pre-meeting
materials, and making regular reports to the Board. The Chair of the Audit
Committee will also maintain regular liaison with the CEO, CFO, and the lead
engagement partner of the external auditor.

C. The Audit Committees schedule of
meetings and agendas will be set annually by the Audit Committee. Dates and
locations will be provided to the Board, the Audit Committee members, the
external auditors and management in advance.

D. The Audit Committee will meet in
camera separately with the CEO and separately with the CFO of the Company at
least annually to review the financial affairs of the Company.

E. The Audit Committee will meet with
the external auditor of the Company in camera at least once each year, at such
time(s) as it deems appropriate, to review the external auditors examination
and report.

F. The external auditor must be given
reasonable notice of, and has the right to appear before and to be heard at,
each meeting of the Audit Committee.

G. Each of the chair of the Audit
Committee, members of the Audit Committee, Chair of the Board, external auditor,
CEO, CFO or secretary shall be entitled to request that the Chair of the Audit
Committee call a meeting which shall be held within 48 hours of receipt of such
request to consider any matter that such individual believes should be brought
to the attention of the Board or the shareholders.

|VI. | REPORTS
|--- | -------

A. The Audit Committee will report, at
least quarterly, to the Board regarding the Audit Committees examinations and
recommendations, and annually to the Board regarding the Audit Committees
compliance with this Charter.

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B. The Audit Committee will report its
activities to the Board to be incorporated as a part of the minutes of the Board
meeting at which those activities are reported.

|VII. | MINUTES
|---- | -------

A. The Audit Committee will maintain
written minutes of its meetings, which minutes will be filed with the minutes of
the meetings of the Board.

|VIII. | ANNUAL PERFORMANCE
EVALUATION
|----- | -----------------------------

A. The Board will conduct an annual
performance evaluation of the Audit Committee, taking into account the Charter,
to determine the effectiveness of the Committee.

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