Exhibit 99-2







GREAT PANTHER
SILVER LIMITED



CONSOLIDATED
FINANCIAL STATEMENTS



FOR THE YEARS
ENDED

DECEMBER 31,
2016 and 2015



Expressed
in US Dollars











GREAT
PANTHER SILVER LIMITED



MANAGEMENT’S
STATEMENT OF RESPONSIBILITY FOR FINANCIAL REPORTING



Management
of Great Panther Silver Limited is responsible for the presentation and preparation of the accompanying consolidated financial
statements of Great Panther Silver Limited and all related financial information contained in the Annual Report, including Management’s
Discussion and Analysis.



The consolidated
financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board. They include certain amounts that are based on estimates and judgments of management. Financial information
presented elsewhere in the Annual Report is consistent with that contained in the consolidated financial statements.



Management
is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with
the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management has a process in place
to evaluate internal control over financial reporting based on the criteria established by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO - 2013), the Internal Control-Integrated Framework.We, as Chief Executive Officer and
Chief Financial Officer, will certify our annual filings with the CSA and SEC as required in Canada by National Instrument 52-109
and in the United States as required by the Securities Exchange Act of 1934.



The
Company’s Audit Committee is appointed by the Board of Directors annually and is comprised of three independent directors.
The Audit Committee meets quarterly to review the Company’s consolidated financial statements and Management’s Discussion
and Analysis, and on an annual basis, the independent auditors’ report. The Audit Committee recommends to the Board of Directors
the independent auditors to be appointed by the shareholders at each annual meeting and reviews the independence and effectiveness
of their work. The independent auditors have unrestricted access to the Company, the Audit Committee, and the Board of Directors.



MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING



Management
is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (the “Exchange
Act”).



Under
the supervision and with the participation of our Company's Chief Executive Officer and Chief Financial Officer, management conducted
an evaluation of the effectiveness of our internal control over financial reporting, as of December 31, 2016, based on the framework
set forth in Internal Control- Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO - 2013). Based on this evaluation, management concluded that our internal control over financial reporting was effective
as of December 31, 2016.



KPMG LLP, an independent
registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December
31, 2016, as stated in their report which appears herein.



|“Robert A. Archer”      | “Jim A. Zadra”         
|----------------------- | -----------------------
|Chief Executive Officer | Chief Financial Officer
|February 24, 2017       | February 24, 2017      





| | KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | KPMG Canada provides services to KPMG LLP.                                                                                                                                                                    | 















|                                   | KPMG LLP | Telephone      | (604) 691-3000
|---------------------------------- | -------- | -------------- | --------------
|Chartered Professional Accountants | Fax      | (604) 691-3031
|PO Box 10426 777 Dunsmuir Street   | Internet | www.kpmg.ca   
|Vancouver BC V7Y 1K3               |          |               
|Canada                             |          |               



INDEPENDENT
AUDITORS’ REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders of Great Panther Silver
Limited



We have audited the accompanying consolidated
financial statements of Great Panther Silver Limited, which comprise the consolidated statements of financial position as at December
31, 2016 and December 31, 2015, the consolidated statements of comprehensive income, changes in shareholders’ equity
and cash flows for the years then ended, and notes, comprising 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.



Auditors’ 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 our judgment, including the assessment of the risks of material misstatement of the consolidatedfinancial statements,
whether due to fraud or error. In making those risk assessments, we consider 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.



Opinion



In our opinion, the consolidated financial
statements present fairly, in all material respects, the consolidated financial position of Great Panther Silver Limited as at
December 31, 2016 and December 31, 2015, and its consolidated financial performance and its consolidated cash flows for the years
then ended in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board.





| | KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | KPMG Canada provides services to KPMG LLP.                                                                                                                                                                    | 















Other Matter



We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States), Great Panther Silver Limited’s internal control
over financial reporting as of December 31, 2016, based on the criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February
24, 2017 expressed an unqualified opinion on the effectiveness of Great Panther Silver Limited’s internal control over financial
reporting.



KPMG LLP (Signed)



Chartered Professional Accountants



February 24, 2017

Vancouver, Canada





| | KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | KPMG Canada provides services to KPMG LLP.                                                                                                                                                                    | 















|                                   | KPMG LLP | Telephone      | (604) 691-3000
|---------------------------------- | -------- | -------------- | --------------
|Chartered Professional Accountants | Fax      | (604) 691-3031
|PO Box 10426 777 Dunsmuir Street   | Internet | www.kpmg.ca   
|Vancouver BC V7Y 1K3               |          |               
|Canada                             |          |               



REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders of Great Panther Silver Limited:



We have audited Great Panther Silver Limited’s
internal control over financial reporting as of December 31, 2016, based on criteria established inInternal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Great Panther
Silver Limited’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 report titled Management’s
Statement of Responsibility for Financial Reporting. Our responsibility is to express an opinion on the Great Panther Silver Limited’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, and testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included 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 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 its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.





| | KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | KPMG Canada provides services to KPMG LLP.                                                                                                                                                                    | 















In our opinion, Great Panther Silver Limited
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).



We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of
Great Panther Silver Limited as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive income,
shareholders’ equity, and cash flows for each of the years ended December 31, 2016 and December 31, 2015, and our report
dated February 24, 2017 expressed an unqualified opinion on those consolidated financial statements.



KPMG LLP (Signed)



Chartered Professional Accountants



February 24, 2017
Vancouver, Canada





| | KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | KPMG Canada provides services to KPMG LLP.                                                                                                                                                                    | 













Great
Panther Silver Limited

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in thousands of US dollars)



As at December 31, 2016 and 2015,
and January 1, 2015








|                                                 |  | December 31, |         |   | December 31, |   |         | January 1, | 
|------------------------------------------------ |  | ------------ | ------- | - | ------------ | - | ------- | ---------- | 
|                                                 |  | 2016         |         |   | 2015         |   |         | 2015       | 
|                                                 |  |              |         |   |              |   |         |            | 
|Assets                                           |  |              |         |   |              |   |         |            | 
|                                                 |  |              |         |   |              |   |         |            | 
|Current assets:                                  |  |              |         |   |              |   |         |            | 
|Cash and cash equivalents                        |  | $            | 41,642  |   |              | $ | 13,685  |            | 
|Short-term deposits                              |  |              | 15,020  |   |              |   | -       |            | 
|Trade and other receivables (note 5)             |  |              | 10,178  |   |              |   | 9,635   |            | 
|Inventories (note 6)                             |  |              | 5,744   |   |              |   | 6,540   |            | 
|Other current assets                             |  |              | 529     |   |              |   | 850     |            | 
|                                                 |  |              | 73,113  |   |              |   | 30,710  |            | 
|Non-current assets:                              |  |              |         |   |              |   |         |            | 
|Mineral properties, plant and equipment (note 7) |  |              | 14,096  |   |              |   | 16,284  |            | 
|Exploration and evaluation assets (note 8)       |  |              | 2,112   |   |              |   | 4,158   |            | 
|Intangible assets (note 9)                       |  |              | 22      |   |              |   | 85      |            | 
|Deferred tax asset (note 13)                     |  |              | 98      |   |              |   | 316     |            | 
|                                                 |  | $            | 89,441  |   |              | $ | 51,553  |            | 
|                                                 |  |              |         |   |              |   |         |            | 
|Liabilities and Shareholders’ Equity             |  |              |         |   |              |   |         |            | 
|                                                 |  |              |         |   |              |   |         |            | 
|Current liabilities:                             |  |              |         |   |              |   |         |            | 
|Trade and other payables                         |  | $            | 6,017   |   |              | $ | 5,233   |            | 
|Derivative liabilities (note 10)                 |  |              | 536     |   |              |   | -       |            | 
|                                                 |  |              |         |   |              |   |         |            | 
|Non-current liabilities:                         |  |              |         |   |              |   |         |            | 
|Reclamation and remediation provision (note 11)  |  |              | 3,466   |   |              |   | 3,649   |            | 
|Deferred tax liability (note 13)                 |  |              | 2,134   |   |              |   | 3,064   |            | 
|                                                 |  |              | 12,153  |   |              |   | 11,946  |            | 
|                                                 |  |              |         |   |              |   |         |            | 
|Shareholders’ equity:                            |  |              |         |   |              |   |         |            | 
|Share capital (note 12)                          |  |              | 128,485 |   |              |   | 96,268  |            | 
|Reserves                                         |  |              | 18,115  |   |              |   | 8,533   |            | 
|Deficit                                          |  |              | (69,312 | ) |              |   | (65,194 | )          | 
|                                                 |  |              | 77,288  |   |              |   | 39,607  |            | 
|                                                 |  | $            | 89,441  |   |              | $ | 51,553  |            | 



See accompanying notes to the consolidated
financial statements.











Great
Panther Silver Limited

CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME

(Expressed in thousands of US dollars,
unless otherwise noted)



For the years ended December 31,
2016 and 2015








|                                                                         |  | 2016 |         |   | 2015 |  
|------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | -
|                                                                         |  |      |         |   |      |  
|Revenue (note 20)                                                        |  | $    | 61,881  |   |      | $
|Cost of sales                                                            |  |      |         |   |      |  
|Production costs                                                         |  |      | 34,153  |   |      |  
|Amortization and depletion                                               |  |      | 5,436   |   |      |  
|Share-based compensation                                                 |  |      | 270     |   |      |  
|                                                                         |  |      | 39,859  |   |      |  
|                                                                         |  |      |         |   |      |  
|Mine operating earnings                                                  |  |      | 22,022  |   |      |  
|                                                                         |  |      |         |   |      |  
|General and administrative expenses                                      |  |      |         |   |      |  
|Administrative expenses                                                  |  |      | 4,959   |   |      |  
|Amortization and depletion                                               |  |      | 140     |   |      |  
|Share-based compensation                                                 |  |      | 714     |   |      |  
|                                                                         |  |      | 5,813   |   |      |  
|                                                                         |  |      |         |   |      |  
|Exploration, evaluation and development expenses                         |  |      |         |   |      |  
|Exploration and evaluation expenses                                      |  |      | 3,286   |   |      |  
|Mine development costs                                                   |  |      | 2,799   |   |      |  
|Share-based compensation                                                 |  |      | 42      |   |      |  
|                                                                         |  |      | 6,127   |   |      |  
|                                                                         |  |      |         |   |      |  
|Impairment charges (note 8)                                              |  |      | 1,679   |   |      |  
|                                                                         |  |      |         |   |      |  
|Finance and other (expense) income                                       |  |      |         |   |      |  
|Interest income                                                          |  |      | 225     |   |      |  
|Finance costs                                                            |  |      | (99     | ) |      |  
|Foreign exchange (loss) gain                                             |  |      | (11,135 | ) |      |  
|Other (expense) income                                                   |  |      | (3      | ) |      |  
|                                                                         |  |      | (11,012 | ) |      |  
|                                                                         |  |      |         |   |      |  
|Loss before income taxes                                                 |  |      | (2,609  | ) |      |  
|                                                                         |  |      |         |   |      |  
|Income tax expense (recovery) (note 13)                                  |  |      |         |   |      |  
|Current expense                                                          |  |      | 1,918   |   |      |  
|Deferred recovery                                                        |  |      | (409    | ) |      |  
|                                                                         |  |      | 1,509   |   |      |  
|Net loss for the year                                                    |  | $    | (4,118  | ) |      | $
|                                                                         |  |      |         |   |      |  
|Other comprehensive income (loss), net of tax                            |  |      |         |   |      |  
|Items that are or may be reclassified subsequently to net income (loss): |  |      |         |   |      |  
|Foreign currency translation                                             |  |      | 5,452   |   |      |  
|Change in fair value of available-for-sale financial assets, net of tax  |  |      | (3      | ) |      |  
|                                                                         |  |      | 5,449   |   |      |  
|Total comprehensive income (loss) for the year                           |  | $    | 1,331   |   |      | $
|                                                                         |  |      |         |   |      |  
|Loss per share (note 12(f))                                              |  |      |         |   |      |  
|Basic and diluted                                                        |  | $    | (0.03   | ) |      | $



See accompanying notes to the consolidated financial statements.



2







Great
Panther Silver Limited

CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015












|                                |  | Share
    Capital          |         |  | Reserves |   |         |                                   |  |   |                                    |  
|------------------------------- |  | -------------------------- | ------- |  | -------- | - | ------- | --------------------------------- |  | - | ---------------------------------- | -
|                                |  | Number
of  shares  (000’s) |         |  | Amount   |   |         | Share
     options  and  warrants |  |   | Foreign
     currency  translation |  
|                                |  |                            |         |  |          |   |         |                                   |  |   |                                    |  
|Balance at January 1, 2015      |  |                            | 139,562 |  |          | $ | 95,143  |                                   |  | $ | 10,003                             |  
|Cangold acquisition (note 8(a)) |  |                            | 2,139   |  |          |   | 1,115   |                                   |  |   | 7                                  |  
|Share options exercised         |  |                            | 12      |  |          |   | 10      |                                   |  |   | (3                                 | )
|Share-based compensation        |  |                            | -       |  |          |   | -       |                                   |  |   | 946                                |  
|Comprehensive loss              |  |                            | -       |  |          |   | -       |                                   |  |   | -                                  |  
|Balance at December 31, 2015    |  |                            | 141,713 |  |          | $ | 96,268  |                                   |  | $ | 10,953                             |  
|                                |  |                            |         |  |          |   |         |                                   |  |   |                                    |  
|Balance at January 1, 2016      |  |                            | 141,713 |  |          | $ | 96,268  |                                   |  | $ | 10,953                             |  
|Financings (note 12(c))         |  |                            | 22,186  |  |          |   | 29,086  |                                   |  |   | 3,998                              |  
|Share options exercised         |  |                            | 3,039   |  |          |   | 3,131   |                                   |  |   | (891                               | )
|Share-based compensation        |  |                            | -       |  |          |   | -       |                                   |  |   | 1,026                              |  
|Comprehensive income (loss)     |  |                            | -       |  |          |   | -       |                                   |  |   | -                                  |  
|Balance at December 31, 2016    |  |                            | 166,938 |  |          | $ | 128,485 |                                   |  | $ | 15,086                             |  



See accompanying notes to the consolidated financial statements.



3







Great
Panther Silver Limited

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(Expressed in thousands of US dollars)



For
the years ended December 31, 2016 and 2015








|                                                                    |  | 2016 |         |   | 2015 |  
|------------------------------------------------------------------- |  | ---- | ------- | - | ---- | -
|                                                                    |  |      |         |   |      |  
|Cash flows from operating activities                                |  |      |         |   |      |  
|Net loss for the year                                               |  | $    | (4,118  | ) |      | $
|Items not involving cash:                                           |  |      |         |   |      |  
|Amortization and depletion                                          |  |      | 5,576   |   |      |  
|Impairment charges (note 8)                                         |  |      | 1,679   |   |      |  
|Unrealized foreign exchange loss (gain)                             |  |      | 10,692  |   |      |  
|Income tax expense (recovery)                                       |  |      | 1,509   |   |      |  
|Share-based compensation                                            |  |      | 1,026   |   |      |  
|Other non-cash items (note 19(a))                                   |  |      | (306    | ) |      |  
|Interest received                                                   |  |      | 142     |   |      |  
|Income taxes paid                                                   |  |      | (225    | ) |      |  
|                                                                    |  |      | 15,975  |   |      |  
|Changes in non-cash working capital:                                |  |      |         |   |      |  
|Increase in trade and other receivables                             |  |      | (2,285  | ) |      |  
|Increase in inventories                                             |  |      | (94     | ) |      |  
|Decrease (increase) in other current assets                         |  |      | 215     |   |      |  
|(Decrease) increase in trade and other payables                     |  |      | (179    | ) |      |  
|Net cash from operating activities                                  |  |      | 13,632  |   |      |  
|                                                                    |  |      |         |   |      |  
|Cash flows from investing activities:                               |  |      |         |   |      |  
|Additions to mineral properties, plant and equipment                |  |      | (4,673  | ) |      |  
|Additions to intangible assets                                      |  |      | (22     | ) |      |  
|Acquisition of Cangold (notes 8(a))                                 |  |      | -       |   |      |  
|Additions to exploration and evaluation assets (note 8(b))          |  |      | -       |   |      |  
|Investments in short-term deposits                                  |  |      | (15,020 | ) |      |  
|Net cash used in investing activities                               |  |      | (19,715 | ) |      |  
|                                                                    |  |      |         |   |      |  
|Cash flows from financing activities:                               |  |      |         |   |      |  
|Proceeds from financings, net of expenses (note 12(c))              |  |      | 33,084  |   |      |  
|Proceeds from exercise of share options                             |  |      | 2,240   |   |      |  
|Net cash from financing activities                                  |  |      | 35,324  |   |      |  
|                                                                    |  |      |         |   |      |  
|Effect of foreign currency translation on cash and cash equivalents |  |      | (1,284  | ) |      |  
|                                                                    |  |      |         |   |      |  
|Increase (decrease) in cash and cash equivalents                    |  |      | 27,957  |   |      |  
|Cash and cash equivalents, beginning of year                        |  |      | 13,685  |   |      |  
|Cash and cash equivalents, end of year                              |  | $    | 41,642  |   |      | $



Supplemental cash flow information
(note 19)



See accompanying notes to the consolidated
financial statements.



4







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For the years ended December 31,
2016 and 2015








| | 1. | Nature of operations
| | -- | --------------------



Great Panther Silver Limited (the
“Company”) is a public company which is listed on the Toronto Stock Exchange and on the NYSE MKT LLC and is incorporated
and domiciled in Canada. The Company’s registered and records office is located at 1330 – 200 Granville Street, Vancouver,
BC.



The Company’s current activities
focus on the mining of precious metals from its operating mines in Mexico, as well as the acquisition, exploration and development
of mineral properties within the Americas. The Company wholly owns two producing mining operations: the Topia Mine and the Guanajuato
Mine Complex (“GMC”). The GMC comprises the Company’s Guanajuato Mine, San Ignacio Mine, the Cata processing
plant, and the associated infrastructure. The Company also has mineral property interests in the exploration stage: the El Horcon,
Santa Rosa and Plomo projects located in Mexico, as well as the Argosy project located in the Red Lake Mining District in Northwestern
Ontario, Canada. On December 19, 2016, the Company entered into an agreement to acquire a 100% interest in the Coricancha Mining
Complex (the “CMC”), located in the Central Andes of Peru (see note 17(a)).



| | 2. | Basis of presentation
| | -- | ---------------------



These consolidated financial statements
have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee
(“IFRIC”).



Certain amounts in the prior period
have been reclassified to conform to the presentation in the current period.



These consolidated financial statements
were approved by the Board of Directors on February 24, 2017.



| | 3. | Significant accounting policies
| | -- | -------------------------------



The accounting policies set out
below have been applied consistently by the Company's entities and to all years presented in these consolidated financial statements,
except as disclosed in note 3(c):



| | (a) | Basis of consolidation
| | --- | ----------------------



These consolidated financial statements
include the accounts of the Company and its subsidiaries: Minera Mexicana el Rosario, S.A. de C.V.; Metalicos de Durango, S.A.
de C.V.; Minera de Villa Seca, S.A. de C.V.; Coboro Minerales de Mexico, S.A. de C.V. (“Coboro”); Great Panther Silver
Peru S.A.C.; Cangold Limited (“Cangold”), Great Panther Finance Canada Limited; and GP Finance International S.a. r.l.
All intercompany balances and transactions are eliminated on consolidation.



| | (b) | Basis of measurement
| | --- | --------------------



These consolidated
financial statements have been prepared on the historical cost basis except for the following items in the statement of financial
position:



| | · | Derivative financial instruments are measured at fair value;                              
| | - | ------------------------------------------------------------------------------------------
| | · | Financial instruments at fair value through profit or loss are measured at fair value; and
| | · | Available-for-sale financial assets are measured at fair value.                           



| | (c) | Foreign currency translation
| | --- | ----------------------------

Commencing on July 1, 2016 (the
“Effective Date”), the functional currency of the Company and its subsidiaries was reassessed as a result of a change
in underlying transactions, events and conditions, including US dollar denominated financings undertaken by the Company. The functional
currency of the Canadian parent company changed from the Canadian dollar to the US dollar and certain subsidiaries changed from
the Mexican peso and Peruvian sol to the US dollar. The functional currency of two of the Company’s Mexican subsidiaries
remains the Mexican peso. The presentation currency of the Company was also changed from the Canadian dollar (or “C$”)
to the US dollar effective July 1, 2016.



The change in functional currency
was accounted for on a prospective basis, with prior period comparative information translated to the US dollar at the foreign
exchange rates on the Effective Date. The relevant foreign exchange rates on the Effective Date were: 1.3052 Canadian dollars per
US dollar; 18.555 Mexican pesos per US dollar; and 0.3030 Peruvian soles per US dollar.



Transactions and balances



Foreign currency transactions are translated into the relevant functional
currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognized in net income.



5







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 3. | Significant accounting policies- continued
| | -- | ------------------------------------------



Translation
of subsidiary results into the presentation currency



The operating
results and statements of financial position of the Company’s subsidiaries which have a functional currency that differs
from the Company’s presentation currency are translated into the presentation currency as follows:



| | · | Assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date of the statement of financial position;                                                                                                                                                                           
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Income and expenses for each statement of comprehensive
income are translated at average exchange rates, unless the average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of
the transactions; and
| | · | All resulting exchange differences are recognized as a
separate component of equity.                                                                                                                                                                                                                                                       



On consolidation, exchange differences
arising from the translation of the net investment in foreign entities are recognized in a separate component of equity, foreign
currency translation reserve. When a foreign operation is sold, such exchange differences are recognized in net income as part
of the gain or loss on sale.



| | (d) | Cash and cash equivalents
| | --- | -------------------------



Cash and cash equivalents are carried
in the statement of financial position at amortized cost. Cash and cash equivalents consist of cash on deposit with banks and highly
liquid investments that are readily convertible to known amounts of cash or have maturity dates at the date of purchase of three
months or less.



| | (e) | Inventories
| | --- | -----------



Inventories consist of:



| | · | Ore stockpiles and concentrate inventories which are stated at the lower of weighted average cost
and net realizable value. Costs include production costs and amortization and depletion directly attributable to the inventory
production process. Net realizable value is the expected selling price for the finished product less the costs to get the product
into saleable form and to the selling location.                                                                                                
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Materials and supplies inventory, which includes the cost of consumables used in operations such
as fuel, grinding media, chemicals and spare parts, are stated at the lower of weighted average cost and replacement cost which
approximates net realizable value. Major spare parts and standby equipment are included in property, plant, and equipment when
they are expected to be used during more than one period and if they can only be used in connection with an item of property, plant
and equipment.
| | · | Silver bullion, to be sold as coins and bars, is recorded at lower of cost and net realizable value.                                                                                                                                                                                                                                                                                                                                                                                                              



| | (f) | Mineral properties, plant and equipment
| | --- | ---------------------------------------



Mineral properties



Mine development costs are capitalized
if management determines that there is sufficient evidence to support probability of generating positive economic returns in the
future. A mineral resource is considered to have economic potential when the technical feasibility and commercial viability of
extraction of the mineral resource is demonstrable considering long-term metal prices. Therefore, prior to capitalizing such costs,
management determines whether the following conditions have been met: there is a probable future benefit that will contribute to
future cash inflows; the Company can obtain the benefit and control access to it; and, the transaction or event giving rise to
the benefit has already occurred.



In the event that that the Company does not have sufficient evidence to support the probability of generating
positive economic returns in the future, mine development costs are expensed in the statement of comprehensive income. The Company
has historically expensed mine development costs for the San Ignacio Mine. In September 2015, the Company commenced expensing mine
development costs for the Guanajuato Mine when the published Measured and Indicated Resources for the Guanajuato Mine represented
less than twelve months of remaining production. Mine development costs incurred at the GMC includes expenditure associated with
accessing mineral resources and gaining further information regarding the ore body, whether by means of ramp development, drilling
and/or sampling.



Producing mineral properties acquired through business acquisitions
are recognized at fair value on the acquisition date. Where applicable, the estimated cost of mine closure and restoration for
the property is included in the cost of mineral properties.



6







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For the years ended December 31,
2016 and 2015








| | 3. | Significant accounting policies – continued
| | -- | -------------------------------------------



Plant and equipment



Plant and equipment is originally
recorded at cost at the time of construction, purchase, or acquisition, and is subsequently measured at cost less accumulated amortization
and impairment. Cost includes all costs required to bring the plant and equipment into a condition and location where it is capable
of operating according to its intended use.



Costs incurred for major overhaul
of existing equipment or infrastructure are capitalized as plant and equipment and are subject to amortization once they are commissioned.
Costs associated with routine maintenance and repairs are charged to operations as incurred.



Amortization and depletion



Plant and equipment is amortized
using the straight-line method over the remaining life of the mine, or over the remaining useful life of the asset, if shorter.
All other equipment, buildings and furniture and fixtures which do not relate directly to the mining operations are amortized over
the useful life of the asset. Land is not amortized.



The following amortization rates
are used by the Company for plant, equipment, buildings and furniture and fixtures which do not relate specifically to the mining
development and drilling activities:



| | Computer equipment     | straight-line over the estimated useful life of 3 years
| | ---------------------- | -------------------------------------------------------
| | Furniture and fixtures | straight-line over the estimated useful life of 5 years
| | Office equipment       | straight-line over the estimated useful life of 5 years
| | Leasehold improvements | straight-line over the term of the lease               



When assets are retired or sold,
the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in
the statement of comprehensive income.



| | (g) | Exploration and evaluation assets
| | --- | ---------------------------------



Exploration properties



Exploration properties represent
properties for which the Company has not yet performed sufficient exploration work to determine whether significant mineralization
exists. Exploration properties are carried at the cost of acquisition and included in exploration and evaluation assets. Exploration
expenditures incurred on such properties are expensed as incurred as exploration expenditures in the statement of comprehensive
income. Examples of exploration expenditures that are expensed under this policy include topographical, geological, geochemical
and geophysical studies; exploratory drilling; trenching; and sampling. The Company considers its Santa Rosa, El Horcon, Plomo
and Argosy projects to be exploration properties as at December 31, 2016.



Evaluation properties



Evaluation properties represent properties
for which the Company has identified a mineral resource of such quantity and grade or quality that it has reasonable prospects
for economic extraction. A mineral resource is considered to have reasonable prospects for economic extraction when the Company
has sufficient information to determine that extraction is viable and feasible at expected long-term metal prices. Expenditures
made in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource are capitalized
and included in exploration and evaluation assets. Evaluation expenditures include the costs of drilling, sampling and other costs
related to defining and delineating the mineral deposit.



When the technical feasibility and
commercial viability of the extraction of mineral resources associated with the Company’s evaluation properties are demonstrable
and management has made a decision to proceed with development, the capitalized costs associated with evaluation assets are reclassified
from exploration and evaluation assets to mineral properties and are tested for impairment at that time.



Amortization and depletion



Exploration and evaluation assets
are not subject to depletion or amortization, but rather are tested for impairment when circumstances indicate that the carrying
value may not be recoverable.



| | (h) | Leased assets
| | --- | -------------



Leases
in which the Company assumes substantially all risks and rewards of ownership are classified as finance leases. Finance leases
are recognized at the lower of the fair value and the present value of the minimum lease payments at inception of the lease. Subsequent
to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases
are operating leases and are recognized on a straight-line basis in the Company’s statement of comprehensive income.



7







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 3. | Significant accounting policies - continued
| | -- | -------------------------------------------



| | (i) | Intangible assets
| | --- | -----------------



Finite-life intangible assets that
are acquired by the Company, which includes computer software and costs of computer software customization and implementation,
are stated at cost less accumulated amortization and impairment losses. Amortization is recorded in cost of sales or general and
administrative expenses in the statement of comprehensive income on a straight-line basis over the estimated useful lives of the
intangible assets. The estimated useful life for computer software is 3 years.



| | (j) | Impairment of non-financial assets
| | --- | ----------------------------------



Exploration and evaluation assets
are tested for impairment when circumstances indicate that the carrying value may not be recoverable. When facts and circumstances
suggest that the carrying amount of an asset exceeds its recoverable amount, the Company performs an impairment test by comparing
the recoverable amount to the carrying amount of the relevant exploration and evaluation property. When the carrying value exceeds
the recoverable amount of the relevant exploration and evaluation property, an impairment charge is recorded and the property is
written down to its recoverable amount. In addition, exploration and evaluation assets are tested for impairment at the date they
are transferred to mineral properties, plant and equipment.



The Company’s mineral properties,
plant and equipment are reviewed for any indication of impairment at each financial reporting date or at any time if an indicator
of impairment is considered to exist. If any such indication exists, an estimate of the recoverable amount is undertaken, being
the higher of an asset’s fair value less costs to sell and the asset’s value in use. If the asset’s carrying
amount exceeds its recoverable amount then an impairment loss is recognized in net income or loss for the period, and the carrying
value of the asset on the statement of financial position is reduced to its recoverable amount. Fair value is determined as the
amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing
parties. Fair value of mineral properties is generally determined as the present value of the estimated future cash flows expected
to arise from the continued use of the asset, including any expansion prospects, discounted by an appropriate pre-tax discount
rate to arrive at a net present value.



Value in use is determined as the
present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and
from its ultimate disposal. Value in use is determined by applying assumptions specific to the Company’s continued use which
includes future development. As such, these assumptions may differ from those used in calculating fair value.



In testing for indicators of impairment
and performing impairment calculations, assets are grouped in cash-generating units, which are identified as the smallest identifiable
group of assets that generates cash inflows that are largely independent of the cash inflows from other assets. The estimates of
future discounted cash flows are subject to risks and uncertainties including estimated production, grades, recoveries, future
metals prices, discount rates, exchange rates and operating costs.



Non-financial assets other than goodwill
that have suffered an impairment are evaluated for possible reversal of the impairment whenever events or changes in circumstances
indicate that the impairment may have reversed. When a reversal of a previous impairment is recorded, the reversal amount is adjusted
for depreciation that would have been recorded had the impairment not been recorded.



| | (k) | Share-based compensation
| | --- | ------------------------



Equity-settled share-based compensation
arrangements such as the Company’s stock option plan are measured at fair value at the date of grant and recorded within
equity. The fair value at grant date of all share-based compensation is recognized as compensation expense over the vesting period,
with a corresponding credit to shareholders’ equity. The amount recognized as an expense is adjusted to reflect share options
forfeited. The Company estimates the fair value of share options granted using the Black-Scholes option pricing model.



| | (l) | Revenue recognition
| | --- | -------------------



The Company recognizes revenue from
the sale of concentrates when it is probable that the economic benefits associated with the transaction will flow to the Company,
the risks and rewards of ownership are transferred to the customer and the revenue can be reliably measured. Revenue is based on
market metal prices and mineral content. Revenue is recorded in the consolidated statement of comprehensive income, net of treatment
and refining costs paid to counterparties under terms of the relevant sales arrangements. Revenue from the sale of the concentrates
is subject to adjustment upon final settlement based upon metal prices, weights and assays. For each reporting period until final
settlement, estimates of metal prices are used to record sales. Variations between the sales price recorded at the initial recognition
date and the actual final sales price at the settlement date caused by changes in the market metal prices results in an embedded
derivative in the related trade accounts receivable balance. The embedded derivative is recorded at fair value each period until
final settlement occurs, with changes in fair value classified as a component of revenue.



8







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 3. | Significant accounting policies - continued
| | -- | -------------------------------------------



| | (m) | Reclamation and remediation provisions
| | --- | --------------------------------------



The Company's mining and exploration
activities are subject to various laws and regulations governing the protection of the environment. The Company recognizes the
cost of future reclamation and remediation as a liability when: the Company has a legal or constructive obligation as a result
of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reasonable estimate
of the obligation can be made. The liability is measured initially by discounting expected costs to the net present value using
pre-tax rates and risk assumptions specific to the liability. The resulting cost is capitalized to the carrying value of the related
assets, or expensed to exploration, evaluation and development expenses where there is no carrying value of the related assets.
In subsequent periods, the liability is adjusted for accretion of the discount with the offsetting amount charged to the statement
of comprehensive income as finance cost. Any change in the amount or timing of the underlying cash flows is adjusted to the carrying
value of the liability, with the offsetting amount recorded as an adjustment to the reclamation and remediation provision cost
included in mineral properties or exploration, evaluation and development expenses. Any amount charged to the carrying value of
assets is depreciated over the remaining life of the relevant assets.



It is reasonably possible that the
ultimate cost of remediation and reclamation could change in the future due to uncertainties associated with defining the nature
and extent of environmental disturbance, the application of laws and regulations by regulatory authorities, changes in remediation
technology and changes in discount rates. The Company reviews its reclamation and remediation provision at least annually and as
evidence becomes available indicating that its remediation and reclamation liabilities may have changed. Any such changes in costs
could materially impact the future amounts recorded as reclamation and remediation obligations.



| | (n) | Financial instruments
| | --- | ---------------------



The Company’s financial instruments consist of cash and cash equivalents, short-term deposits, marketable
securities, trade and other receivables, trade and other payables, as well as derivative instruments. These financial instruments
are classified as either financial assets at fair value through profit or loss, available-for-sale, held-to-maturity, loans and
receivables, financial liabilities at fair value through profit or loss or financial liabilities at amortized cost. Management
determines their classification at initial recognition.



Transaction costs are expensed as
incurred for financial instruments measured at fair value. The effective interest rate method of amortization is used for any transaction
costs for financial instruments measured at amortized cost, which includes loans and receivables and financial liabilities at amortized
cost.



Available-for-sale financial assets



Available-for-sale
financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any other
financial asset categories. The Company’s marketable securities are recorded at fair value. Changes in fair value, other
than impairment losses, are recognized in other comprehensive income (loss) and presented in the fair value reserve in shareholders’
equity. When the financial assets are sold or an impairment write-down is required, losses accumulated in the fair value reserve
recognized in shareholders’ equity are included inthe statement of comprehensive income.



Loans and receivables



Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. The Company’s cash and cash equivalents, guaranteed investment certificates classified within
short-term deposits, and trade and other receivables are classified as loans and receivables and are initially measured at fair
value and subsequently measured at amortized cost less any impairment.



Financial liabilities at fair value through profit
or loss



A financial
liability is classified at fair value through profit or loss if it is classified as held for trading in the near future or is designated
as such upon initial recognition. The Company’s derivative liabilities are classified as fair value through profit or loss.
They are initially and subsequently recorded at fair value and changes in fair value are recognized inthe statement of
comprehensive income. In the case of cash flow hedge transactions that qualify for hedge accounting
treatment, gains and losses would be recognized in other comprehensive income if designated as hedges for accounting purposes.



Financial liabilities at amortized
cost



Financial liabilities at amortized cost are non-derivative financial
liabilities that are not classified as financial liabilities at fair value through profit or loss. The Company’s trade and
other payables are classified as financial liabilities at amortized cost and are initially measured at fair value and subsequently
measured at amortized cost using the effective interest rate method.



9







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 3. | Significant accounting policies - continued
| | -- | -------------------------------------------



Derivative financial instruments



When
the Company enters into derivative contracts these transactions are designed to reduce exposures related to assets and liabilities,
firm commitments or anticipated transactions. All derivatives are initially recognized at their fair value on the date the derivative
contract is entered into and are subsequently remeasured at their fair value at each statement of financial position date. Any
changes in fair value are recognized in thestatement of comprehensive income.



Embedded
derivatives: Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when
their risks and characteristics are not closely related to their host contracts. The Company’s accounts receivable in respect
of unsettled shipments are considered to contain embedded derivatives which are adjusted to their fair value at the end of each
period. Any changes in fair value are recognized in thestatement of comprehensive income.



Impairment of financial instruments



The Company
assesses at each financial reporting date whether there is objective evidence that a financial asset or a group of financial assets
is impaired using the following criteria:



| | · | For available-for-sale financial assets, an impairment loss is established
when there is a significant or prolonged decline in fair value of the investment or when there is objective evidence that the carrying
amount of the investment may not be recovered. The amount of the impairment loss is measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously recognized inthe statement
of comprehensive income. Any amounts related to that asset are removed from losses accumulated in the
fair value reserve recognized in shareholders’ equity and are included inthe statement of comprehensive income.
Reversals in respect of available-for-sale financial assets are not reversed throughthe statement of comprehensive income.
Any increase in fair value subsequent to an impairment loss is recognized directly in other comprehensive income until the assets
are disposed of.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | For loans and receivables, a provision for impairment is established when there is objective evidence
that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor or delinquency in payments are considered indicators that a trade receivable is impaired. The amount
of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the asset’s effective interest rate. The carrying amount of the asset is reduced through the use of provision
account and the amount of the loss is recognized in the statement of comprehensive income within general and administrative expenses.
When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries
of amounts previously written off are credited against general and administrative expenses in the statement of comprehensive income.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (o) | Income taxes
| | --- | ------------



Income tax is recognized in net income
or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized directly in
equity.



Current tax comprises the expected
tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect
of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or
received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantially enacted
at the reporting date.



Deferred tax assets and liabilities
are determined based on differences between the financial statement carrying values of existing assets and liabilities and their
respective income tax bases (temporary differences), and tax loss carry forwards. Deferred tax assets and liabilities are measured
using enacted or substantively enacted tax rates expected to be in effect when the temporary differences are likely to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is included in net income in the period
in which the change is substantively enacted. The amount of deferred tax assets recognized is limited to the amount that is, in
management’s estimation, probable that future taxable profits will be available against which the asset can be utilized.



Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by
the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.



10







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 3. | Significant accounting policies - continued
| | -- | -------------------------------------------



| | (p) | Earnings per share
| | --- | ------------------



Earnings per share is calculated
based on the weighted average number of shares outstanding during the period. The Company follows the treasury stock method for
the calculation of diluted earnings per share. Under this method, dilution is calculated based upon the net number of common shares
issued should “in-the-money” options and warrants be exercised and the proceeds be used to repurchase common shares
at the average market price in the year. Dilution from convertible securities is calculated based on the number of shares to be
issued after taking into account the reduction of the related after-tax interest expense.



Basic earnings per share is computed
by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings
per share is computed similar to basic earnings per share except that the weighted average shares outstanding are increased to
include additional shares from the assumed exercise of share options and warrants, if dilutive.



| | (q) | Segment reporting
| | --- | -----------------



The Company has identified its operating
segments based on the internal reports that are reviewed and used by the chief executive office and the executive management team
(the chief operating decision maker or “CODM”) in assessing performance and in determining allocation of resources.
The CODM considers the business from both a geographic and product perspective and assesses the performance of the operating segments
based on measures such as net property, plant and equipment as well as operating results. All operating segments’ operating
results are reviewed regularly by the Company’s senior management to make decisions about resources to be allocated to the
segment and to assess its performance, and for which discrete financial information is available. The Company has determined the
operating segments based on this information.



Segment results that are reported
to senior management include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly of corporate office expenses.



| | (r) | Accounting standards issued and adopted
| | --- | ---------------------------------------



The Company has not adopted any new
accounting standards during the year ended December 31, 2016.



| | (s) | Accounting standards issued but not yet adopted
| | --- | -----------------------------------------------



IFRS 15 Revenue
from Contracts with Customers



In May 2014, the IASB issued a new
IFRS 15 Revenue from Contracts with Customers. The standard contains a single model that applies to contracts with customers
and two approaches to recognizing revenue: at a point in time or over time. The model features a contract-based five-step analysis
of transactions to determine whether, how much and when revenue is recognized. New estimates and judgmental thresholds have been
introduced, which may affect the amount and/or timing of revenue recognized. In September 2015, the IASB deferred the effective
date of the standard to annual periods beginning on or after January 1, 2018, with earlier application permitted. The Company is
currently evaluating the impact that these standards are expected to have on its consolidated financial statements.



IFRS 9 Financial
Instruments



In July 2014, the IASB issued the
final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces
IAS 39 Financial Instruments: Recognition and Measurement, and all previous versions of IFRS 9. The standard introduces
new requirements for classification and measurement, impairment, and hedge accounting. New disclosure requirements will also
be required. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. The
Company is currently evaluating the impact these standards are expected to have on its consolidated financial statements.



IFRS 16Leases



In January 2016, the IASB issued
IFRS 16 Leases, which will replace IAS 17 Leases. This standard introduces a single lessee accounting model and requires
a lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset
is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying asset and
a lease liability representing its obligation to make lease payments. The standard will be effective for annual periods beginning
on or after January 1, 2019, but earlier application is permitted for entities that apply IFRS 15 Revenue from Contracts with Customers
at or before the date of initial adoption of IFRS 16. The extent of the impact of adoption of the standard has not yet been determined.



11







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 4. | Significant accounting estimates and judgments
| | -- | ----------------------------------------------



The preparation of the consolidated
financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions which affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period.



Estimates are based on historical
experience and other factors considered to be reasonable, and are reviewed on an ongoing basis. Revisions to estimates and the
resulting effects on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively.



The Company has identified the following
areas where estimates, assumptions and judgments are made and where actual results may differ from the estimates under different
assumptions and conditions and may materially affect financial results of the Company’s statement of financial position reported
in future periods.



| | (a) | Resource estimation
| | --- | -------------------



The accuracy of resource estimates
is a function of the quantity and quality of available data and assumptions made and judgments used in the geological and engineering
interpretation, and may be subject to revision based on various factors. Changes in resource estimates may impact the carrying
value of mineral property, plant and equipment, the calculation of amortization and depletion, the capitalization of mine development
costs, and the timing of cash flows related to reclamation and remediation provision.



| | (b) | Useful lives of mineral properties, plant and equipment
| | --- | -------------------------------------------------------



The Topia Mine mineral property is
depleted using the straight-line method over the estimated remaining life of the mine. The Company estimates the remaining life
of its producing mineral properties on an annual basis using a combination of quantitative and qualitative factors including historical
results, mineral resource estimates, and management’s intent to operate the property. The estimated remaining life of the
producing mineral property is used to calculate amortization and depletion expense, assess impairment charges and the carrying
values of assets, and for forecasting the timing of the payment of reclamation and remediation costs.



There are numerous uncertainties
inherent in the estimation of the remaining lives of the producing mineral properties, and assumptions that are valid at the time
of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange
rates, or production costs may change the economic status of the resources, estimates of production from areas not included in
the National Instrument 43-101 (“NI 43-101”) reports, and management’s intent to operate the property, and may
ultimately have a material impact on the estimated remaining lives of the properties.



| | (c) | Reclamation and remediation provision
| | --- | -------------------------------------



The amounts recorded for reclamation
and remediation provisions are based on estimates prepared by third party environmental specialists, if available, or by persons
within the Company who have the relevant skills and experience. These estimates are based on remediation activities required by
environmental laws, the expected timing of cash flows, and the pre-tax risk free interest rates on which the estimated cash flows
have been discounted. These estimates also include an assumption of the rate at which costs may inflate in future periods. Actual
results could differ from these estimates. The estimates require extensive judgment about the nature, cost and timing of the work
to be completed, and may change with future changes to costs, environmental laws and regulations and remediation practices.



| | (d) | Review of asset carrying values and assessment of impairment
| | --- | ------------------------------------------------------------



The Company reviews each asset or
cash generating unit at each reporting date to determine whether there are any indicators of impairment. If any such indication
exists, a formal estimate of recoverable amount is performed and an impairment loss is recognized to the extent that the carrying
amount exceeds the recoverable amount. The recoverable amount of an asset or cash generating unit is measured at the higher of
fair value less costs to sell and value in use.



The determination of fair value less costs to sell and value in
use requires management to make estimates and assumptions about expected production and sales volumes, metal prices, ore tonnage
and grades, recoveries, operating costs, reclamation and remediation costs, future capital expenditures and appropriate discount
rates for future cash flows. The estimates and assumptions are subject to risk and uncertainty, and as such there is the possibility
that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances,
some or all of the carrying value of the assets may be further impaired or the impairment charge reduced with the impact recorded
in the statement of comprehensive income.



12







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 4. | Significant accounting estimates and judgments– continued
| | -- | ---------------------------------------------------------



| | (e) | Revenue from concentrate sales
| | --- | ------------------------------



Revenue from the sale of metals in
concentrate is recorded at the time when it is probable that the economic benefits associated with the transaction will flow to
the Company, the risks and rewards of ownership are transferred to the customer and the revenue can be reliably measured. Variations
between the sales price recorded at the initial recognition date and the actual final sales price at the settlement date caused
by changes in market metals prices result in an embedded derivative in the related trade accounts receivable. The embedded derivative
is recorded at fair value each period until final settlement occurs, with changes in fair value classified as a component of revenue.
During periods of high price volatility, the effect of mark-to-market price adjustments related to the concentrate shipments which
remain to be settled could be significant. In addition, actual settlement prices could vary significantly from the estimated prices
or forward prices applied at prior reporting dates.



| | (f) | Income taxes and recoverability of deferred tax assets
| | --- | ------------------------------------------------------



In assessing
the probability of realizing income tax assets, the Company makes estimates related to expected future taxable income, potential
tax planning opportunities, estimated timing of reversals of temporary differences, and the likelihood that tax positions taken
will be sustained upon examination by applicable tax authorities. Where applicable tax laws and regulations are unclear or subject
to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur which may materially affect
the amounts of income tax assets recognized. In addition, future changes in tax laws could limit the Company’s ability to
realize the benefits from deferred tax assets.



| | (g) | Determination of functional currencies
| | --- | --------------------------------------



The determination of an entity’s
functional currency is a matter of judgment based on an assessment of the specific facts and circumstances relevant to determining
the primary economic environment of each individual entity within the group. The Company reconsiders the functional currencies
used when there is a change in events and conditions considered in determining the primary economic environment of each entity.



| | 5. | Trade and other receivables
| | -- | ---------------------------



|                           |  | December 31, 2016 |        |  | December 31, 2015 |  
|-------------------------- |  | ----------------- | ------ |  | ----------------- | -
|Trade accounts receivable  |  | $                 | 5,395  |  |                   | $
|Value added tax receivable |  |                   | 4,345  |  |                   |  
|Other                      |  |                   | 438    |  |                   |  
|                           |  | $                 | 10,178 |  |                   | $



The Company, through its Mexican
subsidiaries, pays value added tax on the purchase and sale of goods and services at a rate of 16%. The net amount paid or payable
is recoverable, but such recovery is subject to review and assessment by local tax authorities.



| | 6. | Inventories
| | -- | -----------



|                       |  | December 31,2016 |       |  | December 31,2015 |  
|---------------------- |  | ---------------- | ----- |  | ---------------- | -
|Concentrate            |  | $                | 2,488 |  |                  | $
|Ore stockpile          |  |                  | 753   |  |                  |  
|Materials and supplies |  |                  | 2,494 |  |                  |  
|Silver bullion         |  |                  | 9     |  |                  |  
|                       |  | $                | 5,744 |  |                  | $



The amount of inventory recognized
as cost of sales for the years ended December 31, 2016 and 2015 includes production costs and amortization and depletion directly
attributable to the inventory production process.



The amount of reversal of previous write-down of inventories to
net realizable value for the year ended December 30, 2016 was $24 (2015 – write-down of $9).



13







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 7. | Mineral properties, plant and equipment
| | -- | ---------------------------------------



|                                      |  | Mineral  properties |        |   | Plant and  equipment |   |        | Land and  buildings |  |   | Furniture,  fixtures and  equipment |   |  | Total |      
|------------------------------------- |  | ------------------- | ------ | - | -------------------- | - | ------ | ------------------- |  | - | ----------------------------------- | - |  | ----- | -----
|Cost                                  |  |                     |        |   |                      |   |        |                     |  |   |                                     |   |  |       |      
|Balance, January 1, 2015              |  | $                   | 37,163 |   |                      | $ | 26,063 |                     |  | $ | 2,476                               |   |  | $     | 2,449
|Additions                             |  |                     | 2,516  |   |                      |   | 2,031  |                     |  |   | 9                                   |   |  |       | 386  
|Change in reclamation provision asset |  |                     | (40    | ) |                      |   | 631    |                     |  |   | -                                   |   |  |       | -    
|Disposals                             |  |                     | -      |   |                      |   | -      |                     |  |   | -                                   |   |  |       | (20  
|Foreign exchange                      |  |                     | 844    |   |                      |   | 607    |                     |  |   | 58                                  |   |  |       | 45   
|Balance, December 31, 2015            |  | $                   | 40,483 |   |                      | $ | 29,332 |                     |  | $ | 2,543                               |   |  | $     | 2,860
|Additions                             |  |                     | 305    |   |                      |   | 4,208  |                     |  |   | 111                                 |   |  |       | 124  
|Change in reclamation provision asset |  |                     | 142    |   |                      |   | 297    |                     |  |   | -                                   |   |  |       | -    
|Disposals                             |  |                     | -      |   |                      |   | -      |                     |  |   | -                                   |   |  |       | (22  
|Foreign exchange                      |  |                     | (5,021 | ) |                      |   | (3,680 | )                   |  |   | (321                                | ) |  |       | (292 
|Balance, December 31, 2016            |  | $                   | 35,909 |   |                      | $ | 30,157 |                     |  | $ | 2,333                               |   |  | $     | 2,670
|Accumulated depreciation              |  |                     |        |   |                      |   |        |                     |  |   |                                     |   |  |       |      
|Balance, January 1, 2015              |  | $                   | 24,583 |   |                      | $ | 17,306 |                     |  | $ | 1,457                               |   |  | $     | 1,994
|Amortization and depletion (a)        |  |                     | 9,156  |   |                      |   | 3,200  |                     |  |   | 77                                  |   |  |       | 225  
|Disposals                             |  |                     | -      |   |                      |   | -      |                     |  |   | -                                   |   |  |       | (20  
|Foreign exchange                      |  |                     | 498    |   |                      |   | 389    |                     |  |   | 34                                  |   |  |       | 35   
|Balance, December 31, 2015            |  | $                   | 34,237 |   |                      | $ | 20,895 |                     |  | $ | 1,568                               |   |  | $     | 2,234
|Amortization and depletion (a)        |  |                     | 887    |   |                      |   | 4,200  |                     |  |   | 55                                  |   |  |       | 231  
|Disposals                             |  |                     | -      |   |                      |   | -      |                     |  |   | -                                   |   |  |       | (22  
|Foreign exchange                      |  |                     | (4,231 | ) |                      |   | (2,650 | )                   |  |   | (199                                | ) |  |       | (232 
|Balance, December 31, 2016            |  | $                   | 30,893 |   |                      | $ | 22,445 |                     |  | $ | 1,424                               |   |  | $     | 2,211
|Net book value                        |  |                     |        |   |                      |   |        |                     |  |   |                                     |   |  |       |      
|December 31, 2015                     |  | $                   | 6,246  |   |                      | $ | 8,437  |                     |  | $ | 975                                 |   |  | $     | 626  
|December 31, 2016                     |  | $                   | 5,016  |   |                      | $ | 7,712  |                     |  | $ | 909                                 |   |  | $     | 459  



| | (a) | Change in estimate
| | --- | ------------------



On February 22, 2016, the Company
provided an update on the Mineral Resource for the GMC, following which management reviewed the remaining useful life of the GMC.
The estimate of the useful life of the GMC was determined to be 3 years, an increase from the previous estimate of 1 year as at
January 1, 2016. As a result, the depreciation recorded during the year ended December 31, 2016 was approximately $548 less than
would have been recorded prior to the change in estimate.



On July 9, 2015, the Company provided
an update on the Mineral Resource at the Topia Mine following which management reviewed the remaining useful life of the Topia
mineral property. The estimate of the useful life of the mineral property was determined to be 11 years, an increase from the previous
estimate of 6.5 years as at July 1, 2015. As a result, the depletion recorded during the year ended December 31, 2016 was approximately
$361 less than would have been recorded prior to the change in estimate.



During the fourth quarter of 2016, the Company announced that it
was transitioning to a new dry stack tailings storage facility at the Topia Mine and, as a result, the Company fully amortized
the remaining carrying value ($684) of its existing tailings storage facility.



14







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 8. | Exploration and evaluation assets
| | -- | ---------------------------------



|                           |  | Santa Rosa  Property |       |   | El Horcon  Property |   |       | CMC |  |   | GDLR
 Project |   |  | Total |       
|-------------------------- |  | -------------------- | ----- | - | ------------------- | - | ----- | --- |  | - | ------------- | - |  | ----- | ------
|Cost                       |  |                      |       |   |                     |   |       |     |  |   |               |   |  |       |       
|Balance, January 1, 2015   |  | $                    | 1,103 |   |                     | $ | 1,257 |     |  | $ | -             |   |  | $     | -     
|Acquisition costs (a), (b) |  |                      | -     |   |                     |   | -     |     |  |   | 1,679         |   |  |       | 2,303 
|Impairment (a)             |  |                      | -     |   |                     |   | -     |     |  |   | -             |   |  |       | (2,303
|Foreign exchange           |  |                      | 27    |   |                     |   | 29    |     |  |   | 63            |   |  |       | -     
|Balance, December 31, 2015 |  | $                    | 1,130 |   |                     | $ | 1,286 |     |  | $ | 1,742         |   |  | $     | -     
|Impairment (b)             |  |                      | -     |   |                     |   | -     |     |  |   | (1,679        | ) |  |       | -     
|Foreign exchange           |  |                      | (142  | ) |                     |   | (162  | )   |  |   | (63           | ) |  |       | -     
|Balance, December 31, 2016 |  | $                    | 988   |   |                     | $ | 1,124 |     |  | $ | -             |   |  | $     | -     



| | (a) | Cangold acquisition
| | --- | -------------------



On February 26, 2015, the Company
entered into a binding letter agreement to acquire all of the outstanding shares of Cangold by way of a statutory plan of arrangement.
As a result, the Company would acquire a 100% interest in Cangold and its wholly-owned subsidiary Coboro. Coboro held an option
to acquire the GDLR Project gold-silver project in Mexico and, prior to the completion of the Cangold acquisition, Cangold was
a related party (with certain directors in common).



On May 27, 2015, the Company completed
the acquisition of all of the 42,780,600 common shares of Cangold issued and outstanding to third parties, in exchange for 2,138,898
common shares of Great Panther. The Company also issued 475,992 warrants (exercisable at prices ranging from C$3.60 per share to
C$4.00 per share) and 124,250 stock options (exercisable at prices ranging from C$2.00 per share to C$3.00 per share), replacing
warrants and stock options previously issued by Cangold. All the warrants issued had expired as of December 31, 2015.



On February 24, 2016, the Company
terminated its option agreement with Vista Gold after conducting an evaluation of the GDLR project, which included the 2015 drill
program, and determining that the project did not warrant further exploration. As a result of the termination of the option agreement,
the Company recorded an impairment charge of $2,303 against the carrying value of the GDLR Project during the year ended December
31, 2015, reducing the carrying value to nil.



As part of the Cangold acquisition,
the Company also acquired 100% interests in the Plomo exploration property located in Sonora, Mexico and the Argosy exploration
property located in the Red Lake Mining District in Northwestern Ontario. No carrying value was ascribed to either of these properties.



| | (b) | CMC option agreement
| | --- | --------------------



On May 19, 2015, the Company entered
into a two-year option agreement with wholly-owned subsidiaries of Nyrstar N.V. (“Nyrstar”) whereby the Company could
acquire a 100% interest in the CMC. The CMC is a gold-silver-copper-lead-zinc mine, located in the Peruvian province of Huarochiri,
approximately 90 kilometres east of Lima. It has a processing facility along with supporting mining infrastructure, and has been
on care and maintenance since August 2013. Under the terms of the option agreement, the Company made an initial option payment
of $1,500.



On May 11, 2016, the Company gave
notice to Nyrstar of termination of its option agreement. As a result of the termination of the option agreement, the Company recorded
an impairment charge of $1,679 against the carrying value of the CMC exploration asset during the year ended December 31, 2016,
reducing the carrying value to nil.



The Company continued its evaluation of the CMC and, on December
19, 2016 announced an agreement to acquire a 100% interest in the CMC (note 17(a)).



15







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 9. | Intangible assets
| | -- | -----------------



|                            |  | 2016 |       |   | 2015 |  
|--------------------------- |  | ---- | ----- | - | ---- | -
|Cost                        |  |      |       |   |      |  
|Balance, January 1          |  | $    | 1,623 |   |      | $
|Additions                   |  |      | 22    |   |      |  
|Foreign exchange            |  |      | (167  | ) |      |  
|Balance, December 31        |  |      | 1,478 |   |      | $
|Accumulated depreciation    |  |      |       |   |      |  
|Balance, January 1          |  | $    | 1,538 |   |      | $
|Amortization and depletion  |  |      | 78    |   |      |  
|Foreign exchange            |  |      | (160  | ) |      |  
|Balance, December 31        |  |      | 1,456 |   |      |  
|Net book value, December 31 |  | $    | 22    |   |      | $



The Company’s intangible assets
include computer software and costs of computer software customization and implementation.



| | 10. | Derivative instruments
| | --- | ----------------------



A significant portion of the Company’s
capital, exploration, operating and administrative expenditures are incurred in Mexican pesos. Revenues from the sale of concentrates
are denominated in US dollars. The fluctuation of the US dollar in relation to the Mexican peso will consequently impact the financial
performance of the Company. To manage the Company’s exposure to changes in the US dollar/Mexican peso exchange rate, the
Company entered into forward contracts to purchase Mexican pesos in exchange for US dollars at various rates and maturity dates.



As at December 31, 2016, forward
contracts for the purchase of MXN 280,000,000 (in exchange for US dollars at various pre-determined rates varying from MXN 19.32/USD
to MXN 21.34/USD at various maturity dates until July 18, 2017) remained outstanding. The fair value of these outstanding foreign
currency forward contracts was estimated as a liability of $536. A derivative loss of $536 was recognized as part of foreign exchange
gains (losses) within the statement of comprehensive income for the year ended December 31, 2016.



| | 11. | Reclamation and remediation provision
| | --- | -------------------------------------



The Company’s reclamation
and remediation provision relates to site restoration, clean-up and ongoing treatment and monitoring of the GMC and Topia operations.
Although the ultimate amount of the rehabilitation provision is uncertain, the present value of these obligations is based on information
currently available which is reviewed at each reporting date to take into account any material changes to the information.



|                                                   |  | 2016 |       |   | 2015 |  
|-------------------------------------------------- |  | ---- | ----- | - | ---- | -
|Balance, January 1                                 |  | $    | 3,649 |   |      | $
|Change in estimates                                |  |      | 278   |   |      |  
|Accretion expense                                  |  |      | 23    |   |      |  
|Reclamation work performed                         |  |      | (18   | ) |      |  
|Foreign exchange                                   |  |      | (466  | ) |      |  
|Reclamation and remediation provision, December 31 |  | $    | 3,466 |   |      | $



Of the total change in estimate,
a reduction of $161 associated with the GMC was recorded as mine development costs in exploration, evaluation and development expenses
within the statement of comprehensive income.



The reclamation and remediation provision is based on
the following assumptions:





|                                                |  | 2016 |             |   | 2015 |  
|----------------------------------------------- |  | ---- | ----------- | - | ---- | -
|Total estimated cash flows, before inflation    |  | $    | 3,810       |   |      | $
|Expected settlement of obligations (years)      |  |      | 2019 – 2047 |   |      |  
|Weighted average risk-free rate (discount rate) |  |      |             |   |      |  
|GMC                                             |  |      | 2.04        | % |      |  
|Topia                                           |  |      | 2.75        | % |      |  



A 1% change in the discount
rate would decrease or increase the provision by $338 while holding the other assumptions constant.





16







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 12. | Share capital
| | --- | -------------



| | (a) | Authorized
| | --- | ----------

Unlimited number of common shares without
par value

Unlimited number of Class A preferred
shares without par value, issuable in series

Unlimited number of Class B preferred
shares without par value, issuable in series



| | (b) | Issued and fully paid
| | --- | ---------------------

Common shares: 166,937,734 (December
31, 2015 – 141,712,605)

Preferred shares: nil (December 31,
2015 – nil)



| | (c) | Financings
| | --- | ----------

On April 21, 2016, the Company entered
into an At-the-Market Offering agreement. The Company had the discretion to sell common shares of the Company to a maximum gross
sales proceeds of $10,000 through to December 31, 2016. The Company issued 3,498,627 shares under the offering for net proceeds
of $5,181.



On July 12, 2016, the Company
closed a bought deal offering for gross proceeds of $29,900, consisting of 18,687,500 units at a price of $1.60 per unit. Each
unit consisted of one common share in the capital of the Company and one-half of one common share purchase warrant. Each whole
warrant entitles the holder thereof to purchase one share at the exercise price of $2.25 per share for a period of 18 months after
the closing of the offering. The Company paid a cash commission to the underwriters equal to 6% of the gross proceeds of the offering
and recognized net proceeds of $27,903, of which $3,998 was attributed to the warrants issued as part of the unit offering.



| | (d) | Share options
| | --- | -------------

The Company is authorized to grant
incentive share options (“options”) to officers, directors, employees and consultants as incentive for their services,
subject to limits with respect to insiders. Pursuant to the Company’s 2016 Amended and Restated Incentive Share Option Plan,
options are non-transferable, subject to permitted transferees, and the aggregate may not exceed 10% of the outstanding shares
at the time of an option grant and the aggregate to any one person may not exceed 5% of the outstanding shares. The exercise price
of options is determined by the Board of Directors but shall not be less than the closing price of the common shares on the Toronto
Stock Exchange on the last business day immediately preceding the date of grant. Grant date share price is the closing market price
on the day the options were granted.



Options have expiry dates of no later
than 5 years after the date of grant and will cease to be exercisable 90 days following the termination of the participant’s
employment or engagement.



|                               |  | 2016             |        |   | 2015                             |   
|------------------------------ |  | ---------------- | ------ | - | -------------------------------- | --
|                               |  | Options  (000’s) |        |   | Weighted average
 exercise price |   
|Outstanding, beginning of year |  |                  | 12,976 |   |                                  | C$
|Granted                        |  |                  | 2,038  |   |                                  |   
|Forfeited/Expired              |  |                  | (2,926 | ) |                                  |   
|Exercised                      |  |                  | (3,039 | ) |                                  |   
|Outstanding, end of year       |  |                  | 9,049  |   |                                  | C$
|Exercisable, end of year       |  |                  | 3,940  |   |                                  | C$



|Range of exercise price |  | Options

outstanding (000’s) |       |  | Weighted average
 remaining 
contractual life
 (years) |  |     | Options
 exercisable (000’s) |  |  | Weighted average
 exercise price | 
|----------------------- |  | ---------------------------- | ----- |  | ------------------------------------------------------ |  | --- | ---------------------------- |  |  | -------------------------------- | 
|C$0.65                  |  |                              | 2,710 |  |                                                        |  | 3.4 |                              |  |  | 1,212                            | 
|C$0.71 to C$0.86        |  |                              | 2,232 |  |                                                        |  | 3.6 |                              |  |  | 1,147                            | 
|C$1.31                  |  |                              | 1,803 |  |                                                        |  | 2.5 |                              |  |  | 995                              | 
|C$1.71 to C$2.00        |  |                              | 347   |  |                                                        |  | 0.7 |                              |  |  | 347                              | 
|C$2.16 to C$2.19        |  |                              | 1,918 |  |                                                        |  | 4.6 |                              |  |  | 200                              | 
|C$2.25 to C$3.00        |  |                              | 39    |  |                                                        |  | 0.3 |                              |  |  | 39                               | 
|                        |  |                              | 9,049 |  |                                                        |  | 3.4 |                              |  |  | 3,940                            | 



During the year ended December 31,
2016, the Company recorded share-based compensation expense of $1,026 (2015 - $946). During the year ended December 31, 2015, the
Company capitalized $7 of share-based compensation associated with the Cangold acquisition.





17







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 12. | Share capital - continued
| | --- | -------------------------



The weighted average fair value of
options granted during the year ended December 31, 2016 was C$0.98 (2015 – C$0.23). The fair value per option granted was
determined using the following weighted average assumptions at the time of the grant using the Black Scholes option pricing model:



|                        |  | 2016 |      |   | 2015 | 
|----------------------- |  | ---- | ---- | - | ---- | 
|Risk-free interest rate |  |      | 0.51 | % |      | 
|Expected life (years)   |  |      | 2.6  |   |      | 
|Annualized volatility   |  |      | 73   | % |      | 
|Forfeiture rate         |  |      | 15   | % |      | 



The annualized volatility assumption
is based on the historical and implied volatility of the Company’s Canadian dollar common share price on the Toronto Stock
Exchange. The risk-free interest rate assumption is based on yield curves on Canadian government bonds with a remaining term equal
to the expected life of the options.



| | (e) | Share purchase warrants
| | --- | -----------------------



As part of the Company’s $29,900
bought deal financing (note 12(c)), the Company issued 9,343,750 share purchase warrants, all of which remained outstanding as
at December 31, 2016 (December 31, 2015: nil). Each warrant entitles the holder thereof to purchase one common share at the exercise
price of $2.25 per share for a period of 18 months after the closing of the offering. The fair value per share purchase warrant
was determined to be $0.43, using the following weighted average assumptions at the time of the issuance using the Black Scholes
option pricing model:



|                                |  | 2016 |     
|------------------------------- |  | ---- | ----
|Share price at measurement date |  | $    | 1.47
|Risk-free interest rate         |  |      | 0.69
|Expected life (years)           |  |      | 1.5 
|Annualized volatility           |  |      | 88  



| | (f) | Loss per share and diluted loss per share
| | --- | -----------------------------------------



|                                                      |  | 2016 |         |   | 2015 |  
|----------------------------------------------------- |  | ---- | ------- | - | ---- | -
|Net loss for the year                                 |  | $    | (4,118  | ) |      | $
|                                                      |  |      | (000’s) |   |      |  
|Basic weighted average number of shares outstanding   |  |      | 154,217 |   |      |  
|Effect of dilutive securities                         |  |      | -       |   |      |  
|Diluted weighted average number of shares outstanding |  |      | 154,217 |   |      |  
|Loss per share:                                       |  |      |         |   |      |  
|Basic and diluted                                     |  | $    | (0.03   | ) |      | $



Potentially dilutive share options
and share purchase warrants have not been included in the diluted earnings per share calculation for the years presented because
the effect of including these shares would be anti-dilutive.



| | 13. | Income taxes
| | --- | ------------



| | (a) | Income tax expense
| | --- | ------------------



|                              |  | 2016 |       |   | 2015 |  
|----------------------------- |  | ---- | ----- | - | ---- | -
|Current expense:              |  |      |       |   |      |  
|Income tax                    |  | $    | 30    |   |      | $
|Special mining duty           |  |      | 1,493 |   |      |  
|Withholding tax               |  |      | 395   |   |      |  
|                              |  |      | 1,918 |   |      |  
|Deferred (recovery) expense:  |  |      |       |   |      |  
|Income tax                    |  |      | 167   |   |      |  
|Special mining duty           |  |      | (618  | ) |      |  
|Withholding taxes accrued     |  |      | 42    |   |      |  
|                              |  |      | (409  | ) |      |  
|Income tax (recovery) expense |  | $    | 1,509 |   |      | $





18







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 13. | Income taxes -continued
| | --- | -----------------------



The reconciliation of income taxes
calculated at the Canadian statutory tax rate to the income tax expense shown in these financial statements is as follows:



|                                                                    |  | 2016 |        |   | 2015 |  
|------------------------------------------------------------------- |  | ---- | ------ | - | ---- | -
|Net loss before tax                                                 |  | $    | (2,609 | ) |      | $
|Canadian statutory income tax rate                                  |  |      | 26     | % |      |  
|                                                                    |  |      |        |   |      |  
|Income tax expense at the statutory income tax rate                 |  | $    | (678   | ) |      | $
|Difference in statutory tax rates in foreign jurisdictions          |  |      | 246    |   |      |  
|Changes in statutory tax rates                                      |  |      | 46     |   |      |  
|Non-deductible expenses                                             |  |      | 2,243  |   |      |  
|Benefit of tax attributes not previously recognized and other items |  |      | (1,842 | ) |      |  
|Change in prior years                                               |  |      | 112    |   |      |  
|Non-taxable items                                                   |  |      | 70     |   |      |  
|Special mining duty                                                 |  |      | 875    |   |      |  
|Withholding taxes                                                   |  |      | 437    |   |      |  
|Income tax expense (recovery)                                       |  | $    | 1,509  |   |      | $



| | (b) | Deferred income tax assets and liabilities
| | --- | ------------------------------------------



|                                         |  | December 31, 2016 |        |   | December 31, 2015 |  
|---------------------------------------- |  | ----------------- | ------ | - | ----------------- | -
|Deferred income tax assets               |  | $                 | 98     |   |                   | $
|Deferred income tax liabilities          |  |                   | (1,609 | ) |                   |  
|Deferred special mining duty liabilities |  |                   | (525   | ) |                   |  
|                                         |  | $                 | (2,036 | ) |                   | $





The following temporary differences
and tax losses give rise to deferred income tax assets and liabilities as at:



|                                          |  | December 31, 2016 |        |   | December 31, 2015 |  
|----------------------------------------- |  | ----------------- | ------ | - | ----------------- | -
|Tax losses carried forward                |  | $                 | 2,146  |   |                   | $
|Provision for reclamation and remediation |  |                   | 277    |   |                   |  
|Trade and other receivables               |  |                   | (2,019 | ) |                   |  
|Withholding tax liability                 |  |                   | (1,609 | ) |                   |  
|Property, plant and equipment             |  |                   | (1,072 | ) |                   |  
|Other deductible temporary differences    |  |                   | 241    |   |                   |  
|Net deferred income tax liabilities       |  | $                 | (2,036 | ) |                   | $



As at December 31, 2016, the Company
had tax operating losses in Mexico of approximately $27,589 expiring between 2018 and 2026, and non-capital losses of approximately
$12,706 in Canada expiring between 2026 and 2036. The Company also has $221 in tax losses in Peru, and capital losses of $996 in
Canada, which do not expire.



Unrecognized deferred tax assets:



Temporary
differences and tax losses arising in Canada have not been recognized as deferred tax assets due to the fact that management has
determined it is not probable that sufficient future taxable profits will be earned in these jurisdictions to recover such assets.
The unrecognized temporary differences and tax losses are summarized as follows:



|                                       |  | December 31, 2016 |        |  | December 31, 2015 |  
|-------------------------------------- |  | ----------------- | ------ |  | ----------------- | -
|Tax losses carried forward             |  | $                 | 38,367 |  |                   | $
|Property, plant and equipment          |  |                   | 1,116  |  |                   |  
|Other deductible temporary differences |  |                   | 11,547 |  |                   |  
|Unrecognized temporary differences     |  | $                 | 51,030 |  |                   | $



Management assesses these temporary
differences regularly and adjusts the unrecognized deferred tax asset in the period when management determines it is probable that
some portion of the assets will be realized.





19







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 14. | Capital management
| | --- | ------------------



The Company’s
objectives when managing capital are to:



| | · | ensure there are adequate capital resources to safeguard
the Company’s ability to continue as a going concern;                                                                                 
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | maintain adequate levels of funding to support the acquisition,
exploration and development of mineral properties and exploration, and evaluation assets, and the operation of producing mines;
| | · | maintain investor, creditor and market confidence to sustain
future development of the business; and                                                                                           
| | · | provide returns to shareholders and benefits for other
stakeholders.                                                                                                                           



In assessing the capital structure of the Company, management includes in its assessment the components
of shareholders’ equity and debt, net of cash and cash equivalents and short-term deposits. The Topia Mine and the GMC mines
are in production, but exploration and development activities are also performed at these and other exploration properties in order
to identify further resources. The Company plans to use existing funds, as well as funds from the future sale of concentrates to
fund operations, development and exploration activities.



The Company manages its capital
in a manner that provides sufficient funding for operational activities. Annual capital and operating expenditure budgets, and
rolling forecasts, are used to determine the necessary capital requirements. These budgets are approved by management and the Board
of Directors and updated for changes in the underlying assumptions, economic conditions and risk characteristics of the underlying
assets, as necessary. For the year ended December 31, 2016, the Company’s management assessed changes in quantitative and
qualitative data with respect to the Company’s objectives, policies and processes for managing capital implemented in the
prior year to ensure their continued appropriateness. Going forward, the Company will continue to focus on internally generated
cash flow to attempt to minimize its reliance on equity and debt financing.



The Company’s capital
structure is dependent on expected business growth and changes in the business environment. As at December 31, 2016, the Company
is not subject to externally imposed capital requirements.



| | 15. | Fair value of financial instruments
| | --- | -----------------------------------



The Company’s financial instruments include cash and cash equivalents, short-term deposits, marketable
securities, trade and other receivables, trade and other payables and derivative instruments. The carrying values of cash and cash
equivalents, short-term deposits, trade and other receivables, and trade and other payables approximate their fair values due to
the short-term nature of the items. The fair values of marketable securities are based on current bid prices at the balance sheet
date. The embedded derivative in trade accounts receivable is recorded at fair value each period until final settlement occurs,
with changes in fair value classified as a component of revenue. The derivative instrument is recorded at fair value, with changes
in fair value recorded as a foreign exchange (loss) gain within finance and other income (expense).



In evaluating fair value information,
considerable judgment is required to interpret the market data used to develop the estimates. The use of different market assumptions
and valuation techniques may have a material effect on the estimated fair value amounts. Accordingly, the estimates of fair value
presented herein may not be indicative of the amounts that could be realized in a current market exchange.



IFRS requires disclosures about
the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value
measurement. The three levels of the fair value hierarchy are:



| | · | Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------
| | · | Level 2 – Inputs other than quoted prices that are observable for the asset or liability
either directly or indirectly; and
| | · | Level 3 – Inputs that are not based on observable market data.                                                             



There have been no transfers between
fair value levels during the reporting period.



The following table summarizes the
Company’s financial instruments as at December 31, 2016:



|                          |  | Available-
for-sale
 financial
 assets |   |  | Loans and
 receivables |   |        | Financial
 assets/
 liabilities at
 fair value
 through P&L |  |   | Financial
 liabilities at
 amortized 
cost |   |  | Total |        |   | Fair value
 hierarchy
|------------------------- |  | -------------------------------------- | - |  | ---------------------- | - | ------ | ----------------------------------------------------------- |  | - | ------------------------------------------ | - |  | ----- | ------ | - | ---------------------
|Financial Assets          |  |                                        |   |  |                        |   |        |                                                             |  |   |                                            |   |  |       |        |   |                      
|Cash and cash equivalents |  | $                                      | - |  |                        | $ | 41,642 |                                                             |  | $ | -                                          |   |  | $     | -      |   |                      
|Short-term deposits       |  |                                        | - |  |                        |   | 15,020 |                                                             |  |   | -                                          |   |  |       | -      |   |                      
|Marketable securities     |  |                                        | 5 |  |                        |   | -      |                                                             |  |   | -                                          |   |  |       | -      |   |                      
|Trade accounts receivable |  |                                        | - |  |                        |   | 5,395  |                                                             |  |   |                                            |   |  |       |        |   |                      
|Other receivables         |  |                                        | - |  |                        |   | 438    |                                                             |  |   | -                                          |   |  |       | -      |   |                      
|Financial Liabilities     |  |                                        |   |  |                        |   |        |                                                             |  |   |                                            |   |  |       |        |   |                      
|Trade and other payables  |  | $                                      | - |  |                        | $ | -      |                                                             |  | $ | -                                          |   |  | $     | (6,017 | ) |                      
|Derivative instruments    |  |                                        | - |  |                        |   | -      |                                                             |  |   | (536                                       | ) |  |       | -      |   |                      







20







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 16. | Financial risk exposure and risk management
| | --- | -------------------------------------------



The Company is exposed in varying
degrees to credit, liquidity, and market risk through its use of financial instruments. Management’s close involvement in
the operations allows for the identification of risks and variances from expectations. The Board approves and monitors the risk
management processes. The Board’s main objectives for managing risks are to ensure liquidity, the fulfillment of obligations,
the continuation of the Company’s development and exploration program, and limited exposure to credit and market risks. There
were no changes to the objectives or the process from the prior year.



| | (a) | Credit risk
| | --- | -----------



Credit risk is the risk of potential loss to the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The
Company is exposed to credit risk from its cash and cash equivalents, short-term deposits, and trade and other receivables. The
risk exposure is limited to their carrying amounts at the balance sheet date. The risk is mitigated by holding cash and cash equivalents
and short-term deposits with highly rated Canadian and Mexican financial institutions. The Company does not invest in asset-backed
deposits or investments and does not expect any credit losses. The Company periodically assesses the quality of its investments
and is satisfied with the credit rating of the financial institutions and the investment grade of its guaranteed investment certificates.
Trade and other receivables primarily consist of trade accounts receivable and value added tax recoverable (“VAT”).
To reduce credit risk, the Company regularly reviews the collectability of its trade and other receivables and establishes an allowance
based on its best estimate of potentially uncollectible amounts. Trade receivables are due from large, multinational corporations
that have conducted business in Mexico for a number of years. The Company historically has not had difficulty collecting receivables
from its customers, nor have customers defaulted on any payments.



The average credit period for sales
is four months and the Company will contractually receive up to 90% advance payments of receivables. The Company has financial
risk management policies in place to ensure that all receivables are received within the pre-agreed credit terms.



The aging of trade accounts receivable and VAT
at each reporting date are as follows:



|                  |  | December 31, 2016 |       |  | December 31, 2015 |  
|----------------- |  | ----------------- | ----- |  | ----------------- | -
|Less than 30 days |  | $                 | 3,118 |  |                   | $
|More than 30 days |  | $                 | 6,622 |  |                   | $



| | (b) | Liquidity risk:
| | --- | ---------------



Liquidity risk is the risk that the
Company will not be able to meet its financial obligations as they become due. The Company ensures there is sufficient capital
to meet short-term business requirements. A key management goal is to maintain an optimal level of liquidity through the active
management of the Company’s assets, liabilities and cash flows. The Company prepares annual budgets which are approved by
the Board of Directors and prepares cash flows and liquidity forecasts on a quarterly basis. In addition, the Company maintains
a $10,000 credit facility which can be used to effectively reduce the credit period of trade receivables (note 19(c)).



The Company’s financial liabilities
consist of trade and other payables which are due within one year. Other than the Company’s reclamation and remediation provisions,
there are no financial liabilities with a maturity of greater than one year.



| | (c) | Market risk:
| | --- | ------------



The significant market risks to which
the Company is exposed are currency, interest rate, commodity price and exchange price risk.



| | (i) | Currency risk
| | --- | -------------



The operating results and financial
position of the Company are reported in US dollars. As the Company operates in an international environment, some of the Company’s
financial instruments and transactions are denominated in currencies other than the US dollar. The results of the Company’s
operations are subject to currency transaction and translation risks.



A significant portion of the Company’s
exploration, development and operating costs and administrative costs are incurred in Mexican pesos or Canadian dollars. The fluctuation
of the Canadian dollar and Mexican peso in relation to the US dollar will consequently impact the profitability of the Company
and may also affect the value of the Company’s assets and the amount of shareholders’ equity.



To manage the Company’s exposure to changes in the US dollar/Mexican
peso exchange rate, the Company entered into forward contracts during the year ended December 31, 2016 (note 10).



21







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 16. | Financial risk exposure and risk management - continued
| | --- | -------------------------------------------------------



For
financial instruments denominated in foreign currencies as at December 31, 2016, a 10% change in the prevailing exchange rates
as at December 31, 2016, with all other variables held constant, would have the following
impact on the Company’s earnings:





|                     |  | 10% change  in CAD |     |  | 10% change  in MXN |  
|-------------------- |  | ------------------ | --- |  | ------------------ | -
|Change in net income |  | $                  | 152 |  |                    | $



The closing exchange rates for December
31, 2016 of MXN/USD of 20.664 (2015: 17.340), and CAD/USD of 1.345 (2015: 1.396) were used in the above analysis.



| | (ii) | Interest rate risk
| | ---- | ------------------



The Company is exposed to interest rate risk on its short-term deposits and cash and cash equivalents,
from the possibility that change in market interest rates will affect future cash flows. The Company’s approach is to invest
cash in high interest savings accounts and guaranteed investment certificates at fixed or floating rates of interest in order to
maintain liquidity, while achieving a satisfactory return for shareholders. The Company manages risk by monitoring changes in interest
rates and by maintaining a relatively short duration for its portfolio of cash equivalent securities. Many of these instruments
can be immediately redeemed and those of a fixed term do not exceed one year.



For interest-bearing financial instruments as at December 31, 2016, an increase or decrease in interest
rate of 1% applied increase or decrease net income and comprehensive income by $73.



| | (iii) | Commodity price risk
| | ----- | --------------------



The Company is subject to risk from
fluctuations in the market prices of silver, gold, lead and zinc. Silver and gold, as well as lead and zinc prices have historically
fluctuated widely and are affected by numerous factors outside of the Company’s control, including, but not limited to, government
regulations relating to prices, taxes, royalties, allowable production, imports, exports, supply, industrial and retail demand,
forward sales by producers and speculators, levels of worldwide production and short-term changes in supply and demand because
of speculative hedging activities.



The profitability of the Company’s
operations is highly correlated to the market prices of these metals, as is the ability of the Company to develop its mineral properties
and exploration and evaluation assets. The value of trade receivables at the balance sheet date depends on changes in metal prices
until finalization of sales prices per the contractual quotation period. If metal prices decline for a prolonged period below the
cost of production of the Company’s Topia Mine and GMC, it may not be economically feasible to continue production.



The Company has a stated policy
that it will not engage in long-term hedging of silver prices.



For
provisionally priced trade receivables, a 10% change in the prevailing commodity prices as at December 31, 2016, with all other
variables held constant, would have the following impact on the Company’s earnings:





|                     |  | 10% change in
 silver |     |  | 10% change in
 gold |   |     | 10% change in lead |  |   | 10% change
 in zinc | 
|-------------------- |  | --------------------- | --- |  | ------------------- | - | --- | ------------------ |  | - | ------------------- | 
|Change in net income |  | $                     | 816 |  |                     | $ | 995 |                    |  | $ | 44                  | 



| | (iv) | Exchange price risk
| | ---- | -------------------



The fair value of marketable securities
is based on quoted market prices which the shares of the investments can be exchanged for. The exchange price of the shares may
fluctuate significantly depending on various other market factors. To mitigate the risk, the Company’s approach is to maintain
minimal investments in marketable securities.



22







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 17. | Commitments and contingencies
| | --- | -----------------------------



| | (a) | Commitments
| | --- | -----------



As of December 31, 2016, the Company
had the following commitments:



|                         |  | Total |       |  | 1 year |   |       | 2-3 years |  |   | 4-5 years |  |  | Thereafter |    
|------------------------ |  | ----- | ----- |  | ------ | - | ----- | --------- |  | - | --------- |  |  | ---------- | ---
|Operating lease payments |  | $     | 1,378 |  |        | $ | 238   |           |  | $ | 454       |  |  | $          | 445
|Drilling services        |  |       | 816   |  |        |   | 816   |           |  |   |           |  |  |            |    
|Equipment purchases      |  |       | 73    |  |        |   | 73    |           |  |   | -         |  |  |            | -  
|Consulting               |  |       | 6     |  |        |   | 6     |           |  |   | -         |  |  |            | -  
|Total commitments        |  | $     | 2,273 |  |        | $ | 1,133 |           |  | $ | 454       |  |  | $          | 445



On December 19, 2016, the Company entered into an agreement to acquire a 100% interest in the CMC. Under the terms of the
purchase agreement, the purchase price comprises (i) $100 to be paid upon closing, (ii) an amount equal to cash on hand in
the CMC at completion, and (iii) earn-out consideration of up to $10,000. Under the earn-out, Nyrstar will be paid 15% of
the free cash flow generated by the CMC during the 5-year period after which the CMC is cumulative free cash flow positive
from closing. The Company expects the acquisition to close during the first quarter of 2017. Pursuant to the purchase agreement,
the Company will undertake the reclamation of certain legacy tailings facilities at the CMC, which Nyrstar will fund to a
maximum of $20,000. In addition, Nyrstar will maintain a $9,700 closure bond for the CMC for a period of three years from
the time of closing. The Company will assume this mine closure bond at the end of this three-year period, unless the Company
determines within this three-year period to permanently close the CMC. In the event of a determination to permanently close
the CMC within this period, Nyrstar will fund mine closure costs to the extent of its mine closure bond obligation. Nyrstar
has also agreed to settle all outstanding fines or sanctions, to a maximum of $4,000 (subject to certain exclusions to which
the cap will not apply). Any obligations that exceed the amounts guaranteed by Nyrstar are the responsibility of the Company.



| | (b) | Contingencies
| | --- | -------------



In February 2016, the Comisión
Nacional del Agua (“CONAGUA”), the Mexican federal agency responsible for water administration, required that the Company
make formal applications for permits associated with the occupation and construction of the tailings facility at the GMC. Following
the February meeting, the Company filed its applications. After the Company filed the applications, CONAGUA carried out an inspection
of the tailings facility and requested further technical information. The Company is in the process of compiling the requested
technical information. The compilation, submission, and CONAGUA’s review of such information, has been ongoing for several
months, and is expected to continue to extend at least into the second quarter of 2017. The Company believes its current tailings footprint can
be maintained and will support operations at the GMC until at least 2020. The Company also believes, based on its meetings and
other communication with CONAGUA, that it will be able to obtain all of the above noted permits if and as required, with no suspension
of the GMC operations. While the Company is confident that it will be able to obtain the tailings permits, there is no guarantee
that it will complete the review process with CONAGUA without any actions that may suspend its operations at the GMC. Nor is there
any guarantee that the terms of such permits will be favorable to the Company. The failure to obtain a required permit could impact
the Company’s ability to continue operating the tailings facility at the GMC.



Since the February 2016 meeting
with CONAGUA, the Company has also discovered through its own undertaking that some additional CONAGUA permits may be needed in
connection with water discharge and use at GMC tailings facility and at the San Ignacio Mine. An application has been made for
the permit in the case of the San Ignacio Mine. The Company is assessing whether it requires an additional water use permit during
the dry season. The Company believes that it will be able to acquire any necessary water discharge and use permits without any
impact to its operations, but cannot guarantee that there is no risk in this regard.



| | 18. | Related party transactions
| | --- | --------------------------



| | (a) | Subsidiaries
| | --- | ------------



|Name                                      |  | Incorporation
 Location |  | Ownership |     |   | Principal Activity
|----------------------------------------- |  | ----------------------- |  | --------- | --- | - | ------------------
|Mineral Mexicana el Rosario, S.A. de C.V. |  | Mexico                  |  |           | 100 | % |                   
|Metalicos de Durango, S.A. de C.V.        |  | Mexico                  |  |           | 100 | % |                   
|Minera de Villa Seca, S.A. de C.V.        |  | Mexico                  |  |           | 100 | % |                   
|Coboro Minerales de Mexico S.A. de C.V.   |  | Mexico                  |  |           | 100 | % |                   
|Great Panther Silver Peru S.A.C.          |  | Peru                    |  |           | 100 | % |                   
|Cangold Peru S.A.C.                       |  | Peru                    |  |           | 100 | % |                   
|Great Panther Finance Canada Limited      |  | Canada                  |  |           | 100 | % |                   
|Cangold Limited                           |  | Canada                  |  |           | 100 | % |                   
|GP Finance International S.a. r.l.        |  | Luxembourg              |  |           | 100 | % |                   



23







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 18. | Related party transactions -continued
| | --- | -------------------------------------



| | (b) | Goods and services
| | --- | ------------------



The Company entered into the following
related party transactions:



|                                                |  | 2016 |   |  | 2015 |  
|----------------------------------------------- |  | ---- | - |  | ---- | -
|Services provided to Cangold and its subsidiary |  | $    | - |  |      | $



Prior to the Cangold acquisition
(note 8(a)), Cangold had three directors and/or officers that were also directors and/or officers of the Company. Robert A. Archer
and Kenneth W. Major served as board members of both companies, and Robert F. Brown served as an officer of both companies. Mr.
Archer also served as Chief Executive Officer and President of both the Company and Cangold. The Company’s employees provided
certain exploration and corporate secretarial services to Cangold and its subsidiary. In addition, the Company charged rent for
shared office space. The amounts owing from Cangold and Coboro were derecognized upon the completion of the Cangold acquisition.



These transactions occurred in the
normal course of operations, are measured at fair value, and were made on terms equivalent to those that prevail with arm’s
length transactions. There were no amounts owing to related parties as at December 31, 2016 or December 31, 2015.



| | (c) | Key management compensation
| | --- | ---------------------------



Key management includes the Company’s
Directors, President and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and the Vice Presidents. The
amounts owing to key management personnel were included in trade and other payables. The Company is committed to making severance
payments amounting to approximately $1,758 to certain officers and management in the event that there is a change of control of
the Company.



|                         |  | 2016 |       |  | 2015 |  
|------------------------ |  | ---- | ----- |  | ---- | -
|Salaries and benefits    |  | $    | 1,883 |  |      | $
|Directors’ fees          |  |      | 249   |  |      |  
|Termination benefits     |  |      | -     |  |      |  
|Share-based compensation |  |      | 722   |  |      |  
|                         |  | $    | 2,854 |  |      | $



| | 19. | Supplemental cash flow information
| | --- | ----------------------------------



| | (a) | Other non-cash items are comprised of the following:
| | --- | ----------------------------------------------------



|                                                                     |  | 2016 |      |   | 2015 |  
|-------------------------------------------------------------------- |  | ---- | ---- | - | ---- | -
|Non-cash amounts associated with reclamation provision (through P&L) |  | $    | (138 | ) |      | $
|Interest income                                                      |  |      | (225 | ) |      |  
|Interest expense                                                     |  |      | 57   |   |      |  
|                                                                     |  | $    | (306 | ) |      | $



| | (b) | The non-cash investing and financing activities of the Company include the following:
| | --- | -------------------------------------------------------------------------------------



|                                                                            |  | 2016 |     |   | 2015 |  
|--------------------------------------------------------------------------- |  | ---- | --- | - | ---- | -
|Non-cash consideration related to the Cangold acquisition (note 8(a))       |  | $    | -   |   |      | $
|Change in rehabilitation provision asset                                    |  |      | 439 |   |      |  
|Change in trade payables related to mineral properties, plant and equipment |  |      | (53 | ) |      |  
|                                                                            |  | $    | 386 |   |      | $



| | (c) | Undrawn credit facilities
| | --- | -------------------------



On June 13, 2016, the Company
renewed its $10,000 credit facility from Auramet International LLC (“Auramet”). The facility expires on June 30,
2017 and bears interest at a rate of LIBOR plus 5%. The facility allows the Company to draw down amounts equal to the amounts
receivables from a specific customer with whom Auramet has established a commercial relationship. Repayment of any amounts
drawn will be due at the same time that the customer repays the relevant amounts receivable. In addition, Auramet has also
provided the Company with a $500 margin credit facility, should the Company wish to enter into any derivative instruments
associated with commodities marketed to parties other than Auramet. The Company has not drawn down any amounts on these
facilities.



24







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 20. | Operating segments
| | --- | ------------------



The Company’s operations are
all within the mining sector, consisting of two operating segments both of which are located in Mexico, one exploration and one
Corporate. Due to diversities in geography and production processes, the Company operates the GMC and the Topia Mine separately,
with separate budgeting and evaluation of results of operations and exploration activities. The Corporate segment provides financial,
human resources and technical support to the two mining operations. The GMC operations produce silver and gold, and the Topia operations
produce silver, gold, lead and zinc.





|                                  |  | Operations |        |  |       |   |        |                   |  |   |           |  
|--------------------------------- |  | ---------- | ------ |  | ----- | - | ------ | ----------------- |  | - | --------- | -
|                                  |  | GMC        |        |  | Topia |   |        | Exploration(1)(2) |  |   | Corporate |  
|2016                              |  |            |        |  |       |   |        |                   |  |   |           |  
|External mineral sales            |  | $          | 49,831 |  |       | $ | 12,050 |                   |  | $ | -         |  
|Income (loss) before income taxes |  |            | 17,923 |  |       |   | 1,084  |                   |  |   | (3,162    | )
|Net income (loss)                 |  |            | 17,923 |  |       |   | 1,084  |                   |  |   | (3,162    | )
|Additions to non-current assets   |  |            | 2,773  |  |       |   | 1,975  |                   |  |   | -         |  
|                                  |  |            |        |  |       |   |        |                   |  |   |           |  
|As at December 31, 2016           |  |            |        |  |       |   |        |                   |  |   |           |  
|Total assets                      |  | $          | 13,889 |  |       | $ | 11,767 |                   |  | $ | 2,328     |  
|Total liabilities                 |  | $          | 5,321  |  |       | $ | 1,856  |                   |  | $ | 75        |  
|2015                              |  |            |        |  |       |   |        |                   |  |   |           |  
|External mineral sales            |  | $          | 16,170 |  |       | $ | 11,992 |                   |  | $ | -         |  
|Intersegment revenue              |  |            | 28,056 |  |       |   | -      |                   |  |   | -         |  
|Income (loss) before income taxes |  |            | 1,161  |  |       |   | 282    |                   |  |   | (4,347    | )
|Net income (loss) for the year    |  |            | 1,161  |  |       |   | 282    |                   |  |   | (4,347    | )
|Additions to non-current assets   |  |            | 4,219  |  |       |   | 480    |                   |  |   | 3,990     |  
|                                  |  |            |        |  |       |   |        |                   |  |   |           |  
|As at December 31, 2015           |  |            |        |  |       |   |        |                   |  |   |           |  
|Total assets                      |  | $          | 17,136 |  |       | $ | 13,146 |                   |  | $ | 4,908     |  
|Total liabilities                 |  | $          | 5,524  |  |       | $ | 2,360  |                   |  | $ | 79        |  



| | (1) | Includes the Company’s exploration and evaluation assets of Santa Rosa, El Horcon, the CMC
and the GDLR Project.
| | --- | ----------------------------------------------------------------------------------------------------------------

| | (2) | In May 2015, the Company acquired the CMC exploration asset in Peru. During the year ended December
31, 2016, the Company recorded an impairment charge of $1,679 (note 8(b)), reducing the carrying value of the non-current assets
associated with this geographic segment to nil (December 31, 2015 - $1,742).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For the years ended December 31,
2016 and 2015, the Company’s revenue comprised the following:



|                                        |  | 2016 |        |   | 2015 |  
|--------------------------------------- |  | ---- | ------ | - | ---- | -
|Silver                                  |  | $    | 34,475 |   |      | $
|Gold                                    |  |      | 27,270 |   |      |  
|Lead                                    |  |      | 1,808  |   |      |  
|Zinc                                    |  |      | 2,318  |   |      |  
|Ore processing revenue                  |  |      | 410    |   |      |  
|Smelter and refining charges            |  |      | (5,278 | ) |      |  
|Impact of change in functional currency |  |      | 878    |   |      |  
|                                        |  | $    | 61,881 |   |      | $



25







Great
Panther Silver Limited

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

(Expressed in thousands of US dollars,
unless otherwise noted)



For
the years ended December 31, 2016 and 2015








| | 20. | Operating segments - continued
| | --- | ------------------------------



For the years ended December 31, 2016 and 2015, the
Company had three customers (2015- three customers) that accounted for the majority total revenues as follows:



|Customer        |  | Segment |  | 2016 |        |  | 2015 |  
|--------------- |  | ------- |  | ---- | ------ |  | ---- | -
|Customer A      |  | GMC     |  | $    | 29,979 |  |      | $
|Customer B      |  | GMC     |  |      | 19,633 |  |      |  
|Customer C      |  | Topia   |  |      | 11,859 |  |      |  
|Other customers |  |         |  |      | 410    |  |      |  
|                |  |         |  | $    | 61,881 |  |      | $



The trade accounts receivable balance of $5,395 at December 31,
2016 (2015 – $6,946) relates to three customers (2015 – three customers).



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