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UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

[   ] REGISTRATION STATEMENT PURSUANT TO SECTION 12
(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15
(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 000-50897

GREAT PANTHER SILVER
LIMITED(Formerly Great Panther Resources Limited) (Exact
name of Registrant as specified in its charter)

Not Applicable(Translation of
Registrant's Name into English)

British Columbia, Canada(Jurisdiction
of incorporation or organization)

2100-1177 West Hastings StreetVancouver,
British Columbia, Canada V6E 2K3(Address of principal executive
offices)

Securities registered or to be registered pursuant to Section
12(b) of the Act:

|Not Applicable | Not Applicable                                 
|-------------- | -----------------------------------------------
|Title of Class | Name of Each Exchange on Which
      Registered

Securities registered or to be registered pursuant to Section
12(g) of the Act.

Common Shares Without Par Value(Title of
Class)

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Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.

Not Applicable
  Title of Class

Indicate the number of outstanding shares of each of the
Registrant's classes of capital or common stock as of the close of the
period covered by the annual report.

There were 111,239,631 common shares, without par value, issued
and outstanding as of December 31, 2009.

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. [  
] YES    [X] NO

If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. [X]
YES    [   ] NO

Note  Checking the box above will not relieve any registrant
required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. 
  [X] YES    [   ] NO

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check one):

Large accelerated filer [   ]          
  Accelerated filer [X]           
   Non-accelerated filer [  ]

Indicate by check mark which financial statement item the
registrant has elected to follow.
  [X] Item 17    [   ] Item 18

If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). 
  [   ] YES    [X] NO

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [   ] YES  
 [   ] NO

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NOTE TO UNITED STATES READERS

DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING
PRACTICES

The Company is permitted, under the multi-jurisdictional
disclosure system adopted by the United States Securities and Exchange
Commission (the SEC), to prepare this annual report in accordance with
Canadian disclosure requirements, which differ from those of the United States.
The Company prepares its financial statements in accordance with Canadian
generally accepted accounting practices (GAAP), and they are subject to
Canadian auditing and auditor independence standards. They are not comparable to
financial statements of United States companies. Significant measurement
differences between Canadian GAAP and United States GAAP are described in Note
21 of the audited consolidated financial statements of the Company.

RESOURCE AND RESERVE ESTIMATES

Certain terms contained in this Form 20-F have been prepared in
accordance with the requirements of the securities laws in effect in Canada,
which differ from the requirements of United States securities laws. The terms
mineral reserve, proven mineral reserve and probable mineral reserve are
Canadian mining terms as defined in accordance with Canadian National Instrument
43-101  Standards of Disclosure for Mineral Projects (NI 43-101) and the
Canadian Institute of Mining, Metallurgy and Petroleum (the CIM) - CIM
Definition Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as amended. These definitions differ from the definitions in SEC
Industry Guide 7 under the United States Securities Act of 1993, as amended (the
Securities Act). Under SEC Industry Guide 7 standards, a final or bankable
feasibility study is required to report reserves, the three-year historical
average price is used in any reserve or cash flow analysis to designate reserves
and the primary environmental analysis or report must be filed with the
appropriate governmental authority.

In addition, the terms mineral resource, measured mineral
resource, indicated mineral resource and inferred mineral resource are
defined in and required to be disclosed by NI 43-101; however, these terms are
not defined terms under SEC Industry Guide 7 and are normally not permitted to
be used in reports and registration statements filed with the SEC. Investors are
cautioned not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves. Inferred mineral resources
have a great amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of inferred mineral resources may not form the
basis of feasibility or pre-feasibility studies, except in rare cases. Investors
are cautioned not to assume that all or any part of an inferred mineral resource
exists or is economically or legally mineable. Disclosure of contained ounces
in a resource is permitted disclosure under Canadian regulations; however, the
SEC normally only permits issuers to report mineralization that does not
constitute reserves by SEC Industry Guide 7 standards as in place tonnage and
grade without reference to unit measures.

Accordingly, information contained in this annual report and
the documents incorporated by reference herein contain descriptions of our
mineral deposits that may not be comparable to similar information made public
by U.S. companies subject to the reporting and disclosure requirements under the
United States federal securities laws and the rules and regulations thereunder.

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GLOSSARY OF TERMS

The following glossary, which is not exhaustive, should be used
only as an adjunct to a thorough reading of the entire document of which it
forms a part.

adit: A horizontal or close-to-horizontal tunnel,
man-made for mining purposes.

Ag: The chemical symbol for silver on the Periodic
Table.

andesite: A fine-grained brown or greyish intermediate
volcanic rock.

Au: The chemical symbol for gold on the Periodic Table.

breccia: A course-grained rock, composed of angular,
broken rock fragments held together by a mineral cement or a fine-grained
matrix.

chloritization: A form of alteration of a rock involving
the replacement by, conversion into, or introduction of chloride.

crosscuts: Mine openings or passageways that intersect a
vein or ore bearing structure at an angle.

epithermal: Applied to hydrothermal deposits formed at
low temperature and pressure.

Feasibility Study: A detailed study of a deposit in
which all geological, engineering, operating, economic and other relevant
factors are engineered in sufficient detail that it could reasonably serve as
the basis for a final decision by a financial institution to finance the
development of the deposit for mineral production.

felsic: Applied to an igneous rock having abundant
light-colored materials.

hectare: A metric unit of land measure equal to 10,000
square metres or 2.471 acres.

hydrothermal: Relating to hot fluids circulating in the
earth's crust.

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

Inferred Mineral Resource:As defined by the Canadian
Institute of Mining, Metallurgy, and Petroleum, an Inferred Mineral Resource is
that part of a Mineral Resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling and
reasonably assumed, but not verified, geological and grade continuity. The
estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings, and drill holes.ii

Measured Mineral Resource: As defined by the Canadian
  Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources
  and Mineral Reserves, a Measured Mineral Resource is part of a Mineral Resource
  for which quantity, grade or quality, densities, shape and physical characteristics
  are so well established that they can be estimated with confidence sufficient
  to allow the appropriate application of technical and economic parameters, to
  support production planning and evaluation of the economic viability of the
  deposit.

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The estimate is based on a detailed and reliable exploration,
  sampling and testing information gathered through appropriate techniques from
  locations such as outcrops, trenches, pits, workings, and drill holes that are
  spaced closely enough to confirm both geological and grade continuity.

mineral: An inorganic substance having usually a
definite chemical composition and, if formed under favourable conditions, having
a certain characteristic atomic structure which is expressed in its crystalline
form and other physical properties.

Mineral Resource:As defined by the Canadian Institute
  of Mining, Metallurgy, and Petroleum, a Mineral Resource is a concentration
  or occurrence of natural, solid, inorganic, or fossilized organic material in
  or on the Earths crust in such form and quantity and of such a grade or
  quality that it has reasonable prospects for economic extraction. The location,
  quantity, grade geological characteristics and continuity of a Mineral Resource
  are known, estimated or interpreted from specific geological evidence and knowledge.

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

mineral claim: The portion of mining ground held under
law by a claimant.

mineralization: Implication that the rocks contain
sulphide minerals and that these could be related to ore.

ore: That part of a mineral deposit which could be
economically and legally extracted.

Probable Mineral Reserve:As defined by the Canadian
Institute of Mining, Metallurgy, and Petroleum, a Probable Mineral Reserve is
the economically mineable part of an Indicated, and in some circumstances a
Measured, Mineral Resource demonstrated by at least a Preliminary Feasibility
Study. This Study must include adequate information on mining, processing,
metallurgical, economic, and other relevant factors that demonstrate, at the
time of reporting, that economic extraction can be justified.

Proven Mineral Reserve:As defined by the Canadian Institute
  of Mining, Metallurgy, and Petroleum, a Proven Mineral Reserve, is the economically
  mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary
  Feasibility Study. This Study must include adequate information on mining, processing,
  metallurgical, economic, and other relevant factors that demonstrate, at the
  time of reporting, that economic extraction is justified.

quartz: A common rock forming mineral consisting of
silicon and oxygen.

rhyolite: A fine-grained volcanic (intrusive) rock of
granitic composition.

sulfidation: The reaction of a metal or alloy with a
sulfur-containing species to produce a sulfur compound that forms on or beneath
the surface of the metal or alloy.

stockwork: A metalliferous deposit characterized by the
impregnation of the mass of rock with many small veins or nests irregularly
grouped.

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vein: A zone or belt of mineralized rock lying within
boundaries clearly separating it from neighbouring rock. A mineralized zone has,
more or less, a regular development in length, width and depth to give it a
tabular form and is commonly inclined at a considerable angle to the horizontal.
The term "lode" is commonly used synonymously for vein.

PART I

This annual report contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors" that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

As used in this annual report, the terms "we", "us", "our", and
"Great Panther" mean Great Panther Silver Limited (formerly Great Panther
Resources Limited), and our 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.,
and/or New Age Investments Inc., unless otherwise indicated.

Unless otherwise indicated, all dollar amounts referred to
herein are in Canadian dollars.

ITEM
1            Identity of
Directors, Senior Management and Advisers

*A.****Directors and Senior Management*

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

B.Advisers

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

C*.*Auditors

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

ITEM
2            Offer
Statistics and Expected Timetable

Not applicable.

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ITEM
3Key
Information

*A.*          
*Selected Financial Data*

The following tables summarize certain of our key selected
financial data. This information should be read in conjunction with the more
detailed financial statements included in this Annual Report.

Selected Financial Data(Stated in
Canadian Dollars unless otherwise noted - Calculated in accordance with Canadian
GAAP)

Fiscal Year Ended December 31 (Audited)

Canadian GAAP
    2009
    2008 (revised)1
    2007
    2006
    2005Sales or Operating
      Revenue
    31,731,715
    22,445,438
    15,523,094
    6,333,034
    -Loss for the year
    (866,851)
    (13,760,826)
    (19,700,861)
    (15,084,437)
    (5,231,685)Loss per Common Share  basic and diluted
    (0.01)
    (0.17)
    (0.27)
    (0.25)
    (0.22)Total Assets
    37,174,266
    22,310,681
    31,053,110
    32,132,259
    19,218,970Capital Stock
    75,910,220
    57,865,462
    56,988,447
    46,393,145
    21,536,440Number of Common Shares (adjusted to reflect
      consolidation of common shares)
    111,239,631
    81,654,521
    80,744,352
    69,797,348
    47,349,431Long-Term Debt
      2
    4,460,210
    5,544,976
    4,117,236
    2,450,740
    5,587,217Cash Dividends per Common Share
    Nil
    Nil
    Nil
    Nil
    Nil


|1 | Loss for the year was revised for the effect of an
      adjustment to future income taxes that was not considered significant to
      be recorded last year.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                               
|2 | Excludes asset retirement obligations and future income
      tax liability.                                                                                  

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Selected Financial Data(Stated in
Canadian Dollars Unless Otherwise Noted - Calculated in accordance with US GAAP)

Fiscal Year Ended December 31 (Audited)

United States GAAP
    2009
    2008
      (revised)1
    2007
    2006
    2005Sales or Operating
      Revenue
    31,731,715
    22,445,438
    15,523,094
    6,333,034
    -Income (loss) for
      the year
    (2,270,896)
    (13,285,882)
    (19,323,049)
    (14,934,638)
    (5,231,685)Income (loss) per Common Share  basic and diluted
    (0.03)
    (0.16)
    (0.27)
    (0.25)
    (0.22)Total Assets
    37,174,266
    22,310,681
    31,053,110
    32,132,259
    19,218,970Capital Stock
    79,625,551
    64,076,667
    63,199,652
    52,604,350
    27,747,645Number of Common Shares (adjusted to reflect
      consolidation of common shares)
    111,239,631
    81,654,521
    80,744,352
    69,797,348
    47,349,431Long-Term
      Debt2
    5,153,813
    6,963,286
    6,158,625
    3,306,941
    5,587,217Cash Dividends per Common Share
    Nil
    Nil
    Nil
    Nil
    Nil


|1 | Loss for the year was revised for the effect of an
      adjustment to future income taxes that was not considered significant to
      be recorded last year.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                               
|2 | Excludes asset retirement obligations and future income
      tax liability.                                                                                  

Disclosure of Exchange Rate History

On March 12, 2010, the exchange rate in effect for Canadian
dollars exchanged for United States dollars, expressed in terms of Canadian
dollars, and based on the noon buying rates in New York City, for cable
transfers in Canadian dollars, as certified for customs purposes by the Federal
Reserve Bank of New York was $1.0187.

For the past five fiscal years ended December 31, 2009 the
following average exchange rates were in effect, and for each of the previous
six months, the following high and low exchange rates were in effect, for
Canadian dollars exchanged for United States dollars and expressed in terms of
Canadian dollars:

Year/Month End
    Average
    Low/HighDecember 31, 2005
    $1.2115
    not applicableDecember 31, 2006
    $1.1340
    not applicableDecember 31, 2007
    $1.0734
    not applicableDecember 31, 2008
    $1.0660
    not applicableDecember 31, 2009
    $1.0537
    not applicable


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Year/Month End
    Average
    Low/HighSeptember 30, 2009
    not applicable
    $1.0615/$1.1060October 31, 2009
    not applicable
    $1.0289/$1.0843November 30, 2009
    not applicable
    $1.0458/$1.0742December 31, 2009
    not applicable
    $1.0400/$1.0713January 31, 2010
    not applicable
    $1.0260/$1.0669February 28, 2010
    not applicable
    $1.0419/$1.0735


*B.*          
*Capitalization and Indebtedness*

Not Applicable

*C.*          
  *Reasons for the Offer and Use of Proceeds*

Not applicable

D.Risk Factors

Risks Associated with Mining

Our reserve and resource estimates are based on
interpretation and assumptions and may yield less mineral production under
actual conditions than is currently estimated.

In making determinations about whether to advance any of our
projects to development, we must rely upon estimated calculations as to the
mineral reserves and grades of mineralization on our properties. Until ore is
actually mined and processed, mineral reserves and grades of mineralization must
be considered as estimates only. These estimates are imprecise and depend upon
geological interpretation and statistical inferences drawn from drilling and
sampling which may prove to be unreliable. We cannot assure you that:

- Reserve, resource or other mineralization estimates will be accurate; or
- Mineralization can be mined or processed profitably.

Any material changes in mineral reserve estimates and grades of
mineralization will affect the economic viability of placing a property into
production and a propertys return on capital. Our reserve and resource
estimates have been determined and valued based on assumed future prices,
cut-off grades and operating costs that may prove to be inaccurate. Extended
declines in market prices for silver, gold, zinc and lead may render portions of
our mineralization uneconomic and result in reduced reported mineral reserves.

Any material reductions in estimates of mineralization, or of
our ability to extract this mineralization, could have a material adverse effect
on our results of operations or financial condition. We cannot assure you that
mineral recovery rates achieved in small scale tests will be duplicated in large
scale tests under on-site conditions or in production scale.

Mineral operations are subject to government regulations
which could have the effect of reducing or preventing us from exploiting any
possible mineral reserves on our properties.

Mining and exploration activities are subject to national and
  local laws and regulations governing prospects, taxes, labour standards, occupational
  health, land use, environmental protection, mine safety and others which currently
  or in the future may have a substantial adverse impact on our Company. In order
  to comply with applicable laws, we may be required to make capital expenditures
  until a particular problem is remedied.

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Existing and possible future environmental legislation, regulation
  and action could cause additional expense, capital expenditures, restriction
  and delays in the activities of our Company, the extent of which cannot be reasonably
  predicted. Violators may be required to compensate those suffering loss or damage
  by reason of our mining activities and may be fined if convicted of an offence
  under such legislation.

Mining and mineral exploration has substantial operational
risks, which could prevent us from achieving profitable operations.

Mining and mineral exploration involves many risks, which even
a combination of experience, knowledge and careful evaluation may not be able to
overcome. Operations in which we have an interest will be subject to all of the
hazards and risks normally incidental to exploration, development and production
of base, precious and other metals, any of which could result in damage to or
destruction of mines and other producing facilities, damage to life and
property, environmental damage and possible legal liability for any or all
damage. The nature of these risks is such that liabilities could exceed policy
limits of our insurance coverage, in which case we could incur significant costs
that could prevent us from becoming profitable. Most exploration projects do not
result in the discovery of commercially mineable ore deposits and no assurance
can be given that any anticipated level of recovery of ore reserves will be
realized or that any identified mineral deposit will ever qualify as a
commercially viable ore body which can be legally and economically exploited.

Our projects are located in Mexico where mining and
exploration activities may be affected in varying degrees by political and
government regulations, which could have a negative impact on our ability to
continue our operations.

Mining and exploration activities in Mexico may be affected in
varying degrees by political instabilities and government regulations relating
to the mining industry. Any changes in regulations or shifts in political
conditions are beyond our control and may adversely affect our business. Our
operations may also be affected in varying degrees by government regulations
with respect to restrictions on production, price controls, export controls,
income taxes, expropriations of property, environmental legislation and mine
safety. The status of Mexico as a developing country may make it more difficult
for us to obtain any required financing for our projects. The effect of all
these factors cannot be accurately predicted. Notwithstanding the progress
achieved in restructuring Mexican political institutions and revitalizing its
economy, the present administration, or any successor government, may not be
able to sustain the progress achieved. We do not carry political risk insurance.

Our operations may be subject to environmental regulations
which may result in the imposition of fines and penalties.

Our operations may be subject to environmental regulations
promulgated by government agencies from time to time. There is no assurance that
environmental regulations will not change in a manner that could have an adverse
effect on our Company's financial condition, liquidity or results of operations.
Environmental legislation is constantly expanding and evolving in ways that
impose stricter standards and more rigorous enforcement, with higher fines and
more severe penalties for non-compliance, and increased scrutiny of proposed
projects. There is an increased level of responsibility for companies, and
trends towards criminal liability for officers and directors for violations of
environmental laws, whether inadvertent or not. The cost of compliance with
changes in governmental regulations has a potential to reduce the profitability
of our operations.

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While we maintain appropriate insurance for liability and
property damage, we may become subject to liability for hazards that cannot be
insured against, which if such liabilities arise, could reduce or eliminate
profitability for our Company.

Our operations may involve the use of dangerous and hazardous
substances. While extensive measures are taken to prevent discharges of
pollutants in the ground water and the environment, and it is anticipated that
we will maintain appropriate insurance for liability and property damage in
connection with our business, we may become subject to liability for hazards
that cannot be insured against or which we may elect not to insure ourselves
against due to high premium costs or other reasons. Should such liabilities
arise, they could reduce or eliminate the profitability of us, resulting in a
decline in the value of our securities. In the course of mining and exploration
of our mineral properties, certain risks and, in particular, unexpected or
unusual geological operating conditions including rock bursts, cave-ins, fires,
flooding and earthquakes, may occur. It is not always possible to fully insure
against such risks and we may decide not to take out insurance against such
risks as a result of high premiums or other reasons. Should such liabilities
arise, they could reduce or eliminate any future profitability and result in
increasing costs and a decline in the value of our securities.

There can be no assurance that title to any property
interest acquired by us or our subsidiary is secured.

Although we have taken reasonable precaution to ensure that
legal title to our properties is properly documented, there can be no assurance
that our Company's, or our subsidiaries, property interests may not be
challenged or impugned. Such property interests may be subject to prior
unregistered agreements or transfers or other land claims, and title may be
affected by undetected defects and adverse laws and regulations.

Our properties are in the production, development and
exploration stages; however, they have not all been proven commercially viable
at this time and there is no assurance that commercially viable quantities of
ore will continue to be discovered.

Our mineral properties are in the early production,
development, and/or exploration stages and are not all commercially viable at
this time. Despite extensive exploration work on our mineral properties and a
long history of continuous production at both the Topia and Guanajuato mines, no
known bodies of commercial ore or economic deposits have been established to the
satisfaction of National Instrument 43-101 on any of the mineral properties.
Mineral exploration involves a high degree of risk. There is no assurance that
commercially viable quantities of ore will be discovered at our exploration
sites, or that our exploration properties will be brought into commercial
production. If we are not able to continue to locate sufficient quantities of
commercially viable ore and bring our exploration properties into commercial
production, we may not be able to continue operations and, as a result, our
shareholders may lose any investment in our Company.

We are subject to environmental protection legislation with
which we must comply or suffer sanctions from regulatory authorities.

If the results of our geological exploration program indicate
commercially exploitable reserves and we decide to pursue commercial production
of our mineral claims, we may be subject to an environmental review process
under environmental assessment legislation. Compliance with an environmental
review process may be costly and may delay commercial production. Furthermore,
there is the possibility that we would not be able to proceed with commercial
production upon completion of the environmental review process if government
authorities do not approve our mine or if the costs of compliance with
government regulation adversely affect the commercial viability of the proposed
mine.

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Mineral prices are subject to dramatic and unpredictable
fluctuations.

The market price of precious metals and other minerals is
volatile and cannot be controlled. If the price of precious metals and other
minerals should drop significantly, the economic prospects of the projects in
which we have an interest could be significantly reduced or rendered uneconomic.
There is no assurance that, even if commercial quantities of ore are discovered,
a profitable market may exist for the sale of same. Factors beyond our control
may affect the marketability of any minerals discovered. Mineral prices have
fluctuated widely, particularly in recent years. The marketability of minerals
is also affected by numerous other factors beyond our control, including
government regulations relating to royalties, allowable production and importing
and exporting of minerals, the effect of which cannot be accurately predicted.

We cannot assure you that we will successfully acquire
additional commercially mineable mineral rights.

Most exploration projects do not result in the discovery of
commercially mineable ore deposits and no assurance can be given that any
anticipated level of recovery of ore reserves will be realized or that any
identified mineral deposit will ever qualify as a commercially mineable (or
viable) ore body which can be legally and economically exploited. Estimates of
reserves, resources, mineral deposits and production costs can also be affected
by such factors as environmental permitting regulations and requirements,
weather, environmental factors, unforeseen technical difficulties, unusual or
unexpected geological formations and work interruptions.

Material changes in ore reserves, grades, stripping ratios or
recovery rates may affect the economic viability of any project. Our future
growth and productivity will depend, in part, on our ability to identify and
acquire additional commercially mineable mineral rights, and on the costs and
results of continued exploration and potential development programs. Mineral
exploration is highly speculative in nature and is frequently non-productive.
Substantial expenditures are required to:

- Establish ore reserves through drilling and metallurgical and other testing
  techniques;
- Determine metal content and metallurgical recovery processes to extract
  metal from the ore; and
- Construct, renovate or expand mining and processing facilities.

In addition, if we discover ore, it would take several years
from the initial phases of exploration until production is possible. During this
time, the economic feasibility of production may change. As a result of these
uncertainties, there can be no assurance that we will successfully acquire
additional commercially mineable (or viable) mineral rights.

Risks Associated with our Business

Fluctuation in foreign currency exchange rates may affect
our results.

The Company maintains its bank accounts in Canadian dollars,
U.S. dollars and Mexican Pesos. The Company expects its revenue will continue to
be in U.S. dollars while certain of its costs are incurred in Canadian dollars
and Mexican Pesos. An appreciation in the Mexican Peso against the Canadian or
U.S. dollar will increase the costs of carrying on operations. A decrease in the
U.S. dollar against the Canadian dollar will result in a loss to the Company to
the extent that the Company holds funds in U.S. dollars.

---

- 13 -

Variations in the market prices of metals may affect our
ability to raise funding to continue exploration, development and mining of our
properties. In addition, any significant fluctuations in metal prices will
impact on our decision to accelerate or reduce our exploration activities.

Factors beyond our control may affect the marketability of any
substances discovered. The prices of various metals have experienced significant
movement over the last three years, and are affected by numerous factors beyond
our control, including international economic and political trends, expectations
of inflation, currency exchange fluctuations, interest rates and global or
regional consumption patterns, speculative activities and increased production
due to improved mining and production methods. The supply of and demand for
metals are affected by various factors, including political events, economic
conditions and production costs in major mineral producing regions. Variations
in the market prices of metals may affect our ability to raise funding to
continue exploration of our properties. In addition, any significant
fluctuations in metal prices will impact on our decision to accelerate or reduce
our exploration activities.

We are dependent on the services of certain key officers,
and the loss of these certain key personnel may have a materially adverse effect
on our Company.

While engaged in the business of mining and exploring mineral
properties in Mexico, the nature of our business, our ability to continue our
exploration of potential projects, and to develop a competitive edge in the
marketplace, depends, in large part, on our ability to attract and maintain
qualified key management personnel. Competition for such personnel is intense,
and we may not be able to attract and retain such personnel. Our growth has
depended, and in the future will continue to depend, on the efforts of our key
management personnel such as Robert A. Archer, our President, CEO and a
director, Kaare G. Foy, Executive Chairman and a director, Charles Brown, our
Chief Operating Officer and Raakel Iskanius, our Chief Financial Officer. The
loss of any of these people would have a material adverse effect on us.
Currently, we have contracts with these key employees. We do not have key-man
life insurance.

Conflicts of interest may arise as a result of our directors
and officers being directors and officers of other natural resource companies.

Certain of our directors and officers may continue to be
involved in a wide range of business activities through their direct and their
indirect participation in corporations, partnerships or joint ventures.
Situations may arise in connection with potential acquisitions and investments
where the other interests of these director and officers may conflict with the
interests of our Company. Our directors and officers with conflicts of interest
will be subject to and will follow the procedures set out in the applicable
corporate legislation.

Risks Relating to an Investment in our Securities

The trading price of our common shares on the Toronto Stock
Exchange (TSX) has been and may continue to be subject to wide fluctuations.

Trading prices of our shares may fluctuate in response to a
number of factors, many of which are beyond our control. In addition, the stock
market in general, and the market for gold and silver exploration companies in
particular, has experienced extreme price and volume fluctuations that have
often been unrelated or disproportionate to the operating performance of such
companies. These broad market and industry factors may adversely affect the
market price of our shares, regardless of our operating performance.

In the past, following periods of volatility in the market
price of a company's securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs and a diversion of management's attention and resources.

---

- 14 -

Our By-laws indemnify our officers and directors against all
costs, charges and expenses incurred by them.

Our By-laws contain provisions limiting the liability of our
officers and directors for all acts, receipts, neglects or defaults of
themselves and all of our other officers or directors for any other loss, damage
or expense incurred by our Company which shall happen in the execution of the
duties of such officers or directors, as do indemnification agreements between
us and our directors and officers. Such limitations on liability may reduce the
likelihood of derivative litigation against our officers and directors and may
discourage or deter our shareholders from suing our officers and directors based
upon breaches of their duties to our Company, though such an action, if
successful, might otherwise benefit our Company and our shareholders.

Investors' interests in our Company will be diluted and
investors may suffer dilution in their net book value per share if we issue
incentive stock options to our employees, directors, officers and consultants.

We have granted, and in the future may grant, to directors,
officers, insiders, and employees, options to purchase our common shares as
non-cash incentives to those persons. Such options have been and may in future,
be granted at exercise prices equal to market prices, or at prices as allowable
under the policies of the TSX. The issuance of additional shares will cause our
existing shareholders to experience dilution of their ownership interests.

Investors' interests in our Company will be diluted and
investors may suffer dilution in their net book value per share if we issue
additional shares or raise funds through the sale of equity securities.

Depending on the outcome of our exploration programs and mining
operations, we may issue additional shares to finance additional programs and
mining operations or to acquire additional properties. In the event that we are
required to issue additional shares or decide to enter into joint ventures with
other parties in order to raise financing through the sale of equity securities,
investors' interests in our Company will be diluted and investors may suffer
dilution in their net book value per share depending on the price at which such
securities are sold. As at December 31, 2009, there are also outstanding common
share purchase warrants and options exercisable into 18,934,281 common shares
which, if exercised, would represent approximately 14.5% of our issued and
outstanding shares. If all of these shares are exercised and issued, such
issuance also will cause a reduction in the proportionate ownership and voting
power of all other shareholders. The dilution may result in a decline in the
market price of our shares.

U.S. investors may not be able to enforce their civil
liabilities against us or our directors, controlling persons and officers.

It may be difficult to bring and enforce suits against us. We
were incorporated under the Company Act(British Columbia) and continued
in the Yukon Territory under theBusiness Corporations Act(Yukon), and
then continued to British Columbia under the Business Corporations Act
(British Columbia) on July 9, 2004. All of our directors and officers are
residents of countries other than the United States and all of our assets are
located outside of the United States. Consequently, it may be difficult for
United States investors to affect service of process in the United States upon
those directors or officers who are not residents of the United States, or to
realize in the United States upon judgments of United States courts predicated
upon civil liabilities under the United States Securities Exchange Act of 1934,
as amended. There is substantial doubt whether an original action could be
brought successfully in Canada against any of such persons or us predicated
solely upon such civil liabilities.

---

- 15 -

Trading of our stock may be restricted by the SEC's "Penny
Stock" regulations which may limit a stockholder's ability to buy and sell our
stock.

The U.S. Securities and Exchange Commission has adopted
regulations which generally define "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.

U.S. investors could suffer adverse tax consequences if we
are characterized as a passive foreign investment company.

We may be treated as a passive foreign investment company, or
PFIC, for United States federal income tax purposes during the 2009 tax year or
in subsequent years. We may be deemed a PFIC because previous financings
combined with proceeds of future financings may produce, or be deemed to be held
to produce, passive income. Additionally, U.S. citizens should review the
section entitled "Taxation-U.S. Federal Income Taxation - Passive Foreign
Investment Companies" contained in this annual report for a more detailed
description of the PFIC rules and how those rules may affect their ownership of
our capital shares.

If we are or become a PFIC, many of the U.S. shareholders will
be subject to the following adverse tax consequences:

|- | They will be taxed at the highest ordinary income tax
      rates in effect during their holding period on certain distributions on
      our capital shares, and gains from the sale or other disposition of our
      capital shares;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                        
|- | They will be required to pay interest on taxes allocable
      to prior periods; and                                                                                                                                                   
|  |                                                                                                                                                                                                                                        
|- | The tax basis of our capital
      shares will not be increased to fair market value at the date of their
      date.                                                                                                                  

We do not expect to declare or pay any dividends.

We have not declared or paid any dividends on our common stock
since our inception, and we do not anticipate paying any such dividends for the
foreseeable future.

---

- 16 -

ITEM
4             
Information on the Company

*A.*          
*History and Development of Great Panther*

We were originally incorporated under the Company Act
(British Columbia) in 1965 under the name Lodestar Mines Ltd. Since that time,
we have had the following name changes:

|- | in 1980, to Lodestar Energy Inc.                                     
|- | ---------------------------------------------------------------------
|  |                                                                      
|- | in 1985, to Controlled
      Environmental Farming International Ltd.
|  |                                                                      
|- | in 1987, to International
      Controlled Investments Inc.          
|  |                                                                      
|- | in 1991, to New Age Ventures Inc.                                    
|  |                                                                      
|- | in January 1998, to Great Panther
      Inc.                         
|  |                                                                      
|- | in October 2003, to Great Panther
      Resources Limited.           
|  |                                                                      
|- | on January 1, 2010, to Great
      Panther Silver Limited.           

On March 22, 1996 we continued under the Business
Corporation Act (Yukon). On July 9, 2004, we continued to British Columbia
under the Business Corporation Act (British Columbia).

We have offices located at Suites 350 and 2100, 1177 West
Hastings Street, Vancouver, British Columbia, V6E 2K3, Canada. Our telephone
number is 604-608-1766, and our facsimile number is 604-608-1744.

Our Company is currently a reporting issuer under the
securities laws of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,
New Brunswick, Newfoundland Labrador, Nova Scotia and Prince Edward Island.

On June 18, 1980, our common shares were listed on the TSX
Venture Exchange (formerly known as the CDNX, and the Vancouver Stock Exchange).
Our trading symbol is "GPR", and until February 27, 2005, we were classified by
the TSX Venture Exchange as a Tier 2 company.

On October 2, 2003, we consolidated our common shares whereby
every ten common shares before consolidation became one common share after
consolidation.

On February 28, 2006, the TSX Venture Exchange elevated our
classification from a Tier 2 company to a Tier 1 company.

On November 14, 2006, our common shares began trading on the
TSX with the trading symbol GPR. Subsequently, we were de-listed from the
TSX Venture Exchange.

On January 23, 2009, we closed a private placement offering of
5,125,000 units of the Company (Units) at a price of $0.20 per Unit to raise
gross proceeds of $1,025,000. Each Unit comprised of one common share and
one-half of one non-transferable share purchase warrant. Each whole warrant
entitled the holder, upon exercise, to acquire one common share of the Company
at a price of $0.35 per share until January 22, 2010. The Company also issued to
the finders, 169,050 non-transferable share purchase warrants (the Finders
Warrants) to purchase up to 169,050 common shares, which were exercisable at a
price of $0.35 until January 22, 2010.

---

- 17 -

On November 17, 2009, we closed an equity offering made in
Canada by short form prospectus of 17,617,500 units of the Company (Units) at
a price of $0.70 per Unit to raise gross proceeds of $12,332,250. Each Unit
comprised of one common share and one-half of one transferable share purchase
warrant. Each whole warrant entitles the holder, upon exercise, to purchase one
common share of the Company at a price of $0.90 per share until November 17,
2011. The common shares issued under the terms of the short form prospectus were
free trading from the closing date. The Company also issued to the agents,
963,150 non-transferable share purchase warrants (the Agents Warrants) to
purchase up to 963,150 common shares, which are exercisable at a price of $0.90
until November 17, 2011.

On January 1, 2010 we changed the Company's name from Great
Panther Resources Limited to Great Panther Silver Limited. There was no change
to the Company's capital structure or its symbol and the common shares continue
to trade on the main board of the Toronto Stock Exchange under the symbol GPR.

Topia Mine

Effective February 18, 2004, we entered into the Topia Option
Agreement, which granted us the right and option, for a term of one year, to
purchase 100% of the ownership rights in and to all the fixed assets, machinery,
equipment (includes the mill, buildings, offices, houses and quarters for the
workers) and Topia Mining Concessions located in the Municipality of Topia,
State of Durango, Mexico from Cia Minera des Canelas y Topia, as optionor, by
making cash payments totalling US $1,737,084 as follows:

| | (a) | US $100,000 within 10 days of the date of registration at
      the Mining registry of the option agreement;                                                                                                                                             
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                          
| | (b) | US $150,000 within 5 days of the date the Company
      notifies the optionor of its decision to exercise the option;                                                                                                                                    
| |     |                                                                                                                                                                                                                                                          
| | (c) | US $540,165 on the date of signing of the purchase
      agreement (June 30, 2005);                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                          
| | (d) | Three annual payments of US $300,000, US $300,000 and US
      $346,919 each of the first, second and third year, respectively,
      commencing 18 months after the date the Company notifies the optionor of
      its decision to exercise the option.

All payments due to the optionor were made as of December 31,
2007.

In addition to the payments to the optionor, we agreed to
assume the debt encumbering the property, totalling US $814,594 upon signing of
the purchase agreement. The debt owing was secured by the Topia Mine assets. The
balance of the debt was repayable out of production from concentrate sales as a
10% net smelter return (NSR). After the debt was repaid, there was no further
NSR. As of December 31, 2007, the remaining debt balance was fully paid and
there were no outstanding conditions to retain title to the property. The
Company has surface rights for the land on which the plant sits and mineral
rights for the rest of the property.

As at December 31, 2009, there are no NSR royalties, or other
royalties payable, and there are no work commitments.

On March 8, 2006, the Company purchased a 100% interest in the
Arcoiris concession. The agreement required cash payments of US$20,000 (paid)
upon signing of the purchase agreement and additional staggered payments
totalling US$280,000 (paid). The Arcoiris concession is a strategic claim that
is contiguous with the existing Topia Mine Property. The 100 hectare concession
contains portions of the strike extension and down-dip projection of the Dos
Amigos Vein that the Company has already started developing on its own ground.

---

- 18 -

On December 16, 2009, the Company acquired a 100% interest in
the "La Prieta" concession for US$330,000. US$300,000 was paid in 2009 and
US$30,000 is to be paid by March 31, 2010. The 94-hectare claim hosts two
previously mined silver-gold-lead-zinc-quartz vein structures and is situated
approximately two kilometres south of the principal veins presently being mined
by the Company, and within the Company's overall land package. As such, it is
within easy hauling distance to the Companys plant in Topia.

Guanajuato Mine

On October 25, 2005, we signed a formal purchase agreement with
the Sociedad Cooperativa Minero Metalúrgica Santa Fe de Guanajuato to purchase
100% of the ownership rights in a group of producing silver-gold mines in the
Guanajuato Mining District. The total purchase price was US$7,250,000, which
included 1,107 hectares in two main properties, the 1,200 tonne-per-day plant,
workshops and administration facilities, complete mining infrastructure, mining
equipment, and certain surface rights. At December 31, 2005 we paid
US$3,625,000. In 2006, we paid the remaining balance of US$3,625,000.

On May 15, 2006, we announced the purchase of 3.88 hectares of
real estate adjacent to the plant at our Guanajuato Silver-Gold Mine Complex.
The land was purchased from the Sociedad Cooperativa Minero Metalúrgica Santa Fe
de Guanajuato, the same Cooperative from which the mines were purchased in 2006,
for a total of US$690,425. A payment of US$201,825 was made at the time of the
signing of the purchase agreement and the remaining balance of US$488,600 was
paid in the second half of 2006. The Company has clear title to the property.
The decision to buy the extra land was taken in order to facilitate any future
expansion of the plant facilities and to protect the plant site from any
possible development nearby.

On December 27, 2007, the Company purchased an additional
0.2804 hectares of land immediately adjacent to the plant and below our tailings
dam at the Guanajuato Mine Complex. The land was purchased from the Sociedad
Cooperativa Minero Metalúrgica Santa Fe de Guanajuato, the same Cooperative from
which the mines were purchased in 2006, for a total of US$320,530. Payments were
made in two instalments, US$45,790 and US$274,740, on March 31, 2008 and June
30, 2008, respectively. The land was primarily purchased in order to protect the
area from any possible development. The Company has received clear title to the
new property.

As at December 31, 2009, there are no outstanding conditions to
retain title to the property. The Company has mineral and some surface rights.

Mapimi Project

On September 11, 2006, the Company signed an option agreement
to purchase 100% of the ownership rights to seventeen mining concessions
collectively known as the Mapimi Project (formerly Km 66) in eastern Durango
State, Mexico. In consideration for the right and purchase option the Company
was to make staged payments totalling US$3,000,000 and issue 500,000 common
shares over a four-year period. The vendors retain a 3% NSR of which, each 0.5%,
up to a maximum of 2%, can be purchased by the Company for US$500,000.

On September 16, 2009, the Company announced the termination of
its option on the Mapimi project as management determined that it was
uneconomical to continue with the project and it was better use of the Companys
funds to focus its efforts on expanding the production and resources at its
existing mines.

As at the date of termination, US$800,000 had been paid and
500,000 common shares had been issued.

---

- 19 -

San Antonio Project

Effective February 11, 2004, we entered into the Santo Nino
Option Agreement, which granted us the right and option, for a period of three
years, to purchase 100% of the ownership rights in and to the Santo Nino Mining
Concession located in the Guadalupe y Calvo Mining District, State of Chihuahua,
Mexico from Mr. Alfredo Rodriguez Chávez, as optionor, by making staged cash
payments totalling US $165,000. All of the payments were made as of December 31,
2007.

On February 2, 2007, we signed an option agreement with Altair
Ventures Inc. (Altair). Terms of the agreement allowed Altair to acquire a 70%
interest in the four mining claims named San Antonio, Iran, Chirpa, and
Santo Nino, by making staggered cash payments of US$200,000, issuing a total
of 200,000 Altair common shares to Great Panther and incurring a minimum of
US$1,000,000 of exploration expenditures over a three-year period. As at
December 31, 2009, US$60,000 and 200,000 shares of Altair have been received in
accordance with the agreement.

On February 1, 2010, Altair forfeited its option. The Company
agreed to accept 1,117,866 common shares of Altair at a deemed issue price of
$0.15 per share as full payment of Altairs indebtedness to the Company at
January 31, 2010.

There is no underlying Net Smelter Return royalty or other
royalties and no work commitments on the concession.

Virimoa Project

On June 13, 2005, we entered into an option agreement to
purchase 100% of the ownership rights in and to two mining claims designated as
the Virimoa Property, located in the Topia Mining District, State of Durango,
Mexico from Minera Acero del Fuego, S.A. de C.V., as optionor. Under the terms
of the option agreement, we were to compensate the optionor of the Virimoa
Property by making four cash payments totalling US$300,000 (US$50,000 paid) over
a period of three years. In a concurrent agreement, we were required to issue a
total of 300,000 common shares (150,000 issued) to the optionor. If we exercised
this option, the optionor would retain a 2% NSR, half of which could be
purchased by us for US$1 million.

On May 30, 2007, the Company provided notice that it was
terminating the option agreement on the Virimoa property in Durango State.

B.           
  Business Overview

We are a primary silver mining and exploration company listed
on the Toronto Stock Exchange (TSX), trading under the symbol GPR. Our
current activities are focused on the mining of precious and base metals from
our two wholly owned mines in Mexico. In addition, we are also involved in the
acquisition, exploration and development of other properties in Mexico.

We have two primary mining properties: (1) Topia Mine and (2)
Guanajuato Mine. We had two primary exploration properties (one at the date of
this report): (1) Mapimi (option agreement terminated in September 2009) and (2)
San Antonio.

Primary Mining Properties

*(1)*          
*Topia Mine*

The property is located in northwest Durango State and consists
of four groups of mining concessions covering a total area of 6,399 hectares.
All are 100% owned by our Mexican subsidiary, Minera Mexicana el Rosario, S.A.
de C.V.

---

- 20 -

The property covers most of the Topia Mining District where
mineralization consists of epithermal silver-gold-lead-zinc veins hosted in
andesitic volcanic rocks. More than a dozen sub-parallel veins are known to
exist at Topia and some extend for more than 4 kilometres along strike. Vein
widths are typically narrow, 0.2 to 1.0 metre.

Great Panther purchased the mine in 2005 and commenced mining
in January 2006. In March 2006, we reached a significant milestone in becoming a
primary silver producer with our first shipment of concentrates from operations.
Production was ramped up steadily until reaching approximately 3,000 tonnes per
month in late 2007. Custom milling for a local miner helps utilize the plants
capacity which operates at approximately 170 tonnes per day.

Exploratory development work continues on many high grade veins
at Topia with priority on the San Gregorio, Rosario, Recompensa, Cantarranas and
Don Benito veins. Stoping has been initiated at Argentina, Level 2, where good
grades and better widths are already resulting in an increase in production.

Exploration spending at Topia is projected to total
approximately $4 million over the next three years. New underground mine
development, much of which will support exploration and resource development, is
anticipated to reach more than 5.5 kilometres at Topia. An estimated total of
20,000 metres of exploration drilling will concentrate on defining resources,
looking for vein extensions and testing new targets. In 2010, planned surface
exploration diamond drilling totals 6,000 metres.

Production

Over the past year, Topia has transformed its operations with
very positive results. Ore quality and metal production continues to excel at a
much lower cost per ounce of silver as the focus has shifted to production
stoping, with exploratory development limited to higher grade mining areas,
while the plant metallurgical performance has continued to improve.

Metal production for the year was 437,079 oz Ag, 403 oz Au,
1,919,816 lbs Pb, and 2,331,015 lbs Zn, or 661,237 Ag eq oz, which was 12%
greater than planned and within 4% of 2008.

A summary of production at Topia for 2009 is as follows:

FY09-Q1
    
    
    FY09-Q2
    
    
    FY09-Q3
    
    
    FY09-Q4
    
    
    TOTALTonnes milled
    
    7,261
    
    
    7,837
    
    
    7,679
    
    
    7,268
    
    
    30,045Silver ounces
    
    110,814
    
    
    112,616
    
    
    110,724
    
    
    102,925
    
    
    437,079Gold ounces
    
    110
    
    
    125
    
    
    79
    
    
    89
    
    
    403Lead tonnes
    
    222
    
    
    233
    
    
    211
    
    
    205
    
    
    871Zinc tonnes
    
    276
    
    
    270
    
    
    263
    
    
    248
    
    
    1,057Silver equivalent ounces (Ag eq oz)1
    
    169,162
    
    
    172,550
    
    
    164,262
    
    
    155,263
    
    
    661,236


|1 | For 2009, silver equivalent ounces for each metal were
      established using commodity prices of: US$850 per oz, US$11 per oz,
      US$0.50 per lb, and US$0.50 per lb; for gold, silver, lead & zinc,
      respectively, and applied to the recovered metal content of the
      concentrates that were produced by the two operations. Average recoveries
      of 89.7% for Ag, 83.0% for Au, 92.9% for Pb, and 87.90% for Zn were
      realized which resulted in the production of 437,079 oz Ag, 403 oz Au,
      1,919,816 lbs Pb, and 2,331,015 lbs Zn for a silver equivalent production
      of 661,236 ounces.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The plant performance at Topia was excellent in 2009 with
record metal recoveries of 89.7% for Ag, 83.0% for Au, 92.9% for Pb, and 87.9%
for Zn compared to 87.1% for Ag, 84.9% for Au, 91.1% for Pb and 85.6% for Zn in
2008. In addition to processing 30,045 tonnes from the Company's mines, 11,017
tonnes were custom milled for a local miner, thereby increasing revenue and
keeping unit costs down.

---

- 21 -

A short surface exploratory drill program was completed in the
third quarter of 2009 aimed at exploring extensions on strike from, and at depth
below, existing workings on the Cantarranas (East), San Gregorio, Rosario,
Recompensa and Veta Madre (El Ochenta) veins. A total of twenty-one diamond
drill holes were completed totalling 2,649 metres.

The focus of the surface drill program was to work closely with
the mine engineers in drilling areas that were being considered for future
development, in order to prioritize areas and to increase the mineral resource.
Based on the results of the 2009 drilling program, a more aggressive surface
drill program is being planned to expand the mineral resource on veins presently
being exploited and to explore a number of highly prospective veins and vein
segments elsewhere on the Company's extensive land package.

Ore was mined from twelve separate small mines. Production from
the San Gregorio and El Rosario veins contributed one third of the silver
production and new development on both veins will ensure further improved
production in 2010. Production from the Argentina vein will also increase as
accelerated development and stoping are facilitated by the addition of new
mobile equipment in the first quarter of 2010. Over the next two years, the mine
will be developed to the sixth level with a significant increase in production.
Measured and indicated resources are estimated at 117,000 tonnes while inferred
resources potentially add another 152,000 tonnes at silver grades exceeding 600
g/t or 20 oz per tonne.

Principal Capital Expenditures

During 2009, mine development was the most significant capital
expenditure at Topia. Following the completion of the equity financing in
November 2009, to accelerate its growth strategy and achieve mining
efficiencies, the Company placed equipment orders for one 8 ton haul truck, one
drill jumbo and 6 underground loaders of varying sizes.

*(2)*          
  *Guanajuato Mine*

The Guanajuato silver-gold mine complex in Guanajuato, Mexico
consists of three principal mines, the Valenciana, Cata and Rayas. These mines
occupy the heart of the 25-kilometre long Veta Madre (Mother Lode) structure
that controls the majority of the silver-gold mineralization in the Guanajuato
Mine District. These mines are amongst the most historic and best known in
Mexico as silver was discovered in the area in 1548 and estimates of historical
production range from 700 million to 1.5 billion ounces of silver, and 4 to 7
million ounces of gold.

Great Panther purchased the mines in 2005, after many years of
under-capitalization, and immediately set out to prove up new resources,
rehabilitate the mines and refurbish the plant. Production commenced in June of
2006 and has increased steadily since that time. The plant is presently
processing approximately 12,000 tonnes per month but has a capacity to more than
double that.

From the fourth quarter of 2005 to the end of 2009, the surface
diamond drilling program at Guanajuato was highly successful in identifying and
delineating new zones of silver-gold mineralization. These discoveries highlight
the lack of previous exploration on the property and the potential for new zones
to be found throughout the mine. The easy access to these zones from existing
underground workings and the utilization of existing infrastructure means that
these zones can be developed quickly and cost-effectively.

In 2009, mining was carried out on the Cata Clavo, the Rayas
and the Guanajuatito areas, all with high silver and gold values. New
development areas such as the gold-rich Santa Margarita vein and the Los Pozos
zone in the Rayas area, in addition to excellent production from the high grade
Cata Clavo and the Guanajuatito North Zone, contributed to the improved grades
and production. The Promontorio area, which was suspended a year ago, has been
re-opened for exploratory development.

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- 22 -

Exploration spending at Guanajuato for the new strategy is
projected to total approximately $10 million over the next three years. New
underground mine development is anticipated to reach more than 10 kilometres at
Guanajuato, some of which is designated for exploration drilling. An estimated
total of 45,000 metres of exploration drilling will concentrate on defining
resources, looking for vein extensions and testing new targets. Of this total,
18,000 metres are planned in 2010 when the focus will be on the deep drilling of
the Rayas Clavo at Guanajuato where drilling has commenced. Surface drilling at
San Ignacio and on other targets within the La Luz trend will commence in 2010
once specific targets have been identified and permits are in place.

Principal Capital Expenditures

During 2009, one scissor lift for $312,823 and one drill jumbo
for €338,000 euros were purchased and equipment orders for a further two drill
jumbos, two scissor lifts and two scoop trams were placed following the
completion of the November 2009 equity financing. The new equipment will allow
the Company to achieve mining efficiencies and thereby increase production.

Production

After a period of preliminary plant and mine rehabilitation,
Great Panther commenced production in June of 2006 on easily accessible low
grade stockwork zones. The development of high grade zones did not proceed as
quickly as originally anticipated. However, in 2007 these did reach the point
where they were contributing to production. As such, the average head grades at
Guanajuato remained low for 2006 and only slowly improved through most of 2007.
With increasing production from the higher grade areas of the mines and the
vigilant implementation of grade control procedures, the average grade for the
mine improved significantly such that in December 2007, grades were more than
twice what they were at the start of the year. Grades continued to improve in
2009 with the average silver head grade increasing 35% to 275g/t from 203g/t in
2008.

The plant at Guanajuato contains three ball mills. The Company
initiated production with one ball mill, brought a second on stream in November
2006, and commissioned the third ball mill in 2007. A metallurgical testwork
program, directed by a senior Canadian metallurgist, was initiated in the fourth
quarter of 2007 to assess the plant upgrades necessary to improve plant recovery
and concentrate quality. Metallurgical performance has shown continuous
improvement through 2008 and 2009.

Metal production for the year was 1,019,751 oz Ag and 6,748 oz
Au, or 1,541,220 Ag eq oz, which was 4% greater than planned and a 37% increase
over 2008.

A summary of production at Guanajuato for 2009 is as follows:

FY09-Q1
    
    
    FY09-Q2
    
    
    FY09-Q3
    
    
    FY09-Q4
    
    
    TOTALTonnes milled
    
    31,732
    
    
    32,606
    
    
    34,325
    
    
    39,853
    
    
    138,516Silver ounces
    
    223,821
    
    
    220,742
    
    
    288,087
    
    
    287,101
    
    
    1,019,751Gold ounces
    
    1,130
    
    
    1,379
    
    
    1,872
    
    
    2,367
    
    
    6,748Silver equivalent ounces (Ag eq oz)1
    
    311,105
    
    
    327,295
    
    
    432,795
    
    
    470,025
    
    
    1,541,220


|1 | For 2009, silver equivalent ounces for each metal were
      established using commodity prices of: US$850 per oz, US$11 per oz, for
      gold and silver respectively, and applied to the recovered metal content
      of the concentrates that were produced by the two operations. Average
      recoveries of 83.3% for Ag and 84.8% for Au were realized which resulted
      in the production of 1,019,751 oz Ag and 6,748 oz Au for a silver
      equivalent production of 1,541,220 ounces.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Plant metallurgical performance at Guanajuato was showed further
  improvement in 2009 with record average recoveries of 84.8% for gold and 83.3%
  for silver, compared to 78.6% and 83.7%, respectively, for 2008.

---

- 23 -

The quality of the concentrates improved significantly to 13,518g/t
  for silver and 89g/t for gold, compared to 9,476g/t and 61gpt, respectively,
  for 2008.

Mining of the Cata Clavo reached the 490 level where
development was carried out on the Veta Madre and Alto 1 veins. Stoping from the
460 level advanced well such that production from Cata reached more than 250
tonnes per day in the fourth quarter, or 50% of the total Guanajuato production,
at estimated grades of 277g/t Ag and 1.6g/t Au.

Mining at Guanajuatito focused on the North Zone, with cut and
fill stoping from the 50 and 80 levels. In the fourth quarter, ore production
averaged 115 tonnes per day at excellent estimated grades of 318g/t Ag and
2.3g/t Au.

At Rayas, development focused on our new discoveries, the Los
Pozos and Santa Margarita structures, which continued to demonstrate significant
potential. Development of Los Pozos was extended to the 298 and 310 levels by
the fourth quarter from where 4,600 tonnes were mined grading 340g/t Ag and
1.9g/t Au. Production is being accelerated in the first quarter of 2010 with the
introduction of new mining equipment. A new electrichydraulic drill jumbo has
been installed in the Los Pozos development area which will facilitate faster
development and increased production.

The gold-rich Santa Margarita vein was explored by ramp
development below the 390 level with ore grades from fourth quarter development
on vein estimated to be more than 8.0g/t Au. It was this source of gold-rich ore
that contributed to the higher gold production in the quarter. Gold production
from this vein will continue to increase during 2010.

Diamond drilling to explore for extensions of, and better
define, the Cata Clavo, around and below the 490 level, is underway. Diamond
drilling is also in progress to define and explore the Los Pozos structure
between the 275 and 345 levels. An extensive exploration drill program is being
initiated in the first quarter of 2010 to explore the deeper extensions of the
Rayas structures including the Santa Margarita vein.

Mining of the Guanajuatito North Zone from the 80 and 50 metre
levels continued. The grade and tonnes of ore mined (8,270 tonnes at 318 g/t
silver and 2.25 g/t gold) remained very positive as mining efficiency benefited
from improved ground support measures.

Geological Justification of the Exploration Project

Geological exploration at the Guanajuato Mine project is
justified broadly based on the following. After a complete review of over 65
years of accumulated geological mapping, detailed sampling, and drilling by the
former operator, the Companys geological team outlined numerous areas in late
2005 for further detailed exploration either by surface or underground core
drilling, detailed geological mapping and re-sampling. Key areas that were and
continue to be explored are listed below. Core drilling related to immediate
mine planning / exploitation is not considered in this review.

San Vicente and Animas: The 2005 review of historic data
revealed that underground sampling with economically significant results had not
been exploited. As this ore was readily accessible from surface, it was the
first area to undergo geological mapping and re-sampling during 2005 and 2006.
In 2006, a surface core drilling program intersected economically significant
results leading to re-commencement of underground exploitation in 2007.
Continued exploitation in the San Vicente and Animas areas proved to be
uneconomic due to low metal prices and low metal grades and the areas were
closed in mid-2008.

Guanajuatito: The 2005 review of historic data revealed
  that underground sampling and surface core drilling with economically significant
  results had not been exploited. As such, the underground workings were re-mapped,
  and sampled to confirm previous results. On surface, a core drilling program
  was conducted in late 2005 and 2006.

---

- 24 -

Based on the favourable results, mining and mine development
  recommenced in 2007 and has been extended down from the plus 20 metre level
  to the 80 metre level. The geology department at the Guanajuato Mine continues
  exploration activities with daily sampling, geological mapping of development
  headings and underground core drilling. A major underground cross cut and drift
  is being developed which will allow for the core drilling of the Guanajuatito
  area along a 400 meter strike length, below the 80 metre level. The development
  and drilling will be undertaken during 2010 and 2011.

Promontorio: The 2005 review of historic data revealed
that some areas with economically significant results from underground sampling
had not been exploited. Surface geological mapping and rock sampling were
completed in 2005. Surface core drilling in 2006 intersected economically
significant mineralization and was followed up in 2007 with more detailed core
drilling. Mine development and exploitation into the Promontorio area commenced
in early 2008 from one underground level (35 metre level) accessed from the San
Vicente area. In 2010 the 75 level is being refurbished for the exploitation of
the Veta Madre between the 75 and 35 levels.

Cata: The 2005 review of historic data revealed that
areas with economically significant results from underground sampling and
underground core drilling had not been exploited. A deep underground drilling
program, below the 1,700-metre elevation (406 metre level, the lowest level of
exploitation by the previous operator), to in-fill and expand the previous
operators drilling at Cata, commenced in 2007 and was completed in September
2008. Economically significant mineralization has been intersected in many of
the Cata deep drill holes, as reported in various news releases of 2007 and
2008. The company reported its first NI 43-101 compliant resource at Guanajuato
from the Cata area on June 30, 2009.

Several other areas of economic significance were geologically
mapped underground and re-sampled in 2006. Exploitation in the deepest parts of
Cata, and below the previous operators work, re-commenced in 2007 and is
ongoing with a program of ramping, sub-level development and production using
cut-and-fill mining methods. To date, mining has been extended from the 406
metre level to the 490 metre level. During the first half of 2010, production
core drilling will continue to the north of and below present workings.

Valenciana: The 2005 review of historic data revealed
that underground sampling and underground core drilling with economically
significant results had not been exploited. A small program of underground
geological mapping and sampling in 2006 confirmed the 2005 historic review. Of
particular note is that multiple veins were mapped and extremely high grade
silver-gold values were noted on the margins of old Spanish stopes. Due to
logistical limitations in re-establishing services into Valenciana, detailed
underground geological mapping and sampling was delayed until August 2008.
Rehabilitation of the 320 metre level is underway and exploratory development
and core drilling from underground locations will commence in 2010. A larger
program of deeper core drilling, below the 320metre level, is expected to
commence in 2011.

Tepeyac: The 2005 review of historic data revealed that
underground development above the 2,000 metre elevation was minimal with no
evidence of surface drilling. This gap in exploration along the Veta Madre was
seen as an excellent opportunity to potentially drill off a shallow section of
economically significant mineralization. A core drilling program consisting of
eight holes was completed during 2007 with no significant results.

Maravillas: The 2005 review of historic data revealed
that underground development above the 2,000 metre elevation was minimal with no
evidence of surface drilling. This gap in exploration along the Veta Madre,
along the west flank of the old Spanish Cata orebody workings, was seen as an
excellent opportunity to potentially drill off a shallow section of economically
significant mineralization. Six core holes were completed in 2007 with two
containing significant silver-gold mineralization in the Veta Madre. A follow up
surface core drilling program of four core holes is under consideration.

---

- 25 -

Rayas: The 2005 review of historic data revealed that
some areas with economically significant results from underground sampling and
underground core drilling had not been exploited. Exploitation is now ongoing
with back filling of old stopes and mining of old pillars. Renewed exploration
of the deep potential at Rayas, below the 1,650 metre elevation, (450 metre
level) of previous exploitation, is underway.. The first phase of cross cut and
drift development is complete and drilling commenced in February 2010. Further
development to provide additional core drilling locations will be ongoing
throughout 2010. Drilling in the deep Rayas area is expected to take until at
least mid 2011.

Santa Margarita: In the Rayas area, development along
the Santa Margarita structure discovered economically significant gold and
silver mineralization in mid-2009. The Santa Margarita structure is parallel to
the Veta Madre and approximately 10 metres to the southwest. Development is
ongoing via ramp access between the 390 and 435 metre levels. Coincidentally,
the Rayas deep core drilling program commencing in 2010 will also test the Santa
Margarita structure.

Los Pozos: The Los Pozos area is located between the
Cata and Rayas shafts and has been the site of ramp development and underground
core drilling throughout 2009. The Los Pozos area is part of the Veta Madre that
had not been exploited by previous operators, and whose economic significance
was ascertained by re-sampling and underground core drilling during 2009.
Presently, the ramp has been completed from the 275 level to the 310 sub-level.
Development will continue down to the main 345 haulage level during 2010.
Further underground core drilling is expected.

Funding for Exploration Program

The exploration program at Guanajuato will be funded through
equity finance raised in 2009 and cash flow from operations.

Individuals Responsible for Conducting Proposed Exploration
Work and Their Qualifications

Robert F. Brown, P. Eng

The exploration program will be guided by Robert F. Brown, P.
Eng (Province of British Columbia, Canada) who is both the Company qualified
person as defined under NI43-101 and Vice President of Exploration.

Mr. Brown gained insight into exploration geology and on-site
mine geology working 15 years with LAC Minerals Ltd, a former Canadian mining
company, and then another 14 years with various junior exploration companies, in
Canada, Mexico, Ecuador, Peru, Argentina and Indonesia before joining the
Company in 2004.

Sampling - Collection, Preparation, Analytical Procedures,
and Quality Assurance/Quality Control Protocols

Core and rock samples are brought to surface every day from
various underground workings to two central gathering points. Mine channel
samples are sorted in a secure building within the Guanajuato complex and hand
delivered to an on-site, independently operated laboratory. Core samples are
delivered to a large secure warehouse within the Guanajuato complex where they
undergo detailed logging and are cut in half with a core saw, with half the core
bagged for assay and the other half stored securely in a locked building.
Exploration geologists add blank and standard samples into the sequence of
bagged core, and deliver the samples to the laboratory.

Mine channel samples are collected daily by trained samplers
under the supervision of mine geologists. Mine geologists mark up the
underground locations where the samples are to be taken by the samplers.

---

- 26 -

The samplers label the sample bags, collect the samples, and
seal the bags underground. The samplers then carry the samples to surface and to
the secure area. Mine geologists then sort the samples and add blank and
standard samples into the sequence of samples, and deliver the samples to the
laboratory.

In the core warehouse, geologists log the core. This includes
detailed geotechnical measurements, geological logging following a standardized
geological legend, and marking the core for core saw splitting. After the core
is split, the geologists describe in detail each sample to be taken, then label,
tag, fill, and seal each sample bag with the appropriate core. Samples are
delivered daily to the laboratory.

Rock and core geological and sample details are entered daily
into a dedicated geological database located on the Guanajuato mine computer
server.

The Guanajuato assay laboratory was constructed in 2006-07 in a
warehouse within the Guanajuato mine complex. It was designed by SGS Canada
Inc., an internationally recognized analytical company (SGS Group). Laboratory
equipment was procured from sources recommended by SGS, and construction was
overseen by SGS. The Guanajuato mine laboratory was the 101st
independent laboratory designed and built by SGS. The laboratory is owned by the
Company and independently operated by SGS.

All samples collected at the mine are assayed at the on-site
laboratory. All samples are assayed for silver and gold using a combination of
fire assay and atomic absorption finish. Select samples including mine
concentrate samples use a combination of fire assay and gravimetric finish for
silver and gold assaying. Certain exploration samples are also analyzed for
copper, lead, zinc, arsenic, and antimony using aqua regia digestion and atomic
absorption finish. Assay results are stored in an onsite computer server, and
e-mailed daily to the Guanajuato mine computer server. Assays are then merged
into the mine database.

Assay quality assurance is guaranteed by the Company geologists
inserting blank, standard and split samples into the sample sequence. Standard
samples are inserted one every twenty samples, while blanks and splits are
inserted one every 40 samples. This is apart from internal quality assurance
measures taken by SGS.

Primary Exploration Properties

*(1)*          
*Mapimi Project*

The Mapimi Project (formerly Km66) was an advanced stage
exploration project that hosts significant silver-lead-zinc-gold mineralization
and a recently discovered molybdenum deposit. The Companys goal at Mapimi was
to define a bulk tonnage deposit amenable to open pit mining, thereby
significantly enhancing Great Panther's growing portfolio of silver projects.
The property consisted of 17 concessions in northeast Durango State and bisected
by a paved highway approximately 100 kilometres from Peñoles' smelter at
Torreon, so infrastructure was considered excellent.

Exploration on the Mapimi property since 2006 has consisted of
detailed geological mapping and re-sampling of outcrops, adits and trenches; an
airborne geophysical survey and a ground induced polarization geophysical
survey; and 12,448 metres of core drilling in 60 holes. The drilling on the La
Gloria and Las Palmitas Ag-Pb-Zn Zones, which commenced in December 2006,
increased the confidence level of the initial resource, resulting in a new
Indicated Mineral Resource estimated at 6,585,900 tonnes grading 28g/t silver,
0.09g/t gold, 0.41% lead and 1.14% Zn and an Inferred Mineral Resource at
2,027,900 tonnes grading 34g/t silver, 0.13g/t gold, 0.54% lead and 0.81%
zinc.

Drill-testing of other targets on the property resulted in the
discovery of a buried molybdenum deposit, named the Bulls-Eye Zone, and of
Ag-Pb-Zn mineralization in an area named the North Zone.

---

- 27 -

On September 16, 2009, the Company announced the termination of
its option on the Mapimi project as management determined that it was
uneconomical to continue with the project and it was better use of the Companys
funds to focus its efforts on expanding the production and resources at its
existing mines.

*(2)*          
  *San Antonio Project*

The mining concessions comprising the San Antonio project cover
an area of 11,946 hectares, and are located in the municipality of Guadalupe y
Calvo, State of Chihuahua, Mexico, approximately 162 kilometres south-southwest
of the city of Hidalgo de Parral, Chihuahua, and 265 kilometres southwest of the
city of Chihuahua.

Multiple targets have been identified by Great Panther at San
Antonio within a variety of geological settings, including gold-copper veins,
breccias and stockworks, as well as silver-lead-zinc veins. A total of 20
separate mineralized structures have been identified to date. Underground
sampling by the Company in 2004 along the Santo Niño Zone returned an average
grade of 7.75 g/t gold over an average width of 3.03 metres along a 25 metre
strike length. Great Panther previously had an option to acquire a 100% interest
in the Santo Niño concession and has exercised that right and transferred the
title. The Company now owns a 100% undivided interest in the entire San Antonio
package. As the project is considered to be a non-core asset to the Company, it
has been optioned to Altair Ventures Incorporated.

On February 1, 2010, Altair forfeited its option.

Revenues

The Company recognizes revenue from the sale of concentrates
based on the market metal prices and mineral content when title to the
concentrates transfers to the customer, which generally occurs on the date of
delivery. Revenue is recorded net of treatment and refining costs paid to
counter parties under terms of the off-take arrangements. Revenue from the sale
of the concentrates is subject to adjustment upon final settlement based upon
metal prices, weights and assays. Adjustments to revenue for metal prices are
recorded monthly and any other adjustments are recorded on final settlement.

For the year ended December 31, 2009, we earned $31,731,715 in
revenue from our Topia and Guanajuato mining operations. Revenues for 2008 were
$22,445,438.

Market Prices

The market prices of gold, silver and other precious metals
have historically fluctuated widely and are affected by numerous global factors
beyond our control. A decline in such market prices may have an adverse effect
on revenues we receive from the sale of minerals. A decline in prices will also
reduce our exploration efforts and make it more difficult to raise capital.

Seasonality of our Business

Our business is not expected to be seasonal and our mining and
milling operations will be carried out year round.

Sources and Availability of Raw Materials

Other than water and power, both of which are readily available
and do not experience any material price volatility, we do not require any raw
materials with which to carry out our business.

---

- 28 -

Patents and Licenses; Industrial Commercial and Financial
Contracts; and New Manufacturing Processes

In conducting our business operations, we are not dependent on
any patented or licensed processes, technology, industrial, commercial or
financial contracts or new manufacturing processes.

Competitive Conditions

We compete with other mining companies, some of which have
greater financial resources and technical facilities, for the acquisition of
mineral interests, as well as for the recruitment and retention of qualified
employees.

Government Regulations

The mining industry in Mexico is controlled by the Secretaria
de Economia  Dirección General de Minas which is located and administered from
Mexico City. Mining concessions in Mexico may only be obtained by Mexican
nationals or Mexican companies incorporated under Mexican laws. The construction
of processing plants requires further governmental approval.

The holder of a mining concession is granted the exclusive
right to explore and develop a designated area. Mining concessions are granted
for 50 years from the date of their registration with the Public Registry of
Mining to the concession holder as a matter of law if all regulations have been
complied with. During the final five years of this period, the concession holder
may apply for one additional 50 year period, which is automatically granted
provided all other concession terms had been complied with.

In accordance with the Federal Duties Law ("LFD") the holder of
a mining concession is obligated to pay biannual duties in January and July of
each year based upon the number of hectares covered by the concession area.

Concessionaires must perform work each year that must begin
within ninety days of the concession being granted. Concessionaires must file
each May, proof of the work performed. Non-compliance with these requirements is
cause for cancellation only after the Ministry of Mines communicates in writing
to the Concessionaire of any such default, granting the Concessionaire a
specified time frame in which to remedy the default.

There are no limitations on the total amount of surface covered
by mining concessions or on the amount of land held by an individual or company.
Excessive accumulation of land is regulated indirectly through the duties levied
on the property and the production requirements as outlined above.

Mexican mining law does not require royalties to the
Government, except for the discovery premium related to National Mineral
Reserves, Concessions in Marine Zones and Allotments to the Council of Mineral
Resources.

*C.*          
  *Organizational Structure*

As at the date of this annual report, we have four wholly-owned
subsidiaries. They are:

|1. | Minera Mexicana el Rosario, S.A. de C.V. (MMR), a
      company incorporated in the United States of Mexico. This Mexican
      subsidiary holds our Mexican property interests. This Mexican subsidiary
      was acquired by us on February 5, 2004.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 29 -

|2. | Metalicos de Durango, S.A. de C.V., a company
      incorporated in the United States of Mexico on July 12, 2005. This
      operational subsidiary is responsible for the day-to-day affairs and
      operations of the Topia Mine.                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                             
|3. | Minera de Villa Seca, S.A. de C.V., a company
      incorporated in the United States of Mexico on October 5, 2005. This
      operational subsidiary is responsible for the day-to-day affairs and
      operations of the Guanajuato Mine.                
|   |                                                                                                                                                                                                                                                             
|   | On November 30, 2009, Exploraciones Mineras el Rosario,
      S.A. de C.V., the Companys subsidiary responsible for exploration and
      further development of the Companys mineral properties, was merged with
      Minera de Villa Seca, S.A. de C.V.
|   |                                                                                                                                                                                                                                                             
|4. | New Age Investments Inc., a company incorporated in the
      Province of Alberta in Canada. This company is presently
  inactive.                                                                                                                          

*D.*          
*Property, Plant and Equipment*

We rent executive and administrative office space located at
Suite 350 and Suite 2100-1177 West Hastings Street, Vancouver, British Columbia,
V6E 2K3, Canada, for the sum of $19,722 per month.

Our Mexican subsidiary, Minera Mexicana el Rosario, S.A. de
C.V. (MMR), rents office space at the following locations:

- Juan Nepomuceno Herrera No. 712, Fraccionamiento Valle del Campestre, León,
  Guanajuato, Mexico, C.P. 37150, for the sum of $16,500 Mexican Pesos
  (approximately $1,351) per month
- Cerro Gordo No. 210 Fraccionamiento Lomas del Parque, Durango, Durango,
  Mexico, C.P. 3410, for the sum of $8,000 Mexican Pesos (approximately $655)
  per month; and

Our Mexican subsidiary Minera de Villa Seca, S.A. de C.V.,
maintains office space at Hacienda de Bustos, Mineral de Cata, Guanajuato,
Guanajuato, Mexico, C.P. 36010. The premises are owned by MMR.

Our Mexican subsidiary, Metalicos de Durango, S.A. de C.V.,
maintains office space at Boulevard La Sierra No. 1, Topia, Durango, Mexico,
C.P. 34541. The premises are owned by MMR.

We believe that our current office arrangements provide
adequate space for our foreseeable future needs.

We rent land for the tailings dam located in Topia, Durango,
Mexico.

We rent accommodation for mine personnel and corporate business
travel located in Guanajuato, Guanajuato, Mexico.

At present, our activities are focused on the mining,
exploration, development and acquisition of precious and base metal properties
located in Mexico.

---

- 30 -

Primary Mining Properties

*(1)****Topia Mine***

*a.******Location and Accessibility*

The Topia mine is located in the municipality of Topia in the
west central part of Durango State, Mexico. Access is gained by travelling north
for roughly 200 km on paved highway #23 from Durango through the city of
Santiago Papasquiaro, and then west on paved and gravel roads to the town of
Topia, a distance of approximately 150 km. Total driving time from Durango City
is about 8 hours. Most of the main roads in Topia are paved with concrete or
cobblestones, and the town contains numerous stores, restaurants and hotels. A
small airstrip on the east side of the town is serviced daily from Culiacán,
Sinaloa by small aircraft. Flight time from Culiacán is less than an hour.

The terrain is quite steep and rugged with elevations ranging
from approximately 600 metres in the river valleys in the western portion of the
property rising to nearly 2,000 metres in the northeastern portion of the
property where high level plateaus exist. The area is generally dry except
during the rainy season when between 20-50cm of rain may fall. Mining operations
and most exploration activities (especially underground exploration and
development) can be conducted on a year-round basis. Access to the numerous mine
entrances is via gravel roads that are narrow in the steep Sierra.

Refer to Exhibit 8.3 - Map of Topia Property.

*b.******History*

Although the discovery of silver in the area dates back to
1538, the existing mine was not built until 1952, when Peñoles consolidated the
mining concessions and built road access into the town. Great Panther purchased
the mine in 2005 and commenced mining in January 2006.

*c.******Geology and Mineralization*

The Topia mine lies within the Sierra Madre Occidental
geological province of northwestern Mexico. The Sierra Madre is a prolific belt
of mineral wealth hosting many significant gold and silver deposits. The
silver-gold-lead-zinc veins of the Topia district have formed along a
northeast-trending series of faults and are of the epithermal type. Mineralized
veins are limited to the lower series of andesitic lavas and interbedded
pyroclastics known as the Topia andesites. These veins contain ore grade
mineralization over a limited vertical extent of between 100 and 300 metres but
this mineralized zone extends laterally along strike in individual veins for as
much as four kilometres.

*d.******Mineral Resource and Mineral Reserve Estimates*

There are no known reserves on the property and the proposed
program is exploratory in nature. Although the Company has not established
Mineral Reserves for the property, we feel that Mineral Resources are adequate
for mine planning and exploitation at Topia.

During 2009, Wardrop, a Tetra Tech Company, (Wardrop) of
Vancouver, BC, provided an update to the ongoing mineral resource development at
Topia. The 2009 mineral resource estimate comprises Measured & Indicated
Mineral Resources of 173,103 tonnes at 552g/t silver, 0.99g/t gold, 5.58% lead
and 4.83% zinc (5,458,218 silver equivalent ounces) as well as 174,562 tonnes of
633g/t silver, 1.03g/t gold, 5.10% lead and 3.84% zinc (5,692,957 silver
equivalent ounces) in the Inferred category. At current production levels,
management considers the new resource to be sufficient for at least a 10 year
mine life.

The 2009 mineral resource estimate provides an update for the
  Argentina vein only, while the estimate delivered by Wardrop in 2006 for some
  of the other veins on the property came largely from the verification of Peñoles'
  resources, and are still intact, as mining to date has come from new mine development
  on these veins. (Resources for the "other veins" were estimated by Wardrop using
  metal prices as reported in the 2006 report.) The breakdown for the Argentina
  Vein and Other Veins on the property is given in the table below.

---

- 31 -

2009 Resource Update:

VEIN
    CATEGORY
    Tonnes
    Ag g/t
    Au g/t
    Pb %
    Zn %ARGENTINA
    MEASURED
    40,015
    669
    0.704
    6.85
    4.78INDICATED
    77,229
    642
    0.713
    6.12
    4.58INFERRED
    152,189
    690
    0.972
    5.36
    3.67OTHER
    M & I
    55,859
    345
    1.57
    3.91
    5.21INFERRED
    22,373
    243
    1.39
    3.31
    4.97TOTAL
    M & I
    173,103
    552
    0.99
    5.58
    4.83INFERRED
    174,562
    633
    1.03
    5.10
    3.84


Metal Prices (2009)
      Recoveries
      Capping
        GradesAu
      US$890/oz
      85.0%
      Au (g/t)
      6.0Ag
      US$12.50/oz
      87.0%
      Ag (g/t)
      2,000.0Pb
      US$0.625/lb
      92.2%
      Pb (%)
      20.0Zn
      US$0.625/lb
      82.0%
      Zn
        (%)
      20.0


The 2009 Argentina mineral resource calculation was based on a
minimum NSR value of $US75 / tonne (75% of total operating costs). This is
applicable at Topia since the general and administrative ("G&A") costs are
$US25 / tonne. Current operating costs for the Argentina vein are $US100 / tonne
ore mined and processed, and any additional resources to the mining plan would
require no increase in G&A costs and reduced unit mining costs. The 2009
Argentina vein mineral resource value assumed:

|1. | the June 1, 2009, concentrate sales contracts with Louis
      Dreyfus Commodities, which are effective until December 31,
2010;
|-- | --------------------------------------------------------------------------------------------------------------------------------
|2. | average metal prices for April 2009, typical plant
      recoveries, and grade capping all shown in the table above; and        
|3. | 33% mine dilution.                                                                                                              

---

- 32 -

When combined with the 2009 Argentina resource, the new total
contained metal for each resource category is shown in the table below.

Contained metal (all veins):

Category
    Tonnes
    Ag ozs
    Au ozs
    Pb lbs
    Zn lbs
    Ag oz EqM & I Resources
    173,103
    3,080,954
    5,507
    21,278,080
    18,430,862
    5,458,218Inferred Resources
    174,562
    3,560,237
    5,793
    19,585,856
    14,746,998
    5,692,957


The improved understanding of, and confidence in, the Argentina
mineralization has led directly to a modest improvement in the measured and
indicated mineral resource but a dramatic increase in the inferred mineral
resource as shown in the table below. This is largely due to the fact that more
drill holes can now be incorporated into the inferred category.

Percentage Increase in Argentina Vein Resources 2009 over
2008:

Category
    Tonnes
    Ag ozs
    Au ozs
    Pb lbs
    Zn lbs
    Ag oz EqM & I Resources
    20%
    32%
    46%
    23%
    20%
    29%Inferred Resources
    101%
    160%
    131%
    193%
    214%
    168%


The 2009 mineral resource estimate has increased over that
reported in 2008 mainly due to:

- a re-interpretation of the drill hole data,
- new vein channel sampling data from exploration development on Level 2,
- a correction of the survey of old underground workings to surface
  topography,
- improved ore grades at Topia, (522g/t silver; 0.58g/t gold; 3.26% lead and
  4.20% zinc for the year to end of June),
- updated and improved metallurgical recoveries, and
- improved concentrate sales terms.

These contributed to a greater understanding and confidence in
the interpretation of the Argentina vein.

At the current production rate of approximately 30,000 tonnes
per year, and considering that not all resources may be mined, management
expects the resources above to support a mine life at Topia of at least 10 more
years. Great Panther has already been mining Topia for 3 and a half years and
the mine saw 47 years of continuous production prior to that. The Company plans
to continue the systematic replacement of annual production with new resources.
This "rolling resource" is typical for underground mines as it is often not
cost-effective to define a large resource/reserve in advance of mining.

Due to the steep topography and the nature of the narrow veins
at Topia, surface drilling is typically widely spaced and is used as a guide for
underground development by locating and confirming structural continuity and
grade, while development by drifting, sampling and some underground drilling
along the vein defines the measured and indicated mineral resources. As such,
the surface drilling is used to determine inferred resources and additional
Exploration Potential for the veins. With the increased confidence in the
Argentina Vein data, some of the tonnes previously included as Exploration
Potential have been upgraded to the Inferred category. Several other veins on
the property have not yet been drilled and are not included in any category.

---

- 33 -

Exploration Potential has been estimated in-house for only the
Don Benito and Argentina veins to demonstrate the potential mineral resources in
these areas prior to mine development. According to NI 43-101, Exploration
Potential must be reported as ranges and these are presented in the following
table. The Exploration Potential is conceptual in nature and based on wide
spaced exploration drilling at Argentina, and exploration drilling and two
development levels at Don Benito. There has been insufficient exploration to
define a mineral resource from these data to date and it is uncertain if further
exploration will result in the Exploration Potential being delineated as a
mineral resource.

Exploration Potential:

Vein
    Tonnes
    Ag
    Au
    Pb
    ZnArgentina
    60,000-80,000
    400-600g/t
    1-2g/t
    4-6%
    2-4%Don Benito
    60,000-80,000
    300-600g/t
    1-4g/t
    4-8%
    3-6%


These tonnages include some of the drilling and development
completed during the spring of 2008 (see GPR news releases dated February 19,
June 2 and June 23, 2008), plus ongoing underground drilling, and could
represent another 4 to 5 years of mine life with further definition. The
Argentina vein remains open to expansion at depth and for approximately 500
metres to the east below old mine workings. As well, development and stoping on
the Cantarranas (Hormiguera and San Miguel Mines), El Rosario, San Gregorio, and
Recompensa veins will lead to future mineral resource estimates.

*e.******Exploration History*

The Company has conducted extensive work on the Topia property
as far back as 2004. The diamond drill program conducted between June 2004 and
February 2005 comprised 7,436 metres in 30 surface holes with results evidencing
high grade silver-lead-zinc mineralization. Five separate areas were tested with
one or two main veins present in each area. The main goal of the program was to
test the strike, dip and grade continuity of the veins beyond where they had
been mined in the past in order to indicate the exploration potential of the
property and to guide the short term underground development work with the goal
of successfully re-opening the mine.

Based upon the success of the exploration program, the Company
exercised its option to purchase the Topia Mine in July 2005. Once access was
gained to the underground workings, underground mapping, sampling and diamond
drilling became an integral part of the ongoing exploration program at Topia. In
December 2005, we commenced limited production at the Topia Silver-Lead-Zinc
Mine in Durango, Mexico.

In March 2006, we reached a significant milestone in becoming a
primary silver producer with our first shipment of concentrates from operations.
In the second half of 2006, we commissioned our second ball mill increasing the
plants production from 120 to 170 tonnes per day.

During 2007 and 2008, ongoing exploration development of the
mine continued to demonstrate high grades of silver-lead-zinc. In addition, new
underground drilling and chip-sampling has demonstrated very good potential on
the yet unmined parts of many of the known veins.

Surface drilling continued into early 2008 and then resumed in
mid-2009 where a 4,000-metre program on the major production areas of
Recompensa, Hormiguera, El Rosario, and San Gregorio. Great Panther has now
drilled a total of 20,873 metres in 97 surface holes and 3,541 metres in 68
underground holes. A further 6,000 metres of drilling commenced in March
2010.

---

- 34 -

*f.******Total Costs Incurred to Date and All Planned Future Costs*

As at December 31, 2009, total costs incurred on mineral
properties, plant and equipment at Topia were $9,656,000. Total costs incurred
on exploration were $9,327,000.

Planned costs for 2010 are approximately $6 million for capital
investment and exploration.

*g.******Source of Power and Water that can be Utilized at the Property*

Topia is connected to the national power grid. Artesian springs
located above Topia provide water year-round by gravity to the town. Most of the
lower mine portals discharge water and the Victoria adit has provided enough
water to supply milling activities in the past.

*(2)*          
*Guanajuato Mine*

*a.******Location and Accessibility*

The Guanajuato mine is located alongside the city of
Guanajuato, 380 km northwest of Mexico City in central Mexico. Guanajuato is
situated in the Central Plateau of Mexico in the mountains of Sierra de
Guanajuato at elevations ranging from 1,600 to 2,200 metres. The principle claim
group is centred at approximately 21o03N latitude and
101o15W longitude (NAD 27, UTM coordinates 2327500N, 265500E). The
Guanajuato mine consists of 1,107.28 hectares, made up of 28 non-contiguous
concessions.

Excellent access is availed to Guanajuato with an international
airport 30 minutes to the west near Silao/Leon. Toll freeways skirt the city
linking it with Leon, Guadalajara, and Mexico City. All of the facilities of the
Guanajuato mine are accessed from city streets.

The Guanajuatito ramp provides easy access to the
mineralization throughout the Guanajuatito-Encarnación area where only a minor
amount of mining has taken place in the past.

Refer to Exhibit 8.4  Map of Guanajuato Property.

*b.******History*

The Guanajuato Mining District was founded in 1548, with the
first discovery of silver in the area. Estimates of historical production range
from 700 million to 1.5 billion ounces of silver and 4 to 7 million ounces of
gold.

Mining at Guanajuato has been conducted since the year 1600,
initially by the Spaniards and subsequently by Mexican, British and American
companies. Since 1939, the property now owned by Great Panther was owned and
operated by a Mexican mining cooperative. Production by the latter, from whom
the Company bought the property, had dwindled to about 200 tonnes per day by
2005, despite the plant capacity of 1,200 tonnes per day. Grades had dropped and
the cooperative was losing money. Operations stopped completely in August of
that year and Great Panther took possession of the mine in December 2005.

*c.******Geology and Mineralization*

Three major fault systems with associated mineralization occur
  in the Guanajuato Mining District, La Luz, Sierra, and the Veta Madre systems,
  the largest being the 25 km long Veta Madre. The principal mineralizing event
  is thought to be late Oligocene in age +27 Ma, which has created three identifiable
  stages of mineralization according to Clark (2005); 1) pre-ore, 2) ore,
  3) post-ore and the ore can be divided into three zones; upper ore, lower ore,
  and deep ore. The upper ore is defined as being >2,100m above sea level
  (a.s.l.),.), lower ore is found between 2,100m and 1,700m a.s.l. and deep ore
  as being <1,700m a.s.l.

---

- 35 -

All historic descriptions of the mineralization contain the
term ore. In most cases, the terminology applies to previously mined
mineralization. Historic authors have generally agreed that there are three
separate zones of mineralization; upper ore, lower ore and deep ore. Normally
this categorization refers to areas now mined out but in other cases, it refers
to horizons of un-mined material that may contain mineralization that would not
be considered as ore as defined by NI 43- 101 Standards of Disclosure for
Mineral Projects adopted by the securities regulators in Canada. The authors
have chosen to use the same language to be consistent with the historic
documentation and are not implying that the mineralization will ever become ore
that can be mined at a profit.

The Veta Madre systems strike northwesterly and dip
450 to 650SW. The bulk of the mining production has come
from a five-kilometre section of the Veta Madre stretching between the
Valenciana shaft of our Companys ground in the northwest to the Sirena shaft on
Peñoles ground in the southeast. In this five kilometre area, the vein stockwork
averages approximately 20 metres in width but can be as wide as 90 metres. Most
of the historic production has come from the economically important lower ore
level (2,100 metres to 1,700 metres a.s.l.) and is typically associated with
faults and both footwall and hanging wall stockwork vein systems.

The argentiferous mineralization is hosted in quartz veins with
gangue mineralogy of quartz, calcite, pyrite, adularia, and sericite. The
principal silver bearing mineralization is acanthite (argentite), aguilarite and
naumannite while gold occurs as free gold and as electrum. The gold to silver
ratios vary from approximately 1:1 to 1:200 and historically have averaged about
1:100. Base metal mineralization is not common; when it occurs it is observed as
chalcopyrite, sphalerite and galena. The exception is the deep ore in the
Rayas mine which is associated with chalcopyrite and galena.

The economic mineralization is hosted in
quartz-carbonate-adularia veins and stockwork systems with identifiable
ore-shoots that carry the bulk of the economic mineralization. The ore shoots
are discontinuous, 10-40 metre wide and typically equal in vertical dimensions
to strike length. The discontinuous nature of the ore-shoots has made ongoing
underground and surface exploration challenging and not necessarily well
understood. On average, approximately 20% of the volume of the individual veins
becomes ore.

*d.******Mineral Resource and Mineral Reserve Estimates*

There are no known reserves on the property and the proposed
program is exploratory in nature. Although the Company has not established
Mineral Reserves for the property, we feel that Mineral Resources are adequate
for mine planning and exploitation at Guanajuato.

During 2009, Wardrop, a Tetra Tech Company, (Wardrop) of
Vancouver, BC, completed the first NI 43-101 compliant mineral resource estimate
on the zone known as the 'Cata Clavo' at Guanajuato. The new resource estimate
of 5,032,000 silver equivalent ounces represents only a very small part of the
4.2 kilometre strike length of the Guanajuato deposit owned by the Company.
Other zones, namely Guanajuatito and Rayas, are currently being mined and do not
yet have a compliant resource. Further exploratory and delineation drilling are
planned for these zones in order to establish additional resources in the
future.

The Cata Clavo was the target of the Companys deep drilling
  program in 2008 and is separated into three zones, namely, the Veta Madre, Alto
  1, and Alto 2. The upper limit of the Veta Madre zone is set at the floor of
  the 430 metre level as it has been extensively mined out above this level, and
  all zones extend at least 100 metres vertically below the 430 metre level. The
  mineralized zones used in the resource represent only this 100 metre vertical
  height and a strike length of approximately 150 metres.

---

- 36 -

Using a cut-off net smelter return value of US$37.50/tonne, the
capped indicated mineral resource contains 5,032,000 ounces silver equivalent,
while the uncapped indicated mineral resource contains 6,491,000 ounces silver
equivalent. Capped inferred resources are estimated at 285,000 ounces silver
equivalent.

In order to define the mineral resource, an estimated net
smelter return was calculated for each resource block. The NSR assumed metal
prices of US$12.50/oz Ag and US$890/oz Au, relevant 2009 concentrate sales
contract terms, typical plant performance metal recoveries and concentrate
grades, and mining dilution of 15%. Total operating costs for the mining of the
Cata Clavo orebody, including mining, milling, and general and administration
costs, are currently US$52/tonne. Experience gained from mining the Cata Clavo
by the cut-and-fill mining method determined that the appropriate cut-off value
for defining the resource be set at $US37.50/tonne NSR. For reference, Wardrop
also estimated the resources using a $50.00/tonne NSR cut-off and both are
presented in the table below.

The mineral resource estimation utilized geology and assay data
from both exploration diamond drill-holes (37 holes at approximately 50-metre
centers) and 50 production diamond drill-holes (detailed infill). Capping was
applied separately to the exploration and production drill-holes. Assays from
the exploration drill-holes were capped at 1,300g/t silver and 7.5g/t gold.
Assays from the production drill-holes were capped at 4,000g/t silver and
15.5g/t gold. The impact of capping is negligible on the resource estimates for
the Veta Madre and Alto 2 zones, but reduces the grade estimates by more than
45% for the higher grade Alto 1 zone. Since there has been little underground
exposure and mining of the Alto 1 vein to date, there is no experience to
justify raising the capping values at this time and hence it is considered that
there is much upside potential for this vein.

Indicated capped mineral resources at a cut-off NSR value of
US$37.50/tonne are estimated to be 351,000 tonnes at grades of 359g/t silver and
1.19g/t gold, while uncapped grades are 462g/t Ag and 1.55g/t Au. The capped
estimate contains 4,071,000 oz silver and 13,000 oz gold, or 5,032,000 silver
equivalent ounces (Ag eq oz). The uncapped estimate contains 5,239,000 oz silver
and 17,000 oz gold, or 6,491,000 Ag eq oz. In addition, capped inferred
resources of 24,000 tonnes grading 296g/t silver and 0.98g/t gold are estimated,
containing 231,000 oz silver and 765 oz gold, or 285,000 Ag eq oz.

Since early 2008, mine development and stoping, using
mechanized cut-and-fill mining, has been carried out in the Veta Madre zone of
the Cata Clavo between the 430 and 417 levels (immediately above the mineral
resource area). During the seven-month period to the end of April 2009
(effective date of the mineral resource), a total of 19,894 tonnes of ore has
been mined from this area at average mill-head grades of 308g/t silver and
1.44g/t gold. In the same period, an additional 16,551 tonnes, with an average
grade of 354g/t silver and 1.58g/t gold has been processed from the mining of
the Veta Madre zone above the 460 level of the Cata Clavo (within the indicated
mineral resource). The ongoing mine development on the three zones generally
confirms the Cata Clavo mineral resources and the resultant grades from mining
and processing compare favourably to the Wardrop indicated mineral resource
grades of 339g/t silver and 0.99g/t gold for the Veta Madre (see table below).

---

- 37 -

Indicated and inferred mineral resources at the Cata Clavo as
estimated by Wardrop are tabulated below:

INDICATED
    CUT-OFF (US$)
    Tonnes
    Ag (g/t)
    Ag CAP (g/t)
    Au (g/t)
    Au CAP (g/t)ALTO 2
    50
    34,000
    396
    349
    1.46
    1.43ALTO 2
    37.5
    39,000
    359
    318
    1.36
    1.33ALTO 1
    50
    82,000
    883
    467
    3.26
    1.75ALTO 1
    37.5
    96,000
    776
    419
    2.85
    1.55MADRE
    50
    182,000
    377
    377
    1.09
    1.09MADRE
    37.5
    215,000
    339
    339
    0.99
    0.99TOTAL INDICATED
    
    298,000
    518
    398
    1.73
    1.31TOTAL INDICATED
    
    351,000
    462
    359
    1.55
    1.19


INFERRED
    CUT-OFF (US$)
    Tonnes
    Ag (g/t)
    Ag CAP (g/t)
    Au (g/t)
    Au CAP(g/t)ALTO 2
    50
    3,000
    518
    370
    1.58
    1.43ALTO 2
    37.5
    4,000
    473
    340
    1.48
    1.35ALTO 1
    50
    6,000
    233
    233
    0.69
    0.69ALTO 1
    37.5
    8,000
    209
    209
    0.62
    0.62MADRE
    50
    9,000
    389
    389
    1.25
    1.25MADRE
    37.5
    11,000
    340
    340
    1.1
    1.1TOTAL INFERRED
    
    19,000
    366
    337
    1.14
    1.11TOTAL INFERRED
    
    24,000
    319
    296
    1.01
    0.98


The Cata Clavo mineral resource was estimated by two methods,
Inverse Distance Squared (ID2) and Nearest Neighbour (ID5). The ID2 estimate
is considered to be the more representative of the two and the Nearest Neighbour
estimate was carried out as a check of reasonableness of the ID2 estimate
results. The interpretation of the Veta Madre, Alto 1 and Alto 2, along with the
construction of the wireframe solids for mineral resource estimation, were
completed by staff of the Company and duly checked by Wardrop.

Mining of the Cata Clavo represents one of three main areas
being mined at the Guanajuato silver-gold mine and accounts for more than 50% of
the total Guanajuato metal production. It will continue to be a major source of
production as the Alto 1 zone is expected to be richer below the 460 level. An
access decline is being driven beyond the 460 metre level and development and
ore definition drilling of the Veta Madre, Alto 1, and Alto 2 zones of the Cata
Clavo orebody is ongoing.

The resource estimate positively supports the potential for further
  increases in production from Guanajuato. The study by Wardrop points to potential
  areas, both laterally and at depth, where it is expected the resources of the
  Cata Clavo may be increased through additional exploration.

---

- 38 -

Furthermore, Wardrop recommends a substantial underground exploration
  programme for the area between the Cata Clavo and the depth extension of the
  Rayas Clavo, approximately one kilometre along strike to the southeast.

The Veta Madre and Alto 1 zones are complex zones of pyrite and
argentite mineralization within argillic and propylitic alteration in brecciated
shale. Footwall to the Veta Madre is a barren silica breccia with large angular
shale fragments. The Alto 2 zone is a mix of shale and diorite fragment breccia
at the shale contact with a hanging-wall diorite dyke. All zones strike
generally NW-SE and dip 45 degrees southwest.

*e.******Exploration History*

Since acquiring the Guanajuato Mine in 2005, Great Panther has
completed 88 surface drill holes totalling 15,222.00 metres and 37 underground
holes totalling 7,791.00 metres.

The 2005 drilling was completed under and northwest of the
Guanajuatito ramp along the trend of the Veta Madre, approximately one kilometre
northwest of the famous Valenciana Mine (owned by Great Panther). It was
designed to duplicate and surround a lone 1989 drill hole (#317) that
intersected a 5.35 metre wide zone grading 3.34 g/t Au and 81.5 g/t Ag,
including 10.65 g/t gold and 165 g/t silver over 1.55 metres. The drilling
program intersected bonanza grade silver and above average gold within the Veta
Madre vein structure.

An extensive underground sampling program continued through
2006 at Guanajuato. Preliminary sampling in the first quarter of 2006 returned
spectacular bonanza grades from the Valenciana Mine. Silver grades ranged from
1,100 g/t (32 oz/t) to 30,468 g/t (889 oz/t) and gold grades ranged from 19 g/t
(0.6 oz/t) to 177 g/t (5.2 oz/t) in 27 selective grab samples taken by the mine
staff. These results yield an arithmetic average of 11,036 g/t (322 oz/t) Ag and
62 g/t Au (1.8 oz/t). Using a silver-to-gold ratio of 60:1, this equates to a
silver equivalent grade of 13,373 g/t (430 oz/t) or a gold equivalent grade of
224 g/t (7.2 oz/t). The samples also contained, on average, 0.34% Cu, 0.24% Pb
and 0.87% Zn.

The samples were taken from the walls of six different stopes
above and below the 285 metre level over a total strike length of about 500
metres in a part of the mine that has historically been mined by hand, dating
back to the early 19th century. As such, there has been very little, if any,
mechanized mining here, and stopes are typically small and erratic in shape. The
sampling was carried out as a first-pass assessment of the tenor and
distribution of mineralization that has been left behind by these historic
mining campaigns. While grades from the various stopes were comparable, it is
presently unknown just how representative these grades may be from a mining
standpoint.

In addition, initial surface rock sampling on the Promontorio
claim, southeast of the Rayas Shaft, has identified a gold-rich zone of
mineralization along more than 100 metres of the Veta Madre structure.

---

- 39 -

Compilation of the underground data is ongoing, as will be the
evaluation of the extent of former mining, and re-sampling of stopes and levels.
There is more than 300 metres of strike length to the southeast of Promontorio
that has apparently seen only limited exploration and underground development,
such that the potential for previously unrecognized mineralization in this area
is excellent. Overall, the property encompasses more than four kilometres of
strike length on the Veta Madre structure, much of which has seen little to no
exploration.

In June 2006, we commenced the first phase of our underground
diamond drilling program. The purpose of the drilling was to better define zones
of silver-gold mineralization for production purposes and for the preparation of
a NI 43-101 compliant resource. This drilling focused mainly on San Vicente
North.

In October 2006, we commenced a second phase of our diamond
drilling program and completed extensive underground sampling at the limits of
the silver-gold mineralization in the Guanajuatito mine.

In early 2006, we commenced a Phase II surface diamond drilling
program designed to test three separate areas along 4 kilometres of strike
length of the Veta Madre. The drill program was to follow-up on the successful
drilling at Guanajuatito, in the northwest part of the property, as well as to
test the Animas and Garrapata areas which are farther along strike to the
southeast. The program was highly successful in identifying and delineating
three new zones of silver-gold mineralization in the northwest, central and
southeast parts of the mine property. These discoveries accentuate the previous
lack of exploration on the property and the potential for new zones to be found
throughout the mine. In addition, the easy access to these zones from existing
underground workings means that they can be developed and mined quickly and
cost-effectively.

The Company continued surface diamond drilling in 2007 and
intersected four new silver-gold zones and provided further definition on the
three previously known zones of silver-gold mineralization in the Promontorio
area. All zones are sub-parallel and occur within 70 metres of the main Veta
Madre. Having several zones within close proximity like this will significantly
lower their development costs and plans are already in preparation for the
exploitation of this area. The new mineralization lies between 70 and 150 metres
below surface and is accessible by ramp.

In September 2007, a deep underground drilling program
commenced in the Cata area of the Guanajuato mine. The program was designed to
twin, then fill in between, diamond drill holes completed in the 1980s and
1990s by the previous owners that indicated the continuation of silver-gold
mineralization for approximately 200 metres below the existing mine
workings.

The deep drilling at the Guanajuato mine is testing the area
between the 400 and 600 metre levels (dip length of 300 metres) along a strike
length of 1,000 metres between and below the Cata and Rayas shafts. This
drilling will be conducted under the historically high grade Cata and Rayas
Clavos, which contained strong gold-silver mineralization down to the 417
metre and 450 metre levels, respectively. Drilling on the Cata Clavo was
completed in 2008, and successfully confirmed the depth extension of high grade
gold and silver mineralization. Mining has extended from the 430 to the 490
metre levels of the Cata Clavo and the ramp will be extended to lower levels of
the Cata Mine area. The program continues in the Rayas area in 2010.

*f.******Total Costs Incurred to Date and All Planned Future Costs*

As at December 31, 2009, total costs incurred on mineral
properties, plant and equipment at the Guanajuato mines were $16,864,000. Total
exploration costs were $6,675,000.

Planned costs for 2010 are approximately $12.8 million for
capital investment and exploration.

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- 40 -

*g.******Source of Power and Water that can be Utilized at the Property*

The electricity supply to the operations in our Guanajuato mine
is provided through the national power grid administered by CFE. The water
supply is carried out through groundwater of our mines and rainwater
filtrations.

Primary Exploration Properties

*(1)*          
*Mapimi Project*

*a.******Location and Accessibility*

The Property is situated in the northern plateau region of
Durango State. It is located approximately 66 kilometres west of the town of
Bermejillo and 100 kilometres north-west from the city of Torreon and San Pedro
de las Colonias, in Coahuila State. The property is easily accessible and the
infrastructure is considered excellent, since the property is bisected by paved
highway approximately 100 kilometres from Peñoles smelter at Torreon.

Airports are situated in the city of Torreon as well as the
city of Durango. Both airports have scheduled daily flights to and from Mexico
City, Mazatlan, Monterrey and Houston, Texas.

Refer to Exhibit 8.5  Map of Mapimi Property.

*b.******History*

In 1995, Minera Apolo, S.A. de C.V. (Apolo) acquired the
property and optioned the property to Coeur dAlene Mines Inc. in late 1996.
Between 1997 and 1998, Coeur DAlene carried out regional and geological mapping
in some areas of the property. They completed a total of 397 metres of
trenching, a gravity survey, 81 reverse circulation drill holes, 22 diamond
drill holes and 422 surface channel samples. Coeur dAlene returned the property
to the vendor in 1998 and Great Panther optioned it in September 2006.

On September 16, 2009, the Company announced the termination of
its option on the Mapimi project as management determined that it was
uneconomical to continue with the project and it was a better use of the
Companys funds to focus its efforts on expanding the production and resources
at its existing mines.

*c.******Geology and Mineralization*

The structural fabric of the Mapimi Project appears to be
complex. Rhyolite sills intrude sandstones, calcareous siltstones, and
limestones of the Cretaceous Caracol Formation, a common host to many of the
world class silver-lead-zinc deposits throughout the Mexican Silver Belt.
Pre-mineral faulting and fracturing is intense within and adjacent to the
mineralized zones, providing excellent porosity for mineralizing fluids.
Post-mineral faulting is also common and offsets mineralized zones in
places.

Mineralization at Mapimi includes three distinct types. Two
adjacent and related zones called La Gloria and Las Palmitas contain lead, zinc,
and silver minerals with lesser amounts of gold and copper minerals. This style
is associated with hydrothermal breccias and stockworks related to a cluster of
rhyolite domes, and shows a strong similarity to the historic Real de Angeles
District in Zacatecas State, Mexico. An upper, oxidized portion (~40-60 metres)
of the mineralization consists of jarosite and hematite; with sulphides
consisting of pyrite, silver sulfosalts, sphalerite and galena at depth. The
breccias have a general orientation of N40E, and a steep northwest dip. The
largest breccia to date has known dimensions of 250 by 45 metres but is open in
all directions. More than 20 breccia bodies have been identified in 5 main
sectors.

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- 41 -

A second type of silver-lead-zinc mineralization occurs
approximately three kilometres north of La Gloria and appears to be of the
carbonate replacement type. Called the North Zone, mineralization here is narrow
but high grade and appears to be related to the rhyolite-sediment contacts. It
is hosted in the Caracol Formation but there may be potential for better widths
and grades in the underlying Aurora Limestone.

The third style of mineralization at Mapimi was discovered in
2008 and consists of molybdenite in quartz veins within a zone of skarn
alteration. Named the Bulls-Eye Zone because it is highlighted by a strong
magnetic anomaly, the mineralization starts at a depth of about 40 metres and
extends over an area of about 250 metres in diameter and is approximately 200
metres thick. The Bulls-Eye Zone lies between La Gloria and the North Zone.

*d.******Mineral Resource and Mineral Reserve Estimates*

There are no known reserves on the property and the field
program was exploratory in nature. The Company does have a resource estimate as
described below.

During 2006, the Company commissioned Wardrop to prepare a NI
43-101 compliant resource estimate for the property. The independently produced
report estimated that the Palmitas and Gloria Zones together contain an Inferred
Mineral Resource of 4,969,800 tonnes at a grade of 59 g/t Ag, 0.13 g/t Au, 0.81%
Pb and 1.31% Zn. Wardrop calculated that these grades equate to a silver
equivalent grade of 139 g/t using commodity prices (based upon 3 year averages)
of US$7.70/oz for silver, US$471/oz for gold, US$0.41/lb for lead and US$0.69/lb
for zinc and recoveries of 76%, 70%, 80% and 80%, respectively. This resource
equates to a total of 22.3 million ounces of silver equivalent.

The resource estimate was based upon a comprehensive
exploration program completed on the property by Coeur d'Alene Mines during 1997
and 1998, wherein they drilled 81 reverse circulation holes (7,515 metres and
3,614 samples) and 22 diamond drill holes (2,983 metres and 900 samples). The
geological database also includes 422 surface channel samples. Coeur d'Alene
dropped the property in 1998. The resource includes 2,643,600 tonnes of oxide
material at a grade of 51 g/t Ag, 0.11 g/t Au, 0.73% Pb and 0.98% Zn for a
silver equivalent grade of 113 g/t and 2,326,200 tonnes of sulphide
mineralization at a grade of 68 g/t Ag, 0.16 g/t Au, 0.90% Pb and 1.69% Zn for a
silver equivalent grade of 169 g/t. As the grade of sulphide mineralization is
50% higher than the 40-60 metre-thick oxide zone, the Company expects the
overall grade of the resource to increase over time as the deposit is extended
to depth.

In March 2008, Wardrop delivered an updated NI 43-101 compliant
mineral resource estimate for the La Gloria / Las Palmitas Zones. The new
estimate effectively upgraded the previous resource of 22.3 million silver
equivalent ounces (Ag eq oz) from the Inferred to the Indicated category and
added an additional 6.3 million Ag eq oz in the Inferred category for a global
resource of 28.6 million recoverable Ag eq oz.

The new estimate included the twenty-nine core holes,
representing 6,298 metres, completed during Great Panthers Phase I drilling
program in the first half of 2007 (see below in Exploration). This program
consisted mostly of fill-in holes focused on the La Gloria Zone and adjacent Las
Palmitas Zone in an effort to confirm, expand, and better delineate the previous
Inferred Mineral Resource.

The 2007 Phase I drilling at Mapimi increased the confidence
level of the resource, resulting in a new Indicated Mineral Resource estimated
at 6,585,900 tonnes grading 28g/t silver, 0.09g/t gold, 0.41% lead and 1.14% Zn
and an Inferred Mineral Resource at 2,027,900 tonnes grading 34g/t silver,
0.13g/t gold, 0.54% lead and 0.81% zinc.

In the new resource estimate, Wardrop used different parameters
  than in 2006, such that the new estimate was considered to be more robust. In
  keeping with the previously reported resource estimate, Wardrop applied a cut-off
  grade of 50g/t silver equivalent. Metal prices and recoveries used were US$9.55/oz
  and 76%, respectively, for silver, US$530/oz and 70% for gold, US$0.63/lb and
  80% for lead and US$1.00/lb and 80% for zinc.

---

- 42 -

Statistically higher grade samples were also removed by capping
  the assay data at 150g/t for silver, 3.0g/t for gold, and 4.5% for each of lead
  and zinc. Wardrop used Ordinary Kriging and Inverse Distance Squared to estimate
  the resource, with blocks of 5 metres x 5 metres x 5 metres being used for the
  three-dimensional model. Metallurgical recoveries used are the same as for the
  2006 resource estimate, which were based upon tests conducted by Silver Standard
  Resources Inc. in 1999 as part of a property review.

The effect of the higher commodity prices used in the most
recent resource estimate compared to those used in 2006 is that lower grade
material now becomes potentially economic, which thereby lowers the average
grade of the resource while increasing the tonnage. Thus, the new resource
represented an increase in tonnage of approximately 73% while the average grade
of the Indicated and Inferred Resources was now 105g/t Ag Eq and 97g/t Ag Eq,
respectively, compared to 139g/t Ag Eq in the 2006 resource. As such, the
estimated recoverable ounces of silver equivalent increased by approximately
28%.

The work to date on La Gloria and Las Palmitas resulted in a
well-defined resource that could now be modeled for extraction by open pit
mining methods. An in-house scoping study was initiated that examined basic
issues such as permitting, metallurgy, transportation, mining, milling and
construction costs, etc. While this would have laid the groundwork for later
feasibility studies, it was still the Companys objective to increase the size
of the overall project resource by drilling targets outside of La Gloria/Las
Palmitas. The North Zone and the Bulls-Eye molybdenum mineralization may have
added to the viability of the project. We advise U.S. investors that while these
terms Resource Estimate and Inferred Mineral Resource are recognized and
required under Canadian regulations, the U.S. Securities and Exchange Commission
does not recognize them. U.S. investors are cautioned not to assume that any
part of all of the mineral deposits in this category will ever be converted into
reserves.

*e.******Exploration History*

A first phase exploration program was implemented at Mapimi in
late 2006 and consisted of an airborne geophysical survey and ground induced
polarization geophysical survey follow-up; detailed geological mapping and
re-sampling of outcrops, adits and trenches; followed by a core drilling program
focused on confirming previous Coeur dAlene drilling results in the Las
Palmitas and La Gloria zones.

During February 2007, Great Panther contracted Aeroquest
Limited to fly a 550 line kilometre airborne electromagnetic (EM) and magnetic
geophysical survey over the Mapimi project. Numerous EM and magnetic targets
were detected and the interpretation of this survey, in conjunction with surface
mapping, provided a geological framework for 103 kilometres of detailed induced
polarization (I.P.) geophysics. While some of the geophysical anomalies
outlined by the airborne survey are directly related to regional geological
features, others appear to be related to known mineralization or are spatially
associated with zones of strong alteration.

The Phase II diamond drilling program, which commenced in
October 2007, tested two large coincident geological, geochemical, and
geophysical anomalies, namely the Bulls-Eye and North Zones. The program
identified semi-massive silver-lead-zinc mineralization in the North Zone that
is spatially related to the rhyolite-sediment contacts and a large zone of
molybdenum mineralization in the Bulls-Eye Zone.

To the end of 2008, a total of 12,448 metres in 60 holes have
been drilled by the Company at Mapimi. Exploration at Mapimi was suspended in
mid-2008 in order to conserve cash.

On September 16, 2009, the Company announced the termination of
its option on the Mapimi project.

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- 43 -

*f.******Total Costs Incurred to Date and All Planned Future Costs*

At the date of the termination of the option, total exploration
costs incurred at Mapimi were $5,329,000. Management determined that it was
uneconomical to continue with this project and the Company is focusing its
efforts on expanding the production and resources at its existing mines.

*g.******Source of Power and Water that can be Utilized at the Property*

The municipality of Mapimi is on an electrical power grid and
has telephone services provided by TelMex. Water and drainage systems are also
present.

*(2)*          *San Antonio Project*

*a.******Location and Accessibility*

The San Antonio Project is located 50 kilometres NNW of the Guadalupe
  y Calvo Mining District in the State of Chihuahua, Mexico and approximately
  162 kilometres S-SW of the city of Hidalgo de Parral, Chihuahua, and 265 kilometres
  SW of the city of Chihuahua. It consists of four contiguous mining concessions
  covering in the aggregate 11,946 hectares. Three of these concessions were staked
  and one (Santo Niño) was purchased and all are owned 100% by MMR.

Concession
    Size (hectares)
    Expiry DateSanto Niño
    80
    21/04/2036San Antonio
    9,447
    15/04/2051Iran
    2,184
    09/05/2055La Chiripa
    235
    03/05/2056


Road access to the San Antonio project is via paved highway
from Hidalgo de Parral to the town of Guadalupe y Calvo, a distance of 255
kilometres, and then to Baborigame via a maintained unsurfaced road, a distance
of 90 kilometres, and then via 33 kilometres of logging and ranch roads to a
small ranch in the Arroyo San Antonio near the center of the project area.
Straight line distance from Baborigame to the project area is 9 kilometres.

*b.******History*

The San Antonio prospect lies within the Guadalupe y Calvo
mining district. Earliest recorded mining activity in the region is the
discovery in 1835 of the veins in the San Juan Nepocemo area west of Baborigame.
Various Au-Ag vein deposits were subsequently discovered and commercial mining
continued without interruption until 1940. Since then, only small scale
artisanal mining has been conducted in the region. The San Antonio project lies
outside of the areas of significant mine development, and little is known of the
exploration history of the project. The numerous workings in the Arroyo San
Antonio attest to minor production from the project area.

Neither significant nor modern exploration programs are known
to have been conducted at the property. Anaconda, Barrick Gold and Hemlo Gold
made reconnaissance visits to the property in the 1990's. In the 1980's the
Consejo de Recursos Minerales conducted site specific visits to the Sary, Piedra
Verde, and Santo Niño claims. The property was visited by Robert Archer, the
President and CEO of the Company, in May of 2003. Mr. Archer collected ten
reconnaissance rock chip samples from mine workings and altered outcrops in the
Arroyo San Antonio.

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- 44 -

The property had not been subjected to exploration drilling
prior to our acquisition of the claims.

*c.******Geology and Mineralization*

Numerous epithermal veins and mineralized structural zones are
exposed in the Arroyo San Antonio. It is not clear if these structures are
faults that juxtaposed rock types, or alternatively the structures formed along
pre-existing lithologic contacts. Mineralized structures vary from 1 to 200 cm
wide. All of these mineralized structures lie within a much broader zone of
pervasive chloritization that is continuously exposed along the Arroyo San
Antonio.

Geologic and mineral occurrence maps indicate that within the
project area at least 12 mineralized structures or veins have been explored or
exploited, and numerous others of unknown extent and importance are present.
Great Panther evaluated many of these in 2004 and 2005 and established that many
were of limited potential to support an economic mining operation. Nonetheless,
their evaluation revealed important information regarding the geological setting
of the project area and allowed the Company to focus in on areas with the
greatest potential.

*d.******Mineral Resource and Mineral Reserve Estimates*

As of the date of this report, there are no known reserves on
the property and any near term field work would be exploratory in nature.

*e.******Exploration History*

The 2004-2005 exploration program at San Antonio comprised
geological mapping and sampling, prospecting, soil sampling and diamond
drilling. The objective of the program was to identify zones of continuous and
potentially economic gold and copper grades within the mineralized structures
(veins) or stockwork zones. Historical mining on these veins was limited and
their vertical and lateral extent is unknown as they have never been drilled.
Ongoing exploration work sampled the historic workings in detail, along with
numerous other structures that have been found in the area. In addition, the
large zone of stockwork and disseminated mineralization that lies between the
veins was systematically sampled in order to determine the grade and
distribution of gold and copper values as field crews continued to work their
way from north to south across the core claims. A diamond drill program which
commenced in February 2005 comprised 1,936 metres in 16 holes, and focused on
the high grade gold-copper vein system in the central part of the property.

No field work was done on the property in 2006.

In 2007, Altair Ventures, under the terms of the aforementioned
option agreement, conducted an exploration program with Great Panther as
operator. The focus of the exploration effort was to fully evaluate the numerous
gossans and alteration zones on the project using a combination of geological
mapping, rock sampling, and PIMA surveys. All three techniques, plus satellite
image analysis, aided the Company in defining priority targets for more detailed
sampling and appraisal as drill targets. Phase Two diamond drilling commenced on
the San Antonio project in November 2007. The program comprised 1,585 metres in
8 holes and tested a district scale epithermal system that has been identified
on the property.

Three drill holes within the Gossan Breccia zone, noted as a
potential high sulphidation gold system from geochemistry and PIMA alteration
studies, returned no significant assay results and detected no deeper epithermal
feeder structures. As such, it may be a remnant, thin (<50 metres thick)
rhyolitic volcanic unit with incipient alteration.

The five other drill holes demonstrated that there is excellent
  continuity of the high level structures and mineralization along strike and
  to depth, especially at San Cayetano, La Gringa, and La Gringa Norte.

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- 45 -

On surface these three vein / structures are continuous for approximately
  400 metres each and they have been followed to depths of 100 - 140 metres. Due
  to the extreme topography in this part of the project, however, these intercepts
  appear to be still too high within the mineralizing system to determine if the
  lead-zinc-silver-gold veins progress into a copper-gold zone at depth. Deeper
  drilling to test this concept may be considered.

Field work on the project was being conducted by Resource
Geosciences de Mexico, S.A. de C.V. of Hermosillo, Sonora under contract to our
Mexican subsidiary, Minera Mexicana el Rosario, S.A. de C.V.

No field work was done on the property in 2009. On February 1,
2010, Altair forfeited its option.

ITEM
4A         Unresolved Staff
Comments

None

ITEM
5            Operating
and Financial Review and Prospects

The information in this section is presented in accordance with
Canadian generally accepted accounting principles, and has been reconciled to
United States generally accepted accounting principles. The following discussion
of our financial condition and results of operations for the fiscal years ended
December 31, 2009, 2008 and 2007 should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
registration statement in accordance with Item 8 "Financial Information".

Critical Accounting Estimates

The accounting estimates believed to require the most
difficult, subjective or complex judgements, and which are the most critical to
our reporting of results of operations and financial position, are as follows:

Amortization

The Companys mineral properties and related plant and
equipment are amortized based upon estimates of useful lives not to exceed the
life of the mine. Effective October 1, 2008, the life of the Topia mine was
extended from 2 years to 7 years. Effective December 31, 2008, the life of the
Guanajato mine was extended from 2 years to 3 years. These estimates may change
in circumstances where the assets useful life changes based upon new
information.

Impairment of long-lived assets

The Company reviews and evaluates its long-lived assets,
including mineral properties, plant and equipment, for impairment when events or
changes in circumstances indicate that the related carrying amounts may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to its estimated undiscounted
future cash flows expected to be generated by the asset. Estimated cash flows
include assumptions about long-term silver, gold, lead and zinc prices, future
production levels, and future operating, capital and reclamation costs. If
carrying value exceeds estimated discounted future cash flows, an impairment
loss is recognized based on the excess of carrying value over the estimated fair
value of the asset.

Management's estimates are subject to risks and uncertainties
of changes affecting the recoverability of the Company's investment in its
mineral property, plant, equipment and mine development. Management's estimates
of these factors are based on current conditions. Nonetheless, it is reasonably
possible that in the near term, changes that could adversely affect management's
estimate of net cash flows expected to be generated from its properties could
occur which may necessitate a write-down for asset impairment.

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- 46 -

Site Restoration Costs

Upon the completion of any mining activities, the Company will
customarily be required to undertake environmental reclamation activities in
accordance with local and/or industry standards. 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
contamination, the application of laws and regulations by regulatory authorities
and changes in remediation technology. The Company continually reviews its
accrued liabilities, if any, as evidence becomes available indicating that its
remediation and reclamation liabilities may have changed. Any such increases in
costs could materially impact the future amounts charged to operations for
reclamation and remediation obligations.

Stock-based Compensation Expense

From time to time, the Company may grant share purchase options
to directors, officers, employees and service providers. The Company uses the
Black-Scholes option pricing model to estimate a value for these options. This
model, and other models which are used to value options, require inputs such as
expected volatility, expected life to exercise and interest rates. Changes to
any of these inputs could cause a significant change in the stock-based
compensation expense charged in a period.

Income Taxes

The Company uses the liability method which takes into account
the differences between financial statement treatment and tax treatment of
certain transactions, assets and liabilities. Future tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Valuation allowances are established
to reduce future tax assets when there is potential that some or all of the
assets will not be realized. Estimates of future taxable income and the
continuation of ongoing prudent tax planning arrangements have been considered
in assessing the utilization of available tax losses. Changes in circumstances
and assumptions and clarifications of uncertain tax regimes may require changes
to the valuation allowances associated with the Companys future tax
liabilities.

*A.*           *Operating Results*

Revenue for the year ended December 31, 2009 was $31.7 million,
an increase of $9.3 million or 41% as compared to 2008 and $16.2 million or
104.5% as compared to 2007. The increase from 2008 to 2009 is primarily a result
of higher production and lower smelting and refining costs. Total production for
the 2009 fiscal year of 2,202,457 Ag eq oz increased by 22% from 1,809,720 Ag eq
oz in 2008 and by 65% from 1,336,629 Ag eq oz in 2007. Smelting and refining
costs for Guanajuato were reduced substantially during the last half of the
fourth quarter of 2008 when a new customer contract was negotiated. The full
effect of the cost savings are reflected in 2009. The Company also negotiated
more favourable, open market terms for spot sales of Topias lead concentrate
during the first half of 2009. These savings were partially offset by general
decreases in metal prices. Compared to 2008, average silver, lead and zinc
prices for the year ended December 31, 2009 decreased by 3%, 18%, and 12% while
the gold price increased 12%.

For the years ended December 31, 2009, 2008 and 2007, cost of
sales was $16.8 million, $18.1 million, and $14.2 million, respectively. The
Company implemented cost reduction and mine site efficiency measures during the
fourth quarter of 2008. As a result, savings were realized from reduced mine
operating costs for the full year in fiscal 2009. On a per silver ounce basis,
costs have decreased significantly as costs were reduced and grades improved.
Earnings from mining operations increased 248% to $15.0 million for the year
ended December 31, 2009 from $4.3 million for the same period in 2008 and
increased 994% from $1.4 million for the same period in 2007.

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- 47 -

For the years ended December 31, 2009, 2008 and 2007, the total
combined cash cost per ounce was US$5.58, US$10.25 and US$11.14, respectively.
The 46% year over year decrease from 2008 to 2009 was achieved by sharply
reduced site-controlled costs and lower smelting and refining charges for
Guanajuato and Topia concentrates. The strategy to focus on higher grade ore as
well as other efficiency initiatives to reduce costs is proving to be
successful.

Amortization and depletion of mineral properties, plant and
equipment for the twelve months ended December 31, 2009 was $3.6 million,
compared to $4.3 million and $3.6 million for the same periods in 2008 and 2007,
respectively. The year over year decrease from 2008 to 2009 was due to the
extension of Topias mine life from a remaining three years to seven years at
the end of 2008.

The Company incurred mineral property exploration expenditures
of $1.6 million for the twelve months ended December 31, 2009, compared to $6.3
million and $6.8 million for the corresponding periods in 2008 and 2007,
respectively. The significant year over year decrease from 2008 to 2009 in
mineral property exploration expenditures was due to the deferral of most mine
development that was not related to immediate production, as part of the cost
containment program implemented in the fourth quarter 2008. Exploratory drilling
resumed at both Guanajuato and Topia during the third and fourth quarters of
2009.

For the years ended December 31, 2009, 2008 and 2007, general
and administrative expenses totaled $5.8 million, $6.0 million and $4.7 million,
respectively. The $0.2 million year over year decrease from 2008 to 2009 was
mainly due to $0.5 million of non-recurring costs incurred in 2008 relating to:
Value-Added Tax (VAT) recovery fees, a provision for potentially uncollectible
VAT and a true-up of 2007 audit fees. These savings were partially offset by the
payment of bonuses in the fourth quarter of 2009.

For the year ended December 31, 2009, the Company incurred
stock-based compensation expense of $2.4 million. The Company granted in the
fourth quarter 855,000 incentive stock options to consultants, staff and a
director at an exercise price of $0.90. During the third quarter 2009, the
Company issued 1,300,000 stock options granted to employees, consultants,
directors and officers with an exercise price of $0.70, resulting in a $0.7
million stock-based compensation expense. During the first quarter of 2009, the
Company recorded $1.3 million in stock-based compensation expense as a result of
granting 6,222,700 incentive stock options to employees, consultants, directors
and officers, of which 5,912,700 are exercisable at a price of $0.45 per share
and 310,000 are exercisable at a price of $0.52 per share. The Company cancelled
4,556,700 incentive stock options exercisable at $0.90 and $1.42 per share which
had been granted in prior years.

During the third quarter of 2009, the Company repaid its $2.02
million, 8% per annum, unsecured convertible loan note by issuing 3,740,741
common shares at $0.54 per share. This transaction resulted in $0.05 million
being charged as debt settlement expense to the income statement and $1.6
million being recorded against retained earnings for settlement of the
convertible debt.

The Company recorded a foreign exchange loss of $0.4 million
for the fiscal year 2009. For the twelve months ended December 31, 2008 and
2007, the Company recorded a foreign exchange gain of $0.1 million a foreign
exchange loss of $1.4 million, respectively. The foreign exchange loss for the
fiscal year 2009 is mainly a result of the general appreciation of the Canadian
dollar against both the United States dollar and the Mexican peso during the
year, whereas the Canadian dollar weakened against both currencies in 2008.

For the year ended December 31, 2009, the Company has a net loss
  of $0.9 million compared to a net loss of $13.8 million for the year ended December
  31, 2008 and a net loss of $19.7 million for the year ended December 31, 2007.
  On a year over year basis, earnings from mining operations improved by $10.7
  million during 2009, which was a result of the Companys efforts to implement
  mine site efficiencies, increase production, and improve grades. The Company
  realized $4.7 million in year over year savings as a result of scaling down
  its exploration program in response to poor economic conditions in the latter
  half of 2008 and into the first part of 2009.

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- 48 -

*B.*          
  *Liquidity and Capital Resources*

At December 31, 2009, the Company had working capital of
$18,152,744 and cash and cash equivalents of $13,312,091 compared to working
capital of $1,320,087 and cash and cash equivalents of $606,244 at December 31,
2008. This increase in liquidity in 2009 resulted from a $13.9 million increase
in cash generated by operating activities, before changes in non-cash working
capital, to $6.4 million in 2009 from cash used by operating activities of $7.4
million in 2008. This was partially offset by a decrease in non-cash operating
working capital of $9.3 million. Cash flow from financing activities increased
by $12.8 million primarily due to a financing completed in November 2009.

Great Panther plans to produce 2.6 million Ag eq oz in 2010 and
invest $13 million in capital expenditures and $6.3 million in mineral property
exploration expenditures. These investments in 2010 will include the purchase of
new, more efficient mobile mining equipment, plant upgrades, significantly
furthering mine development and ramping up exploratory drilling, and will make
good progress towards the goal of increasing production to 3.8 million Ag eq oz
and growing resources to 40 million Ag eq oz by 2012. Management anticipates
that cash flow generated from mining activities along with working capital will
be sufficient to fund the Companys operations without requiring any additional
capital during the next twelve months.

At the date of this report, the Company had no material
off-balance sheet arrangements such as obligations under guarantee contracts,
contingent interest in assets transferred to any unconsolidated entity,
obligations under certain derivative instruments, or obligation under a material
variable interest held in any unconsolidated entity that provides financing,
liquidity, market or credit risk.

Operating Activities

For the year ended December 31, 2009, cash flow provided by
operating activities was $1.3 million. This compares to cash flow used in
operating activities of $3.3 million in 2008. Before changes in non-cash working
capital, the Company generated $6.4 million in operating cash flow during 2009,
compared to cash out flow of $7.4 million in 2008. The year over year
improvement is largely attributable to higher revenue from increased production,
savings from mine site efficiencies, reduced smelting costs, reduced exploration
and general and administrative expenses.

Changes in non-cash operating working capital decreased by $9.3
million during 2009 as accounts payables were brought current and deposits on
equipment orders were made. Higher sales at the end of December 2009 resulted in
increased trade accounts receivable compared to December 31, 2008, all of which
has subsequently been collected.

Investing Activities

For the year ended December 31, 2009, the Company had a net
cash outflow from investing activities for the development of mineral properties
and purchase of capital assets of $2.4 million, of which $0.6 million was
financed through a capital lease and a promissory note, compared to $2.7 million
in 2008, of which $0.8 million was financed through a capital lease. This
compares to the previously anticipated capital expenditures of $2.1 million.
Great Panther significantly curtailed capital expenditures beginning mid-2008 as
economy worsened. The Company started incurring capital expenditures in the
fourth quarter 2009 as the three-year growth strategy commenced. The Company
plans to invest $13 million in capital expenditures in 2010.

---

- 49 -

Financing Activities

Cash flows from financing activities were $13.2 million during
2009 compared to $0.3 million in 2008. Proceeds received from equity financings
and the exercise of warrants and options totaling $13.5 million were partially
offset by a $0.4 million repayment of a capital lease obligation.

For the year ended December 31, 2009, the Company raised
proceeds of $0.5 million through the exercise of warrants and $0.7 million
through the exercise of options.

On January 23, 2009, the Company closed a private placement
offering of 5,125,000 units of the Company ("Units") at a price of $0.20 per
Unit to raise gross proceeds of $1,025,000. The Company received $85,000 of the
gross proceeds in 2008. Each Unit comprised one common share and one-half of one
non-transferable share purchase warrant. The securities issued in the private
placement were subject to a hold period that expired May 24, 2009. Each whole
warrant entitled the holder, upon exercise, to acquire one common share of the
Company at a price of $0.35 until January 22, 2010. The financing proceeds were
primarily used for additional working capital required in the beginning of 2009
at the Company's 100% owned Guanajuato and Topia Mines in Mexico.

On September 24, 2009, the Company repaid its $2.02 million, 8%
interest per annum, unsecured convertible loan note due March 9, 2010 by the
issuance of 3,740,741 fully paid common shares of the Company at $0.54 per
common share.

On November 17, 2009, the Company closed a short form
prospectus equity offering for gross proceeds of $12,332,250 and paid cash
issuance costs of $928,714. The common shares issued under the terms of the
short form prospectus were free trading from the closing date. The offering
consisted of 17,617,500 units at $0.70 per unit and each unit comprised one
common share and one-half of one transferable share purchase warrant, each whole
warrant exercisable to purchase one common share for a period of 24 months from
the closing date, at an exercise price of $0.90. The agents received cash
commission of 6% of the proceeds and 963,150 non-transferable Agents warrants
equal to 6% of the units sold, net of sales arranged by the Company. Each
Agents' warrant is exercisable to purchase one common share for a period of 24
month from the closing date at a price of $0.90 per common share. The Company
intends to use the net proceeds of this offering to accelerate exploration
drilling, mine development, the acquisition of new underground equipment, mine
infrastructure refurbishment including power distribution at Guanajuato and
plant equipment replacement and upgrades at both Topia and Guanajuato. As well,
the proceeds will be used for general working capital purposes and potential
acquisition activity.

---

- 50 -

Reconciliation between Canadian and United States
Generally Accepted Accounting Principles and United States Accounting
Pronouncements

The effect of the measurement differences between Canadian GAAP
and US GAAP on the consolidated balance sheets is summarized as follows:

|                                                                |  | December
      31, 2009 |   |  | December
      31, 2008 |  
|--------------------------------------------------------------- |  | ----------------------- | - |  | ----------------------- | -
|                                                                |  |                         |   |  |                         |  
|                                                                |  | Canadian                |   |  | US                      |  
|                                                                |  | GAAP                    |   |  | GAAP                    |  
|                                                                |  |                         |   |  |                         |  
|Convertible note payable (note (a)(iv))                         |  | 3,356,397               |   |  | 4,050,000               |  
|                                                                |  |                         |   |  |                         |  
|Share capital (note (a)(iii) and note (a)(vii))                 |  | 75,910,220              |   |  | 79,625,551              |  
|                                                                |  |                         |   |  |                         |  
|Contributed surplus (note (a)(iii) and note
      (a)(vii))     |  | 10,268,043              |   |  | 12,778,917              |  
|                                                                |  |                         |   |  |                         |  
|Equity component of convertible loan notes
      (note (a)(iv)) |  | 1,563,000               |   |  | -                       |  
|                                                                |  |                         |   |  |                         |  
|Deficit                                                         |  | (60,862,380             | ) |  | (65,735,276             | )

|1 | Loss for the year was revised for the effect of an
      adjustment to future income taxes that was not considered significant to
      be recorded last year.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

Share capital and contributed surplus:

|                                                                           |   | 2009       |  |   | 2008       | 
|-------------------------------------------------------------------------- | - | ---------- |  | - | ---------- | 
|                                                                           |   |            |  |   |            | 
|Share capital and contributed surplus,
      under Canadian GAAP           | $ | 86,178,263 |  | $ | 65,590,362 | 
|                                                                           |   |            |  |   |            | 
|Adjustment for stock-based compensation for
      employees (note (a)(ii)) |   | 15,000     |  |   | 15,000     | 
|                                                                           |   |            |  |   |            | 
|Reversal of recapitalization of deficit (note (a)(iii))                    |   | 6,211,205  |  |   | 6,211,205  | 
|                                                                           |   |            |  |   |            | 
|Share capital and contributed surplus, under US GAAP                       | $ | 92,404,468 |  | $ | 71,816,567 | 

Deficit:

|                                                                                                                 |   | 2009        |   |   | 2008        |  
|---------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                                                                 |   |             |   |   | (revised) 1 |  
|                                                                                                                 |   |             |   |   |             |  
|Deficit, under Canadian GAAP                                                                                     | $ | (60,862,380 | ) | $ | (58,388,865 | )
|                                                                                                                 |   |             |   |   |             |  
|Adjustment for stock-based compensation for
      employees (note (a)(ii))                                       |   | (15,000     | ) |   | (15,000     | )
|                                                                                                                 |   |             |   |   |             |  
|Reversal of recapitalization of deficit
      (note (a)(iii))                                                    |   | (6,211,205  | ) |   | (6,211,205  | )
|                                                                                                                 |   |             |   |   |             |  
|Interest accreted on convertible loan note
      (note (a)(iv))                                                  |   | 1,778,445   |   |   | 1,150,690   |  
|                                                                                                                 |   |             |   |   |             |  
|Reversal of incremental fair value of
      liability component due to early conversion of convertible loan note |   | 51,165      |   |   | -           |  
|                                                                                                                 |   |             |   |   |             |  
|Reversal of premium of the equity component
      upon early conversion of the convertible loan note             |   | 1,606,664   |   |   | -           |  
|                                                                                                                 |   |             |   |   |             |  
|Effect of induced early conversion of
      convertible loan note, under US GAAP (note (a)(iv))                  |   | (1,657,829  | ) |   | -           |  
|                                                                                                                 |   |             |   |   |             |  
|Amortization of option payments (note (a)(v))                                                                    |   | (425,136    | ) |   | -           |  
|                                                                                                                 |   |             |   |   |             |  
|Deficit, under US GAAP                                                                                           | $ | (65,735,276 | ) | $ | (63,464,380 | )

|1 | Loss for the year was revised for the effect of an
      adjustment to future income taxes that was not considered significant to
      be recorded last year.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 51 -

Income (loss) and earnings (loss) per share:

|                                                                                                                 |   | 2009       |   |   | 2008        |   |   | 2007        |  
|---------------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ----------- | - | - | ----------- | -
|                                                                                                                 |   |            |   |   | (revised) 1 |   |   |             |  
|                                                                                                                 |   |            |   |   |             |   |   |             |  
|Loss for the year, under Canadian GAAP                                                                           | $ | (866,851   | ) | $ | (13,760,826 | ) | $ | (19,700,861 | )
|                                                                                                                 |   |            |   |   |             |   |   |             |  
|Reversal of incremental fair value of
      liability component due to early conversion of convertible loan note |   | 51,165     |   |   | -           |   |   | -           |  
|                                                                                                                 |   |            |   |   |             |   |   |             |  
|Effect of induced early conversion of
      convertible loan note, under US GAAP note (a)(iv)                    |   | (1,657,829 | ) |   | -           |   |   | -           |  
|                                                                                                                 |   |            |   |   |             |   |   |             |  
|Interest accreted on convertible loan note
      (note (a)(iv))                                                  |   | 627,755    |   |   | 623,079     |   |   | 377,812     |  
|                                                                                                                 |   |            |   |   |             |   |   |             |  
|Amortization of option payments (note (a)(v))                                                                    |   | (425,136   | ) |   | -           |   |   | -           |  
|                                                                                                                 |   |            |   |   |             |   |   |             |  
|Income (loss) for the year, under US GAAP                                                                        | $ | (2,270,896 | ) | $ | (13,137,747 | ) | $ | (19,323,049 | )
|                                                                                                                 |   |            |   |   |             |   |   |             |  
|Basic and diluted loss per share, under US
      GAAP                                                            | $ | (0.03      | ) | $ | (0.16       | ) | $ | (0.27       | )
|                                                                                                                 |   |            |   |   |             |   |   |             |  
|Weighted average number of common shares, basic and
      diluted                                                |   | 90,210,438 |   |   | 81,321,733  |   |   | 72,227,455  |  

|1 | Loss for the year was revised for the effect of an
      adjustment to future income taxes that was not considered significant to
      be recorded last year.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | These consolidated financial statements have been
      prepared in accordance with Canadian generally accepted accounting
      principles (Canadian GAAP). A description of US GAAP and practices
      prescribed by the US Securities and Exchange Commission (collectively US
      GAAP) that result in measurement differences from Canadian GAAP are as
      follows:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i) | Income taxes:
| | --- | -------------

---

- 52 -

As described in note 2(n), the Company
follows the asset and liability method of accounting for income taxes which is
also in accordance with Statement of Financial Accounting Standards Board
(FASB) No. 109 Accounting for Income Taxes (codified within ASC 740). Under
Canadian GAAP, future tax assets and liabilities are recorded at substantively
enacted tax rates. Under US GAAP, deferred tax assets and liabilities are
recorded at enacted tax rates. In 2009, there were no differences between
enacted and substantively enacted rates. For each of the years ended December
31, 2009 and 2008, net future tax assets are fully offset by a valuation
allowance as it is not more likely than not that the future tax assets would be
realized. As a result, the application of US GAAP in accounting for income taxes
does not result in any material measurement differences from Canadian GAAP for
future tax assets or liabilities.

In June 2006, FASB issued Financial
Interpretation No. 48, Accounting for Uncertainty in Income Taxes (codified
within ASC 740). This interpretation provides guidance on recognition and
measurement of uncertainties in income taxes and is effective for fiscal years
beginning after December 15, 2006. For US GAAP purposes, no adjustment was
required to the consolidated financial statements as a result of the adoption of
this interpretation.

| | (ii)  | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | The Company accounts for stock options at fair value
      under Canadian GAAP commencing on January 1, 2002 as described in note
      2(i). Statement of Financial Accounting Standards Board No. 123,
      Accounting for Stock-Based Compensation (SFAS 123) became effective for US
      GAAP purposes for fiscal years beginning after December 15,
1995.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | For fiscal years ending prior to December 31, 2003, as
      allowed by SFAS 123, the Company followed the intrinsic value principles
      of APB Opinion 25, Accounting for Stock Issued to Employees and related
      interpretations, in measuring compensation expense for employee options.
      Under the intrinsic value method, compensation cost is the excess, if any,
      of the quoted market value of the stock at the measurement date, which is
      generally the grant date, over the amount an employee must pay to acquire
      the stock. The application of APB 25 resulted in compensation expense of
      $15,000 being recognized for employees in the year ended December 31, 2001
      under US GAAP and no similar expense was required under Canadian GAAP.
      Effective January 1, 2003, the Company adopted the fair value recognition
      provisions of SFAS 123 whereby the fair value of the stock options granted
      to employees was expensed.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | Effective January 1, 2006, the Company adopted Statement
      of Financial Accounting Standard (SFAS 123R) Share Based Payment using the
      modified prospective method for all employee awards granted, modified or
      settled after the effective date using the fair value measurement method
      of this standard (codified within ASC 718). For unvested employee equity
      awards as of the effective date, compensation is to be recognized based
      upon the grant date fair value determined under SFAS 123, adjusted to
      reflect the estimated impact of forfeitures. Upon adoption of SFAS 123R,
      there was no cumulative effect adjustment required. Non-employee awards
      are accounted for under the fair value method under both Canadian and US
      GAAP.                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | There were no significant differences in accounting for
      stock-based compensation between Canadian GAAP and US GAAP during the
      three years ended December 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iii) | Elimination of deficit:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---

- 53 -

During the year ended December 31,
1999, the Company reduced its paid-up capital by $6,211,205 to eliminate the
deficit at March 31, 1999. In order to effect these reductions, it was not
necessary to revalue the assets of the Company. As a consequence, all conditions
under the US GAAP quasi-reorganization rules were not met and the
recapitalization of the deficit would not be recorded.

| | (iv)  | Convertible loan notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | Under Canadian GAAP, the proceeds of the financing
      allocated to the estimated fair value of the conversion feature of the
      debt are recorded as an equity component of the debt (note 9(b)). Under US
      GAAP, a value is assigned to the conversion feature only if the effective
      conversion rate is less than the market price of the common stock at the
      date of issuance, which it was not. Accordingly, no value would be
      assigned under US GAAP to the conversion feature on the convertible notes
      issued in 2006 and 2007.                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | Applying US GAAP, the convertible notes at December 31,
      2009 would be recorded as a liability at face value of $4,050,000 and no
      value would be assigned to the equity component of the convertible notes.
      In addition, accretion on the calculated debt discounts on the convertible
      notes under Canadian GAAP of $627,755 for the year ended December 31, 2009
      (2008 - $623,079, 2007 - $377,812) would not have been recorded, reducing
      interest expense by an equivalent amount.                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | During the year ended December 31, 2009, the Company
      induced the early conversion of the $2,002,000 convertible loan note. In
      accordance with Canadian GAAP, the Company accounted for the early
      conversion as described in (note 9(b)(i)). Under US GAAP, the Company
      recognized an expense of $1,657,829 which is the fair value of the common
      shares transferred in excess of the fair value of the common shares
      issuable pursuant to the original conversion terms.                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (v)   | Mineral properties, plant, and equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | Production facilities and mineral property costs are
      currently amortized over the estimated remaining life of mine of 3 years
      for Guanajuato and 7 years for Topia. Under US GAAP, the Company expects
      to use the units-of-production method based on reserves as defined under
      SEC Industry Guide 7 once such reserve amounts are determinable.                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | Under Canadian GAAP, periodic option payments related to
      mineral properties are expensed prior to commercial feasibility of mining
      operations being established. Under US GAAP, periodic option payments are
      capitalized when such payments are associated with the acquisition of
      mineral rights and amortized over their respective option term. As there
      were no option payments made to the Mapimi project (note 8) during the
      year, a measurement difference of $425,136 resulted from the amortization
      of prior years option payments. There is no material measurement
      difference for the comparative periods.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (vi)  | Statement of Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       | In the statement of cash flows, the presentation of the
      cash flows from operating activities includes an intermediate total which
      is not permitted under US GAAP, ASC 230, Statement of Cash
Flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (vii) | Share capital and contributed
surplus                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---

- 54 -

Under Canadian GAAP, the Company
allocates the net proceeds from equity financings containing common shares and
share purchase warrants to share capital (note 11(b). Under US GAAP, the net
proceeds from the issuance of units are allocated between common shares and
share purchase warrants contained in such units, based on their respective fair
values. Accordingly, the amount of $2,495,874, being the portion of the net
proceeds allocated to these warrants, is recorded to contributed surplus under
US GAAP.

| | (b) | Recently adopted United States accounting
      pronouncements:
| | --- | ---------------------------------------------------------------
| |     |                                                                
| |     | (i)                                                            
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     |                                                                
| |     | (ii)                                                           
| |     |                                                                
| |     | (iii)                                                          
| |     |                                                                
| |     | (iv)                                                           

---

- 55 -

The guidance specifies that issuers
  of such instruments should separately account for the liability and equity components
  of those instruments by allocating the proceeds from issuance between the liability
  component and the embedded conversion option. The Company adopted this statement
  on January 1, 2009 and there was no impact on the financial position or operational
  results of the Company.

| | (v)   | In June 2008, the FASB Task Force reached a consensus on
      EITF Issue No. 07-5 which provides guidance on determining whether an
      instrument (or embedded derivative) is indexed to an entitys own stock
      (codified within ASC 815). The Company adopted this EITF on January 1,
      2009 and there was no impact on the financial position and operational
      results of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (vi)  | In June 2009, the FASB issued Statement No. 168, The FASB
      Accounting Standards Codification and the Hierarchy of GAAP (codified
      within ASC 105). The Accounting Standards Codification (ASC) establishes
      the sources of accounting principles and the framework for selecting
      principles used in the preparation of financial statements of non-
      governmental entities presented in conformity with US GAAP. The statement
      establishes two levels of GAAP: authoritative and non-authoritative. An
      entity must first consider authoritative GAAP for similar transactions or
      events, and then consider non-authoritative guidance from other sources.
      The adoption of the ASC did not have an impact on the Companys
      consolidated financial statements.                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (vii) | In June 2009, the FASB issued general standards of
      accounting for, and disclosure of, events that occur after the balance
      sheet date but before the financial statements are issued or are available
      to be issued (codified within ASC 855). The update sets forth: (a) the
      period after the balance sheet date during which management of a reporting
      entity should evaluate events or transactions that may occur for potential
      recognition or disclosure in the financial statements; (b) the
      circumstances under which an entity should recognize events or
      transactions occurring after the balance sheet date in its financial
      statements; and (c) the disclosures that an entity should make about
      events or transactions that occurred after the balance sheet date. The
      adoption of this standard had no impact on the Companys financial
      position, results of operations or cash flows. Please refer to note 20 for
      the subsequent events note disclosure.

| | (c) | Recently issued United States accounting
      pronouncement:                                                                                                                                                                                                                                                                               
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                             
| |     | (i)                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                             
| | (d) | International Financial Reporting Standards
    (IFRS):                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                             
| |     | In 2006, the Canadian Accounting Standards Board ("AcSB")
        published a new strategic plan that will significantly affect financial
        reporting requirements for Canadian companies. The AcSB strategic plan
        outlines the convergence of Canadian GAAP with IFRS over an expected five
        year transitional period.

---

- 56 -

In February 2008, the AcSB announced
  that 2011 is the changeover date for publicly-listed companies to use IFRS,
  replacing Canada's own GAAP. The transition date is for interim and annual financial
  statements relating to fiscal years beginning on or after January 1, 2011. The
  transition date of January 1, 2011 will require the restatement for comparative
  purposes of amounts reported by the Company for the year ended December 31,
  2010 and restatement of the opening balance sheet as at January 1, 2010.

The execution of the Companys IFRS
conversion plan is underway, including the evaluation of the financial impact
upon IFRS adoption, development of IFRS accounting policies, and redesign of
business processes. The Company anticipates there will be changes in accounting
policies and these changes may materially impact our financial statements but
the impact cannot be reasonably estimated at this time. The Company does
anticipate a significant increase in disclosure resulting from the adoption of
IFRS and is continuing to assess the level of disclosure required as well as
systems changes that may be necessary to gather and process the required
information.

Our planned transition to IFRS and the
conversion project consists of three phases: (i) Planning and Scoping, (ii)
Detailed Assessment, Conversion Planning and Development, and (iii)
Implementation, Parallel Reporting and Review.

Phase One: Planning and Scoping, which
involves project planning and identification of differences between current
Canadian GAAP and IFRS, has been completed. The identified areas of accounting
differences of highest potential impact to the Company, based on existing IFRS
are impairment of assets, asset retirement obligations, property plant and
equipment, exploration and evaluation expenditures, functional currency and
initial adoption of IFRS under the provisions of IFRS 1 First-Time Adoption of
IFRS (IFRS 1).

Phase Two: Detailed Assessment,
Conversion Planning and Development involves detailed diagnostics and evaluation
of the financial impacts of various options and alternative methodologies
available under IFRS; identification and design of operational and financial
business processes; initial staff training; analysis of IFRS 1 optional
exemptions and mandatory exceptions to the general requirement for full
retrospective application upon transition to IFRS; summarization of 2011 IFRS
disclosure requirements; and development of required solutions to address
identified issues. The Company is currently evaluating and finalizing IFRS 1
elections, developing accounting policies, redesigning business processes and
considering the impact on information systems. To assist in this process, the
Company has engaged consultants with extensive knowledge and experience with
IFRS conversions.

To date, the Company has analyzed the
functional currencies of its consolidated entities, identification of cash
generating units, componentization of property, plant and equipment and
accounting policy choices for exploration and evaluation expenditures. The
Company has reached preliminary conclusions on the following IFRS 1 optional
elections: business combinations, fair value as deemed cost election for
property, plant and equipment, cumulative translation differences, share-based
payment transactions and decommissioning liabilities. These conclusions are
pending the Board of Directors approval. The Company has also begun preparing
pro-forma January 1, 2010 financial statements including notes. New accounting
policies are presently being drafted.

Phase Three: Implementation, Parallel
Reporting and Review, expected to commence in mid 2010, will involve the
execution of changes to information systems and business processes; completion
of formal authorization processes to approve recommended accounting policy
changes; and further training programs across the Companys finance and other
affected areas, as necessary. It will culminate in the collection of financial
information necessary to compile IFRS-compliant financial statements and
reconciliations; embedding of IFRS in business processes; and, audit committee
approval of IFRS-compliant financial statements.

---

- 57 -

*C.*          
  *Research and Development*

We do not currently, and did not previously, have research and
development policies in place. Over the past three fiscal years, we spent
approximately $250,000 on due diligence for various other mining properties.

*D.*           *Trend Information*

Our business is mining of precious metals deposits, principally
gold and silver, so the price of these commodities has a direct impact on our
prospects for success and our ability to raise capital. The recent trend for the
price of gold and silver has been positive and has remained steady at relatively
high historical prices. Management believes that the current trend will continue
for the foreseeable future. History has shown, however, that there can be no
such assurances.

*E.*          
*Off-balance Sheet Arrangements*

We do not have any off-balance sheet arrangements.

*F.*          
*Tabular Disclosure of Contractual Obligations*

The following table outlines the contractual obligations of the
Company at December 31, 2009:

Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    After 5 years
    
    
    TotalLong-term debt 1
    $
    457,000
    
    $
    4,359,000
    
    $
    -
    
    $
    -
    
    $
    4,819,000Capital lease obligations
    
    846,000
    
    
    69,000
    
    
    -
    
    
    -
    
    
    915,000Operating leases
    
    160,000
    
    
    284,000
    
    
    93,000
    
    
    -
    
    
    537,000Purchase obligations
      2
    
    5,018,000
    
    
    729,000
    
    
    -
    
    
    -
    
    
    5,747,000Other long-term obligations
    
    -
    
    
    1,114,000
    
    
    405,000
    
    
    2,006,000
    
    
    3,525,000Total obligations
    $
    6,481,000
    
    $
    6,555,000
    
    $
    498,000
    
    $
    2,006,000
    
    $
    15,540,000


|1 | Long term debt includes convertible loan notes, which may
      be converted into common shares of the Company at the holders option at
      any time, and a promissory note.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                
|2 | Purchase obligations include commitments for consulting,
      laboratory, drilling, and equipment purchases.                                                                  

*G.*           *Safe Harbor*

Not applicable.

ITEM
6            
 Directors, Senior Management and Employees

*A.*          
*Directors, Officers and Senior Management*

The information below sets forth the names and business
experience of each of our directors, officers and senior management, as of the
date hereof:

---

- 58 -

Name
    Present Position Great Panther
    Present Position Minera Mexicana el
      Rosario
    Present Position Alberta
      Subsidiary
    Present Position Metalicos de
      Durango
    Present Position Minera de Villa
      SecaKaare G. Foy
    Executive Chairman, Director
    President, Director
    Director
    President, Director
    President, DirectorRobert A. Archer
    President, CEO, Director
    Secretary, Director
    n/a
    Secretary, Director
    Secretary, DirectorMalcolm A. Burne
    Director
    n/a
    Director
    n/a
    n/aJohn T. Kopcheff
    Director
    n/a
    n/a
    n/a
    n/aMartin B. Carsky
    Director
    n/a
    n/a
    n/a
    n/aWendy M. Ratcliffe
    Corporate Secretary
    n/a
    n/a
    n/a
    n/aFrancisco Ramos Sanchez
    Vice President - Business Development
    Director
    n/a
    Director
    DirectorRobert Brown
    Vice President - Exploration
    n/a
    n/a
    n/a
    n/aSergio Rios Martinez
    Vice President - Corporate Relations
    n/a
    n/a
    n/a
    n/aCharles Brown
    Chief Operating Officer
    Chief Operating Officer
    n/a
    Chief Operating Officer
    Chief Operating OfficerRaakel Iskanius
    Chief Financial Officer
    Chief Financial Officer
    Chief Financial Officer
    Chief Financial Officer
    Chief Financial Officer


Business Experience, Function and Area of Experience

Kaare G. Foy

As our Executive Chairman and a director, Mr. Foy is
responsible for the financial and corporate management and supervision of the
affairs and business of our Company and our subsidiaries.

Following graduation from Monash University in Australia, Mr.
Foy became an Associate of the Australian Society of Accountants and a Member of
the Australian Institute of Directors. In 1995, he emigrated to reside
permanently in Canada. For most of his career, he has specialized in company
"turnarounds," and has more than 30 years of experience serving on the boards of
publicly listed companies in Australia, Canada and the United Kingdom, including
Loscam Materials Handling Limited in Australia, and Greenchip Investments PLC in
the United Kingdom.

Mr. Foy is also Executive Chairman and a director of Cangold
Limited, the President of Oceanic Management Limited, and a director of Golden
Prospect Precious Metals Limited, a CISX-listed company.

Robert A. Archer

As our President, Chief Executive Officer and a director, Mr.
Archer is responsible for the day-to-day operations of our Company and for the
development of our strategic direction. He is also responsible for the
management and supervision of the affairs and business in Mexico.

---

- 59 -

Mr. Archer has more than 30 years experience working for mining
companies throughout North America, including Newmont Exploration of Canada
Ltd., Rio Algom Exploration Inc., Placer Dome Canada Ltd. and Noranda
Exploration Inc. He also served as President of Consolidated Magna Ventures Ltd.

Mr. Archer is the President of R. A. Archer & Associates
and Platoro Resource Corp. He also serves as President and Chief Executive
Officer and is a director of Cangold Limited, a company publicly listed on the
TSX Venture Exchange. He is also a non-executive director of Altair Ventures
Incorporated, a company publicly listed on the TSX Venture Exchange.

Malcolm A. Burne

Mr. Burne was our Chairman, President and Chief Executive
Officer from June 3, 1987 until April 27, 2004. Mr. Burne has been a director
since June 3, 1987. As a non-executive director, he is also a member of our
Audit Committee.

A self-employed business banker for many years, and formerly
Executive Chairman of the Australian Bullion Company Pty. Ltd., Malcolm Burne is
also a director of the following public companies: Jubilee Platinum PLC, Cangold
Limited, Golden Prospect Precious Metals Limited, African Aura Mining Inc.,
Community Watch PLC, Far East Resources Limited, Rivington Steel Holdings
Limited, The Venture Capital Exchange Limited, and West End TST Limited, a
publicly listed mineral investments and gold fund company.

Mr. Burne is an independent director.

John T. Kopcheff

Mr. Kopcheff has been a director of our Company since August
2001. As a non-executive director, Mr. Kopcheff is the Chairman of the
Compensation Committee, and until February 12, 2009, he was the Chairman of our
Audit Committee, at which time he stepped down and he is now a member of our
Audit Committee.

He is Managing Director of Victoria Petroleum NL, an oil and
gas company publicly listed on the main board of the Australian Stock Exchange,
and a non-executive director of Greenearth Energy Limited.

Mr. Kopcheff is an independent director.

Martin B. Carsky

Mr. Carsky was appointed director of our Company on February 9,
2009, at which time he was also appointed to the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee. On
February 12, 2009, he was appointed Chairman of the Audit Committee.

He is an experienced financial executive with extensive
experience in capital markets, mergers and acquisitions, restructuring, and
corporate governance. He is the CEO of CON-SPACE Communications Ltd. a member of
the Savox Group of Companies. In addition to Great Panther, he is currently a
director and the Chairman of the Audit Committee of Pacific Safety Products
Inc., Amato Exploration Ltd., and Cangold Limited. Mr. Carsky holds a Bachelor
of Science degree from the University of British Columbia in Vancouver, British
Columbia and holds the designation Chartered Accountant.

Mr. Carsky is an independent director.

---

- 60 -

Wendy Ratcliffe

Ms. Ratcliffe has been our Corporate Secretary since August
  2001. She is responsible for making all necessary regulatory filings for our
  Company and its subsidiaries. Ms. Ratcliffe is also Corporate Secretary of Cangold
  Limited, a company publicly listed on the TSX Venture Exchange.

Ing. Francisco Ramos Sanchez

Ing. Francisco Ramos Sanchez was appointed as Vice President of
Business Development in November 2007. He is responsible for seeking out new
business opportunities for Great Panther. He was formerly Vice President of
Operations from April 2004 through November 2007.

Prior to that, Ing. Ramos was the Vice President, Operations of
our subsidiary MMR, since June 1998. With more than 30 years of experience in
the mining industry, Ing. Ramos is a Mexican mining engineer and metallurgist
based in Queretaro, Mexico. He obtained a Master's Degree in Mining Engineering
from the University of Guanajuato and has worked with senior mining companies
such as Peñoles, IMMSA and Minera Autlan. He has consulted for a number of
junior to mid-size companies in Canada, Mexico and the United States. He is also
the general director of Minco Ingenieria y Construcciones de Queretaro, S. de
R.L. de C.V. and Vice President of Operations of Cangold Limited.

Robert Brown

Mr. Brown has been our Vice President, Exploration since April
30, 2004. He is responsible for overseeing all exploration activities undertaken
by our Company, and has particular experience in the immediate area of our
Company's projects in the Sierra Madre Region of Mexico.

Mr. Brown is a Professional Engineer with a degree in
Engineering Geology from Queen's University. His 30 years of experience in the
mining industry includes 15 years with Lac Minerals in Canada, culminating in
the position of Exploration Manager. For more than 15 years, he has held senior
management positions in the junior sector, working on projects throughout the
Americas, Eastern Europe and Indonesia, primarily in gold and silver
exploration. He is also a director of Cangold Limited and the President and a
director of Finlay Minerals Limited.

Charles Brown

Mr. Brown has been our Chief Operating Officer since August
2007. He is responsible for overseeing aspects of all mines relating to mining
and metallurgy. He is a seasoned professional with more than 30 years experience
successfully operating and developing mines both in Canada and internationally,
from small gold mines in Ontario and Venezuela to being Managing Director of
Tara Mines Ltd in Ireland, where he was responsible for one of the world's
largest underground zinc mines.

Prior to joining Great Panther, he was the Project Manager for
Newgold Inc. during its underground exploration and development program, leading
to the completion of a positive feasibility study.

Mr. Brown graduated from Nottingham University, U.K. with an
honours degree in Mining Engineering.

Raakel S. Iskanius

Ms. Iskanius has been our Chief Financial Officer since May
2007. As our CFO, Ms. Iskanius is responsible for all aspects of the Company's
financial management, including financial reporting, analysis of operations and
regulatory compliance. Ms. Iskanius has more than 19 years of experience as a
finance professional with the vast majority of her career spent in natural gas
utility and multi-branch sectors. A Chartered Accountant, Ms. Iskanius has
worked for companies across North America including Terasen Gas Inc., KPMG and
The Loewen Group Inc.

---

- 61 -

Ms. Iskanius qualified as a Certified General Accountant in
1995 and received her Chartered Accountant designation in 1999. Ms. Iskanius is
also the Chief Financial Officer of Cangold Limited, a company publicly listed
on the TSX Venture Exchange.

Sergio Rios Martinez

Initially a market research analyst and then a financial
planning specialist, Sergio Rios was Mexico's Deputy Trade Commissioner to the
United Kingdom in 1989, before becoming the Senior Trade Commissioner in The
Hague from 1999 to 2001, in charge of more than ten countries. Most recently, he
was the Senior Trade Commissioner for Mexico in Vancouver, Canada from 2001
until mid-2008, in charge of western Canada and the Pacific north-western USA.

Family Relationships

There are no family relationships between any of the persons
named above.

Other Relationships

There are no arrangements or understandings between any major
shareholder, customer, supplier or others, pursuant to which any of the
above-named persons were selected as directors or members of senior management.

*B.*          
  *Compensation*

Other than as set forth in the table below, none of our
executive officers was paid or earned compensation for performing his duties
during the fiscal year ended December 31, 2009. The value of perquisites and
other personal benefits, securities and property for the executive officers that
do not exceed the lesser of $50,000 or 10% of the total of the annual salary and
bonus are not reported herein.

During our last full financial year end, the following persons
were or are our directors and executive officers:

|Name                    | Principal Position                                                    | From                                   | To                       
|----------------------- | --------------------------------------------------------------------- | -------------------------------------- | -------------------------
|Robert A. Archer        | President and
      Chief Executive Officer Director                  | April 27, 2004 April 27,
      2004    | Present Present          
|Malcolm A. Burne        | Director                                                              | June 3, 1987                           | Present                  
|Kaare G. Foy            | Executive
      Chairman Director                                     | April 27, 2004 June 23,
      1994     | Present Present          
|John T. Kopcheff        | Director                                                              | August 16, 2001                        | Present                  
|A. Michael Turko        | Director                                                              | July 7, 2006                           | February 9, 2009         
|Martin B. Carsky        | Director                                                              | February 9, 2009                       | Present                  
|Francisco Ramos Sánchez | Vice President,
      Business Development Vice President, Operations | November 13, 2007 April 30,
      2004 | Present November 13, 2007
|Robert F. Brown         | Vice President, Exploration                                           | April 30, 2004                         | Present                  
|Charles Brown           | Chief Operating
      Officer                                         | August 15, 2007                        | Present                  
|Raakel S. Iskanius      | Chief Financial Officer                                               | May
      22, 2007                     | Present                  

---

- 62 -

Summary Compensation Table

Annual Compensation
      Long
        Term CompensationAwards
      PayoutsName
      Year
      Salary ($)
      Bonus ($)
      **Other** **Annual** **Compen-**sation ($)
      Securities Under Options Granted (#)
      Restricted Shares or Restricted
        Share Units ($)
      LTIP Payouts ($)
      All Other Compen- sation ($)Robert A. Archer
      2009
      30,000(1)
      75,000
      nil
      425,000
      nil
      n/a
      265,570(2)Malcolm Burne
      2009
      30,000(1)
      nil
      nil
      303,000
      nil
      n/a
      nilKaare G. Foy
      2009
      30,000(1)
      50,000
      nil
      325,000
      nil
      n/a
      306,071(3)John T. Kopcheff
      2009
      30,000(1)
      nil
      nil
      307,000
      nil
      n/a
      nilA. Michael Turko
      2009
      3,333(5)
      nil
      nil
      nil
      nil
      n/a
      nilMartin B. Carsky
      2009
      52,167(4)(5)
      nil
      nil
      300,000
      nil
      n/a
      nilFrancisco Ramos Sánchez
      2009
      180,409
      20,000
      nil
      221,000
      nil
      n/a
      nilRobert F. Brown
      2009
      149,400
      17,500
      nil
      200,000
      nil
      n/a
      nilCharles Brown
      2009
      192,000
      40,000
      nil
      350,000
      nil
      n/a
      nilRaakel S. Iskanius
      2009
      157,500
      35,000
      nil
      350,000
      nil
      n/a
      nil


|(1) | Directors' fees.                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                         
|(2) | Consulting fees and other benefits paid to Platoro
      Resource Corp., a company controlled by Robert A. Archer.                                                                                      
|    |                                                                                                                                                                                                         
|(3) | Of this amount, $237,360 was paid for consulting and
      other benefits and $68,711 was paid for rent and other services to Oceanic
      Management Limited, a company controlled by Kaare G. Foy.   
|    |                                                                                                                                                                                                         
|(4) | Of this amount, $36,667 was paid for directors fees and
      $15,500 was paid for work performed as a member of a special board
      committee formed to review merger and acquisition opportunities.
|    |                                                                                                                                                                                                         
|(5) | A. Michael Turko resigned as director on February 9,
      2009. Martin B. Carsky was appointed a director on February 9,
  2009.                                                                       

Compensation of Directors

During the financial year ended December 31, 2009, the
remuneration paid or accrued to directors in their capacity as directors of our
Company was as follows:

Kaare G. Foy
    $
    30,000Robert A. Archer
    $
    30,000Malcolm A. Burne
    $
    30,000John T. Kopcheff
    $
    30,000Martin B. Carsky
    $
    52,167A. Michael Turko
    $
    3,333


We have an incentive stock option plan in which directors are
  eligible to participate. Stock options were granted to directors during the
  year ended December 31, 2009 as outlined in the Summary Compensation Table.

---

- 63 -

C. ****Board Practices

The election and retirement of our directors are provided for
  in our by-laws. An election of directors takes place at each annual meeting
  of shareholders and all the directors then in office retire but, if qualified,
  are eligible for re-election. A director retains office only until the election
  of his successor. The number of directors to be elected at such meeting is the
  number of directors then in office, unless the directors or the shareholders
  otherwise determine. The election is by ordinary resolution of shareholders.
  If an election of directors is not held at the proper time, the incumbent directors
  continue in office until their successors are elected. Our last annual general
  meeting was held on June 30, 2009.

Our by-laws also permit the directors to add additional
directors to the board between annual general meetings as long as the number
appointed does not exceed one-third of the number directors elected at the last
annual general meeting. Individuals appointed as directors to fill casual
vacancies created on the board or added as additional directors hold office like
any other director until the next annual general meeting at which time they may
be re-elected or replaced.

Our officers are re-elected at a directors' meeting following
each annual general meeting.

The members of our audit committee included John T. Kopcheff,
Malcolm A. Burne and A. Michael Turko up until February 9, 2009, at which time
A. Michael Turko resigned as director and Martin Carsky was appointed. The audit
committee reviews and approves the scope of the audit procedures employed by our
independent auditors, reviews the results of the auditor's examination, the
scope of audits, the auditor's opinion on the adequacy of internal controls and
quality of financial reporting and our accounting and reporting principles,
policies and practices, as well as our accounting, financial and operating
controls. The audit committee also reports to the board of directors with
respect to such matters and recommends the selection of independent auditors.
Before financial statements that are to be submitted to the shareholders at an
annual general meeting are considered by the board of directors, such financial
statements are submitted to the audit committee for review with the independent
auditors, following which the report of the audit committee on the financial
statements is submitted to the board of directors.

The members of the nominating and corporate governance
committee included A. Michael Turko, Malcolm A. Burne and John T. Kopcheff up
until February 9, 2009, at which time A. Michael Turko resigned as director and
Martin Carsky was appointed. The mandate of the nominating and corporate
governance committee is to identify individuals qualified to be nominated for
election as directors of the Company or any of the Board's committees, evaluate
the qualifications and independence of each member of the Board and its
committees and recommend to the Board any appropriate changes in the composition
of the Board and any of its committees, evaluate the performance of the Board
and its committees; and develop and recommend to the Board corporate governance
principles.

The members of the compensation committee included Malcolm A.
Burne, John T. Kopcheff and A. Michael Turko up until February 9, 2009, at which
time A. Michael Turko resigned as a director and Martin Carsky was appointed.
The compensation committee reviews and approves the total compensation package
for the Corporations senior executives including, without limitation, their
base salaries, annual incentives, deferred compensation, stock options and other
equity-based compensation, incentive compensation, special benefits,
perquisites, and incidental benefits.

---

- 64 -

*D.*          
  *Employees*

During the fiscal years ended December 31, 2009, December 31,
2008 and December 31, 2007, we had direct employees as outlined below:

Company
    
    2009
    
    
    2008
    
    
    2007Great Panther Silver Limited.
    
    14
    
    
    10
    
    
    15Minera Mexicana el Rosario, S.A. de C.V.
    
    Nil
    
    
    Nil
    
    
    NilMetalicos de Durango, S.A. de C.V.
    
    81
    
    
    46
    
    
    46Minera de Villa Seca, S.A. de C.V.
    
    63
    
    
    54
    
    
    56Exploraciones Mineras el Rosario, S.A. de C.V.
    
    0 1
    
    
    4
    
    
    17TOTAL
    
    158
    
    
    114
    
    
    134


|1 | On November 30, 2009, Exploraciones Mineras el Rosario,
      S.A. de C.V., the Companys subsidiary responsible for exploration and
      further development of the Companys mineral properties, was merged with
      Minera de Villa Seca, S.A. de C.V.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We do not currently have a collective bargaining arrangement
with any labour union or association.

*E.*           *Share Ownership*

Our authorized share capital consists of an unlimited number of
common shares without par value, an unlimited number of Class A preferred shares
without par value issuable in series, and an unlimited number of Class B
preferred shares without par value issuable in series.

The following table sets out, as at March 17, 2010, the number
  of securities beneficially owned by our directors and officers, whom, to our
  knowledge, possess sole voting and investment power with respect to the securities
  shown:

|                                |  | Number of Securities |  |  |               | 
|------------------------------- |  | -------------------- |  |  | ------------- | 
|Name of
      Beneficial Holder |  | Beneficially Owned   |  |  | Percentage(1) | 
|Robert A. Archer                |  | 2,175,100            |  |  | 1.67%         | 
|Charles P. Brown                |  | 848,000              |  |  | 0.65%         | 
|Robert F. Brown                 |  | 362,500              |  |  | 0.28%         | 
|Malcolm A. Burne                |  | 868,033              |  |  | 0.67%         | 
|Martin B. Carsky(2)             |  | 300,000              |  |  | 0.23%         | 
|Kaare G. Foy                    |  | 541,600              |  |  | 0.42%         | 
|Raakel S. Iskanius              |  | 320,000              |  |  | 0.24%         | 
|John T. Kopcheff                |  | 612,000              |  |  | 0.47%         | 
|Francisco Ramos Sanchez         |  | 1,496,000            |  |  | 1.15%         | 
|Wendy M. Ratcliffe              |  | 302,500              |  |  | 0.23%         | 
|Sergio Rios Martinez            |  | 100,000              |  |  | 0.08%         | 

|(1) | Based on the following securities issued and outstanding
      as at March 17, 2010:
|--- | ------------------------------------------------------------------------------------
|    | -                                                                                   
|    | -                                                                                   
|    | -                                                                                   
|(2) | Appointed as director on February 9,
  2009.                                        

---

- 65 -

The voting rights attached to the common shares owned by our
directors and officers do not differ from those voting rights attached to shares
owned by people who are not directors or officers of our Company.

As at March 17, 2010, our directors and officers held, as a
group, directly or indirectly, an aggregate of 3,916,233 common shares,
3,961,000 options exercisable within 60 days and 48,500 warrants exercisable
within 60 days.

The total number of options outstanding as at March 17, 2010,
all exercisable within 60 days, granted to our directors and officers are set
out below:

|                        | Number of Options                     |                               |                                                                       
|----------------------- | ------------------------------------- | ----------------------------- | ----------------------------------------------------------------------
|Name                    | Outstanding                           | Exercise Price                | Expiry Date                                                           
|Robert A. Archer        | 100,000 125,000
      250,000 175,000 | $0.45 $0.90 $0.45
      $0.70 | July 26, 2010 January 5,
      2011 February 8, 2014 September 3, 2014
|Charles P. Brown        | 150,000 125,000 75,000                | $0.45 $0.70 $0.90             | February 8, 2014 September 3, 2014
      December 2, 2014             
|Robert F. Brown         | 100,000 150,000 50,000                | $0.90 $0.45 $0.90             | January 5, 2011 February 8,
      2014 December 2, 2014               
|Malcolm A. Burne        | 100,000 125,000 253,000 50,000        | $0.45 $0.90 $0.45 $0.70       | July 26, 2010 January 5, 2011 February
      8, 2014 September 3, 2014
|Martin B. Carsky        | 150,000 50,000 100,000                | $0.45 $0.70 $0.90             | February 8, 2014 September
      3, 2014 December 2, 2014             
|Kaare G. Foy            | 205,000 75,000                        | $0.90 $0.70                   | January 5, 2011 September 3, 2014                                     
|Raakel Iskanius         | 50,000 125,000 75,000                 | $0.45 $0.70 $0.90             | February 8, 2014 September
      3, 2014 December 2, 2014             
|John T. Kopcheff        | 100,000 125,000 257,000 50,000        | $0.45 $0.90 $0.45 $0.70       | July 26, 2010 January 5, 2011 February
      8, 2014 September 3, 2014
|Francisco Ramos Sanchez | 75,000 125,000 221,000                | $0.45 $0.90 $0.45             | July 26, 2010 January 5,
      2011 February 8, 2014                  
|Wendy M. Ratcliffe      | 25,000 25,000 200,000                 | $0.45 $0.90 $0.45             | July 26, 2010 January 5, 2011 February
      8, 2014                  
|Sergio Rios Martinez    | 50,000 50,000                         | $0.45 $0.90                   | February 8, 2014 December 2, 2014                                     

---

- 66 -

The total number of warrants outstanding as at March 17, 2010,
all exercisable within 60 days, issued to our directors and officers are set out
below:

|                 | Number of Warrants |                |                  
|---------------- | ------------------ | -------------- | -----------------
|Name             | Outstanding        | Exercise Price | Expiry Date      
|Charles P. Brown | 36,000             | $0.90          | November 17, 2011
|Raakel Iskanius  | 7,500              | $0.90          | November 17, 2011
|Wendy Ratcliffe  | 5,000              | $0.90          | November 17, 2011

Stock Option Plan

We have an incentive stock option plan that provides for the
grant of incentive stock options to purchase our common shares to our directors,
officers and key employees and other persons providing ongoing services to us.
Our stock option plan is administered by our board of directors. The maximum
number of our common shares which may be reserved and set aside for issuance
under our stock option plan is equal to 10% of the number of common shares
outstanding from time to time on a non-diluted basis. Each option upon its
exercise entitles the grantee to one common share. The exercise price of common
shares subject to an option will be determined by the board of directors at the
time of grant and will be not less than the discounted market price of the
common shares at the date of grant, as determined under the policies of the
Toronto Stock Exchange. Options may be granted under our stock option plan for
an exercise period of up to five years from the date of grant of the option or
such lesser periods as may be determined by our board of directors.

On March 7, 2008, the Board of Directors approved the adoption
of a Shareholder Rights Plan (the "Plan") as part of its procedures for dealing
with any parties who may seek to acquire control of the Company through a
take-over bid or other transaction. To implement the Plan, the Board of
Directors of the Company authorized the issue of one Right in respect of each
common share of the Company outstanding to holders of record on March 7, 2008.
Until the occurrence of certain specific events, the Rights will trade with the
common shares of the Company.

The Rights become exercisable only when a person, including any
party related to it or acting jointly with it, acquires or announces its
intention to acquire 20% or more of the outstanding common shares of the Company
without complying with the "Permitted Bid" provisions of the Plan. Under the
Plan, a Permitted Bid is a bid made to all shareholders on identical terms and
conditions that is open for at least 60 days. If at the end of 60 days more than
50% of the outstanding shares, other than those owned by the offeror and certain
persons related to the offeror or acting jointly with it, have been tendered,
the offeror may take up and pay for the shares but must extend the bid for a
further 10 business days to allow all other shareholders to tender. Should a
non-permitted acquisition occur, each Right would entitle each holder of common
shares (other than the offeror and certain parties related to the offeror or
acting jointly with it) to purchase additional common shares of the Company at a
50% discount to the market price at the time.

Although the Plan became effective upon its adoption by the
Board of Directors, in accordance with stock exchange requirements it was
submitted to shareholders of the Company for ratification at the annual
shareholders meeting on June 27, 2008, when it was passed and ratified. The Plan
will continue until the annual general meeting of shareholders in 2012. The Plan
was accepted by the Toronto Stock Exchange.

The total number of options outstanding as at March 17, 2010,
granted to our directors and executive officers as a group, to our non-executive
officers as a group, to our employees as a group and to our consultants as a
group, are set out below:

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- 67 -

|                                 | Number of Options                               |                                     |                                                                                           
|-------------------------------- | ----------------------------------------------- | ----------------------------------- | ------------------------------------------------------------------------------------------
|Name                             | Outstanding                                     | Exercise Price                      | Expiry Date                                                                               
|                                 |                                                 |                                     |                                                                                           
|Directors and Executive Officers | 375,000 805,000
      1,481,000 650,000 300,000 | $0.45 $0.90 $0.45
      $0.70 $0.90 | July 26, 2010 January 5,
      2011 February 8, 2014 September 3, 2014 December 2, 2014   
|                                 |                                                 |                                     |                                                                                           
|Non-executive Officers           | 25,000 25,000 250,000
      50,000              | $0.45 $0.90 $0.45
      $0.90       | July 26, 2010 January 5,
      2011 February 8, 2014 December 2, 2014                     
|                                 |                                                 |                                     |                                                                                           
|Employees                        | 958,000 465,000
      230,000                   | $0.45 $0.70 $0.90                   | February 8, 2014 September
      3, 2014 December 2, 2014                                 
|                                 |                                                 |                                     |                                                                                           
|Consultants                      | 650,000 160,000 255,000 150,000 275,000         | $0.45 $0.45 $0.52 $0.70 $0.90       | February 8, 2014 February 29, 2012 March 25, 2011
      September 3, 2014 December 3, 2010

ITEM
7             
Major Shareholders and Related Party Transactions

*A.*          
*Major Shareholders*

As of February 28, 2010, Computershare Trust Company of Canada,
our registrar and transfer agent, reported that we had 113,350,512 common shares
issued and outstanding. Of those common shares, 104,076,022 common shares were
registered to Canadian residents (26 shareholders); 7,832,326 common shares were
registered to residents of the United States (97 shareholders); and 1,442,164
common shares were registered to residents of other foreign countries (22
shareholders). There are no persons known to us to be the beneficial owners of
more than five (5%) of those common shares.

To the best of our knowledge, we are not directly or indirectly
owned or controlled by another corporation, by any foreign government or by any
other natural or legal person.

There are no arrangements known to us, the operation of which
may at a subsequent date result in a change in the control of our Company.

*B.*          
  *Related Party Transactions*

Other than as disclosed below or elsewhere in this annual
report, to the best of our knowledge, there have been no material transactions
or loans from the commencement of our 2009 fiscal year to the date of this
annual report between our Company and: (a) enterprises that directly or
indirectly through one or more intermediaries, control or are controlled by, or
are under common control with, our Company; (b) associates; (c) individuals
owning, directly or indirectly, an interest in the voting power of our Company
that gives them significant influence over our Company, and close members of any
such individual's family; (d) key management personnel of our Company, including
directors and senior management of our Company and close members of such
individuals' families; and (e) enterprises in which a substantial interest in
the voting power is owned, directly or indirectly, by any person described in
(c) or (d) or over which such a person is able to exercise significant
influence.

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- 68 -

During the year ended December 31, 2009, we entered into the
following transactions with related parties:

|                                                                                                          |   | 2009    |  |   | 2008    |  |   | 2007    | 
|--------------------------------------------------------------------------------------------------------- | - | ------- |  | - | ------- |  | - | ------- | 
|                                                                                                          |   |         |  |   |         |  |   |         | 
|Consulting fees paid or accrued to
      companies controlled by directors of the Company                 | $ | 648,402 |  | $ | 595,823 |  | $ | 539,000 | 
|                                                                                                          |   |         |  |   |         |  |   |         | 
|Consulting fees paid or accrued to
      companies controlled by officers of the Company                  |   | 171,118 |  |   | 266,230 |  |   | 395,943 | 
|                                                                                                          |   |         |  |   |         |  |   |         | 
|Cost recoveries received or accrued from a
      company with a common director of the Company            |   | 80,367  |  |   | 82,397  |  |   | 631,117 | 
|                                                                                                          |   |         |  |   |         |  |   |         | 
|Office and administration fees paid or accrued to a
      company controlled by a director of the Company |   | 68,711  |  |   | 36,138  |  |   | 39,879  | 

As at December 31, 2009, $110,060 (2008 - $314,435; 2007 -
$74,401) was due to companies controlled by officers and directors of the
Company. Amounts due from a company with a common director were $147,273 (2008 -
$61,720, 2007- $400,742).

ITEM
8             
Financial Information

Our financial statements are stated in Canadian dollars and are
prepared in accordance with Canadian generally accepted accounting principles
with a reconciliation to United States generally accepted accounting principles.
In this annual report, unless otherwise specified, all dollar amounts are
expressed in Canadian dollars.

Financial Statements filed as part of this Annual Report,
under item 17 Financial Statements:

|- | Report of Independent Registered Public Accounting Firm
      dated March 10, 2010.                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                   
|- | Consolidated balance sheets for the fiscal years ended
      December 31, 2009, and 2008.                                                         
|  |                                                                                                                                                   
|- | Consolidated statements of operations and comprehensive
      loss and deficit for the fiscal years ended December 31, 2009, 2008, and
      2007.
|  |                                                                                                                                                   
|- | Consolidated statements of cash flows for the fiscal
      years ended December 31, 2009, 2008, and 2007.                                         
|  |                                                                                                                                                   
|- | Notes to consolidated financial statements                                                                                                        

Dividend Distributions

Holders of our common shares are entitled to receive such
dividends as may be declared from time to time by our board, in its discretion,
out of funds legally available for that purpose. We intend to retain future
earnings, if any, for use in the operation and expansion of our business and do
not intend to pay any cash dividends in the foreseeable future.

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Significant Changes

Other than as disclosed in this annual report, no significant
change has occurred in our Company's financial statements since the financial
year ended December 31, 2009.

ITEM
9            
 The Offer and Listing

*A.*           *Offer and Listing Details*

Price History

On June 18, 1980, our common shares were listed on the TSX
Venture Exchange (formerly known as the CDNX, and the Vancouver Stock Exchange).
Our common shares traded on the TSX Venture Exchange under the symbol "GPR", and
we were classified by the TSX Venture Exchange as a Tier 2 company.

On October 2, 2003, our common share capital was consolidated
on the basis of one new common share for each ten old common shares.

On February 28, 2006, we were elevated to Tier 1 of the TSX
Venture Exchange.

On November 3, 2006, we received conditional approval for our
TSX listing.

On November 14, 2006, our common shares became listed on the
TSX.

The annual high and low market prices for our common shares for
the five most recent full fiscal years were as follows:

Year Ended
    High
    LowDecember 31, 2005
    $1.17
    $0.36December 31, 2006
    $2.79
    $0.80December 31, 2007
    $2.53
    $1.07December 31, 2008
    $1.72
    $0.18December 31, 2009
    $0.97
    $0.26


The high and low market prices for our common shares for each
full financial quarter for the two most recent full fiscal years were as
follows:

Quarter Ended
    High
    LowMarch 31, 2008
    $1.72
    $0.85June 30, 2008
    $1.48
    $1.05September 30, 2008
    $1.24
    $0.52December 31, 2008
    $0.70
    $0.18March 31, 2009
    $0.52
    $0.26


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- 70 -

Quarter Ended
    High
    LowJune 30, 2009
    $0.67
    $0.42September 30, 2009
    $0.97
    $0.46December 31, 2009
    $0.90
    $0.67


The high and low market prices for our common shares for each
of the most recent six months, from September, 2009 through February, 2010 were
as follows:

Month Ended
    High
    LowSeptember 30, 2009
    $0.97
    $0.52October 31, 2009
    $0.90
    $0.70November 30, 2009
    $0.88
    $0.69December 31, 2009
    $0.89
    $0.79January 31, 2010
    $1.12
    $0.81February 28, 2010
    $0.91
    $0.76


The transfer of our common shares is managed by our transfer
agent, Computershare Trust Company of Canada.

*B.*          
*Plan of Distribution*

Not applicable.

*C.*          
*Markets*

Our common shares trade on the Toronto Stock Exchange (TSX)
under the symbol "GPR" effective November 14, 2006. Our CUSIP number is 39115V
101.

*D.*          
*Selling Shareholders*

Not applicable.

*E.*          
*Dilution*

Not applicable

*F.*          
*Expenses of the Issue*

Not applicable.

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- 71 -

ITEM
10            Additional
Information

*A.*          
*Share Capital*

Not applicable

*B.*          
*Memorandum and Articles of Association*

The information required by this section is incorporated by
reference from our Registration Statement on Form 20-F, filed on August 10,
2004.

*C.*          
  *Material Contracts*

The following is a summary of each material contract, other
than contracts entered into in the ordinary course of business, to which we or
any of our subsidiaries is a party, for the two years immediately preceding
publication of the document, including dates, parties, general nature of the
contracts, terms and conditions, and amount of any consideration passing to or
from us or any other member of the group:

On January 23, 2009, we closed a private placement offering of
5,125,000 units of the Company (Units) at a price of $0.20 per Unit to raise
gross proceeds of $1,025,000. Each Unit comprised of one common share and
one-half of one share purchase warrant. Each whole warrant entitled the holder,
upon exercise, to acquire one common share of the Company at a price of $0.35
per share until January 22, 2010. The Company authorized and created 169,050
non-transferable share purchase warrants (the Finders Warrants) to purchase
up to 169,050 common shares and entitling the holder to purchase one common
share at a price of $0.35 until January 22, 2010.

On November 17, 2009, we closed an equity offering of
17,617,500 units of the Company (Units) at a price of $0.70 per Unit to raise
gross proceeds of $12,332,250. Each Unit comprised of one common share and
one-half of one transferable share purchase warrant. Each whole warrant entitles
the holder, upon exercise, to purchase one common share of the Company at a
price of $0.90 per share until November 17, 2011. The Company authorized and
created non-transferable share purchase warrants (the Agents Warrants) to
purchase up to 6% of the Units sold, net of sales arranged by the Company. Each
Agents Warrants entitles the holder to purchase one common share at a price of
$0.90 until November 17, 2011.

*D.*          
  *Exchange Controls*

There are no government laws, decrees or regulations in Canada
which restrict the export or import of capital or which affect the remittance of
dividends, interest or other payments to non-resident holders of our common
shares. Any remittances of dividends to United States residents and to other
non-residents are, however, subject to withholding tax. See "Taxation" below.

*E.*          
*Taxation*

Canadian Federal Income Taxation

We consider that the following summary fairly describes the
principal Canadian federal income tax consequences applicable to a holder of our
common shares who at all material times deals at arm's length with our Company,
who holds all common shares as capital property, who is resident in the United
States, who is not a resident of Canada and who does not use or hold, and is not
deemed to use or hold, his common shares of our Company in connection with
carrying on a business in Canada (a "non-resident holder"). It is assumed that
the common shares will at all material times be listed on a stock exchange that
is prescribed for purposes of the Income Tax Act (Canada) (the "ITA") and
regulations thereunder. Investors should be aware that the Canadian federal
income tax consequences applicable to holders of our

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- 72 -

common shares will change if, for any reason, we cease to be
listed on a prescribed stock exchange. Accordingly, holders and prospective
holders of our common shares should consult with their own tax advisors with
respect to the income tax consequences of them purchasing, owing and disposing
of our common shares should we cease to be listed on a prescribed stock
exchange.

This summary is based upon the current provisions of the ITA,
the regulations thereunder, the Canada-United States Tax Convention as amended
by the Protocols thereto (the "Treaty") as at the date of the registration
statement and the currently publicly announced administrative and assessing
policies of the Canada Revenue Agency (the "CRA"). This summary does not take
into account Canadian provincial income tax consequences. This description is
not exhaustive of all possible Canadian federal income tax consequences and does
not take into account or anticipate any changes in law, whether by legislative,
governmental or judicial action. This summary does, however, take into account
all specific proposals to amend the ITA and regulations thereunder, publicly
announced by the Government of Canada to the date hereof.

This summary does not address potential tax effects relevant to
our Company or those tax considerations that depend upon circumstances specific
to each investor. Accordingly, holders and prospective holders of our common
shares should consult with their own tax advisors with respect to the income tax
consequences to them of purchasing, owning and disposing of common shares in our
Company.

Dividends

The ITA provides that dividends and other distributions deemed
to be dividends paid or deemed to be paid by a Canadian resident corporation
(such as our Company) to a non-resident of Canada shall be subject to a
non-resident withholding tax equal to 25% of the gross amount of the dividend or
deemed dividend. Provisions in the ITA relating to dividend and deemed dividend
payments to and gains realized by non-residents of Canada, who are residents of
the United States, are subject to the Treaty. The Treaty may reduce the
withholding tax rate on dividends as discussed below.

Article X of the Treaty as amended by the US-Canada Protocol
ratified on November 9, 1995 provides a 5% withholding tax on gross dividends or
deemed dividends paid to a United States corporation which beneficially owns at
least 10% of the voting stock of the company paying the dividend. In cases where
dividends or deemed dividends are paid to a United States resident (other than a
corporation) or a United States corporation which beneficially owns less than
10% of the voting stock of a company, a withholding tax of 15% is imposed on the
gross amount of the dividend or deemed dividend paid. We would be required to
withhold any such tax from the dividend and remit the tax directly to CRA for
the account of the investor.

The reduction in withholding tax from 25%, pursuant to the
Treaty, will not be available:

(a) ****if the shares in respect of which the dividends are paid formed part of
the business property or were otherwise effectively connected with a permanent
establishment or fixed base that the holder has or had in Canada within the 12
months preceding the disposition, or

(b)****
the holder is a U.S. LLC which is not subject to tax in the U.S.

The Treaty generally exempts from Canadian income tax dividends
paid to a religious, scientific, literary, educational or charitable
organization or to an organization exclusively administering a pension,
retirement or employee benefit fund or plan, if the organization is resident in
the U.S. and is exempt from income tax under the laws of the U.S.

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- 73 -

Capital Gains

A non-resident holder is not subject to tax under the ITA in
respect of a capital gain realized upon the disposition of one of our shares
unless the share represents "taxable Canadian property" to the holder thereof.
Our common shares will be considered taxable Canadian property to a non-resident
holder only if:

(a) ****the non-resident holder;

(b)****
persons with whom the non-resident holder did not deal at arm's length; or

(c) ****the non-resident holder and persons with whom he did not deal at arm's
length,

owned not less than 25% of the issued shares of any class or
series of our Company at any time during the five year period preceding the
disposition. In the case of a non-resident holder to whom shares of our Company
represent taxable Canadian property and who is resident in the United States, no
Canadian taxes will generally be payable on a capital gain realized on such
shares by reason of the Treaty unless:

(a)****
the value of such shares is derived principally from real property (including
resource property) situated in Canada,

(b)****
the holder was resident in Canada for 120 months during any period of 20
consecutive years preceding, and at any time during the 10 years immediately
preceding, the disposition and the shares were owned by him when he ceased to be
a resident of Canada,

(c) ****they formed part of the business property or were otherwise effectively
connected with a permanent establishment or fixed base that the holder has or
had in Canada within the 12 months preceding the disposition, or

(d) ****the holder is a U.S. LLC which is not subject to tax in the U.S.

If subject to Canadian tax on such a disposition, the
taxpayer's capital gain (or capital loss) from a disposition is the amount by
which the taxpayer's proceeds of disposition exceed (or are exceeded by) the
aggregate of the taxpayer's adjusted cost base of the shares and reasonable
expenses of disposition. For Canadian income tax purposes, the "taxable capital
gain" is equal to one-half of the capital gain.

United States Federal Income Taxation

The following is a discussion of the material United States
Federal income tax consequences, under current law, applicable to a U.S. Holder
(as defined below) of our common shares who holds such shares as capital assets.
This discussion does not address all potentially relevant Federal income tax
matters and it does not address consequences peculiar to persons subject to
special provisions of Federal income tax law, such as those described below as
excluded from the definition of a U.S. Holder. In addition, this discussion does
not cover any state, local, or foreign tax consequences. (See "Canadian Federal
Income Tax Consequences" above).

The following discussion is based on the Internal Revenue Code
of 1986, as amended (the "Code"), Treasury Regulations, published Internal
Revenue Service ("IRS") rulings, published administrative positions of the IRS
and court decisions that are currently applicable, any or all of which could be
materially and adversely changed, possibly on a retroactive basis, at any time.
In addition, this discussion does not consider the potential effects, both
adverse and beneficial, of any recently proposed legislation which, if enacted,
could be applied, possibly on a retroactive basis, at any time.

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- 74 -

The discussion below does not address potential tax effects
relevant to our Company or those tax considerations that depend upon
circumstances specific to each investor. In addition, this discussion does not
address the tax consequences that may be relevant to particular investors
subject to special treatment under certain U.S. Federal income tax laws, such
as, dealers in securities, tax-exempt entities, banks, insurance companies and
non-U.S. Holders. Purchasers of the common stock should therefore satisfy
themselves as to the overall tax consequences of their ownership of the common
stock, including the State, local and foreign tax consequences thereof (which
are not reviewed herein), and should consult their own tax advisors with respect
to their particular circumstances.

U.S. Holders

As used herein, a "U.S. Holder" includes a beneficial holder of
common shares of our Company who is a citizen or resident of the United States,
a corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof, any trust if a US court
is able to exercise primary supervision over the administration of the trust and
one or more US persons have the authority to control all substantial decisions
of the trust, any entity created or organized in the United States which is
taxable as a corporation for U.S. tax purposes and any other person or entity
whose ownership of common shares of our Company is effectively connected with
the conduct of a trade or business in the United States. A U.S. Holder does not
include persons subject to special provisions of Federal income tax law, such as
tax-exempt organizations, qualified retirement plans, financial institutions,
insurance companies, real estate investment trusts, regulated investment
companies, broker-dealers, non-resident alien individuals or foreign
corporations whose ownership of our common shares is not effectively connected
with the conduct of a trade or business in the United States and shareholders
who acquired their shares through the exercise of employee stock options or
otherwise as compensation.

Dividend Distribution on Shares of our Company

U.S. Holders receiving dividend distributions (including
constructive dividends) with respect to the common shares of our Company are
required to include in gross income for United States Federal income tax
purposes the gross amount of such distributions to the extent that we have
current or accumulated earnings and profits, without reduction for any Canadian
income tax withheld from such distributions. Such Canadian tax withheld may be
deducted or may be credited against actual tax payable, subject to certain
limitations and other complex rules, against the U.S. Holder's United States
Federal taxable income. See "Foreign Tax Credit" below. To the extent that
distributions exceed our current or accumulated earnings and profits, they will
be treated first as a return of capital to the extent of the shareholder's basis
in the common shares of our Company and thereafter as gain from the sale or
exchange of the common shares of our Company. Preferential tax rates for net
long term capital gains may be applicable to a U.S. Holder which is an
individual, estate or trust.

In general, dividends paid on our common shares will not be
eligible for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations.

Foreign Tax Credit

A U.S. Holder who pays (or who has had withheld from distributions)
  Canadian income tax with respect to the ownership of our common shares may be
  entitled, at the election of the U.S. Holder, to either a deduction or a tax
  credit for such foreign tax paid or withheld. This election is made on a year
  by year basis and generally applies to all foreign income taxes paid by (or
  withheld from) the U.S. Holder during that year. There are significant and complex
  limitations which apply to the credit, among which is the general limitation
  that the credit cannot exceed the proportionate share of the U.S. Holder's United
  States income tax liability that the U.S. Holder's foreign source income bears
  to his or its world-wide taxable income. In determining the application of this
  limitation, the various items of income and deduction must be classified into
  foreign and domestic sources. Complex rules govern income such as "passive income",
  "high withholding tax interest", "financial services income", "shipping income"
  and certain other classifications of income.

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- 75 -

A U.S. Holder who is treated as a domestic U.S. corporation
  owning 10% or more of our voting stock is also entitled to a deemed paid foreign
  tax credit in certain circumstances for the underlying foreign tax of our Company
  related to dividends received or Subpart F income received from us. (See the
  discussion below of Controlled Foreign Corporations). The availability of the
  foreign tax credit and the application of the limitations on the foreign tax
  credit are fact specific and holders and prospective holders of our common shares
  should consult their own tax advisors regarding their individual circumstances.

Disposition of Common Shares

If a "U.S. Holder" is holding shares as a capital asset, a gain
or loss realized on a sale of our common shares will generally be a capital gain
or loss, and will be long-term if the shareholder has a holding period of more
than one year. However, gains realized upon sale of our common shares may, under
certain circumstances, be treated as ordinary income, if we were determined to
be a "collapsible corporation" within the meaning of Code Section 341 based on
the facts in existence on the date of the sale (See below for definition of
"collapsible corporation"). The amount of gain or loss recognized by a selling
U.S. Holder will be measured by the difference between (i) the amount realized
on the sale and (ii) his tax basis in our common shares. Capital losses are
deductible only to the extent of capital gains. However, in the case of
taxpayers other than corporations US$3,000 ($1,500 for married individuals
filing separately) of capital losses are deductible against ordinary income
annually. In the case of individuals and other non-corporate taxpayers, capital
losses that are not currently deductible may be carried forward to other years.
In the case of corporations, capital losses that are not currently deductible
are carried back to each of the three years preceding the loss year and forward
to each of the five years succeeding the loss year.

A "collapsible corporation" is a corporation that is formed or
availed principally to manufacture, construct, produce, or purchase prescribed
types or property that the corporation holds for less than three years and that
generally would produce ordinary income on its disposition, with a view to the
stockholders selling or exchanging their stock and thus realizing gain before
the corporation realizes two thirds of the taxable income to be derived from
prescribed property. Prescribed property includes: stock in trade and inventory;
property held primarily for sale to customers in the ordinary course of
business; unrealized receivables or fees, consisting of rights to payment for
non-capital assets delivered or to be delivered, or services rendered or to be
rendered to the extent not previously included in income, but excluding
receivables from selling property that is not prescribed; and property gain on
the sale of which is subject to the capital gain/ordinary loss rule. Generally,
a shareholder who owns directly or indirectly 5 percent or less of the
outstanding stock of the corporation may treat gain on the sale of his shares as
capital gain.

Other Considerations for U.S. Holders

In the following circumstances, the above sections of this
discussion may not describe the United States Federal income tax consequences
resulting from the holding and disposition of common shares of the Registrant.
Our management is of the opinion that there is little, if not, any likelihood
that we will be deemed a "Foreign Personal Holding Company", a "Foreign
Investment Company" or a "Controlled Foreign Corporation" (each as defined
below) under current and anticipated conditions.

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total
  combined voting power or the total value of our outstanding shares is owned,
  actually or constructively, by five or fewer individuals who are citizens or
  residents of the United States and 60% or more of our gross income for such
  year was derived from certain passive sources (e.g., from dividends received
  from its subsidiaries), we would be treated as a "foreign personal holding company".

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- 76 -

In that event, U.S. Holders that hold common shares in our capital
  would be required to include in income for such year their allocable portion
  of our passive income which would have been treated as a dividend had that passive
  income actually been distributed.

Foreign Investment Company

If 50% or more of the combined voting power or total value of
our outstanding shares are held, actually or constructively, by citizens or
residents of the United States, United States domestic partnerships or
corporations, or estates or trusts other than foreign estates or trusts (as
defined by the Code Section 7701(a)(31)), and we are found to be engaged
primarily in the business of investing, reinvesting, or trading in securities,
commodities, or any interest therein, it is possible that we might be treated as
a "foreign investment company" as defined in Section 1246 of the Code, causing
all or part of any gain realized by a U.S. Holder selling or exchanging our
common shares to be treated as ordinary income rather than capital gains.

Passive Foreign Investment Company

A U.S. Holder who holds stock in a foreign corporation during
any year in which such corporation qualifies as a passive foreign investment
company ("PFIC") is subject to U.S. federal income taxation of that foreign
corporation under one of two alternative tax methods at the election of each
such U.S. Holder.

Section 1297 of the Code defines a PFIC as a corporation that
is not formed in the United States and, for any taxable year, either (i) 75% or
more of its gross income is "passive income," which includes interest, dividends
and certain rents and royalties or (ii) the average percentage, by value (or, if
the company is a controlled foreign corporation or makes an election, adjusted
tax basis), of its assets that produce or are held for the production of
"passive income" is 50% or more. For taxable years of U.S. persons beginning
after December 31, 1997, and for tax years of foreign corporations ending with
or within such tax years, the Taxpayer Relief Act of 1997 provides that publicly
traded corporations must apply this test on a fair market value basis only. The
Registrant does not believe that it is a PFIC.

As a PFIC, each U.S. Holder must determine under which of the
alternative tax methods it wishes to be taxed. Under one method, a U.S. Holder
who elects in a timely manner to treat the Registrant as a Qualified Electing
Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will be
subject, under Section 1293 of the Code, to current federal income tax for any
taxable year in which our Company qualifies as a PFIC on his pro-rata share of
our companys (i) "net capital gain" (the excess of net long-term capital gain
over net short-term capital loss), which will be taxed as long-term capital gain
to the Electing U.S. Holder and (ii) "ordinary earnings" (the excess of earnings
and profits over net capital gain), which will be taxed as ordinary income to
the Electing U.S. Holder, in each case, for the U.S. Holder's taxable year in
which (or with which) our taxable year ends, regardless of whether such amounts
are actually distributed. Such an election, once made shall apply to all
subsequent years unless revoked with the consent of the IRS.

A QEF election also allows the Electing U.S. Holder to (i)
generally treat any gain realized on the disposition of his common shares (or
deemed to be realized on the pledge of his common shares) as capital gain; (ii)
treat his share of our net capital gain, if any, as long-term capital gain
instead of ordinary income, and (iii) either avoid interest charges resulting
from PFIC status altogether (see discussion of interest charge below), or make
an annual election, subject to certain limitations, to defer payment of current
taxes on his share of our annual realized net capital gain and ordinary earnings
subject, however, to an interest charge. If the Electing U.S. Holder is an
individual, such an interest charge would be not deductible.

The procedure a U.S. Holder must comply with in making a timely
  QEF election will depend on whether the year of the election is the first year
  in the U.S. Holder's holding period in which our Company is a PFIC.

---

- 77 -

If the U.S. Holder makes a QEF election in such first year,
  (sometimes referred to as a "Pedigreed QEF Election"), then the U.S. Holder
  may make the QEF election by simply filing the appropriate documents at the
  time the U.S. Holder files its tax return for such first year. If, however,
  our Company qualified as a PFIC in a prior year, then the U.S. Holder may make
  an "Unpedigreed QEF Election" by recognizing as an "excess distribution" (i)
  under the rules of Section 1291 (discussed below), any gain that he would otherwise
  recognize if the U.S. Holder sold his stock on the qualification date (Deemed
  Sale Election) or (ii) if we are a controlled foreign corporation ("CFC"), the
  Holder's pro rata share of the corporation's earnings and profits (Deemed Dividend
  Election) (But see "Elimination of Overlap Between Subpart F Rules and PFIC
  Provisions"). The effect of either the deemed sale election or the deemed dividend
  election is to pay all prior deferred tax, to pay interest on the tax deferral
  and to be treated thereafter as a Pedigreed QEF as discussed in the prior paragraph.
  With respect to a situation in which a Pedigreed QEF election is made, if our
  Company no longer qualifies as a PFIC in a subsequent year, normal Code rules
  and not the PFIC rules will apply.

If a U.S. Holder has not made a QEF Election at any time (a
"Non-electing U.S. Holder"), then special taxation rules under Section 1291 of
the Code will apply to (i) gains realized on the disposition (or deemed to be
realized by reason of a pledge) of his common shares and (ii) certain "excess
distributions", as specially defined, by our Company. An "excess distribution"
is any current-year distribution in respect of PFIC stock that represents a
rateable portion of the total distributions in respect of the stock during the
year that exceed 125 percent of the average amount of distributions in respect
of the stock during the three preceding years.

A Non-electing U.S. Holder generally would be required to
pro-rate all gains realized on the disposition of his common shares and all
excess distributions over the entire holding period for the common shares. All
gains or excess distributions allocated to prior years of the U.S. Holder (other
than years prior to our first taxable year during such U.S. Holder's holding
period and beginning after January, 1987 for which it was a PFIC) would be taxed
at the highest tax rate for each such prior year applicable to ordinary income.
The Non-electing U.S. Holder also would be liable for interest on the deferred
tax liability for each such prior year calculated as if such liability had been
due with respect to each such prior year. A Non-electing U.S. Holder that is an
individual is not allowed a deduction for interest on the deferred tax
liability. The portions of gains and distributions that are not characterized as
"excess distributions" are subject to tax in the current year under the normal
tax rules of the Internal Revenue Code.

If, our Company is a PFIC for any taxable year during which a
Non-electing U.S. Holder holds common shares, then we will continue to be
treated as a PFIC with respect to such common Shares, even if it is no longer by
definition a PFIC. A Non-electing U.S. Holder may terminate this deemed PFIC
status by electing to recognize gain (which will be taxed under the rules
discussed above for Non-Electing U.S. Holders) as if such common shares had been
sold on the last day of the last taxable year for which it was a PFIC.

Under Section 1291(f) of the Code, the Department of the
Treasury has issued proposed regulations that would treat as taxable certain
transfers of PFIC stock by Non-electing U.S. Holders that are generally not
otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations,
and transfers at death. If a U.S. Holder makes a QEF Election that is not a
Pedigreed Election (i.e., it is made after the first year during which we are
our Company is a PFIC and the U.S. Holder holds our shares) (a "Unpedigreed
Election"), the QEF rules apply prospectively but do not apply to years prior to
the year in which the QEF first becomes effective. U.S. Holders should consult
their tax advisors regarding the specific consequences of making a Non-Pedigreed
QEF Election.

Certain special, generally adverse, rules will apply with respect
  to the common shares while our Company is we are a PFIC whether or not it is
  treated as a QEF. For example under Section 1297(b)(6) of the Code (as in effect
  prior to the Taxpayer Relief Act of 1997), a U.S. Holder who uses PFIC stock
  as security for a loan (including a margin loan) will, except as may be provided
  in regulations, be treated as having made a taxable disposition of such stock.

---

- 78 -

The foregoing discussion is based on currently effective
provisions of the Code, existing and proposed regulations thereunder, and
current administrative rulings and court decisions, all of which are subject to
change. Any such change could affect the validity of this discussion. In
addition, the implementation of certain aspects of the PFIC rules requires the
issuance of regulations which in many instances have not been promulgated and
which may have retroactive effect. There can be no assurance that any of these
proposals will be enacted or promulgated, and if so, the form they will take or
the effect that they may have on this discussion. Accordingly, and due to the
complexity of the PFIC rules, U.S. Holders of the Registrants common shares are
strongly urged to consult their own tax advisors concerning the impact of these
rules on their investment in our Company. For a discussion of the impact of the
Taxpayer Relief Act of 1997 on a U.S. Holder of a PFIC, see "Mark-to-Market
Election For PFIC Stock Under the Taxpayer Relief Act of 1997" and "Elimination
of Overlap Between Subpart F Rules and PFIC Provisions" below.

Mark-to-Market Election for PFIC Stock Under the Taxpayer
Relief Act of 1997

The Taxpayer Relief Act of 1997 provides that a U.S. Holder of
a PFIC may make a mark-to-market election with respect to the stock of the PFIC
if such stock is marketable as defined below. This provision is designed to
provide a current inclusion provision for persons that are Non-Electing Holders.
Under the election, any excess of the fair market value of the PFIC stock at the
close of the tax year over the Holder's adjusted basis in the stock is included
in the Holder's income. The Holder may deduct any excess of the adjusted basis
of the PFIC stock over its fair market value at the close of the tax year.
However, deductions are limited to the net mark-to-market gains on the stock
that the Holder included in income in prior tax years, or so called "unreversed
inclusions". For purposes of the election, PFIC stock is marketable if it is
regularly traded on (1) a national securities exchange that is registered with
the SEC, (2) the national market system established under Section II A of the
Securities Exchange Act of 1934, or (3) an exchange or market that the IRS
determines has rules sufficient to ensure that the market price represents
legitimate and sound fair market value.

A Holder's adjusted basis of PFIC stock is increased by the
income recognized under the mark-to-market election and decreased by the
deductions allowed under the election. If a U.S. Holder owns PFIC stock
indirectly through a foreign entity, the basis adjustments apply to the basis of
the PFIC stock in the hands of the foreign entity for the purpose of applying
the PFIC rules to the tax treatment of the U.S. owner. Similar basis adjustments
are made to the basis of the property through which the U.S. persons hold the
PFIC stock.

Income recognized under the mark-to-market election and gain on
the sale of PFIC stock with respect to which an election is made is treated as
ordinary income. Deductions allowed under the election and loss on the sale of
PFIC with respect to which an election is made, to the extent that the amount of
loss does not exceed the net mark-to-market gains previously included, are
treated as ordinary losses. The U.S. or foreign source of any income or losses
is determined as if the amount were a gain or loss from the sale of stock in the
PFIC.

If PFIC stock is owned by a CFC (discussed below), the CFC is
treated as a U.S. person that may make the mark-to-market election. Amounts
includible in the CFC's income under the election are treated as foreign
personal holding company income, and deductions are allocable to foreign
personal holding company income.

The above provisions apply to tax years of U.S. persons
beginning after December 31, 1997, and to tax years of foreign corporations
ending with or within such tax years of U.S. persons.

---

- 79 -

The rules of Code Section 1291 applicable to non-qualified
funds as discussed above generally do not apply to a U.S. Holder for tax years
for which a mark-to-market election is in effect. If Code Section 1291 is
applied and a mark-to-market election was in effect for any prior tax year, the
U.S. Holder's holding period for the PFIC stock is treated as beginning
immediately after the last tax year of the election. However, if a taxpayer
makes a mark-to-market election for PFIC stock that is a non-qualified fund
after the beginning of a taxpayer's holding period for such stock, a
co-ordination rule applies to ensure that the taxpayer does not avoid the
interest charge with respect to amounts attributable to periods before the
election.

Controlled Foreign Corporation Status

If more than 50% of the voting power of all classes of stock or
the total value of the stock of our Company is owned, directly or indirectly, by
U.S. Holders, each of whom own after applying rules of attribution 10% or more
of the total combined voting power of all classes of stock of our Company, we
would be treated as a "controlled foreign corporation" or "CFC" under Subpart F
of the Code. This classification would bring into effect many complex results
including the required inclusion by such 10% U.S. Holders in income of their pro
rata shares of "Subpart F income" (as defined by the Code) of our Company and
our earnings invested in "U.S. property" (as defined by Section 956 of the
Code). In addition, under Section 1248 of the Code if we are considered a CFC at
any time during the five year period ending with the sale or exchange of its
stockshares, gain from the sale or exchange of common shares of our Company by
such a 10% U.S. Holder of our common stock at any time during the five year
period ending with the sale or exchange is treated as ordinary dividend income
to the extent of our earnings and profits attributable to the stock sold or
exchanged. Because of the complexity of Subpart F, and because we may never be a
CFC, a more detailed review of these rules is beyond of the scope of this
discussion.

Elimination of Overlap Between Subpart F Rules and PFIC
Provisions

Under the Taxpayer Relief Act of 1997, a PFIC that is also a
CFC will not be treated as a PFIC with respect to certain 10% U.S. Holders. For
the exception to apply, (i) the corporation must be a CFC within the meaning of
section 957(a) of the Code and (ii) the U.S. Holder must be subject to the
current inclusion rules of Subpart F with respect to such corporation (i.e., the
U.S. Holder is a "United States Shareholder," see "Controlled Foreign
Corporation," above). The exception only applies to that portion of a U.S.
Holder's holding period beginning after December 31, 1997. For that portion of a
United States Holder before January 1, 1998, the ordinary PFIC and QEF rules
continue to apply.

As a result of this new provision, if we were ever to become a
CFC, U.S. Holders who are currently taxed on their pro rata shares of Subpart F
income of a PFIC which is also a CFC will not be subject to the PFIC provisions
with respect to the same stock if they have previously made a Pedigreed QEF
Election. The PFIC provisions will however continue to apply to U.S Holders for
any periods in which Subpart F does not apply (for example he is no longer a 10%
Holder or we are no longer a CFC) and to U.S. Holders that did not make a
Pedigreed QEF Election unless the U.S. Holder elects to recognize gain on the
PFIC shares held in our Company as if those shares had been sold.

ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE
COMMON SHARES OF OUR COMPANY.

*F.*          
  *Dividends and Paying Agents*

Not applicable.

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- 80 -

*G.*          
*Statements by Experts*

Not applicable.

*H.*          
*Documents on Display*

Documents concerning our Company referred to in this annual
report may be viewed during normal business hours at our office at 2100, 1177
West Hastings Street, Vancouver, British Columbia, Canada, V6E 2K3 by making an
appointment.

*I.*          
  *Subsidiary Information*

As at the date of this annual report, we have four wholly-owned
subsidiaries: (i) Minera Mexicana el Rosario, S.A. de C.V.; (ii) New Age
Investments Inc.; (iii) Metalicos de Durango, S.A. de C.V.; and (iv) Minera de
Villa Seca, S.A. de C.V.

ITEM
11           
Quantitative and Qualitative Disclosures About Market Risk

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

Currency risk

The operating results and financial position of the Company are
reported in Canadian 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 Canadian dollar. The results of the
Companys operations are subject to currency transaction and translation
risk.

The Companys exploration, development, operating costs, and a
significant portion of its administrative costs are in Mexico and are
denominated in Mexican pesos or US dollars. Revenues from the sale of
concentrates are denominated in US dollars. The fluctuation of the US dollar and
Mexican peso in relation to the Canadian 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.

Comparative foreign exchange rates as at December 31, 2009 and
2008 are as follows:

|                              | 2009  | 2008 
|----------------------------- | ----- | -----
|                              |       |      
|MXN Peso to CDN Dollar        | 0.080 | 0.089
|                              |       |      
|US
      Dollar to CDN Dollar | 1.051 | 1.218

The Company has not entered into any agreements or purchased
any foreign currency hedging arrangements to hedge possible currency risks at
this time. Management believes the foreign exchange risk derived from currency
conversions for the Mexican operations is not significant and therefore does not
hedge its foreign exchange risk. Additionally, the US dollar trade accounts
receivable are short term in nature and foreign currency risk exposure is
minimal.

Interest rate risk

The Companys policy is to invest cash in guaranteed investment
  certificates at fixed or floating rates of interest and cash equivalents are
  to be maintained in floating rates of interest in order to maintain liquidity,
  while achieving a satisfactory return for shareholders. Fluctuations in interest
  rates impact the value of cash and cash equivalents.

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- 81 -

The Company manages risk by monitoring changes in interest rates
  in comparison to prevailing market rates. As at December 31, 2009, the Company
  held $12,379,172 in high interest savings accounts and guaranteed investment
  certificates.

With respect to financial liabilities, the convertible loan
notes and promissory note carry fixed interest rates of 8.0%, and 6.0% per
annum, respectively, and two capital leases carry fixed interest rates of at
10.5% and 12% per annum. As such, the Company is not subject to fluctuations in
interest rates.

Commodity price risk

The value of the Companys mineral resource properties depends
on the price of silver, gold, lead and zinc and the outlook for these minerals.
As at December 31, 2009, market prices were US$16.99/oz for silver, US$1,140/oz
for gold, US$2,390/tonne for lead, and US$2,569/tonne for 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, market fluctuations,
government regulations relating to prices, taxes, royalties, allowable
production, import, exports and supply and demand, industrial and retail demand,
forward sales by producers and speculators, levels of worldwide production,
short-term changes in supply and demand because of speculative hedging
activities, and certain other factors related specifically to silver and gold.
The value of trade receivables depends on changes in metal prices over the
quotational period.

The profitability of the Companys operations is highly
correlated to the market price of silver and gold. If metal prices decline for a
prolonged period below the cost of production of the Companys Topia and
Guanajuato mines, it may not be economically feasible to continue production.

The Company has not entered into any hedging or other commodity
based risk instruments.

Sensitivity analysis

Based on historic trends over the last twelve months,
volatilities in the above-noted market risks, and managements knowledge and
experience in the financial markets, the Company believes the following
movements are reasonably possible over a twelve-month period.

- A parallel shift of +1%/-1% from the prevailing market interest rates on
  deposits as of December 31, 2009.
- Proportional foreign exchange movement of -10% (depreciation of CAD) and
  +10% (appreciation of CAD) against the USD, from the December 31, 2009 CAD to
  USD exchange rate of 0.951.
- Proportional foreign exchange movement of -10% (depreciation of CAD) and
  +10% (appreciation of CAD) against the Mexican peso, from the December 31,
  2009 CAD to Mexican peso exchange rate of 12.481.
- A parallel shift of +10%/-10% from the prevailing commodity prices of
  US$16.99/oz for silver, US$1,104/oz for gold, US$2,390/tonne for lead, and
  US$2,569/tonne for zinc as of December 31, 2009.

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- 82 -

If these movements were to occur, the impact on the
consolidated net loss for each category of financial instrument held at the
balance sheet date is presented below in thousands of dollars.

|                                         |  |          |   |  | Interest
      Rate Risk |   |  | Currency
      Rate Risk |   |  | Commodity
      Price Risk |  
|---------------------------------------- |  | -------- | - |  | ------------------------ | - |  | ------------------------ | - |  | -------------------------- | -
|                                         |  |          |   |  | -1%                      |   |  | +1%                      |   |  | -10%                       |  
|                                         |  | Carrying |   |  |                          |   |  |                          |   |  |                            |  
|                                         |  | Amount   |   |  | Income                   |   |  | Income                   |   |  | Income                     |  
|                                         |  | ($'000   | ) |  | ($'000                   | ) |  | ($'000                   | ) |  | ($'000                     | )
|Financial assets                         |  |          |   |  |                          |   |  |                          |   |  |                            |  
|                                         |  |          |   |  |                          |   |  |                          |   |  |                            |  
|Cash and cash equivalents                |  |          |   |  |                          |   |  |                          |   |  |                            |  
|CAD                                      |  | 12,026   |   |  | (120                     | ) |  | 120                      |   |  | -                          |  
|USD                                      |  | 1,248    |   |  | (12                      | ) |  | 12                       |   |  | 139                        |  
|Pesos                                    |  | 38       |   |  | -                        |   |  | -                        |   |  | 4                          |  
|Amounts receivable                       |  |          |   |  |                          |   |  |                          |   |  |                            |  
|USD                                      |  | 1,026    |   |  | -                        |   |  | -                        |   |  | 114                        |  
|Pesos                                    |  | 4,407    |   |  | -                        |   |  | -                        |   |  | 490                        |  
|                                         |  |          |   |  |                          |   |  |                          |   |  |                            |  
|Financial liabilities                    |  |          |   |  |                          |   |  |                          |   |  |                            |  
|Accounts payable and accrued liabilities |  |          |   |  |                          |   |  |                          |   |  |                            |  
|USD                                      |  | 254      |   |  | -                        |   |  | -                        |   |  | (28                        | )
|Pesos                                    |  | 1,851    |   |  | -                        |   |  | -                        |   |  | (206                       | )
|Capital lease obligation                 |  |          |   |  |                          |   |  |                          |   |  |                            |  
|USD                                      |  | 863      |   |  | -                        |   |  | -                        |   |  | (96                        | )
|Total Increase
      (Decrease)          |  |          |   |  | (132                     | ) |  | 132                      |   |  | 417                        |  

ITEM
12            Description
of Securities Other Than Equity Securities

*A.*          
*Debt Securities*

Not applicable.

*B.*          
*Warrants and Rights*

Not applicable.

*C.*          
*Other Securities*

Not applicable.

*D.*          
*American Depository Shares*

Not applicable.

PART II

ITEM
13            Defaults,
Dividend Arrearages and Delinquencies

Not applicable.

ITEM
14            Material
Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

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- 83 -

ITEM
15            Controls
and Procedures

Our disclosure controls and procedures are designed to ensure
that information required to be disclosed in our reports filed under Canadian
and U.S. securities regulations is recorded, processed, summarized and reported
within the time periods specified and is accumulated and communicated to our
management, including our Chief Executive Officer and our Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

An evaluation was carried out under the supervision of, and
with the participation of, our management, including our Chief Executive Officer
and our Chief Financial Officer, of the effectiveness of our disclosure controls
and procedures (as such term is defined in the Exchange Act, as amended, Rules
13a-15(e) and 15d-15(e)) as of December 31, 2009. Based on that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of December 31, 2009.

Internal Controls 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, 2009, based on the framework set forth
in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on this evaluation,
management concluded that our internal control over financial reporting was
effective as of December 31, 2009.

KPMG LLP (KPMG), an independent registered public accounting
firm, who audited and reported on our consolidated financial statements, has
issued an attestation report on the effectiveness of our internal control over
financial reporting as of December 31, 2009. The attestation report is included
with the consolidated financial statements in this Annual Report on Form
20-F.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over
financial reporting during the period covered by the annual report, being the
fiscal year ended December 31, 2009, that has materially affected, or is
reasonably likely to materially affect our internal control over financial
reporting. The Company advises that it has taken steps to increase the
efficiency of its internal controls to ensure continued accuracy and timeliness
of the Companys financial reporting.

ITEM
16            Reserved

ITEM 16A        Audit
Committee Financial Expert

Our board of directors had determined that the past Chairman of
the Company's Audit Committee, Mr. John T. Kopcheff BSc (Hons), SPE, AAPG,
qualified as an "audit committee financial expert" as that term is defined in
Item 16A(b) of Form 20-F.

On February 12, 2009, Mr. Martin Carsky was appointed as the
new Chairman of the Audit Committee and Mr. Kopcheff stepped down. Mr. Carsky
also qualifies as an audit committee financial expert and he holds a Bachelor
of Science degree from the University of British Columbia in Vancouver, British
Columbia and holds the designation of Chartered Accountant.

---

- 84 -

More information regarding Mr. Kopcheffs and Mr. Carskys
experience can be found in Item 6 A. Directors, Officers and Senior Management.

Mr. Kopcheff and Mr. Carsky both qualify as "independent" as
the term is used in Section 803 of the AMEX Company Guide.

ITEM 16B        Code of
Ethics

Code of Ethics

Effective June 30, 2005 our Company's Board of Directors
adopted a Code of Ethic and Business Conduct (the Code) that applies to, among
other persons, our Companys Chief Executive Officer, President, Chief Financial
Officer, Chief Operating Officer and Controller.

The Code was amended and updated on September 16, 2008, to
describe the process to be taken if a manager or supervisor directs another
employee to disregard Company policy or internal controls and designates the
Business Ethics Officer as the main contact for reports of violations of the
Code.

The Code is available on our website at
http://www.greatpanther.com/.

ITEM 16C        Principal
Accountant Fees and Services

Audit Fees

Our board of directors appointed KPMG LLP, Chartered
Accountants, as independent auditors to audit our financial statements for the
fiscal year ended December 31, 2009. The aggregate fees billed by KPMG LLP,
Chartered Accountants, for professional services rendered for the audit of our
2009 annual financial statements included in this annual report for the year
ended December 31, 2009 were $350,000, of which $270,000 relates to the year-end
audit and $80,000 relates to review of interim periods in connection with the
short form prospectus. For the year ended December 31, 2008, the audit fees were
$303,000.

Audit Related Fees

The aggregate fees billed for professional services by KPMG
LLP, Chartered Accountants, that are reasonably related to the performance of
the audit or review of our financial statements and which are not reported under
the caption "Audit Fees" above, were $5,000 for the year ended December 31, 2009
and $nil for the year ended December 31, 2008.

The aggregate fees billed by KPMG Mexico for professional
services rendered for the Mexican statutory audits of our subsidiaries annual
financial statements included in this annual report was $nil for the year ended
December 31, 2009 and US$44,750 for the year ended December 31, 2008.

Tax Fees

The aggregate fees billed for tax compliance, tax advice and
tax planning by KPMG LLP, Chartered Accountants, were $5,000 for the year ended
December 31, 2009, compared to $3,500 for the year ended December 31, 2008. The
aggregate fees billed for certification of the Companys Value Added Tax
receivable by KPMG Mexico in December 31, 2008 was US$17,500.

---

- 85 -

All Other Fees

The aggregate fees billed by KPMG LLP, Chartered Accountants,
for other non-audit professional services, other than those services listed
above, were $6,000 for the year ended December 31, 2009 and $31,642 for the year
ended December 31, 2008.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before KPMG LLP, Chartered Accountants, is
engaged by us or our subsidiaries to render any auditing or permitted non-audit
related service, the engagement be:

|- | Approved by our audit committee; or                                                                                                                                                                                                                                                                                                                                                 
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                     
|- | Entered into pursuant to pre-approval policies and
      procedures established by the audit committee, provided the policies and
      procedures are detailed as to the particular service, the audit committee
      is informed of each service, and such policies and procedures do not
      include delegation of the audit committee's responsibilities to
      management.

The Audit Committee pre-approves all services provided by our
independent auditors. All of the above services and fees were reviewed and
pre-approved by the audit committee.

The Audit Committee has considered the nature and amount of the
fees billed by KPMG LLP, Chartered Accountants, and believes that the provision
of the services for activities unrelated to the audit is compatible with
maintaining KPMG LLP, Chartered Accountants, independence.

ITEM 16D.       Exemption from
the Listing Standards for Audit Committees

Not Applicable.

ITEM 16E        
Purchases of Equity Securities of the Company and Affiliated Purchasers

Not Applicable.

ITEM 16F         Change
in Registrants Certifying Accountant

Not Applicable.

---

- 86 -

PART III

ITEM
17            Financial
Statements

Financial Statements Filed as Part of the Annual
Report:

|- | Report of Independent Registered
      Public Accounting Firm dated March 10, 2010.                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                   
|- | Consolidated balance sheets for
      the fiscal years ended December 31, 2009 and 2008.                                                          
|  |                                                                                                                                                   
|- | Consolidated statements of
      operations and comprehensive loss and deficit for the fiscal years ended
      December 31, 2009, 2008, and 2007.
|  |                                                                                                                                                   
|- | Consolidated statements of cash
      flows for the fiscal years ended December 31, 2009, 2008, and 2007.                                         
|  |                                                                                                                                                   
|- | Notes to consolidated financial
      statements                                                                                                  

ITEM
18            Financial
Statements

Refer to Item 17 - Financial Statements.

ITEM
19            Exhibits

The following exhibits are being filed as part of this annual
report, or are incorporated by reference where indicated:

|1.   | Articles
        of Incorporation and By-laws:                                                                                                                                                                                    
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                   
|1.1  | Continuation
        Application under the Business Corporation Act(British Columbia)
        (incorporated by reference from our Registration Statement on Form 20-F,
        filed on August 10, 2004).                         
|     |                                                                                                                                                                                                                                   
|1.2  | Certificate
        of Continuation dated July 9, 2004 (incorporated by reference from our
        Registration Statement on Form 20-F, filed on August 10, 2004).                                                                
|     |                                                                                                                                                                                                                                   
|1.3  | Notice of Articles
        (incorporated by reference from our Registration Statement on Form 20-F,
        filed on August 10, 2004).                                                                                            
|     |                                                                                                                                                                                                                                   
|1.4  | Bylaws (incorporated
        by reference from our Registration Statement on Form 20-F, filed on August
        10, 2004).                                                                                                        
|     |                                                                                                                                                                                                                                   
|1.5* | Certificate
        of Name Change to Great Panther Silver Limited                                                                                                                                                                
|     |                                                                                                                                                                                                                                   
|2.   | Instruments
        Defining Rights of Security Holders                                                                                                                                                                           
|     |                                                                                                                                                                                                                                   
|2.1  | Shareholder
        Rights Plan (incorporated by reference from our Registration Statement
        on Form 20- F, filed on August 10, 2004, amended March 7, 2008).                                                               
|     |                                                                                                                                                                                                                                   
|4.   | Material
        Contracts                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                   
|4.1  | Share Purchase
        Agreement dated December 9, 2003 with Robert A. Archer and Ing. Francisco
        Ramos Sánchez (incorporated by reference from our Registration Statement
        on Form 20-F, filed on August 10, 2004).

---

- 87 -

|4.2   | Option Agreement
        dated February 11, 2004 between our subsidiary, Minera Mexicana el Rosario,
        S.A. de C.V. and Eduardo Rodriguez Chávez, acting in representation
        of Alfredo Rodriguez Chávez (incorporated by reference from our Registration
        Statement on Form 20-F, filed on August 10, 2004).                                            
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.3   | Agreement dated
        February 18, 2004 between our subsidiary, Minera Mexicana el Rosario,
        S.A. de C.V. and Cia. Minera des Canelas y Topia, S.A. de C.V., MET-MEX
        Peñoles, S.A. de C.V. and Minera Mexicana la Ciénega, S.A. de
        C.V. (incorporated by reference from our Registration Statement on Form
        20-F, filed on August 10, 2004).
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.4   | Agreement dated
        February 28, 2004 between our subsidiary, Minera Mexicana el Rosario,
        S.A. de C.V. and Carolos Teodoro Ortiz Rodriquez, Abelardo Garza Hernanadez
        and Minera San Miguel de los Tarros, S.A. de C.V. (incorporated by reference
        from our Registration Statement on Form 20-F, filed on August 10, 2004).                     
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.5   | Letter of Intent
        dated January 19, 2005 with Minera Acero del Fuego, S.A. de C.V. (Virimoa
        Project) (incorporated by reference from our Registration Statement on
        Form 20-F, filed on July 15, 2005).                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.6   | Letter of Intent
        dated January 4, 2005 between our Company and Compania Minera de Canelas
        y Topia, S.A. de C.V.                                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.7   | Purchase Agreement
        dated June 30, 2005 between our Company and Compania Minera de Canelas
        y Topia, S.A. de C.V.                                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.8   | Purchase Agreement
        dated October 25, 2005 between our Company and the Sociedad Coopertiva
        Minero Metalúrgics Santa Fe de Guanajuato.                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.9   | Letter of Intent
        dated April 26, 2006 between our Company and Minera Apollo S.A. de C.V.                                                                                                                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.10  | Letter of Intent
        dated December 7, 2006 between our Company and Altair Ventures Incorporated.                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.11  | Option Agreement
        dated February 2, 2007 between our Company and Altair Ventures Incorporated
        (incorporated by reference from our Registration Statement on Form 20-F,
        filed on April 3, 2008).                                                                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.12  | Shareholder
        Rights Plan Agreement dated March 7, 2008 between the Company and Computershare
        Investor Services Inc. (incorporated by reference from our Registration
        Statement on Form 20-F, filed on April 3, 2008).                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                             
|4.13* | Option
        Termination and Debt Settlement Agreement with Altair on the San Antonio
    property dated February 1, 2010.                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                             
|8.    | Subsidiaries                                                                                                                                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                             
|8.1   | Minera Mexicana
        el Rosario, S.A. de C.V. (incorporated by reference from our Registration
        Statement on Form 20-F, filed on August 10, 2004).                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                             
|8.2   | New Age Investments
        Inc. (incorporated by reference from our Registration Statement on Form
        20-F, filed on August 10, 2004).                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                             
|8.3   | Metalicos de
        Durango, S.A. de C.V.                                                                                                                                                                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                                                             
|8.4   | Minera de Villa
        Seca, S.A. de C.V.                                                                                                                                                                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                                                             
|11.   | Code of Ethics                                                                                                                                                                                                                                                                                                                                                              

---

- 88 -

|11.1  | Code of Ethics
        (incorporated by reference from our Registration Statement on Form 20-F,
        filed on July 15, 2005, updated August 2007 and September 2008).                       
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                
|12.   | 302 Certification                                                                                                                                                                              
|      |                                                                                                                                                                                                
|12.1* | Section
        302 Certification under Sarbanes-Oxley Act of 2002 for Robert A. Archer.                                                                                                       
|      |                                                                                                                                                                                                
|12.2* | Section
        302 Certification under Sarbanes-Oxley Act of 2002 for Raakel S. Iskanius.                                                                                                     
|      |                                                                                                                                                                                                
|13.   | 906 Certification                                                                                                                                                                              
|      |                                                                                                                                                                                                
|13.1* | Section
        906 Certification under Sarbanes-Oxley Act of 2002 for Robert A. Archer.                                                                                                       
|      |                                                                                                                                                                                                
|13.2* | Section
        906 Certification under Sarbanes-Oxley Act of 2002 for Raakel S. Iskanius.                                                                                                     
|      |                                                                                                                                                                                                
|15.   | Additional
        Exhibits                                                                                                                                                                    
|      |                                                                                                                                                                                                
|15.1  | Summary Report
        on the San Antonio Gold Prospect dated November 2003 (incorporated by
        reference from our Registration Statement on Form 20-F, filed on August
        10, 2004).
|      |                                                                                                                                                                                                
|15.2  | Summary Report
        on the Topia Project dated November 20, 2003 (incorporated by reference
        from our Registration Statement on Form 20-F, filed on August 10, 2004).                
|      |                                                                                                                                                                                                
|15.3  | Map of Topia
        Property (incorporated by reference from our Registration Statement on
        Form 20- F/A, filed on February 6, 2009).                                                  
|      |                                                                                                                                                                                                
|15.4  | Map of Guanajuato
        Property (incorporated by reference from our Registration Statement on
        Form 20-F/A, filed on February 6, 2009).                                              
|      |                                                                                                                                                                                                
|15.5  | Map of Mapimi
        Property (incorporated by reference from our Registration Statement on
        Form 20-F/A, filed on February 6, 2009).                                                  

* Filed herewith.



__________________________________________________

i This definition was obtained from the Canadian
Institute of Mining, Metallurgy, and Petroleum, and was adopted August 20, 2000.

ii This definition was obtained from the Canadian
Institute of Mining, Metallurgy, and Petroleum, and was adopted August 20, 2000

iiiOctober 12, 2006 press release.

---

SIGNATURES

The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign on this annual report on its behalf.

Great Panther Silver Limited
(Registrant)

/s/ Robert A. Archer
Robert A. Archer 
President and Chief Executive Officer 
(Principal Executive Officer)

/s/ Raakel S. Iskanius
Raakel S. Iskanius 
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

Date: March 19, 2010

---









GREAT PANTHER SILVER
  LIMITED(Formerly Great Panther Resources Limited)

CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDEDDECEMBER 31, 2009 and 2008Expressed in
    Canadian Dollars

---

GREAT PANTHER SILVER LIMITED

MANAGEMENTS STATEMENT OF RESPONSIBILITY FOR
  FINANCIAL REPORTING

The 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 this Annual Report, including Managements Discussion and Analysis.

The consolidated financial statements have been prepared in
  accordance with Canadian generally accepted accounting principles. 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) in 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 external 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, 2009, based on the framework set forth
  in Internal Control-Integrated Frameworkissued by the Committee of
  Sponsoring Organizations of the Treadway Commission (COSO). Based on this
  evaluation, management concluded that our internal control over financial
  reporting was effective as of December 31, 2009.

KPMG LLP, an independent registered public accounting firm, has
  audited the effectiveness of our internal control over financial reporting as of
  December 31, 2009, as stated in their report which appears herein.

|Robert A. Archer      | Raakel S. Iskanius   
|----------------------- | -----------------------
|Chief Executive Officer | Chief Financial Officer
|                        |                        
|March 10, 2010          | March 10, 2010         

---

KPMG LLP
      Telephone
      (604) 691-3000Chartered Accountants
      Fax
      (604) 691-3031PO Box 10426 777 Dunsmuir Street
      Internet
      www.kpmg.caVancouver BC V7Y 1K3Canada


REPORT OF INDEPENDENT REGISTERED PUBLIC 
  ACCOUNTING FIRM

To the Board of Directors of Great Panther Resources Limited

We have audited the accompanying consolidated balance sheets of
  Great Panther Silver Limited (the Company")as of December 31, 2009 and
  2008 and the related consolidatedstatements of operations and
  comprehensive loss, deficit and cash flows for each of the years in the
  three-year period ended December 31, 2009. These consolidated financial
  statements are the responsibility of the Company's management. 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.We also conducted our audits 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 the financial statements are free of material
  misstatement. An audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the financial statements. An audit also includes
  assessing the accounting principles used and significant estimates made by
  management, as well as evaluating the overall financial statement presentation.
  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of the
  Company as of December 31, 2009 and 2008 and the results of its operations and
  its cash flows for each of the years in the three-year period ended December 31,
  2009 in conformity with Canadiangenerally accepted accounting
  principles.

Canadian generally accepted accounting principles vary in
  certain significant respects from US generally accepted accounting principles.
  Information relating to the nature and effect of such differences is presented
  in Note 21 to the consolidated financial statements.

We also have audited, in accordance with the standards of the
  Public Company Accounting Oversight Board (United States), the Company's
  internal control over financial reporting as of December 31, 2009, based on the
  criteria established in Internal ControlIntegrated Frameworkissued by
  the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and
  our report dated March 10, 2010expressed an unqualified opinion on the
  effectiveness of the Companys internal control over financial reporting.

KPMG LLP (signed)

Chartered Accountants

Vancouver, Canada

March 10, 2010

KPMG LLP, a Canadian
  limited liability partnership is the Canadianmember
      firm of KPMG International, a Swiss cooperative.

---

KPMG LLP
      Telephone
      (604) 691-3000Chartered Accountants
      Fax
      (604) 691-3031PO Box 10426 777 Dunsmuir Street
      Internet
      www.kpmg.caVancouver BC V7Y 1K3Canada


REPORT OF INDEPENDENT REGISTERED PUBLIC 
  ACCOUNTING FIRM

To the Board of Directors of Great Panther Resources Limited

We have audited Great Panther Silver Limited’s (the “Company") internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, 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.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework 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 balance sheets of the Company as of December 31, 2009 and 2008 and the related consolidated statements of operations and comprehensive loss, deficit and cash flows for each of the years in the three-year period ended December 31, 2009 and our report dated March 10, 2010 expressed an unqualified opinion on those consolidated financial statements.

KPMG LLP (signed)

Chartered Accountants

Vancouver, Canada

March 10, 2010

KPMG LLP, a Canadian
  limited liability partnership is the Canadianmember
      firm of KPMG International, a Swiss cooperative.

---

GREAT PANTHER SILVER LIMITED
  (Formerly Great Panther Resources Limited) 
  CONSOLIDATED
  BALANCE SHEETS 
  (Expressed in Canadian Dollars)

December 31, 2009 and 2008

|                                                                |   | 2009        |   |   | 2008             |  
|--------------------------------------------------------------- | - | ----------- | - | - | ---------------- | -
|                                                                |   |             |   |   | (Revised         |  
|                                                                |   |             |   |   | note
      2(a)) |  
|                                                                |   |             |   |   |                  |  
|Assets                                                          |   |             |   |   |                  |  
|                                                                |   |             |   |   |                  |  
|Current assets:                                                 |   |             |   |   |                  |  
|Cash and cash equivalents                                       | $ | 13,312,091  |   | $ | 606,244          |  
|Marketable securities                                           |   | 22,754      |   |   | 6,435            |  
|Amounts receivable (note
      5)                               |   | 5,539,238   |   |   | 3,737,925        |  
|Income
      taxes recoverable                                  |   | 342,217     |   |   | 431,523          |  
|Inventories (note 6)                                            |   | 1,438,376   |   |   | 945,506          |  
|Prepaid expenses,
      deposits and advances                   |   | 1,585,069   |   |   | 495,287          |  
|                                                                |   | 22,239,745  |   |   | 6,222,920        |  
|                                                                |   |             |   |   |                  |  
|Mineral
      properties, plant and equipment (note 7)          |   | 14,934,521  |   |   | 16,087,761       |  
|                                                                |   |             |   |   |                  |  
|                                                                | $ | 37,174,266  |   | $ | 22,310,681       |  
|                                                                |   |             |   |   |                  |  
|Liabilities and Shareholders Equity                            |   |             |   |   |                  |  
|                                                                |   |             |   |   |                  |  
|Current liabilities:                                            |   |             |   |   |                  |  
|Accounts
      payable and accrued liabilities                  | $ | 2,658,024   |   | $ | 4,466,335        |  
|Current portion of
      capital lease obligations (note 18(f)) |   | 800,761     |   |   | 436,498          |  
|Current
      portion of promissory note (note 9(a))            |   | 121,994     |   |   | -                |  
|Current portion of future income tax liability (note
      16)  |   | 506,222     |   |   | -                |  
|                                                                |   | 4,087,001   |   |   | 4,902,833        |  
|Long-term liabilities:                                          |   |             |   |   |                  |  
|Capital
      lease obligations (note 18(f))                    |   | 62,634      |   |   | 456,788          |  
|Promissory note (note
      9(a))                               |   | 118,424     |   |   | -                |  
|Convertible loan notes (note 9(b))                              |   | 3,356,397   |   |   | 4,651,690        |  
|Asset retirement
      obligations (note 10)                    |   | 1,382,091   |   |   | 1,104,877        |  
|Future income tax
      liability (note 16)                     |   | 1,311,609   |   |   | 1,376,588        |  
|                                                                |   | 10,318,156  |   |   | 12,492,776       |  
|Shareholders equity:                                           |   |             |   |   |                  |  
|Share capital (note
      11(b))                                |   | 75,910,220  |   |   | 57,865,462       |  
|Contributed surplus (note 11(c))                                |   | 10,268,043  |   |   | 7,724,900        |  
|Equity component of
      convertible loan notes (note 9(b))    |   | 1,563,000   |   |   | 2,569,000        |  
|Advances
      on share subscriptions (note 11(f))              |   | -           |   |   | 85,000           |  
|Accumulated other
      comprehensive income (loss) (note 12)   |   | (22,773     | ) |   | (37,592          | )
|Deficit                                                         |   | (60,862,380 | ) |   | (58,388,865      | )
|                                                                |   | 26,856,110  |   |   | 9,817,905        |  
|Nature of operations (note 1)                                   |   |             |   |   |                  |  
|Commitments and contingencies (note 18)                         |   |             |   |   |                  |  
|Subsequent events (note 20)                                     |   |             |   |   |                  |  
|                                                                |   |             |   |   |                  |  
|                                                                | $ | 37,174,266  |   | $ | 22,310,681       |  

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board:

|Martin B.
      Carsky | Director | Kaare G. Foy | Director
|------------------------ | -------- | -------------- | --------

1

---

GREAT PANTHER SILVER LIMITED
  (Formerly Great Panther Resources Limited) 
  CONSOLIDATED
  STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 
  (Expressed in Canadian
  Dollars)

Years ended December 31, 2009, 2008 and 2007

|                                                                                                     |   | 2009       |   |   | 2008             |   |   | 2007        |  
|---------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------------- | - | - | ----------- | -
|                                                                                                     |   |            |   |   | (Revised         |   |   |             |  
|                                                                                                     |   |            |   |   | note
      2(a)) |   |   |             |  
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Revenues:                                                                                            |   |            |   |   |                  |   |   |             |  
|Mineral sales                                                                                        | $ | 31,731,715 |   | $ | 22,445,438       |   | $ | 15,523,094  |  
|Cost of sales (excluding amortization and
      depletion)                                           |   | 16,767,683 |   |   | 18,144,223       |   |   | 14,152,657  |  
|                                                                                                     |   | 14,964,032 |   |   | 4,301,215        |   |   | 1,370,437   |  
|Expenses:                                                                                            |   |            |   |   |                  |   |   |             |  
|Amortization and depletion of
      mineral properties, plant and equipment                          |   | 3,576,796  |   |   | 4,285,029        |   |   | 3,603,668   |  
|Accretion on asset retirement obligation (note
      10)                                             |   | 277,214    |   |   | 281,677          |   |   | 22,704      |  
|Mineral property exploration
      expenditures (note 8)                                             |   | 1,581,955  |   |   | 6,327,926        |   |   | 6,803,104   |  
|General and administrative                                                                           |   | 5,802,508  |   |   | 5,965,595        |   |   | 4,672,362   |  
|Stock-based compensation (note 11(d))                                                                |   | 2,377,927  |   |   | 1,608,271        |   |   | 1,129,500   |  
|                                                                                                     |   | 13,616,400 |   |   | 18,468,498       |   |   | 16,231,338  |  
|                                                                                                     |   | 1,347,632  |   |   | (14,167,283      | ) |   | (14,860,901 | )
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Other income (expenses):                                                                             |   |            |   |   |                  |   |   |             |  
|Interest income                                                                                      |   | 58,955     |   |   | 240,929          |   |   | 207,892     |  
|Interest expense                                                                                     |   | (1,168,799 | ) |   | (1,155,197       | ) |   | (1,035,577  | )
|Debt settlement expense (note 9(b)(i))                                                               |   | (51,165    | ) |   | -                |   |   | -           |  
|Foreign exchange gain (loss)                                                                         |   | (383,400   | ) |   | 113,042          |   |   | (1,440,802  | )
|Gain
      (loss) on disposal of fixed assets                                                        |   | (2,014     | ) |   | 31,168           |   |   | -           |  
|                                                                                                     |   | (1,546,423 | ) |   | (770,058         | ) |   | (2,268,487  | )
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Loss before provision for income taxes                                                               |   | (198,791   | ) |   | (14,937,341      | ) |   | (17,129,388 | )
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Recovery of (provision for) income taxes (note 16)                                                   |   | (668,060   | ) |   | 1,176,515        |   |   | (2,571,473  | )
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Loss for the year                                                                                    |   | (866,851   | ) |   | (13,760,826      | ) |   | (19,700,861 | )
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Other comprehensive income (loss), net of tax: Unrealized
      gain (loss) on marketable securities |   | 14,819     |   |   | (43,537          | ) |   | 5,945       |  
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Comprehensive loss for the year                                                                      | $ | (852,032   | ) | $ | (13,804,363      | ) | $ | (19,694,916 | )
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Basic and diluted loss per share                                                                     | $ | (0.01      | ) | $ | (0.17            | ) | $ | (0.27       | )
|                                                                                                     |   |            |   |   |                  |   |   |             |  
|Weighted average number of shares                                                                    |   | 90,210,438 |   |   | 81,321,733       |   |   | 72,227,455  |  

See accompanying notes to consolidated financial statements.

2

---

GREAT PANTHER SILVER LIMITED
  (Formerly Great Panther Resources Limited) 
  CONSOLIDATED
  STATEMENTS OF DEFICIT 
  (Expressed in Canadian Dollars)

Years ended December 31, 2009, 2008 and 2007

|                                              |   | 2009        |   |   | 2008             |   |   | 2007        |  
|--------------------------------------------- | - | ----------- | - | - | ---------------- | - | - | ----------- | -
|                                              |   |             |   |   | (Revised         |   |   |             |  
|                                              |   |             |   |   | note
      2(a)) |   |   |             |  
|                                              |   |             |   |   |                  |   |   |             |  
|Deficit, beginning of year                    | $ | (58,388,865 | ) | $ | (44,628,039      | ) | $ | (24,927,178 | )
|Settlement of convertible note (note 9(b)(i)) |   | (1,606,664  | ) |   | -                |   |   | -           |  
|Loss for the year                             |   | (866,851    | ) |   | (13,760,826      | ) |   | (19,700,861 | )
|                                              |   |             |   |   |                  |   |   |             |  
|Deficit, end of year                          | $ | (60,862,380 | ) | $ | (58,388,865      | ) | $ | (44,628,039 | )

See accompanying notes to consolidated financial statements.

3

---

GREAT PANTHER SILVER LIMITED
  (Formerly Great Panther Resources Limited) 
  CONSOLIDATED
  STATEMENTS OF CASH FLOWS 
  (Expressed in Canadian Dollars)

Years ended December 31, 2009, 2008 and 2007

|                                                                            |   | 2009       |   |   | 2008             |   |   | 2007        |  
|--------------------------------------------------------------------------- | - | ---------- | - | - | ---------------- | - | - | ----------- | -
|                                                                            |   |            |   |   | (Revised         |   |   |             |  
|                                                                            |   |            |   |   | Note
      2(a)) |   |   |             |  
|                                                                            |   |            |   |   |                  |   |   |             |  
|Cash flows provided by (used in) operating
      activities:                |   |            |   |   |                  |   |   |             |  
|Loss for the year                                                           | $ | (866,851   | ) | $ | (13,760,826      | ) | $ | (19,700,861 | )
|Items not
      involving cash:                                             |   |            |   |   |                  |   |   |             |  
|Amortization
      and depletion of mineral properties, plant and equipment |   | 3,576,796  |   |   | 4,285,029        |   |   | 3,603,668   |  
|Foreign exchange (gain) loss on debt                                        |   | (73,037    | ) |   | 133,612          |   |   | (778        | )
|Foreign exchange (gain) loss on future income tax                           |   | (161,828   | ) |   | -                |   |   | -           |  
|Stock-based compensation                                                    |   | 2,377,927  |   |   | 1,608,271        |   |   | 1,129,500   |  
|Shares
      issued for mineral exploration expenditures                    |   | -          |   |   | 191,568          |   |   | 246,000     |  
|Shares
      received for mineral exploration expenditures                  |   | (1,500     | ) |   | (10,177          | ) |   | (33,850     | )
|Future income tax                                                           |   | 603,070    |   |   | (1,044,916       | ) |   | 2,421,504   |  
|Interest accretion on debt discount                                         |   | -          |   |   | 11,154           |   |   | 259,355     |  
|Interest accretion on convertible notes payable                             |   | 627,755    |   |   | 623,079          |   |   | 377,812     |  
|Debt settlement expense                                                     |   | 51,165     |   |   | -                |   |   | -           |  
|Interest on capital lease obligation                                        |   | -          |   |   | 24,438           |   |   | -           |  
|Accretion on asset retirement obligations                                   |   | 277,214    |   |   | 281,677          |   |   | 22,704      |  
|Write-down of inventory                                                     |   | -          |   |   | 240,810          |   |   | -           |  
|Loss (gain) on disposal of capital assets                                   |   | 2,014      |   |   | (31,168          | ) |   | -           |  
|                                                                            |   | 6,412,725  |   |   | (7,447,449       | ) |   | (11,674,946 | )
|Changes
      in non-cash operating working capital:                        |   |            |   |   |                  |   |   |             |  
|Amounts receivable                                                          |   | (1,801,313 | ) |   | 2,277,611        |   |   | (2,384,389  | )
|Inventories                                                                 |   | (471,155   | ) |   | (357,566         | ) |   | (143,346    | )
|Prepaid expenses and deposits                                               |   | (1,089,782 | ) |   | 371,085          |   |   | 245,025     |  
|Accounts payable and accrued liabilities                                    |   | (1,840,322 | ) |   | 1,959,822        |   |   | 1,930,532   |  
|Income taxes                                                                |   | 89,306     |   |   | (68,303          | ) |   | (490,695    | )
|Net cash
      provided by (used in) operating activities                   |   | 1,299,459  |   |   | (3,264,800       | ) |   | (12,517,819 | )
|                                                                            |   |            |   |   |                  |   |   |             |  
|Cash flows provided by (used in) investing
      activities:                |   |            |   |   |                  |   |   |             |  
|Mineral properties and
      capital expenditures                           |   | (1,762,302 | ) |   | (1,927,624       | ) |   | (3,328,413  | )
|Proceeds from disposal
      of capital assets                              |   | 5,177      |   |   | 100,614          |   |   | -           |  
|Net cash used in
      investing activities                                 |   | (1,757,125 | ) |   | (1,827,010       | ) |   | (3,328,413  | )
|                                                                            |   |            |   |   |                  |   |   |             |  
|Cash flows provided by (used in) financing activities:                      |   |            |   |   |                  |   |   |             |  
|Repayment
      of long-term debt                                           |   | -          |   |   | (104,898         | ) |   | (1,456,893  | )
|Repayment of capital
      lease obligations                                |   | (364,745   | ) |   | (180,985         | ) |   | -           |  
|Repayment
      of promissory note                                          |   | (9,840     | ) |   | -                |   |   | -           |  
|Proceeds from advances on
      share subscriptions                         |   | -          |   |   | 85,000           |   |   | -           |  
|Proceeds
      from exercise of warrants                                    |   | 519,153    |   |   | 142,710          |   |   | 8,725,054   |  
|Proceeds from exercise of
      options                                     |   | 730,859    |   |   | 398,250          |   |   | 678,000     |  
|Proceeds
      from issuance of convertible notes                           |   | -          |   |   | -                |   |   | 4,050,000   |  
|Issuance of shares for cash, net of issue costs                             |   | 12,288,086 |   |   | -                |   |   | -           |  
|Net cash provided by
      financing activities                             |   | 13,163,513 |   |   | 340,077          |   |   | 11,996,161  |  
|                                                                            |   |            |   |   |                  |   |   |             |  
|Increase (decrease) in cash and cash
      equivalents                      |   | 12,705,847 |   |   | (4,751,733       | ) |   | (3,850,071  | )
|                                                                            |   |            |   |   |                  |   |   |             |  
|Cash and cash equivalents, beginning of year                                |   | 606,244    |   |   | 5,357,977        |   |   | 9,208,048   |  
|                                                                            |   |            |   |   |                  |   |   |             |  
|Cash and cash equivalents, end of year                                      | $ | 13,312,091 |   | $ | 606,244          |   | $ | 5,357,977   |  

See accompanying notes to consolidated financial statements.

4

---

GREAT PANTHER SILVER LIMITED
  (Formerly Great Panther Resources Limited) 
  CONSOLIDATED
  STATEMENTS OF CASH FLOWS 
  (Expressed in Canadian Dollars)

Years ended December 31, 2009, 2008 and 2007

|                                                                              |   | 2009      |  |   | 2008     |   |   | 2007    | 
|----------------------------------------------------------------------------- | - | --------- |  | - | -------- | - | - | ------- | 
|                                                                              |   |           |  |   |          |   |   |         | 
|Supplementary cash flow
      information:                                    |   |           |  |   |          |   |   |         | 
|Income
      taxes received                                                   | $ | 24,316    |  | $ | 63,296   |   | $ | -       | 
|Income taxes paid                                                             |   | -         |  |   | -        |   |   | 640,664 | 
|Interest
      expense paid                                                   |   | 366,202   |  |   | 496,526  |   |   | 330,517 | 
|Interest income received                                                      |   | 58,955    |  |   | 250,317  |   |   | 198,504 | 
|                                                                              |   |           |  |   |          |   |   |         | 
|Non-cash financing and
      investing transactions:                          |   |           |  |   |          |   |   |         | 
|Mineral
      property adjustment from changes in asset retirement obligation |   | -         |  |   | (277,971 | ) |   | 986,182 | 
|Assumption
      of capital lease obligation on purchase of equipment         |   | 407,891   |  |   | 785,047  |   |   | -       | 
|Value added
      tax on capital lease obligation                             |   | 80,348    |  |   | 136,293  |   |   | -       | 
|Warrants issued for financing fee (note 11(b))                                |   | 442,334   |  |   | -        |   |   | -       | 
|Issuance
      of shares pursuant to mineral property option agreements       |   | -         |  |   | 191,568  |   |   | 246,000 | 
|Issuance of promissory note for equipment (note 9(a))                         |   | 250,258   |  |   | -        |   |   | -       | 
|Shares
      issued on conversion of convertible note (note 9(b)(i))          |   | 4,586,877 |  |   | -        |   |   | -       | 
|                                                                              |   |           |  |   |          |   |   |         | 

See accompanying notes to consolidated financial
  statements.

5

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended
      December 31, 2009, 2008 and 2007

|1. | Nature of operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Great Panther Silver Limited (the Company) was
      continued under the Business Corporations Act (Yukon) on March 22, 1996
      and continued under the Business Corporations Act (British Columbia) on
      July 9, 2004. On October 2, 2003, the Company changed its name from Great
      Panther Inc. to Great Panther Resources Limited and the common shares were
      consolidated whereby ten common shares were exchanged for one new common
      share. On December 17, 2009, the Companys shareholders approved changing
      the Company's name from Great Panther Resources Limited to Great Panther
      Silver Limited which became effective as of January 1, 2010. No change to
      the Company's capital structure is involved and the common shares of the
      Company continue to trade on the main board of the Toronto Stock Exchange
      under the symbol GPR.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company is in the business of acquisition,
      development and exploration, and operation of mineral properties and mines
      in Mexico. Among the properties in which the Company has interests, the
      Topia and Guanajuato mines are in production. The Companys other mineral
      property interests are in the exploration stage and it has not yet been
      determined as to whether these properties contain ore reserves that are
      economically viable. Costs associated with these exploration stage
      properties have been expensed.                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These financial statements have been prepared by
      management on a going concern basis, which assumes the realization of
      assets and liquidation of liabilities in the normal course of business.
      The business of mining and exploring for minerals involves a high degree
      of risk and there can be no assurance that the current exploration and
      development programs will result in the discovery and development of
      economic ore reserves.                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | Significant accounting policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

6

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| |     | estimates relate to the assessment for impairment and
      useful life of mineral properties, plant and equipment, site restoration
      costs, valuation of amounts receivable and future income tax assets,
      assumptions used in determining the fair value of non-cash stock-based
      compensation, the fair value of the equity component of convertible loan
      notes and the fair values assigned to the net assets acquired and
      liabilities assumed on acquisition. Due to the inherent uncertainty
      involved with making such estimates, actual results reported in future
      years could differ from these estimates.                                                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (d) | Cash and cash equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Cash and cash equivalents consist of highly liquid
      investments that are readily convertible to known amounts of cash. Short
      term investments have maturity dates of three months or less from the date
      of purchase, or they are redeemable prior to maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (e) | Marketable securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Marketable securities are recorded at fair value based on
      quoted market prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (f) | Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Inventories consist of ore stockpiles and concentrate
      inventories which are valued at the lower of weighted average cost and net
      realizable value. Costs include all direct production costs and fixed
      overhead. 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 average cost and replacement cost.
      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 minted and sold as
      coins and bars, are recorded at lower of cost and net realizable
      value.                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (g) | Mineral properties, plant and equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Companys policy is to expense, as incurred,
      exploration expenditures, periodic option payments related to mineral
      properties and administrative and land use costs incurred prior to
      commercial feasibility of mining operations being established. Mineral
      property acquisition costs are capitalized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Mineral property acquisition costs include cash
      consideration and the fair value of common shares issued for mineral
      property interests, pursuant to the terms of the relevant agreement. Costs
      related to the acquisition of property and mineral rights, equipment,
      construction of production facilities and the development and betterment
      of mine infrastructure and equipment are capitalized. Costs of permitting,
      evaluation and feasibility are capitalized upon completion of an analysis
      which demonstrates the economic viability of the mineral deposit. Mineral
      property sales proceeds or option payments received for exploration rights
      are treated as cost recoveries.                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Once commercial production has commenced, production
      facilities and equipment are depreciated using the units-of-production
      method, if sufficient reserve information is available or the
      straight-line method over their estimated useful lives, not to exceed the
      life of the mine to which the assets relate. As at December 31, 2009, the
      Company did not have a reliable estimate of reserves and therefore did not
      use the units-of-production method. Effective October 1, 2008, the
      remaining life of the Topia mine was extended from 2 years to 7 years.
      Effective December 31, 2008, the remaining life of the Guanajuato mine was
      extended from 2 years to 3 years. Managements estimate of expected
      remaining mine life is based upon available internal and external
      estimated resource information, historical production
      and

7

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

recovery levels, planned future
  production and recovery levels, and other factors. Changes in mine life are
  recognized prospectively.

Maintenance and repairs are charged to
  operations as incurred. 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 operations.

Capital assets held at the parent
  company are recorded at cost less accumulated depreciation, calculated using the
  following basis:

| | Computer equipment     | 30% declining balance                   
| | ---------------------- | ----------------------------------------
| | Furniture and fixtures | 20% declining balance                   
| | Office equipment       | 20% declining balance                   
| | Leasehold improvements | straight-line over the term of the lease

| | (h) | Impairment of long-lived assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company reviews and evaluates its long-lived assets,
      including mineral properties, plant and equipment, for impairment when
      events or changes in circumstances indicate that the related carrying
      amounts may not be recoverable. Recoverability of assets to be held and
      used is measured by a comparison of the carrying amount of an asset to its
      estimated undiscounted future cash flows expected to be generated by the
      asset. Estimated cash flows include assumptions about long-term silver,
      gold, lead and zinc prices, future production levels, and future
      operating, capital and reclamation costs. If carrying value exceeds
      estimated discounted future cash flows, an impairment loss is recognized
      based on the excess of carrying value over the estimated fair value of the
      asset.                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Management's estimates are subject to risks and
      uncertainties of changes affecting the recoverability of the Company's
      investment in its mineral property, plant, equipment and mine development.
      Management's estimates of these factors are based on current conditions.
      Nonetheless, it is reasonably possible that in the near term, changes that
      could adversely affect management's estimate of net cash flows expected to
      be generated from its properties could occur, which may necessitate a
      write-down for asset impairment.                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (i) | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company accounts for stock-based payments granted to
      non-employees after January 1, 2002 and employees after January 1, 2003
      using the fair value-based method. Under the fair value-based method,
      compensation cost is measured at the fair value as the awards are earned
      and services performed and charged to operations over the service period
      which normally is the period during which the options vest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (j) | Revenue recognition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company recognizes revenue from the sale of
      concentrates based on market metal prices and mineral content when title
      to the concentrates transfers to the customer, which generally occurs on
      the date the shipment is received. Revenue is recorded in the consolidated
      statement of operations net of treatment and refining costs paid to
      counter parties under terms of the off-take 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
      using forward metal prices based upon the expected final settlement date.
      Variations between the sales price recorded at the shipment date and the
      actual final sales price at the settlement

8

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| |     | date caused by changes in market metal prices results in
      an embedded derivative in the related 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (k) | Asset retirement obligations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The Company's mining and exploration activities are
      subject to various laws and regulations governing the protection of the
      environment. The Company recognizes the fair value of future reclamation
      and remediation as a liability in the period in which it incurs a legal
      obligation associated with the retirement of tangible long-lived assets
      that results from the acquisition, construction, development, and/or
      normal use of the asset, if a reasonable estimate of fair value can be
      made. The liability is measured initially at fair value and the resulting
      cost capitalized to the carrying value of the related assets. In
      subsequent periods, the liability is adjusted for accretion of the
      discount with the offsetting amount charged to earnings, and any change in
      the amount or timing of the underlying cash flows with the offsetting
      amount recorded as an adjustment to mineral properties. The asset
      retirement cost is depreciated over the remaining life of the
      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 contamination, the application of laws and regulations by
      regulatory authorities and changes in remediation technology. The Company
      continually reviews its asset retirement obligations 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 charged to operations for reclamation and remediation
      obligations.                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (l) | Financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The Companys financial instruments consist of cash and
      cash equivalents, marketable securities, amounts receivable, accounts
      payable and accrued liabilities, promissory note and convertible loan
      notes. These financial instruments are classified as either
      held-for-trading, available-for-sale, held-to-maturity, loans and
      receivables or other financial liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Held-for-trading financial instruments include cash and
      cash equivalents and are initially and subsequently recorded at fair
      value. Unrealized gains and losses related to revaluations are recorded in
      net income for the period. A financial asset is classified in this
      category if acquired principally for the purpose of selling in the short
      term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Transaction costs are expensed as incurred for financial
      instruments designated as held-for-trading. 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 other financial liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Available-for-sale financial
      assets include marketable securities and are initially and subsequently
      recorded at fair value. Unrealized gains and losses resulting from
      revaluation are included in other comprehensive income. When the assets
      are sold or an impairment write down is required, the accumulated fair
      value adjustments recognized in equity are included in the income
      statement. Financial assets that are non-derivatives and not classified in
      any of the other categories are classified as available- for-sale.
      Categories of regular way purchases and sales of financial assets are
    accounted for at the settlement date.                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Loans and receivables include amounts receivable and are
      initially measured at fair value and subsequently measured at amortized
      cost. Gains and losses resulting from revaluations,
      impairment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

9

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

write-downs and foreign exchange
  translation adjustments are recognized in net earnings for the period. Financial
  assets with fixed or determinable payments that are not quoted in an active
  market are classified in this category.

Other financial liabilities include
  accounts payable, accrued liabilities, promissory note and convertible loan
  notes. Other financial liabilities are initially measured at fair value and
  subsequently measured at amortized cost using the effective interest rate
  method. Gains and losses resulting from revaluation and foreign exchange
  translation adjustments are recognized in net earnings for the period.

The conversion feature of the
  convertible loan notes are recorded at fair value using a Black-Scholes
  valuation model upon issue of the note. The fair value of the conversion feature
  is recorded as an equity component of the note financing, reducing the amount
  assigned to the debt component. The debt component is accreted to its fair value
  until extinguished on conversion or maturity.

The Company assesses at each balance
  sheet 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, a provision for
      impairment is established when there is a significant or prolonged decline
      in fair value of the marketable securities or when there is objective
      evidence that the carrying amount of the marketable securities may not be
      recovered. The amount of the provision is the cumulative loss measured as
      the difference between the acquisition cost and the current fair value,
      less any impairment loss on that financial asset previously recognized in
      profit or loss, is removed from equity and recognized in the income
      statement. Impairment losses recognized in the income statement are not
      reversed through the income statement.                                                                                                                                                                                                                                                                                                                                                     
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | 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 original effective interest rate. The carrying
      amount of the asset is reduced through the use of an allowance account and
      the amount of the loss is recognized in the income statement 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 income
      statement.

| | (m) | Foreign currency translation:                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The functional currency of the Company and its
      subsidiaries is the Canadian dollar.                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Monetary items denominated in a foreign currency are
      translated to Canadian dollars at exchange rates in effect at the balance
      sheet date and non-monetary items are translated at rates of exchange in
      effect when the assets were acquired or obligations incurred. Revenues and
      expenses are translated at rates in effect at the time of the
      transactions. Foreign exchange gains and losses are included in
      income.

10

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (n) | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company uses the asset and liability method of
      accounting for income taxes. Under this method, future income 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. Future income 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 future income tax assets and liabilities of a change in tax
      rates is included in operations in the period in which the change is
      substantively enacted. The amount of future income tax assets recognized
      is limited to the amount that is, in managements estimation, more likely
      than not to be realized.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (o) | Loss per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Basic loss per share is computed by dividing net loss by
      the weighted average number of common shares outstanding during the
      reporting period. Diluted loss per share is computed similar to basic loss
      per share except that the weighted average shares outstanding are
      increased to include additional shares from the assumed exercise of stock
      options and warrants, if dilutive. The number of additional shares is
      calculated by assuming that outstanding stock options or warrants were
      exercised and that the proceeds from such exercises were used to acquire
      shares of common stock at the average market price during the reporting
      period. Diluted loss per share is the same as basic loss per share because
      the effect on the basic loss per share of outstanding options and warrants
      is anti-dilutive.                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (p) | Comparative figures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Certain comparative figures have been reclassified to
      conform with current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|3. | Adoption of new accounting standards:                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                      
|   | Effective January 1, 2009, the Company adopted the
      following new accounting standards issued by the Canadian Institute of
      Chartered Accountants (CICA):
|   |                                                                                                                                                                      
|   | (a)                                                                                                                                                                  
|   |                                                                                                                                                                      
|   |                                                                                                                                                                      
|   |                                                                                                                                                                      
|   | (b)                                                                                                                                                                  
|   |                                                                                                                                                                      
|   |                                                                                                                                                                      

11

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (c) | EIC 174  Mining Exploration Costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | In March 2009, the AcSB issued EIC 174 which provides
      guidance on the capitalization of mining exploration costs, particularly
      when mineral reserves have not been established and the conditions that a
      mining enterprise should consider when determining the need to perform an
      impairment review of such costs. The guidance provided by EIC 174 has been
      applied in the preparation of these financial statements and did not have
      a material impact on the valuation of the Companys mineral
      properties.                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (d) | Fair Value Hierarchy:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | During the year, the AcSB amended CICA 3862, Financial
      Instruments  Disclosures,to require enhanced disclosures about the
      relative reliability of the data, or inputs, that an entity uses to
      measure the fair values of its financial instruments. It requires
      financial instruments measured at fair value to be classified into one of
      three levels in the fair value hierarchy based on the lowest level input
      that is significant to the fair value measurement in its entirety. The
      amended section relates to disclosure only and did not have a material
      impact on the financial results of the Company. These disclosures are
      presented in note 14.                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (e) | Financial Instruments  Recognition and
      Measurement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | During the year, the AcSB amended CICA 3855 to (i) change
      the categories into which a debt instrument is required or permitted to be
      classified; (ii) change the impairment model for held-to-maturity
      financial assets to the incurred credit loss model of CICA 3025; (iii)
      require reversal of previously recognized impairment losses on
      available-for-sale financial assets in specified circumstances; (iv)
      provide additional guidance concerning the assessment of embedded
      derivatives upon reclassification of a financial asset out of
      held-for-trading category; and (v) to clarify the application of the
      effective interest rate method after a debt instrument has been impaired.
      The adoption of these amendments did not result in a material impact on
      the Companys consolidated financial
      statements.

|4. | Recent accounting pronouncements:
|-- | ---------------------------------
|   |                                  
|   | (a)                              
|   |                                  
|   |                                  
|   |                                  
|   | (b)                              
|   |                                  
|   |                                  

12

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (c) | International Financial Reporting Standards
      (IFRS):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | In February 2008, the AcSB announced that 2011 is the
      changeover date for publicly-listed companies to use IFRS, replacing
      Canada's own GAAP. The transition date is for interim and annual financial
      statements relating to fiscal years beginning on or after January 1, 2011.
      The transition date of January 1, 2011 will require the restatement for
      comparative purposes of amounts reported by the Company for the year ended
      December 31, 2010 and restatement of the opening balance sheet as at
      January 1, 2010. The execution of the Companys IFRS conversion plan is
      underway, including the evaluation of financial impact upon IFRS adoption,
      development of IFRS accounting policies, and redesign of business
      processes. The Company anticipates there will be changes in accounting
      policies and these changes may materially impact our financial statements
      but the impact cannot be reasonably estimated at this
      time.

|5. | Amounts receivable:
|-- | -------------------

| |                                      |   | 2009      |   |   | 2008      |  
| | ------------------------------------ | - | --------- | - | - | --------- | -
| |                                      |   |           |   |   |           |  
| | Trade accounts receivable            | $ | 3,471,546 |   | $ | 1,693,512 |  
| | Value added tax recoverable          |   | 2,023,878 |   |   | 2,223,757 |  
| | Other                                |   | 251,388   |   |   | 123,782   |  
| |                                      |   | 5,746,812 |   |   | 4,041,051 |  
| |                                      |   |           |   |   |           |  
| | Allowance for
      doubtful amounts |   | (207,574  | ) |   | (303,126  | )
| |                                      |   |           |   |   |           |  
| |                                      | $ | 5,539,238 |   | $ | 3,737,925 |  

|   | The Company, through its Mexican subsidiaries, pays value
      added tax on the purchase and sale of goods and services at a rate of 15%.
      Effective January 1, 2010, the value added tax rate increased to 16%. The
      net amount paid or payable is recoverable, but such recovery is subject to
      review and assessment by local tax authorities.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                  
|6. | Inventories:                                                                                                                                                                                                                                                                                                                                                     

| |                                                              |   | 2009      |  |   | 2008      |  
| | ------------------------------------------------------------ | - | --------- |  | - | --------- | -
| |                                                              |   |           |  |   |           |  
| | Finished product - concentrates                              | $ | 410,628   |  | $ | 506,383   |  
| | Ore stockpile                                                |   | 80,298    |  |   | 7,026     |  
| | Materials and supplies                                       |   | 680,724   |  |   | 672,907   |  
| | Silver bullion                                               |   | 266,726   |  |   | -         |  
| |                                                              |   | 1,438,376 |  |   | 1,186,316 |  
| | Write-down of
      finished product to net realizable value |   | -         |  |   | (240,810  | )
| |                                                              |   |           |  |   |           |  
| |                                                              | $ | 1,438,376 |  | $ | 945,506   |  

The amount of inventory recognized as
  an expense for the years ended December 31, 2009 and 2008 is represented by the
  amount of cost of sales before reversals of inventory write-downs. For the year
  ended December 31, 2009, the Company recognized in cost of sales the reversal of
  the write-down of finished product to net realizable value in the amount of
  $240,810 (2008  nil).

13

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

|7. | Mineral properties, plant and equipment:                                                           
|-- | ---------------------------------------------------------------------------------------------------
|   |                                                                                                    
|   | The major components of the Company's mineral properties,
      plant and equipment are as follows:

| |                                                                                                                                                                   |   | 2009       |   |   | 2008       |  
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                                                                                                                                   |   |            |   |   |            |  
| | Topia mine:                                                                                                                                                       |   |            |   |   |            |  
| | Mineral properties                                                                                                                                                | $ | 3,115,340  |   | $ | 2,731,978  |  
| | Plant and
      equipment                                                                                                                                         |   | 6,131,575  |   |   | 5,847,432  |  
| | Buildings and mobile
      equipment                                                                                                                              |   | 395,716    |   |   | 395,716    |  
| | Land                                                                                                                                                              |   | 13,544     |   |   | -          |  
| | Asset retirement obligations (note 10)                                                                                                                            |   | 231,439    |   |   | 231,439    |  
| |                                                                                                                                                                   |   | 9,887,614  |   |   | 9,206,565  |  
| | Accumulated depreciation and depletion                                                                                                                            |   | (4,651,464 | ) |   | (3,838,616 | )
| |                                                                                                                                                                   |   | 5,236,150  |   |   | 5,367,949  |  
| |                                                                                                                                                                   |   |            |   |   |            |  
| | Guanajuato mine:                                                                                                                                                  |   |            |   |   |            |  
| | Mineral properties                                                                                                                                                |   | 4,450,292  |   |   | 4,130,020  |  
| | Plant and
      equipment                                                                                                                                         |   | 7,791,861  |   |   | 6,504,682  |  
| | Buildings and mobile
      equipment                                                                                                                              |   | 1,776,685  |   |   | 1,711,403  |  
| | Land                                                                                                                                                              |   | 2,844,889  |   |   | 2,844,889  |  
| | Asset retirement obligations (note 10)                                                                                                                            |   | 569,057    |   |   | 569,057    |  
| |                                                                                                                                                                   |   | 17,432,784 |   |   | 15,760,051 |  
| | Accumulated depreciation and depletion                                                                                                                            |   | (7,957,998 | ) |   | (5,333,231 | )
| |                                                                                                                                                                   |   | 9,474,786  |   |   | 10,426,820 |  
| |                                                                                                                                                                   |   |            |   |   |            |  
| | Santo Nino                                                                                                                                                        |   | 68,542     |   |   | 68,542     |  
| |                                                                                                                                                                   |   |            |   |   |            |  
| | Leasehold improvements and other equipment,
      net
      of 
               accumulated
      depreciation of $283,944 (2008
      - 
               $208,299) |   | 155,043    |   |   | 224,450    |  
| |                                                                                                                                                                   |   |            |   |   |            |  
| |                                                                                                                                                                   | $ | 14,934,521 |   | $ | 16,087,761 |  

| | (a) | Topia mine:                                                                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                
| |     | On June 30, 2005, the Company purchased 100% of the
      ownership rights in and to all the fixed assets, machinery, equipment and
      Topia mining concessions located in the municipality of Topia in the state
      of Durango, Mexico.                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                
| | (b) | Guanajuato mine:                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                
| |     | On October 25, 2005, the Company purchased a 100%
      ownership interest in a group of producing silver- gold mines in
      Guanajuato, Mexico which includes two main properties, a plant, workshops
      and administration facilities, mining infrastructure, equipment, and
      certain surface rights (real estate).
| |     |                                                                                                                                                                                                                                                                                                                                
| | (c) | Arcoiris concession:                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                
| |     | On March 8, 2006, the Company purchased a 100% interest
      in the Arcoiris concession. The Arcoiris concession is contiguous with the
      existing Topia mine property.                                                                                                                                                   

14

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (d) | Fundiciones property:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | On May 15, 2006, the Company purchased a 100% interest in
      the Fundiciones property. The additional 3.88 hectares of real estate is
      adjacent to the existing plant at Guanajuato and will facilitate any
      future expansion of the plant facilities.                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (e) | La Prieta concession:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | On December 15, 2009, the Company acquired a 100%
      interest in the La Prieta concession in the Topia district for $346,652
      (US$330,000). US$300,000 was paid on closing with the remaining US$30,000
      due on March 31, 2010. The La Prieta concession is a 94 hectare claim
      which hosts two previously mined silver-gold-lead-zinc-quartz vein
      structures and is situated approximately two kilometres south of the
      principal veins presently being mined by the
      Company.

|8. | Mineral property exploration
      expenditures:                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                     
|   | The continuity of expenditures on mineral properties for
      the year ended December 31, 2009 is as
      follows:

| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | ------------------------------------------------- | - | ----------------- | - | - | ---------------- |  | - | --------------- |  | - | --------------- |  | - | --------------- |  | - | --------------- |  | - | ---------- | -
| |                                                   |   | San
      Antonio |   |   | Santo
      Nino |  |   | Topia           |  |   | Guanajuato      |  |   | Virimoa         |  |   | Mapimi          |  |   |            |  
| |                                                   |   | Note
      8(a)   |   |   | Note
      8(a)  |  |   | Note
      7(a) |  |   | Note
      7(b) |  |   | Note
      8(b) |  |   | Note
      8(c) |  |   | Total      |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Analysis                                          | $ | -                 |   | $ | -                |  | $ | 18,412          |  | $ | 25,577          |  | $ | -               |  | $ | 3,727           |  | $ | 47,716     |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Drilling                                          |   | -                 |   |   | -                |  |   | 292,730         |  |   | -               |  |   | -               |  |   | -               |  |   | 292,730    |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Field costs                                       |   | -                 |   |   | -                |  |   | 37,758          |  |   | -               |  |   | -               |  |   | -               |  |   | 37,758     |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Geology                                           |   | -                 |   |   | -                |  |   | 305,009         |  |   | 264,082         |  |   | -               |  |   | 84,647          |  |   | 653,738    |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Project administration                            |   | 30,197            |   |   | -                |  |   | 6,947           |  |   | 94,059          |  |   | -               |  |   | 34,616          |  |   | 165,819    |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Mine exploration costs                            |   | -                 |   |   | -                |  |   | 464,561         |  |   | -               |  |   | -               |  |   | -               |  |   | 464,561    |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| |                                                   |   | 30,197            |   |   | -                |  |   | 1,125,417       |  |   | 383,718         |  |   | -               |  |   | 122,990         |  |   | 1,662,322  |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Cost recoveries                                   |   | (80,367           | ) |   | -                |  |   | -               |  |   | -               |  |   | -               |  |   | -               |  |   | (80,367    | )
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| |                                                   |   | (50,170           | ) |   | -                |  |   | 1,125,417       |  |   | 383,718         |  |   | -               |  |   | 122,990         |  |   | 1,581,955  |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Cumulative expenditures, 
      beginning of year |   | 166,591           |   |   | 489,654          |  |   | 8,201,181       |  |   | 6,291,494       |  |   | 369,788         |  |   | 5,205,581       |  |   | 20,724,289 |  
| |                                                   |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Cumulative expenditures, 
      end of year       | $ | 116,421           |   | $ | 489,654          |  | $ | 9,326,598       |  | $ | 6,675,212       |  | $ | 369,788         |  | $ | 5,328,571       |  | $ | 22,306,244 |  

15

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

The continuity of expenditures on
  mineral properties for the year ended December 31, 2008 is as follows:

| |                                                   |  |        |  |   | San
      Antonio |   |   | Santo
      Nino |  |   | Topia     |  |   | Guanajuato |  |   | Virimoa   |   |   | Mapimi    |  |   |            |  
| | ------------------------------------------------- |  | ------ |  | - | ----------------- | - | - | ---------------- |  | - | --------- |  | - | ---------- |  | - | --------- | - | - | --------- |  | - | ---------- | -
| |                                                   |  |        |  |   | Note 8(a)         |   |   | Note 8(a)        |  |   | Note 7(a) |  |   | Note 7(b)  |  |   | Note 8(b) | ) |   | Note 8(c) |  |   | Total      |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Option payments:                                  |  | Cash   |  | $ | -                 |   | $ | -                |  | $ | -         |  | $ | -          |  | $ | -         |   | $ | 375,280   |  | $ | 375,280    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| |                                                   |  | Shares |  |   | -                 |   |   | -                |  |   | -         |  |   | -          |  |   | -         |   |   | 191,568   |  |   | 191,568    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Analysis                                          |  |        |  |   | -                 |   |   | -                |  |   | 44,624    |  |   | 210,420    |  |   | -         |   |   | 117,761   |  |   | 372,805    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Drilling                                          |  |        |  |   | -                 |   |   | -                |  |   | 302,427   |  |   | 890,951    |  |   | -         |   |   | 643,106   |  |   | 1,836,484  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Field costs                                       |  |        |  |   | 1,176             |   |   | -                |  |   | 35,697    |  |   | 15,060     |  |   | -         |   |   | 54,774    |  |   | 106,707    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Geology                                           |  |        |  |   | 5,180             |   |   | -                |  |   | 267,517   |  |   | 694,985    |  |   | -         |   |   | 557,585   |  |   | 1,525,267  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Project administration                            |  |        |  |   | 32,558            |   |   | -                |  |   | 16,083    |  |   | 222,159    |  |   | -         |   |   | 182,021   |  |   | 452,821    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Mine exploration costs                            |  |        |  |   | -                 |   |   | -                |  |   | 1,549,391 |  |   | -          |  |   | -         |   |   | -         |  |   | 1,549,391  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| |                                                   |  |        |  |   | 38,914            |   |   | -                |  |   | 2,215,739 |  |   | 2,033,575  |  |   | -         |   |   | 2,122,095 |  |   | 6,410,323  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Cost recoveries                                   |  |        |  |   | (82,397           | ) |   | -                |  |   | -         |  |   | -          |  |   | -         |   |   | -         |  |   | (82,397    | )
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| |                                                   |  |        |  |   | (43,483           | ) |   | -                |  |   | 2,215,739 |  |   | 2,033,575  |  |   | -         |   |   | 2,122,095 |  |   | 6,327,926  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Cumulative expenditures, 
      beginning of year |  |        |  |   | 210,074           |   |   | 489,654          |  |   | 5,985,442 |  |   | 4,257,919  |  |   | 369,788   |   |   | 3,083,486 |  |   | 14,396,363 |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |           |  |   |            |  |   |           |   |   |           |  |   |            |  
| | Cumulative expenditures, 
      end of year       |  |        |  | $ | 166,591           |   | $ | 489,654          |  | $ | 8,201,181 |  | $ | 6,291,494  |  | $ | 369,788   |   | $ | 5,205,581 |  | $ | 20,724,289 |  

The continuity of expenditures on
  mineral properties for the year ended December 31, 2007 is as follows:

| |                                                   |  |        |  |   | San
      Antonio |   |   | Santo
      Nino |  |   | Topia           |  |   | Guanajuato      |  |   | Virimoa         |  |   | Mapimi          |  |   |            |  
| | ------------------------------------------------- |  | ------ |  | - | ----------------- | - | - | ---------------- |  | - | --------------- |  | - | --------------- |  | - | --------------- |  | - | --------------- |  | - | ---------- | -
| |                                                   |  |        |  |   | Note
      8(a)   |   |   | Note
      8(a)  |  |   | Note
      7(a) |  |   | Note
      7(b) |  |   | Note
      8(b) |  |   | Note
      8(c) |  |   | Total      |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Option payments:                                  |  | Cash   |  | $ | 49,119            |   | $ | 102,721          |  | $ | -               |  | $ | -               |  | $ | -               |  | $ | 216,623         |  | $ | 368,463    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| |                                                   |  | Shares |  |   | -                 |   |   | -                |  |   | -               |  |   | -               |  |   | -               |  |   | 246,000         |  |   | 246,000    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Analysis                                          |  |        |  |   | 19,588            |   |   | -                |  |   | 51,098          |  |   | 293,759         |  |   | -               |  |   | 160,448         |  |   | 524,893    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Drilling                                          |  |        |  |   | 161,212           |   |   | -                |  |   | 766,273         |  |   | 816,417         |  |   | -               |  |   | 928,912         |  |   | 2,672,814  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Field costs                                       |  |        |  |   | 315,688           |   |   | -                |  |   | 111,448         |  |   | 3,007           |  |   | -               |  |   | 171,758         |  |   | 601,901    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Geology                                           |  |        |  |   | 31,582            |   |   | -                |  |   | 323,649         |  |   | 750,145         |  |   | -               |  |   | 459,351         |  |   | 1,564,727  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Project administration                            |  |        |  |   | 30,132            |   |   | -                |  |   | 16,490          |  |   | 52,024          |  |   | -               |  |   | 133,577         |  |   | 232,223    |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Mine exploration costs                            |  |        |  |   | -                 |   |   | -                |  |   | 1,223,200       |  |   | -               |  |   | -               |  |   | -               |  |   | 1,223,200  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| |                                                   |  |        |  |   | 607,321           |   |   | 102,721          |  |   | 2,492,158       |  |   | 1,915,352       |  |   | -               |  |   | 2,316,669       |  |   | 7,434,221  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Cost recoveries                                   |  |        |  |   | (631,117          | ) |   | -                |  |   | -               |  |   | -               |  |   | -               |  |   | -               |  |   | (631,117   | )
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| |                                                   |  |        |  |   | (23,796           | ) |   | 102,721          |  |   | 2,492,158       |  |   | 1,915,352       |  |   | -               |  |   | 2,316,669       |  |   | 6,803,104  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Cumulative expenditures, 
      beginning of year |  |        |  |   | 233,870           |   |   | 386,933          |  |   | 3,493,284       |  |   | 2,342,567       |  |   | 369,788         |  |   | 766,817         |  |   | 7,593,259  |  
| |                                                   |  |        |  |   |                   |   |   |                  |  |   |                 |  |   |                 |  |   |                 |  |   |                 |  |   |            |  
| | Cumulative expenditures, 
      end of year       |  |        |  | $ | 210,074           |   | $ | 489,654          |  | $ | 5,985,442       |  | $ | 4,257,919       |  | $ | 369,788         |  | $ | 3,083,486       |  | $ | 14,396,363 |  

16

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (a) | Santo Nino project:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | On March 13, 2007, the Company satisfied all conditions
      of the option agreement by paying the final installment payment. By making
      cumulative payments of US$165,000 over a three year period, the Company
      was granted ownership to the Santo Nino mining concession located in the
      Guadalupe y Calvo mining district in the state of Chihuahua,
      Mexico.                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | On February 2, 2007, the Company entered into an option
      agreement with Altair Ventures Incorporated (Altair). Terms of the
      agreement allow Altair to acquire a 70% interest in the four mining claims
      named San Antonio, Iran, Chiripa, and Santo Nino by making
      scheduled cash payments totaling US$200,000, issuing a total of 200,000
      shares of Altair and fulfilling certain work commitments on the property
      over a three year period. As at December 31, 2009, US$60,000 and 200,000
      shares of Altair have been received in accordance with the agreement.
      There is no underlying Net Smelter Return royalty or other royalties and
      Great Panther owns 100% of all four concessions as at December 31,
      2009.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | On February 1, 2010, Altair decided not to continue its
      option and as a result forfeited all rights and options to the
      property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (b) | Virimoa Project:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | On June 13, 2005, the Company signed an option agreement
      to earn a 100% interest of the ownership rights in two mining claims
      designated as the Virimoa property located in the Topia mining district in
      the state of Durango, Mexico.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | In May 2007, the Company chose to forfeit all rights and
      options to the property. Of the total consideration of US$300,000 and
      300,000 common shares of the Company, US$50,000 was paid and 150,000
      shares issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (c) | Mapimi Project:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | On September 9, 2009, the Company terminated its option
      agreement dated September 11, 2006, to earn a 100% interest of the
      ownership rights to seventeen mining concessions collectively known as the
      Mapimi project (formerly known as Km 66) in eastern Durango state, Mexico.
      As at December 31, 2009, cumulative expenditures on the Mapimi Project
      were $5,328,571.                                                                                                                                                                                                                                                                                                                                                                                  

17

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

|9. | Long-term debt:
|-- | ---------------

| | (a) | Promissory note:
| | --- | ----------------

| |                 |   | 2009    |  |   | 2008 | 
| | --------------- | - | ------- |  | - | ---- | 
| |                 |   |         |  |   |      | 
| | Promissory note | $ | 240,418 |  | $ | -    | 
| |                 |   |         |  |   |      | 
| | Current portion |   | 121,994 |  |   | -    | 
| |                 |   |         |  |   |      | 
| |                 | $ | 118,424 |  | $ | -    | 

| |     | On September 10, 2009, the Company committed to purchase
      equipment by making equal blended monthly payments of $11,092 for 24
      months, commencing on the first day of the month after delivery of the
      equipment under the terms of the promissory note. The promissory note
      bears interest at 6% per annum, compounded and calculated semi-annually
      and is secured by the equipment. Interest paid on the promissory note
      totaled $1,251 in 2009 (2008  nil).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (b) | Convertible loan notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |                                                                                                                                                                                 |   | 2009      |  |   | 2008      | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------- |  | - | --------- | 
| |                                                                                                                                                                                 |   |           |  |   |           | 
| | $2,020,000 note due March 9, 2010, interest
      rate of 8% per 
      annum payable quarterly. Discounted at an effective
      interest 
      rate of 26.8%. (note 9(b)(i)) | $ | -         |  | $ | 1,680,550 | 
| |                                                                                                                                                                                 |   |           |  |   |           | 
| | $4,050,000 notes due July 14, 2011, interest rate of 8%
      per 
      annum payable quarterly. Discounted at an effective interest 
      rate of 25.1%. (note 9(b)(ii))     |   | 3,356,397 |  |   | 2,971,140 | 
| |                                                                                                                                                                                 |   |           |  |   |           | 
| |                                                                                                                                                                                 | $ | 3,356,397 |  | $ | 4,651,690 | 

| | (i) | On March 8, 2006, the Company issued a $2,020,000 8% per
      annum unsecured convertible note maturing on March 9, 2010. The note was
      convertible into common shares of the Company at a price of $1.32 per
      share at the holders option at any time. On issuance, the conversion
      feature of the note had a fair value of $1,006,000 determined using the
      Black-Scholes valuation model. The assumptions used in the valuation model
      were a risk-free interest rate of 4.1%, volatility of 63.4%, dividends
      paid of 0.0%, and an expected life of the option of 4 years.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | On September 24, 2009, the Company offered an inducement
      to the holder to convert the note into 3,740,741 common shares of the
      Company at a price of $0.54 per share. Total consideration for the
      3,740,741 common shares issued pursuant to the offer was $4,586,877. The
      Company recorded debt settlement expense of $51,165 in earnings and a
      conversion premium of $1,606,664 in accumulated deficit. Interest accreted
      on the note payable in 2009 up to the date of conversion was $242,497
      (2008 - $282,043).                                                

18

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (ii) | On July 13, 2007, the Company completed financing
      agreements for cash proceeds of $4,050,000. The financing consisted of two
      8% per annum unsecured convertible notes maturing July 14, 2011,
      convertible into common shares of the Company at a price of $2.25 per
      share at the holders option at any time. On issuance, the conversion
      feature of the note had a fair value of $1,563,000 using the Black-Scholes
      valuation model. The assumptions used in the valuation model were a
      risk-free interest rate of 4.7%, volatility of 57.9%, dividends paid of
      0.0%, and an expected life of the option of 4 years. Interest accreted on
      the notes payable during 2009 was $385,258 (2008 -
      $341,036).
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The fair value of the conversion
  feature has been recorded in equity, reducing the amount assigned to the debt
  component. The debt component is accreted to its fair value over the term to
  maturity as a non-cash interest charge.

|10. | Asset retirement obligations:                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                            
|    | The Companys asset retirement obligations relate to site
      restoration, clean-up and ongoing treatment and monitoring of the Topia
      and Guanajuato mines. A reconciliation of the provision for asset
      retirement obligations is as follows:

| |                                |   | 2009      |  |   | 2008      |  
| | ------------------------------ | - | --------- |  | - | --------- | -
| |                                |   |           |  |   |           |  
| | Balance, beginning of year     | $ | 1,104,877 |  | $ | 1,101,171 |  
| |                                |   |           |  |   |           |  
| | Changes in cash flow estimates |   | -         |  |   | (277,971  | )
| | Accretion expense              |   | 277,214   |  |   | 281,677   |  
| |                                |   |           |  |   |           |  
| | Balance, end of
      year     | $ | 1,382,091 |  | $ | 1,104,877 |  

The provision for asset retirement
  obligations is based on the following assumptions:

| | • | There has been no change in
      the Companys assessment of its asset retirement obligation during
      the year ended December 31, 2009.                                                                                                                                                                                                                                                                      
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | • | The total undiscounted estimated
      cash flows required to settle the Companys estimated obligations
      is US$2,893,000 (2008  US$2,893,000).                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | • | The expected timing of payments
      totaling US$2,893,000 is estimated as follows: US$914,000 in 2012, US$161,000
      in 2013, US$172,000 in 2014, US$1,218,000 in 2017, US$207,000 in 2018,
      and US$221,000 in 2019. This timing matches the estimated remaining life
      of the mines, which is 2 years for Guanajuato and 6 years for Topia in
      the absence of a reliable estimate of reserves.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | • | A credit-adjusted risk-free
      rate of 25.1% (2008  25.1%) has been used to discount cash flows.                                                                                                                                                                                                                                                                                                              

19

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

|11. | Capital stock:
|--- | --------------

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




| | (b) | Issued:
| | --- | -------

| |                                                                                                  |  | Number
      of |  |   | Stated     |  
| | ------------------------------------------------------------------------------------------------ |  | --------------- |  | - | ---------- | -
| |                                                                                                  |  | common shares   |  |   | value      |  
| |                                                                                                  |  |                 |  |   |            |  
| | Balance, January 1, 2007                                                                         |  | 69,797,348      |  | $ | 46,393,145 |  
| |                                                                                                  |  |                 |  |   |            |  
| | Exercise of I warrants at $0.90 per share                                                      |  | 3,906,200       |  |   | 3,515,580  |  
| | Exercise of agents warrants                                                                      |  | 200,920         |  |   | 180,828    |  
| | Exercise of J warrants at $0.90 per share                                                      |  | 5,034,300       |  |   | 4,530,870  |  
| | Exercise of agent warrants                                                                       |  | 553,084         |  |   | 497,776    |  
| | Exercise of options                                                                              |  | 1,017,500       |  |   | 678,000    |  
| | Issue of shares pursuant to mineral property agreement                                           |  | 200,000         |  |   | 246,000    |  
| | Reclassification from contributed surplus
      on exercise of options and warrants (note 11(c)) |  | -               |  |   | 819,356    |  
| | Reclassification
      to common shares on cashless exercise of options                          |  | 35,000          |  |   | 126,892    |  
| |                                                                                                  |  |                 |  |   |            |  
| | Balance, December 31, 2007                                                                       |  | 80,744,352      |  |   | 56,988,447 |  
| |                                                                                                  |  |                 |  |   |            |  
| |                                                                                                  |  |                 |  |   |            |  
| | Exercise of options                                                                              |  | 465,000         |  |   | 398,250    |  
| | Exercise of warrants                                                                             |  | 100,500         |  |   | 142,710    |  
| | Issue of shares pursuant to mineral
      property agreement                                     |  | 344,669         |  |   | 191,568    |  
| | Reclassification from contributed surplus on exercise of
      options and warrants (note 11(c)) |  | -               |  |   | 157,896    |  
| | Repricing of broker warrants                                                                     |  | -               |  |   | (13,409    | )
| |                                                                                                  |  |                 |  |   |            |  
| | Balance, December 31, 2008                                                                       |  | 81,654,521      |  |   | 57,865,462 |  
| |                                                                                                  |  |                 |  |   |            |  
| | Exercise of L warrants                                                                         |  | 1,385,000       |  |   | 484,750    |  
| | Exercise of finders warrants                                                                    |  | 98,294          |  |   | 34,403     |  
| | Exercise of stock options                                                                        |  | 1,618,575       |  |   | 730,859    |  
| | Private placement at $0.20 per unit, net of costs (note
      11(b)(i))                          |  | 5,125,000       |  |   | 969,549    |  
| | Issue of agent warrants (note
      11(b)(i))                                                    |  | -               |  |   | (22,902    | )
| | Short form prospectus financing at $0.70 per unit, net of
      costs (note 11(b)(ii))           |  | 17,617,500      |  |   | 11,403,536 |  
| | Issue of agent warrants (note
      11(b)(ii))                                                   |  | -               |  |   | (419,432   | )
| | Issue of shares for convertible note (note 9(b)(i))                                              |  | 3,740,741       |  |   | 4,586,877  |  
| | Reclassification from contributed surplus on exercise of
      options and warrants (note 11(c)) |  | -               |  |   | 277,118    |  
| |                                                                                                  |  |                 |  |   |            |  
| | Balance, December 31, 2009                                                                       |  | 111,239,631     |  | $ | 75,910,220 |  

No preferred shares have been issued.

20

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (i)  | On January 23, 2009, the Company issued 5,125,000 units
      by private placement at a price of $0.20 per unit for gross proceeds of
      $1,025,000 and paid cash issuance costs of $55,451. Each unit comprised
      one common share and one-half of one non-transferable share purchase
      warrant (Series L Warrants). The securities issued in the private
      placement were subject to a hold period that expired May 24, 2009. Each
      whole warrant entitled the holder, upon exercise, to acquire one common
      share of the Company at a price of $0.35 until January 22, 2010 (note
      11(e)).
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |      | The Company also issued 169,050 finders warrants, which
      were also exercisable at $0.35 until January 22, 2010 (note 11(e)). The
      fair value of the finders warrants of $22,902 is recorded as a cost of
      financing and is included in contributed surplus.                                                                                                                                                                                                                                                                                                                                                  
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (ii) | On November 17, 2009, the Company issued 17,617,500 units
      by short form prospectus financing at $0.70 per unit for gross proceeds of
      $12,332,250 and paid cash issuance costs of $928,714. The common shares
      issued under the terms of the short form prospectus are free trading from
      the closing date. Each unit comprised one common share and one-half of one
      transferable share purchase warrant (Series S Warrants). Each whole
      warrant is exercisable to purchase one common share for a period of 24
      months from the closing date, at an exercise price of $0.90.         
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |      | The Company also issued 963,150 agents warrants, which
      are also exercisable at $0.90 until November 17, 2011 (note 11(e)). Each
      agents warrant is exercisable to purchase one common share for a period
      of 24 months from the closing date. The fair value of the agents warrants
      of $419,432 is recorded as a cost of financing and is included in
      contributed surplus.                                                                                                                                                                                                                     

| | (c) | Contributed surplus:
| | --- | --------------------

| |                                                                             |   | Stated value |  
| | --------------------------------------------------------------------------- | - | ------------ | -
| |                                                                             |   |              |  
| | Balance, January 1, 2007                                                    | $ | 6,077,864    |  
| |                                                                             |   |              |  
| | Reclassification to common shares on
      exercise of options and warrants |   | (819,356     | )
| | Reclassification to common shares on cashless exercise of
      options     |   | (126,892     | )
| | Stock-based compensation                                                    |   | 1,129,500    |  
| |                                                                             |   |              |  
| | Balance, December 31, 2007                                                  |   | 6,261,116    |  
| |                                                                             |   |              |  
| | Reclassification to common shares on
      exercise of options and warrants |   | (157,896     | )
| | Stock-based compensation                                                    |   | 1,165,121    |  
| | Repricing of agent warrants                                                 |   | 13,409       |  
| | Repricing of stock
      options                                            |   | 443,150      |  
| |                                                                             |   |              |  
| | Balance, December 31, 2008                                                  |   | 7,724,900    |  
| |                                                                             |   |              |  
| | Reclassification to common shares on exercise of options
      and warrants |   | (277,118     | )
| | Issue of agent warrants (note 11(b)(i)and (ii))                             |   | 442,334      |  
| | Stock-based
      compensation                                              |   | 2,377,927    |  
| |                                                                             |   |              |  
| | Balance, December
      31, 2009                                            | $ | 10,268,043   |  

21

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (d) | Stock options and warrants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Company, in accordance with the policies of the
      Toronto Stock Exchange (the Exchange), is authorized to grant incentive
      stock options (options) to officers, directors, employees and
      consultants. The Exchange policies permit the Companys directors to grant
      options for the purchase of shares of the Company to qualified persons as
      incentive for their services. Pursuant to the Companys 2003 Incentive
      Stock Option Plan (the Plan), options must be non-transferable and may
      not exceed 10% of the issued and outstanding common shares of the Company
      at the time of granting and may not exceed 5% of the outstanding to any
      individual (maximum of 2% to any consultant) in any 12-month period. The
      exercise price of options is determined by the board of directors by
      reference to the market value of the shares at the date of grant. Options
      have expiry dates of no longer than five years from the date of grant and
      terminate 30 days following the termination of the participants
      employment. Vesting of options is generally at the time of
      grant.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | On December 3, 2007, the Company amended the Plan to
      allow a participant the right, when entitled to exercise an option, to
      terminate the option and in lieu of receiving common shares pursuant to
      the exercise of the option, receive at no cost to the participant, that
      number of common shares which when multiplied by the closing price of the
      common shares on the day immediately prior to the exercise, have a total
      value equal to the product of that number of common shares subject to the
      option multiplied by the difference between the closing price on the day
      immediately prior to the exercise of the right and the option exercise
      price. In the year ended December 31, 2009, nil (2008  nil; 2007 
      35,000) common shares were issued upon cashless exercises.                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The continuity of common stock options for 2009 is as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Balance
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      December 31,
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      December 31,Price
      
      Expiry date
      
      
      2008
      
      
      Granted
      
      
      Cancelled
      
      
      Expired
      
      
      Exercised
      
      
      20090.45
      
      February 8, 2009
      
      
      490,000
      
      
      -
      
      
      -
      
      
      (490,000
      )
      
      -
      
      
      -0.52
      
      April 5, 2009
      
      
      30,000
      
      
      -
      
      
      -
      
      
      (30,000
      )
      
      -
      
      
      -0.45
      
      May 25, 2009
      
      
      40,000
      
      
      -
      
      
      -
      
      
      (40,000
      )
      
      -
      
      
      -0.45
      
      February 27, 2010
      
      
      125,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      125,0000.45
      
      July 26, 2010
      
      
      400,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      400,0000.90
      
      January 5, 2011
      
      
      1,181,700
      
      
      -
      
      
      (351,700
      )
      
      -
      
      
      -
      
      
      830,0001.42
      
      December 6, 2011
      
      
      1,685,000
      
      
      -
      
      
      (1,685,000
      )
      
      -
      
      
      -
      
      
      -1.42
      
      March 11, 2012
      
      
      100,000
      
      
      -
      
      
      (100,000
      )
      
      -
      
      
      -
      
      
      -1.42
      
      June 5, 2012
      
      
      250,000
      
      
      -
      
      
      (250,000
      )
      
      -
      
      
      -
      
      
      -1.42
      
      September 10, 2012
      
      
      525,000
      
      
      -
      
      
      (525,000
      )
      
      -
      
      
      -
      
      
      -1.42
      
      April 30, 2010
      
      
      350,000
      
      
      -
      
      
      (350,000
      )
      
      -
      
      
      -
      
      
      -1.42
      
      May 14, 2013
      
      
      1,220,000
      
      
      -
      
      
      (1,220,000
      )
      
      -
      
      
      -
      
      
      -1.42
      
      July 31, 2013
      
      
      125,000
      
      
      -
      
      
      (125,000
      )
      
      -
      
      
      -
      
      
      -0.45
      
      February 8, 2014
      
      
      -
      
      
      5,752,700
      
      
      (200,000
      )
      
      -
      
      
      (1,608,575
      )
      
      3,944,1250.45
      
      February 29, 2012
      
      
      -
      
      
      160,000
      
      
      -
      
      
      -
      
      
      -
      
      
      160,0000.52
      
      March 25, 2011
      
      
      -
      
      
      310,000
      
      
      -
      
      
      -
      
      
      -
      
      
      310,0000.70
      
      September 3, 2014
      
      
      -
      
      
      1,300,000
      
      
      -
      
      
      -
      
      
      (10,000
      )
      
      1,290,0000.90
      
      December 3, 2010
      
      
      -
      
      
      275,000
      
      
      -
      
      
      -
      
      
      -
      
      
      275,0000.90
      
      December 2, 2014
      
      
      -
      
      
      580,000
      
      
      -
      
      
      -
      
      
      -
      
      
      580,0006,521,700
      
      
      8,377,700
      
      
      (4,806,700
      )
      
      (560,000
      )
      
      (1,618,575
      )
      
      7,914,125Weighted average exercise price
      
      $
      1.16
      
      $
      0.54
      
      $
      1.34
      
      $
      0.45
      
      $
      0.45
      
      $
      0.59


As at December 31, 2009, all share options
  are fully vested. The weighted average remaining contractual life of the options
  outstanding as at December 31, 2009 is 3.43 years.

22

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (i)   | On February 9, 2009, the Company granted incentive stock
      options to employees, consultants, directors and officers to purchase up
      to an aggregate of 5,752,700 common shares under the Companys Incentive
      Share Option Plan. These options vest immediately and are exercisable for
      a period of five years from the date of grant at a price of $0.45 per
      share. On February 9, 2009, the Company cancelled 3,106,700 incentive
      stock options exercisable at $0.90 and $1.42 which had been granted in
      prior years to employees and consultants. On February 18, 2009, the
      Company cancelled 1,450,000 incentive stock options exercisable at $1.42
      which had previously been granted to directors and officers.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ii)  | On March 1, 2009, the Company entered into a consulting
      agreement and granted incentive stock options to purchase up to an
      aggregate of 160,000 common shares, exercisable at a price of $0.45. These
      options vest as to 25% on the date of grant and 25% as to every three
      months thereafter, and expire three years from the date of
      grant.                                                                                                                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iii) | On March 25, 2009, the Company entered into two separate
      consulting agreements and granted incentive stock options to purchase up
      to an aggregate of 310,000 common shares at an exercise price of $0.52.
      These options vest immediately and expire two years from the date of
      grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iv)  | On September 4, 2009, the Company granted incentive stock
      options to employees, consultants, directors and officers to purchase up
      to an aggregate of 1,300,000 common shares under the Companys Incentive
      Stock Option Plan. These options vest immediately and are exercisable for
      a period of five years from the date of grant at a price of $0.70 per
      share.                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (v)   | On December 3, 2009, the Company granted incentive stock
      options to employees, consultants, directors and officers to purchase up
      to an aggregate of 855,000 common shares under the Companys Incentive
      Stock Option Plan. These options vest immediately and are exercisable for
      a period of five years for employees, directors and officers and
      exercisable for a period of one year for consultants from the date of
      grant at a price of $0.90 per share.                                                                                                                                                                                                                                                                     

The continuity of common stock options
  for 2008 is as follows:

Balance
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      December 31,
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      December 31,price
      
      Expiry date
      
      
      2007
      
      
      Granted
      
      
      Cancelled
      
      
      Expired
      
      
      Exercised
      
      
      20080.45
      
      February 8, 2009
      
      
      490,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      490,0000.52
      
      April 5, 2009
      
      
      30,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      30,0000.45
      
      May 25, 2009
      
      
      60,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (20,000
      )
      
      40,0000.45
      
      February 27, 2010
      
      
      150,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (25,000
      )
      
      125,0000.45
      
      July 26, 2010
      
      
      400,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      400,0000.90
      
      January 5, 2011
      
      
      1,201,700
      
      
      -
      
      
      -
      
      
      -
      
      
      (20,000
      )
      
      1,181,7000.90
      
      January 14, 2008
      
      
      400,000
      
      
      -
      
      
      -
      
      
      -
      
      
      (400,000
      )
      
      -2.65
      
      January 14, 2008
      
      
      400,000
      
      
      -
      
      
      -
      
      
      (400,000
      )
      
      -
      
      
      -1.42
      
      December 6, 2011
      
      
      2,105,000
      
      
      -
      
      
      (420,000
      )
      
      -
      
      
      -
      
      
      1,685,0001.42
      
      March 11, 2012
      
      
      115,000
      
      
      -
      
      
      (15,000
      )
      
      -
      
      
      -
      
      
      100,0001.42
      
      June 5, 2012
      
      
      375,000
      
      
      -
      
      
      (125,000
      )
      
      -
      
      
      -
      
      
      250,0001.42
      
      September 10, 2012
      
      
      550,000
      
      
      -
      
      
      (25,000
      )
      
      -
      
      
      -
      
      
      525,0001.42
      
      April 30, 2010
      
      
      -
      
      
      350,000
      
      
      -
      
      
      -
      
      
      -
      
      
      350,0001.42
      
      May 14, 2013
      
      
      -
      
      
      1,485,000
      
      
      (265,000
      )
      
      -
      
      
      -
      
      
      1,220,0001.42
      
      July 31, 2013
      
      
      -
      
      
      125,000
      
      
      -
      
      
      -
      
      
      -
      
      
      125,0006,276,700
      
      
      1,960,000
      
      
      (850,000
      )
      
      (400,000
      )
      
      (465,000
      )
      
      6,521,700Weighted average exercise price
      
      $
      1.22
      
      $
      1.42
      
      $
      1.64
      
      $
      2.65
      
      $
      0.86
      
      $
      1.16


23

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

The continuity of common stock options
  for 2007 is as follows:

Balance
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      BalanceExercise
      
      
      
      
      January 1,
      
      
      
      
      
      
      
      
      
      
      
      Cashless
      
      
      
      
      
      December 31,price
      
      Expiry date
      
      
      2007
      
      
      Granted
      
      
      Cancelled
      
      
      Expired
      
      
      Exercise
      
      
      Exercised
      
      
      20070.45
      
      February 8, 2009
      
      
      490,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      490,0000.52
      
      April 5, 2009
      
      
      30,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      30,0000.45
      
      May 25, 2009
      
      
      100,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (40,000
      )
      
      60,0000.45
      
      February 27, 2010
      
      
      200,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (50,000
      )
      
      150,0000.45
      
      July 11, 2010
      
      
      100,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (100,000
      )
      
      -0.45
      
      August 30, 2010
      
      
      75,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (75,000
      )
      
      -0.45
      
      July 26, 2010
      
      
      580,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (180,000
      )
      
      400,0000.60
      
      September 29, 2007
      
      
      125,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (125,000
      )
      
      -0.90
      
      January 5, 2011
      
      
      1,551,700
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (350,000
      )
      
      1,201,7000.90
      
      December 31, 2007
      
      
      237,500
      
      
      -
      
      
      -
      
      
      -
      
      
      (140,000
      )
      
      (97,500
      )
      
      -0.90
      
      January 14, 2008
      
      
      400,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      400,0002.65
      
      January 14, 2008
      
      
      400,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      400,0002.65
      
      December 6, 2011
      
      
      2,295,000
      
      
      -
      
      
      (190,000
      )
      
      -
      
      
      -
      
      
      -
      
      
      2,105,0002.65
      
      March 11, 2012
      
      
      -
      
      
      165,000
      
      
      (50,000
      )
      
      -
      
      
      -
      
      
      -
      
      
      115,0002.00
      
      June 5, 2012
      
      
      -
      
      
      525,000
      
      
      (150,000
      )
      
      -
      
      
      -
      
      
      -
      
      
      375,0002.00
      
      September 10, 2012
      
      
      -
      
      
      550,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      550,0006,584,200
      
      
      1,240,000
      
      
      (390,000
      )
      
      -
      
      
      (140,000
      )
      
      (1,017,500
      )
      
      6,276,700Weighted
        average exercise price
      
      $
      1.50
      
      $
      2.09
      
      $
      2.40
      
      
      -
      
      $
      0.90
      
      $
      0.67
      
      $
      1.71


The Company applies the fair
  value-based method of accounting for employee stock options granted after
  January 1, 2003. During the year ended December 31, 2009, the Company recorded
  compensation expense for the fair value of stock options of $2,377,927 (2008 -
  $1,608,271, 2007 - $1,129,500) for stock options that were granted during the
  year. The weighted average fair value of options granted during 2009 was $0.28
  (2008 - $0.32, 2007 - $0.91) . The fair value per option was determined using
  the following weighted average assumptions:

| |                         | 2009      | 2008      | 2007     
| | ----------------------- | --------- | --------- | ---------
| |                         |           |           |          
| | Risk-free interest rate | 2.0%      | 3.0%      | 4.4%     
| | Dividend paid           | 0.0%      | 0.0%      | 0.0%     
| | Expected life           | 4.7 years | 4.1 years | 5.0 years
| | Volatility              | 90.7%     | 66.6%     | 64.0%    

24

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (e) | Warrants:                                               
| | --- | --------------------------------------------------------
| |     |                                                         
| |     | The continuity of warrants for 2009 is as
      follows:

Balance
      
      
      
      BalanceExercise
      
      December 31,
      
      
      
      December 31,Series
      price
      Expiry date
      2008
      Issued
      Exercised
      Expired
      2009Series L Warrants
      0.35
      January 22, 2010
      -
      2,562,500
      (1,385,000)
      -
      1,177,500Series S Warrants
      0.90
      November 17, 2011
      -
      8,808,750
      -
      -
      8,808,750Finders Warrants
      0.35
      January 22, 2010
      -
      169,050
      (98,294)
      -
      70,756Agent Warrants
      0.90
      November 17, 2011
      -
      963,150
      -
      -
      963,150-
      12,503,450
      (1,483,294)
      -
      11,020,156


The continuity of warrants for 2008 is
  as follows:

Balance
      
      
      
      BalanceExercise
      
      December 31,
      
      
      
      December 31,Series
      price
      Expiry date
      2007
      Issued
      Exercised
      Expired
      2008Series K Warrants
      1.42
      June 1, 2008
      3,621,999
      -
      (100,500)
      (3,521,499)
      -Broker Warrants
      1.42
      June
        1, 2008
      479,375
      -
      -
      (479,375)
      -4,101,374
      -
      (100,500)
      (4,000,874)
      -


The continuity of warrants for 2007 is
  as follows:

Balance
      
      
      
      BalanceJanuary 1,
      
      
      
      December 31,Series
      price
      Expiry date
      2007
      Issued
      Exercised
      Expired
      2007Series "I" Warrants
      0.90
      Nov. 30, 2007
      3,906,200
      -
      (3,906,200)
      -
      -Agents' Warrants
      0.90
      Nov. 30, 2007
      200,920
      -
      (200,920)
      -
      -Series "J" Warrants
      0.90
      Dec. 20, 2007
      5,034,300
      -
      (5,034,300)
      -
      -Agents Warrants
      0.90
      Dec. 20, 2007
      553,084
      -
      (553,084)
      -
      -Series K Warrants
      2.65
      June 1, 2008
      3,621,999
      -
      -
      -
      3,621,999Broker Warrants
      2.00
      June
        1, 2008
      479,375
      -
      -
      -
      479,37513,795,878
      -
      (9,694,504)
      -
      4,101,374


| | (f) | Advances on share subscriptions                                                                                                                                                                                                                                                                                      
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                      
| |     | As at December 31, 2009, the Company received $nil (2008
      - $85,000) in advances on share subscriptions to be applied to future
      private placements. The 2008 advances were restricted as of December 31,
      2008 and were applied against the January 23, 2009 private placement (note
      11(b)(i)).

25

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (g) | Shareholder Rights Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | On March 7, 2008, the Board of Directors approved the
      adoption of a Shareholder Rights Plan (the "Plan") as part of its
      procedures for dealing with any parties who may seek to acquire control of
      the Company through a take-over bid or other transaction. To implement the
      Plan, the Board of Directors of the Company authorized the issue of one
      Right in respect of each common share of the Company outstanding to
      holders of record on March 7, 2008. Until the occurrence of certain
      specific events, the Rights will trade with the common shares of the
      Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The Rights become exercisable only when a person,
      including any party related to it or acting jointly with it, acquires or
      announces its intention to acquire 20% or more of the outstanding common
      shares of the Company without complying with the "Permitted Bid"
      provisions of the Plan. Under the Plan, a Permitted Bid is a bid made to
      all shareholders on identical terms and conditions that is open for at
      least 60 days. If at the end of 60 days more than 50% of the outstanding
      shares, other than those owned by the offeror and certain persons related
      to the offeror or acting jointly with it, have been tendered, the offeror
      may take up and pay for the shares but must extend the bid for a further
      10 business days to allow all other shareholders to tender. Should a
      non-permitted acquisition occur, each Right would entitle each holder of
      common shares (other than the offeror and certain parties related to the
      offeror or acting jointly with it) to purchase additional common shares of
      the Company at a 50% discount to the market price at the time.
        The Plan
          was ratified on June 27, 2008 and will continue until the annual general
          meeting of shareholders in 2012.

|12. | Accumulated other comprehensive income
      (loss):
|--- | ----------------------------------------------------

| |                                                 |   | 2009    |   |   | 2008    |  
| | ----------------------------------------------- | - | ------- | - | - | ------- | -
| |                                                 |   |         |   |   |         |  
| | Balance, beginning of year                      | $ | (37,592 | ) | $ | 5,945   |  
| |                                                 |   |         |   |   |         |  
| | Unrealized gain (loss) on marketable securities |   | 14,819  |   |   | (43,537 | )
| |                                                 |   |         |   |   |         |  
| | Balance, end of year                            | $ | (22,773 | ) | $ | (37,592 | )

26

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

|13. | Capital management:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Companys objectives when managing capital are
      to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Topia and Guanajuato mines are in production, but
      exploration activities are also performed at these properties in order to
      identify further resources. Funds realized from the sale of concentrates
      along with working capital are sufficient to finance the operations of the
      producing properties, as well as fund overhead 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, 2009,
      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 reduce or eliminate its reliance on
      equity and debt financing.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | As at December 31, 2009, total managed capital was
      $18,004,229, comprised of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |                                |   | December
      31, |   |   | December
      31, | 
| | ------------------------------ | - | ------------------ | - | - | ------------------ | 
| |                                |   | 2009               |   |   | 2008               | 
| |                                |   |                    |   |   |                    | 
| | Total debt (1)                 | $ | 4,460,210          |   | $ | 5,544,976          | 
| | Less: Cash                     |   | 13,312,091         |   |   | 606,244            | 
| | Net debt (cash)                |   | (8,851,881         | ) |   | 4,938,732          | 
| |                                |   |                    |   |   |                    | 
| | Shareholders equity           |   | 26,856,110         |   |   | 9,817,905          | 
| |                                |   |                    |   |   |                    | 
| | Adjusted capital               | $ | 18,004,229         |   | $ | 14,756,637         | 
| |                                |   |                    |   |   |                    | 
| | Debt to adjusted capital ratio |   | (0.49              | ) |   | 0.33               | 

(1)      Includes current and
  long term portions of capital lease obligation and promissory note and
  convertible loan note

The Companys capital structure is
  dependent on expected business growth and changes in the business
  environment.

The Company is subject to externally
  imposed capital requirements under one of its lease financing contracts (note
  18(f)). The Companys subsidiary may not transfer or assign more than 20% of its
  assets to a third party or enter into a merger contract without prior consent or
  the debt becomes fully repayable. Neither the Company nor any of its
  subsidiaries are subject to any other externally imposed capital requirements
  such as

27

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

loan covenants or capital ratios.
  During the year ended December 31, 2009, the Company met all externally imposed
  capital and debt repayment requirements.

|14. | Fair value of financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The carrying values of cash and cash equivalents, amounts
      receivable, and accounts payable and accrued liabilities 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 December 31,
      2009. The fair values of the capital lease obligations to third parties
      approximate their amortized costs as the interest rates reflect estimated
      market rates at December 31, 2009. The fair value of the convertible notes
      at December 31, 2009 is $3,564,370 as determined using the Black-Scholes
      valuation model. The assumptions used in the valuation model were a
      risk-free interest rate of 1.5%, volatility of 114.6%, dividends paid of
      0.0%, and an expected life of the options of 1.5 years. The carrying value
      of the convertible notes at December 31, 2009 is $3,356,397.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 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 different 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | During 2009, CICA Section 3862, Financial Instruments
      - Disclosures,was amended to require 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                                                                    

The following table illustrates the
  classification of the Companys financial instruments within the fair value
  hierarchy as at December 31, 2009 (1):

| |                             |   | Level 1    |  |   | Level 2 |  |   | Level 3 |  |   | Total      | 
| | --------------------------- | - | ---------- |  | - | ------- |  | - | ------- |  | - | ---------- | 
| | Cash and cash equivalents   | $ | 13,312,091 |  | $ | -       |  | $ | -       |  | $ | 13,312,091 | 
| | Marketable
      securities |   | 22,754     |  |   | -       |  |   | -       |  |   | 22,754     | 
| |                             | $ | 13,334,845 |  | $ | -       |  | $ | -       |  | $ | 13,334,845 | 

| | (1) | Information for the year ended December 31, 2008 has not
      been presented in the table because comparative information is not
      required in the year of adoption.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For the year ended December 31, 2009, a
  mark-to-market gain of $14,819 (2008  ($43,537)) for marketable securities
  designated as available-for-sale has been recognized in other comprehensive
  loss. Available-for-sale financial assets are denominated in Canadian dollars.
  There were no disposals or impairment provisions during the year.

28

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

|15. | Financial risk exposure and risk
      management:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The Company is exposed in varying degrees to a number of
      risks arising from financial instruments. Managements close involvement
      in the operations allows for the identification of risks and variances
      from expectations. The Company does not use financial instruments to
      mitigate these risks and has no designated hedging transactions. The
      Company has no collateral on its debts except for the equipment in note
      9(a). 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 exploration
      program, and limited exposure to credit and market risks. There were no
      changes to the objectives or the process from the prior year.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The types of risk exposure and the way in which such
      exposures are managed are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

29

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (c) | 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. One of managements goals 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.                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | For the year ended December 31, 2009, cash flows provided
      by operations, receipt of trade and VAT receivables, proceeds from the
      January 23, 2009 equity financing and draws on cash and cash equivalents
      were used to fund the operating costs associated with the producing
      properties as well as mineral property exploration expenditures and head
      office costs. The Companys cash and cash equivalents are invested in high
      interest savings accounts and guaranteed investment certificates which are
      available on demand to fund the Companys operating costs and other
      financial demands.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The maturity of the Companys convertible loan notes and
      capital lease obligations are disclosed in notes 9(b) and 18(f). The
      Company manages the long-term liquidity risks associated with the
      convertible loan notes by including a holders conversion feature in the
      agreements, which it anticipates will be exercised. In the event that the
      conversion feature is not exercised, the expectation is that the Company
      will have sufficient cash flow from operations to repay the
      debt.                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (d) | Market risk:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The significant market risks to which the Company is
      exposed are currency, interest rate and commodity price risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | (i) Currency risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The operating results and financial position of the
      Company are reported in Canadian 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 Canadian dollar.
      The results of the Companys operations are subject to currency
      transaction and translation risks.                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Companys exploration, development, operating costs,
      and a significant portion of its administrative costs are in Mexico and
      are denominated in Mexican pesos or US dollars. Revenues from the sale of
      concentrates are denominated in US dollars. The fluctuation of the US
      dollar and Mexican peso in relation to the Canadian 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.                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Comparative foreign exchange rates as at December 31,
      2009 are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                               |  | December
      31, |  |  | December
      31, | 
| | ----------------------------- |  | ------------------ |  |  | ------------------ | 
| |                               |  | 2009               |  |  | 2008               | 
| |                               |  |                    |  |  |                    | 
| | MXN Peso to CDN Dollar        |  | 0.080              |  |  | 0.089              | 
| | US Dollar to CDN
      Dollar |  | 1.051              |  |  | 1.218              | 

The Company has not entered into any
  agreements or purchased any foreign currency hedging arrangements to hedge
  possible currency risks at this time. Management believes the foreign exchange

30

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

risk derived from currency conversions
  for the Mexican operations is not significant and therefore does not hedge its
  foreign exchange risk. Additionally, the US dollar trade accounts receivable
  are short term in nature and foreign currency risk exposure is minimal.

(ii) Interest rate risk

The Companys policy is to invest cash
  in high interest savings accounts and guaranteed investment certificates at
  fixed or floating rates of interest and cash equivalents are to be maintained in
  floating rates of interest in order to maintain liquidity, while achieving a
  satisfactory return for shareholders. Fluctuations in interest rates impact the
  value of cash and cash equivalents. The Company manages risk by monitoring
  changes in interest rates in comparison to prevailing market rates. As at
  December 31, 2009, the Company held $12,379,172 in high interest savings
  accounts and guaranteed investment certificates.

With respect to financial liabilities,
  the convertible loan notes and promissory note carry fixed interest rates of
  8.0%, and 6.0% per annum, respectively, and two capital leases carry fixed
  interest rates of at 10.5% and 12% per annum. As such, the Company is not
  subject to fluctuations in interest rates.

(iii) Commodity price risk

The value of the Companys mineral
  resource properties depends on the price of silver, gold, lead and zinc and the
  outlook for these minerals. At December 31, 2009, market prices were US$16.99/oz
  for silver, US$1,104/oz for gold, US$2,390/tonne for lead, and US$2,569/tonne
  for 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, market
  fluctuations, government regulations relating to prices, taxes, royalties,
  allowable production, import, exports and supply and demand, industrial and
  retail demand, forward sales by producers and speculators, levels of worldwide
  production, short-term changes in supply and demand because of speculative
  hedging activities, and certain other factors related specifically to silver and
  gold. The value of trade receivables depends on changes in metal prices over the
  quotational period.

The profitability of the Companys
  operations is highly correlated to the market price of silver and gold. If metal
  prices decline for a prolonged period below the cost of production of the
  Companys Topia and Guanajuato mines, it may not be economically feasible to
  continue production.

The Company has not entered into any
  hedging or other commodity based risk instruments.

(iv) Sensitivity analysis

Based on historic trends over the last
  twelve months, volatilities in the above-noted market risks, and managements
  knowledge and experience in the financial markets, the Company believes the
  following movements are reasonably possible over a twelve-month period.

| | • | A parallel shift of +1%/-1% from the prevailing market
      interest rates on deposits as of December 31, 2009.                                                                                                       
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                        
| | • | Proportional foreign exchange movement of -10%
      (depreciation of CAD) and +10% (appreciation of CAD) against the USD, from
      the December 31, 2009 CAD to USD exchange rate of 0.951.                         
| |   |                                                                                                                                                                                                                        
| |   | Proportional foreign exchange movement of -10%
      (depreciation of CAD) and +10% (appreciation of CAD) against the Mexican
      peso, from the December 31, 2009 CAD to Mexican peso exchange rate of
      12.481.

31

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | • | A parallel shift of +10%/-10% from the prevailing
      commodity prices of US$16.99/oz for silver, US$1,104/oz for gold,
      US$2,390/tonne for lead, and US$2,569/tonne for zinc as of December 31,
      2009.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If these movements were to occur, the
  impact on the consolidated net income (loss) for each category of financial
  instrument held at the balance sheet date is presented below in thousands of
  dollars.

Interest
        Rate Risk
      
      
      Currency
        Rate Risk
      
      
      Commodity
        Price Risk-1%
      
      
      +1%
      
      
      -10%
      
      
      +10%
      
      
      -10%
      
      
      +10%CarryingAmount
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      Income($'000
      )
      
      ($'000
      )
      
      ($'000
      )
      
      ($'000
      )
      
      ($'000
      )
      
      ($'000
      )
      
      ($'000
      )Financial assetsCash and cash equivalentsCAD
      
      12,026
      
      
      (120
      )
      
      120
      
      
      -
      
      
      -
      
      
      -
      
      
      -USD
      
      1,248
      
      
      (12
      )
      
      12
      
      
      139
      
      
      (113
      )
      
      -
      
      
      -Pesos
      
      38
      
      
      -
      
      
      -
      
      
      4
      
      
      (3
      )
      
      -
      
      
      -Amounts receivableUSD
      
      1,026
      
      
      -
      
      
      -
      
      
      114
      
      
      (93
      )
      
      (98
      )
      
      98Pesos
      
      4,407
      
      
      -
      
      
      -
      
      
      490
      
      
      (401
      )
      
      (250
      )
      
      250Financial liabilitiesAccounts payable and accrued liabilitiesUSD
      
      254
      
      
      -
      
      
      -
      
      
      (28
      )
      
      23
      
      
      -
      
      
      -Pesos
      
      1,851
      
      
      -
      
      
      -
      
      
      (206
      )
      
      168
      
      
      -
      
      
      -Capital lease obligationUSD
      
      863
      
      
      -
      
      
      -
      
      
      (96
      )
      
      78
      
      
      -
      
      
      -Total Increase (Decrease)
      
      
      
      
      (132
      )
      
      132
      
      
      417
      
      
      (341
      )
      
      (348
      )
      
      348


|16. | Income taxes:                                  
|--- | -----------------------------------------------
|    |                                                
|    | Provision for (recovery of) income
      taxes:

| |                           |   | 2009    |  |   | 2008             |   |   | 2007      | 
| | ------------------------- | - | ------- |  | - | ---------------- | - | - | --------- | 
| |                           |   |         |  |   | (Revised         |   |   |           | 
| |                           |   |         |  |   | note
      2(a)) |   |   |           | 
| |                           |   |         |  |   |                  |   |   |           | 
| | Current income taxes      | $ | 64,990  |  | $ | (131,599         | ) | $ | 149,969   | 
| | Future income
      taxes |   | 603,070 |  |   | (1,044,916       | ) |   | 2,421,504 | 
| |                           |   |         |  |   |                  |   |   |           | 
| |                           | $ | 668,060 |  | $ | (1,176,515       | ) | $ | 2,571,473 | 

32

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

Income tax expense (recovery) differs
  from the amount which would result from applying the statutory Canadian tax
  rates for the following reasons:

| |                                                                |   | 2009     |   |   | 2008             |   |   | 2007        |  
| | -------------------------------------------------------------- | - | -------- | - | - | ---------------- | - | - | ----------- | -
| |                                                                |   |          |   |   | (Revised         |   |   |             |  
| |                                                                |   |          |   |   | note
      2(a)) |   |   |             |  
| |                                                                |   |          |   |   |                  |   |   |             |  
| | Net loss before tax                                            | $ | (198,791 | ) | $ | (14,937,341      | ) | $ | (17,129,388 | )
| | Canadian income tax rate                                       |   | 30.00%   |   |   | 31.00%           |   |   | 34.12%      |  
| |                                                                |   |          |   |   |                  |   |   |             |  
| | Income tax recovery expected                                   |   | (59,637  | ) |   | (4,630,576       | ) |   | (5,844,547  | )
| | Permanent differences                                          |   | 526,953  |   |   | 786,549          |   |   | (81,800     | )
| | Difference in tax rates                                        |   | (342,839 | ) |   | 1,575,899        |   |   | 561,686     |  
| | Benefit of tax attributes not recognized
      and other items |   | 543,583  |   |   | 1,091,613        |   |   | 7,936,134   |  
| |                                                                |   |          |   |   |                  |   |   |             |  
| |                                                                | $ | 668,060  |   | $ | (1,176,515       | ) | $ | 2,571,473   |  

The significant components of the
  Companys future income tax assets are as follows:

| |                                                              |   | 2009       |   |   | 2008             |  
| | ------------------------------------------------------------ | - | ---------- | - | - | ---------------- | -
| |                                                              |   |            |   |   | (Revised         |  
| |                                                              |   |            |   |   | note
      2(a)) |  
| |                                                              |   |            |   |   |                  |  
| | Future income tax assets:                                    |   |            |   |   |                  |  
| | Mineral property, plant
      and equipment and related debt | $ | 847,106    |   | $ | 880,991          |  
| | Office
      equipment financing and other                   |   | 450,091    |   |   | 313,855          |  
| | Capital losses                                               |   | 243,122    |   |   | 252,794          |  
| | Non-capital losses                                           |   | 4,903,460  |   |   | 4,068,367        |  
| | Total future income tax
      assets                         |   | 6,443,779  |   |   | 5,516,007        |  
| |                                                              |   |            |   |   |                  |  
| | Valuation allowance                                          |   | (6,443,779 | ) |   | (5,516,007       | )
| | Future
      income tax assets, net of allowance             |   | -          |   |   | -                |  
| |                                                              |   |            |   |   |                  |  
| | Future income tax liabilities:                               |   |            |   |   |                  |  
| | Mineral properties                                           |   | (1,817,831 | ) |   | (1,376,588       | )
| |                                                              |   |            |   |   |                  |  
| | Current portion                                              |   | 506,222    |   |   | -                |  
| |                                                              |   |            |   |   |                  |  
| | Future income tax
      liability                            | $ | (1,311,609 | ) | $ | (1,376,588       | )

At December 31, 2009, the Company had
  operating losses of $20,190,606 (2008 - $17,300,903; 2007 - $13,170,509) and
  capital losses of $1,934,816 (2008 - $1,934,816; 2007 - $1,934,816). The
  operating losses at December 31, 2009 includes $19,027,307 (2008 - $15,269,158;
  2007 - $12,365,275) in Canada and $1,163,299 (2008  $2,031,745; 2007 
  $805,233) in Mexico. The capital losses are without expiry, and the operating
  losses expire at various dates to 2029.

A new tax in Mexico, referred to as a
  Flat Tax, was enacted in 2007 and came into effect on January 1, 2008. The
  Flat Tax is an alternative minimum tax. Taxpayers are required to pay the higher
  of the amount due under Income Tax or Flat Tax. The tax basis of fixed assets is
  significantly reduced and tax losses originating from prior years are not
  deductible under Flat Tax. For the year ended December 31, 2009, three of the
  Companys subsidiaries were subject to Flat Tax.

33

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

|17. | Related party transactions:                                                    
|--- | -------------------------------------------------------------------------------
|    |                                                                                
|    | The Company entered into the following transactions with
      related parties:

| |                                                                                                                     |   | 2009    |  |   | 2008    |  |   | 2007    | 
| | ------------------------------------------------------------------------------------------------------------------- | - | ------- |  | - | ------- |  | - | ------- | 
| |                                                                                                                     |   |         |  |   |         |  |   |         | 
| | Consulting fees paid or accrued
      to companies 
         controlled by directors of the
      Company           | $ | 648,402 |  | $ | 595,823 |  | $ | 539,000 | 
| |                                                                                                                     |   |         |  |   |         |  |   |         | 
| | Consulting fees paid or accrued
      to companies 
         controlled by officers of the Company                  |   | 171,118 |  |   | 266,230 |  |   | 395,943 | 
| |                                                                                                                     |   |         |  |   |         |  |   |         | 
| | Cost recoveries received or
      accrued from a 
         company with a common director of the Company            |   | 80,367  |  |   | 82,397  |  |   | 631,117 | 
| |                                                                                                                     |   |         |  |   |         |  |   |         | 
| | Office and administration fees paid or accrued
      to 
         a company controlled by a director of the Company |   | 68,711  |  |   | 36,138  |  |   | 39,879  | 

|    | As at December 31, 2009, $110,060 (2008  $314,435; 2007
       $74,401) was due to companies controlled by officers and directors of
      the Company and was included in accounts payable. Amounts due from
      companies with a common director were $147,273 (2008  $61,720, 2007 
      $400,742) and were included in amounts receivable.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                      
|    | The above transactions occurred in the normal course of
      operations and are measured at the exchange amount which is the amount of
      consideration established and agreed to by the parties.                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                      
|18. | Commitments and
      contingencies:                                                                                                                                                                                                                                                                                                                 

| | (a) | The Company is committed to making severance payments
      amounting to approximately $1,870,000 to certain officers and management
      in the event that there is a change of control of the Company.                    
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                              
| | (b) | Commitments outstanding relating to laboratory and
      drilling services amount to $1,834,000 in 2010 and $729,000 in
      2011.                                                                                          
| |     |                                                                                                                                                                                                                              
| | (c) | The Company is committed to operating lease payments of
      $160,000 in 2010, $143,000 in 2011, $141,000 in 2012 and $93,000 in
      2013.                                                                                
| |     |                                                                                                                                                                                                                              
| | (d) | During the year, the Company entered into consulting
      agreements with third parties totaling a commitment of $136,000 in
      2010.                                                                                    
| |     |                                                                                                                                                                                                                              
| | (e) | During the year, the Company entered into equipment
      purchase commitments with third party vendors totaling $3,048,205. The
      Company expects to fulfill these capital expenditure commitments in fiscal
      2010.

34

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (f) | The Company acquired equipment through two capital leases
      that bear interest at annual rates of 10.5% and 12% and require lease
      payments to the expiry date as follows:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

December
        31,2009Years ending December 31:2010
      $
      846,2712011
      
      68,609Total minimum lease payments
      
      914,880Less: amount
        representing interest
      
      (51,485
      )Balance of capital lease obligation
      
      863,395Current portion
      
      800,761$
      62,634


| |     | Included in mineral properties, plant and equipment at
      December 31, 2009, are leased assets with a cost of $1,319,688 and
      accumulated depreciation of $319,933. Interest on the capital leases of
      $84,749 (2008 - $24,438) is included in interest expense.                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                           
| | (g) | On February 17, 2009, the Company committed to
      implementing an environmental program as a result of participating in a
      voluntary audit to ensure compliance with regulations governing the
      protection of the environment in Mexico. The Company expects to make
      expenditures of $397,000 in 2010 as a result of the
      program.

35

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

|19. | Segmented information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The Companys operations are all within the mining
      sector, consisting of two operating segments both of which are located in
      Mexico and one corporate segment located in Canada. Due to diversities in
      geography and production processes, the Company operates the Guanajuato
      and Topia mines 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 Guanajuato operations produce silver and gold, and
      Topia operations produce silver, gold, lead and
      zinc.

Year ended December 31, 2009Mexico
      
      
      CanadaGuanajuato
      
      
      Topia
      
      
      Other
      
      
      Corporate
      
      
      Total
      
      
      Corporate
      
      
      TotalRevenue
      $
      22,296,535
      
      $
      9,435,180
      
      $
      -
      
      $
      -
      
      $
      31,731,715
      
      $
      -
      
      $
      31,731,715Cost of sales
      
      11,100,804
      
      
      5,666,879
      
      
      -
      
      
      -
      
      
      16,767,683
      
      
      -
      
      
      16,767,683Amortization and depletion
        of mineral properties, plant and equipment
      
      2,653,517
      
      
      840,384
      
      
      -
      
      
      -
      
      
      3,493,901
      
      
      82,895
      
      
      3,576,796Mineral property exploration
        expenditures
      
      383,718
      
      
      1,125,417
      
      
      72,820
      
      
      -
      
      
      1,581,955
      
      
      -
      
      
      1,581,955General and administrative
      
      -
      
      
      -
      
      
      -
      
      
      1,279,381
      
      
      1,279,381
      
      
      4,523,127
      
      
      5,802,508Stock-based compensation
      
      383,400
      
      
      172,822
      
      
      -
      
      
      168,853
      
      
      725,075
      
      
      1,652,852
      
      
      2,377,927Income (loss) before income
        taxes
      
      7,595,146
      
      
      1,532,415
      
      
      (72,820
      )
      
      (1,794,902
      )
      
      7,259,839
      
      
      (7,458,630
      )
      
      (198,791
      )Net income (loss)
      
      7,595,146
      
      
      1,532,415
      
      
      (72,820
      )
      
      (2,462,962
      )
      
      6,591,779
      
      
      (7,458,630
      )
      
      (866,851
      )Capital expenditures
      
      1,721,374
      
      
      681,050
      
      
      -
      
      
      -
      
      
      2,402,424
      
      
      18,027
      
      
      2,420,451Total assets
      $
      13,740,126
      
      $
      6,708,383
      
      $
      68,542
      
      $
      2,569,756
      
      $
      23,086,807
      
      $
      14,087,459
      
      $
      37,174,266


Year ended December 31, 2008 (Revised - note 2(a))Mexico
      
      
      CanadaGuanajuato
      
      
      Topia
      
      
      Other
      
      
      Corporate
      
      
      Total
      
      
      Corporate
      
      
      TotalRevenue
      $
      15,150,463
      
      $
      7,294,975
      
      $
      -
      
      $
      -
      
      $
      22,445,438
      
      $
      -
      
      $
      22,445,438Cost of sales
      
      12,030,276
      
      
      6,113,947
      
      
      -
      
      
      -
      
      
      18,144,223
      
      
      -
      
      
      18,144,223Amortization and depletion
        of mineral properties, plant and equipment
      
      2,580,224
      
      
      1,603,035
      
      
      -
      
      
      -
      
      
      4,183,259
      
      
      101,770
      
      
      4,285,029Mineral property exploration
        expenditures
      
      2,033,575
      
      
      2,215,739
      
      
      2,078,612
      
      
      -
      
      
      6,327,926
      
      
      -
      
      
      6,327,926General and administrative
      
      -
      
      
      -
      
      
      -
      
      
      2,092,816
      
      
      2,092,816
      
      
      3,872,779
      
      
      5,965,595Stock-based compensation
      
      540,141
      
      
      170,791
      
      
      
      
      
      352,561
      
      
      1,063,493
      
      
      544,778
      
      
      1,608,271Income (loss) before income
        taxes
      
      (2,172,012
      )
      
      (2,951,955
      )
      
      (2,078,612
      )
      
      (2,143,622
      )
      
      (9,346,201
      )
      
      (5,591,140
      )
      
      (14,937,341
      )Net income (loss)
      
      (2,172,012
      )
      
      (2,951,955
      )
      
      (2,078,612
      )
      
      (967,107
      )
      
      (8,169,686
      )
      
      (5,591,140
      )
      
      (13,760,826
      )Capital expenditures
      
      1,868,876
      
      
      754,065
      
      
      -
      
      
      -
      
      
      2,622,941
      
      
      89,730
      
      
      2,712,671Total assets
      $
      11,576,513
      
      $
      7,657,912
      
      $
      68,543
      
      $
      2,585,705
      
      $
      21,888,673
      
      $
      422,008
      
      $
      22,310,681


36

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

Year ended December 31, 2007Mexico
      
      
      CanadaGuanajuato
      
      
      Topia
      
      
      Other
      
      
      Corporate
      
      
      Total
      
      
      Corporate
      
      
      TotalRevenue
      $
      8,604,210
      
      $
      6,918,884
      
      $
      -
      
      $
      -
      
      $
      15,523,094
      
      $
      -
      
      $
      15,523,094Cost of sales
      
      8,926,924
      
      
      5,225,733
      
      
      -
      
      
      -
      
      
      14,152,657
      
      
      -
      
      
      14,152,657Amortization and depletion of mineral properties,
        plant and equipment
      
      1,954,655
      
      
      1,561,903
      
      
      -
      
      
      -
      
      
      3,516,558
      
      
      87,110
      
      
      3,603,668Mineral property exploration expenditures
      
      1,915,352
      
      
      2,492,158
      
      
      2,395,594
      
      
      -
      
      
      6,803,104
      
      
      -
      
      
      6,803,104General and administrative
      
      -
      
      
      -
      
      
      -
      
      
      768,949
      
      
      768,949
      
      
      3,903,413
      
      
      4,672,362Stock-based compensation
      
      290,500
      
      
      -
      
      
      -
      
      
      40,000
      
      
      330,500
      
      
      799,000
      
      
      1,129,500Income (loss) before income taxes
      
      (4,492,927
      )
      
      (2,373,941
      )
      
      (2,395,594
      )
      
      (2,633,797
      )
      
      (11,896,259
      )
      
      (5,233,129
      )
      
      (17,129,388
      )Net income (loss)
      
      (4,492,927
      )
      
      (2,373,941
      )
      
      (2,395,594
      )
      
      (5,196,265
      )
      
      (14,458,727
      )
      
      (5,242,134
      )
      
      (19,700,861
      )Capital expenditures
      
      1,751,488
      
      
      2,341,628
      
      
      -
      
      
      -
      
      
      4,093,116
      
      
      221,479
      
      
      4,314,595Total assets
      $
      11,871,843
      
      $
      9,790,841
      
      $
      68,542
      
      $
      4,849,925
      
      $
      26,581,151
      
      $
      5,097,689
      
      $
      31,678,840


Product Revenue:

| |                                    |   | 2009       |   |   | 2008       |   |   | 2007       |  
| | ---------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| | Silver                             | $ | 23,394,598 |   | $ | 17,315,025 |   | $ | 11,199,504 |  
| | Gold                               |   | 6,935,001  |   |   | 5,082,060  |   |   | 2,663,086  |  
| | Lead                               |   | 1,544,705  |   |   | 1,654,109  |   |   | 1,820,158  |  
| | Zinc                               |   | 911,377    |   |   | 573,484    |   |   | 144,880    |  
| | Ore processing revenues            |   | 742,510    |   |   | 707,192    |   |   | 539,050    |  
| | Smelter and
      refining charges |   | (1,796,476 | ) |   | (2,886,432 | ) |   | (843,584   | )
| |                                    |   |            |   |   |            |   |   |            |  
| |                                    | $ | 31,731,715 |   | $ | 22,445,438 |   | $ | 15,523,094 |  

For the year ended December 31, 2009,
  the Company had two customers that accounted for 95% of total revenues. The
  trade accounts receivable balance of $3,471,546 at December 31, 2009 relates to
  these two customers (note 5). The Guanajuato and Topia segments each had one
  customer account for 68% and 27% of total revenue, respectively.

For the year ended December 31, 2008,
  the Company had two customers that accounted for 97% of total revenues. The
  trade accounts receivable balance of $1,693,512 at December 31, 2008 relates to
  these two customers (note 5). One customer accounted for 85% of total revenues,
  of which 56% was from the Guanajuato segment and 29% from the Topia segment. The
  other customer accounted for 12% of total revenues, which was all related to the
  Guanajuato segment.

For the year ended December 31, 2007,
  the Company had one customer that accounted for 97% of total revenues for both
  the Guanajuato and Topia segments.

37

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

|20. | Subsequent events:                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                     
|    | (a)                                                                                                                                                 
|    |                                                                                                                                                     
|    | (b)                                                                                                                                                 
|    |                                                                                                                                                     
|21. | Reconciliation between Canadian and United States
      generally accepted accounting principles and United States accounting
      pronouncements: 
|    |                                                                                                                                                     
|    | The effect of the measurement differences between
      Canadian GAAP and US GAAP on the consolidated balance sheets is summarized
      as follows:

| |                                                             |  | December
      31, 2009 |   |  | December
      31, 2008 |  
| | ----------------------------------------------------------- |  | ----------------------- | - |  | ----------------------- | -
| |                                                             |  |                         |   |  |                         |  
| |                                                             |  | Canadian                |   |  | US                      |  
| |                                                             |  | GAAP                    |   |  | GAAP                    |  
| |                                                             |  |                         |   |  |                         |  
| | Convertible note payable (note
      21(a)(iv))             |  | 3,356,397               |   |  | 4,050,000               |  
| | Share capital (note 21(a)(iii)and note
      21(a)(vii))    |  | 75,910,220              |   |  | 79,625,551              |  
| | Contributed surplus (note 21(a)(ii) and note 21(a)(vii))    |  | 10,268,043              |   |  | 12,778,917              |  
| | Equity component of convertible note (note
      21(a)(iv)) |  | 1,563,000               |   |  | -                       |  
| | Deficit                                                     |  | (60,862,380             | ) |  | (65,735,276             | )

Share capital and contributed surplus:

| |                                                                              |   | 2009       |  |   | 2008       | 
| | ---------------------------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| |                                                                              |   |            |  |   |            | 
| | Share capital and contributed surplus,
      under Canadian GAAP             | $ | 86,178,263 |  | $ | 65,590,362 | 
| | Adjustment for stock-based compensation for employees (note
      21(a)(ii)) |   | 15,000     |  |   | 15,000     | 
| | Reversal of recapitalization of deficit (note
      21(a)(iii))              |   | 6,211,205  |  |   | 6,211,205  | 
| |                                                                              |   |            |  |   |            | 
| | Share capital and contributed surplus, under US GAAP                         | $ | 92,404,468 |  | $ | 71,816,567 | 

38

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

Deficit:

| |                                                                                                                                         |   | 2009        |   |   | 2008             |  
| | --------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ---------------- | -
| |                                                                                                                                         |   |             |   |   | (Revised         |  
| |                                                                                                                                         |   |             |   |   | note
      2(a)) |  
| |                                                                                                                                         |   |             |   |   |                  |  
| | Deficit, under Canadian GAAP                                                                                                            | $ | (60,862,380 | ) | $ | (58,388,865      | )
| | Adjustment for stock-based compensation for
      employees (note 21(a)(ii))                                                            |   | (15,000     | ) |   | (15,000          | )
| | Reversal of recapitalization
      of deficit (note 21(a)(iii))                                                                         |   | (6,211,205  | ) |   | (6,211,205       | )
| | Interest accreted on convertible loan note
      (note 21(a)(iv))                                                                       |   | 1,778,445   |   |   | 1,150,690        |  
| | Reversal of incremental fair
      value of liability component due to early conversion of convertible loan
      note (note (9)(b)(i)) |   | 51,165      |   |   | -                |  
| | Reversal of premium of the equity component
      upon early conversion of the convertible loan note (note (9)(b)(i))                   |   | 1,606,664   |   |   | -                |  
| | Effect of induced early conversion
      of convertible loan note, under US GAAP (note 21(a)(iv))                                       |   | (1,657,829  | ) |   | -                |  
| | Amortization
      of option payments (note 21(a)(v))                                                                                   |   | (425,136    | ) |   | -                |  
| |                                                                                                                                         |   |             |   |   |                  |  
| | Deficit,
      under US GAAP                                                                                                            | $ | (65,735,276 | ) | $ | (63,464,380      | )

Loss and loss per share:

| |                                                                                                                                   |   | 2009       |   |   | 2008        |   |   | 2007        |  
| | --------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ----------- | - | - | ----------- | -
| |                                                                                                                                   |   |            |   |   | (Revised    |   |   |             |  
| |                                                                                                                                   |   |            |   |   | note 2(a))  |   |   |             |  
| |                                                                                                                                   |   |            |   |   |             |   |   |             |  
| | Loss for the year, under Canadian
      GAAP                                                                                      | $ | (866,851   | ) | $ | (13,760,826 | ) | $ | (19,700,861 | )
| | Reversal of incremental fair value of liability
      component due to early conversion of convertible loan note (note (9)(b)(i)) |   | 51,165     |   |   | -           |   |   | -           |  
| | Effect of induced early conversion
      of convertible loan note, under US GAAP (note 21(a)(iv))                                 |   | (1,657,829 | ) |   | -           |   |   | -           |  
| | Interest accreted on convertible loan note
      (note 21(a)(iv))                                                                 |   | 627,755    |   |   | 623,079     |   |   | 377,812     |  
| | Amortization of option payments (note 21(a)(v))                                                                                   |   | (425,136   | ) |   | -           |   |   | -           |  
| |                                                                                                                                   |   |            |   |   |             |   |   |             |  
| | Loss for the year, under US GAAP                                                                                                  | $ | (2,270,896 | ) | $ | (13,137,747 | ) | $ | (19,323,049 | )
| |                                                                                                                                   |   |            |   |   |             |   |   |             |  
| | Basic and diluted loss per
      share, under US GAAP                                                                             | $ | (0.03      | ) | $ | (0.16       | ) | $ | (0.27       | )
| |                                                                                                                                   |   |            |   |   |             |   |   |             |  
| | Weighted average number of common shares,
      basic and diluted                                                                 |   | 90,210,438 |   |   | 81,321,733  |   |   | 72,227,455  |  

| | (a) | These consolidated financial statements have been
      prepared in accordance with Canadian generally accepted accounting
      principles (Canadian GAAP). A description of US GAAP and practices
      prescribed by the US Securities and Exchange Commission (collectively US
      GAAP) that result in measurement differences from Canadian GAAP are as
      follows:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

39

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (i)  | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      | As described in note 2(n), the Company follows the asset
      and liability method of accounting for income taxes which is also in
      accordance with Statement of Financial Accounting Standards Board (FASB)
      No. 109 Accounting for Income Taxes(codified within ASC 740).
      Under Canadian GAAP, future tax assets and liabilities are recorded at
      substantively enacted tax rates. Under US GAAP, deferred tax assets and
      liabilities are recorded at enacted tax rates. In 2009, there were no
      differences between enacted and substantively enacted rates. For each of
      the years ended December 31, 2009 and 2008, net future tax assets are
      fully offset by a valuation allowance as it is not more likely than not
      that the future tax assets would be realized. As a result, the application
      of US GAAP in accounting for income taxes does not result in any material
      measurement differences from Canadian GAAP for future tax assets or
      liabilities.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      | In June 2006, FASB issued Financial Interpretation No.
      48, Accounting for Uncertainty in Income Taxes(codified within ASC
      740). This interpretation provides guidance on recognition and measurement
      of uncertainties in income taxes and is effective for fiscal years
      beginning after December 15, 2006. For US GAAP purposes, no adjustment was
      required to the consolidated financial statements as a result of the
      adoption of this interpretation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (ii) | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      | The Company accounts for stock options at fair value
      under Canadian GAAP commencing on January 1, 2002 as described in note
      2(i). Statement of Financial Accounting Standards Board No. 123, Accounting for Stock-Based Compensation(SFAS 123) became effective
      for US GAAP purposes for fiscal years beginning after December 15,
      1995.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      | For fiscal years ending prior to December 31, 2003, as
      allowed by SFAS 123, the Company followed the intrinsic value principles
      of APB Opinion 25, Accounting for Stock Issued to Employeesand
      related interpretations, in measuring compensation expense for employee
      options. Under the intrinsic value method, compensation cost is the
      excess, if any, of the quoted market value of the stock at the measurement
      date, which is generally the grant date, over the amount an employee must
      pay to acquire the stock. The application of APB 25 resulted in
      compensation expense of $15,000 being recognized for employees in the year
      ended December 31, 2001 under US GAAP and no similar expense was required
      under Canadian GAAP. Effective January 1, 2003, the Company adopted the
      fair value recognition provisions of SFAS 123 whereby the fair value of
      the stock options granted to employees was expensed.                                     
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      | Effective January 1, 2006, the Company adopted Statement
      of Financial Accounting Standard (SFAS 123R) Share Based Paymentusing the modified prospective method for all employee awards granted,
      modified or settled after the effective date using the fair value
      measurement method of this standard (codified within ASC 718). For
      unvested employee equity awards as of the effective date, compensation is
      to be recognized based upon the grant date fair value determined under
      SFAS 123, adjusted to reflect the estimated impact of forfeitures. Upon
      adoption of SFAS 123R, there was no cumulative effect adjustment required.
      Non-employee awards are accounted for under the fair value method under
      both Canadian and US GAAP.                                                                                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      | There were no significant differences in accounting for
      stock-based compensation between Canadian GAAP and US GAAP during the
      three years ended December 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

40

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (iii) | Elimination of deficit:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | During the year ended December 31, 1999, the Company
      reduced its paid-up capital by $6,211,205 to eliminate the deficit at
      March 31, 1999. In order to effect these reductions, it was not necessary
      to revalue the assets of the Company. As a consequence, all conditions
      under the US GAAP quasi- reorganization rules were not met and the
      recapitalization of the deficit would not be recorded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (iv)  | Convertible loan notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | Under Canadian GAAP, the proceeds of the financing
      allocated to the estimated fair value of the conversion feature of the
      debt are recorded as an equity component of the debt (note 9(b)). Under US
      GAAP, a value is assigned to the conversion feature only if the effective
      conversion rate is less than the market price of the common stock at the
      date of issuance, which it was not. Accordingly, no value would be
      assigned under US GAAP to the conversion feature on the convertible notes
      issued in 2006 and 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | Applying US GAAP, the convertible notes at December 31,
      2009 would be recorded as a liability at face value of $4,050,000 and no
      value would be assigned to the equity component of the convertible notes.
      In addition, accretion on the calculated debt discounts on the convertible
      notes under Canadian GAAP of $627,755 for the year ended December 31, 2009
      (2008 - $623,079, 2007 - $377,812) would not have been recorded, reducing
      interest expense by an equivalent amount.
        During the year ended December
          31, 2009, the Company induced the early conversion of the $2,002,000
          convertible loan note. In accordance with Canadian GAAP, the Company
          accounted for the early conversion as described in (note 9(b)(i)).
          Under US GAAP, the Company recognized an expense of $1,657,829 which is
          the fair value of the common shares transferred in excess of the fair
          value of the common shares issuable pursuant to the original conversion
          terms.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (v)   | Mineral properties, plant, and
      equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | Production facilities and mineral property costs are
      currently amortized over the estimated remaining life of mine of 3 years
      for Guanajuato and 7 years for Topia. Under US GAAP, the Company expects
      to use the units-of-production method based on reserves as defined under
      SEC Industry Guide 7 once such reserve amounts are determinable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | Under Canadian GAAP, periodic option payments related to
      mineral properties are expensed prior to commercial feasibility of mining
      operations being established. Under US GAAP, periodic option payments are
      capitalized when such payments are associated with the acquisition of
      mineral rights and amortized over their respective option term. As there
      were no option payments made to the Mapimi project (note 8) during the
      year, a measurement difference of $425,136 resulted from the amortization
      of prior years option payments. There is no material measurement
      difference for the comparative periods.                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (vi)  | Statement of cash flows                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | In the statement of cash flows, the presentation of the
      cash flows from operating activities includes an intermediate total which
      is not permitted under US GAAP, ASC 230, Statement of Cash
        Flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (vii) | Share capital and contributed surplus                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | Under Canadian GAAP, the Company allocates the net
      proceeds from equity financings containing common shares and share
      purchase warrants to share capital (note 11(b)). Under US GAAP, the
      net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

41

---

|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

proceeds from the issuance of units
  are allocated between common shares and share purchase warrants contained in
  such units, based on their respective fair values. Accordingly, the amount of
  $2,495,874, being the portion of the net proceeds allocated to these warrants,
  is recorded to contributed surplus under US GAAP.

| | (b) | Recently adopted United States accounting
      pronouncements:
| | --- | ---------------------------------------------------------------

| | (i)   | In December 2007, the FASB issued a revised standard on
      accounting for business combinations (codified within ASC 805): The major
      changes to accounting for business combinations are summarized as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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| |       | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |       | The adoption of this Interpretation did not impact the
      Companys results of operations or financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (ii)  | In December 2007, the FASB issued a standard on
      accounting for non-controlling interests and transactions with
      non-controlling interest holders in consolidated financial statements
      (codified within ASC 810-10). This statement specifies that
      non-controlling interests are to be treated as a separate component of
      equity, with increases and decreases in the parents ownership interest as
      capital transactions. This standard requires net income and comprehensive
      income to be displayed for both the controlling and the non-controlling
      interests. Additional required disclosures and reconciliations include a
      separate schedule that shows the effects of any transactions with the
      non-controlling interests on the equity attributable to the controlling
      interest. The adoption of this Interpretation did not impact the Companys
      results of operations or financial position.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (iii) | In March 2008, the FASB issued a new statement enhancing
      disclosures regarding an entitys derivative and hedging activities
      (codified within ASC 815-10-50). This statement was adopted by the Company
      on January 1, 2009 and there was no impact on the financial position or
      operational results of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (iv)  | In May 2008, the FASB issued guidance which clarifies the
      accounting for convertible debt instruments that may be settled in cash
      upon conversion (codified within ASC 470-20). The guidance specifies that
      issuers of such instruments should separately account for the liability
      and equity components of those instruments by allocating the proceeds from
      issuance between the liability component and the embedded conversion
      option. The Company adopted this statement on January 1, 2009 and there
      was no impact on the financial position or operational results of the
      Company.                                                                                                                                                                                                                                                                                                                                 

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|GREAT PANTHER SILVER LIMITED                      
|--------------------------------------------------
|(Formerly Great Panther Resources Limited)        
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS    
|(Expressed in Canadian Dollars)                   
|                                                  
|Years ended December
      31, 2009, 2008 and 2007

| | (v)   | In June 2008, the FASB Task Force reached a consensus on
      EITF Issue No. 07-5 which provides guidance on determining whether an
      instrument (or embedded derivative) is indexed to an entitys own stock
      (codified within ASC 815). The Company adopted this EITF on January 1,
      2009 and there was no impact on the financial position and operational
      results of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (vi)  | In June 2009, the FASB issued Statement No. 168, The
      FASB Accounting Standards Codification and the Hierarchy of GAAP(codified within ASC 105). The Accounting Standards Codification
      (ASC) establishes the sources of accounting principles and the framework
      for selecting principles used in the preparation of financial statements
      of non-governmental entities presented in conformity with US GAAP. The
      statement establishes two levels of GAAP: authoritative and
      non-authoritative. An entity must first consider authoritative GAAP for
      similar transactions or events, and then consider non-authoritative
      guidance from other sources. The adoption of the ASC did not have an
      impact on the Companys consolidated financial statements.                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (vii) | In June 2009, the FASB issued general standards of
      accounting for, and disclosure of, events that occur after the balance
      sheet date but before the financial statements are issued or are available
      to be issued (codified within ASC 855). The update sets forth: (a) the
      period after the balance sheet date during which management of a reporting
      entity should evaluate events or transactions that may occur for potential
      recognition or disclosure in the financial statements; (b) the
      circumstances under which an entity should recognize events or
      transactions occurring after the balance sheet date in its financial
      statements; and (c) the disclosures that an entity should make about
      events or transactions that occurred after the balance sheet date. The
      adoption of this standard had no impact on the Companys financial
      position, results of operations or cash flows. Please refer to note 20 for
      the subsequent events note disclosure.

| | (c) | Recently issued United States accounting
      pronouncement:
| | --- | -------------------------------------------------------------

| | (i) | In June 2009, the FASB issued new guidance relating to
      accounting for Variable Interest Entities (VIE) codified within ASC
      810-10. Key changes include: (a) the elimination of the exemption for
      qualifying special purpose entities (QSPE); (b) a new approach for
      determining who should consolidate a VIE; and (c) changes to when it is
      necessary to reassess who should consolidate a VIE. This standard is
      effective for years beginning after November 15, 2009, and for subsequent
      interim and annual reporting periods thereafter. The Company does not
      expect the adoption of this standard to have a significant effect on the
      Companys results of operations or financial
      position.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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