|PRIMERO MINING CORP.
|--------------------
|DECEMBER 31, 2013   
|                    

Table of contents

|Managements
      Responsibility for Financial Reporting            | 1   
|-------------------------------------------------------------------- | ----
|                                                                     |     
|Report
      of Independent Registered Public Accounting Firm        | 2   
|                                                                     |     
|Consolidated
      statements of operations and comprehensive income | 3   
|                                                                     |     
|Consolidated
      statements of financial position                  | 4   
|                                                                     |     
|Consolidated
      statements of changes in equity                   | 5   
|                                                                     |     
|Consolidated
      statements of cash flows                          | 6   
|                                                                     |     
|Notes
      to the consolidated financial statements                 | 7-50

---

MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING

The consolidated financial statements of Primero Mining Corp.
have been prepared by, and are the responsibility of the Companys management.
The consolidated financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB) and reflect managements best estimates and
judgments based on information currently available. In the opinion of
management, the accounting practices utilized are appropriate in the
circumstances and the consolidated financial statements fairly reflect the
financial position and results of operations of the Company within reasonable
limits of materiality.

Management has developed and maintains a system of internal
controls to obtain reasonable assurance that the Companys assets are
safeguarded, transactions are authorized, and financial information is reliable.
All internal control systems have inherent limitations, including the
possibility of circumvention and overriding of controls, and therefore, can
provide only reasonable assurance as to financial statement reliability and the
safeguarding of assets.

The Board of Directors is responsible for ensuring management
fulfills its responsibilities. The Audit Committee meets with the Companys
management and external auditors to discuss the results of the audits and to
review the consolidated financial statements prior to the Audit Committees
submission to the Board of Directors for approval. The Audit Committee also
reviews the quarterly financial statements and recommends them for approval to
the Board of Directors, reviews with management the Companys systems of
internal control, and approves the scope of the external auditors audit and
non-audit work. The Audit Committee is composed entirely of directors not
involved in the daily operations of the Company who are thus considered to be
free from any relationship that could interfere with their exercise of
independent judgment as a Committee member.

The consolidated financial statements have been audited by
Deloitte LLP and their report outlines the scope of their examination and gives
their opinion on the consolidated financial statements.

|                                    |                        
|----------------------------------- | -----------------------
|Joseph F. Conway                    | David C. Blaiklock     
|President & Chief Executive Officer | Chief Financial Officer
|February 12, 2014                   | February 12, 2014      

---

Independent Auditors Report

To the Shareholders ofPrimero Mining Corp.

We have audited the accompanying consolidated financial
statements of Primero Mining Corp, which comprise the consolidated statement of
financial position as at December 31, 2013 and 2012 and the consolidated
statements of operations and comprehensive income, consolidated statements of
changes in equity, and consolidated statements of cash flows for each of the
years in the two-year period ended December 31, 2013 then ended and a summary of
significant accounting policies and other explanatory information.

Managements Responsibility for the Consolidated Financial
Statements

Management is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or
error.

Auditors Responsibility

Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement. We were not engaged to
perform an audit of the Companys internal control over financial reporting. Our
audits include consideration of internal controls over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no
such opinion.

An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of Primero Mining Corp
as at December 31, 2013 and 2012 and its financial performance and its cash
flows for the years ended in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board.

(Signed) Deloitte LLP

Independent Registered Chartered AccountantsFebruary 12,
2014Vancouver, British Columbia

2

---

|PRIMERO MINING CORP.                                                                 
|-------------------------------------------------------------------------------------
|                                                                                     
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      INCOME                 
|                                                                                     
|YEARS ENDED DECEMBER 31, 2013 AND 2012                                               
|(In thousands of
      United States dollars, except for share and per share amounts)

|                                                                |  |        |  | 2013        |   |  | 2012       |  
|--------------------------------------------------------------- |  | ------ |  | ----------- | - |  | ---------- | -
|                                                                |  | Notes  |  |             |   |  |            |  
|                                                                |  |        |  | $           |   |  | $          |  
|                                                                |  |        |  |             |   |  |            |  
|                                                                |  |        |  |             |   |  |            |  
|Revenue                                                         |  | 6      |  | 200,326     |   |  | 182,939    |  
|                                                                |  |        |  |             |   |  |            |  
|Operating expenses                                              |  | 7,8    |  | (88,086     | ) |  | (75,495    | )
|Depreciation and
      depletion                                |  | 12     |  | (36,236     | ) |  | (28,055    | )
|Total cost of sales                                             |  |        |  | (124,322    | ) |  | (103,550   | )
|                                                                |  |        |  |             |   |  |            |  
|Earnings from mine operations                                   |  |        |  | 76,004      |   |  | 79,389     |  
|Exploration expenses                                            |  |        |  | (431        | ) |  | -          |  
|General and administrative expenses                             |  | 7      |  | (24,470     | ) |  | (30,003    | )
|                                                                |  |        |  |             |   |  |            |  
|Earnings from operations                                        |  |        |  | 51,103      |   |  | 49,386     |  
|Other expense                                                   |  | 8      |  | (8,590      | ) |  | (1,842     | )
|Foreign exchange loss                                           |  |        |  | (798        | ) |  | (948       | )
|Finance income                                                  |  |        |  | 296         |   |  | 1,192      |  
|Finance expense                                                 |  | 13 (b) |  | (674        | ) |  | (2,887     | )
|Share of equity-accounted results                               |  | 4      |  | (187        | ) |  | -          |  
|Loss on derivative contracts                                    |  |        |  | -           |   |  | (226       | )
|                                                                |  |        |  |             |   |  |            |  
|Earnings before income taxes                                    |  |        |  | 41,150      |   |  | 44,675     |  
|                                                                |  |        |  |             |   |  |            |  
|Income tax (expense) recovery                                   |  | 9      |  | (45,400     | ) |  | 4,878      |  
|                                                                |  |        |  |             |   |  |            |  
|Net (loss) income for the year                                  |  |        |  | (4,250      | ) |  | 49,553     |  
|                                                                |  |        |  |             |   |  |            |  
|Other comprehensive income                                      |  |        |  |             |   |  |            |  
|Items not subsequently reclassified to profit or
      loss:    |  |        |  |             |   |  |            |  
|Exchange differences on translation of
      foreign operations |  |        |  | (3,580      | ) |  | 386        |  
|Total
      comprehensive (loss) income for the year            |  |        |  | (7,830      | ) |  | 49,939     |  
|                                                                |  |        |  |             |   |  |            |  
|Basic (loss) income per share                                   |  |        |  | (0.04       | ) |  | 0.54       |  
|Diluted (loss) income per share                                 |  |        |  | (0.04       | ) |  | 0.54       |  
|                                                                |  |        |  |             |   |  |            |  
|Weighted average number of common shares
      outstanding      |  |        |  |             |   |  |            |  
|Basic                                                           |  | 10     |  | 108,528,425 |   |  | 91,469,356 |  
|Diluted                                                         |  | 10     |  | 108,903,821 |   |  | 91,635,428 |  

|See accompanying notes to the consolidated financial
      statements. | 3
|---------------------------------------------------------------------- | -

---

|PRIMERO MINING CORP.                         
|---------------------------------------------
|CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|(In thousands of
      United States dollars)

|                                        |  |                         |  | December 31, |   |  | December 31, |  
|--------------------------------------- |  | ----------------------- |  | ------------ | - |  | ------------ | -
|                                        |  | Notes                   |  | 2013         |   |  | 2012         |  
|                                        |  |                         |  | $            |   |  | $            |  
|                                        |  |                         |  |              |   |  |              |  
|Assets                                  |  |                         |  |              |   |  |              |  
|Current assets                          |  |                         |  |              |   |  |              |  
|Cash and cash equivalents               |  |                         |  | 110,711      |   |  | 139,244      |  
|Trade and other receivables             |  |                         |  | 4,794        |   |  | 3,792        |  
|Taxes receivable                        |  | 9                       |  | 10,224       |   |  | 5,914        |  
|Prepaid expenses                        |  |                         |  | 7,729        |   |  | 4,607        |  
|Inventories                             |  | 11                      |  | 12,171       |   |  | 11,044       |  
|Total current assets                    |  |                         |  | 145,629      |   |  | 164,601      |  
|                                        |  |                         |  |              |   |  |              |  
|Non-current assets                      |  |                         |  |              |   |  |              |  
|Mining interests                        |  | 12                      |  | 636,253      |   |  | 496,132      |  
|Equity investment                       |  | 4                       |  | 1,042        |   |  | -            |  
|Deferred tax asset                      |  | 9 (b)                   |  | -            |   |  | 9,773        |  
|Total assets                            |  |                         |  | 782,924      |   |  | 670,506      |  
|                                        |  |                         |  |              |   |  |              |  
|Liabilities                             |  |                         |  |              |   |  |              |  
|Current liabilities                     |  |                         |  |              |   |  |              |  
|Trade and other payables                |  | 15 ( e) (i), (ii)       |  | 33,958       |   |  | 36,520       |  
|Taxes payable                           |  | 9                       |  | 6,735        |   |  | 2,209        |  
|Current portion of long-term debt       |  | 13
      (a)            |  | 5,000        |   |  | 12,786       |  
|Total current liabilities               |  |                         |  | 45,693       |   |  | 51,515       |  
|                                        |  |                         |  |              |   |  |              |  
|Non-current liabilities                 |  |                         |  |              |   |  |              |  
|Taxes payable                           |  | 9                       |  | 8,456        |   |  | 6,055        |  
|Deferred tax liability                  |  | 9 (b)                   |  | 29,762       |   |  | -            |  
|Decommissioning liability               |  | 14                      |  | 8,730        |   |  | 8,283        |  
|Long-term debt                          |  | 13 (a)                  |  | 22,214       |   |  | 27,214       |  
|Other
      long-term liabilities       |  | 15 (
      e) (i), (ii) |  | 6,979        |   |  | 5,701        |  
|Total liabilities                       |  |                         |  | 121,834      |   |  | 98,768       |  
|                                        |  |                         |  |              |   |  |              |  
|Equity                                  |  |                         |  |              |   |  |              |  
|Share capital                           |  | 15 ( a) (b)             |  | 553,518      |   |  | 456,734      |  
|Warrant reserve                         |  | 15 (d)                  |  | 34,237       |   |  | 34,237       |  
|Share-based payment reserve             |  | 15 ( c), ( e) (iii)     |  | 15,518       |   |  | 15,120       |  
|Foreign currency translation reserve    |  |                         |  | (4,644       | ) |  | (1,064       | )
|Retained earnings                       |  |                         |  | 62,461       |   |  | 66,711       |  
|Total equity                            |  |                         |  | 661,090      |   |  | 571,738      |  
|Total liabilities
      and equity      |  |                         |  | 782,924      |   |  | 670,506      |  
|                                        |  |                         |  |              |   |  |              |  
|Commitments and contingencies (Note 21) |  |                         |  |              |   |  |              |  

Approved on behalf of the Board of Directors

|                           |                           
|-------------------------- | --------------------------
|Joseph F. Conway, Director | Michael E. Riley, Director
|February 12, 2014          | February 12, 2014         

|See accompanying notes to the consolidated financial
      statements. | 4
|---------------------------------------------------------------------- | -

---

|PRIMERO MINING CORP.                                                             
|---------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY                                     
|(In thousands of
      United States dollars, except for number of common shares)

|                                             |  |                   |  |                     |  |  |          |  |  |         |  |  |             |   |  | Foreign   |   |  |           |   |  |         |  
|-------------------------------------------- |  | ----------------- |  | ------------------- |  |  | -------- |  |  | ------- |  |  | ----------- | - |  | --------- | - |  | --------- | - |  | ------- | -
|                                             |  |                   |  |                     |  |  |          |  |  |         |  |  | Share-based |   |  | currency  |   |  | Retained  |   |  |         |  
|                                             |  |                   |  | Share
      capital |  |  | Warrants |  |  | payment |  |  | translation |   |  | Earnings/ |   |  | Total     |  
|                                             |  | Notes             |  | Shares              |  |  | Amount   |  |  | reserve |  |  | reserve     |   |  | reserve   |   |  | (Deficit) |   |  | Equity  |  
|                                             |  |                   |  |                     |  |  | $        |  |  | $       |  |  | $           |   |  | $         |   |  | $         |   |  | $       |  
|                                             |  |                   |  |                     |  |  |          |  |  |         |  |  |             |   |  |           |   |  |           |   |  |         |  
|Balance, January 1, 2012
      (as restated) |  |                   |  | 88,259,831          |  |  | 423,250  |  |  | 34,237  |  |  | 14,645      |   |  | (1,450    | ) |  | 17,158    |   |  | 487,840 |  
|Shares issued for                            |  |                   |  |                     |  |  |          |  |  |         |  |  |             |   |  |           |   |  |           |   |  |         |  
|Conversion of Debt                           |  | 13 (a)            |  | 8,422,460           |  |  | 30,000   |  |  | -       |  |  | -           |   |  | -         |   |  | -         |   |  | 30,000  |  
|Exercise of stock options                    |  | 15 ( c)           |  | 523,331             |  |  | 3,484    |  |  | -       |  |  | (952        | ) |  | -         |   |  | -         |   |  | 2,532   |  
|Foreign currency translation                 |  |                   |  | -                   |  |  | -        |  |  | -       |  |  | -           |   |  | 386       |   |  | -         |   |  | 386     |  
|Share-based payment                          |  | 15 ( c)           |  | -                   |  |  | -        |  |  | -       |  |  | 1,427       |   |  | -         |   |  | -         |   |  | 1,427   |  
|Net income                                   |  |                   |  | -                   |  |  | -        |  |  | -       |  |  | -           |   |  | -         |   |  | 49,553    |   |  | 49,553  |  
|Balance, December 31, 2012                   |  |                   |  | 97,205,622          |  |  | 456,734  |  |  | 34,237  |  |  | 15,120      |   |  | (1,064    | ) |  | 66,711    |   |  | 571,738 |  
|Shares issued for                            |  |                   |  |                     |  |  |          |  |  |         |  |  |             |   |  |           |   |  |           |   |  |         |  
|Acquisition of Cerro Resources
      NL      |  | 4                 |  | 17,983,956          |  |  | 93,337   |  |  | -       |  |  | 759         |   |  | -         |   |  | -         |   |  | 94,096  |  
|Exercise of stock
      options              |  | 15 (c)            |  | 495,000             |  |  | 3,232    |  |  | -       |  |  | (1,316      | ) |  | -         |   |  | -         |   |  | 1,916   |  
|Exercise of PSUs                             |  | 15 (e) (ii)       |  | 41,457              |  |  | 215      |  |  | -       |  |  | -           |   |  | -         |   |  | -         |   |  | 215     |  
|Foreign currency translation                 |  |                   |  | -                   |  |  | -        |  |  | -       |  |  | -           |   |  | (3,580    | ) |  | -         |   |  | (3,580  | )
|Share-based payment                          |  | 15 (c), (e) (iii) |  | -                   |  |  | -        |  |  | -       |  |  | 955         |   |  | -         |   |  | -         |   |  | 955     |  
|Net (loss) income                            |  |                   |  | -                   |  |  | -        |  |  | -       |  |  | -           |   |  | -         |   |  | (4,250    | ) |  | (4,250  | )
|Balance, December 31, 2013                   |  |                   |  | 115,726,035         |  |  | 553,518  |  |  | 34,237  |  |  | 15,518      |   |  | (4,644    | ) |  | 62,461    |   |  | 661,090 |  

Total comprehensive loss was $7,830 for the year ended December
31, 2013 (December 31, 2012 - income of $49,939)

|See accompanying notes to the consolidated financial
      statements. | 5
|---------------------------------------------------------------------- | -

---

|PRIMERO MINING CORP.                         
|---------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS        
|YEARS ENDED DECEMBER 31, 2013 AND 2012       
|(In thousands Of
      United States dollars)

|                                                                   |  | Notes        |  | 2013    |   |  | 2012    |  
|------------------------------------------------------------------ |  | ------------ |  | ------- | - |  | ------- | -
|                                                                   |  |              |  | $       |   |  | $       |  
|                                                                   |  |              |  |         |   |  |         |  
|Operating activities                                               |  |              |  |         |   |  |         |  
|Earnings before income taxes                                       |  |              |  | 41,150  |   |  | 44,675  |  
|Adjustments for:                                                   |  |              |  |         |   |  |         |  
|Depreciation and
      depletion                                   |  | 12           |  | 36,236  |   |  | 28,055  |  
|Changes to decomissioning
      liability                          |  |              |  | (199    | ) |  | (161    | )
|Share-based
      payments - Stock Option plan                     |  | 15 ( c)      |  | 200     |   |  | 1,533   |  
|Share-based payments - Phantom
      Share Unit plan               |  | 15 ( e)      |  | 6,585   |   |  | 14,700  |  
|Payments made
      under the Phantom Share Unit Plan              |  | 15 ( e)      |  | (13,481 | ) |  | (877    | )
|Unrealized loss on equity
      accounted investment               |  |              |  | 187     |   |  | -       |  
|                                                                   |  |              |  |         |   |  |         |  
|Cash paid for derivative
      contracts (net of sales proceeds)   |  |              |  | -       |   |  | (23     | )
|Loss on
      derivative asset                                     |  |              |  | -       |   |  | 226     |  
|Loss on disposal of assets                                         |  |              |  | 269     |   |  | 811     |  
|Unrealized
      foreign exchange loss                             |  |              |  | 2,414   |   |  | 175     |  
|Taxes paid                                                         |  |              |  | (1,343  | ) |  | (2,001  | )
|Other adjustments                                                  |  |              |  |         |   |  |         |  
|Finance income (disclosed in investing activities)                 |  |              |  | (296    | ) |  | (1,192  | )
|Finance expense                                                    |  |              |  | 674     |   |  | 2,887   |  
|                                                                   |  |              |  | 72,396  |   |  | 88,808  |  
|                                                                   |  |              |  |         |   |  |         |  
|Changes in non-cash working capital                                |  | 16           |  | (2,591  | ) |  | 25,402  |  
|Cash provided by operating activities                              |  |              |  | 69,805  |   |  | 114,210 |  
|                                                                   |  |              |  |         |   |  |         |  
|Investing activities                                               |  |              |  |         |   |  |         |  
|Equity investment in Santana Minerals Limited                      |  |              |  | (1,254  | ) |  | -       |  
|Expenditures on mining
      interests                             |  | 12           |  | (71,481 | ) |  | (39,740 | )
|Acquisition of Cerro Resources NL                                  |  | 4            |  | (3,373  | ) |  | -       |  
|Acquisition of remaining
      interest in Cerro del Gallo project |  |              |  | (8,000  | ) |  | -       |  
|Interest received                                                  |  |              |  | 296     |   |  | 1,192   |  
|Cash used in investing activities                                  |  |              |  | (83,812 | ) |  | (38,548 | )
|                                                                   |  |              |  |         |   |  |         |  
|Financing activities                                               |  |              |  |         |   |  |         |  
|Repayment of debt                                                  |  | 13 (a)       |  | (12,786 | ) |  | (10,050 | )
|Proceeds on exercise of
      options                              |  | 15 ( c)      |  | 1,916   |   |  | 2,532   |  
|Interest paid                                                      |  | 13
      (a) |  | (2,057  | ) |  | (9,024  | )
|Cash used in financing activites                                   |  |              |  | (12,927 | ) |  | (16,542 | )
|                                                                   |  |              |  |         |   |  |         |  
|Effect of foreign exchange rate changes on cash                    |  |              |  | (1,599  | ) |  | (637    | )
|                                                                   |  |              |  |         |   |  |         |  
|(Decrease) Increase in cash                                        |  |              |  | (28,533 | ) |  | 58,483  |  
|Cash, beginning of
      year                                      |  |              |  | 139,244 |   |  | 80,761  |  
|Cash, end of year                                                  |  |              |  | 110,711 |   |  | 139,244 |  
|                                                                   |  |              |  |         |   |  |         |  
|Supplemental cash flow information (Note
      16)                 |  |              |  |         |   |  |         |  

|See accompanying notes to the consolidated financial
          statements. | 6
|-------------------------------------------------------------------------- | -

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|1. | Nature of operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Primero Mining Corp. (Primero or the Company) was
      incorporated in Canada on November 26, 2007 under the Business
      Corporations Act (British Columbia). The Companys registered office is
      Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia. Primero
      is a publicly traded company, listed on both the Toronto and New York
      Stock Exchanges; Primero has no parent company.                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Primero is a Canadian-based precious metals producer with
      mining operations in Mexico. The Company is focused on building a
      portfolio of high-quality, low-cost precious metals assets in the Americas
      through acquiring, exploring, developing and operating mineral resource
      properties.                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company owns one producing property, the San Dimas
      gold-silver mine, located in Mexicos San Dimas district, on the border of
      Durango and Sinaloa states, one project in the development stage, Cerro
      del Gallo, located in the state of Guanajuato in central Mexico and one
      exploration property, Ventanas, located in Durango state, Mexico. In
      addition, the Company has announced the acquisition of Brigus Gold Corp
      (Brigus), which has an operating mine in Ontario, Canada and is expected
      to close in the first quarter of 2014 (Note 22).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | Significant accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements were approved by
      the Companys Board of Directors on February 12, 2014.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Statement of Compliance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The consolidated financial statements of the Company have
      been prepared in accordance and full compliance with International
      Financial Reporting Standards (IFRS) as issued by the International
      Accounting Standards Board (IASB).                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Basis of measurement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements have been
      prepared on a historical cost basis other than the phantom share units
      which are accounted for at fair value with changes in fair value being
      included in the statement of operations and comprehensive
income.                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The preparation of these financial statements requires
      management to make estimates and assumptions that affect the reported
      amounts of revenues, expenses, assets, and liabilities at the date of the
      financial statements. If in future such estimates and assumptions, which
      are based on managements best judgment at the date of the financial
      statements, deviate materially from actual circumstances, the original
      estimates and assumptions will be modified as appropriate in the period in
      which the circumstances change.                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

7

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | (b) | Functional and presentation currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The functional currency of Primero Empresa Minera, S.A.
      de C.V, Silver Trading, and certain subsidiaries of Cerro is the U.S.
      dollar. The functional currency of the other subsidiaries of Cerro is the
      Australian dollar. The functional currency of Primero Mining Luxembourg
      S.a.r.l is the Mexican peso. The functional currency of the parent
      company, incorporated in Canada, is the Canadian dollar.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Monetary assets and liabilities denominated in currencies
      other than an entitys functional currency are translated into the
      functional currency at the exchange rates prevailing at the statement of
      financial position date; non-monetary assets denominated in foreign
      currencies (and not measured at fair value) are translated using the rates
      of exchange at the transaction dates. Non-monetary assets denominated in
      foreign currencies that are measured at fair value are translated using
      the rates of exchange at the dates that those fair values are determined.
      The resulting foreign exchange gains and losses are included in the
      determination of earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Statement of operations items denominated in currencies
      other than the presentation currency are translated at the period average
      exchange rates. With the exception of foreign exchange differences on an
      intercompany loan between Primero Mining Luxembourg S.a.r.l. and Primero
      Empresa, S.A. de C.V., for which exchange differences are recorded in
      other comprehensive income (OCI), the resulting foreign exchange gains
      and losses are included in the determination of earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The presentation currency of the Company is the U.S.
      dollar. The results of the Canadian parent company and Primero Mining
      Luxembourg S.a.r.l are translated into the U.S. dollar presentation
      currency as follows: all assets and liabilities are translated at the
      exchange rate prevailing at the statement of financial position date;
      equity balances are translated at the rates of exchange at the transaction
      dates, and all items included in the statement of operations are
      translated using the period average exchange rates unless there are
      significant fluctuations in the exchange rate, in which case the rate at
      the date of transaction is used. All differences arising upon the
      translation to the presentation currency are recorded in the foreign
      currency translation reserve within OCI; there is no tax impact of this
      translation. The amounts in OCI are not expected to be reclassified to the
      statement of operations and comprehensive income in future.                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (c) | Investment in associates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company has one associate. An associate is an entity
      over which the Company has significant influence, and is neither a
      subsidiary nor a joint venture. The Company has significant influence when
      it has the power to participate in the financial and operating policy
      decisions of the associate but does not have control or joint control over
      those policy decisions. The Company accounts for its investments in
      associates using the equity method. Under the equity method, the Companys
      investment in an associate is initially recognized at cost and subsequently increased
      or decreased to recognize the Company's share of earnings and losses of
      the associate, after any adjustments necessary to give effect to uniform
      accounting policies, and for impairment losses after the initial
      recognition date. The Companys share of an associates losses that are in
      excess of its investment in the associate are recognized only to the
      extent that the Company has incurred legal or constructive obligations or
      made payments on behalf of the associate. The Company's share of earnings
      and losses of associates are recognized in net earnings during the period.
      Distributions received from an associate are accounted for as a reduction
      in the carrying amount of the Companys investment.

8

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |     | Intercompany transactions between the Company and its
      associates are recognized only to the extent of unrelated investors
      interests in the associates. Intercompany balances between the Company and
      its associates are not eliminated. At the end of each reporting period,
      the Company assesses whether there is any objective evidence that an
      investment in an associate is impaired. Objective evidence includes
      observable data indicating that there is a measurable decrease in the
      estimated future cash flows of the associates operations. When there is
      objective evidence that an investment in associate is impaired, the
      carrying amount of such investment is compared to its recoverable amount,
      being the higher of its fair value less costs to sell and value-in-use. If
      the recoverable amount of an investment in associate is less than its
      carrying amount, the carrying amount is reduced to its recoverable amount
      and an impairment loss, being the excess of carrying amount over the
      recoverable amount, is recognized in the period of impairment. When an
      impairment loss reverses in a subsequent period, the carrying amount of
      the investment in associate is increased to the revised estimate of
      recoverable amount to the extent that the increased carrying amount does
      not exceed the carrying amount that would have been determined had an
      impairment loss not been previously recognized. A reversal of an
      impairment loss is recognized in net earnings in the period in which the
      reversal occurs.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (d) | Business combinations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Business combinations are accounted for using the
      acquisition method. At the acquisition date, the Company recognizes at
      fair value: (i) all of the identifiable assets acquired, the liabilities
      assumed and any non-controlling interest in the acquiree; and (ii) the
      consideration transferred to the vendor. Those mineral reserves,
      resources, exploration potential and other assets that are able to be
      valued are recognized in the assessment of fair values on acquisition.
      Other potential reserves, resources, mineral rights and other assets,
      which in managements opinion values cannot be reliably determined, are
      not recognized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | When the fair value of the consideration transferred
      exceeds the net of the acquisition date amounts of the identifiable assets
      acquired and the liabilities assumed measured at fair value, the
      difference is treated as goodwill. This goodwill is not amortized, and is
      reviewed for impairment annually or when there is an indication of
      impairment. If the fair value attributable to the Companys share of the
      identifiable net assets exceeds the cost of acquisition, the difference is
      immediately recognized in the statement of operations and comprehensive
      income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Costs, such as advisory, legal, accounting, valuation and
      other professional or consulting fees related to a business combination
      are expensed as incurred. Costs associated with the issuance of equity and
      debt instruments are charged to the relevant account on the statement of
      financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

9

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | (e) | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Revenue is derived from the sale of gold and silver.
      Revenue is recognized on individual contracts when there is persuasive
      evidence that all of the following criteria are met:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (f) | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Cash and cash equivalents consist of cash on hand,
      deposits in banks and highly liquid investments with an original maturity
      of 90 days or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (g) | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Finished goods (gold and silver in doré),
      work-in-progress, and stockpiled ore are valued at the lower of average
      production cost and net realizable value. Net realizable value is
      calculated as the estimated price at the time of sale less estimated
      future production costs to convert the inventories into saleable
    form.                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Ore extracted from the mine is stockpiled and
      subsequently processed into finished goods. Production costs are
      capitalized and included in the work-in-process inventory based on the
      current mining cost incurred up to the refining process, including
      applicable overhead, depreciation and depletion relating to mining
      interest, and expensed at the average production cost per recoverable
      ounce of gold or silver. The average production cost of finished goods
      represents the average cost of work-in-process inventories incurred prior
      to the refining process, plus applicable refining cost. Supplies are
      valued at the lower of average cost or replacement cost.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (h) | Mining interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Mining interests include mining and exploration
      properties and related plant and equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

10

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |      | Upon initial acquisition, land, buildings, plant and
      equipment are valued at cost, being the purchase price and the directly
      attributable costs of acquisition or construction required to bring the
      asset to the location and condition necessary for the asset to be capable
      of operating in the manner intended by management.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                          
| |      | In subsequent periods, buildings, plant and equipment are
      stated at cost less accumulated depreciation and any impairment in value.
      Land is stated at cost less any impairment in value and is not
      depreciated.                                                                                                                        
| |      |                                                                                                                                                                                                                                                                                                                                                          
| | (ii) | Exploration and evaluation expenditures                                                                                                                                                                                                                                                                                                                  
| |      |                                                                                                                                                                                                                                                                                                                                                          
| |      | Exploration and evaluation expenditure is charged to the
      statement of operations and comprehensive income unless both of the
      following conditions are met, in which case it is deferred under mining
      interests:                                                                                                                      

| |  | it is expected that the expenditure will be recouped by
      future exploitation or sale; and                                                                                                                              
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | substantial exploration and evaluation activities have
      identified a mineral resource with sufficient certainty that permits a
      reasonable assessment of the existence of commercially recoverable
      reserves.

| |       | General and administrative expenditures relating to
      exploration and evaluation activities are capitalized where they can be
      directly attributed to the site undergoing exploration and
    evaluation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (iii) | Mining properties and mine development
  expenditure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | The cost of acquiring mineral reserves and mineral
      resources is capitalized on the statement of financial position as
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | Mine development costs incurred to maintain current
      production are included in the statement of operations and comprehensive
      income. These costs include the development and access costs (tunneling)
      of production drifts to develop the ore body in the current production
      cycle. The distinction between mining expenditures incurred to develop new
      ore bodies and to develop mine areas in advance of current production is
      mainly the production timeframe of the mining areas. For those areas being
      developed which will be mined in future periods, the costs incurred are
      capitalized and depleted when the related mining area is mined as compared
      to current production areas, where development costs are considered as
      operating expenses given that the short-term nature of these expenditures
      matches the economic benefit of the ore being mined.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | The Company reviews and evaluates its mining properties
      for impairment when events and changes in circumstances indicate that the
      related carrying amounts may not be recoverable. The carrying amounts of
      the assets are compared to the recoverable amount of the assets whenever
      events or changes in circumstances indicate that the net book value may
      not be recoverable. The recoverable amount is the higher of value in use
      and fair value less costs to sell. In assessing value in use, the
      estimated future cash flows are discounted to their present value using a
      pre-tax discount rate that reflects current market assessments of the time
      value of money and the risks specific to the asset for which the
  estimates of future cash flows have not been adjusted.                                                                                           

11

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |      | The Company bases its impairment calculation on detailed
      budgets and forecasts which are prepared separately for each of the
      Companys CGUs to which the individual assets are allocated (the Company
      currently has two CGUs, the San Dimas mine and the Cerro del Gallo
      project). These budgets and forecasts cover the life of the
mine.                                                                                                                                                                                                                                                                                                                                                                       
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      | If the recoverable amount of an asset (or CGU) is
      estimated to be less than its carrying amount, the carrying amount is
      reduced to its recoverable amount. An impairment is recognized immediately
      as an expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      | Where an impairment subsequently reverses, the carrying
      amount of the asset (or CGU) is increased to the revised estimate of its
      recoverable amount, subject to the amount not exceeding the carrying
      amount that would have been determined had no impairment been recognized
      for the asset (or CGU) in prior years. A reversal of impairment is
      recognized immediately in the statement of operations and comprehensive
      income.                                                                                                                                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (iv) | Borrowing costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      | Borrowing costs directly relating to the financing of
      qualifying assets are added to the capitalized cost of those projects
      until such time as the assets are substantially ready for their intended
      use or sale which, in the case of mining properties, is when they are
      capable of commercial production. Where funds have been borrowed
      specifically to finance a project, the amount capitalized represents the
      actual borrowing costs incurred. Where the funds used to finance a project
      form part of general borrowings, the amount capitalized is calculated
      using a weighted average of rates applicable to relevant general
      borrowings of the Company during the period.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      | All other borrowing costs are recognized in the statement
      of operations and comprehensive income in the period in which they are
      incurred. Borrowing costs are included as part of interest paid in the
      statement of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (v)  | Major maintenance and repairs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      | Expenditure on major maintenance and repairs includes the
      cost of replacement parts of assets and overhaul costs. Where an asset or
      part of an asset is replaced and it is probable that future economic
      benefits associated with the item will be available to the Company, that
      expenditure is capitalized and the carrying amount of the item replaced
      derecognized. Similarly, overhaul costs associated with major maintenance
      are capitalized where it is probable that future economic benefits will be
      available and any remaining carrying amounts of the cost of previous
      overhauls are derecognized. All other costs are expensed as
    incurred.                            

12

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | (vi) | Depreciation and depletion
| | ---- | --------------------------

| |    | Depreciation and depletion is provided so as to write off
      the cost less estimated residual values of mining properties, buildings,
      plant and equipment on the following bases:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | Mining properties are depleted using the
      units-of-production method over the mines estimated and economically
      proven and probable reserves and an estimate of the portion of resources
      expected to be classified as reserves. Depletion is calculated on a
      mine-by-mine basis. If a mine has significant components with differing
      useful lives, depletion is calculated based on the useful life of each
      component. For the years ended December 31, 2013 and 2012, the Company had
      one operating mine, the San Dimas mine, and therefore all of the depletion
      in the years ended December 31, 2013 and 2012 relates to the San Dimas
      mine.                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | Mineralization at the San Dimas mine is segregated into
      reserves (including proven and probable), resources (including measured,
      indicated and inferred) and exploration potential. The definitions applied
      by the Company to these categories of mineralization are as
  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | a) | Proven and probable mineral reserve - the economically
      mineable part of a measured or indicated mineral resource demonstrated by
      at least a preliminary feasibility study. This study must include adequate
      information on mining, processing, metallurgical, economic and other
      relevant factors that demonstrate, at the time of reporting, that economic
      extraction can be justified. A mineral reserve includes diluting materials
      and allowances for losses that may occur when the material is
  mined.                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | b) | Measured mineral resource - that part of a mineral
      resource for which quantity, grade or quality, densities, shape, and
      physical characteristics are so well established that they can be
      estimated with confidence sufficient to allow the appropriate application
      of technical and economic parameters, to support production planning and
      evaluation of the economic viability of the deposit. The estimate is based
      on detailed and reliable exploration, sampling and testing information
      gathered through appropriate techniques from locations such as outcrops,
      trenches, pits, workings and drill holes that are spaced closely enough to
      confirm both geological and grade continuity.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | c) | Indicated mineral resource - that part of a mineral
      resource for which quantity, grade or quality, densities, shape and
      physical characteristics, can be estimated with a level of confidence
      sufficient to allow the appropriate application of technical and economic
      parameters, to support mine planning and evaluation of the economic
      viability of the deposit. The estimate is based on detailed and reliable
      exploration and testing information gathered through appropriate
      techniques from locations such as outcrops, trenches, pits, workings and
      drill holes that are spaced closely enough for geological and grade
      continuity to be reasonably assumed.                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | d) | Inferred mineral resource - that part of a mineral
      resource for which quantity and grade or quality can be estimated on the
      basis of geological evidence and limited sampling and reasonably assumed,
      but not verified, geological and grade continuity. The estimate is based on limited information
      and sampling gathered through appropriate techniques from locations such
  as outcrops, trenches, pits, workings and drill holes.                                                                                                                                                                                                                                                                                       

13

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | e) | Exploration potential  mineralization quantified by the
      Companys geologists with a sufficient degree of confidence to include in
      the Companys acquisition fair value determination, but without the
      necessary level of measurement precision to enable it to be classified as
      a mineral reserve or resource as defined by National Instrument 43-101 
      Standards of Disclosure for Mineral Projects (NI 43-101).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | During the year ended December 31, 2013, the Company
      changed the depletion estimation methodology for the San Dimas mine. This
      change in methodology is considered a change in estimate and has been
      accounted for prospectively from October 1, 2013. Prior to the change in
      estimate, the total mining property capitalized in respect of the San
      Dimas asset was depleted on a units-of- production basis over 100% of
      probable reserves and 75% of inferred resources and exploration potential.
      The depletion estimation methodology was revised in order to divide the
      total mining property capitalized in respect of the San Dimas asset into a
      depletable component and a non-depletable component. The value assigned to
      the depletable component is equal to the value assigned to the proven and
      probable reserves (which includes measured and indicated resources) and
      inferred resources of the San Dimas asset. The value assigned to the non-
      depletable component is the value assigned to the exploration potential of
      the San Dimas asset. The allocation of values to the proven and probable
      reserves, inferred resources and exploration potential of the San Dimas
      asset are based on the discounted cash flow analysis of the Companys
      life-of-mine plan. The depletable component of the capitalized total
      mining property is depleted over 100% of reserves and a portion of
      resources included in the Companys life-of- mine plan. The non-depletable
      component is not depleted but, in combination with the depletable
      component, is evaluated for impairment when events and changes in
      circumstances indicate that the carrying amount may not be recoverable.
      This change in estimate has not had a material impact on the Companys
      depletion expense in the current period and is not expected to have a
      material impact in future periods.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Each year, coincident with the updated reserve and
      resource estimates and preparation of the updated life-of-mine plan, the
      Company expects that a portion of inferred resources will be transferred
      to reserves and a portion of exploration potential will be transferred to
      inferred resources. As a result, the category of non-depletable
      mineralization is expected to reduce and, in the absence of further
      additions to exploration potential, eventually be fully classified within
      the depletable component over the life of mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

14

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

When considering the percentage of resources to include
      in the depletion base of the depletable component, management considers
      which of the Companys inferred resources are believed to eventually be
      classified as measured and indicated resources, and if economically
      recoverable, will be included in proven and probable reserves. In
      assessing which resources to include so as to best reflect the useful life
      of the mine, management considers resources that have been included in the
      life-of-mine plan. To be included in the life-of-mine
  plan, resources need to be above the cut-off
grade set by management, which means that the resource can be economically mined
and is therefore commercially viable. This consistent systematic method for
inclusion in the life-of-mine plan takes into account managements view of the
gold price and exchange rates. In addition, in order to determine the proportion
of resources to include in the depletion base, management considers the
existence, commercial viability and potential economic recovery of such
resources based on historical experience and available geological and drilling
information of the area under consideration and other operations/parts of the
mine that are contiguous to the area under consideration. In instances where
management is able to demonstrate the economic recovery of such resources with a
high level of confidence, such additional resources, which may also include
certain of the inferred resources, are included in the calculation of
depletion.

The Company capitalizes certain
development costs to mining properties. Development costs generally comprise
expenditures for drifts to access resources and exploration potential and costs
to construct raises and ramps. Development costs incurred during a period are
added to the total mining property capitalized at the commencement of the period
in calculating the depletion expense. Future development costs necessary to
access inferred resources, have been taken into account when determining the
pattern of depletion for the Companys mining properties; such costs are
included in the life-of-mine plan and are determined by the Companys geologists
and engineers based on an in-depth knowledge of the mine and planned development
work to access resources.

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

Buildings, plant and equipment
unrelated to production are depreciated using the straight-line method based on
estimated useful lives.

Where significant parts of an asset
have differing useful lives, depreciation is calculated on each separate
component. The estimated useful life of each item or part has due regard to both
its own physical life limitations and the present assessment of economically
recoverable reserves of the mine property at which the item is located, and to
possible future variations in those assessments. Estimates of remaining useful
lives and residual values are reviewed annually. Changes in estimates which
affect depreciation are accounted for prospectively.

The expected useful lives are as
follows:

Mining properties and leases are based
on estimated life of reserves and a portion of mineralization expected to be
classified as reserves on a units-of-production basis.

15

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | Plant and buildings                 | 8 years to life of mine
| | ----------------------------------- | -----------------------
| | Construction equipment and vehicles | 4 years                
| | Computer equipment                  | 3 years                

| | (vii) | Disposal                                                                                                                                                                                                                                                       
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                
| |       | Upon disposition, an item within mining interests is
      derecognized, and the difference between its carrying value and net sales
      proceeds is disclosed as a profit or loss on disposal in the statement of
      operations and comprehensive income.

| | (i) | Provisions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | General                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Provisions are recognised when the Company has a present
      obligation (legal or constructive) as a result of a past event, it is
      probable that an outflow of resources embodying economic benefits will be
      required to settle the obligation and a reliable estimate can be made of
      the amount of the obligation. Where the Company expects some or all of a
      provision to be reimbursed, for example under an insurance contract, the
      reimbursement is recognised as a separate asset, but only when the
      reimbursement is virtually certain. The expense relating to any provision
      is presented in the statement of operations and comprehensive income net
      of any reimbursement. If the effect of the time value of money is
      material, provisions are discounted using a current pre-tax rate that
      reflects where appropriate, the risks specific to the liability. Where
      discounting is used, the increase in the provision due to the passage of
      time is recognised as finance expense in the statement of operations and
      comprehensive income.                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Decommissioning liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The Company records a liability for the estimated
      reclamation and closure of a mine, including site rehabilitation and
      long-term treatment and monitoring costs, discounted to net present value.
      The net present value is determined using the liability-specific risk-free
      interest rate. The estimated net present value of reclamation and closure
      cost obligations is re-measured on an annual basis or when changes in
      circumstances occur and/or new material information becomes available.
      Increases or decreases to the obligations arise due to changes in legal or
      regulatory requirements, the extent of environmental remediation required,
      cost estimates and the discount rate applied to the obligation. The net
      present value of the estimated cost of these changes is recorded in the
      period in which the change is identified and quantifiable. Reclamation and
      closure cost obligations relating to operating mine and development
      projects are recorded with a corresponding increase to the carrying
      amounts of related assets.                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (j) | Leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The Company holds leases for office space and equipment.
      Leases are classified as either finance or operating leases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Assets held under finance leases, where substantially all
      of the risks and rewards of ownership have passed to the Company, are
      capitalized on the statement of financial position at the lower of the
      fair value of the leased property and the present value of
  the minimum lease payments during the lease term calculated
      using the interest rate implicit in the lease agreement. The corresponding
      liability to the lessor is included in the statement of financial position
      as a finance lease obligation. Capitalized amounts are determined at the
      inception of the lease and are depreciated over the shorter of their
      useful economic lives or the lease term. Lease payments are apportioned
      between finance charges and reduction of the lease obligation so as to
      achieve a constant rate of interest on the remaining balance of the
      liability. Finance charges are recognized in the statement of operations
      and comprehensive income unless they are directly attributable to
      qualifying assets, in which case they are capitalized in accordance with
  the Companys accounting policy on borrowing costs.

16

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |     | Leases where substantially all of the risks and rewards
      of ownership have not passed to the Company are classified as operating
      leases. Rentals payable under operating leases are charged to the
      statement of operations and comprehensive income on a straight-line basis
      over the lease term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (k) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Income tax expense comprises current and deferred tax.
      Current tax and deferred tax are recognized in the statement of operations
      and comprehensive income except to the extent they relate to items
      recognized directly in equity or in other comprehensive income (OCI), in
      which case the related taxes are recognized in equity or OCI.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Current income tax is the expected cash tax payable or
      receivable on the taxable income or loss for the year, which may differ
      from earnings reported in the statement of operations and comprehensive
      income due to items of income or expenses that are not currently taxable
      or deductible for tax purposes, using tax rates substantively enacted at
      the reporting date, and any adjustment to tax payable in respect of
      previous years.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Deferred income tax is recognized in respect of unused
      tax losses, tax credits and temporary differences between the carrying
      amounts of assets and liabilities for financial reporting purposes and the
      amounts used for taxation purposes. Deferred tax is measured at the tax
      rates that are expected to be applied to temporary differences when they
      reverse, based on the tax rates that have been substantively enacted at
      the reporting date. Deferred tax assets and liabilities are offset if
      there is a legally enforceable right to offset current tax liabilities and
      assets, and they relate to income taxes levied by the same tax authority
      on the same taxable entity, or on different tax entities, but they intend
      to settle current tax liabilities and assets on a net basis or their tax
      assets and liabilities will be realized simultaneously.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | A deferred tax asset is recognized for unused tax losses,
      tax credits and deductible temporary differences, to the extent that it is
      probable that future taxable profits will be available against which they
      can be utilized. Deferred tax assets are reviewed at each reporting date
      and are reduced to the extent that it is no longer probable that the
      related tax benefit will be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | The Company records foreign exchange gains and losses
      representing the impacts of movements in foreign exchange rates on the tax
      bases of non-monetary assets and liabilities which are denominated in
      foreign currencies. Foreign exchange gains and losses relating to deferred
      income taxes are included in deferred income tax expense or recovery in
      the statements of operations and comprehensive
income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

17

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |     | The Company recognizes uncertain tax positions in its
      financial statements when it is considered more likely than not that the
      tax position shall be sustained.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (l) | Income per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Basic income per share is computed by dividing net income
      by the weighted average number of common shares outstanding during the
      period. The computation of diluted income per share assumes the
      conversion, exercise or contingent issuance of securities only when such
      conversion, exercise or issuance would have a dilutive effect on income
      per share. For this purpose, the treasury stock method is used for the
      assumed proceeds upon the exercise of stock options and warrants that are
      used to purchase common shares at the average market price during the
      period.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (m) | Sharebased payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| | (i)  | Equity-settled awards to employees and others providing
      similar services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      | For equity-settled awards, the fair value of the award is
      charged to the statement of operations and comprehensive income and
      credited to share-based payment reserve (within equity in the consolidated
      statement of financial position) ratably over the vesting period, after
      adjusting for the number of awards that are expected to vest. The fair
      value of the awards is determined at the date of grant using the
      Black-Scholes option pricing model. At each statement of financial
      position date prior to vesting, the cumulative expense representing the
      extent to which the vesting period has expired and managements best
      estimate of the awards that are ultimately expected to vest, is computed
      and charged to the statement of operations and comprehensive
  income.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      | No expense is recognized for awards that ultimately do
      not vest. For any awards that are cancelled, any expense not yet
      recognized is recognized immediately in the statement of operations and
      comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      | Where the terms of an equity-settled award are modified,
      as a minimum an expense is recognized as if the terms had not been
      modified over the original vesting period. In addition, an expense is
      recognized for any modification which increases the total fair value of
      the share-based payment arrangement as measured at the date of
      modification, over the remainder of the vesting period.                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (ii) | Cash-settled awards to employees and others providing
      similar services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      | For cash-settled awards, the fair value is re-calculated
      at each statement of financial position date until the awards are settled,
      using the Black-Scholes option pricing model (with any changes in fair
      value recognized in the statement of operations and comprehensive income).
      During the vesting period, a liability is recognized representing the
      portion of the vesting period which has expired at the statement of
      financial position date multiplied by the fair value of the awards
      expected to vest at that date. After vesting, the full fair value of the
      unsettled awards at each statement of financial position date is
      recognized as a liability. Movements in value are recognized in the
      statement of operations and comprehensive income.                      

18

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | (iii) | Equity or cash-settled awards to employees and others
      providing similar services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | The Company accounts for awards issued under the 2013
      Phantom Share Unit Plan as equity-settled. For equity-settled awards, the
      fair value of the award is charged to the statement of operations and
      comprehensive income and credited to share-based payment reserve (within
      equity in the consolidated statement of financial position) ratably over
      the vesting period. The fair value of the awards is determined at the date
      of grant using the closing market price of the Companys shares. At each
      statement of financial position date prior to vesting, the cumulative
      expense representing the extent to which the vesting period has expired
      and managements best estimate of the awards that are ultimately expected
      to vest, is computed and charged to the statement of operations and
      comprehensive income.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | No expense is recognized for awards that ultimately do
      not vest. For any awards that are cancelled, any expense not yet
      recognized is recognized immediately in the statement of operations and
      comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | Where the terms of an equity-settled award are modified,
      as a minimum an expense is recognized as if the terms had not been
      modified over the original vesting period. In addition, an expense is
      recognized for any modification which increases the total fair value of
      the share-based payment arrangement as measured at the date of
      modification, over the remainder of the vesting
period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | (n) | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | All financial instruments are required to be measured at
      fair value on initial recognition. Measurement in subsequent periods
      depends upon whether the financial instrument is classified as fair value
      through profit or loss (FVTPL), available-for-sale, held-to- maturity,
      loans and receivables, or other liabilities. Financial instruments
      classified as FVTPL are measured at fair value with unrealized gains and
      losses recognized in the statement of operations and comprehensive income.
      Available-for-sale financial assets are measured at fair value with
      unrealized gains and losses recognized in other comprehensive income.
      Financial assets classified as held-to-maturity, loans and receivables,
      and financial liabilities classified as other financial liabilities, are
      measured at amortized cost. Transaction costs in respect of financial
      assets and liabilities which are measured as FVTPL are recognized in the
      statement of operations and comprehensive income immediately. Transaction
      costs in respect of other financial instruments are included in the
      initial fair value measurement of the financial instrument.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company may enter into derivative contracts or
      financial instruments and non- financial contracts containing embedded
      derivatives. Embedded derivatives are required to be accounted for
      separately at fair value as derivatives when the risks and characteristics
      of the embedded derivatives are not closely related to those of their host
      contract, and the host contract is not designated as fair value through
      profit or loss. These embedded derivatives are measured at fair value with
      changes in fair value recognized in other comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Trade and other receivables and cash are classified as
      loans and receivables, which are measured at amortized cost. Trade and
      other payables, and the promissory note are classified as other financial
      liabilities, which are measured at amortized cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

19

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

Derecognition

A financial asset (or, where
applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognised when:

| |  | The rights to receive cash flows
      from the asset have expired, or                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company has transferred its rights to receive cash
      flows from the asset or has assumed an obligation to pay the received cash
      flows in full without material delay to a third party under a
      pass-through arrangement; and either (a) the Company has transferred
      substantially all the risks and rewards of the asset, or (b) the Company
      has neither transferred nor retained substantially all the risks and
      rewards of the asset, but has transferred control of the asset.

| |     | When the Company has transferred its rights to receive
      cash flows from an asset or has entered into a pass-through arrangement,
      and has neither transferred nor retained substantially all of the risks
      and rewards of the asset, nor transferred control of it, the asset is
      recognised to the extent of the Companys continuing involvement in it. In
      that case, the Company also recognises an associated liability. The
      transferred asset and the associated liability are measured on a basis
      that reflects the rights and obligations that the Company has
    retained.                                                                                                                                                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Continuing involvement that takes the form of a guarantee
      over the transferred asset is measured at the lower of the original
      carrying amount of the asset and the maximum amount of consideration that
      the Company could be required to pay under the guarantee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (o) | Segmented reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company operates in one geographic area. The
      Companys operating segments reflect the Companys different mining
      interests and are reported in a manner consistent with the internal
      reporting to the chief operating decision maker, used to assess each
      segments performance. Primero currently has two reportable segments: the
      San Dimas mine (which currently includes the Ventanas property) and the
      Cerro del Gallo project.                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (p) | Measurement uncertainties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The preparation of consolidated financial statements
      requires that the Companys management make assumptions and estimates of
      effects of uncertain future events on the carrying amounts of the
      Companys assets and liabilities at the end of the reporting period.
      Actual results may differ from those estimates as the estimation process
      is inherently uncertain. Actual future outcomes could differ from present
      estimates and assumptions, potentially having material future effects on
      the Companys consolidated financial statements. Estimates are reviewed on
      an ongoing basis and are based on historical experience and other facts
      and circumstances. Revisions to estimates and the resulting effects on the
      carrying amounts of the Companys assets and liabilities are accounted for
      prospectively.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The significant assumptions about the future and other
      major sources of estimation uncertainty as at the end of the reporting
      period that have a significant risk of resulting in a material adjustment
      to the carrying amounts of the Companys assets and liabilities are as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

20

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | (i)   | Economic recoverability and probability of future
      economic benefits of exploration, evaluation and development
  costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | The Company has determined that exploration drilling,
      evaluation, development and related costs incurred which have been
      capitalized are economically recoverable. Management uses several criteria
      in its assessments of economic recoverability and probability of future
      economic benefits including geological and metallurgical information,
      history of conversion of mineral deposits to proven and probable reserves,
      scoping and feasibility studies, accessible facilities, and existing
      permits for the life of mine plan. The estimates contained within these
      criteria could change over time which could affect the economic
      recoverability of capitalized costs.                                                                                                                                                                                                                                                                   
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ii)  | Estimated recoverable ounces                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | The carrying amounts of the Companys mining properties
      are divided into a depletable and non-depletable pool; the depletable pool
      is depleted based on recoverable ounces contained in proven and probable
      reserves and a portion of resources (Note 2 (h)). The Company includes a
      portion of resources in its depletion base where it is considered probable
      that those resources will be economically extracted. Changes to estimates
      of recoverable ounces and depletable costs including changes resulting
      from revisions to the Companys mine plans can result in a change to
      future depletion rates.                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iii) | Determination of useful lives of property, plant and
      equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | Assets other than mining interests are depreciated using
      the straight-line method. Should the actual useful life of the property,
      plant or equipment vary future depreciation charges may change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iv)  | Impairment charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | At the end of each reporting period, the Company assesses
      each cash generating unit to determine whether any indication of
      impairment exists. Where an indicator of impairment exists, an impairment
      analysis is performed. The impairment analysis requires the use of
      estimates and assumptions including amongst others, long-term commodity
      prices, discount rates, length of mine life, future production levels,
      future operating costs, future capital expenditures and tax positions
      taken. The estimates and assumptions are subject to risk and uncertainty;
      hence, there is the possibility that changes in circumstances will alter
      these projections, which may impact the recoverable amount of the assets.
      In such circumstances some or all of the carrying value of the assets may
      be further impaired or the impairment charge reduced with the impact
      recorded in the consolidated statements of operations.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (v)   | Decommissioning liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | The Companys accounting policy for the recognition of
      accrued site closure costs requires significant estimates and assumptions
      such as the requirements of the relevant legal and regulatory framework,
      the magnitude of possible disturbance and the timing, extent and costs of
      required closure and rehabilitation activity. Changes to these estimates and assumptions may
      result in future actual expenditures differing from the amounts currently
      provided for. The decommissioning liability is periodically reviewed and
  updated based on the available facts and circumstances.                                                                                                                                                                                                                                                                                                                                                                      

21

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | (vi)   | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |        | The Company is periodically required to estimate the tax
      basis of assets and liabilities. Where applicable tax laws and regulations
      are either unclear or subject to varying interpretations, it is possible
      that changes in these estimates could occur that materially affect the
      amounts of deferred income tax assets and liabilities recorded in the
      financial statements. Changes in deferred tax assets and liabilities
      generally have a direct impact on earnings in the period of changes. Each
      period, the Company evaluates the likelihood of whether some portion or
      all of each deferred tax asset will not be realized. This evaluation is
      based on historic and future expected levels of taxable income, the
      pattern and timing of reversals of taxable temporary timing differences
      that give rise to deferred tax liabilities, and tax planning initiatives.
      Levels of future taxable income are affected by, among other things, the
      market price for gold and silver, production costs, quantities of proven
      and probable reserves, interest rates and foreign currency exchange
      rates.
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (vii)  | Valuation of inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |        | All inventory is valued at the lower of average cost or
      net realizable value. Management is required to make various estimates and
      assumptions to determine the value of stockpiled ore, in-circuit gold
      inventories and doré inventories. The estimates and assumptions include
      surveyed quantities of stockpiled ore, in- circuit process volumes, gold
      and silver contents of both, costs to recover saleable ounces, recoverable
      ounces once processed and the price per ounce of gold or silver when
      ounces of gold and silver are expected to be recovered and sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (viii) | The fair values of assets and liabilities acquired in
      business combinations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |        | In a business combination, it generally takes time to
      obtain the information necessary to measure the fair values of assets
      acquired and liabilities assumed and the resulting goodwill, if any.
      Changes to the provisional measurements of assets and liabilities acquired
      including the associated deferred income taxes and resulting goodwill may
      be retrospectively adjusted when new information is obtained until the
      final measurements are determined (within one year of acquisition date).
      The determination of fair value as of the acquisition date requires
      management to make certain estimates about future events, including, but
      not restricted to, estimates of mineral reserves and resources acquired,
      exploration potential, future operating costs and capital expenditures,
      future metal prices, long-term foreign exchange rates, and discount
      rates.                                                                                                                                                                                                                                               
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (ix)   | Share-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |        | The Company makes certain estimates and assumptions when
      calculating the fair values of share-based compensation granted. The
      significant estimations and assumptions include expected
volatility, expected life, expected dividend rate and expected risk-free rate of
return. Changes in these assumptions may result in a material change to the
expense recorded for the issuance of share-based compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

22

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

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

| | (i)   | Tax ruling in Mexico                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | The Company has taken the position that if the Mexican
      tax laws relative to the APA ruling do not change and the Company does not
      change the structure of the silver purchase agreement, the ability of the
      Company to continue to pay taxes in Mexico based on realized prices of
      silver will continue for the life of the San Dimas mine (see Notes 5 and 9
      (b)). Should this judgment change, there would be a material change in
      both the income and deferred tax position recognized by the
  Company.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (ii)  | Liability to sell silver to Silver Wheaton
  Caymans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | The Company has accounted for and presented the liability
      to sell silver to Silver Wheaton Caymans (Note 5) net within the mining
      interests rather than as a separate liability in the Companys statement
      of financial position.                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (iii) | Componentization of property, plant and
  equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | Assets are componentized for the purposes of
      depreciation. Should the componentization of assets change, depreciation
      charges may vary materially in the future.                                                                                                                                                                                                                                                                                                                                                                   
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (iv)  | Asset acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | The Company has determined that the acquisition of Cerro
      (Note 4) was an asset acquisition rather than a business combination. This
      is considered a significant judgment that could have a material impact on
      the assets and liabilities recognized as well as any future depletion
      expense.                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (v)   | Functional currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | The determination of a subsidiarys functional currency
      often requires significant judgment where the primary economic environment
      in which the subsidiary operates may not be clear. This can have a
      significant impact on the consolidated results of the
  Company.                                                                                                                                                                                                                                                       

23

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|3. | Changes in accounting policies and recent
      pronouncements issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Changes in accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company has made no changes to its accounting
      policies during the year ended December 31, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Recent pronouncements issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company has adopted the following new and revised
      standards, along with any consequential amendments, effective January 1,
      2013. These changes were made in accordance with the applicable
      transitional provisions.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In June 2011, the IASB issued amendments to IAS 1 
      Presentation of Financial Statements (IAS 1). The amendments are
      effective for annual periods beginning on or after July 1, 2012. The
      amendments to IAS 1 require companies preparing financial statements in
      accordance with IFRS to group together items within OCI that may be
      reclassified to the profit or loss section of the Consolidated Statement
      of Operations from those that will not be reclassified. The amendments
      also reaffirm existing requirements that items in OCI and profit or loss
      should be presented as either a single statement or two consecutive
      statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company applied the amendments to IAS 1 effective
      January 1, 2013 and accordingly has grouped OCI items as required for both
      the current and comparative period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In May 2011, the IASB issued IFRS 10 - Consolidated
      Financial Statements(IFRS 10), which supersedes SIC 12 -
      Consolidation- Special Purpose Entitiesand the requirements relating
      to consolidated financial statements in IAS 27 - Consolidated and
      Separate Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | IFRS 10 changes the definition of control so that the
      same criteria apply to all entities, both operating and special purpose
      entities, to determine control. The revised definition focuses on the need
      to have both power over the investee to direct relevant activities and
      exposure to variable returns before control is present.                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company adopted IFRS 10 on January 1, 2013 on a
      retrospective basis; there has been no impact upon the Companys financial
      statements as a result of the adoption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | IFRS 11, Joint Arrangements, supersedes IAS 31,
      Interests in Joint Ventures,and requires joint arrangements to be
      classified either as joint operations or joint ventures depending on the
      contractual rights and obligations of each investor that jointly controls
      the arrangement. For joint operations, a company recognizes its share of
      assets, liabilities, revenues and expenses of the joint operation. An
      investment in a joint venture is accounted for using the equity method as
      set out in IAS 28, Investments in Associates and Joint Ventures
      (amended in 2011).                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company adopted IFRS 11 on January 1, 2013 on a
      retrospective basis. There was no impact on the Companys financial
      statements in the prior period. The Company accounted for its investment
      in the entity which owns the Cerro del Gallo project as a joint operation
      until December 19, 2013 when it purchased the remaining 30.8% of the Cerro
      del Gallo project from Goldcorp Inc. The Company now consolidates 100% of
      the subsidiary which owns the Cerro del Gallo project (Note 4).                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | IFRS 13 Fair Value Measurement (IFRS 13) was issued by
      the IASB in May 2011, and is effective for annual periods beginning on or
      after January 1, 2013. IFRS 13 was issued to
remedy the inconsistencies in the requirements for measuring
      fair value and for disclosing information about fair value measurement in
      various current IFRSs. IFRS 13 defines fair value as the price that would
      be received to sell an asset or paid to transfer a liability in an orderly
  transaction between market participants at the measurement date.                                                                                                                          

24

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|   | IFRS 13 relates to how to measure fair value, not what
      should be measured at fair value. The Company adopted IFRS 13 on January
      1, 2013 on a prospective basis. The adoption of IFRS 13 did not require
      any adjustments to the valuation techniques used by the Company to measure
      fair value and did not result in any measurement adjustments as at January
      1, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In October 2011, the IASB issued IFRIC 20 - Stripping
      Costs in the Production Phase of a Mine                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (IFRIC 20). IFRIC 20 clarifies the requirements for
      accounting for the costs of stripping activities in the production phase
      of an open-pit mine when two benefits accrue: (i) usable ore that can be
      used to produce inventory and (ii) improved access to further quantities
      of material that will be mined in future periods. The IFRIC allows a
      company to determine a measure to allocate costs between inventory
      produced and the stripping activity asset; the IFRIC provides examples of
      measures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | IFRIC 20 is effective for annual periods beginning on or
      after January 1, 2013. The Cerro del Gallo project is planned to be an
      open pit mine. The Company will apply the provisions of IFRIC 20 to the
      Cerro del Gallo project and develop a policy for allocation of costs once
      stripping activity begins.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company has reviewed new and revised accounting
      pronouncements that have been issued but are not yet effective and
      determined that the following may have an impact in the future on the
      Company:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | As of January 1, 2015, Primero will be required to adopt
      IFRS 9, Financial Instruments, which is the result of the first
      phase of the IASBs project to replace IAS 39, Financial Instruments:
      Recognition and Measurement. The new standard replaces the current
      multiple classification and measurement models for financial assets and
      liabilities with a single model that has only two classification
      categories: amortized cost and fair value. The Company is currently
      assessing the impact that IFRS 9 will have on its financial
    statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4. | Acquisition of Cerro Resources NL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | 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 (the "Arrangement") under the Australian
      Corporations Act 2001. Cerro was an exploration and development company
      whose principal asset was 69.2% ownership of the feasibility stage Cerro
      Del Gallo project, a gold-silver-copper deposit located in the state of
      Guanajuato, Mexico.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Under the terms of the Arrangement, each Cerro
      shareholder received 0.023 of a Primero common share for each Cerro common
      share held, and each Cerro option holder received 0.023 of a Primero
      option for each Cerro option held. Additionally, Cerro shareholders
      received 80.01% of the common shares of a newly incorporated company,
      Santana Minerals Limited ("Santana"). Santana assumed Cerro's interests in
      the Namiquipa, Espiritu Santo, Mt Philp and Kalman projects, shares in
      Syndicated Metals Limited and approximately $4 million in cash. The
      Company subscribed for a 19.99% interest in Santana, which is held by the
      Company as an equity accounted investment. It has been determined
      significant influence exists due to Primeros 25% representation on the Santana Board of
Directors. As such, the Company records its share of Santanas quarterly profit
or loss, and adjusts the carrying value of the investment accordingly. There are
currently no transactions between the Company and Santana. The initial value
assigned to the Companys interest in Santana was based on 19.99% of Santanas
total market capitalization.

25

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

After the spinout of Santana, Cerros
only asset was its interest in the Cerro del Gallo project. The Company
determined that the Cerro del Gallo project was not a business in accordance
with the definition in IFRS 3 Business combinations, and therefore it
accounted for the acquisition as an asset acquisition rather than a business
combination.

On December 19, 2013, the Company
acquired the remaining 30.8% interest in the Cerro del Gallo project from a
subsidiary of Goldcorp Inc. The consideration comprised an upfront cash payment
of $8 million, plus contingent payments based on meeting certain milestones or
market conditions. The contingent payments include $8 million (the First
Contingent Payment) after achieving commercial production on the phase I heap
leach operation; $5 million if the date of the First Contingent Payment occurs
before December 19, 2018 and the gold price averages $1,500 per ounce for a
consecutive 30 day period within one year following the date of the First
Contingent Payment, and not later than December 19, 2018; $14 million (the
Second Contingent Payment) on announcement of a decision by Primero to
construct a carbon-in-leach mill for Phase II (the Third Contingent Payment),
and $5 million if the date of the Second Contingent Payment occurs before
December 19, 2018 and the gold price averages $1,500 per ounce for a consecutive
30 day period within one year following the date of the Second Contingent
Payment, and not later than December 19, 2018 (the Fourth Contingent
Payment).

The First, Second, Third and Fourth
Contingent Payments are considered to be contingent liabilities. These
contingent liabilities have not been included in the purchase consideration as
at December 31, 2013, and shall only be recognized if and when the contingency
in question is satisfied. The purchase price of the 30.8% interest in the Cerro
del Gallo project is considered to be $8 million prior to any of the
contingencies being satisfied. The Company determined that the Cerro del Gallo
project was not a business in accordance with the definition in IFRS 3
Business combinationsat the date of purchasing the remaining 30.8% and
therefore it also accounted for the acquisition as an asset acquisition rather
than a business combination.

The following table summarizes the fair
value of the consideration transferred to Cerro shareholders and Goldcorp Inc.
for the respective purchase of 69.2% and 30.8% of the Cerro del Gallo project,
including transaction costs and the amounts of identified assets acquired and
liabilities assumed:

26

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |                           |  | Purchase of 69.2% |   |  | Purchase of 30.8% | 
| | ------------------------- |  | ----------------- | - |  | ----------------- | 
| |                           |  |                   |   |  |                   | 
| | Purchase price            |  | $                 |   |  | $                 | 
| | Shares                    |  | 93,337            |   |  | -                 | 
| | Stock options             |  | 759               |   |  | -                 | 
| | Cash                      |  | 2,782             |   |  | 8,000             | 
| | Transaction costs         |  | 890               |   |  | -                 | 
| |                           |  | 97,768            |   |  | 8,000             | 
| |                           |  |                   |   |  |                   | 
| | Net assets acquired:      |  | $                 |   |  | $                 | 
| | Cash                      |  | 300               |   |  | 77                | 
| | Working capital and other |  | (2,794            | ) |  | 547               | 
| | Property and equipment    |  | 410               |   |  | 239               | 
| | Mineral property          |  | 99,852            |   |  | 7,137             | 
| |                           |  | 97,768            |   |  | 8,000             | 

|5. | Silver purchase agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In 2004, the owner of the San Dimas mine entered into an
      agreement to sell all the silver produced at the San Dimas mine for a term
      of 25 years to Silver Wheaton Caymans in return for an upfront payment
      comprising cash and shares of Silver Wheaton Corp. and a per ounce payment
      of the lesser of $3.90 (adjusted for annual inflation), or the market
      price. The Company was required to assume the agreement, with amendments,
      when it acquired the San Dimas mine. The amendments provided that for each
      of the first four years after the acquisition date, the first 3.5 million
      ounces per annum of silver produced by the San Dimas mine, plus 50% of the
      excess silver above this amount, must be sold to Silver Wheaton Caymans at
      the lesser of $4.04 per ounce (adjusted by 1% per year) and market prices.
      After four years, for the life of the mine, the first 6 million ounces per
      annum of silver produced by the San Dimas mine, plus 50% of the excess
      silver above this amount, must be sold to Silver Wheaton Caymans at the
      lesser of $4.20 per ounce (adjusted by 1% per year) and market prices. All
      silver not sold to Silver Wheaton Caymans is available to be sold by the
      Company at market prices.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The expected cash flows associated with the sale of the
      silver to Silver Wheaton Caymans at a price lower than market price have
      been reflected in the fair value of the mining interest recorded upon
      acquisition of the San Dimas mine. The Company has presented the value of
      any expected future cash flows from the sale of any future silver
      production to Silver Wheaton Caymans as part of the mining interest, as
      the Company did not receive any of the upfront payment which was made by
      Silver Wheaton to acquire its interest in the silver production of the San
      Dimas mine. Further, the Company does not believe that the agreement to
      sell to Silver Wheaton Caymans meets the definition of an onerous contract
      or other liability as the obligation to sell silver to Silver Wheaton
      Caymans only arises upon production of the silver (Note 2
  (p)).                                                                                                                                                                                                                                                                                                                                                                                        

27

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|6. | Revenue                               
|-- | --------------------------------------
|   |                                       
|   | Revenue comprises the following
sales:

2013
    
    
    2012$
    
    
    $Gold
    
    157,304
    
    
    145,224Silver (Note 5)
    
    43,022
    
    
    37,715200,326
    
    
    182,939


|   | As described in Note 5, for the first four years
      post-acquisition of the San Dimas mine, the Company is entitled to sell
      50% of silver production above a 3.5 million ounce annual threshold at
      market prices. The contract year for the purposes of the threshold runs
      from August 6 of a year to August 5 of the next year. The Company sold
      999,162 ounces of silver at market prices during the year ended December
      31, 2013 (2012  716,229).
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|7. | General and administrative expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | General and administrative expenses comprise the
      following:                                                                                                                                                                                                                                                                                                                                                                                                                     

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


|   | An additional $0.3 million of share-based compensation is
      included in operating expenses for the year ended December 31, 2013 (2012
      - $1.2 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8. | Other expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | When Primero acquired the San Dimas mine in August 2010,
      a potential liability was known to exist related to the registration of
      employees at San Dimas under the Mexican social security system (IMSS).
      Mexico has a legal requirement that employees are registered for IMSS and
      that their employers pay premiums under the IMSS. The employees were not
      registered because government provided social security benefits were not
      available in the vicinity of the mine due to the remoteness of the
      location. Instead benefits were provided by the employer, DMSL. After the
      acquisition of the mine, Primero continued to provide social security
      benefits to its Mexican employees.                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company was in talks with the IMSS authority for
      approximately two years and the change in the Mexican federal government
      brought matters to a conclusion. The outcome was that effective June 1,
      2013 all of the Mexican employees were registered for IMSS and the
      Company is paying social security premiums on their behalf. In
      addition, the IMSS authority assessed the Company $6.9 million in respect
      of past amounts due (including penalties and interest), dating back to
      August 2010, which the Company paid in August 2013. The amount that
      relates to 2013 ($1.4 million) has been charged to operating expenses
      while the amount that relates to 2012 and earlier years ($5.5 million) has
  been charged to other expenses in the statement of operations.

28

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|9. | Income taxes
|-- | ------------
|   |             
|   | (a)         

2013
    
    
    2012$
    
    
    $Earnings before income taxes
    
    41,150
    
    
    44,675Canadian federal and provincial income tax rate
    
    25.75%
    
    
    25.00%Expected income tax expense
    
    (10,596
    )
    
    (11,169
    )(Increase) decrease attributable to:Effect of
      different foreign statutory rates on earnings of subsidiaries
    
    (1,695
    )
    
    (2,062
    )Share-based payments
    
    (18
    )
    
    (407
    )Additional
      deductible expenses
    
    10,497
    
    
    13,778Impact of foreign exchange
    
    331
    
    
    2,554Impact of
      foreign exchange on deferred income tax assets and liabilities
    
    (1,169
    )
    
    9,822Impact of Mexican inflation on
      tax values
    
    1,757
    
    
    1,531Withholding
      taxes on intercompany interest
    
    (4,750
    )
    
    (4,947
    )Recovery of Luxembourg taxes
    
    -
    
    
    1,473Royalty taxes in
      Mexico
    
    (35,864
    )
    
    -Benefit of tax losses (not recognized)
    
    (3,893
    )
    
    (5,695
    )Income tax (expense) recovery
    
    (45,400
    )
    
    4,878Income tax expense is
      represented by:Current tax (expense) recovery
    
    (2,063
    )
    
    660Deferred tax (expense) recovery
    
    (43,337
    )
    
    4,218Income tax (expense) recovery
    
    (45,400
    )
    
    4,878


On December 11, 2013, the Mexican
government enacted a tax reform to introduce a mining royalty effective January
2014. This royalty is deductible for tax purposes and is calculated as 7.5% of a
royalty base which is computed as follows:

29

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

Taxable revenues for income tax
purposes (except interest and inflationary adjustment), less allowable
deductions for income tax purposes (except interest, inflationary adjustment,
depreciation and mining fees), less prospecting and exploration expenses of the
year.

The Company has taken the position that
the royalty is an income tax as it is based on a measure of revenue less certain
specified costs. On substantial enactment, a taxable temporary difference
arises, as mining assets and financial assets/liabilities have a book basis but
no tax basis for purposes of the royalty. The Company has recognized a deferred
tax liability of $35.9 million as at December 31, 2013 in respect of this
royalty. This deferred tax liability will be drawn down to $nil as a reduction
to tax expense over the life of mine as the mine and its related assets are
depleted/depreciated.

The Companys overall Canadian
statutory tax rate increased from 25% in 2012 to 25.75% in 2013.

There is no taxation related to the
other comprehensive income balance recorded by the Company.

(b) The significant components of the
Companys deferred tax liabilities and assets are as follows:

December 31,
    
    
    December 31,2013
    
    
    2012$
    
    
    $Non-capital losses and other
      future deductions
    
    12,913
    
    
    13,847Decommissioning liability to be recovered
    
    1,351
    
    
    904Other
    
    17,642
    
    
    4,464Deferred tax assets
    
    31,906
    
    
    19,215Mineral property, plant and equipment
    
    (61,668
    )
    
    (9,442
    )Deferred tax liabilities
    
    (61,668
    )
    
    (9,442
    )Net deferred tax (liability) asset
    
    (29,762
    )
    
    9,773


The Company believes that it is
probable that the results of future operations will generate sufficient taxable
income to realize the above noted deferred tax assets. Of the Companys total
deferred tax asset of $31.9 million, $7.5 million is expected to be recovered
within twelve months of the statement of financial position date and the
remainder after twelve months of the financial position date. Of the Companys
total deferred tax liability of $61.7 million, $3.9 million is expected to be
paid within twelve months of the statement of financial position date and the
remainder after twelve months of the statement of financial position date. The
Company has total unused tax losses of $87.7 million that are available without
restriction of use to carry forward against future taxable income of the
entities in which the losses arose, however, $44.7 million of these losses (of
which $4.4 million expire in 2020, 2021, and 2022 and $40.3 million expire in
2030, 2032, and 2033) relate to entities that have a history of losses, and may
not be used to offset taxes in other entities. The majority of the remainder of
the losses expire in 2021.

30

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

Deductible temporary differences and
unused tax losses for which no deferred tax assets have been recognized are
attributable to the following:

December 31,
    
    
    December 31,2013
    
    
    2012$
    
    
    $Non-capital losses
    
    50,825
    
    
    17,323Capital losses
    
    3,563
    
    
    3,064Share issuance costs
    
    2,987
    
    
    6,511Accrued liabilities and other
    
    8,150
    
    
    14,945Special mining duties
    
    8,339
    
    
    -73,864
    
    
    41,843


|    | The aggregate amount of taxable temporary differences
      associated with investments in subsidiaries for which deferred taxes have
      not been recognized, as at December 31, 2013 is $19.8 million.                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On October 17, 2011 the Companys Mexican subsidiary
      filed an application for an advance pricing agreement (APA) with the
      Mexican tax authorities on the appropriate price for the intercompany sale
      of silver under the silver purchase agreement. On October 4, 2012, the
      Mexican tax authorities ruled on the APA. The ruling confirmed that the
      Company's Mexican subsidiary appropriately recorded revenue and taxes from
      sales under the silver purchase agreement at realized prices rather than
      spot prices effective from August 6, 2010.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | 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 the Company continues to sell silver
      from its San Dimas mine on the same terms and there are no changes in the
      application of Mexican tax laws relative to the APA ruling, the Company
      expects to pay taxes on realized prices for the life of the San Dimas
      mine.                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10. | Income per share (EPS)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Basic income per share amounts are calculated by dividing
      the net income for the year by the weighted average number of common
      shares outstanding during the year.                                                                                                                                                                                                                                                                                                                                                                                                                

| |                                                              |  | 2013        |   |  | 2012       | 
| | ------------------------------------------------------------ |  | ----------- | - |  | ---------- | 
| |                                                              |  |             |   |  |            | 
| |                                                              |  |             |   |  |            | 
| | Net (loss) income attributable to
      shareholders (basic) |  | (4,250      | ) |  | 49,553     | 
| | Net (loss) income attributable to shareholders (diluted)     |  | (4,250      | ) |  | 49,553     | 
| | Weighted average number of shares (basic)                    |  | 108,528,425 |   |  | 91,469,356 | 
| | Weighted average
      number of shares (diluted)            |  | 108,903,821 |   |  | 91,635,428 | 
| | Basic (loss) income per share ($s)                           |  | (0.04       | ) |  | 0.54       | 
| | Diluted (loss) income per share ($s)                         |  | (0.04       | ) |  | 0.54       | 

31

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

The following is a reconciliation of
the basic and diluted weighted average number of common shares:

| |                                                          |  | 2013        |  |  | 2012       | 
| | -------------------------------------------------------- |  | ----------- |  |  | ---------- | 
| |                                                          |  |             |  |  |            | 
| |                                                          |  |             |  |  |            | 
| | Weighted average number of ordinary shares
      - basic |  | 108,528,425 |  |  | 91,469,356 | 
| | Potentially
      dilutive options (i)                   |  | 375,396     |  |  | 166,072    | 
| | Weighted average number of ordinary shares - diluted     |  | 108,903,821 |  |  | 91,635,428 | 

(i) Calculated using the treasury
buy-back method

For the years ended December 31, 2013
and 2012, certain of the outstanding stock options had a dilutive effect, which
had a minor impact on basic income per share. The following table lists the
equity securities whose exercise price exceeded the Companys average market
price in the period, and therefore were anti-dilutive in nature:

2013
    
    
    2012Stock options
    
    5,745,240
    
    
    7,144,490Warrants
    
    20,800,000
    
    
    20,800,000


|    | On January 29, 2014, the Company issued 100,000 common
      shares upon the exercise of stock options. This was the only transaction
      involving shares or potential shares between the reporting date and the
      date of completion of these financial statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                            
|11. | Inventories                                                                                                                                                                                                                                                                

2013
    
    
    2012$
    
    
    $Supplies
    
    4,981
    
    
    4,929Finished goods
    
    1,297
    
    
    3,759Work-in-progress
    
    5,893
    
    
    2,35612,171
    
    
    11,044


The total amount of inventory expensed
during the year was $120.3 million (2012 - $97.1 million). No inventory is
carried at fair value less costs to sell.

Substantially all inventory is expected
to be recovered within 12 months of the statement of financial position date.

32

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|12. | Mining interests                                                                                 
|--- | -------------------------------------------------------------------------------------------------
|    |                                                                                                  
|    | Mining interests include mining and exploration
      properties and related plant and equipment:

Mining
    
    
    Exploration and
    
    
    
    
    
    Plant,
    
    
    Constructionproperties
    
    
    evaluation
    
    
    Land and
    
    
    equipment
    
    
    in
    
    
    Computerand
      leases
    
    
    assets
    
    
    buildings
    
    
    and vehicles
    
    
    progress
    
    
    equipment
    
    
    Total$
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $CostAt January 1, 2012
    
    416,465
    
    
    -
    
    
    50,562
    
    
    53,416
    
    
    2,408
    
    
    1,637
    
    
    524,488Additions
    
    -
    
    
    13,537
    
    
    167
    
    
    4,028
    
    
    23,022
    
    
    278
    
    
    41,032Reclassifications and
      adjustments
    
    26,569
    
    
    (13,537
    )
    
    577
    
    
    1,868
    
    
    (17,131
    )
    
    -
    
    
    (1,654
    )Assets written off
    
    -
    
    
    -
    
    
    (100
    )
    
    (909
    )
    
    -
    
    
    (6
    )
    
    (1,015
    )At December 31, 2012
    
    443,034
    
    
    -
    
    
    51,206
    
    
    58,403
    
    
    8,299
    
    
    1,909
    
    
    562,851Additions
    
    122,188
    
    
    -
    
    
    2,015
    
    
    10,219
    
    
    42,084
    
    
    692
    
    
    177,198Reclassifications and
      adjustments
    
    15,461
    
    
    -
    
    
    2,262
    
    
    2,694
    
    
    (20,417
    )
    
    -
    
    
    -Assets written off
    
    -
    
    
    -
    
    
    (69
    )
    
    (402
    )
    
    -
    
    
    (5
    )
    
    (476
    )At December 31, 2013
    
    580,683
    
    
    -
    
    
    55,414
    
    
    70,914
    
    
    29,966
    
    
    2,596
    
    
    739,573Depreciation and
      depletionAt January 1, 2012
    
    26,364
    
    
    -
    
    
    2,871
    
    
    8,408
    
    
    -
    
    
    421
    
    
    38,064Depreciation and depletion charged for the
      year
    
    18,865
    
    
    -
    
    
    2,283
    
    
    7,303
    
    
    -
    
    
    408
    
    
    28,859Accumulated depreciation on assets written off
    
    -
    
    
    -
    
    
    (10
    )
    
    (191
    )
    
    -
    
    
    (3
    )
    
    (204
    )At December 31, 2012
    
    45,229
    
    
    -
    
    
    5,144
    
    
    15,520
    
    
    -
    
    
    826
    
    
    66,719Depreciation and depletion
      charged for the year
    
    25,575
    
    
    -
    
    
    2,308
    
    
    8,283
    
    
    -
    
    
    642
    
    
    36,808Accumulated depreciation on assets written off
    
    -
    
    
    -
    
    
    (10
    )
    
    (192
    )
    
    -
    
    
    (5
    )
    
    (207
    )At December 31, 2013
    
    70,804
    
    
    -
    
    
    7,442
    
    
    23,611
    
    
    -
    
    
    1,463
    
    
    103,320Carrying amountAt December 31, 2012
    
    397,805
    
    
    -
    
    
    46,062
    
    
    42,883
    
    
    8,299
    
    
    1,083
    
    
    496,132At December 31, 2013
    
    509,879
    
    
    -
    
    
    47,972
    
    
    47,303
    
    
    29,966
    
    
    1,133
    
    
    636,253


All property and assets related to the
San Dimas mine are pledged as security for the Companys obligations under the
silver purchase agreement and the promissory note entered into upon the
acquisition of the San Dimas mine (Notes 5 and 13). In addition, the Cerro del
Gallo project is pledged as security for the Companys obligations under the
promissory note (Note 13).

33

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

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

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

For the years ended December 31, 2013
and 2012, $14.3 million and $11.6 million , respectively, of development costs
were included in the recognized value of mining properties of which $12.4
million and $10.0 million, respectively, were included in the depletable
component. For the year ended December 31, 2013, $55.0 million of future
development costs were included in the calculation of depletion expense.

Depletion expense for the year ended
December 31, 2013 was $25.6 million (2012 - $18.9 million). Had the depletion
expense been calculated without inclusion of inferred resources and, where
applicable, exploration potential, and related future development costs, the
depletion expense would have been $65.0 million (2012 - $70.5 million).

The basis for calculating the depletion
expense is described in Note 2, Significant accounting policies.

Additionally, $0.6 million of depletion
cost was included in the inventories balance at December 31, 2013 (2012 - $0.8
million). Borrowing costs of $2.1 million were capitalized during 2013 (2012 -
$1.3 million) at a weighted average borrowing rate of 6% (2012  4.7%).
Included within mining properties for the year ended December 31, 2013 is a $0.1
million reduction of the decommissioning liability (2012 - $1.7 million
reduction).

34

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|13. | Current and long-term debt
|--- | --------------------------

(a)

December 31,
    
    
    December 31,2013
    
    
    2012$
    
    
    $Promissory note
    
    27,214
    
    
    40,000Total
    
    27,214
    
    
    40,000Less: Current portion of debt
    
    (5,000
    )
    
    (12,786
    )Long-term
      debt
    
    22,214
    
    
    27,214


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

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

(b) Finance expense

Finance expense comprised the
following:

2013
    
    
    2012$
    
    
    $Interest and accretion on convertible note
    
    -
    
    
    572Interest on promissory note
    
    2,057
    
    
    2,787Capitalization of borrowing costs
    
    (2,140
    )
    
    (1,287
    )Accretion on decommissioning liability
    
    642
    
    
    726Other
    
    115
    
    
    89674
    
    
    2,887


35

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|14. | Decommissioning liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The decommissioning liability consists 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 (2012 - $28.9
      million) and the present value of the obligation was estimated at $8.7
      million (2012- $8.3 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, management has assumed is in 22 years
      (2012  23 years). The discount rate of 7.75% used by the Company in 2013
      and 2012 is based on prevailing risk-free pre-tax rates in Mexico for
      periods of time which coincide with the period over which the
      decommissioning costs are discounted.

| |                                                    |  | $      |  
| | -------------------------------------------------- |  | ------ | -
| |                                                    |  |        |  
| | Decomissioning liability - January 1, 2012         |  | 9,373  |  
| | Change in estimate of mine life                    |  | (1,654 | )
| | Accretion expense                                  |  | 726    |  
| | Reclamation
      expenditures                     |  | (162   | )
| | Decomissioning liability - December 31,
      2012 |  | 8,283  |  
| |                                                    |  |        |  
| | Change in inflation rate                           |  | (145   | )
| | Accretion expense                                  |  | 642    |  
| | Reclamation expenditures                           |  | (50    | )
| | Decomissioning
      liability - December 31, 2013 |  | 8,730  |  

|15. | Share capital
|--- | -------------
|    |              
|    | (a)          

| |                                          |  | 2013        |  |  | 2012       | 
| | ---------------------------------------- |  | ----------- |  |  | ---------- | 
| | Common shares issued and fully paid      |  |             |  |  |            | 
| |                                          |  |             |  |  |            | 
| | At January 1                             |  | 97,205,622  |  |  | 88,259,831 | 
| | Issued during
      period (Note 15 (b)) |  | 18,520,413  |  |  | 8,945,791  | 
| | At
      December 31                     |  | 115,726,035 |  |  | 97,205,622 | 

| | (b) | Common shares issuance                                                                                                           
| | --- | ---------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                  
| |     | Share capital is recorded in the share capital reserve
      within Equity in the consolidated statement of financial
  position.
| |     |                                                                                                                                  
| |     | (i)                                                                                                                              
| |     |                                                                                                                                  
| |     | (ii)                                                                                                                             

36

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | (iii) | During the year ended December 31 2013, the Company
      issued 495,000 common shares upon the exercise of stock options.                                                       
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                  
| | (iv)  | On August 7, 2012 the Company issued 8,422,460 common
      shares to Goldcorp Inc. upon the conversion of the remaining $30 million
      of the Convertible Note (Note 13 (a)).
| |       |                                                                                                                                                                                  
| | (v)   | During the year ended December 31, 2012 the Company
      issued 523,331 common shares upon the exercise of stock
  options                                                      

| | (c) | Stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Under the Companys stock option plan (the Rolling
      Plan), the number of common shares that may be issued on the exercise of
      options granted under the plan is equal to 10% of the issued and
      outstanding shares of the Company at the time an option is granted (less
      any common shares reserved for issuance under other share compensation
      arrangements). The majority of options issued typically vest over two
      years; one third upon the date of grant, one third a year from the grant
      date, and one third two years from the grant date, however, this is at the
      discretion of the Board of Directors upon grant. All options are
      equity-settled and have a maximum term of ten years when granted. Vested
      options granted under the Rolling Plan will generally expire 90 days after
      the date that the optionee ceases to be employed by, provide services to,
      or be a director or officer of, the Company, and any unvested options will
      terminate immediately. Each employee share option converts into one common
      share of the Company on exercise. No amounts are paid or payable by the
      recipient upon receipt of the option. The options carry neither rights to
      dividends nor voting rights. Options may be exercised at any time from the
      date of vesting to the date of their expiry.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | As at December 31, 2013, the following stock options were
      outstanding and exercisable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

Outstanding
    
    
    ExercisableNumber
    
    
    
    
    
    Remaining
    
    
    Number
    
    
    
    
    
    Remainingof options
    
    
    Exercise
    
    
    contractual
    
    
    of options
    
    
    Exercise
    
    
    contractualExpiry date
    
    outstanding
    
    
    price
    
    
    life
      (years)
    
    
    exercisable
    
    
    price
    
    
    life
      (years)Cdn$
    
    
    
    
    
    
    
    
    Cdn$July 9, 2014
    
    10,000
    
    
    2.70
    
    
    0.4
    
    
    10,000
    
    
    2.70
    
    
    0.4September 8, 2014
    
    28,750
    
    
    5.22
    
    
    0.7
    
    
    28,750
    
    
    5.22
    
    
    0.7November 14, 2014
    
    34,500
    
    
    8.70
    
    
    0.8
    
    
    34,500
    
    
    8.70
    
    
    0.8December 3, 2014
    
    46,000
    
    
    8.70
    
    
    1.0
    
    
    46,000
    
    
    8.70
    
    
    1.0December 31, 2014
    
    155,250
    
    
    7.39
    
    
    1.0
    
    
    155,250
    
    
    7.39
    
    
    1.0August 6, 2015
    
    4,609,490
    
    
    6.00
    
    
    1.5
    
    
    4,609,490
    
    
    6.00
    
    
    1.5August 25, 2015
    
    1,645,000
    
    
    5.26
    
    
    1.6
    
    
    1,645,000
    
    
    5.26
    
    
    1.6November 3, 2015
    
    230,000
    
    
    7.53
    
    
    1.8
    
    
    230,000
    
    
    7.53
    
    
    1.8November 3, 2015
    
    230,000
    
    
    8.70
    
    
    1.8
    
    
    230,000
    
    
    8.70
    
    
    1.8November 12, 2015
    
    380,000
    
    
    6.43
    
    
    1.8
    
    
    380,000
    
    
    6.43
    
    
    1.8November 8, 2016
    
    300,000
    
    
    3.47
    
    
    2.8
    
    
    200,000
    
    
    3.47
    
    
    2.8March 31, 2017
    
    75,000
    
    
    2.60
    
    
    3.2
    
    
    25,000
    
    
    2.60
    
    
    3.2November 12, 2017
    
    60,000
    
    
    6.74
    
    
    3.7
    
    
    20,000
    
    
    6.74
    
    
    3.7July 9, 2019
    
    160,000
    
    
    2.70
    
    
    5.4
    
    
    160,000
    
    
    2.70
    
    
    5.47,963,990
    
    
    5.85
    
    
    1.8
    
    
    7,773,990
    
    
    5.90
    
    
    1.7


37

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

The following is a continuity schedule
of the options outstanding for the year:

| |                                      |  |           |   |  | Weighted | 
| | ------------------------------------ |  | --------- | - |  | -------- | 
| |                                      |  |           |   |  | average  | 
| |                                      |  | Number of |   |  | exercise | 
| |                                      |  | options   |   |  | price    | 
| |                                      |  |           |   |  | Cdn$     | 
| |                                      |  |           |   |  |          | 
| | Outstanding at January 1,
      2012 |  | 8,574,490 |   |  | 5.54     | 
| | Exercised                            |  | (523,331  | ) |  | 5.12     | 
| | Granted                              |  | 135,000   |   |  | 4.44     | 
| | Cancelled                            |  | (35,000   | ) |  | 4.20     | 
| | Forfeited                            |  | (346,669  | ) |  | 5.21     | 
| | Outstanding at December 31, 2012     |  | 7,804,490 |   |  | 5.57     | 
| | Granted                              |  | 866,525   |   |  | 7.92     | 
| | Exercised                            |  | (495,000  | ) |  | 4.38     | 
| | Cancelled                            |  | (70,000   | ) |  | 6.43     | 
| | Expired                              |  | (142,025  | ) |  | 7.99     | 
| | Outstanding at December 31, 2013     |  | 7,963,990 |   |  | 5.85     | 

The weighted average share price on the
date options were exercised during 2013 was Cdn$5.90 (2012  Cdn $6.31).

The 866,525 options granted in 2013
were issued to the former option holders of Cerro, pursuant to the terms of the
Arrangement (Note 4). The fair value of options granted was calculated using the
Black-Scholes option pricing model. For all grants, the assumed dividend yield
and forfeiture rate were nil and 5%, respectively. Other conditions and
assumptions were as follows:

Average
    
    
    
    Weightedexpected
    
    
    
    averageNumber of
    life of options
    Exercise
    Risk free
    Volatility
    Black-ScholesIssue date
    options
    (years)
    price
    interest rate
    (i)
    value assignedMay 22, 2013
    96,025
    0.3
    8.70
    1.03
    49
    0.03May 22, 2013
    46,000
    0.5
    6.52
    1.03
    44
    0.33May 22, 2013
    28,750
    1.3
    5.22
    1.03
    54
    1.39May 22, 2013
    34,500
    1.5
    8.70
    1.03
    54
    0.62May 22, 2013
    46,000
    1.5
    8.70
    1.03
    54
    0.64May 22, 2013
    155,250
    1.6
    7.39
    1.03
    54
    0.90May 22, 2013
    230,000
    2.5
    7.53
    1.03
    55
    1.27May
      22, 2013
    230,000
    2.5
    8.70
    1.03
    55
    1.06866,525


The fair value of the options granted
in 2012 was calculated using the Black-Scholes option pricing model. For all
grants, the assumed dividend yield and forfeiture rate were nil and 5%
respectively. Other conditions and assumptions were as follows:

38

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

Average
    
    
    
    Weightedexpected
    
    
    
    averageNumber of
    life of options
    Exercise
    Risk free
    Volatility
    Black-ScholesIssue date
    options
    (years)
    price
    interest rate
    (i)
    value assignedCdn$
    %
    %
    Cdn$November 12, 2012
    60,000
    3.5
    6.74
    1.19
    51
    2.56March 31, 2012
    75,000
    3.5
    2.60
    1.39
    47
    0.92


| | (i) | Volatility was determined based upon the average historic
      volatility of a number of comparable companies, where sufficient history
      of the Company was not available, calculated over the same period as the
      expected life of the option. Where sufficient history was available, the
      volatility was determined based upon the historic volatility of the
      Companys share price over the same period of time as the expected life of
      the option.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d)  | Warrants                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | As at December 31, 2013 and December 31, 2012, the
      Company had 20.8 million warrants outstanding which were exercisable to
      purchase 20.8 million common shares at a price of Cdn $8.00 until July 20,
      2015.                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Where warrants were issued as part of a unit or
      subscription receipt comprised of common shares and warrants, the value
      assigned to the warrants was based on their relative fair value (as
      compared to the shares issued), determined using the Black-Scholes pricing
      model. This value is assigned to the warrant reserve within equity in the
      consolidated statement of financial position.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (e) | Phantom Share Unit Plan                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company has three phantom
      share unit plans                                                                                                                                                                                                                                                                                                                                                                        

| | (i)  | On May 29, 2010, the Board of Directors approved the
      establishment of the Companys Phantom Share Unit Plan (PSUP); this is a
      cash-settled plan and the exercise price of all units is $nil. The amount
      to be paid out in respect of units which vest under the plan is the number
      of PSUs that vest multiplied by the volume weighted average price per
      share of the Company traded on the Toronto Stock Exchange over the last
      twenty trading days preceding the vesting date.                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (ii) | On May 28, 2012 the Companys shareholders approved the
      establishment of the Directors PSU plan (Directors PSUP). A person
      holding Director PSUs is entitled to elect to receive, at vesting either
      (1) a cash amount equal to the number of Directors PSUs that vest
      multiplied by the volume weighted average trading price per common share
      over the five preceding trading days, or (2) the number of common shares
      equal to the number of Directors PSUs (subject to the total number of
      common shares issuable at any time under the Directors PSU Plan, combined
      with all other common shares issuable under any other equity compensation
      arrangements then in place, not exceeding 10% of the total number of
      issued and outstanding common shares of the Company). If no election is
      made, the Company will pay out such Directors PSUs in
  cash.

39

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| | (iii) | On May 8, 2013 the Companys shareholders approved the
      establishment of the 2013 PSU plan (2013 PSUP). A person holding PSUs
      issued under this plan is entitled to receive, at vesting either (1) a
      cash amount equal to the number of 2013 PSUs that vest multiplied by the
      volume weighted average trading price per common share over the five
      preceding trading days, (2) the number of common shares equal to the
      number of PSUs (subject to the total number of common shares issuable at
      any time under the PSU Plan, combined with all other common shares
      issuable under any other equity compensation arrangements then in place,
      not exceeding 10% of the total number of issued and outstanding common
      shares of the Company), or (3) a combination of cash and equity. The
      choice of settlement is solely at the Company`s
  discretion.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following units were issued and
outstanding as at December 31, 3013 under the PSUP and Directors PSUP plans:

| |                   | Number of   |                   |                  
| | ----------------- | ----------- | ----------------- | -----------------
| |                   | units       |                   |                  
| | Date of issue     | outstanding | Vesting date      | Expiry date      
| | February 27, 2011 | 95,666      | February 27, 2014 | December 31, 2014
| | May 19, 2011      | 31,105      | May 19, 2014      | December 31, 2014
| | November 8, 2011  | 33,333      | November 8, 2014  | December 31, 2014
| | March 31, 2012    | 781,126     | March 31, 2014    | December 31, 2014
| | March 31, 2012    | 781,127     | March 31, 2015    | December 31, 2015
| | March 31, 2012    | 38,460      | December 1, 2014  | December 31, 2014
| | May 25, 2012      | 31,410      | May 25, 2014      | December 31, 2014
| | May 25, 2012      | 31,411      | May 25, 2015      | December 31, 2015
| | August 3, 2012    | 3,008       | August 3, 2014    | December 31, 2014
| | August 3, 2012    | 3,009       | August 3, 2015    | December 31, 2015
| | November 12, 2012 | 28,902      | November 12, 2014 | December 31, 2014
| | November 12, 2012 | 28,902      | November 12, 2015 | December 31, 2015
| | February 25, 2013 | 271,617     | February 25, 2014 | December 31, 2014
| | February 25, 2013 | 271,617     | February 25, 2015 | December 31, 2015
| | February 25, 2013 | 271,617     | February 25, 2016 | December 31, 2016
| | March 28, 2013    | 56,223      | December 1, 2014  | December 31, 2014
| | March 28, 2013    | 56,224      | December 1, 2015  | December 31, 2015
| | June 26, 2013     | 5,605       | December 1, 2014  | December 31, 2014
| | June 26, 2013     | 5,606       | December 1, 2015  | December 31, 2015
| | Total             | 2,825,968   |                   |                  

All of the units issued under the PSUP
and Directors PSUP have been measured at the reporting date using their fair
values. The total amount of expense recognized in the statement of operations
and comprehensive income during 2013 in relation to the PSUP and Directors PSUP
was $5.8 million (2012 - $14.7 million). The total liability recognized at
December 31, 2013 in respect of the PSUP and Directors PSUP was $8.1 million
(2012 - $16.9 million), of which $5.1 million (2012 - $12.9 million) is
classified as a current liability, reported within trade and other payables,
with the remaining $3.0 million (2012 - $4.0 million) classified as a long-term
liability, reported within other long-term liabilities. None of these
cash-settled units was vested at December 31, 2013, but all remain
outstanding.

The Company issued 814,851 units under
the PSUP during the year ended December 31, 2013 (2012  2,657,821 units), and
185,483 units under the Directors PSUP (2012  115,384 units).

40

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

The fair value of the units as at
December 31, 2013 was calculated using the Black-Scholes option pricing model
with an assumed dividend yield and forfeiture rate of nil and 0% respectively.
Other conditions and assumptions were as follows:

Number of
    
    
    Remaining
    
    
    Exercise
    
    
    Risk free
    
    
    Volatility
    
    
    Black-ScholesIssue date
    
    units
    
    
    Term
      (years)
    
    
    price
    
    
    interest rate
    
    
    (i)
    
    
    value
      assignedCdn$
    
    
    %
    
    
    %
    
    
    Cdn$February 27, 2011
    
    95,666
    
    
    0.2
    
    
    0.00
    
    
    1.13
    
    
    43
    
    
    4.68May 19, 2011
    
    31,105
    
    
    0.4
    
    
    0.00
    
    
    1.13
    
    
    45
    
    
    4.68November 8, 2011
    
    33,333
    
    
    0.9
    
    
    0.00
    
    
    1.13
    
    
    50
    
    
    4.68March 31, 2012
    
    1,562,253
    
    
    0.2
    
    
    0.00
    
    
    1.13
    
    
    42
    
    
    4.68March 31, 2012
    
    38,460
    
    
    0.9
    
    
    0.00
    
    
    1.13
    
    
    49
    
    
    4.68May 25th, 2012
    
    62,821
    
    
    0.4
    
    
    0.00
    
    
    1.13
    
    
    45
    
    
    4.68August 3, 2012
    
    6,017
    
    
    0.6
    
    
    0.00
    
    
    1.13
    
    
    48
    
    
    4.68November 12, 2012
    
    57,804
    
    
    0.9
    
    
    0.00
    
    
    1.13
    
    
    50
    
    
    4.68February 25, 2013
    
    814,851
    
    
    1.2
    
    
    0.00
    
    
    1.13
    
    
    54
    
    
    4.68March 28, 2013
    
    112,447
    
    
    0.9
    
    
    0.00
    
    
    1.13
    
    
    45
    
    
    4.68June 26, 2013
    
    11,211
    
    
    0.9
    
    
    0.00
    
    
    1.13
    
    
    45
    
    
    4.68Total
    
    2,825,968


| | (i) | Volatility was determined based upon the average historic
      volatility of a number of comparable companies, where sufficient history
      of the Company was not available, calculated over the same period as the
      expected life of the unit. Where sufficient history was available, the
      volatility was determined based upon the historic volatility of the
      Companys share price over the same period of time as the expected life of
      the unit.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following units were issued and
outstanding as at December 31, 2013 under the 2013 PSUP:

Number ofunitsDate of issue
    outstanding
    Vesting date
    Expiry dateMay 10, 2013
    81,033
    May 10, 2014
    December 31, 2014May 10, 2013
    81,033
    May 10, 2015
    December 31, 2015May 10, 2013
    81,034
    May 10, 2016
    December 31, 2016June 26, 2013
    20,530
    June 26, 2014
    December 31, 2014June 26, 2013
    20,530
    June 26, 2015
    December 31, 2015June 26, 2013
    20,530
    June 26, 2016
    December 31, 2016August 12, 2013
    29,948
    August 12, 2014
    December 31, 2014August 12, 2013
    29,948
    August 12, 2015
    December 31, 2015August 12, 2013
    29,949
    August 12, 2016
    December 31, 2016November 8, 2013
    5,853
    November 8, 2014
    December 31, 2014November 8, 2013
    5,853
    November 8, 2015
    December 31, 2015November 8, 2013
    5,853
    November 8, 2016
    December 31, 2016Total
    412,094


During the year ended December 31,
2013, the Company issued 418,576 2013 PSUP units (2012  nil).

The 2013 PSUP is accounted for as an
equity-settled plan. All of the outstanding units have been measured at the
reporting date using their grant date fair value, calculated as the grant date
closing price of Primero shares on the TSX. The total
      amount of expense recognized in the statement of operations and
      comprehensive income for the year ended December 31, 2013 in relation to
the 2013 PSUP was $0.7 million (2012 - $nil).

41

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|16. | Supplementary cash flow information                              
|--- | -----------------------------------------------------------------
|    |                                                                  
|    | Changes in non-cash working capital comprise the
      following:

2013
    
    
    2012$
    
    
    $Trade and other receivables
    
    (4,235
    )
    
    2,985Taxes receivable
    
    (2,104
    )
    
    14,636Prepaid expenses
    
    (3,123
    )
    
    974Inventories
    
    (853
    )
    
    (782
    )Trade and other payables
    
    6,135
    
    
    5,823Taxes payable
    
    1,589
    
    
    1,766(2,591
    )
    
    25,402


|17. | Capital management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | There have been no significant changes in the Companys
      objectives, policies and processes for managing its capital, including
      items the Company regards as capital, during the year ended December 31,
      2013. The Company manages its common shares, stock options, warrants and
      debt as capital. The Companys objectives in managing capital are to
      safeguard its ability to continue as a going concern in order to provide
      returns for shareholders and benefits for other stakeholders. To meet this
      objective, the Company will ensure it has sufficient cash resources to
      pursue the exploration and development of its mining properties, to fund
      future production at the San Dimas mine, development of the Cerro del
      Gallo project and potential acquisitions.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | To support these objectives the Company manages its
      capital structure and makes adjustments to it in light of changes in
      economic conditions and risk characteristics of its underlying assets. To
      maintain or adjust its capital structure, the Company may attempt to issue
      shares, issue debt, acquire or dispose of assets or adjust the amount of
      cash held. The Company does not currently pay out dividends.                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Companys investment policy is to invest its cash in
      highly liquid short-term interest-bearing investments with maturities of
      90 days or less from the original date of acquisition, selected with
      regards to the expected timing of expenditures from continuing operations.
      The Company is subject to a number of externally imposed capital
      requirements relating to its debt (Note 13).The requirements are both
      financial and operational in nature; the Company has complied with all
      such requirements during the year.                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Pursuant to the terms of the promissory note (Note 13),
      the Company is required to maintain the following financial
    covenants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

42

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

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

|    | Tangible net worth means equity less intangible assets.
      Free cash flow means cash flow from operating activities as reported in
      the consolidated statement of cash flows, less the aggregate of capital
      expenditures at the San Dimas mine, principal and interest on the
      promissory note and convertible debt and up to $5 million per year on
      account of acquisition opportunities. 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|18. | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Companys financial instruments at December 31, 2013
      consist of cash, trade and other receivables, trade and other payables,
      and debt.                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | At December 31, 2013, the carrying amounts of cash, trade
      and other receivables, and trade and other payables are considered to be a
      reasonable approximation of their fair values due to their short-term
      nature.                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The fair value of the promissory note upon initial
      recognition was considered to be its face value and the promissory note
      has subsequently been carried at amortized cost. At December 31, 2013 the
      fair value of the promissory note was $27.3 million using a discounted
      future cash-flow analysis. The Company had no derivative assets at
      December 31, 2013 or December 31, 2012.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Fair value measurements of financial assets and
      liabilities recognized in the consolidated statement of financial
      position                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | IFRS requires that financial instruments are assigned to
      a fair value hierarchy that reflects the significance of inputs used in
      making fair value measurements as follows:                                                                                                                                                                                                                             

| |  | Level 1 - quoted (unadjusted)
      prices in active markets for identical assets or liabilities;                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 2 - inputs other than quoted prices included in
      Level 1 that are observable for the asset or liability, either directly
      (i.e. as prices) or indirectly (i.e. derived from prices); and
| |  | Level 3 - inputs for the asset or
      liability that are not based on observable market data.                                                                                                         

At December 31, 2013, the Company does
not have any financial assets or liabilities measured at fair value.

Derivative instruments - Embedded
derivatives

Financial instruments and non-financial
contracts may contain embedded derivatives, which are required to be accounted
for separately at fair value as derivatives when the risks and characteristics
of the embedded derivatives are not closely related to those of their host
contract and the host contract is not carried at fair value. The Company
regularly assesses its financial instruments and non-financial contracts to
ensure that any embedded derivatives are accounted for in accordance with its
policy. There were no embedded derivatives requiring separate accounting at
December 31, 2013 or 2012.

43

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

Financial instrument risk
exposure

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

| | (a) | Credit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Credit risk is the risk that the counterparty to a
      financial instrument will cause a financial loss for the Company by
      failing to discharge its obligations. Credit risk is primarily associated
      with trade and other receivables; however, it also arises on cash. To
      mitigate exposure to credit risk on financial assets, the Company ensures
      non-related counterparties demonstrate minimum acceptable credit
      worthiness and ensures liquidity of available funds.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company closely monitors its financial assets and
      does not have any significant concentration of credit risk with
      non-related parties. The Company invests its cash in highly rated
      financial institutions and sells its products exclusively to organizations
      with strong credit ratings. The credit risk associated with trade
      receivables at December 31, 2013 is considered to be negligible.                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Companys maximum exposure to credit risk at December
      31, 2013 and 2012 is as follows:                                                                                                                                                                                                                                                                                                                                                                                                          

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

| | (b) | Liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Liquidity risk is the risk that the Company will
      encounter difficulty in meeting obligations associated with its financial
      liabilities that are settled by delivering cash or another financial
      asset. The Company has developed a planning, budgeting and forecasting
      process to help determine the funds required to support its normal
      operating requirements on an ongoing basis and its expansionary
    plans.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | In the normal course of business, the Company enters into
      contracts and performs business activities that give rise to commitments
      for future minimum payments. The following table summarizes the
      contractual maturities of the Companys financial liabilities and
      operating and capital commitments at December 31,
2013:                                                                                              

44

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

December 31December 31, 2013
    
    
    2012Within
    
    
    
    
    
    Over1
      year
    
    
    2-5
      years
    
    
    5
      years
    
    
    Total
    
    
    Total$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Trade and other payables and accrued
      liabilities
    
    33,958
    
    
    -
    
    
    -
    
    
    33,958
    
    
    23,645Share based payments
    
    5,054
    
    
    3,090
    
    
    -
    
    
    8,144
    
    
    16,864Promissory note and interest
    
    6,678
    
    
    23,584
    
    
    -
    
    
    30,262
    
    
    45,196Minimum rental and operating lease payments
    
    2,530
    
    
    2,269
    
    
    -
    
    
    4,799
    
    
    2,836Reclamation and closure cost obligations
    
    -
    
    
    4,790
    
    
    26,557
    
    
    31,347
    
    
    28,869Commitment to
      purchase plant and equipment
    
    6,062
    
    
    -
    
    
    -
    
    
    6,062
    
    
    3,69454,282
    
    
    33,733
    
    
    26,557
    
    
    114,572
    
    
    121,104


| |     | The Company expects to discharge its commitments as they
      come due from its existing cash balances, cash flow from operations and
      collection of receivables.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                        
| |     | The total operating lease expense during the year ended
      December 31, 2013 was $0.8 million (2012 - $0.6 million).                                                
| |     |                                                                                                                                                                        
| | (c) | Market risk                                                                                                                                                            

| | (i) | Currency risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Currency risk is the risk that the fair values or future
      cash flows of the Companys financial instruments will fluctuate because
      of changes in foreign currency exchange rates. Exchange rate fluctuations
      may affect the costs incurred in the Companys operations. Gold is sold in
      U.S. dollars and costs are incurred principally in U.S. dollars and
      Mexican pesos. The appreciation of the Mexican peso against the U.S.
      dollar can increase the costs of gold production and capital expenditures
      in U.S. dollar terms. The Company also holds cash that is denominated in
      Canadian dollars and Mexican pesos which are subject to currency risk. The
      Companys head office general and administrative expenses are mainly
      denominated in Canadian dollars and are translated to US dollars at the
      average rate during the period, as such if the US dollar appreciates as
      compared to the Canadian dollar, the costs of the Company would decrease
      in US dollar terms. The Company is further exposed to currency risk
      through non- monetary assets and liabilities of its Mexican entity whose
      taxable profit or loss is denominated in a non-US dollar currency. A small
      amount of expenses were also incurred in Australian dollars during the
      year ended December 31, 2013 in relation to the acquisition of Cerro (Note
      4). Changes in exchange rates give rise to temporary differences resulting
      in a deferred tax liability or asset with the resulting deferred tax
      charged or credited to income tax expense.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | During the year ended December 31, 2013, the Company
      recognized a loss of $0.8 million on foreign exchange (2012 - loss of $0.9
      million). Based on the above net exposures at December 31, 2013, a 10%
      depreciation or appreciation of the Mexican peso against the U.S. dollar would result
      in a $8.2 million increase or decrease in the Companys after-tax net
      earnings (loss) (2012 - $4.5 million); and a 10% depreciation or
      appreciation of the Canadian dollar against the U.S. dollar would result
      in a $2.1 million increase or decrease in the Companys after-tax net
earnings (loss) (2012 - $2.7 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

45

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |       | The Company does not currently use derivative instruments
      to reduce its exposure to currency risk, however, management monitors its
      differing currency needs and tries to reduce its exposure to currency
      risks through exchanging currencies at what are considered to be optimal
      times.                                                                                                                                                                                                                                                                                                                                                                           
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (ii)  | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | Interest rate risk is the risk that the fair values and
      future cash flows of the financial instruments will fluctuate because of
      changes in market interest rates. The exposure to interest rates is
      monitored. The Company has very limited interest rate risk as the net
      exposure of financial instruments subject to floating interest rates is
      not material.                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iii) | Price risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | Price risk is the risk that the fair value or future cash
      flows of the Companys financial instruments will fluctuate because of
      changes in commodity prices. Profitability depends on sales prices for
      gold and silver. Metal prices are affected by numerous factors such as the
      sale or purchase of gold and silver by various central banks and financial
      institutions, interest rates, exchange rates, inflation or deflation,
      fluctuations in the value of the U.S. dollar and foreign currencies,
      global and regional supply and demand, and the political and economic
      conditions of major producing countries throughout the world.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | The table below summarizes the impact on profit after tax
      for a 10% change in the average commodity price achieved by the Company
      during the year. The analysis is based on the assumption that the gold and
      silver prices move 10% with all other variables held
  constant.                                                                                                                                                                                                                                                                                                                                                                                             

| |               |  | Increase (decrease) in income after
      taxes |  
| | ------------- |  | ----------------------------------------------- | -
| |               |  | for the year ended                              |  
| |               |  | December 31, 2013                               |  
| |               |  | $000s                                           |  
| | Gold prices   |  |                                                 |  
| | 10% increase  |  | 9,993                                           |  
| | 10% decrease  |  | (9,993                                          | )
| |               |  |                                                 |  
| | Silver prices |  |                                                 |  
| | 10% increase  |  | 1,511                                           |  
| | 10% decrease  |  | (1,511                                          | )

46

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

|19. | Related party transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Transactions with Goldcorp Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | At December 31, 2013, Goldcorp owned approximately 27% of
      the Companys common shares. The Company has a promissory note outstanding
      to a wholly-owned subsidiary of Goldcorp (Note 13). Interest accrues on
      the promissory note and is recorded within trade and other payables. A
      payment of $5 million plus accrued interest of $4.4 million was paid under
      the terms of the Promissory note on January 3, 2012. The second annual
      installment of $5 million plus accrued interest of $2.8 million was paid
      on December 31, 2012. In addition to the annual installments, the Company
      paid $7.8 million against the principal balance on February 21, 2013, in
      compliance with the free cash flow covenant contained in the promissory
      note. The third annual installment of $5 million plus accrued interest of
      $2.1 million was paid on December 31, 2013. The Company did not generate
      excess free cash flow during the year ended December 31, 2013.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | On December 19, 2013, the Company paid $8 million to a
      subsidiary of Goldcorp to acquire its 30.8 % interest in the Cerro del
      Gallo project, which increased the Companys interest to 100% (Note 4). On
      August 7, 2012, the Company repaid the $30 million convertible note due to
      a subsidiary of Goldcorp by issuing 8,422,460 common shares and paying
      accrued interest of $1.9 million in cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | During the year ended December 31, 2013, $0.9 million
      (2012 - $2.5 million) was paid to DMSL for the purchase of equipment,
      equipment leasing fees and services received under a transition services
      agreement between the Company and DMSL. These amounts are considered to be
      at fair value. As at December 31, 2013, the Company had an amount payable
      of $2.8 million outstanding to DMSL (2012 - $2.3 million). As at December
      31, 2013, the Company had an amount owing from Goldcorp Inc. of $nil (2012
      - $0.3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Compensation of key management personnel of the
      Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Aggregate compensation recognized in respect of key
      management personnel of the Company including directors is as
    follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |                              |  | 2013   |  |  | 2012   | 
| | ---------------------------- |  | ------ |  |  | ------ | 
| |                              |  | $      |  |  | $      | 
| |                              |  |        |  |  |        | 
| | Short-term employee benefits |  | 2,875  |  |  | 2,868  | 
| | Share-based
      payment    |  | 8,886  |  |  | 9,730  | 
| | Total                        |  | 11,761 |  |  | 12,598 | 

|    | The Company does not offer any post-employment benefits
      with respect to key management personnel.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|20. | Segmented information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Companys mining properties operate in one geographic
      area, Mexico. The Company has two operating segments, the San Dimas mine
      and the Cerro del Gallo project, which reflect the Companys different
      mining interests and are reported in a manner consistent with the
      internal reporting (to the chief operating
decision maker) used to assess each segments performance. Significant
information relating to reportable segments is summarized below; corporate
information is provided to form a reconciliation to the results of the Company
as at and for the years-ended December 31, 2013 and 2012, however does not
constitute a segment:

47

---

|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |                               |  |                   |  |  |                 |  |  |                   |  |  | Three months ended |  |  |           |  |  |                 |  |  |           | 
| | ----------------------------- |  | ----------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------ |  |  | --------- |  |  | --------------- |  |  | --------- | 
| |                               |  | December 31, 2013 |  |  |                 |  |  | December 31, 2012 |  |  |                    | 
| |                               |  | San Dimas         |  |  | Cerro Del Gallo |  |  | Corporate         |  |  | Total              |  |  | San Dimas |  |  | Cerro Del Gallo |  |  | Corporate | 
| |                               |  |                   |  |  |                 |  |  |                   |  |  |                    |  |  |           |  |  |                 |  |  |           | 
| | Equity investment             |  | -                 |  |  | -               |  |  | 1,042             |  |  | 1,042              |  |  | -         |  |  | -               |  |  | -         | 
| | Additions to mining interests |  | 67,750            |  |  | 109,276         |  |  | 172               |  |  | 177,198            |  |  | 40,902    |  |  | -               |  |  | 130       | 
| | Total assets                  |  | 635,050           |  |  | 109,618         |  |  | 38,256            |  |  | 782,924            |  |  | 653,393   |  |  | -               |  |  | 17,113    | 
| | Total liabilities             |  | 105,586           |  |  | 596             |  |  | 15,652            |  |  | 121,834            |  |  | 67,910    |  |  | -               |  |  | 30,858    | 

| |                                   |  |                   |   |  |                 |   |  |                   |   |  | Year ended |   |  |           |   |  |                  |  |  |           |  
| | --------------------------------- |  | ----------------- | - |  | --------------- | - |  | ----------------- | - |  | ---------- | - |  | --------- | - |  | ---------------- |  |  | --------- | -
| |                                   |  | December 31, 2013 |   |  |                 |   |  | December 31, 2012 |   |  |            |  
| |                                   |  | San Dimas         |   |  | Cerro Del Gallo |   |  | Corporate         |   |  | Total      |   |  | San Dimas |   |  | Cerro  Del Gallo |  |  | Corporate |  
| | Revenue                           |  | 200,326           |   |  | -               |   |  | -                 |   |  | 200,326    |   |  | 182,939   |   |  | -                |  |  | -         |  
| | Depreciation and depletion        |  | (35,901           | ) |  | (222            | ) |  | (113              | ) |  | (36,236    | ) |  | (27,969   | ) |  | -                |  |  | (86       | )
| | Finance expense                   |  | -                 |   |  | -               |   |  | (674              | ) |  | (674       | ) |  | -         |   |  | -                |  |  | (2,887    | )
| | Share of equity-accounted results |  | -                 |   |  | -               |   |  | (187              | ) |  | (187       | ) |  | -         |   |  | -                |  |  | -         |  
| | Income tax (expense) recovery     |  | (45,301           | ) |  | -               |   |  | (99               | ) |  | (45,400    | ) |  | 3,388     |   |  | -                |  |  | 1,490     |  
| | Net
      income (loss)           |  | 34,785            |   |  | (205            | ) |  | (38,830           | ) |  | (4,250     | ) |  | 84,267    |   |  | -                |  |  | (34,714   | )

|    | Intersegment sales and transfers are eliminated in the
      above information reported to the Companys chief operating decision
      maker.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                               
|21. | Commitments and contingencies                                                                                                                 
|    |                                                                                                                                               
|    | (a)                                                                                                                                           
|    |                                                                                                                                               
|    |                                                                                                                                               
|    |                                                                                                                                               
|    |                                                                                                                                               

48

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

| |     | 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. There has been no material change in this contingency
      during the year ended December 31, 2013.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | As at December 31, 2013, the Company had entered into
      commitments to purchase plant and equipment totaling $6.1 million (2012 -
      $3.7 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (c) | Due to the size, complexity and nature of the Companys
      operations, various legal and tax matters arise in the ordinary course of
      business. The Company accrues for such items when a liability is both
      probable and the amount can be reasonably estimated. In the opinion of
      management, any potential charges not yet accrued will not have a material
      effect on the consolidated financial statements of the
  Company.                                                                                                                                                                                                 

|22. | Announcement of acquisition of Brigus Gold
    Corp                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | On December 16, 2013, the Company announced that it has
      entered into an arrangement agreement (the "Arrangement Agreement") with
      Brigus whereby Primero will acquire all outstanding common shares of
      Brigus pursuant to a plan of arrangement (the "Plan of Arrangement").
      Brigus is a gold producing company whose principal assets are the Black
      Fox Black Fox mine site and adjacent exploration properties, Grey Fox and
      Pike River, located in Township of Black River-Matheson, Ontario,
      Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Pursuant to the Arrangement, Primero will acquire each
      outstanding Brigus common share for 0.175 of a Primero common share (the
      Exchange Ratio). In addition, Brigus shareholders will receive 0.1 of a
      common share in a newly incorporated company (SpinCo) for each Brigus
      common share as part of the Arrangement. SpinCo will hold Brigus
      non-Ontario assets and will be capitalized with approximately Cdn$10
      million in cash. Upon completion of the Arrangement, Brigus shareholders
      will hold, in aggregate, a 90.1% interest in SpinCo and Primero will hold
      the remaining 9.9% interest in SpinCo. All outstanding options to purchase
      Brigus common shares will be exchanged for options to purchase Primero
      common shares based upon the Exchange Ratio pursuant to the Arrangement.
      Following completion of the Arrangement, each outstanding warrant to
      purchase a Brigus common share will be exercisable to purchase 0.175 of a
      Primero common share and 0.1 of a SpinCo common share.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The transaction will be carried out by way of a
      court-approved plan of arrangement and will require approval by at least
      66 2/3% of the votes cast by the shareholders of Brigus at a special
      meeting. The issuance of the Companys common shares in connection with
      the proposed transaction will require the approval of a majority of the
      shareholders of Primero voting at a special meeting. In addition to
      shareholder and court approvals, the proposed transaction will be subject
      to applicable regulatory approvals and the satisfaction of certain other
      conditions customary in transactions of this nature. The shareholder
      meetings will be held on February 27, 2014.                                                                                                                                                                                                                                                                                                                                               

49

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|PRIMERO MINING CORP.                                                         
|-----------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                               
|DECEMBER 31, 2013                                                            
|(Amounts in
      thousands of United States dollars unless otherwise stated)

The Company will make a change of
control offer for Brigus outstanding $50 million 6.5% convertible senior
unsecured debentures (the Debentures) in accordance with their trust indenture
dated March 23, 2011. During the 30 day period following the effective date of
the Arrangement, Debenture holders will receive notice (the Debenture Change of
Control Notice) stating that a change of control has occurred along with an
offer to purchase the Debentures at 100% of the principal amount plus accrued
and unpaid interest on the date that is 30 business days following delivery of
the Debenture Change of Control Notice.

The Company will also make a change of
control offer for Brigus outstanding Cdn$24 million senior secured term notes
(the Notes) in accordance with their senior secured facility agreement dated
October 29, 2012. During the 10 day period following the effective date of the
Arrangement, Note holders will receive notice (the Note Change of Control
Notice) stating that a change of control has occurred along with an offer to
purchase the Notes at 105% of the principal amount plus accrued and unpaid
interested on the date that is 20 days following delivery of the Note Change of
Control Notice.

50

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