---

Table of contents

|Managements
      Responsibility for Financial Reporting        | 1    
|---------------------------------------------------------------- | -----
|                                                                 |      
|Reports
      of Independent Registered Public Accounting Firm   | 2-5  
|                                                                 |      
|Consolidated statements of operations and comprehensive
    loss | 6    
|                                                                 |      
|Consolidated
      statements of financial position              | 7    
|                                                                 |      
|Consolidated
      statements of changes in equity               | 8    
|                                                                 |      
|Consolidated
      statements of cash flows                      | 9    
|                                                                 |      
|Notes
      to the consolidated financial statements             | 10-63

---

MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING

Managements Report on Financial StatementsThe
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.

The Board of Directors is responsible for ensuring management
fulfills its financial reporting 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 reviews 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.

Managements Report over Internal Controls over Financial
ReportingManagement has developed and maintains a system of internal
controls to obtain reasonable assurance regarding the reliability of financial
reporting and the preparation of the consolidated financial statements. All
internal control systems have inherent limitations, including the possibility of
circumvention and overriding of controls, and therefore, may not prevent or
detect misstatements. Management has assessed the effectiveness of the Companys
internal control over financial reporting based on the framework in Internal
Control  Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) Managements assessment
identified a material weakness solely relating to the valuation of business
combinations with respect to the acquisition of Brigus as further described in
the Companys management discussion and analysis.

The effectiveness of the companys internal control over
financial reporting as of December 31, 2014 has been audited by Deloitte LLP, as
reflected in their report for 2014.

Joseph F. Conway
    Wendy KaufmanPresident & Chief Executive
      Officer
    Chief Financial OfficerFebruary 11, 2015
    February 11, 2015




| | 1
| | -

---

Deloitte LLP
2800 - 1055 Dunsmuir Street
4 Bentall Centre
P.O. Box 49279
Vancouver BC V7X 1P4
Canada
Tel: 604-669-4466
Fax: 778-374-0496
www.deloitte.ca

Report of Independent Registered Public
Accounting Firm
To the Shareholders of
Primero Mining corp.
We have audited the accompanying consolidated financial statements of Primero
Mining Corp. and subsidiaries (the Company), which comprise the consolidated
statements of financial position as at December 31, 2014 and December 31, 2013,
and the consolidated statements of operations and comprehensive loss,
consolidated statements of changes in equity, and consolidated statements of
cash flows for each of the years in the two years ended December 31, 2014, 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.
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. In making those risk assessments, the auditor considers
internal control relevant to the entitys preparation and fair presentation of
the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances. 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.

| | 2
| | -

---

Deloitte LLP
2800 - 1055 Dunsmuir Street
4 Bentall Centre
P.O. Box 49279
Vancouver BC V7X 1P4
Canada
Tel: 604-669-4466
Fax: 778-374-0496
www.deloitte.ca

Opinion
In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of Primero Mining Corp. and
subsidiaries as at December 31, 2014 and December 31, 2013, and their financial
performance and their cash flows for each of the years, in the two-years ended
December 31, 2014 in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board.Other Matter
We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the Companys internal control over
financial reporting as of December 31, 2014, based on the criteria established
in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated
February 11, 2015 expressed an adverse opinion on the Companys internal control
over financial reporting.(Signed) Deloitte LLP
Chartered Accountants
February 11, 2015
Vancouver, Canada



| | 3
| | -

---

Deloitte LLP
2800 - 1055 Dunsmuir Street
4 Bentall Centre
P.O. Box 49279
Vancouver BC V7X 1P4
Canada
Tel: 604-669-4466
Fax: 778-374-0496
www.deloitte.ca

Report of Independent Registered Public
Accounting Firm
We have audited the internal control over financial reporting of Primero Mining
Corp. and subsidiaries (the Company) as of December 31, 2014, based on the
criteria established in Internal Control - Integrated Framework 2013 issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The Companys
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Managements
Report over Internal Controls over Financial Reporting. Our responsibility is to
express an opinion on the Companys internal control over financial reporting
based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on that risk, and performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A companys internal control over financial reporting is a process designed by,
or under the supervision of, the companys principal executive and principal
financial officers, or persons performing similar functions, and effected by the
companys board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A companys internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys
assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

| | 4
| | -

---

Deloitte LLP
2800 - 1055 Dunsmuir Street
4 Bentall Centre
P.O. Box 49279
Vancouver BC V7X 1P4
Canada
Tel: 604-669-4466
Fax: 778-374-0496
www.deloitte.ca



A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the companys annual or
interim financial statements will not be prevented or detected on a timely
basis. The following material weakness has been identified and included in
managements assessment. Management has identified a material weakness relating
to the valuation of business combinations with respect to the acquisition of Brigus Gold Corp. This material weakness was considered in determining the
nature, timing and extent of audit tests applied in our audit of the
consolidated financial statements as of and for the year ended December 31,
2014, of the Company and this report does not affect our report on such
financial statements.
In our opinion, because of the effect of the material weakness identified above
on the achievement of the objectives of the control criteria, the Company has
not maintained effective internal control over financial reporting as of
December 31, 2014, based on the criteria established in Internal
Control - Integrated Framework 2013 issued by the Committee of Sponsoring
Organizations of the Treadway Commission. 
We have also audited, in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board
(United States), the consolidated financial statements as of and for the year
ended December 31, 2014 of the Company and our report dated February 11, 2015
expressed an unmodified opinion on those financial statements. (Signed) Deloitte LLP
Chartered Accountants 
February 11, 2015
Vancouver, Canada

| | 5
| | -

---



|PRIMERO MINING CORP.                                                                 
|-------------------------------------------------------------------------------------
|                                                                                     
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      LOSS                   
|                                                                                     
|YEARS ENDED DECEMBER 31, 2014 AND 2013                                               
|(In thousands of
      United States dollars, except for share and per share amounts)

|                                                                     |  |          |  |  | 2014        |   |  | 2013        |  
|-------------------------------------------------------------------- |  | -------- |  |  | ----------- | - |  | ----------- | -
|                                                                     |  | Notes    |  |  |             |   |  |             |  
|                                                                     |  |          |  |  | $           |   |  | $           |  
|Revenue                                                              |  | 7        |  |  | 274,612     |   |  | 200,326     |  
|Operating expenses                                                   |  |          |  |  | (159,280    | ) |  | (88,086     | )
|Depreciation and depletion                                           |  | 14       |  |  | (62,669     | ) |  | (36,236     | )
|Total cost of
      sales                                            |  |          |  |  | (221,949    | ) |  | (124,322    | )
|Earnings from mine operations                                        |  |          |  |  | 52,663      |   |  | 76,004      |  
|Mining interests impairment charge                                   |  | 4        |  |  | (110,000    | ) |  | -           |  
|Goodwill impairment charge                                           |  | 4        |  |  | (98,961     | ) |  | -           |  
|Exploration expenses                                                 |  |          |  |  | (1,816      | ) |  | (431        | )
|General and administrative expenses                                  |  | 8        |  |  | (36,806     | ) |  | (24,470     | )
|                                                                     |  |          |  |  |             |   |  |             |  
|(Loss) earnings from operations                                      |  |          |  |  | (194,920    | ) |  | 51,103      |  
|Transaction costs and other expenses                                 |  | 3(i)(ii) |  |  | (9,203      | ) |  | (8,590      | )
|Foreign exchange gain (loss)                                         |  |          |  |  | 2,691       |   |  | (798        | )
|Finance income                                                       |  |          |  |  | 429         |   |  | 296         |  
|Finance expense                                                      |  | 15(b)    |  |  | (6,970      | ) |  | (674        | )
|Share of equity-accounted investment results                         |  | 3(ii)    |  |  | (975        | ) |  | (187        | )
|Gain on derivative liability                                         |  | 20       |  |  | 2,291       |   |  | -           |  
|(Loss) earnings before income taxes                                  |  |          |  |  | (206,657    | ) |  | 41,150      |  
|                                                                     |  |          |  |  |             |   |  |             |  
|Income tax expense                                                   |  | 10       |  |  | (17,727     | ) |  | (45,400     | )
|                                                                     |  |          |  |  |             |   |  |             |  
|Net loss for
      the year                                          |  |          |  |  | (224,384    | ) |  | (4,250      | )
|Other comprehensive income                                           |  |          |  |  |             |   |  |             |  
|Items not subsequently reclassified to profit or
      loss:         |  |          |  |  |             |   |  |             |  
|Exchange
      differences on translation of foreign operations      |  |          |  |  | (61         | ) |  | (3,580      | )
|Items that may be subsequently reclassified to
      profit or loss: |  |          |  |  |             |   |  |             |  
|Mark-to-market losses on
      available-for- sale securities        |  |          |  |  | (456        | ) |  | -           |  
|                                                                     |  |          |  |  |             |   |  |             |  
|Total comprehensive loss for the year                                |  |          |  |  | (224,901    | ) |  | (7,830      | )
|                                                                     |  |          |  |  |             |   |  |             |  
|Basic loss per share                                                 |  | 11       |  |  | (1.48       | ) |  | (0.04       | )
|Diluted loss per
      share                                         |  | 11       |  |  | (1.48       | ) |  | (0.04       | )
|                                                                     |  |          |  |  |             |   |  |             |  
|Weighted average number of common shares outstanding                 |  |          |  |  |             |   |  |             |  
|Basic                                                                |  | 11       |  |  | 152,063,899 |   |  | 108,528,425 |  
|Diluted                                                              |  | 11       |  |  | 152,063,899 |   |  | 108,528,425 |  

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

---

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

|                                             | Notes             |  | December 31, 2014 |   |  |  | December 31, 2013 |  
|-------------------------------------------- | ----------------- |  | ----------------- | - |  |  | ----------------- | -
|                                             |                   |  | $                 |   |  |  | $                 |  
|Assets                                       |                   |  |                   |   |  |  |                   |  
|Current assets                               |                   |  |                   |   |  |  |                   |  
|Cash and cash
      equivalents              |                   |  | 27,389            |   |  |  | 110,711           |  
|Trade and other receivables                  |                   |  | 7,607             |   |  |  | 4,794             |  
|Taxes receivable                             |                   |  | 25,724            |   |  |  | 10,224            |  
|Prepaid expenses                             |                   |  | 6,633             |   |  |  | 7,729             |  
|Inventories                                  | 12                |  | 20,366            |   |  |  | 12,171            |  
|Total current assets                         |                   |  | 87,719            |   |  |  | 145,629           |  
|                                             |                   |  |                   |   |  |  |                   |  
|Non-current assets                           |                   |  |                   |   |  |  |                   |  
|Restricted cash                              | 13                |  | 17,646            |   |  |  | -                 |  
|Mining interests                             | 14                |  | 881,480           |   |  |  | 636,253           |  
|Deferred tax
      asset                     | 10 (b)            |  | 611               |   |  |  | 17,898            |  
|Inventories                                  | 12                |  | 14,309            |   |  |  | -                 |  
|Equity
      investment                      | 3 (ii)            |  | 384               |   |  |  | 1,042             |  
|Available for sale investment                | 3 (i)             |  | 671               |   |  |  | -                 |  
|Total assets                                 |                   |  | 1,002,820         |   |  |  | 800,822           |  
|                                             |                   |  |                   |   |  |  |                   |  
|Liabilities                                  |                   |  |                   |   |  |  |                   |  
|Current liabilities                          |                   |  |                   |   |  |  |                   |  
|Trade and other
      payables               |                   |  | 50,743            |   |  |  | 33,958            |  
|Taxes payable                                | 10                |  | 8,263             |   |  |  | 6,735             |  
|Current portion of long-term debt            | 15 (a)            |  | 5,616             |   |  |  | 5,000             |  
|Total current liabilities                    |                   |  | 64,622            |   |  |  | 45,693            |  
|                                             |                   |  |                   |   |  |  |                   |  
|Non-current liabilities                      |                   |  |                   |   |  |  |                   |  
|Taxes payable                                | 10                |  | 11,295            |   |  |  | 8,456             |  
|Deferred tax liability                       | 10 (b)            |  | 50,374            |   |  |  | 47,660            |  
|Decommissioning
      liability              | 16                |  | 32,566            |   |  |  | 8,730             |  
|Long-term debt                               | 15 (a)            |  | 89,771            |   |  |  | 22,214            |  
|Other long-term
      liabilities            | 17 (e)            |  | 4,802             |   |  |  | 6,979             |  
|Derivative liability                         | 3 (i),20          |  | 1,405             |   |  |  | -                 |  
|Total liabilities                            |                   |  | 254,835           |   |  |  | 139,732           |  
|                                             |                   |  |                   |   |  |  |                   |  
|Equity                                       |                   |  |                   |   |  |  |                   |  
|Share capital                                | 17 (a)(b)         |  | 858,761           |   |  |  | 553,518           |  
|Warrant reserve                              | 17 (d)            |  | 34,782            |   |  |  | 34,237            |  
|Share-based payment reserve                  | 17 (c ),(e) (iii) |  | 21,526            |   |  |  | 15,518            |  
|Accumulated other
      comprehensive income |                   |  | (5,161            | ) |  |  | (4,644            | )
|Retained earnings (deficit)                  |                   |  | (161,923          | ) |  |  | 62,461            |  
|Total equity                                 |                   |  | 747,985           |   |  |  | 661,090           |  
|Total liabilities and equity                 |                   |  | 1,002,820         |   |  |  | 800,822           |  
|                                             |                   |  |                   |   |  |  |                   |  
|Commitments and contingencies (Note 23)      |                   |  |                   |   |  |  |                   |  
|Subsequent events (Note 24)                  |                   |  |                   |   |  |  |                   |  
|Approved on behalf of the Board of Directors |                   |  |                   |   |  |  |                   |  

|                           |                           
|-------------------------- | --------------------------
|Joseph F. Conway, Director | Michael E. Riley, Director
|February 11, 2015          | February 11, 2015         

|See accompanying notes to the consolidated financial
      statements. | 7
|---------------------------------------------------------------------- | -

---

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

|                                        |                 |  |                     |  |  |          |  |  |         |  |  |               |   |  | Accumulated |   |  |           |   |  |          |  
|--------------------------------------- | --------------- |  | ------------------- |  |  | -------- |  |  | ------- |  |  | ------------- | - |  | ----------- | - |  | --------- | - |  | -------- | -
|                                        |                 |  |                     |  |  |          |  |  |         |  |  | Share-based   |   |  | other       |   |  | Retained  |   |  |          |  
|                                        |                 |  | Share
      capital |  |  | Warrants |  |  | payment |  |  | comprehensive |   |  | earnings/   |   |  | Total     |  
|                                        | Notes           |  | Shares              |  |  | Amount   |  |  | reserve |  |  | reserve       |   |  | income      |   |  | (deficit) |   |  | equity   |  
|                                        |                 |  |                     |  |  | $        |  |  | $       |  |  | $             |   |  | $           |   |  | $         |   |  | $        |  
|                                        |                 |  |                     |  |  |          |  |  |         |  |  |               |   |  |             |   |  |           |   |  |          |  
|Balance, January 1,
      2013          |                 |  | 97,205,622          |  |  | 456,734  |  |  | 34,237  |  |  | 15,120        |   |  | (1,064      | ) |  | 66,711    |   |  | 571,738  |  
|Shares issued for                       |                 |  |                     |  |  |          |  |  |         |  |  |               |   |  |             |   |  |           |   |  |          |  
|Acquisition of
      Cerro Resources NL | 3 (ii)          |  | 17,983,956          |  |  | 93,337   |  |  | -       |  |  | 759           |   |  | -           |   |  | -         |   |  | 94,096   |  
|Exercise of stock options               | 17 (c)          |  | 495,000             |  |  | 3,232    |  |  | -       |  |  | (1,316        | ) |  | -           |   |  | -         |   |  | 1,916    |  
|Exercise of PSUs                        | 17 (e) (ii)     |  | 41,457              |  |  | 215      |  |  | -       |  |  | -             |   |  | -           |   |  | -         |   |  | 215      |  
|Foreign currency translation            |                 |  | -                   |  |  | -        |  |  | -       |  |  | -             |   |  | (3,580      | ) |  | -         |   |  | (3,580   | )
|Share-based payment                     | 17 (c),(e)(iii) |  | -                   |  |  | -        |  |  | -       |  |  | 955           |   |  | -           |   |  | -         |   |  | 955      |  
|Net loss                                |                 |  | -                   |  |  | -        |  |  | -       |  |  | -             |   |  | -           |   |  | (4,250    | ) |  | (4,250   | )
|Balance, December 31, 2013              |                 |  | 115,726,035         |  |  | 553,518  |  |  | 34,237  |  |  | 15,518        |   |  | (4,644      | ) |  | 62,461    |   |  | 661,090  |  
|Shares issued for                       |                 |  |                     |  |  |          |  |  |         |  |  |               |   |  |             |   |  |           |   |  |          |  
|Acquisition of
      Brigus Gold Corp.  | 3 (i)           |  | 41,340,347          |  |  | 279,049  |  |  | 545     |  |  | 6,983         |   |  | -           |   |  | -         |   |  | 286,577  |  
|Exercise of stock options               | 17 (c)          |  | 1,921,744           |  |  | 14,144   |  |  | -       |  |  | (4,247        | ) |  | -           |   |  | -         |   |  | 9,897    |  
|Exercise of PSUs                        | 17 (e) (ii)     |  | 81,477              |  |  | 350      |  |  | -       |  |  | -             |   |  | -           |   |  | -         |   |  | 350      |  
|Exercise of warrants                    | 17
      (d)    |  | 4,790               |  |  | 47       |  |  | -       |  |  | -             |   |  | -           |   |  | -         |   |  | 47       |  
|Flow-through agreement                  | 17 (b)          |  | 2,481,482           |  |  | 11,653   |  |  | -       |  |  | -             |   |  | -           |   |  | -         |   |  | 11,653   |  
|Accumulated other comprehensive income  |                 |  | -                   |  |  | -        |  |  | -       |  |  | -             |   |  | (517        | ) |  | -         |   |  | (517     | )
|Share-based payment                     | 17 (c),(e)(iii) |  | -                   |  |  | -        |  |  | -       |  |  | 3,272         |   |  | -           |   |  | -         |   |  | 3,272    |  
|Net
      loss                          |                 |  | -                   |  |  | -        |  |  | -       |  |  | -             |   |  | -           |   |  | (224,384  | ) |  | (224,384 | )
|Balance, December 31, 2014              |                 |  | 161,555,875         |  |  | 858,761  |  |  | 34,782  |  |  | 21,526        |   |  | (5,161      | ) |  | (161,923  | ) |  | 747,985  |  

Total comprehensive loss was $224,901 for the year ended
December 31, 2014 (2013 - $7,830)

|See accompanying notes to the consolidated financial
      statements. | 8
|---------------------------------------------------------------------- | -

---

|PRIMERO MINING CORP.                         
|---------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS        
|YEARS ENDED DECEMBER 31, 2014 AND 2013       
|(In thousands of
      United States dollars)

|                                                                   |  |              |  | 2014     |   |  | 2013    |  
|------------------------------------------------------------------ |  | ------------ |  | -------- | - |  | ------- | -
|                                                                   |  | Notes        |  |          |   |  |         |  
|Operating activities                                               |  |              |  |          |   |  |         |  
|(Loss) earnings before income
      taxes                          |  |              |  | (206,657 | ) |  | 41,150  |  
|Adjustments for:                                                   |  |              |  |          |   |  |         |  
|Mining
      interests impairment charge                           |  | 4            |  | 110,000  |   |  | -       |  
|Goodwill impairment charge                                         |  | 4            |  | 98,961   |   |  | -       |  
|Depreciation and
      depletion                                   |  | 14           |  | 62,669   |   |  | 36,236  |  
|Payments relating to
      decomissioning liability                |  | 16           |  | -        |   |  | (199    | )
|Share-based
      payments - Stock Option plan                     |  | 17 (c )      |  | 994      |   |  | 200     |  
|Share-based payments - Phantom
      Share Unit plan               |  | 17 (e )      |  | 9,743    |   |  | 6,585   |  
|Payments made
      under the Phantom Share Unit Plan              |  | 17 (e )      |  | (10,051  | ) |  | (13,481 | )
|Unrealized loss on equity
      accounted investment               |  | 3 (ii)       |  | 975      |   |  | 187     |  
|Unrealized gain
      on derivative liability                      |  | 20           |  | (2,291   | ) |  | -       |  
|Write-off of assets                                                |  |              |  | 1,329    |   |  | 269     |  
|Write-down of
      inventory                                      |  | 12           |  | 1,750    |   |  | -       |  
|Unrealized foreign exchange loss                                   |  |              |  | 1,839    |   |  | 2,414   |  
|Taxes paid                                                         |  | 10           |  | (2,144   | ) |  | (1,343  | )
|Other adjustments                                                  |  |              |  |          |   |  |         |  
|Finance income (disclosed in investing
      activities)           |  |              |  | (429     | ) |  | (296    | )
|Finance expense                                                    |  |              |  | 6,970    |   |  | 674     |  
|Operating cash flow before working capital
      changes           |  |              |  | 73,658   |   |  | 72,396  |  
|                                                                   |  |              |  |          |   |  |         |  
|Changes in non-cash working capital                                |  | 18           |  | (29,446  | ) |  | (2,591  | )
|Cash provided by
      operating activities                        |  |              |  | 44,212   |   |  | 69,805  |  
|                                                                   |  |              |  |          |   |  |         |  
|Investing activities                                               |  |              |  |          |   |  |         |  
|Expenditures on mining
      interests                             |  | 14           |  | (112,294 | ) |  | (71,481 | )
|Acquisition of Brigus Gold Corp (net)                              |  | 3 (i)        |  | (7,773   | ) |  | -       |  
|Acquisition of Cerro Resources
      NL                            |  | 3 (ii)       |  | -        |   |  | (3,373  | )
|Acquisition of remaining interest in Cerro del
      Gallo project |  | 3 (ii)       |  | -        |   |  | (8,000  | )
|Equity investment in Santana
      Minerals Limited                |  | 3 (ii)       |  | (343     | ) |  | (1,254  | )
|Interest received                                                  |  |              |  | 429      |   |  | 296     |  
|Cash used in investing activities                                  |  |              |  | (119,981 | ) |  | (83,812 | )
|                                                                   |  |              |  |          |   |  |         |  
|Financing activities                                               |  |              |  |          |   |  |         |  
|Repayment of debt                                                  |  | 15 (a)       |  | (58,896  | ) |  | (12,786 | )
|Proceeds on exercise of
      options and warrants                 |  | 17 (c ),(d)  |  | 9,944    |   |  | 1,916   |  
|Proceeds on issuance of flow-through shares
      (net)            |  | 17 (b)       |  | 14,633   |   |  | -       |  
|Interest paid                                                      |  |              |  | (4,390   | ) |  | (2,057  | )
|Drawdown of line of credit, net of transaction costs               |  | 15
      (a) |  | 37,470   |   |  | -       |  
|Cash used in financing activites                                   |  |              |  | (1,239   | ) |  | (12,927 | )
|                                                                   |  |              |  |          |   |  |         |  
|Effect of foreign exchange rate changes on cash                    |  |              |  | (6,314   | ) |  | (1,599  | )
|                                                                   |  |              |  |          |   |  |         |  
|Decrease in cash                                                   |  |              |  | (83,322  | ) |  | (28,533 | )
|Cash and cash
      equivalents, beginning of year                 |  |              |  | 110,711  |   |  | 139,244 |  
|Cash and cash equivalents, end of year                             |  |              |  | 27,389   |   |  | 110,711 |  

Supplemental cash flow information (Note 18)

|See accompanying notes to the consolidated financial
      statements. | 9
|---------------------------------------------------------------------- | -

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      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 and Canada. The Company is focused on building
      a portfolio of high-quality, low-cost precious metals assets in the
      Americas through acquiring, exploring, developing and operating mineral
      resource properties.                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company owns two producing properties, the San Dimas
      gold-silver mine, located in Mexicos San Dimas district, on the border of
      Durango and Sinaloa states, and the Black Fox gold mine located near
      Timmins, Ontario, Canada. The Company owns two properties adjacent to the
      Black Fox gold mine - Grey Fox and Pike River, which together with the
      Black Fox mine and the Black Fox mill, located on the Stock Mill property,
      comprise the Black Fox Complex. The Company also has 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | Significant accounting policies, judgments and
      estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These consolidated financial statements were approved by
      the Companys Board of Directors on February 11, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | 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 (with the exception of those balances
      measure at fair value (Note 20)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | 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.                                                                                                                                                      

10

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (a) | Basis of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | These consolidated financial statements include the
      accounts of the Company and its subsidiaries from their respective dates
      of acquisition. All intragroup balances and transactions between entities
      of the group have been eliminated in full. The Companys significant
      subsidiaries, which are all wholly owned, are: Primero Empresa Minera,
      S.A. de C.V., which owns the San Dimas mine, Primero Gold Canada Inc.,
      which owns the Black Fox Complex, San Anton de las Minas, S.A. de C.V.,
      which owns the Cerro del Gallo project, Silver Trading (Barbados) Limited
      (Silver Trading) and Primero Mining Luxembourg S.a.r.l. On January 1,
      2015, Primero Gold Canada Inc. was amalgamated with Primero Mining
      Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (b) | Functional and presentation currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The presentation currency of the Company is the U.S.
      dollar.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The functional currency of Primero Empresa Minera, S.A.
      de C.V, Primero Canada Gold Inc., San Anton de las Minas S.A. de C.V. and
      Silver Trading is the U.S. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The accounts of the entities with non-U.S. dollar
      functional currencies 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 annual 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 other comprehensive income (OCI);
      there is no tax impact of this translation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (c) | Investment in associates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The Company has one associate, Santana Minerals Ltd. 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 year. Distributions received from an
      associate are accounted for as a reduction in the carrying amount of the
      Companys investment.

11

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      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 of disposal 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. If 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

12

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (iv) | it is probable that the economic benefits associated with
      the transaction will flow to the Company and collectability of proceeds is
      reasonably assured; and
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                         
| | (v)  | the costs incurred or to be incurred in respect of the
      transaction can be measured reliably.                                                                      

| |     | Revenue is recorded at the time of cash receipt. Sales
      prices are based on the terms of the contract or at spot prices.                                                                                                                                                                                                                                                                                                           
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (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) | Restricted cash                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Restricted cash includes cash that has been pledged for
      other uses, such as reclamation, and is not available for immediate
      disbursement.                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (h) | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Inventories including finished goods (gold and silver),
      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 a mine is stockpiled and subsequently
      processed into finished goods. Production costs including mining and
      milling costs, applicable overhead, depreciation and depletion are
      capitalized to inventory depending on its current location and condition.
      Inventories of stockpiled ore that are not expected to be processed in the
      next year are classified as non-current inventories.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Inventories also include supplies, which are valued at
      the lower of average cost or replacement cost.                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (i) | Mining interests                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Mining interests include:                                                                                                                                                                                                                                                                                                                                                                                                               

| | (i)  | Land, buildings, plant and equipment                                                                                                                                                                                                                                                                                                                     
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                          
| |      | 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                                                                                                                                                                                                                                                                                                                  

13

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

Exploration and evaluation expenditure
is charged to the statement of operations and comprehensive income (loss) in the year
it is incurred 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 when 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 in the statement of financial position as
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | Mine development costs incurred to develop areas of the
      mine which will be mined in future periods are capitalized and depleted
      when the related mining area is mined. Mine development costs incurred to
      prepare current production areas are considered operating expenses and
      expensed in the year as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | 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 dispose. In assessing fair value, the
      estimated future cash flows are discounted to their present value using a
      post-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.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | The Company bases its impairment calculation on detailed
      budgets and forecasts which are prepared separately for each of the
      Companys cash generating units (CGUs) to which the individual assets
      are allocated. These budgets and forecasts cover the expected 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 during the year in
    the statement of operations and comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                

14

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (iv) | Stripping costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      | In open pit mining operations, it is necessary to incur
      costs to remove overburden and other mine waste materials in order to
      access the ore body. Pre-production stripping costs are capitalized as
      incurred. Stripping costs incurred during the production stage of an open
      pit mine are accounted for as production costs during the period that the
      stripping costs were incurred, unless these costs provide a future
      economic benefit. Production phase stripping costs are considered to
      generate a future economic benefit when (i) the related stripping activity
      provides access to ore to be mined in the future; (ii) increases the fair
      value of the mine as access to future mineral reserves becomes less
      costly; (iii) increases the productive capacity; or (iv) extends the
      productive life of the mine. These costs are capitalized as a mine
      development expenditure. Stripping costs incurred and capitalized during
      the production phase are depleted using the units-of- production method
      over the reserves and resources (where relevant as part of the depletion
      policy) that directly benefit from the specific stripping
  activity.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (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 when 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 maintenance and repair costs are
      expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      | Mineralization at the Companys mine sites is segregated
      into reserves (including proven and probable), resources (including
      measured, indicated and inferred) and exploration potential. The
      definitions applied by the Company are based on those in National
      Instrument 43-101  Standards of Disclosure for Mineral Projects (NI
      43-101); in addition, the Company also applies the following
      definition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

15

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

Exploration potential 
mineralization quantified by the Companys geologists with a sufficient degree
of confidence to include in the Companys acquisition fair value determination,
but without the necessary level of measurement precision to enable it to be
classified as a mineral reserve or resource as defined by NI 43-101.

The Companys depletion estimation
methodology divides the total mining property capitalized in respect of a mining
asset into a depletable component and a non-depletable component. The value
assigned to the depletable component is equal to the value assigned to the
proven and probable reserves and a portion of resources of the asset. The value
assigned to the non-depletable component is the value assigned to the
exploration potential of the asset and the remaining resources not included in
the depletable component. The allocation of values to the proven and probable
reserves, resources and exploration potential of the asset are based on the
discounted cash flow analysis of the Companys future expected cash flows to be
derived from each mine. The depletable component of the capitalized total mining
property is depleted over 100% of reserves and a portion of resources included
in the Companys discounted cash flow analysis. The non-depletable component is
not depleted but, in combination with the depletable component, is evaluated for
impairment when events and changes in circumstances indicate that the carrying
amount may not be recoverable.

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 proven and
probable reserves and 75% of resources and exploration potential.

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

When considering the portion of
resources to include in the depletion base of the depletable component,
management considers which of the Companys resources are believed to eventually
be classified as proven and probable reserves. In assessing which resources to
include so as to best reflect the useful life of the mine, management considers
resources that have been included in the discounted cash flow analysis. To be
included in the analysis, resources need to be above the cut-off grade set by
management, which means that the resource can be economically mined and is
therefore commercially viable. This consistent systematic method for inclusion
in the analysis takes into account managements view of the future long-term
gold and silver prices 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.

16

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

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

Due to the fact that the economic
assumptions used to estimate the reserves, resources and exploration potential
change from year to year, and because additional geological data is generated
during the course of operations, estimates of the reserves, resources and
exploration potential and may change from year to year. Changes in the reserve
and the resource base used in the discounted cash flow analysis plan may affect
the calculation of depletion and such changes are recognized prospectively.

Buildings, plant and equipment
unrelated to production are depreciated (net of residual value) using the
straight-line method based on estimated useful lives.

Where significant components 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 are based on
estimated life of reserves and a portion of mineralization expected to be
classified as reserves on a units-of-production basis.

| | Plant and buildings                 | 5 years to life
      of mine
| | ----------------------------------- | -----------------------------
| | Construction equipment and vehicles | 4 years                      
| | Computer equipment                  | 3  5 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.

17

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (j) | 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 year in which they are
      incurred. Borrowing costs are included as part of interest paid in the
      statement of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| | (k) | Flow-through Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company may, from time to time, issue flow-through
      shares (as defined in the Canadian Income Tax Act) to finance a portion of
      its Canadian exploration program. Pursuant to the terms of the
      flow-through share agreements, the Company agrees to incur qualifying
      expenditures and renounce the tax deductions associated with these
      qualifying expenditures to the subscribers by an agreed upon date. The
      excess of cash consideration received over the market price of the
      Companys shares at the date of the announcement of the flow-through share
      financing is recorded as a liability. This liability is extinguished and
      recognized in the statement of operations and comprehensive income (loss)
      when the renunciation of the tax benefit by the Company, is
    recorded.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | A deferred tax liability is recognized for the taxable
      temporary difference that arises from the difference between the carrying
      amount of eligible expenditures that are capitalized to exploration and
      evaluation assets and their tax basis. If the Company has sufficient tax
      assets to offset the deferred tax liability, the liability will be offset
      by use of the deferred tax asset.                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (l) | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Goodwill may arise on the Companys acquisitions due
      amongst other things to: (i) the ability of the Company to capture certain
      synergies through management of the acquired operation within the Company;
      (ii) the potential to increase reserves, resources and exploration
      potential through exploration activities; and (iii) the requirement to
      record a deferred tax liability for the difference between the assigned
      fair values and the tax bases of assets acquired and liabilities
      assumed.                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Goodwill is allocated to CGUs for the purpose of
      impairment testing. The allocation is made to those cash generating units
      or groups of CGUs that are expected to benefit
from the synergies of the business combination. If the
      composition of one or more cash generating units to which goodwill has
      been allocated changes due to a re-organization, the goodwill is
    re-allocated to the units affected.                                                                                                                                                                                                                                                                                                                                                                                                               

18

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |     | Goodwill is not amortized. The Company performs an
      impairment test for goodwill annually and when events or changes in
      circumstances indicate that the related carrying amount may not be
      recoverable. If the carrying amount of a CGU to which goodwill has been
      allocated exceeds the recoverable amount, an impairment loss is recognized
      for the amount in excess. The impairment loss is allocated first to reduce
      the carrying amount of goodwill allocated to the CGU to nil and then to
      the other assets of the CGU based on the relative carrying amounts of
      those assets. Impairment losses recognized for goodwill are not reversed
      in subsequent periods should the value of the CGU recover.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company considers use of its internal discounted cash
      flow economic models as a proxy for the calculation of fair value less
      costs of disposal, given a willing market participant would use such
      models in establishing a value for the properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (m) | Provisions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | General                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Provisions are recognized 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 recognized 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;
      this liability is then accreted to full value over the life of the mine
      with the accretion charge being recorded as a finance expense. 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 mines
and development projects are recorded with a corresponding
      increase to the carrying amounts of related assets and the adjusted cost
  is depreciated on a prospective basis.

19

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (n) | 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 in 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 as
      finance expense 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.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | 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 as operating expenses or
      general and administrative expenses on a straight-line basis over the
      lease term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (o) | 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 (loss) except to the extent they relate to items
      recognized directly in equity or in 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 local taxable income or loss for the year for each
      taxable entity using tax rates enacted or substantively enacted at the
      reporting date. This may differ from earnings reported in the statement of
      operations and comprehensive income due to income or expense items that
      are not currently taxable or deductible for tax purposes, and any
      adjustment to income taxes 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.                                                                                                                                                                                                                                                                                                   

20

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |     | A deferred tax asset is recognized to the extent that it
      is probable that future taxable profits will be available against which
      the asset 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 the
      translation of the deferred income tax balance from local statutory
      accounts to functional currency accounts are included in deferred income
      tax expense or recovery in the statements of operations and comprehensive
      income.                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Uncertain income tax positions are recorded in the
      consolidated financial statements when probable and measured at the amount
      expected to be paid to (recovered from) the taxation authority using the
      Companys best estimate of the amount.                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (p) | Income (loss) per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Basic income (loss) per share is computed by dividing net
      income (loss) by the weighted average number of common shares outstanding
      during the period. The computation of diluted income (loss) 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 (loss) 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.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (q) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

21

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |       | 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.                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | (r) | 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.

22

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

Financial instruments classified as
FVTPL are measured at fair value with gains and losses recognized in the
statement of operations and comprehensive income. Financial assets classified as
held-to-maturity, loans and receivables, and financial liabilities classified as
other liabilities, are measured at amortized cost. Trade and other receivables,
cash and cash equivalents, and restricted cash are classified as loans and
receivables, which are measured at amortized cost. Trade and other payables, the
line of credit, the convertible debentures and the promissory note are
classified as other financial liabilities, which are measured at amortized
cost.

Transaction costs in respect of
financial assets and liabilities which are measured at 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.

A financial asset is classified as
available-for-sale when: (i) it is not classified as a loan and receivable, a
held-to-maturity investment or at FVTPL; or (ii) it is designated as
available-for-sale on initial recognition. The Companys equity investment is
classified as available-for-sale and is measured at fair value with
mark-to-market gains and losses recognized in other comprehensive income; at
current the company has one available-for-sale equity security being its
investment in Fortune Bay. When available-for-sale investments in marketable
securities and equity securities are derecognized, the cumulative mark-to-market
gains or losses that had been previously recognized in OCI are reclassified to
earnings for the period. When there is objective evidence that an
available-for-sale financial asset is impaired, the cumulative loss that had
been previously recognized in OCI is reclassified to earnings for the period.

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.

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.

23

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |     | 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.                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (s) | Segmented reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | The Company operates in two geographic areas; Mexico and
      Canada. 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 three reportable segments:
      the San Dimas mine (which currently includes the Ventanas property), the
      Black Fox Complex and the Cerro del Gallo project.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (t) | Measurement uncertainties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | 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:                                                                                                                                                                                                          

| | (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, accessibility, 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 operating mines are
      divided into a depletable and non-depletable pools; the depletable pool is
      depleted based on recoverable ounces contained in proven and probable
      reserves and a portion of resources. The Company includes a portion of
      resources in its depletion base where it is considered likely 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) | Deferred stripping                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | The Company defers stripping costs related to open pit
      mining operations when these costs are considered to generate a future
      benefit. The determination of these amounts requires the use of judgments
      and estimates such as estimates of tonnes of waste to be removed over the
      life of the mining area and economically recoverable reserves extracted as a result. Changes in a
      mines life and design may result in changes to the expected stripping
      ratio. Any changes in these estimates are accounted for
    prospectively.                                                                                                                                                   

24

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (iv)  | Determination of useful lives of property, plant and
      equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       | Property, plant and equipment are depreciated to their
      estimated residual value over the estimated useful life of the asset.
      Should the actual useful life of the property, plant or equipment vary,
      future depreciation charges may change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (v)   | Impairment charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       | Goodwill and non-current assets are tested for impairment
      if there is an indicator of impairment, and in the case of goodwill, at
      least annually. 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 estimates. 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 the carrying value of the assets may be impaired or a
      prior periods impairment charge reversed (with the exception of goodwill
      for which impairment charges are not reversed) with the impact recorded in
      the statements of operations and comprehensive (loss) income.                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (vi)  | 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, rehabilitation activity and applicable discount rates.
      Changes to these estimates and assumptions may result in actual
      expenditures in the future differing from the amounts currently provided
      for. The decommissioning liability is periodically reviewed and updated
      based on the available facts and circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (vii) | 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 change. 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.

25

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (viii) | Valuation of inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |        | All inventory, other than supplies, 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 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.                                                                                                                                                                                                                                                                                                              
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (ix)   | 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.
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (x)    | 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 or vesting of share- based
      compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

The critical judgments 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 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 Advance Pricing Agreement (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 6(i) and 10). Should this judgment change, there could be a material change in
      the Companys results of operations, financial condition and cash
    flows.

26

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (ii)  | Gold and silver purchase arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | The Company has accounted for and presented the liability
      to deliver silver to Silver Wheaton Caymans (Note 6(i)) and gold to
      Sandstorm Gold Ltd (Sandstorm) (Note 6(ii)) net within the mining
      interests rather than as a separate liability in the Companys statement
      of financial position. If the mining interests and liabilities were
      separately recorded, there could be a material change in depreciation and
      depletion expense and deliveries against the liabilities would be recorded
      as credit in the statement of operations.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (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 3(ii)) 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.                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (u)   | Functional currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | The determination of a subsidiarys functional currency
      often requires significant judgment where the primary economic environment
      in which an entity operates may not be clear. This can have a significant
      impact on the consolidated results of the
Company.                                                                                                                                                                                                                                                                                                      

|3. | Acquisitions of mining
interests
|-- | --------------------------------

| | (i) | Brigus Gold Corp
| | --- | ----------------

On March 5, 2014, the Company acquired
all of the issued and outstanding common shares of Brigus Gold Corp (Brigus)
pursuant to a plan of arrangement (the "Arrangement"), thereby taking control of
Brigus. Brigus was a gold producing company, whose principal assets were the
Black Fox mine and adjacent properties, Grey Fox and Pike River, located in the
Township of Black River-Matheson, Ontario, Canada, and the Black Fox mill
(together the Black Fox Complex). The purchase was part of the Companys
strategy of building a portfolio of precious metal assets.

Pursuant to the Arrangement, Primero
acquired each outstanding Brigus common share for 0.175 of a Primero common
share (the Exchange Ratio). In addition, Brigus shareholders received 0.1 of a
common share in a newly incorporated company, Fortune Bay Corp. (Fortune Bay)
for each Brigus common share as part of the
Arrangement. Fortune Bay holds Brigus non-Ontario assets and was capitalized on
March 5, 2014 with Cdn$10 million in cash by Primero. Upon completion of the
Arrangement, Brigus shareholders held, in aggregate, a 90.1% interest in Fortune
Bay and Primero held the remaining 9.9% interest. Upon completion of the
Arrangement, each outstanding warrant to purchase a Brigus common share became
exercisable to purchase 0.175 of a Primero common share and 0.1 of a Fortune Bay
common share.

27

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The Company accounts for its equity
investment in Fortune Bay as an available for sale financial instrument which is
measured at fair value. Any unrealized gains and losses relating to the equity
investment in Fortune Bay are recorded in OCI and are reflected in Accumulated
other comprehensive income within equity on the statement of financial
position.

On March 14, 2014 the Company made a
change of control offer for Brigus outstanding Cdn$24 million senior secured
term notes in accordance with the facility agreement dated October 29, 2012
governing the notes. The offer stated that a change of control had occurred and
offered to purchase the notes at 105% of the principal amount plus accrued and
unpaid interest. The notes were repaid in full on April 3, 2014.

On April 4, 2014, the Company also made
a change of control offer for Brigus outstanding $50 million 6.5% convertible
senior unsecured debentures in accordance with their trust indenture dated March
23, 2011. The offer stated that a change of control had occurred and offered to
purchase the debentures at 100% of the principal amount plus accrued and unpaid
interest on May 16, 2014. Investors holding $1.9 million of the debentures
accepted the Companys offer and these debentures were repaid on May 16,
2014.

The Company determined that the
acquisition of Brigus was a business combination in accordance with the
definition inIFRS 3 Business combinations and as such has accounted for
it in accordance with this standard using the acquisition method with Primero as
the acquirer. On March 28, 2014, Brigus changed its name to Primero Gold Canada
Inc.

Since its acquisition on March 5, 2014,
Primero Gold Canada Inc. has generated revenue of $75.7 million and a net loss
of $167.4 million. These results are included in the Companys consolidated
statement of operations and comprehensive (loss) income for the year ended
December 31, 2014. Had the acquisition of Primero Gold Canada Inc. taken place
on January 1, 2014, the total consolidated revenue and net loss for the Company
would have been $287.3 million and $233.2 million, respectively.

Upon the acquisition of Brigus, the
Company identified goodwill of $99.0 million. This goodwill is calculated as the
difference between the fair value of the consideration issued for the
acquisition of Brigus and the fair value of all other assets and liabilities
acquired. The goodwill arose primarily as a result of the increase in the
Companys share price from the date of announcing the acquisition of Brigus (Cdn
$5.22) to the completion of the acquisition (Cdn$7.50). In addition, goodwill
of $10.0 million arose due to the recognition of deferred income tax liabilities
on the transaction due to the requirement to record a deferred tax liability for
the difference between the assigned values and the tax bases of assets acquired
and liabilities assumed. All of the goodwill has been allocated to the Black Fox
Complex CGU for impairment purposes. Subsequent to the acquisition, the Company
determined that it could not support the value assigned to goodwill and recorded
an impairment charge of the full $99.0 million during the third quarter of 2014
(Note 4). None of the goodwill is deductible for tax purposes.

28

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The fair value assigned to the
identified assets and liabilities was finalized during the fourth quarter of
2014 and is presented below. Transaction costs of $7.5 million relating to the
acquisition have been expensed in accordance with IFRS 3, Business
combinations;these transaction costs are recognized within transaction
costs and other expenses in the consolidated statement of operations and
comprehensive loss.

The following table summarizes the fair
value of the consideration transferred to Brigus shareholders and the fair
values of identified assets acquired and liabilities assumed. The fair values of
the identified assets and liabilities purchased have not been amended from those
reported as at September 30, 2014 with the exception of a $3.8 million increase
in deferred tax liability and a corresponding increase in mining interests.

| |                                              |  | $000s   |  
| | -------------------------------------------- |  | ------- | -
| | Purchase price                               |  |         |  
| | Common shares                                |  | 279,049 |  
| | Cash                                         |  | 15,030  |  
| | Share-based compensation                     |  | 6,983   |  
| | Warrants                                     |  | 545     |  
| |                                              |  | 301,607 |  
| |                                              |  |         |  
| |                                              |  |         |  
| | Net assets acquired                          |  |         |  
| | Assets                                       |  |         |  
| | Cash                                         |  | 7,257   |  
| | Restricted Cash                              |  | 18,524  |  
| | Accounts receivable                          |  | 848     |  
| | Inventories                                  |  | 15,567  |  
| | Investment in Fortune Bay                    |  | 1,127   |  
| | Prepaid expenses                             |  | 482     |  
| | Mining interests and property, plant and equ |  | 302,551 |  
| | Goodwill                                     |  | 98,961  |  
| |                                              |  |         |  
| | Liabilities & Equity                         |  |         |  
| | Accounts payable                             |  | (30,370 | )
| | Finance leases                               |  | (15,511 | )
| | Decommissioning liability                    |  | (15,746 | )
| | Convertible debentures                       |  | (45,168 | )
| | Derivative liability                         |  | (3,696  | )
| | Senior secured notes                         |  | (22,713 | )
| | Deferred tax
      liability                 |  | (10,506 | )
| |                                              |  | 301,607 |  

As a result of the finalization of the
purchase price allocation in the fourth quarter, depletion expense was adjusted
from the date of acquisition and a $13.2 million decrease was recorded in the
Companys fourth quarter statement of operations and comprehensive loss relating
to the period March 5 to September 30, 2014.

29

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The contractual amounts of accounts
receivable purchased was $nil.

(ii) 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 "Scheme") 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 Scheme, 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 as an equity accounted investment since 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.

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 inIFRS 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 (Goldcorp). 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 after achieving commercial production on the
      phase I heap leach operation (the First Contingent Payment);                                                                                                                                                                                                                     
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $5 million if the date of the First Contingent Payment
      occurs before December 19, 2018 and the gold price averages $1,500 or more
      per ounce for a consecutive 30 day period within one year following the
      date of the First Contingent Payment, and not later than December 19, 2018
      (the Second Contingent Payment);  
| |  | $14 million on announcement of a decision by Primero to
      construct a carbon-in-leach mill for Phase II (the Third Contingent
      Payment),                                                                                                                                                                                              
| |  | $5 million if the date of the Second Contingent Payment
      occurs before December 19, 2018 and the gold price averages $1,500 or more
      per ounce for a consecutive 30 day period within one year following the
      date of the Second Contingent Payment, and not later than December 19,
      2018 (the Fourth Contingent Payment).

The First, Second, Third and Fourth
Contingent Payments are considered to be contingent liabilities. These
contingent liabilities were not included in the purchase consideration 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 $8.0 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 inIFRS 3
Business combinations at 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.

30

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

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:

| |                                   |  | Purchaseof69.2% |   |  | **Purchase of
      30.8%** |  |  | Total   |  
| | --------------------------------- |  | --------------- | - |  | --------------------------- |  |  | ------- | -
| |                                   |  |                 |   |  |                             |  |  |         |  
| | Purchase price                    |  |                 |   |  |                             |  |  |         |  
| | Common shares                     |  | 93,337          |   |  | -                           |  |  | 93,337  |  
| | Share-based compensation          |  | 759             |   |  | -                           |  |  | 759     |  
| | Cash                              |  | 2,782           |   |  | 8,000                       |  |  | 10,782  |  
| | Transaction costs                 |  | 890             |   |  | -                           |  |  | 890     |  
| |                                   |  | 97,768          |   |  | 8,000                       |  |  | 105,768 |  
| |                                   |  |                 |   |  |                             |  |  |         |  
| | N etassetsacquired:               |  |                 |   |  |                             |  |  |         |  
| | Cash                              |  | 300             |   |  | 77                          |  |  | 377     |  
| | W orking capital & other          |  | (2,794          | ) |  | 547                         |  |  | (2,247  | )
| | Property, plant &
      equipment |  | 410             |   |  | 239                         |  |  | 649     |  
| | Mining interests                  |  | 99,852          |   |  | 7,137                       |  |  | 106,989 |  
| |                                   |  | 97,768          |   |  | 8,000                       |  |  | 105,768 |  

|4. | Impairment charges
|-- | ------------------

|a) | Mineral Properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company completed an assessment of the fair value of
      of its CGUs as at December 31, 2014, based on their fair value less costs
      of disposal, and as a result, recorded non-cash impairment charges
      aggregating $110.0 million comprised of $75.0 million related to the Black
      Fox Complex CGU and $35.0 million to the Cerro del Gallo project CGU
      (Notes 14 and 22). The impairment has been recognized in the consolidated
      statement of operations and comprehensive loss on the line Mining
      interests impairment charge. The Black Fox Complex comprises the Black
      Fox mine and adjacent properties, Grey Fox and Pike River.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The fair value models are considered to be Level 3 within
      the fair value hierarchy (Note 20). The estimates of future cash flows
      used in the fair value less cost of disposal models were derived from the
      most recent budgets and forecasts which cover the life of the mines. These
      plans are typically developed annually and are based on managements
      current best estimates of optimized mine and processing plans, future
      operating costs and the assessment of capital expenditure of mine site.
      Key assumptions used in the fair value models
include:                                                                            

31

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |  | Discount rates of between 6% and 8% based on the
      Companys weighted average cost of capital at December 31, 2014.                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An estimated gold price of $1,200 per ounce for 2015,
      $1,260 per ounce for 2016 and $1,300 per ounce beyond based on observable
      market data including spot price and industry analyst consensus.                                                                                                              
| |  | A life-of-mine of between 7 and 11 years, based on the
      latest mine plans of the Company. The Company has included more than 5
      years of cash flows into the life of mine model based on its understanding
      of the geology and drilling results at the Black Fox Complex and Cerro del
      Gallo project.
| |  | No growth rate was assumed in the model as the model is
      calculated in nominal terms.                                                                                                                                                                                                                                

| |    | Black Fox Complex                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The impairment test for the Black Fox Complex was based
      on its 2015 budget, which expects the open-pit to be depleted by September
      2015. The resulting non-cash impairment charge for the Black Fox Complex was
      due to Companys growing understanding of the project parameters,
      including a decline in minable ounces and depletion of the open pit in
      2015.                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The impairment value of $75.0 million booked in relation to
      the Black Fox Complex is highly sensitive to the commodity prices used in
      the cash flow projection. If the commodity prices had increased or
      decreased by 10% the impairment charge would have decreased or increased,
      respectively, by approximately $80.0 milion (resulting in no impairment in
      the case of a 10% increase in the commodity price).
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | Cerro del Gallo Project                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The Company has decided not to construct the phase 1 heap
      leach project for Cerro del Gallo in 2015. The timing of construction will
      depend on market conditions and project returns.                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The impairment test for the Cerro del Gallo was based on
      a 4,500,000 tonnes per year. The resulting non-cash impairment charge for
      Cerro del Gallo was due to a decision to delay the construction at Cerro
      del Gallo and a change in a number of economic parameters.                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The impairment value of $35.0 million booked in relation to the
      Cerro del Gallo project is highly sensitive to commodity prices used in
      the cash flow projection. If the commodity prices had increased or
      decreased by 10% the impairment charge would have decreased or increased,
      respectively, by approximately $30.0 milion                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | b) | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                       

2014
    
    
    2013At January 1
    
    -
    
    
    -Recognized upon business combination (Note 3(i))
    
    98,961
    
    
    -Impairment charge recognized
    
    (98,961
    )
    
    -At Decembe r31
    
    -
    
    
    -


32

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

On December 16, 2013, Primero announced
that it was acquiring all of the issued and outstanding shares of Brigus Gold
Corp. under a share exchange deal. At this time, the share price of the Company
was Cdn$5.22. The acquisition was closed on March 5, 2014 (Note 3 (i)) at which
point, the Companys share price had risen to Cdn$7.50. In accordance with IFRS
3, Business Combinations, the closing share price on the date of the transaction
is used to determine the fair value of the purchase price when valuing the
shares issued by the Company. This increase in the share price of the Company
prior to closing the acquisition resulted in additional purchase consideration
for accounting purposes of $85.0 million from the values originally determined
in December 2013.

As described in Note 3(i), goodwill of
$99.0 million arose on the Brigus transaction, most of which is attributed to
the additional consideration as a result of the increase in the Companys share
price between announcement and closing of the acquisition. All of this goodwill
was assigned to the Black Fox Complex CGU (also considered one of the Companys
operating segments under IFRS 8) as it was the only business unit that benefited
from the acquisition.

Since the acquisition date, the Company
has followed an extensive valuation process on the Black Fox Complex and review
of the Black Fox mine plan. The fair value model used to fair value the mineral
assets acquired as a result of the business combination with Brigus was
finalized during the fourth quarter 2014 and is presented in Note 3(i). The
Company has determined that the valuation cannot support the carrying value of
the goodwill and accordingly a goodwill impairment charge was recorded for the
full carrying value of $99.0 million in the third quarter of 2014. The
impairment has been recognized in the consolidated statement of operations and
comprehensive loss on the line Goodwill impairment charge.

The final carrying value of the Black
Fox Complex as at March 5, 2014 based on the fair value model is $301.6 million.
Key assumptions used in the fair value model include:

| |  | A discount rate of 7.50% based on the Companys weighted
      average cost of capital at March 5, 2014                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A life of mine average gold price of $1,290 based on
      market consensus gold prices as at March 5, 2014                                                                                                                                                                                                                    
| |  | A life-of-mine of 11 years, based on the latest mine
      plans of the Company as at March 5, 2014. The Company has included more
      than 5 years of cash flows into the life of mine model based on its
      understanding of the geology of the Timmins mining camp and drilling
      results at the Black Fox Complex.
| |  | No growth rate was assumed in the model as the model is
      calculated in nominal terms.                                                                                                                                                                                                                                     

As a result of the impairment charge,
the carrying value of the mining interest of the Black Fox Complex was recorded
at its recoverable amount; as such a negative change in any one key assumption
would reduce the recoverable amount below the carrying amount which could result
in an impairment of the mining assets of the Black Fox Complex.

33

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

|5. | Changes in accounting policies and recent
      pronouncements issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | New policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The following accounting standard was adopted during the
      year ended December 31, 2014:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | IFRIC 21  Levies (IFRIC 21), an interpretation of IAS
      37  Provisions, Contingent Liabilities and Contingent Assets ("IAS 37"),
      clarifies that the obligating event, as defined by IAS 37, that gives rise
      to a liability to pay a levy is the activity described in the relevant
      legislation that triggers the payment of the levy. The Company has applied
      IFRIC 21 on a retrospective basis in compliance with the transitional
      requirements of IFRIC 21. The application of IFRIC 21 did not result in an
      adjustment to the Companys consolidated financial statements.                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In addition, the following accounting policies were also
      adopted during 2014: Stripping costs, Flow-through Sharesand Goodwill.These policies are described above under Note
      2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Recent pronouncements issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company has reviewed new and revised accounting
      pronouncements that have been issued but are not yet effective and
      determined that the following may have an impact in the future on the
      Company:                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In May 2014, the IASB issued IFRS 15 - Revenue from
      Contracts with Customers ("IFRS 15") which supersedes existing standards
      and interpretations including IAS 18, Revenue. IFRS 15 establishes a
      single five-step model framework for determining the nature, amount,
      timing and uncertainty of revenue and cashflows arising from a contract
      with a customer. The standard is effective for annual periods beginning on
      or after January 1, 2017, with early adoption permitted. The Company is
      currently evaluating the impact the standard is expected to have on its
      consolidated financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Primero will be required to adopt IFRS 9, Financial
      Instruments on January 1, 2018. IFRS 9 is the result of the first phase
      of the IASBs project to replace IAS 39, Financial Instruments:
      Recognition and Measurement. The new standard replaces the current
      multiple classification and measurement models for financial assets and
      liabilities with a single model that has only two classification
      categories: amortized cost and fair value. The Company is currently
      assessing the impact that IFRS 9 will have on its financial
    statements.                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|6. | Gold and silver purchase
  agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| | (i) | Silver purchase agreement  San Dimas
  mine                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In 2004, the then owner of the San Dimas mine entered
      into an agreement to sell all the silver produced at the San Dimas mine
      for a term of 25 years to Silver Wheaton Caymans 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 in 2010. The amendments
      provided that for each of the first four years after the acquisition date (i.e., up to
      August 5, 2014), the first 3.5 million ounces per annum of silver produced
      by the San Dimas mine, plus 50% of the excess silver above this amount,
      must be sold to Silver Wheaton Caymans at the lesser of $4.04 per ounce
      (adjusted by 1% per year) and market prices. After four years (i.e., from
      August 6, 2014), 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.

34

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |      | 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 (t)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (ii) | Gold purchase agreement  Black Fox
  Complex                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |      | On November 9, 2010, the then owner of the Black Fox
      Complex entered into an gold purchase agreement (the Gold Purchase
      Agreement) with Sandstorm to sell a portion of future gold production
      from the Black Fox mine and a portion of the adjoining Pike River property
      (the Black Fox Extension) for an upfront cash payment of $56.3 million
      and ongoing per ounce payments of the lesser of $500 per ounce of gold
      (subject to an inflationary adjustment beginning in 2013, not to exceed 2%
      per year) and the London fix price quoted by the London Bullion Market
      Association (the Fixed Price) for each ounce delivered (the
      Goldstream). The Company was required to assume the Gold Purchase
      Agreement when it acquired Brigus in 2014. Sales under the Gold Purchase
      Agreement commenced on January 1, 2011. Under the terms of the Gold
      Purchase Agreement, the upfront payment is reduced by the difference
      between the market price of gold on the business day prior to the date of
      gold delivery and the Fixed Price of the gold multiplied by the total
      ounces of gold delivered (the Uncredited Balance). If, after the term of
      the Agreement (November 9, 2090), the Uncredited Balance has not been
      reduced to $nil, then the Company will be required to repay the amount of
      the Uncredited Balance.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |      | On November 5, 2012, Brigus elected to repurchase 4% and
      3.7% of the future gold production at the Black Fox mine and Black Fox
      Extension, respectively, for $24.4 million, thereby reducing the original
      Uncredited Balance to $31.9 million. The Uncredited Balance upon
      acquisition on March 5, 2014 was $7.1 million. Sandstorm is now entitled
      to 8% of the future gold production at the Black Fox mine and 6.3% at the
      Black Fox Extension. The Company has no additional option to repurchase
      any remaining portion of the Goldstream.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

35

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The expected cash flows associated
with the sale of the gold to Sandstorm at a price lower than market price have
been reflected in the fair value of the mining interest recorded upon
acquisition of the Brigus (Note 3 (i)). The Company has presented the value of
any expected future cash flows from the sale of any future gold production to
Sandstorm as part of the mining interest, as the Company did not receive any of
the upfront payment which was made by Sandstorm to acquire its interest in the
gold production from Black Fox and Pike River.

|7. | Revenue                                       
|-- | ----------------------------------------------
|   |                                               
|   | Revenue is comprised of the following
  sales:

| |        |  | 2014    |  |  | 2013    | 
| | ------ |  | ------- |  |  | ------- | 
| |        |  | $       |  |  | $       | 
| |        |  |         |  |  |         | 
| | Gold   |  | 230,320 |  |  | 157,304 | 
| | Silver |  | 44,292  |  |  | 43,022  | 
| |        |  | 274,612 |  |  | 200,326 | 

As described in Note 6 (i), for the
first four years post-acquisition of the San Dimas Mine, the Company was
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 final year of
this four year period was 2014; from 2015 onwards the Company is entitled to
sell 50% of silver production above a 6 million ounce threshold per annum at
market prices. The threshold for 2014 was met in early March, while the
threshold for 2013 was met in mid-April. During the year ended December 31,
2014, the Company sold 1,243,060 ounces of silver at market prices for revenues
of $24.6 million (2013  999,162 ounces for $21.6 million).

From the acquisition date of Brigus to
December 31, 2014, the Company recorded revenue of $2.2 million related to gold
sales under the Gold Purchase Agreement (2013 - $nil) (Note 6 (ii)).

36

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

|8. | General and administrative expenses                              
|-- | -----------------------------------------------------------------
|   |                                                                  
|   | General and administrative expenses comprise the
      following:

(In thousands of
      U.S. dollars)
    
    2014
    
    
    2013Share-based payment
    
    9,342
    
    
    6,441Salaries and wages
    
    13,168
    
    
    8,257Rent and office costs
    
    2,663
    
    
    1,904Legal, accounting,consulting, and other professional fees
    
    4,520
    
    
    3,753Estimated costs of Vancouver office closure
      andrelocation of finance function
    
    1,777
    
    
    -Other general and administrative expenses
    
    5,336
    
    
    4,115Total
    
    36,806
    
    
    24,470


|   | An additional $1.4 million of share-based compensation is
      included in operating expenses for the year ended December 31, 2014 (2013
      - $0.3 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|9. | Transaction costs and other expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In 2014, transaction costs of $7.5 million were incurred
      relating to the Brigus acquisition (Note 3(i)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In 2013, $5.5 million was expensed in relation to a
      settlement regarding social security benefits at San Dimas. 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
      transaction costs and other expenses.                                               

37

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

|10. | Income taxes
|--- | ------------

|(a) | The following table reconciles income taxes calculated at
      the statutory rate with the income tax expense presented in these
      consolidated financial statements:
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                |  | 2014     |   |  | 2013    |  
| | ---------------------------------------------- |  | -------- | - |  | ------- | -
| |                                                |  |          |   |  |         |  
| |                                                |  | $        |   |  | $       |  
| |                                                |  |          |   |  |         |  
| | (Loss) income before income taxes              |  | (206,657 | ) |  | 41,150  |  
| |                                                |  |          |   |  |         |  
| | Canadian federal and provincial income taxrate |  | 26.00%   |   |  | 25.75%  |  
| |                                                |  |          |   |  |         |  
| | Expected income tax (expense) recovery         |  | 53,730   |   |  | (10,596 | )
| |                                                |  |          |   |  |         |  
| | (Increase) decrease attributable to:           |  |          |   |  |         |  
| | Effect of different foreign statutory          |  |          |   |  |         |  
| | rates on
      earnings of subsidiaries        |  | (1,308   | ) |  | (1,695  | )
| | Share-based payments                           |  | 134      |   |  | (18     | )
| | Amounts allowable                              |  |          |   |  |         |  
| | for tax purposes                               |  | 10,764   |   |  | 10,497  |  
| | Impact of Mexican inflation                    |  |          |   |  |         |  
| | on tax values                                  |  | 649      |   |  | 1,757   |  
| | Impact of foreign exchange                     |  | (2,296   | ) |  | 331     |  
| | Impact of foreign exchange on deferred         |  |          |   |  |         |  
| | income tax
      assets and liabilities        |  | (19,782  | ) |  | (1,169  | )
| | Withholding taxes on                           |  |          |   |  |         |  
| | intercompany
      interest                    |  | (4,445   | ) |  | (4,750  | )
| | Royalty taxes in Mexico                        |  | (1,508   | ) |  | (35,864 | )
| | Flow through share
      renunciation          |  | (1,765   | ) |  | -       |  
| | Impairment of mining interests and goodwill    |  | (44,990  | ) |  | -       |  
| | Ontario mining taxes                           |  | (2,558   | ) |  | -       |  
| | Benefit of tax losses not recognized           |  | (4,352   | ) |  | (3,893  | )
| | Income tax expense                             |  | (17,727  | ) |  | (45,400 | )
| |                                                |  |          |   |  |         |  
| | Income tax expense is represented
      by:    |  |          |   |  |         |  
| | Current income tax expense                     |  | (4,752   | ) |  | (2,063  | )
| | Deferred income tax expense                    |  | (12,975  | ) |  | (43,337 | )
| | Net income tax
      expense                   |  | (17,727  | ) |  | (45,400 | )

On December 11, 2013, the Mexican
government enacted a tax reform to introduce a mining royalty effective January
1, 2014. This royalty is deductible for tax purposes and is calculated as 7.5%
of a royalty base which is computed as follows:

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.

38

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The Company has taken the position that
the royalty is an income tax as it is based on a measure of revenue less certain
specified costs. On substantial enactment, a taxable temporary difference arose,
as mining assets and financial assets/liabilities had a book basis but no tax
basis for purposes of the royalty. The Company has recognized a net deferred tax
liability of $32.6 million as at December 31, 2014 (December 31, 2013 - $35.9
million) 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 25.75% in 2013 to 26% in 2014.

There is currently no taxation related
to the OCI balances recorded by the Company.

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

2014
    
    
    2013$
    
    
    $Mineral property, plant and equipment
    
    (18,575
    )
    
    (13,554
    )Non-capital losses and other future deductions
    
    -
    
    
    12,913Decommissioning liability to be recovered
    
    1,294
    
    
    1,081Deduction for Mexican royalty taxes
    
    11,942
    
    
    11,796Other
    
    5,950
    
    
    5,662Deferred tax asset
    
    611
    
    
    17,898M ineral property, plant and equipment
    
    (49,697
    )
    
    (48,114
    )Decommissioning liability to be recovered
    
    1,350
    
    
    270Other
    
    (2,027
    )
    
    184Deferred taxliability
    
    (50,374
    )
    
    (47,660
    )Net deferred taxliability
    
    (49,763
    )
    
    (29,762
    )


Based on discounted cash flow models
for each of the Companys mines, 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 $nil 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 $50.4 million,
$5.5 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 Canadian
losses of $204.5 million that are available to be applied against future taxable
income. These losses expire from 2025 to 2034. Of these losses, $139.0 million
are restricted to use only against income from the same or similar business that
created these losses. The Company also has
losses of $34.6 million, of which $15.5 million expire in 2015 through 2017, and
the rest in 2018 through 2024, relating to entities that have a history of
losses, and may not be used to offset taxes in other entities.

39

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The company has $150.5 million in
Canadian resource tax pools which do not expire and can be utilized to shelter
future income earned from the Black Fox Complex.

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

| |                               |  | 2014    |  |  | 2013   | 
| | ----------------------------- |  | ------- |  |  | ------ | 
| |                               |  | $       |  |  | $      | 
| |                               |  |         |  |  |        | 
| | Non-capital losses            |  | 129,187 |  |  | 50,825 | 
| | Capital losses                |  | 5,718   |  |  | 3,563  | 
| | Share issuance costs          |  | 4,714   |  |  | 2,987  | 
| | Accrued liabilities and other |  | 45,624  |  |  | 8,150  | 
| | Special mining duties         |  | 5,714   |  |  | 8,339  | 
| |                               |  | 190,957 |  |  | 73,864 | 

|    | The aggregate amount of taxable temporary differences
      associated with investments in subsidiaries for which deferred taxes have
      not been recognized, as at December 31, 2014 is $26.9 million.                                                                                                                                                                                                                                                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On October 17, 2011 the Companys Mexican subsidiary
      filed an 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.                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|11. | Loss per share (EPS)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Basic loss per share amounts are calculated by dividing
      the net loss for the year by the weighted average number of common shares
      outstanding during the year.                                                                                                                                                                                                                                                                                                                                                                 

40

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

2014
    
    
    2013Net loss attributable to shareholders
      (basic)
    
    (224,384
    )
    
    (4,250
    )Net loss attributable to shareholders (diluted)
    
    (224,384
    )
    
    (4,250
    )Weighted average number of shares
       (basic)
    
    152,063,899
    
    
    108,528,425Weighted average
      number of shares (diluted)
    
    152,063,899
    
    
    108,528,425Basic loss per share ($s)
    
    (1.48
    )
    
    (0.04
    )Diluted loss per share ($s)
    
    (1.48
    )
    
    (0.04
    )


|12. | Inventories
|--- | -----------

2014
    
    
    2013$
    
    
    $Current portion of inventoryGold and silver
    
    6,950
    
    
    1,297Stockpiled ore
    
    585
    
    
    3,748W ork-in-progress
    
    6,140
    
    
    2,145Supplies
    
    6,691
    
    
    4,98120,366
    
    
    12,171Long-term stockpiled ore
    
    14,309
    
    
    -Total inventory
    
    34,675
    
    
    12,171


41

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

|    | The total amount of inventory
      written down to net realizable value during the year ended December 31,
      2014 was $1.8 million (2013 - $nil).                                                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                         
|    | Substantially all inventory (other than long-term
      inventory) is expected to be recovered within 12 months of the statement
      of financial position date.                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                         
|13. | Restricted cash                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                         
|    | Restricted cash of $17.6 million (2013 - $nil) represents
      funds held as security for letters of credit issued by the Company in
      favour of the Ontario Ministry of Northern Development, Mines and Forestry
      to meet the Companys bonding requirements for the site closure
      obligations of the Black Fox Complex.

42

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

|14. | Mining interests                                                                                 
|--- | -------------------------------------------------------------------------------------------------
|    |                                                                                                  
|    | Mining interests include mining and exploration
      properties and related plant and equipment:

Mining
    
    
    
    
    
    Plant,
    
    
    Constructionproperties
    
    
    Landand
    
    
    equipment
    
    
    inand
      leases
    
    
    buildings
    
    
    and
      vehicles
    
    
    progress
    
    
    Total$
    
    
    $
    
    
    $
    
    
    $
    
    
    $CostAt January 1, 2013
    
    443,034
    
    
    51,206
    
    
    60,312
    
    
    8,299
    
    
    562,851Additions
    
    122,188
    
    
    2,015
    
    
    10,911
    
    
    42,084
    
    
    177,198Reclassifications and adjustments
    
    15,461
    
    
    2,262
    
    
    2,694
    
    
    (20,417
    )
    
    -Assets written off
    
    -
    
    
    (69
    )
    
    (407
    )
    
    -
    
    
    (476
    )At December 31, 2013
    
    580,683
    
    
    55,414
    
    
    73,510
    
    
    29,966
    
    
    739,573Additions
    
    66,830
    
    
    2,841
    
    
    24,170
    
    
    34,927
    
    
    128,768Assets acquired in a business combination
    
    223,388
    
    
    8,784
    
    
    67,414
    
    
    2,965
    
    
    302,551Impairment of mining interests (Note 4)
    
    (110,000
    )
    
    -
    
    
    -
    
    
    -
    
    
    (110,000
    )Reclassifications and adjustments
    
    19,599
    
    
    1,716
    
    
    53
    
    
    (28,155
    )
    
    (6,787
    )Assets written off
    
    -
    
    
    -
    
    
    (1,859
    )
    
    -
    
    
    (1,859
    )At December 31, 2014
    
    780,500
    
    
    68,755
    
    
    163,288
    
    
    39,703
    
    
    1,052,246Depreciation and depletionAt January 1, 2013
    
    45,229
    
    
    5,144
    
    
    16,346
    
    
    -
    
    
    66,719Depreciation and depletion charged for the year
    
    25,575
    
    
    2,308
    
    
    8,925
    
    
    -
    
    
    36,808Accumulated depreciation on assets written off
    
    -
    
    
    (10
    )
    
    (197
    )
    
    -
    
    
    (207
    )At December 31, 2013
    
    70,804
    
    
    7,442
    
    
    25,074
    
    
    -
    
    
    103,320Depreciation and depletion charged for the
      year
    
    42,891
    
    
    3,243
    
    
    21,840
    
    
    -
    
    
    67,974Accumulated
      depreciation on asset swritten off
    
    -
    
    
    -
    
    
    (528
    )
    
    -
    
    
    (528
    )At December 31, 2014
    
    113,695
    
    
    10,685
    
    
    46,386
    
    
    -
    
    
    170,766Carrying amountAt December 31,
      2013
    
    509,879
    
    
    47,972
    
    
    48,436
    
    
    29,966
    
    
    636,253At December 31, 2014
    
    666,805
    
    
    58,070
    
    
    116,902
    
    
    39,703
    
    
    881,480


43

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

A summary of mining interest by
property is as follows:

Mining
    
    
    
    
    
    Plant,
    
    
    Constructionproperties
    
    
    Landand
    
    
    equipment
    
    
    inand
      leases
    
    
    buildings
    
    
    and vehicles
    
    
    progress
    
    
    Total$
    
    
    $
    
    
    $
    
    
    $
    
    
    $San Dimas
    
    402,417
    
    
    46,604
    
    
    47,885
    
    
    29,966
    
    
    526,872Black Fox Complex
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Cerro del Gallo
    
    107,462
    
    
    1,368
    
    
    224
    
    
    -
    
    
    109,054Corporate
    
    -
    
    
    -
    
    
    327
    
    
    -
    
    
    327At December 31, 2013
    
    509,879
    
    
    47,972
    
    
    48,436
    
    
    29,966
    
    
    636,253San Dimas
    
    409,548
    
    
    45,890
    
    
    52,047
    
    
    36,136
    
    
    543,621Black Fox Complex
    
    178,887
    
    
    8,359
    
    
    64,323
    
    
    3,567
    
    
    255,136Cerro del Gallo
    
    78,370
    
    
    3,821
    
    
    246
    
    
    -
    
    
    82,437Corporate
    
    -
    
    
    -
    
    
    286
    
    
    -
    
    
    286At December 31, 2014
    
    666,805
    
    
    58,070
    
    
    116,902
    
    
    39,703
    
    
    881,480


All property of the San Dimas mine is
pledged as security for the Companys obligations under the silver purchase
agreement, and certain assets of the Black Fox Complex are pledged as security
for the gold purchase agreement (Note 6(i)). Substantially all of the Companys
assets are pledged as security under the line of credit (Note 15 (a)(iii)).

The carrying value of property, plant,
and equipment under finance leases at December 31, 2014 was $22.4 million (2013
- $nil).

The basis for calculating the depletion
expense is described in Note 2, Significant accounting policies.The
following table gives further details of the depletion calculation:

San Dimas
    Black Fox1Value assigned to depletable
      component 2014 (2013)
    $342.7 million ($282.3 million)
    $79.9 millionValue assigned to non-depletable
      component 2014 (2013)
    $57.8 million ($106.8 million)
    $90.5 million% of reserves used in the
      depletable pool 2014 (2013)
    **100%** (100%)
    100%% of resources used in the
      depletable pool 2014 (2013)
    **75%** (75%)
    0%Oz of reserves used in the
      depletable pool 2014 (2013)
    **0.9 million** (0.7 million)
    0.5 millionOz of resources used in the
      depletable pool 2014 (2013)
    **0.7 million** (0.6 million)
    0Future development costs included
      in the depletion calculation 2014
    **$77.0 million**
      **(2013)**$55.0 million)
    $0


12013 not applicable as the mine was
not owned by Primero in 2013.

Depletion expense for the year ended
December 31, 2014 was $41.3 million (2013 - $25.6 million). Had the depletion
expense been calculated without inclusion of inferred resources and, where applicable, exploration potential, and related
      future development costs, the depletion expense would have been $60.3
million (2013 - $65.0 million).

44

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

|    | Depreciation and depletion expense for the year ended
      December 31, 2014 was $68.0 million (2013 - $36.8 million), of which $5.2
      million represents the change in the inventories balance in the year ended
      December 31, 2014 (2013  $0.6 million). Borrowing costs of $1.1 million
      were capitalized during 2014 (2013 - $2.1 million) at a weighted average
      borrowing rate of 6% (2013  6%). Included within mining properties for
      the year ended December 31, 2014 is a $0.8 million increase of the
      decommissioning liability (2013 - $0.1 million reduction).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|15. | Current and long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

(a)

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


| | (i)  | On August 6, 2010, in connection with the acquisition of
      the San Dimas Mine, the Company issued a 6% promissory note for $50
      million to Desarrolos Mineros San Luis, S.A. de C.V. (DMSL), a
      subsidiary of Goldcorp. The Company repaid the promissory note in full on
      May 29, 2014.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (ii) | As part of the acquisition of Brigus, the Company assumed
      $50 million of senior unsecured debentures. The debenture bears interest
      at 6.5% and matures March 31, 2016. As disclosed in Note 3 (i), the
      Company made a change of control offer for Brigus senior unsecured
      convertible debentures on April 4, 2014. Investors holding $1.9 million of
      the debentures accepted the Companys offer and these debentures were
      repaid on May 16, 2014, leaving $48.1 million of principal outstanding as
      at December 31, 2014.                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | In accordance with IAS 39, Financial Instruments:
      Recognition and Measurement, the debentures are considered to contain an
      embedded derivative relating to the conversion option. The conversion
      option was valued upon initial recognition at fair value using an option
      pricing model and was separated from the debt component of the debentures.
      The debt component of the debentures was measured upon initial
      recognition, based on the present value of the cash flows associated with
      the debentures. Subsequent to initial recognition, the embedded derivative
      component is re-measured at fair value at each reporting date while the
      debt component is accreted to the face value of the debentures using the
      effective interest rate through periodic charges to finance expense over
      the term of the debentures. Accretion relating to the debentures for year
      ended December 31, 2014 was $1.1 million (2013 -
$nil).

45

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (iii) | The Company closed a $75 million revolving credit
      facility, provided by two Canadian banks, on May 23, 2014. The line of
      credit has a three-year term and bears interest at a floating interest
      rate equal to LIBOR or the the prime rate of Canada or the bankers
      acceptance rate (depending on the choice of credit availment by the
      Company) plus an applicable margin, which was approximately 4.75% per
      annum during the year ended December 31, 2014. The line of credit is
      secured by substantially all of the Companys assets. As at December 31,
      2014, the Company had drawn $40 million under the line of credit. Net
      transaction costs of $2.2 million have been netted against the drawn
      amount resulting in a carrying balance of $37.8 million at December 31,
      2014. These transaction costs are being amortized over the term of the
      line of credit, with a corresponding credit to debt.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iv)  | The Company is obligated under various finance leases for
      equipment as well as a milling facility on the Black Fox Complex. All
      finance lease agreements provide that the Company can purchase the leased
      equipment at the end of the lease term for a nominal amount. Interest
      payable on the various leases range from a fixed rate of 4.75% to 6.60%.
      The are no restrictions placed on the Company as a result of these leases,
      however, the lessors hold first security rights over the leased
    assets.                                                                                                                                                                                                                                                                                                                                                                                                                               

(b) Finance expense

Finance expense comprised the
following:

2014
    
    
    2013$
    
    
    $Interest and accretionon
      convertible debentures
    
    3,729
    
    
    -Interest and fees online of credit
    
    1,493
    
    
    -Interest on promissory note
    
    673
    
    
    2,057Interest on finance leases
    
    671
    
    
    -Interest on senior secured
      notes
    
    149
    
    
    -Capitalization of borrowing costs
    
    (1,114
    )
    
    (2,140
    )Accretion on decommissioning
      liability
    
    1,054
    
    
    642Other
    
    315
    
    
    1156,970
    
    
    674


|16. | Decommissioning liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The decommissioning liability consists of reclamation and
      closure costs for the San Dimas mine and the Black Fox Complex. The
      undiscounted cash flow amount of the total obligation was $57.2 million at
      December 31, 2014 (2013 - $31.3 million relating to San Dimas only) and
      the present value of the obligation was estimated at $32.6 million (2013-
      $8.7 million relating to San Dimas only), calculated using a discount rate
      of 7.75% for San Dimas and 2% for the Black Fox Complex 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 19 years for San
      Dimas and 9 years for the Black Fox Complex (2013  22 years relating to
      San Dimas only). The discount rates used by the Company in 2014 and 2013
      are based on prevailing risk-free pre-tax rates in Mexico and Canada,
      respectively, for periods of time which coincide with the period over
      which the decommissioning costs are discounted.

46

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |                                                   |  | San Dimas |   |  | Black Fox |   |  |        |  
| | ------------------------------------------------- |  | --------- | - |  | --------- | - |  | ------ | -
| |                                                   |  | mine      |   |  | Complex   |   |  | Total  |  
| |                                                   |  | $         |   |  | $         |   |  | $      |  
| |                                                   |  |           |   |  |           |   |  |        |  
| | Decomissioning
      liability  - January 1, 2013 |  | 8,283     |   |  | -         |   |  | 8,283  |  
| | Change in inflation rate                          |  | (145      | ) |  | -         |   |  | (145   | )
| | Accretion expense                                 |  | 642       |   |  | -         |   |  | 642    |  
| | Reclamation expenditures                          |  | (50       | ) |  | -         |   |  | (50    | )
| | Decomissioning liability  - December 31, 2013     |  | 8,730     |   |  | -         |   |  | 8,730  |  
| |                                                   |  |           |   |  |           |   |  |        |  
| | Upon acquisition (March 5,
      2014)            |  | -         |   |  | 15,746    |   |  | 15,746 |  
| | Adjustment for credi trisk                        |  | -         |   |  | 7,707     |   |  | 7,707  |  
| | Change in end of mine life                        |  | 393       |   |  | -         |   |  | 393    |  
| | Accretion expense                                 |  | 660       |   |  | 394       |   |  | 1,054  |  
| | Foreign exchange and other adjustments            |  | (393      | ) |  | (671      | ) |  | (1,064 | )
| | Decomissioning liability  - Decem ber 31, 2014    |  | 9,390     |   |  | 23,176    |   |  | 32,566 |  

|17. | Share capital
|--- | -------------

| | (a) | Authorized share capital consists of unlimited common
      shares without par value and unlimited preferred shares, issuable in
      series with special rights and restrictions
attached.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                          |  | 2014        |  |  | 2013        | 
| | ---------------------------------------- |  | ----------- |  |  | ----------- | 
| | Common shares issued and  fully paid     |  |             |  |  |             | 
| |                                          |  |             |  |  |             | 
| | At January 1                             |  | 115,726,035 |  |  | 97,205,622  | 
| | Issued during
      period  (Note17 (b)) |  | 45,829,840  |  |  | 18,520,413  | 
| | At
      December 31                     |  | 161,555,875 |  |  | 115,726,035 | 

| |     | The outstanding carrying value of share capital is
      recorded in the share capital reserve in the statement of financial
      position.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                             
| | (b) | Common shares issuance                                                                                                                      

| | (i) | During the year ended December 31, 2014, the Company
      issued 41,340,347 common shares as consideration for the acquisition of
      Brigus (Note 3(i)), 1,921,744 common shares upon the exercise of stock
      options, 2,481,482 common shares pursuant to two flow-through agreements
      (see below), 81,477 common shares as consideration for awards issued under
      the Directors PSU plan (Note 17(e)(iii)), and 4,790 shares upon the
      exercise of warrants.                                                                     
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company received $14.6 million (net of transaction
      costs) from the proceeds of two flow-through financings in 2014 to fund
      exploration costs at the Grey Fox and Pike River properties. Primero
      raised Cdn$9 million in March 2014 by issuing 1,000,000 flow through
      shares and Cdn$8 million in December 2014 by issuing 1,481,482
      flow-through shares. All of the March 2014 financing was spent by December
      31, 2014 and all of the December 2014 financing is expected to be spent by
      December 31, 2015.

47

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| | (ii) | During the year ended December 31, 2013, the Company
      issued 17,983,956 common shares as consideration for the acquisition of
      Cerro (Note 3(ii)), 495,000 common shares upon the exercise of stock
      options, and 41,457 common shares as consideration for awards issued under
      the Directors PSU plan (Note 7(e)(iii)).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (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 three
      years; one third a year from the grant date, one third two years from the
      grant date, and one third three 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, 2014, the following stock options were
      outstanding and exercisable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Awards Outstanding
    
    Awards ExercisableGrant Price
    
    Remaining
    
    
    RemainingQuantity
    Contractual
    
    Quantity
    ContractualLife
    
    
    Life$2.60-$5.09
    759,836
    3.2
    
    570,079
    2.8$5.10-$5.38
    785,000
    0.6
    
    785,000
    0.6$5.39-$5.92
    477,335
    3.0
    
    477,335
    3.0$5.93-$6.22
    4,533,490
    0.6
    
    4,533,490
    0.6$6.23-$6.74
    456,893
    1.0
    
    436,893
    0.9$6.75-$7.12
    450,486
    2.1
    
    450,486
    2.1$7.13-$7.36
    266,020
    1.1
    
    266,020
    1.1$7.37-$7.68
    617,832
    4.1
    
    -
    -$7.69-$8.76
    426,940
    1.5
    
    368,124
    1.0$8.77-$17.53
    480,392
    1.5
    
    480,392
    1.59,254,224
    1.4
    
    8,367,819
    1.1


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

48

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |                                  |  |            |   |  | Weighted | 
| | -------------------------------- |  | ---------- | - |  | -------- | 
| |                                  |  |            |   |  | average  | 
| |                                  |  | Number of  |   |  | exercise | 
| |                                  |  | options    |   |  | price    | 
| |                                  |  |            |   |  | Cdn$     | 
| | Outstanding at January 1, 2013   |  | 7,804,490  |   |  | 5.57     | 
| | Exercised                        |  | (495,000   | ) |  | 4.38     | 
| | Granted                          |  | 866,525    |   |  | 7.92     | 
| | Cancelled                        |  | (70,000    | ) |  | 6.43     | 
| | Expired                          |  | (142,025   | ) |  | 7.99     | 
| | Outstanding at December 31, 2013 |  | 7,963,990  |   |  | 5.85     | 
| | Granted                          |  | 3,682,393  |   |  | 6.75     | 
| | Exercised                        |  | (1,921,744 | ) |  | 5.50     | 
| | Cancelled                        |  | (172,500   | ) |  | 6.90     | 
| | Expired                          |  | (297,915   | ) |  | 7.70     | 
| | Outstanding at December 31, 2014 |  | 9,254,224  |   |  | 6.17     | 

The weighted average share price on
the date the options were exercised during 2014 was Cdn$7.79 (2013  Cdn$5.90).

Of the 3,682,393 options granted in
2014, 2,708,488 were issued to the former option holders of Brigus, pursuant to
the Arrangement (Note 3(i)). The 866,525 options granted in 2013 were issued to
the former option holders of Cerro, pursuant to the terms of the Scheme (Note
3(ii)). The fair value of newly issued options 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 for options issued in the year ended December 31, 2014 were as
follows:

WeightedAverage
    
    
    
    
    
    
    
    
    
    
    
    averageexpected
    
    
    Exercise
    
    
    
    
    
    
    
    
    Black-ScholesNumber of
    
    
    life of options
    
    
    price
    
    
    Risk free
    
    
    Volatility
    
    
    value assignedIssue date
    
    options
    
    
    (years)
    
    
    Cdn$
    
    
    interest rate
    
    
    (i)
    
    
    Cdn$February 18, 2014
    
    750,332
    
    
    3.5
    
    
    7.40
    
    
    1.29
    
    
    53
    
    
    2.89March 28, 2014
    
    58,816
    
    
    3.5
    
    
    7.95
    
    
    1.36
    
    
    53
    
    
    3.14November 10, 2014
    
    164,757
    
    
    3.5
    
    
    4.11
    
    
    1.25
    
    
    57
    
    
    1.44973,905


| | (i) | 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, 2014 and December 31, 2013, 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.

49

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |     | In addition, upon completion of the Arrangement, each
      outstanding warrant to purchase a Brigus common share became exercisable
      to purchase 0.175 of a Primero common share and 0.1 of a Fortune Bay
      common share. An aggregate of 15.9 million Brigus warrants to purchase 2.8
      million common shares of the Company at a price of Cdn$12.51 - $12.53
      expired November 19, 2014.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The outstanding carrying value of warrants is recorded
      within the Warrants reserve within equity on the statement of financial
      position.                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                              
| | (e) | Phantom share unit plans                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Company has three phantom share unit
  plans                                                                                                                                                                                                                                                                                                                                                             

| | (i)   | 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)  | 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 or (3) a combination of cash and
      shares.                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iii) | 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 or (3) a combination of cash and shares. The choice of
      settlement is solely at the Company`s discretion.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | Units issued under the PSUP and Directors PSUP are
      accounted as cash-settled awards, while units issued under the 2013 PSUP
      are treated as equity-settled awards.                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | The following units were issued and outstanding as at
      December 31, 2014 under the PSUP and Directors PSUP
  plans:                                                                                                                                                                                                                                                                                                                                                                                    

50

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |                     | Number of  |                     |                  
| | ------------------- | ---------- | ------------------- | -----------------
| |                     | units      |                     |                  
| | Date
      of issue | outstandng | Vesting date        | Expiry date      
| | March 31, 2012      | 689,651    | March 31, 2015      | December 31, 2015
| | May 25, 2012        | 7,051      | May 25, 2015        | December 31, 2015
| | August 3, 2012      | 3,009      | August 3, 2015      | December 31, 2015
| | November 12, 2012   | 28,902     | November 12, 2015   | December 31, 2015
| | February 25, 2013   | 219,912    | February 25, 2015   | December 31, 2015
| | February 25, 2013   | 219,913    | February 25, 2016   | December 31, 2016
| | March 28, 2013      | 56,226     | December 1, 2015    | December 31, 2015
| | June 26, 2013       | 5,605      | December 1, 2015    | December 31, 2015
| | February 18, 2014   | 57,434     | December 1, 2015    | December 31, 2015
| | February 18, 2014   | 57,434     | December 1, 2016    | December 31, 2016
| | March 28, 2014      | 2,045      | March 28, 2015      | December 31, 2015
| | March 28, 2014      | 2,045      | March 28, 2016      | December 31, 2016
| | March 28, 2014      | 2,046      | March 28, 2017      | December 31, 2017
| | May 12, 2014        | 4,682      | December 1, 2015    | December 31, 2015
| | May 12, 2014        | 4,682      | December 1, 2016    | December 31, 2016
| | June 16, 2014       | 51,502     | June 16, 2015       | December 31, 2015
| | June 16, 2014       | 51,502     | June 16, 2016       | December 31, 2016
| | June
      16, 2014 | 51,502     | June
      16, 2017 | December 31, 2017
| | Total               | 1,515,143  |                     |                  

51

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The following is a continuity schedule
of units outstanding for the period:

| |                                  |  | Number of  |  
| | -------------------------------- |  | ---------- | -
| |                                  |  | units      |  
| |                                  |  |            |  
| | Outstanding at January 1, 2013   |  | 4,504,292  |  
| | Redeemed                         |  | (2,656,060 | )
| | Granted                          |  | 1,000,334  |  
| | Cancelled                        |  | (22,598    | )
| | Outstanding at December 31, 2013 |  | 2,825,968  |  
| | Redeemed                         |  | (1,490,119 | )
| | Granted                          |  | 358,432    |  
| | Cancelled                        |  | (179,138   | )
| | Outstanding at December 31 ,2014 |  | 1,515,143  |  

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 consolidated statement of
operations and comprehensive loss during the year ended December 31, 2014 in
relation to the PSUP and Directors PSUP was $6.4 million and (2013 - $5.8
million). The total liability recognized at December 31, 2014 in respect of the
PSUP and Directors PSUP was $4.4 million (2013 - $8.1 million), of which $3.7
million (2013 - $5.1 million) is classified as a current liability, reported
within trade and other payables, with the remaining $0.7 million (2013 - $3.0
million) classified as a long-term liability, reported within other long-term
liabilities. None of these cash-settled units was vested at December 31, 2014,
but all remain outstanding.

52

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The following units were issued and
outstanding as December 31, 2014 under the 2013 PSUP:

Number ofunitsDate of issue
    outstanding
    Vesting date
    Expiry dateMay 10, 2013
    72,681
    May 10, 2015
    December 31, 2015May 10, 2013
    72,682
    May 10, 2016
    December 31, 2016June 26, 2013
    13,046
    June 26, 2015
    December 31, 2015June 26, 2013
    13,047
    June 26, 2016
    December 31, 2016August 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, 2015
    December 31, 2015November 8, 2013
    5,853
    November 8, 2016
    December 31, 2016February 18, 2014
    124,481
    February 18, 2015
    December 31, 2015February 18, 2014
    124,482
    February 18, 2016
    December 31, 2016February 18, 2014
    124,482
    February 18, 2017
    December 31, 2017March 28, 2014
    70,589
    March 28, 2015
    December 31, 2015March 28, 2014
    70,589
    March 28, 2016
    December 31, 2016March 28, 2014
    70,590
    March 28, 2017
    December 31, 2017May 12, 2014
    21,951
    May 12, 2015
    December 31, 2015May 12, 2014
    21,951
    May 12, 2016
    December 31, 2016May 12, 2014
    21,951
    May 12, 2017
    December 31, 2017June 16, 2014
    15,380
    June 16, 2015
    December 31, 2015June 16, 2014
    15,380
    June 16, 2016
    December 31, 2016June 16, 2014
    15,380
    June 16, 2017
    December 31, 2017August 11, 2014
    1,226
    August 11, 2015
    December 31, 2015August 11, 2014
    1,226
    August 11, 2016
    December 31, 2016August 11, 2014
    1,226
    August 11, 2017
    December 31, 2017November 10, 2014
    69,507
    November 10, 2015
    December 31, 2015November 10, 2014
    69,507
    November 10, 2016
    December 31, 2016November 10, 2014
    69,507
    November 10, 2017
    December 31, 2017Total
    1,152,464


The following is a continuity schedule
of units outstanding for the period:

Number ofunitsOutstanding at January 1,2 013
    
    -Redeemed
    
    -Granted
    
    418,576Cancelled
    
    (6,482
    )Outstanding at December 31, 2013
    
    412,094Redeemed
    
    (140,103
    )Granted
    
    969,878Cancelled
    
    (89,405
    )Outstanding at Decem ber 31, 2014
    
    1,152,464


53

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

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 consolidated statement of operations and comprehensive (loss)
income for the year ended December 31, 2014 in relation to the 2013 PSUP was
$3.4 million (2013 - $0.7 million).

|18. | Supplementary cash flow information                              
|--- | -----------------------------------------------------------------
|    |                                                                  
|    | Changes in non-cash working capital comprise the
      following:

2014
    
    
    2013$
    
    
    $Trade and other receivables
    
    (3,299
    )
    
    (4,235
    )Taxes receivable
    
    (14,445
    )
    
    (2,104
    )Prepaid expenses
    
    (1,286
    )
    
    (3,123
    )Inventories
    
    (3,630
    )
    
    (853
    )Trade and other payables
    
    (6,674
    )
    
    6,135Taxes payable
    
    (112
    )
    
    1,589(29,446
    )
    
    (2,591
    )


|    | Working capital balances assumed upon the acquisition of
      Brigus and Cerro are excluded from the table above and instead are netted
      within Acquisition of Brigus Gold Corp (net) and Acquisition of Cerro
      Resources NL, respectively, under cash flow from investing activities in
      the consolidated statement of cash flows.                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|19. | Capital management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Company manages its common shares, stock options,
      warrants and debt as capital. The Companys objectives in managing capital
      are to safeguard its ability to continue as a going concern in order to
      provide returns for shareholders and benefits for other stakeholders. To
      meet this objective, the Company will ensure it has sufficient cash
      resources to pursue the exploration and development of its mining
      properties, to fund future production at the San Dimas and Black Fox
      mines, development of the Grey Fox mine and the Cerro del Gallo project,
      as well as potential acquisitions.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | To support these objectives the Company manages its
      capital structure and 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 15). The requirements are both financial and
operational in nature; the Company has complied with all such requirements
during the year.                                                                                       

54

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

Pursuant to the terms of the line of
credit (Note 15), the Company is required to maintain the following financial
covenants:

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

|    | As at December 31, 2014, the Company was fully compliant
      with these covenants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|20. | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Companys financial instruments at December 31, 2014
      consist of cash and cash equivalents, trade and other receivables,
      restricted cash, an equity investment in Fortune Bay, trade and other
      payables, the convertible debentures and the line of credit.                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | At December 31, 2014, the carrying amounts of cash and
      cash equivalents, trade and other receivables, restricted cash and trade
      and other payables are considered to be a reasonable approximation of
      their fair values due to their short-term nature.                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Companys equity investment in Fortune Bay is
      designated as available for sale and is held at fair value. Any unrealized
      gains or losses on available for sale assets are recognized in OCI. During
      the period from March 5 to December 31, 2014, the Company recorded an
      unrealized loss of $0.5 million in OCI relating to its investment in
      Fortune Bay. Fortune Bay is a publicly-listed company and the fair value
      is based on the trading price its shares as at the date of the
      consolidated statement of financial position.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The fair value of the convertible debtentures upon
      initial recognition was based on the present value of the future cash
      flows to be paid under the terms of the debentures. Subsequently, the
      convertible debentures are being carried at amortized cost. The fair value
      of the line of credit upon initial recognition was considered to be its
      face value and is subsequently being carried at amortized
  cost.                                                                                                                                 

Fair value (i)
    
    
    Carrying valueDecember 31, 2014
    
    
    December 31, 2014$
    
    
    $Convertible debentures
    
    48,954
    
    
    46,315Line
      of credit
    
    37,786
    
    
    37,827


(i) Calculated using a discounted cash
flow analysis

Derivative instruments - Embedded
derivatives

55

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

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

The convertible debentures assumed with
the acquisition of Brigus (Note 3 (i)) are considered to contain an embedded
derivative liability which was initially recognized at fair value using an
option pricing model, and is subsequently measured at fair value each period
during the term of the debentures. During the year ended December 31, 2014 an
unrealized derivative gain of $2.3 million was recognized in relation to this
derivative liability.

Fair value measurements of financial
assets and liabilities recognized on the Consolidated Statements of Financial
Position

The categories of the fair value
hierarchy that reflect the significance of inputs used in making fair value
measurements are as follows:

Level 1  quoted 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, 2014, the levels in the
fair value hierarchy that the Companys financial assets and liabilities are
measured and recognized on a recurring basis are as follows:

| |                                                     |  | December 31, 2014 |  |  | December 31, 2013 | 
| | --------------------------------------------------- |  | ----------------- |  |  | ----------------- | 
| |                                                     |  | Level 1           |  |  | Level 2           | 
| |                                                     |  | $                 |  |  | $                 | 
| | Available for sale investment in Fortune
      Bay1 |  | 671               |  |  | -                 | 
| | Derivative
      liability 2                        |  | -                 |  |  | 1,405             | 

| | (1) | Fortune Bay is a publicly-listed company and the fair
      value is based on the trading price of its shares as at the date of the
      statement of financial position.                          
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                     
| | (2) | Calculated using an option pricing model with the
      following inputs: share price $3.85, conversion price $14.00, expected
      life 1.25 years, volatility 92.52% and a discount rate of
  8%.

As at December 31, 2014, there were no
financial assets and liabilities measured and recognized at fair value on a
non-recurring basis.

The Companys policy for determining
when a transfer occurs between levels in the fair value hierarchy is to assess
the impact at the date of the event or the change in circumstances that could
result in a transfer. There were no transfers between levels in the fair value
hierarchy during the year ended December 31, 2014.

56

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

At December 31, 2014, there were no
financial assets or liabilities measured and recognized in the consolidated
statements of financial position at fair value that would be categorized as
Level 3 in the fair value hierarchy (December 31, 2013  $nil).

Financial instrument risk exposure

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

| | (a) | Credit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Credit risk is the risk that the counterparty to a
      financial instrument will cause a financial loss for the Company by
      failing to discharge its obligations. Credit risk is primarily associated
      with trade and other receivables; however, it also arises on cash. To
      mitigate exposure to credit risk on financial assets, the Company ensures
      non-related counterparties demonstrate minimum acceptable credit
      worthiness and ensures liquidity of available funds.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company closely monitors its financial assets and
      does not have any significant concentration of credit risk with
      non-related parties. The Company invests its cash in highly rated
      financial institutions and sells its products exclusively to organizations
      with strong credit ratings. The credit risk associated with trade
      receivables at December 31, 2014 is considered to be negligible.                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Companys maximum exposure to credit risk at December
      31, 2014 and 2013 is as follows:                                                                                                                                                                                                                                                                                                                                                                                                          

| |                           |  | 2014   |  |  | 2013    | 
| | ------------------------- |  | ------ |  |  | ------- | 
| |                           |  | $      |  |  | $       | 
| |                           |  |        |  |  |         | 
| | Cashand restricted cash   |  | 45,035 |  |  | 110,711 | 
| | Tradeand otherreceivables |  | 7,607  |  |  | 4,794   | 
| | Taxesreceivable           |  | 25,724 |  |  | 10,224  | 

| |     | The Company has no concentrations of credit risk other
      than those in the table above. There is 10 months of VAT outstanding from
      the Mexican tax authorities (included in taxes receivable), which the
      Company expects to be refunded in due course.                                                                                                                                                                            
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (b) | Liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Liquidity risk is the risk that the Company will
      encounter difficulty in meeting obligations associated with its financial
      liabilities that are settled by delivering cash or another financial
      asset. The Company has developed a planning, budgeting and forecasting
      process to help determine the funds required to support its normal
      operating requirements on an ongoing basis and its expansionary
    plans.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | In the normal course of business, the Company enters into
      contracts and performs business activities that give rise to commitments
      for future minimum payments. The following table summarizes the
      contractual maturities of the Companys financial liabilities and
      operating and capital commitments at December 31,
2014:                                                                                              

57

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |                                                        |  |        |  |  |                   |  |  |               |  |  |         |  |  | December 31 | 
| | ------------------------------------------------------ |  | ------ |  |  | ----------------- |  |  | ------------- |  |  | ------- |  |  | ----------- | 
| |                                                        |  |        |  |  | December 31, 2014 |  |  |               |  |  | 2013    | 
| |                                                        |  | Within |  |  |                   |  |  | Over          |  |  |         |  |  |             | 
| |                                                        |  | 1 year |  |  | 2-5
      years   |  |  | 5
      years |  |  | Total   |  |  | Total       | 
| |                                                        |  | $      |  |  | $                 |  |  | $             |  |  | $       |  |  | $           | 
| | Trade and other payables and
      accrued liabilities |  | 44,178 |  |  | -                 |  |  | -             |  |  | 44,178  |  |  | 33,958      | 
| | Share based payments                                   |  | 3,718  |  |  | 696               |  |  | -             |  |  | 4,414   |  |  | 8,144       | 
| | Promissory note and interest                           |  | -      |  |  |                   |  |  | -             |  |  | -       |  |  | 30,262      | 
| | Convertible debentures and interest                    |  | 3,128  |  |  | 49,684            |  |  | -             |  |  | 52,812  |  |  | -           | 
| | Line of credi tand interest                            |  | 1,169  |  |  | 41,520            |  |  | -             |  |  | 42,689  |  |  | -           | 
| | Finance lease payments                                 |  | 5,616  |  |  | 5,629             |  |  | -             |  |  | 11,245  |  |  | -           | 
| | Minimum rental and operating
      lease payments      |  | 3,859  |  |  | 4,080             |  |  | -             |  |  | 7,939   |  |  | 4,799       | 
| | Reclamation and closure cost obligations               |  | -      |  |  | 12,511            |  |  | 44,683        |  |  | 57,194  |  |  | 31,347      | 
| | Commitment to purchase plant and equipment             |  | 886    |  |  | -                 |  |  | -             |  |  | 886     |  |  | 6,062       | 
| |                                                        |  | 62,554 |  |  | 114,120           |  |  | 44,683        |  |  | 221,357 |  |  | 114,572     | 

| |     | The Company expects to discharge its commitments as they
      come due from its existing cash balances, cash flow from operations,
      collection of receivables and new borrowings. The Company has no
      concentrations of liquidity risk.                                                                                                                                                                                                                                                                              
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The Company has entered into commercial leases on certain
      types of equipment and office space which have been classified as
      operating leases. These leases have lives of between 1 and 6 years. There
      are no restrictions placed on the Company as a result of entering into
      these leases. Some of the leases contain renewal or purchase options at
      the end of the lease. The total operating lease expense during the year
      ended December 31, 2014 was $2.2 million (2013 - $0.8 million).
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (c) | Market risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | (i) | Currency risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Currency risk is the risk that the fair values or future
      cash flows of the Companys financial instruments will fluctuate because
      of changes in foreign currency exchange rates. Exchange rate fluctuations
      may affect the costs incurred in the Companys operations. Gold is sold in
      U.S. dollars and costs are incurred principally in U.S. dollars, Canadian
      dollars and Mexican pesos. The appreciation of the Mexican peso or the
      Canadian dollar against the U.S. dollar can increase the costs of gold
      production and capital expenditures in U.S. dollar terms. The Company also
      holds cash that is denominated in Canadian dollars and Mexican pesos which
      are subject to currency risk. The Companys head office general and
      administrative expenses are mainly denominated in Canadian dollars and are
      translated to US dollars at the average rate during the period, as such if
      the US dollar appreciates as compared to the Canadian dollar, the costs of
      the Company would decrease in US dollar terms. The Company is further
      exposed to currency risk through non-monetary assets and liabilities of
      its Mexican and Canadian entities whose taxable profit or loss is
      denominated in a non-US dollar currency. 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.

58

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

| |       | During the year ended December 31, 2014, the Company
      recognized a gain of $2.7 million on foreign exchange (2013 - loss of $0.8
      million). Based on the above net exposures at December 31, 2014, a 10%
      depreciation or appreciation of the Mexican peso against the U.S. dollar
      would result in a $2.2 million increase or decrease in the Companys
      after-tax net earnings (loss) (2013 - $8.2 million); and a 10%
      depreciation or appreciation of the Canadian dollar against the U.S.
      dollar would result in a $9.4 million increase or decrease in the
      Companys after-tax net earnings (loss) (2013 - $2.1 million).                   
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | The Company does not currently use derivative instruments
      to reduce its exposure to currency risk, however, management monitors its
      differing currency needs and tries to reduce its exposure to currency
      risks through exchanging currencies at what are considered to be optimal
      times.                                                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (ii)  | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | Interest rate risk is the risk that the fair values and
      future cash flows of the financial instruments will fluctuate because of
      changes in market interest rates. The exposure to interest rates is
      monitored. The Companys exposure to interest rate risk is limited to the
      line of credit which is subject to a floating interest rate. An increase
      or decrease of 100 basis points in the interest rate would result in a
      decrease or increase in profit after tax of $0.4 million (assuming $40
      million drawn on the line of credit).                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iii) | Price risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | Price risk is the risk that the fair value or future cash
      flows of the Companys financial instruments will fluctuate because of
      changes in commodity prices. Profitability depends on sales prices for
      gold and silver. Metal prices are affected by numerous factors such as the
      sale or purchase of gold and silver by various central banks and financial
      institutions, interest rates, exchange rates, inflation or deflation,
      fluctuations in the value of the U.S. dollar and foreign currencies,
      global and regional supply and demand, and the political and economic
      conditions of major producing countries throughout the world.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | The table below summarizes the impact on profit after tax
      for a 10% change in the average commodity price achieved by the Company
      during the year. The analysis is based on the assumption that the gold and
      silver prices move 10% with all other variables held
  constant.                                                                                                                                                                                                                                                                                                                                                                                             

For the year ended December 31,2014
    
    
    2013$000s
    
    
    $000sGold  prices10% increase
    
    16,880
    
    
    9,99310% decrease
    
    (16,880
    )
    
    (9,993
    )Silver prices10% increase
    
    1,823
    
    
    1,51110% decrease
    
    (1,823
    )
    
    (1,511
  )


59

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

The Company has no concentrations of
market risk.

|21. | Related party transactions                                                                                                                                                                                                                                                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                           
|    | As at December 31, 2014, the Companys related parties
      include its subsidiaries, associates over which it exercises significant
      influence, and key management personnel. During its normal course of
      operation, the Company enters into transactions with its related parties
      for goods and services.             
|    |                                                                                                                                                                                                                                                                                                                                           
|    | As at December 31, 2013, Goldcorp owned 31,151,200 of the
      Companys common shares, approximately 27% of the Companys total shares.
      On March 26, 2014 Goldcorp sold all these shares and as such as at
      December 31, 2014, Goldcorp no longer held an equity interest in Primero
      and was no longer a related party.
|    |                                                                                                                                                                                                                                                                                                                                           
|    | During the year ended December 31, 2014 $nil (2013 - $0.9
      million) was paid to DMSL (a subsidiary of Goldcorp) for the purchase of
      equipment, equipment leasing fees and services received under a transition
      services agreement between the Company and DMSL.                                                          
|    |                                                                                                                                                                                                                                                                                                                                           
|    | During the year ended December 31, 2014 the Company paid
      an additional $0.4 million to maintain its 19.99% ownership percentage in
      Santana as the result of a rights issue.                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                           
|    | There were no further related party transactions for the
      years ended December 31, 2014 and 2013 that have not been disclosed in
      these consolidated financial statements.                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                           
|    | Compensation of key management personnel of the
      Company                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                           
|    | The key management personnel of the Company are
      considered to be all directors, the Chief Executive Officer, the Chief
      Financial Officer and the Chief Operating Officer. Aggregate compensation
      recognized in respect of key management personnel of the Company including
      directors is as follows:              

2014
    
    
    2013$
    
    
    $Short-term em ployee benefits
    
    2,761
    
    
    2,875Share-based payment
    
    3,815
    
    
    8,886Termination benefits
    
    1,224
    
    
    -Post
      employment benefits
    
    -
    
    
    -Total
    
    7,800
    
    
    11,761


|    | As at December 31, 2014 all of the termination benefits
      were outstanding and $1.2 million of the short-term employee benefits were
      outstanding. All of the compensation of key management personnel was
      equivalent to that which would be incurred in an arms length
      transaction.                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|22. | Segmented information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | As a result of the Brigus acquisition, the Company now
      operates in two geographic areas, Mexico (the San Dimas mine and the Cerro
      del Gallo project) and Canada (the Black Fox Complex). The Companys
      operating segments reflect its different mining interests and are reported
      in a manner consistent with the internal reporting used to assess each
      segments performance. Significant information relating to reportable
operating segments is summarized below (note that Black Fox Complex information
is included since acquisition on March 5, 2014):

60

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

As atin thousands of US  dollars
    
    December 31, 2014Black FoxSan Dimas
    
    
    Cerro del Gallo
    
    
    Complex
    
    
    Corporate
    
    
    TotalEquity investment
    
    -
    
    
    -
    
    
    -
    
    
    384
    
    
    384Available for sale investment
    
    -
    
    
    -
    
    
    -
    
    
    671
    
    
    671Mining interests
    
    543,621
    
    
    82,437
    
    
    255,136
    
    
    286
    
    
    881,480Total assets
    
    611,759
    
    
    84,969
    
    
    305,587
    
    
    505
    
    
    1,002,820Total liabilities
    
    86,689
    
    
    396
    
    
    55,993
    
    
    111,757
    
    
    254,835


December 31, 2013Black FoxSan Dimas
    
    
    Cerro del Gallo
    
    
    Complex
    
    
    Corporate
    
    
    TotalEquity investment
    
    -
    
    
    -
    
    
    -
    
    
    1,042
    
    
    1,042Available for sale investment
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Mining interests
    
    526,872
    
    
    109,054
    
    
    -
    
    
    327
    
    
    636,253Total assets
    
    652,948
    
    
    109,618
    
    
    -
    
    
    38,256
    
    
    800,822Total liabilities
    
    123,484
    
    
    596
    
    
    -
    
    
    15,652
    
    
    139,732


Year endedin thousands of US dollars
    
    December 31, 2014Black FoxSan Dimas
    
    
    Cerro del Gallo
    
    
    Complex
    
    
    Corporate
    
    
    TotalRevenue
    
    198,864
    
    
    -
    
    
    75,748
    
    
    -
    
    
    274,612Depreciation and depletion
    
    (44,769
    )
    
    (114
    )
    
    (17,786
    )
    
    -
    
    
    (62,669
    )Mining interests impairment
      charge
    
    -
    
    
    (35,000
    )
    
    (75,000
    )
    
    -
    
    
    (110,000
    )Goodwill impairment charge
    
    -
    
    
    -
    
    
    (98,961
    )
    
    -
    
    
    (98,961
    )Finance expense
    
    (661
    )
    
    
    
    
    (394
    )
    
    (5,915
    )
    
    (6,970
    )Share of equity accounted investment
    
    -
    
    
    -
    
    
    -
    
    
    (975
    )
    
    (975
    )Income tax expense
    
    (22,986
    )
    
    -
    
    
    4,317
    
    
    942
    
    
    (17,727
    )Net
      income (loss)
    
    24,940
    
    
    (35,379
    )
    
    (167,373
    )
    
    (46,572
    )
    
    (224,384
  )


December 31, 2013Black FoxSan Dimas
    
    
    Cerro del Gallo
    
    
    Complex
    
    
    Corporate
    
    
    TotalRevenue
    
    200,326
    
    
    -
    
    
    -
    
    
    -
    
    
    200,326Depreciation and depletion
    
    (35,901
    )
    
    (222
    )
    
    -
    
    
    (113
    )
    
    (36,236
    )Goodwill impairment charge
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Finance expense
    
    (642
    )
    
    -
    
    
    -
    
    
    (32
    )
    
    (674
    )Share of equity accounted
      investment
    
    -
    
    
    -
    
    
    -
    
    
    (187
    )
    
    (187
    )Income tax expense
    
    (45,301
    )
    
    -
    
    
    -
    
    
    (99
    )
    
    (45,400
    )Net income (loss)
    
    34,785
    
    
    (205
    )
    
    -
    
    
    (38,830
    )
    
    (4,250
  )


Intersegment sales and transfers are
eliminated in the above information reported to the Companys chief operating
decision maker.

61

---

|PRIMERO MINING CORP.                                                                   
|---------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                         
|DECEMBER 31 2014                                                                       
|(Amounts in tables
      in thousands of United States dollars unless otherwise stated)

|23. | Commitments and
contingencies
|--- | -----------------------------

|(a) | An Ejido is a communal ownership of land recognized by
      the federal laws in Mexico. While mineral rights are administered by the
      federal government through federally issued mining concessions, access to
      surface rights is also required for mining operations. An Ejido controls
      surface rights over its communal property through an assembly where each
      of the Ejido members has a voting right. An Ejido may sell or lease lands
      directly to a private entity and it may also allow individual members of
      the Ejido to obtain title to specific parcels of land and thus the right
      to sell or lease the land.                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The San Dimas mine uses Ejidos lands pursuant to written
      agreements with Ejidos. Some of these agreements may be subject to
      renegotiation and changes to the existing agreements may increase
      operating costs or have an impact on operations. In cases where access to
      land is required for operations and an agreement cannot be reached with
      the land owner, Primero may seek access under Mexican law which provides
      for priority rights for mining activities.                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Three of the properties included in the San Dimas mine
      and for which Primero holds legal title are subject to legal proceedings
      commenced by Ejidos seeking title to the property. None of the proceedings
      name Primero as a party and Primero therefore has no standing to
      participate in them. In all cases, the defendants are previous owners of
      the properties, either deceased individuals who, according to certain
      public deeds, owned the properties more than 80 years ago, corporate
      entities that are no longer in existence, or Goldcorp companies. Some of
      the proceedings also name the Tayoltita Property Public Registry as
      co-defendant.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | While Primero cannot intervene in these proceedings, in
      the event that a final decision is rendered in favour of the Ejido,
      Primero may seek to annul the decision or commence an action as an
      affected third party on the basis that it is the legitimate owner and is
      in possession of the property. If Primero is not successful in its
      challenge, the San Dimas mine could face higher costs associated with
      agreed or mandated payments that would be payable to the Ejidos for use of
      the properties. There has been no material change in this contingency
      during the year ended December 31, 2104.                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(b) | As at December 31, 2014, the Company had entered into
      commitments to purchase plant and equipment totaling $0.9 million (2013 -
      $6.1 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.                                                                                                                                                                                                                                                       

|24. | Subsequent events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | On January 20, 2015, the Company announced that it had
      entered into an agreement with a syndicate of underwriters pursuant to
      which the underwriters have agreed to purchase US$75 million aggregate
      principal amount of 5.75% convertible unsecured subordinated debentures on
      a bought-deal basis (the "Offering"). Primero has also granted the
      underwriters an option to purchase up to an additional 15% of the
      Offering, on the same terms and conditions, exercisable in whole or in
      part at any time up to 30 days following the closing of the Offering. The
      Offering closed on February 9, 2015.

62

---