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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, 2011

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 001-35043

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 Street Vancouver, British
Columbia, Canada V6E 2K3(Address of principal executive offices)

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

|Common Shares Without Par Value | NYSE Amex Equities                       
|------------------------------- | -----------------------------------------
|Title of Class                  | Name of Each Exchange on Which Registered

Securities registered or to be registered pursuant to Section
12(g) of the Act.Not Applicable.

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Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.Not Applicable

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 137,408,912 common shares, without par value,
issued and outstanding as of December 31, 2011.

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.[   ] YES [X] 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 has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).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 basis of accounting the registrant
has used to prepare the financial statements included in this filing:
US GAAP [   ] International Financial Reporting Standards
      as issued by the International Accounting Standards
      Board [X] Other [   ]

If Other has been checked in response to the previous section,
indicate by check mark which financial statement item the registrant has elected
to follow.[   ] Item 17 [   ] Item 18

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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             
|------------------------------------------
|REGARDING DIFFERENCES IN UNITED STATES AND
|CANADIAN REPORTING PRACTICES              

FINANCIAL INFORMATION

The Company prepares its financial statements in accordance
with International Financial Reporting Standards (IFRS), as issued by the
International Accounting Standards Board (IASB) and interpretations of the
International Financial Reporting Interpretations Committee (IFRIC), and they
are subject to Canadian auditing and auditor independence standards. IFRS
differs in some respects from United States generally accepted accounting
principles, (U.S. GAAP) or (United States GAAP), and thus our financial
statements may not be comparable to financial statements of United States
companies.

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 1933, as amended (the
Securities Act). Under SEC Industry Guide 7 standards, mineralization may not
be classified as a reserve unless the determination has been made that the
mineralization could be economically and legally produced or extracted at the
time the reserve determination is made. Among other things, all necessary
permits would be required to be in hand or issuance imminent in order to
classify mineralized material as reserves under the SEC standards. 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.

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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.

FORWARD-LOOKING STATEMENTS

Certain statements in this document constitute 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 anticipates, believes, plans, estimates, expects,
intends, predicts, potential or continues, statements that an action or
event may, might, could, should, or will be taken or occur, or other
similar expressions. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company, or other future events, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the risks associated with outstanding litigation, risks associated
with project development; the need for additional financing; operational risks
associated with mining and mineral processing; fluctuations in metal prices;
title matters; uncertainties and risks related to carrying on business in
foreign countries; environmental liability claims and insurance; reliance on key
personnel; the potential for conflicts of interest among certain officers,
directors or promoters of the Company and its subsidiaries with certain other
projects; the absence of dividends; currency fluctuations; competition;
dilution; the volatility of the Companys common share price and volume; and tax
consequences to U.S. shareholders; and other risks and uncertainties set out
under Risk Factors in this Annual Report.

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.

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.

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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. (Source:
Canadian Institute of Mining, Metallurgy, and Petroleum, and was adopted August
20, 2000.)

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. (Source: Canadian Institute of Mining, Metallurgy,
and Petroleum, and was adopted August 20, 2000.)

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. 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.

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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.

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

As used in this annual report, the terms "we", "us", "our,
the Company 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., Great Panther Silver Peru S.A.C, and/or New Age Investments Inc.

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

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|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 3 | Key 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 IFRS)

Fiscal Year Ended December 31 (Audited)

Expressed in (000s) of Canadian Dollars

2011
    20102
    20093
    20083
    20073Sales or Operating Revenue
    57,818
    42,206
    31,732
    22,445
    15,523Income (Loss) for the year
    11,506
    10,660
    (867)
    (13,761)
    (19,701)Income (loss) per Common Share  basic
    0.09
    0.09
    (0.01)
    (0.17)
    (0.27)Income (loss) per Common Share diluted
    0.08
    0.09
    (0.01)
    (0.17)
    (0.27)Total Assets
    102,944
    55,451
    37,174
    22,311
    31,053Capital Stock
    121,536
    83,470
    75,910
    57,865
    56,988Number of Common Shares (adjusted to reflect consolidation
      of common shares)
    137,408,912
    119,913,766
    111,239,631
    81,654,521
    80,744,352Long-Term Debt 1
    nil
    4,663
    4,460
    5,545
    4,117Cash Dividends per Common Share
    nil
    nil
    nil
    nil
    nil


1Excludes reclamation and remediation provisions
and deferred tax liability.2Restated to reflect adoption of IFRS
as required by all Canadian publicly held companies.3Presented
in Canadian GAAP. The adoption of IFRS in Canada did not require restatement of
fiscal years prior to 2010.

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Disclosure of Exchange Rate History

Except as may be otherwise indicated, all dollar amounts are
stated in Canadian dollars, the Companys functional and reporting currency. The
following tables are based on exchange rates published in the Federal Reserve
Statistical Release for the conversion of Canadian dollars into one United
States dollar. Averages are based on daily noon buying rates for cable transfers
in New York City certified for customs purposes by the Federal Reserve Bank of
New York:

|     |   | Feb. 2012 |  |   | Jan. 2012 |  |   | Dec. 2011 |  |   | Nov. 2011 |  |   | Oct. 2011 |  |   | Sept. 2011 | 
|---- | - | --------- |  | - | --------- |  | - | --------- |  | - | --------- |  | - | --------- |  | - | ---------- | 
|Low  | $ | 0.9866    |  | $ | 0.9986    |  | $ | 1.0106    |  | $ | 1.0125    |  | $ | 0.9932    |  | $ | 0.9751     | 
|High | $ | 1.0016    |  | $ | 1.0272    |  | $ | 1.0403    |  | $ | 1.0487    |  | $ | 1.0605    |  | $ | 1.0389     | 

|                    |   | 2011   |  |   | 2010   |  |  | 2009   |  |  | 2008   |  |  | 2007    | 
|------------------- | - | ------ |  | - | ------ |  |  | ------ |  |  | ------ |  |  | ------- | 
|Average for Period* | $ | 0.9858 |  | $ | 1.0298 |  |  | 1.1412 |  |  | 1.0660 |  |  | 1.07334 | 

Note:

* The average exchange rate for each period is based on the
average of the exchange rates on the last day of each month in such period.

On March 2, 2012, the exchange rate for the conversion of
Canadian dollars into one United States dollar was US$1.00:Cdn$0.9887, based on
the exchange rate published in the Federal Reserve Statistical Release on March
5, 2012.

|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.

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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. 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.

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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.

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 any of our subsidiaries is secured.

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- 13 -

Although we have taken reasonable precautions 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.

The Companys primary mineral properties, Topia and Guanajuato,
have been in the production stage for more than three years and are profitable;
however, the Companys San Ignacio and Santa Rosa projects are in the
exploration stage and are not all commercially viable at this time.

Proven and probable mineral reserves have been estimated for
the Guanajuato mine in accordance with Canadian National Instrument 43-101 -
Standards of Disclosure for Mineral Projects(NI 43-101),at the
Companys Guanajuato Mine; however, mineralization at the Companys Topia Mine
has not been upgraded to either of these categories. Further, the definition of
reserves under NI 43-101 differs from the definition of the term in SEC
Industry Guide 7.

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
additional commercially exploitable mineralization 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.

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.

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- 14 -

During the year, the Company entered into put and call option
contracts for lead and zinc to hedge against metal price variations. The
contacts are derivative financial instruments that are measured at fair value at
each reporting period with gains or losses recognized in net income in the
period in which it arises.

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 earns revenue in U.S. dollars and to
a lesser extent in Mexican Pesos while its costs are incurred in Canadian
dollars, U.S. dollars and Mexican Pesos. An appreciation in the Mexican Peso
and/or U.S. dollar against the Canadian dollar will increase the costs of
carrying on operations. A decrease in the U.S. dollar against the Canadian
dollar will reduce the Companys revenues as reported in Canadian dollars and
will also result in a loss to the Company to the extent that the Company holds
funds in U.S. dollars. Similarly, a decrease in the Mexican Peso against the
Canadian dollar will reduce the Companys revenues as reported in Canadian
dollars and will also result in a loss to the Company to the extent that the
Company holds funds in Mexican Pesos.

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.

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- 15 -

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 material 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, Charles Brown, our Chief Operating Officer and Martin Carsky, 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.

We are dependent on a small number of customers for our
revenues.

The Company sells refined concentrates containing silver, gold,
lead and zinc to metals traders and smelters. During the year-end December 31,
2011 three customers accounted for 94% of the Companys revenues. The Company
believes that a limited number of customers will continue to represent a
significant portion of its total revenue. Although the Company does not consider
itself economically dependent upon any single customer or combination of
customers due to the existence of other potential metals traders or smelters
capable of purchasing the Companys supply, there can be no assurance that the
Company will be able to maintain its current significant customers or secure
significant new customers on similar terms and this may have a material adverse
effect on the Companys business, financial condition, operating results and
cash flows.

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- 16 -

Risks Relating to an Investment in our Securities

The trading price of our common shares on the Toronto Stock
Exchange (TSX) and the NYSE Amex 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.

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, 2011, there are also outstanding common
share purchase warrants and options exercisable into 4,562,750 common shares
which, if exercised, would represent approximately 3% 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.

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- 17 -

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 the Business 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.

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 US$5 million or individuals
with a net worth in excess of US$1.0 million (excluding the value of the
individuals principal residence) or annual income exceeding US$200,000 or
US$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 2011 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 -Certain U.S. Federal Income Tax Considerations -
Passive Foreign Investment Company Rules" 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.

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- 18 -

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.

|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.

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- 19 -

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

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

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$3.0 million 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$0.5 million.

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 February 2, 2007, we signed an option agreement with Altair
Ventures Inc. (Altair). Terms of the agreement (the Altair Option) 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$0.2
million, issuing a total of 0.2 million Altair common shares to Great Panther
and incurring a minimum of US$1 million of exploration expenditures over a
three-year period.

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$0.8 million had been paid and
500,000 common shares had been issued.

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 (TSX) under the
symbol GPR.

On February 1, 2010, Altair forfeited the Altair 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.

On December 21, 2010, the Company relinquished its rights to
the San Antonio and Santo Nino mining concessions and wrote down the $0.07
million carrying value of the property.

On February 8, 2011, our common shares were listed on the NYSE
Amex Equities Exchange under the trading symbol "GPL". The Company has retained
its listing on the TSX in Canada under the trading symbol GPR.

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- 20 -

Topia Mine

Effective February 18, 2004, the Company entered into the Topia
Option Agreement, which granted 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, the Company 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, 2011, 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.

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 was paid 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.

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- 21 -

Guanajuato Mine

On October 25, 2005, the Company 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
(Guanajuato Mine and San Ignacio Project), the 1,200 tonne-per-day plant,
workshops and administration facilities, complete mining infrastructure, mining
equipment, and certain surface rights. At December 31, 2005 the Company paid
US$3,625,000. In 2006, the Company paid the remaining balance of
US$3,625,000.

On May 15, 2006, the Company purchased 3.88 hectares of real
estate adjacent to the plant at the Companys 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 the
Companys 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, 2011, there are no outstanding conditions to
retain title to the property. The Company has mineral and some surface
rights.

Santa Rosa Project

On July 18, 2011, the Company announced the acquisition of four
mining concessions, totalling 1,514 hectares, approximately 10 to 15 kilometres
northeast of Guanajuato (collectively called the Santa Rosa Project). The
claims are located on the north-west extension of a system of multiple
northwest-southeastern trending parallel structures that could be part of the
"La Sierra" vein system. The La Sierra system is the most easterly of the three
structural systems in the prolific Guanajuato district along with the main Veta
Madre and the La Luz trends. Presently, the Company is mining on the Veta Madre
system at its Guanajuato Mine and exploring on the westerly La Luz system at the
San Ignacio project.

The four claims were purchased from Minera Blanca Alicia, S.A.
de C.V., a private Mexican company, for US$1.5 million with 50% payable on
signing of the purchase agreement and 50% on the registration of the contract
with the Direccion General de Minas (Mexico), which is now complete. A royalty
of 1.3% is payable from ore produced from the four claims.

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- 22 -

|B. | Business Overview
|-- | -----------------

Great Panther Silver Limited is a profitable, primary silver
mining and exploration company listed on the Toronto Stock Exchange (TSX),
trading under the symbol GPR, and on the NYSE Amex Equities Exchange, trading
under the symbol GPL. The Companys current activities are focused on the
mining of precious and base metals from its wholly-owned properties in Mexico.
In addition, Great Panther is also pursuing acquisition opportunities throughout
Latin America to add a third mine to its portfolio of properties.

The Company has two primary mining properties: (1) Topia Mine
and (2) Guanajuato Mine. The Company also owns a development stage property, San
Ignacio, which is approximately 20 kilometres from its Guanajuato processing
plant, and an exploration stage property Santa Rosa which is located
approximately 15 kilometres northeast of Guanajuato. The Company also formerly
had two other exploration properties: (1) Mapimi (option agreement terminated in
September 2009) and (2) San Antonio (claims relinquished on December 21,
2010).

Primary Mining Properties

(1) Topia Mine

The mine 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 the Companys Mexican subsidiary, Minera Mexicana el Rosario,
S.A. de C.V.

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, the Company reached a significant milestone in
becoming a primary silver producer with the first shipment of concentrates from
operations. Production was ramped up steadily and reached a level of
approximately 3,000 tonnes per months. The Topia plant has a capacity of 220
tonnes per day and is currently operated at about 170 tonnes per day including
custom milling for a local miner to utilize the plants extra capacity and the
Company expects to continue this work into the foreseeable future. The
additional capacity is also designed to accommodate production growth from other
areas of the Topia mine.

The Topia concentrator typically operates 5.67 days per week
and 50 weeks per year. There is no work scheduled on a Sunday and 8 hours per
week is scheduled for preventative maintenance.

Further improvements to the Topia processing facility will be
made in 2012, specifically to the crushing and flotation sections of the
processing plant. These improvements will increase capacity to 300 tonnes per
day, from 220 tonnes per day in 2011. The flotation circuit improvements are now
complete and the crushing section modifications will be completed by end of the
second quarter.

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- 23 -

In March 2011, the Company published an updated NI43-101
compliant mineral resource estimate for Topia. The report confirmed that the
2011 Measured and Indicated Mineral Resources estimate is 171,000 tonnes at
864g/t silver, 1.56g/t gold, 7.53% lead and 4.37% zinc (7.44 million silver
equivalent ounces), a 36.3% increase over the 2009 resource estimate. In
addition, the Inferred Mineral Resource estimate is 285,000 tonnes of 868g/t
silver, 1.5g/t gold, 6.5% lead and 3.7% zinc (11.91 million silver equivalent
ounces), a 109.3% increase over the previous estimate. (Supported by NI 43-101
Technical Report on the Topia Mine, State of Durango, Mexico dated March 28,
2011 as filed on SEDAR.)

For 2011, 59 underground drill holes were completed for a total
of 2,767 metres. During the fourth quarter of 2011, a total of 669 metres of
underground diamond drilling was completed in 22 diamond drill holes. Drilling
was carried out to test for additional resources on many vein structures
including Animas, Don Benito, Veta Madre, San Jorge, Cantarranas, Hormiguera,
Argentina, Santa Cruz and Santa Bibiana.

During 2011, ten surface drill holes were completed at Topia
for a total of 1,759 metres of exploration drilling. Six of the diamond drill
holes were completed in the fourth quarter of 2011 for a total of 1,152 metres.
All six holes targeted veins at the La Prieta zone.

At the Topia mine, 2012 exploration will include 2,400 metres
of underground drilling focused on the Don Benito, Recompensa, Oliva,
Cantarranas, San Jorge, La Prieta and La Dura, while 3,900 metres of surface
drilling will focus on the San Gregorio, El Rosario, Higueras, Cantarranas, and
Argentina veins.

Exploration spending at Topia is projected to total
approximately $3 million over the next two 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. Over 5,000 metres of
exploration drilling during 2012 and 2013 will concentrate on defining
resources, looking for vein extensions and testing new targets.

Production

For 2011, Topia reported metal production of 535,881 Ag oz (a
record), 500 Au oz, 2,073,600 Pb lbs and 2,898,750 Zn lbs, from milling 46,968
tonnes of ore, up by 23% from 2010 and a record. In terms of silver equivalents,
this equates to 789,609 Ag eq oz, 4% less than in 2010.

The average grades of ore processed for 2011 were 400g/t Ag,
0.41g/t Au, 2.13% Pb and 3.05% Zn. This compares to average grades of 458g/t Ag
and 0.61g/t Au in 2010. Plant metallurgical performance for 2011 was
satisfactory with metal recoveries of 88.7% for Ag; 80.1% for Au; 94% for Pb;
and 91.7% for Zn.

For the fourth quarter of 2011, the Topia operation reported
metal production of 117,182 Ag oz, 136 Au oz, 467,000 Pb lbs, and 721,500 Zn lbs
from milling 12,056 tonnes of ore, up by 33% from fourth quarter of 2010 and a
quarterly processing record. This equates to 179,008 Ag eq oz, which is down 8%
from the fourth quarter of 2010 due primarily to lower grades which offset the
increase in throughput. Grades for the fourth quarter were 345g/t Ag, 0.44g/t
Au, 1.85% Pb and 2.97% Zn. These compare to grades of 485g/t Ag, 0.46g/t Au,
2.78% Pb and 3.64% Zn for the fourth quarter of 2010.

The lower overall ore grades 2011 have resulted from lower vein
grades encountered in the San Gregorio, El Rosario and El Ochenta vein
operations, which account for approximately 43% of Topias production.

---

- 24 -

Plant metallurgical performance was satisfactory for the fourth
quarter, taking into account lower ore quality. Silver recovery was 87.7%, gold
recovery was 79.2%, lead recovery was 95.0% and zinc recovery was 91.3% . Lead
concentrate grades of 52.83% Pb and 8,528g/t Ag were achieved while the zinc
concentrate averaged 53.60% Zn and 619g/t Ag.

In addition to processing the Companys ore, 4,231 tonnes were
custom milled for a local miner, thereby increasing revenue and keeping unit
costs down.

A summary of production at Topia for 2011 is as follows:

|Topia Mine                           |  |         |  |  |         |  |  |         |  |  |         |  |  |         | 
|------------------------------------ |  | ------- |  |  | ------- |  |  | ------- |  |  | ------- |  |  | ------- | 
|                                     |  | FY11-Q1 |  |  | FY11-Q2 |  |  | FY11-Q3 |  |  | FY11-Q4 |  |  | TOTAL   | 
|Tonnes milled                        |  | 11,013  |  |  | 11,895  |  |  | 12,004  |  |  | 12,056  |  |  | 46,968  | 
|                                     |  |         |  |  |         |  |  |         |  |  |         |  |  |         | 
|Silver ounces                        |  | 137,219 |  |  | 143,774 |  |  | 137,707 |  |  | 117,182 |  |  | 535,882 | 
|Gold ounces                          |  | 93      |  |  | 124     |  |  | 147     |  |  | 136     |  |  | 500     | 
|Lead tonnes                          |  | 241     |  |  | 266     |  |  | 222     |  |  | 212     |  |  | 941     | 
|Zinc tonnes                          |  | 345     |  |  | 348     |  |  | 294     |  |  | 327     |  |  | 1,314   | 
|Silver equivalent ounces (Ag eq oz)1 |  | 200,806 |  |  | 212,108 |  |  | 197,688 |  |  | 179,008 |  |  | 789,610 | 

|1 | For 2011, silver equivalent ounces for each metal were
      established using commodity prices of: US$1,200 per oz, US$20 per oz,
      US$0.90 per lb, and US$0.90 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 88.7% for Ag, 80.1% for Au, 94.0% for Pb, and 91.7% for Zn were
      realized which resulted in the production of 535,882 oz Ag, 500 oz Au, 941
      tonnes Pb, and 1,314 tonnes Zn for a silver equivalent production of
      789,610 ounces.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Mine development continued to extend known areas and provide
access to new mining areas. A surface road was established at the San
Gregorio/El Rosario vein operations to provide access to the veins at the 1,630
metre elevation 30 and 50 metres, respectively, below the existing workings.

Exploratory development to access the veins at the 1630 metre
elevation (Mina 5) proved successful but initially with lower quality ore. At
the Durangueno mine, the San Gregorio vein is being mined at the 1475 and 1510
metre elevations. As there are currently limited Mineral Resources defined there
and no previous exploitation between the 1475 and 1660 metre elevations, these
developments are expected to provide for additional production and add new
Mineral Resources.

Exploratory development at the La Prieta mine was successful
and 1-yard underground loaders are being acquired for the anticipated production
mining. This is a past producing mine with modest Inferred Mineral Resources and
large exploration potential. The Company plans to expand production from this
zone in 2012.

At the Argentina mine, ramp development has been completed to
the third level, providing access for exploratory development in a new area of
Inferred Mineral Resources. Production mining from this level is expected to
contribute to an increase in production for 2012. (Supported by NI 43-101
Technical Report on the Topia Mine, State of Durango, Mexico dated March 28,
2011 as filed on SEDAR.)

---

- 25 -

Principal Capital Expenditures

During 2011, the Company expended $4.4 million on mine
development and capital expenditures at Topia. During the year, the Company
purchased mine cars, trucks, scoops, drillers, engines, pumps and other assets
to accelerate its growth strategy and achieve mining efficiencies.

(2) Guanajuato Mine

The Guanajuato silver-gold mine complex in Guanajuato, Mexico
consists of four principal mining areas: Guanajuatito, Cata, Los Pozos, and
Santa Margarita. 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 13,000 tonnes per month but has a capacity to more than
double that output.

From the fourth quarter of 2005 to the end of 2011, 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 December 2010, Scott Wilson Roscoe Postle Associates
(RPA), of Vancouver, B.C., completed a NI 43-101 compliant mineral
resource/reserve estimate on the Cata Clavo, Los Pozos and Santa Margarita zones
at the Guanajuato mine. The Measured and Indicated mineral resource contains
5,460,000 ounces silver equivalent. Inferred mineral resources are estimated at
2,680,000 ounces silver equivalent. The Measured and Indicated mineral resources
include 4,372,000 Ag eq oz categorized as Proven and Probable mineral reserves,
using a cut-off grade of 185g/t silver equivalent. This is the first time that
NI 43-101 compliant reserves have been estimated for the Guanajuato mine and is
a positive step in confirming the long-term viability of this historic
operation.

During 2011, development of Deep Cata, at the 510 metre level,
exposed six, discreet, high-grade veins/zones: Veta Madre, Contact, Alto 1, Alto
1a, Alto 2, and Alto 2a. The geology of this area is complex and required
additional, closely spaced diamond drilling in order to facilitate the
interpretation and 3-D modeling of each separate vein. Ore mined from the
development of these veins totaled 6,300 tonnes, at grades of 482g/t Ag and
1.83g/t Au, and contributed almost 30% of the total metal production.
Development is continuing, leading to stoping in the first quarter 2012 and
improved metal production throughout 2012.

---

- 26 -

Production from the gold-rich Santa Margarita vein also
improved significantly. Stoping at the 400 metre level accounted for 3,300
tonnes at grades of 8.93g/t Au and 50g/t Ag while new exploratory development on
the 455 metre level produced 845 tonnes at 7.47g/t Au and 87g/t Ag. Access to
the 475 metre level and the two additional, sub-parallel footwall veins (SMBo1
and 2) will be established in the first quarter. Further increases in gold
production are expected from Santa Margarita throughout 2012.

Production from the lower grade, Los Pozos zone continued with
modest grade improvements evident in two of the three production levels. Ore
produced totaled almost 16,000 tonnes at grades of 183g/t Ag and 0.75g/t Au.
Further improvements in ore quality are expected in the first quarter of 2012.

Production stoping of the Guanajuatito North Zone continued
from the 120 metre level with ore production totaling 2,730 tonnes at improved
grades of 196g/t Ag and 0.98g/t Au. Ramp access has been extended to the 160
metre level and initial stope development is underway.

Production

Mined and processed ore at Guanajuato was 169,213 tonnes and
40,114 tonnes for 2011 and the fourth quarter respectively, an increase of 17%
and 3% over the 2010 comparative periods. The operation saw a slight decrease
(3%) in processed ore from the 41,371 tonnes processed in the third quarter of
2011.

Ore grades for the fourth quarter of 207g/t Ag and 1.84g/t Au,
represent a significant improvement from the previous quarter and are within 2%
of the combined ore grades for Q4, 2010. Metal production included 237,572 Ag oz
and 2,145 Au oz, or 366,286 Ag eq oz, which was up 28% from the previous quarter
and down just 1% from Q4, 2010. Plant metallurgical performance remained strong,
with metal recoveries of 89.1% for silver and 90.3% for gold.

For the year, 169,212 tonnes were processed at ore grades of
199g/t Ag and 1.52g/t Au. Metals produced totaled 959,490 Ag oz (down 6% from
2010), plus 7,515 Au oz (up 14% from 2010 and a record), or 1,410,404 Ag eq oz
(down 2% from 2010). The significant improvement in ore grades experienced in
the fourth quarter of 2011 resulted from the initiation of development of the
high-grade Deep Cata area and from improved gold production from the Santa
Margarita vein.

The operation of the five 5.0 cubic metre Outotec flotation
cells was commissioned in May and plant metallurgical performance was excellent
for the year with record recoveries of 88.5% for Ag and 90.3% for Au compared to
88.5% and 88.6%, respectively in 2010.

---

- 27 -

A summary of production at Guanajuato for 2011 is as
follows:

|Guanajuato
      Mine                |  |         |  |  |         |  |  |         |  |  |         |  |  |           | 
|------------------------------------ |  | ------- |  |  | ------- |  |  | ------- |  |  | ------- |  |  | --------- | 
|                                     |  | FY11-Q1 |  |  | FY11-Q2 |  |  | FY11-Q3 |  |  | FY11-Q4 |  |  | TOTAL     | 
|Tonnes milled                        |  | 42,980  |  |  | 44,748  |  |  | 41,371  |  |  | 40,114  |  |  | 169,213   | 
|                                     |  |         |  |  |         |  |  |         |  |  |         |  |  |           | 
|Silver ounces                        |  | 273,421 |  |  | 242,436 |  |  | 206,061 |  |  | 237,572 |  |  | 959,490   | 
|Gold ounces                          |  | 2,217   |  |  | 1,807   |  |  | 1,347   |  |  | 2,145   |  |  | 7,516     | 
|Silver equivalent ounces (Ag eq oz)1 |  | 406,419 |  |  | 350,836 |  |  | 286,862 |  |  | 366,286 |  |  | 1,410,403 | 

|1 | For 2011, silver equivalent ounces for each metal were
      established using commodity prices of: US$1,200 per oz, US$20 per oz,
      US$0.90 per lb, and US$0.90 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 89.1% for Ag and 90.3% for Au were realized which resulted in the
      production of 959,490 oz Ag and 7,516 oz Au, for a silver equivalent
      production of 1,410,403 ounces.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Principal Capital Expenditures

During fiscal 2011, the Company expended $11.1 million on mine
development and $7.8 million on capital expenditures consisting of upgrades to
the plant and mining equipment. The Company purchased equipment to improve mine
efficiency and thereby increase production. Purchased equipment included scissor
lifts, scoop trams, and underground trucks.

Geological Justification of the Guanajuato Mine 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.

---

- 28 -

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. 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. During
2011 deeper drilling at Guanajuatito has defined new mineralization over a
strike length of approximately 100 metres and 300 metres vertically
(approximately 400 metres down the dip). Drilling is being conducted from drill
stations located at or near the 120 metre level in a hanging wall cross-cut
ramp. Two mineralized zones are interpreted from the data - the Veta Madre zone,
and a slightly deeper Footwall zone. Typically, the mineralized portion of the
zones pinches and swells with true widths varying from less than one metre to
5.38 metres. Intersections of the Veta Madre include assays of 268g/t Ag and
0.91g/t Au over a true width of 3.36 metres in UGG11-045. Intersections of the
Footwall zone include assays of 1,493g/t Ag and 13.28g/t Au over a true width of
5.38 metres in UGG11-029, and 866g/t Ag and 2.92g/t Au over a true width of 1.14
metres in UGG11-047.

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 was refurbished for the exploitation of the
Veta Madre between the 75 and 35 levels and production from the 35 level was
onging throughout 2011.

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 have been completed and development along
the 320 level advanced advanced sufficiently to start the deep drilling under
the main Valenciana mine. Underground exploration drilling commenced in the 2nd
quarter of 2011 on the south east portion of the Valenciana area. Results to
date have been negative, but drilling is scheduled to continue through the first
half of 2012 on the deep extensions of the Valenciana area, and thereafter on
assessing the remaining value in the Veta Madre and associated foot wall zones
from the 320 level up to the 240 levels (areas of former Cooperative and Spanish
mining).

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. There is no
further exploration planned and no mineral resources are estimated for this
area.

---

- 29 -

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. Assay
Data and geological interpretation from the drilling in 2010 has been used to
estimate the resources of the Santa Margarita vein. Drilling in the deep Rayas
area in 2011 intersected narrow intersections of gold-silver mineralization,
generally in the hanging wall of the Veta Madre. A follow up program in 2012 has
been scheduled.

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 30 to 40 metres towards the hangingwall. The
Rayas deep core drilling program which commenced in 2010 was successful in
confirming economic mineralisation of the Santa Margarita structure to depth.
Stoping started in 2010 using mechanized cut and fill mining methods. During
2011 stoping at the 400 metre level accounted for 3,300 tonnes at grades of
8.93g/t Ag and 50g/t Ag while new exploratory development on the 455 metre level
produced 845 tonnes at 7.47g/t Ag and 87g/t Ag. Access to the 475 metre level
and the two additional, sub-parallel footwall veins (SMBo1 and 2) will be
established in the first quarter. Further increases in gold production are
expected from Santa Margarita throughout 2012.

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 2011, additional high grade silver-gold mineralization
was discovered in an extension of the Cata Mine in the Guanajuato Mine Complex.
The discovery was made during the course of a detailed deep drilling program
being conducted at 12.5 to 25 metre intervals from several drill stations in the
Cata Mine access ramp at the 510 metre level, the deepest mining development to
date. The drilling program, covering an area of approximately 70 metres down-dip
and 100 metres along strike, has been successful in extending silver-gold
mineralization below the current level of mining and the existing mineral
resource/reserve estimate. Drilling is being conducted from drill stations in
the 510 metre level main access to test each of the "Alto" and Veta Madre zones.
Similar mineralization is noted to the 530 metre level in previously drilled
wide-spaced holes both 25 metres to the southeast (EUG08-021 and 024) and up to
60 metres to the northwest (UGC10-012 and EUG07-002).

---

- 30 -

Development of Deep Cata, at the 510 metre level, exposed six,
discreet, high-grade veins/zones: Veta Madre, Contact, Alto 1, Alto 1a, Alto 2,
and Alto 2a. The geology of this area is complex and required additional,
closely spaced diamond drilling in order to facilitate the interpretation and
3-D modeling of each separate vein. Ore mined from the development of these
veins totaled 6,300 tonnes, at grades of 482g/t Ag and 1.83g/t Au, and
contributed almost 30% of the total metal production in the fourth quarter of
2011. Development is continuing, leading to stoping in the first quarter 2012
and is expected to contribute to improved metal production throughout 2012.

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 and
2010. The zone of mineralization has been confirmed to extend from the 275 to
the 390 metre level. Definition drilling in 2011 indicated that the Los Pozos
zone extends only 10s of meters below the 390 level. Production from Los Pozos
continued throughout 2011.

San Ignacio: The surface drilling program at the San
Ignacio mine property in Guanajuato commenced during the third quarter of 2010.
The property is located approximately 5 kilometres west-northwest of the city of
Guanajuato, where the Company operates its flagship Guanajuato mine. The
property was part of the package purchased by Great Panther in 2005 but due to
the Companys focus on the main mine complex, it had not conducted any work at
San Ignacio until 2010. The past-producing San Ignacio mine was put on
care-and-maintenance by the previous owners in 2001 due to low metal prices but
the infrastructure is still intact.

The San Ignacio mine property covers part of the La Luz vein
district, which is parallel to, and west of, the principal Veta Madre structure
that hosts the main Guanajuato mines. The La Luz district marks the site of the
first discovery of silver in the area in the year 1548, which led to the
discovery of the Veta Madre silver-gold deposits in 1550. It comprises a swarm
of generally north-northwest striking, west dipping quartz veins and breccias
with associated low sulphidation silver-gold mineralization, along an
approximate eight-kilometre long trend.

The Companys San Ignacio mine property covers approximately 4
kilometres of strike length on the La Luz vein system and is contiguous with
Endeavour Silvers Bolanitos mine property that is currently in production. The
San Ignacio mine exploited only about 500 metres of strike length along one of
the three known structures on the property and there is no record of any
previous exploration elsewhere on the claim block. Production records from 1977
to 2001 indicate that a total of 617,455 tonnes at a grade of 113g/t Ag and
1.01g/t Au were extracted from this small portion of the property at an average
rate of approximately 85 tonnes per day. This is similar to the grade that was
mined at Guanajuato prior to the Companys purchase of the mines in 2005 but the
Company has more than doubled this grade since then with increased grade control
and improved mining methods. As there is no processing facility at San Ignacio,
ore was trucked to the Cata plant in the main mine complex in Guanajuato,
approximately 20 kilometres by road.

The Company released an initial, NI 43-101 compliant, Mineral
Resource estimate in October 2011. The estimate comprises Inferred Mineral
Resources of 611,000 tonnes at 127g/t silver and 2.05g/t gold (4,494,000 Ag eq
oz), using a 118g/t Ag eq cut-off grade. A Mineral Resource update is expected
towards the end of the second quarter of 2012.

---

- 31 -

Diamond drilling continued in the fourth quarter of 2011 with
the completion of 26 holes for a total of 5,494 metres. For the year, 58 holes
were completed for 17,313 metres over a strike length of only 450 metres. The
Company provided an update of results on December 05, 2011. Highlights of the
Intermediate Zone intercepts included 213g/t Ag and 5.12g/t Au over a true width
of 3.26 metres, and 201g/t Ag and 6.34g/t Au over a true width of 4.96 metres in
ESI11-039 (section 450N). These two intersections are separated by a void with a
true width of approximately 0.7 metres that is possibly an old mine working from
the 1800's implying a vein width of almost nine metres from which only a very
narrow portion has been previously mined. On section 700N, drill-hole ESI11-048
intersected 296g/t Ag and 1.28g/t Au over a true width of 3.86 metres.

The Nombre de Dios vein intercepts demonstrate a thickening of
the vein on section 600N, with an intersection of 106g/t Ag and 2.11g/t Au over
a true width of 5.15 metres in ESI11-044. Drilling intercepts on the Melladito
vein included 198g/t Ag and 2.26g/t Au over a true width of 3.69 metres in
ESI11-048 (Section 700N).

During the first quarter of 2012, the Company expects one drill
rig to complete fill-in holes at San Ignacio to upgrade the mineral resource
estimate, which is anticipated in the second quarter of 2012. During 2012, the
Company expects drilling to extend the structures south of section 450N, for
approximately 800 metres, northwards of section 900N, for approximately 300
metres, and to initially test a separate prospect on the south end of the
property, a 600 metre strike length of the San Antonio claim.

Funding for Exploration Program

The exploration program at Guanajuato will be funded through
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s qualified
person as defined under NI 43-101 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.

---

- 32 -

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 101stindependent 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

Santa Rosa Project

On July 18, 2011, the Company announced the acquisition of four
mining concessions, totalling 1,514 hectares, approximately 10 to 15 kilometres
northeast of Guanajuato (collectively called the Santa Rosa Project). The
claims are located on the north-west extension of a system of multiple
northwest-southeastern trending parallel structures that could be part of the
"La Sierra" vein system. The La Sierra system is the most easterly of the three
structural systems in the prolific Guanajuato district along with the main Veta
Madre and the La Luz trends. Presently, the Company is mining on the Veta Madre
system at its Guanajuato Mine and exploring on the westerly La Luz system at the
San Ignacio project.

Through the course of due diligence, the Company had already
completed considerable ground work on the Santa Rosa claims. Multiple veins with
argillic alteration and erratic silver and gold values have been identified.
Having now signed the formal agreement, the Company has re-commenced geological
mapping and rock sampling, while potential drill sites are being permitted to
test the various structures.

The four claims were purchased from Minera Blanca Alicia, S.A.
de C.V., a private Mexican company, for US$1.5 million with 50% payable on
signing of the purchase agreement and 50% on the registration of the contract
with the Direccion General de Minas (Mexico), which is now complete. A royalty
of 1.3% is payable from ore produced from the four claims.

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- 33 -

There are numerous past and presently producing mines along the
La Sierra system, including AuRico Gold's currently operating El Cubo mine, with
620,000 gold equivalent ounces in reserves (source: AuRico Gold Inc. website).
While several old mines, some with multiple levels, are evident on the
newly-acquired concessions, no production records exist. The concessions are
within trucking distance to the Companys Cata plant in Guanajuato.

A 2,000 metre drill program was commenced at Santa Rosa in
January 2012.

Revenues

The Company recognizes revenue from the sale of concentrates
upon delivery when persuasive evidence of a sales agreement exists, the risks of
ownerships are transferred to the customer, collection is reasonably assured and
the price is readily determinable. Revenue is based on market metal prices and
mineral content. Revenue is recorded in the consolidated statement of
comprehensive income net of treatment and refining costs paid to 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.

For the year ended December 31, 2011, we earned $57.8 million
in revenue from our Topia and Guanajuato mining operations. Revenues for 2010
were $42.2 million.

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, we do not require any raw materials with which to carry out our
business.

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.

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- 34 -

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.

The Company has taken a proactive approach to managing
environmental risk. The Company participated in a voluntary audit of its
Guanajuato operations and conducted a multi-year environmental program completed
in 2011, working in cooperation with the Mexican environmental authority to
ensure compliance with regulations governing the protection of the environment
in Mexico. The Company is waiting for final certification from the government
authorities in respect of this program.

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- 35 -

|C. | Organizational
Structure
|-- | ------------------------

As at the date of this annual report, we have five 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.    
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                             
|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. | Great Panther Silver Peru S.A.C., a company incorporated
      in Peru on January 13, 2011. This subsidiary is currently inactive and was
      incorporated to pursue future exploration and business development
      activities in Peru.                
|   |                                                                                                                                                                                                                                                             
|5. | New Age Investments Inc., a company incorporated in the
      Province of Alberta on August 23, 1989 under the name 407646 Alberta
      Limited. The subsidiary is currently 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 $20,607 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 $1,270) per month. This lease expired on January 31, 2012,
  although MMR continued to rent and occupy the facility until February 29,
  2012;
- MMR leased new premises on February 20, 2012 at Prolongación Boulevard
  Campestre No. 2502, 5to. Piso oficina 501, Colonia Refugio Campestre, León
  Guanajuato. The sum of the rent is 35,200 Mexican Pesos (approximately $2,700
  per month); and
- Cerro Gordo No. 210 Fraccionamiento Lomas del Parque, Durango, Durango,
  Mexico, C.P. 3410, for the sum of 8,000 Mexican Pesos (approximately $615) per
  month.

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.

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- 36 -

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.

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 20-50 centimetres 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.

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.

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- 37 -

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.

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.

On March 7, 2011, the Company announced that Roscoe Postle
Associates Inc. (RPA) delivered an update to the ongoing mineral resource
development at the Topia mine. The 2011 RPA mineral resource estimate comprised
Measured and Indicated mineral resources of 171,000 tonnes at 864g/t silver,
1.56g/t gold, 7.53% lead and 4.37% zinc (7.44 million silver equivalent ounces),
a 36.3% increase over the 2009 resource estimate. In addition, RPA estimates
285,000 tonnes of 868g/t silver, 1.5g/t gold, 6.5% lead and 3.7% zinc (11.91
million silver equivalent ounces) in the Inferred category, a 109.3% increase
over the previous estimate. (Supported by NI 43-101 Technical Report on the
Topia Mine, State of Durango, Mexico dated March 28, 2011 as filed on
SEDAR.)

The significant increase in the resource base at Topia is a
validation of the longevity of this high grade silver-gold-lead-zinc mine.
Considering there were no compliant resources when the Company bought the Topia
mine, the resource base has been consistently increased with every drill
program, while increasing production at the same time.

The 2011 RPA mineral resource estimate provided updates for the
Argentina vein (Argentina Mine), plus new mineral resource estimates for the Don
Benito (north and south veins in the 1522 and Crucero 9N Mines), Recompensa
(Recompensa and Rincon Mines), Cantarranas (Hormiguera Mine), San Jorge (San
Miguel Mine), San Gregorio (San Gregorio, Mina 7, and Durangueno Mines), El
Rosario and La Prieta veins.

The estimate was based on a minimum NSR value of $US130/tonne
(corresponding to the 2010 direct mining and processing costs which are 77% of
the total operating costs). This is applicable at Topia since the general and
administrative (G&A) costs are $US38/tonne. Current operating costs for
the Topia Mine veins are $US130/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 2011 RPA mineral resource estimate
assumed (1) actual concentrate transport, and smelter treatment and refining
charges in effect through 2009 and 2010; (2) RPA long term estimates of metal
prices as of February 2011, and typical plant recoveries for 2010, in Table 1;
and (3) minimum mining width of 0.3 metres. Capping was individually applied to
each of the veins making up the summary in Table 1.

This estimate replaces those by Wardrop in 2009 and 2006 for
the Argentina and various other veins on the property. The breakdown for the RPA
mineral resource estimates on the Topia property is given in Table 1 below. The
estimate has increased over that reported in 2009, mainly due to inclusion of
new veins that were being explored and mined but were unreported as mineral
resource. A direct comparison of the Wardrop and RPA mineral resources is not
relevant due to differing metal prices and minimum NSR values, as well as
estimating methodologies. However, the overall percentage increase is shown in
Table 3 below.

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- 38 -

The production rate from the Topia mines has been increasing
each year and reached 47,000 tonnes of mined and processed ore in 2011.
Additionally, there are other mineralized veins that are not included in this
resource estimate. By applying reasonable estimates of 50% mining dilution and
80% mining recovery, management expects the current resources to support a mine
life of at least fifteen years. It is anticipated that, with additional
drilling, the resource will continue to increase. 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.

While most of the current resource base came from the Companys
diamond drilling and underground development, the resources estimated in certain
veins (e.g. Argentina) on the property came largely from the verification of
Peñoles sampling, on levels that are planned for access later in 2011 and 2012
and are still intact. The majority of Great Panthers mining to date has come
from new mine development on veins reported in these estimates. There is lesser
production from other veins that are not included in this update and these may
be estimated in future resource updates. The new total contained metal for the
mineral resource categories is shown in Table 2 below.

Cautionary Note to U.S. Investors Concerning
      Estimates of Measured, Indicated and Inferred Mineral
      Resources.The following tables refer to measured
      mineral resources, indicated mineral resources and inferred mineral
      resources. We advise U.S. investors that while this term is recognized
      and, in certain circumstances, required by Canadian securities regulations
      (under National Instrument 43-101 - Standards of Disclosure for Mineral
      Projects, as adopted by the Canadian Securities Administrators), it is
      not recognized by the U.S. Securities and Exchange Commission. The
      estimation of such mineral resources involves greater uncertainty as to
      their economic feasibility than the estimation of proven and probable
      reserves. U.S. investors are cautioned not to assume that any part or all
      of the mineral deposits in these categories will ever be converted into
      reserves. Furthermore, the estimation of inferred mineral resources
      involves far greater uncertainty as to their existence, economic viability
      and legal feasibility than the estimation of other categories of
      resources. It cannot be assumed that all or any part of an inferred
      mineral resource will ever be upgraded to a higher category. Under
      Canadian securities legislation, estimates of inferred mineral resources
      may not form the basis of feasibility or pre-feasibility studies, or
      economic studies, except in rare cases. U.S. investors are cautioned not
      to assume that part or all of an inferred mineral resource exists, or is
      economically or legally mineable.


Table 1.
      2011 Summary Mineral Resource Update:Topia
      Mineral Resources - December 31, 2010Class
    Tonnage
    Ag
    Au
    Pb
    Zn(t)
    (g/t)
    (g/t)
    (%)
    (%)Measured
    58,000
    825
    1.67
    7.57
    4.97Indicated
    113,000
    883
    1.50
    7.50
    4.06M & I
    171,000
    864
    1.56
    7.53
    4.37Inferred
    285,000
    868
    1.50
    6.50
    3.70Metal Prices
    Recoveries(RPA 2011)
    (Plant 2010)Au
    US$1,200/oz
    80.00%Ag
    US$21.00/oz
    92.00%


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- 39 -

Table 1.
      2011 Summary Mineral Resource Update:Topia
      Mineral Resources - December 31, 2010Pb
    US$1.00/lb
    94.00%Zn
    US$1.10/lb
    92.00%


Table 2.
      Contained metal (all veins):Category
    
    Tonnes
    
    
    Ag
      ozs
    
    
    Au
      ozs
    
    
    Pb
      lbs
    
    
    Zn
      lbs
    
    
    Ag
      eq ozM & I Resources
    
    171,000
    
    
    4,738,000
    
    
    8,550
    
    
    28,314,000
    
    
    16,437,000
    
    
    7,436,000Inferred Resources
    
    285,000
    
    
    7,953,000
    
    
    13,560
    
    
    41,092,000
    
    
    23,373,000
    
    
    11,909,000


The addition of multiple other veins into the 2011 RPA mineral
resource estimate has lead to a substantial increase in silver equivalent ounces
from Wardrops estimate of 2009, as shown in Table 3.

Table 3.
      Percentage improvement 2011 over 2009:Category
    RPA 2011 (Ag eq oz)
    Wardrop 2009 (Ag eq oz)
    ChangeM & I Resources
    7.44 million
    5.46 million
    36.30%Inferred Resources
    11.91 million
    5.69 million
    109.30%


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.
Accordingly, the surface drilling is used to determine inferred resources.

At the Topia mine, the Companys 2012 exploration plans are for
2,400 metres of underground drilling focused on the Don Benito, Recompensa,
Oliva, Cantarranas, San Jorge, La Prieta and La Dura; and for 3,900 metres of
surface drilling which will focus on the San Gregorio, El Rosario, Higueras,
Cantarranas, and Argentina veins.

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, the Company commenced limited production at the Topia
Silver-Lead-Zinc Mine in Durango, Mexico.

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- 40 -

In March 2006, the Company reached a significant milestone in
becoming a primary silver producer with its first shipment of concentrates from
operations. In the second half of 2006, a second ball mill was commissioned
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 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.

During the first three quarters of 2010, the Company completed
the 8,815 metre (expanded from the initial 6,000 metre) surface drill program on
the Topia mine veins. The drilling was extremely successful and will guide mine
development to continue to expand silver production from the San Gregorio,
Recompensa, and Cantarranas (Hormiguera mine) veins as well as enable new
production to be added from veins where no mining is currently taking place.
Drilling on the recently acquired La Prieta property proved the potential for
this to be an additional mine for the Topia operations, with high silver values
in the three drill holes of up to 2,500g/t over 0.25 metres. There were also
several significant intercepts of other veins that are not currently being
mined, including the Higuera vein (close to the San Gregorio vein), and the
western portion of the Oliva vein (close to the Recompensa vein).

In addition, mine development on the Cantarranas vein at the
Hormiguera mine has encountered 161 metres of strike length with an average
width of 0.19 metres grading 1,403g/t silver, 0.88g/t gold, 2.02% lead, and
7.76% zinc. At Mina 7, on the San Gregorio vein, development is ongoing
eastward, with 90 metres of strike length on the vein, with an average width of
0.43 metres grading 1,436g/t silver, 0.53g/t gold, 7.26% lead and 12.23% zinc.
Sub-level development and stoping is ongoing in both areas.

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

As at December 31, 2011, total costs incurred on mineral
properties, plant and equipment at Topia were as follows (in thousands of
Canadian dollars):

|                                             |   |                  |  |   | Property        |  |   | Total mineral,  | 
|-------------------------------------------- | - | ---------------- |  | - | --------------- |  | - | --------------- | 
|                                             |   | Mine development |  |   | exploration and |  |   | property, plant | 
|                                             |   | and equipment    |  |   | evaluation      |  |   | and equipment   | 
|Total capitalized                            | $ | 13,844           |  | $ | 7,039           |  | $ | 20,883          | 
|Exploration costs
      previously expensed1 |   | -                |  |   | 4,460           |  |   | 4,460           | 
|                                             |   |                  |  |   |                 |  |   |                 | 
|Total costs
      incurred to date           | $ | 13,844           |  | $ | 11,499          |  | $ | 25,343          | 

1Effective January 1, 2011, the Company adopted
IFRS and elected to capitalize activities in relation to evaluating the
technical feasibility and commercial viability of extracting a mineral resource
once a mineral resource is identified of such quantity and grade or quality that
it has reasonable prospects for economic extraction. The amount of $4,460,
represents costs incurred prior to change in policy. $7,140 relating to property
evaluation costs have been capitalized on transition to IFRS, offset by foreign
exchange of ($730) on total capitalized property exploration and evaluation.

Planned costs for 2012 are approximately $6.1 million for
capital investment and mineral property evaluation.

---

- 41 -

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.

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.

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

---

- 42 -

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 Projectsadopted 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 450to 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

In December 2010, Scott Wilson Roscoe Postle Associates Inc.
(Scott Wilson RPA), of Vancouver, B.C., provided an updated NI 43-101
compliant Measured and Indicated mineral resource estimate on the Cata Clavo,
Los Pozos, and Santa Margarita zones at the Guanajuato mine. The new Measured
and Indicated mineral resource contains 5,460,000 ounces silver equivalent.
Inferred mineral resources are estimated at 2,680,000 ounces silver equivalent.
The Measured and Indicated mineral resources include 4,372,000 Ag eq oz
categorized as Proven and Probable mineral reserves, using a cut-off grade of
185 g/t silver equivalent. (Supported by NI 43-101 Technical Report on the
Guanajuato Mine Complex, Guanajuato, Mexico dated January 31, 2011 as filed on
SEDAR.) This is the first time that NI 43-101 compliant reserves have been
estimated for the Guanajuato Mine and is a positive step in confirming the
long-term viability of this historic operation.

The new resource base represents a 53% increase over the
previous resource estimate in June of 2009, even after deducting the production
from that zone over the last year and a half. This demonstrates the Company's
ability to not only replace what is being mined, but to increase the resource
base and extend the mine life with additional drilling. There were no compliant
resources at Guanajuato when Great Panther purchased the property in 2005 and
most of the more than 4,500,000 Ag eq oz that the Company has mined from
Guanajuato since 2006 has come from non-compliant resources.

---

- 43 -

Mining of the three zones, Cata, Los Pozos, and Santa Margarita
currently accounts for most of the Guanajuato metal production. Resource
drilling is ongoing to delineate new resources and reserves on the upper and
depth extensions of Los Pozos and the southeast strike extension of Santa
Margarita but also includes Guanajuatito, Valenciana, San Telesforo, and the
depth extensions of the Rayas Clavo, none of which are included in this resource
estimation but which will be included in the an update expected in 2012.

For 2011, production from Guanajuato was 959,490 Ag oz and
7,516 Au oz (1,410,403 million Ag eq oz). The resource and reserve estimates,
together with the significant potential of the ongoing drilling programs,
positively support the achievement of the growth strategy objectives for
Guanajuato.

Silver equivalent values were applied to computer generated
block models in order to define the mineral resource. The mineral reserve
cut-off value of 185g/t (6.0 oz/t) silver equivalent is the metal content
contained in one tonne of ore for which the net revenue (net of smelter and
refining costs) is equal to the average full operating costs to mine and process
one tonne of ore. Scott Wilson RPA used medium term projected metal prices of
US$17.67/oz Ag and US$1,150/oz Au (relative price ratio of 65 gold to 1 silver),
2010 concentrate sales contract terms, and typical plant performance metal
recoveries and concentrate grades to calculate the net value. Experience gained
from mining the veins by the cut-and-fill mining method and the upward trend in
metal prices, determined that the appropriate cut-off value for defining mineral
resources at Guanajuato be set at 136g/t (4.3oz/t) silver equivalent. The use of
a lower cut-off for resources reflects the less stringent guidelines for
resources versus reserves.

Based upon these parameters, the Measured and Indicated mineral
resource contains 5,450,000 Ag eq oz including 2,490,000 Ag eq oz in the
Measured category and 2,960,000 Ag eq oz in the Indicated category. Inferred
resources are estimated at 2,680,000 Ag eq oz. Of the Measured and Indicated
mineral resource, 4,372,000 Ag eq oz is classified as Proven and Probable
mineral reserve, using a cut-off of 185g/t silver equivalent. The Proven mineral
reserve is estimated at 1,935,000 Ag eq oz, while the Probable mineral reserve
is estimated at 2,438,000 Ag eq oz. Breakdowns for silver and gold can be found
in the tables below.

Measured, Indicated and Inferred mineral resources in the three
areas were estimated by Dave Rennie, P.Eng, a Principal Geologist for Scott
Wilson RPA, and the proven and probable mineral reserves were estimated by R.
Dennis Bergen, P. Eng, Associate Principal Mining Engineer for Scott Wilson RPA.
Both are independent of Great Panther as per the criteria set out in NI 43-101.
The mineral reserves and mineral resources estimates are tabulated below:

Cautionary Note to U.S. Investors Concerning
      Estimates of Proven and Probable Reserves.The references
      in the following tables to 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
      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 1933, as amended. Under SEC Industry Guide 7 standards, mineralization
      may not be classified as a reserve unless the determination has been
      made that the mineralization could be economically and legally produced or
      extracted at the time the reserve determination is made. Among other
      things, all necessary permits would be required to be in hand or issuance
      imminent in order to classify mineralized material as reserves under the
      SEC standards. Accordingly, the following information 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.


---

- 44 -

|October 31 2010 Proven Mineral Reserves |  |         |  |  |      |  |  |       |  |  |     |  |  |           |  | 
|--------------------------------------- |  | ------- |  |  | ---- |  |  | ----- |  |  | --- |  |  | --------- |  | 
|                                        |  | Tonnage |  |  | Au   |  |  | Au    |  |  | Ag  |  |  | Ag        |  | 
|Zone                                    |  | Kt      |  |  | g/t  |  |  | oz    |  |  | g/t |  |  | oz        |  | 
|Cata - Madre                            |  | 44.0    |  |  | 1.28 |  |  | 1,800 |  |  | 344 |  |  | 486,000   |  | 
|Cata - Alto 1                           |  | 30.5    |  |  | 2.21 |  |  | 2,170 |  |  | 296 |  |  | 290,000   |  | 
|Pozos                                   |  | 65.4    |  |  | 1.29 |  |  | 2,720 |  |  | 309 |  |  | 650,000   |  | 
|Santa Margarita BX                      |  | 7.3     |  |  | 4.47 |  |  | 1,050 |  |  | 21  |  |  | 5,000     |  | 
|Total Proven                            |  | 147.0   |  |  | 1.64 |  |  | 7,740 |  |  | 303 |  |  | 1,431,000 |  | 

|October 31 2010 Probable Mineral Reserves |  |         |  |  |      |  |  |        |  |  |     |  |  |           |  | 
|----------------------------------------- |  | ------- |  |  | ---- |  |  | ------ |  |  | --- |  |  | --------- |  | 
|                                          |  | Tonnage |  |  | Au   |  |  | Au     |  |  | Ag  |  |  | Ag        |  | 
|Zone                                      |  | Kt      |  |  | g/t  |  |  | oz     |  |  | g/t |  |  | oz        |  | 
|Cata - Madre                              |  | 2.1     |  |  | 0.91 |  |  | 60     |  |  | 187 |  |  | 13,000    |  | 
|Cata - Alto 1                             |  | 21.6    |  |  | 1.02 |  |  | 710    |  |  | 225 |  |  | 156,000   |  | 
|Cata - Alto 1a                            |  | 21.6    |  |  | 2.49 |  |  | 1,730  |  |  | 605 |  |  | 420,000   |  | 
|Cata - Alto 2                             |  | 12.3    |  |  | 2.33 |  |  | 920    |  |  | 721 |  |  | 285,000   |  | 
|Pozos                                     |  | 68.6    |  |  | 1.03 |  |  | 2,280  |  |  | 262 |  |  | 577,000   |  | 
|Santa Margarita BX                        |  | 30.4    |  |  | 6.69 |  |  | 6,540  |  |  | 15  |  |  | 15,000    |  | 
|Santa Margarita FWSTK                     |  | 16.6    |  |  | 4.80 |  |  | 2,560  |  |  | 19  |  |  | 10,000    |  | 
|Total
      Probable                      |  | 173.2   |  |  | 2.66 |  |  | 14,790 |  |  | 265 |  |  | 1,475,000 |  | 
|                                          |  |         |  |  |      |  |  |        |  |  |     |  |  |           |  | 
|Total Proven
      & Probable             |  | 320.20  |  |  | 2.19 |  |  | 22,530 |  |  | 282 |  |  | 2,906,000 |  | 

|October 31 2010 Proven & Probable Mineral Reserves |  |         |  |  |      |  |  |        |  |  |     |  |  |           |  | 
|-------------------------------------------------- |  | ------- |  |  | ---- |  |  | ------ |  |  | --- |  |  | --------- |  | 
|                                                   |  | Tonnage |  |  | Au   |  |  | Au     |  |  | Ag  |  |  | Ag        |  | 
|Zone                                               |  | Kt      |  |  | g/t  |  |  | oz     |  |  | g/t |  |  | oz        |  | 
|Cata - Madre                                       |  | 46.1    |  |  | 1.25 |  |  | 1,860  |  |  | 337 |  |  | 499,000   |  | 
|Cata - Alto 1                                      |  | 52.1    |  |  | 1.72 |  |  | 2,880  |  |  | 266 |  |  | 446,000   |  | 
|Cata - Alto 1a                                     |  | 21.6    |  |  | 2.49 |  |  | 1,730  |  |  | 605 |  |  | 420,000   |  | 
|Cata - Alto 2                                      |  | 12.3    |  |  | 2.33 |  |  | 920    |  |  | 721 |  |  | 285,000   |  | 
|Pozos                                              |  | 134.0   |  |  | 1.16 |  |  | 5,000  |  |  | 285 |  |  | 1,227,000 |  | 
|Santa Margarita BX                                 |  | 37.7    |  |  | 6.26 |  |  | 7,590  |  |  | 17  |  |  | 20,000    |  | 
|Santa Margarita FWSTK                              |  | 16.6    |  |  | 4.80 |  |  | 2,560  |  |  | 19  |  |  | 10,000    |  | 
|                                                   |  |         |  |  |      |  |  |        |  |  |     |  |  |           |  | 
|Total Proven & Probable                            |  | 320.2   |  |  | 2.19 |  |  | 22,530 |  |  | 282 |  |  | 2,906,000 |  | 

---

- 45 -

|Notes: |                                                                                                                                               
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------
|1.     | CIM definitions were followed for Mineral
  Reserves.                                                                                         
|2.     | Mineral Reserves are estimated at a cut-off grade of 185
      g/t AgEQ.                                                                      
|3.     | Mineral Reserves are estimated using an average gold
      price of US$1150 per ounce and an average silver price of US$17.67 per
      ounce.
|4.     | The minimum mining width is 1.5 metres.                                                                                                       
|5.     | Bulk density is 2.65 t/m3.                                                                                                                    
|6.     | Numbers may not add due to
rounding.                                                                                                          

Au
    
    
    AgZone
    
    
    
    
    g/t
    
    
    g/tCata/Alto dilution
    
    20%
    
    
    0.30
    
    
    80Cata extraction
    
    80%Alto extraction
    
    85%Pozos dilution
    
    15%
    
    
    0.30
    
    
    80Pozos extraction
    
    85%Santa Margarita dilution
    
    20%
    
    
    1.00
    
    
    10Santa Margarita extraction
    
    90%


Cautionary Note to U.S. Investors Concerning
      Estimates of Measured, Indicated and Inferred Mineral
      Resources.The following tables refer to measured
      mineral resources, indicated mineral resources and inferred mineral
      resources. We advise U.S. investors that while this term is recognized
      and, in certain circumstances, required by Canadian securities regulations
      (under National Instrument 43-101 - Standards of Disclosure for Mineral
      Projects, as adopted by the Canadian Securities Administrators), it is
      not recognized by the U.S. Securities and Exchange Commission. The
      estimation of such mineral resources involves greater uncertainty as to
      their economic feasibility than the estimation of proven and probable
      reserves. U.S. investors are cautioned not to assume that any part or all
      of the mineral deposits in these categories will ever be converted into
      reserves. Furthermore, the estimation of inferred mineral resources
      involves far greater uncertainty as to their existence, economic viability
      and legal feasibility than the estimation of other categories of
      resources. It cannot be assumed that all or any part of an inferred
      mineral resource will ever be upgraded to a higher category. Under
      Canadian securities legislation, estimates of inferred mineral resources
      may not form the basis of feasibility or pre-feasibility studies, or
      economic studies, except in rare cases. U.S. investors are cautioned not
      to assume that part or all of an inferred mineral resource exists, or is
      economically or legally mineable.


|October 31, 2010 Measured Mineral Resource | 
|------------------------------------------ | 
|Zone                                       | 
|                                           | 
|                                           | 
|Cata                                       | 
|Los Pozos                                  | 
|Santa Margarita                            | 
|Total                                      | 

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- 46 -

|October 31, 2010 Indicated Mineral Resource | 
|------------------------------------------- | 
|Zone                                        | 
|                                            | 
|                                            | 
|Cata                                        | 
|Los Pozos                                   | 
|Santa Margarita                             | 
|Total                                       | 

|October 31, 2010 Measured and Indicated Mineral Resource | 
|-------------------------------------------------------- | 
|Zone                                                     | 
|                                                         | 
|                                                         | 
|Cata                                                     | 
|Los Pozos                                                | 
|Santa Margarita                                          | 
|Total                                                    | 

|October 31, 2010 Inferred Mineral Resource | 
|------------------------------------------ | 
|Zone                                       | 
|                                           | 
|                                           | 
|Cata                                       | 
|Los Pozos                                  | 
|Santa Margarita                            | 
|Total                                      | 

Both drill core and underground chip samples were assayed
independently by SGS at the Companys Guanajuato mine site laboratory. The
Companys QA/QC program includes the regular insertion of blanks, duplicates,
and standards into the sample shipments.

e. Exploration History

Since acquiring the Guanajuato Mine in 2005, Great Panther has
completed 93 surface drill holes totalling 17,470 metres and 333 underground
holes totalling 51,777 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.

---

- 47 -

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.
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, the first phase of the underground diamond
drilling program commenced. 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, the Company commenced a second phase of the
diamond drilling program and completed extensive underground sampling at the
limits of the silver-gold mineralization in the Guanajuatito mine. In early
2006, Phase II surface diamond drilling program was started 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.

---

- 48 -

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 is being 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 has been extended these lower levels
of the Cata Mine area. The program continued in the Rayas area in 2010.

In 2011 the Deep Cata short-hole drilling continued to help
define the extensions to the six high grade veins between the 500 and 530 metre
levels and deeper drilling at Guanajuatito has defined new mineralization over a
strike length of approximately 100 metres and 300 metres vertically
(approximately 400 metres down the dip).

Drilling is being conducted from drill stations located at or
near the 120 metre level in a hanging wall cross-cut ramp. Two mineralized zones
are interpreted from the data - the Veta Madre zone, and a slightly deeper
Footwall zone. Typically, the mineralized portion of the zones pinches and
swells with true widths varying from less than one metre to 5.38 metres.
Intersections of the Veta Madre include assays of 268g/t Ag and 0.91g/t Au over
a true width of 3.36 metres in UGG11-045. Intersections of the Footwall zone
include assays of 1,493g/t Ag and 13.28g/t Au over a true width of 5.38 metres
in UGG11-029, and 866g/t Ag and 2.92g/t Au over a true width of 1.14 metres in
UGG11-047.

During 2011, the Company also announced results from
exploratory and ore definition drilling at Santa Margarita. These include
intersections on the main structure of 44.76g/t gold and 46g/t silver over a
true width of 1.14 metres in drill hole UGSM11-005. The SM footwall 1 (SMBo1)
stockwork zone is located adjacent to or within four to eight metres below the
Santa Margarita structure. Intersections on the SMBo1 zone include 17.15g/t Au
and 36g/t Ag over a true width of 3.28 metres in UGSM11-003. The SM footwall 2
(SMBo2) stockwork zone is located about 20 metres below the Santa Margarita
structure. Intersections on the SMBo2 zone include 6.04g/t Au and 7g/t Ag over a
true width of 1.74 metres in UGSM11-007.

During 2011, 169 holes were drilled at Guanajuato for a total
of 26,500 metres. Much of this drilling was targeted towards adding new
resources at the existing operations. 2012 drilling plans for Guanajuato are
approximately 30,000 metres not including an additional 9,600 metres for San
Ignacio.

---

- 49 -

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

As at December 31, 2011, total costs incurred on mineral
properties, plant and equipment at Guanajuato were as follows (in thousands of
Canadian dollars):

|                                             |   |                  |  |   | Property        |  |   | Total mineral,  | 
|-------------------------------------------- | - | ---------------- |  | - | --------------- |  | - | --------------- | 
|                                             |   | Mine development |  |   | exploration and |  |   | property, plant | 
|                                             |   | and equipment    |  |   | evaluation      |  |   | and equipment   | 
|Total capitalized                            | $ | 28,561           |  | $ | 11,018          |  | $ | 39,579          | 
|Exploration costs
      previously expensed1 |   | -                |  |   | 6,616           |  |   | 6,616           | 
|                                             |   |                  |  |   |                 |  |   |                 | 
|Total costs
      incurred to date           | $ | 28,561           |  | $ | 17,634          |  | $ | 46,195          | 

1Effective January 1, 2011, the Company adopted
IFRS and elected to capitalize activities in relation to evaluating the
technical feasibility and commercial viability of extracting a mineral resource
once a mineral resource is identified of such quantity and grade or quality that
it has reasonable prospects for economic extraction. The amount of $6,616,
represents costs incurred prior to change in policy. $4,784 relating to property
evaluation costs have been capitalized on transition to IFRS, offset by foreign
exchange of ($984) on total capitalized property exploration and evaluation.

Planned costs for 2012 are approximately $6.1 million for
capital investment and mineral property evaluation.

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 consists of groundwater at our mines and rainwater filtrations.

Primary Exploration Properties

(1) Santa Rosa Project

a. Location and Accessibility

The Santa Rosa property consists of four mining concessions
located approximately 10 to 15 kilometres north east of the city of Guanajuato
and is accessible by paved roads from Guanjauato. The city of Guanajuato is 380
kilometres 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.

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.

b. History

On July 18, 2011, the Company announced the acquisition of four
mining concessions, totalling 1,514 hectares, approximately 10 to 15 kilometres
northeast of Guanajuato (collectively called the Santa Rosa Project). The four
claims were purchased from Minera Blanca Alicia, S.A. de C.V., a private Mexican
company, for US$1.5 million with 50% payable on signing of the purchase
agreement and 50% on the registration of the contract with the Direccion General
de Minas (Mexico), which is now complete. A royalty of 1.3% is payable from ore
produced from the four claims.

---

- 50 -

c. Geology and Mineralization

The Company completed considerable due diligence work on the
Santa Rosa claims prior to the acquisition. Multiple veins with argillic
alteration and erratic silver and gold values have been identified.

d. Mineral Resource and Mineral Reserve Estimates

There are no known mineral reserves or resources estimated for
the property. The Company commenced exploratory drilling on the property in
2012.

e. Exploration History

The Santa Rosa project is within the Sierra vein system, a
parallel vein system to the Veta Madre at Guanajuato Mine. The Sierra vein
system has seen exploration and exploitation over the last 400 years, including
the present day exploitation of gold and silver from the El Cubo Mine (located
southeast of the Santa Rosa project) by Aurrico Gold Corp.

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

Surface drilling of a 2,000 metre program commenced in January
2012, and is expected to be completed in March 2012.

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

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

(2) San Ignacio Project

a. Location and Accessibility

San Ignacio is located approximately 20 kilometres by road from
the Companys Guanajuato processing plant, in the city of Guanajuato and is
accessible by paved roads from Guanjauato. The city of Guanajuato is 380
kilometres 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.

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.

b. History

The property was part of the Guanajuato purchase by Great
Panther in 2005 but due to the Companys focus on the main Guanajuato mine
complex, it did not commence any work at San Ignacio until 2010. The properties
were acquired from a mining cooperative called the Sociedad Cooperativa Minero
Metalúrgica Santa Fe de Guanajuato (the Cooperative) which owned these since
1939. Production records from 1977 to 2001 indicate that a total of 617,455
tonnes at a grade of 113g/t Ag and 1.01g/t Au were extracted from a small
portion of the property at an average rate of approximately 85 tonnes per
day.

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- 51 -

c. Geology and Mineralization

The San Ignacio Project covers approximately four kilometres of
strike length on the La Luz vein system, which is parallel to, and five
kilometres west of, the principal Veta Madre structure that hosts the Companys
main Guanajuato mine. The San Ignacio property is contiguous with Endeavour
Silvers Bolanitos mine property that is currently in production. It comprises a
swarm of generally north-northwest striking, west dipping quartz veins and
breccias with associated low sulphidation silver-gold mineralization, along an
approximate eight kilometer long trend.

d. Mineral Resource and Mineral Reserve Estimates

The Company released an initial, NI 43-101 compliant, Mineral
Resource estimate in October 2011. The estimate comprises Inferred Mineral
Resources of 611,000 tonnes at 127g/t silver and 2.05g/t gold (4,494,000 Ag eq
oz), using a 118g/t Ag eq cut-off grade.

e. Exploration History

The Company commenced exploration of San Ignacio in the third
quarter of 2010, and completed a number of drilling programs in 2011 leading up
to the release of an the initial Mineral Resource estimate referenced in the
preceding subsection.

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

As at December 31, 2011, total exploration costs at San Ignacio
was $2.8 million. Planned costs for 2012 are approximately $1.2 million for
exploration.

|ITEM 4A | Unresolved Staff Comments
|------- | -------------------------

None.

|ITEM 5 | Operating and Financial Review and
      Prospects
|------ | --------------------------------------------------

The information in this section is presented in accordance with
IFRS. The following discussion of our financial condition and results of
operations for the fiscal years ended December 31, 2011 and 2010 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, which are the most critical to our
reporting of results of operations and financial position, are as follows:

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- 52 -

Revenue recognition

The Company recognizes revenue from the sale of concentrates
upon delivery when it is probable that the economic benefits associated with the
transaction will flow to the Company, the risks and rewards of ownership are
transferred to the customer and the revenue can be reliably measured. This is
generally the shipment date. Revenue is based on market metal prices and mineral
content. Revenue is recorded in the consolidated statements of comprehensive
income 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. Variations between the sales price recorded at
the shipment date and the actual final sales price at the settlement date caused
by changes in the market metal prices results in an embedded derivative in the
related trade accounts receivable balance. Historically the adjustment from
provisional pricing has not been significant in relation to total revenues for
the reporting period. 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.

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 March 31, 2010, the remaining lives of the Topia and
Guanajuato mines were extended from 6 years to 10 years and 2 years to 3 years,
respectively. Later in 2010, the Company obtained successful drilling results at
both mines and completed a NI 43-101 mineral resource/reserve estimate on a
segment of the Guanajuato mine. Consequently, effective December 31, 2010, the
Company extended the Guanajuato mine life from 3 years to 5 years and retained
Topias mine life at 10 years. At December 31, 2011, the Company extended the
mine life of each of its Guanajuato and Topia mines one additional year to
revise the lives to 5 and 10 years respectively. Managements estimate of
expected remaining mine life is based upon available internal and external
estimated resource information, historical production and recovery levels,
planned future production and recovery levels, and other factors. Changes in
mine life are recognized prospectively.

Impairment of long-lived assets

The Companys mineral properties, plant and equipment are
reviewed for an indication of impairment at each financial reporting date or at
any time if an indicator of impairment is considered to exist. If any such
indication exists an estimate of the recoverable amount is undertaken, being the
higher of an assets fair value less costs to sell and value in use. If the
assets carrying amount exceeds its recoverable amount then an impairment loss
is recognized in profit or loss for the period.

Fair value is determined as the amount that would be obtained
from the sale of the asset in an arms length transaction between knowledgeable
and willing parties. Fair value of mineral assets is generally determined as the
present value of the estimated future cash flows expected to arise from the
continued use of the asset, including any expansion prospects.

---

- 53 -

Reclamation and Remediation Provision

The Company's mining and exploration activities are subject to
various laws and regulations governing the protection of the environment. The
Company recognizes the cost of future reclamation and remediation as a liability
in the period in which it incurs a legal or constructive obligation associated
with the retirement of tangible mineral property, plant and equipment assets
that results from the acquisition, construction, development, or normal use of
the asset, if a reasonable estimate of the obligation can be made. The liability
is measured initially by discounting such costs to the net present value using
pre-tax rates and risk assumptions specific to the liability 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 profit or loss as a finance cost, and any change in
the amount or timing of the underlying cash flows with the offsetting amount
recorded as an adjustment to the reclamation and remediation provision cost
included in mineral properties. The reclamation and remediation provision 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, changes in remediation
technology and changes in discount rates. The Company reviews its reclamation
and remediation provision at least annually and as evidence becomes available
indicating that its remediation and reclamation liabilities may have changed.
Any such changes in costs could materially impact the future amounts charged to
operations for reclamation and remediation obligations.

Share-based Payments

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

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

|A. | Operating Results
|-- | -----------------

For the year ended December 31, 2011, the Company earned
revenue of $57.8 million, compared to $42.2 million for the same period in 2010,
an increase of 37%. This year over year increase in revenue is primarily due to
a significant increase in average metal prices over the comparative periods.
This offset a slight decline in metal production and payable metal sales.

---

- 54 -

Average silver, gold, lead and zinc prices realized by the
Company increased 63%, 27%, 11% and 2% respectively from 2010 to 2011.

Cost of sales excluding amortization and depletion and
share-based payments was $25.5 million for the year ended December 31, 2011,
compared to $21.2 million for the same period in 2010. The year over year
increase in cost of sales is primarily due to higher production costs which are
a function of higher mined and processed ore.

Gross profit for the year ended December 31, 2011 was $26.9
million compared to $16.4 million in 2010. The year over year increase in gross
profit is primarily due to higher metal prices.

Consolidated cash costs per ounce were US$10.84 for the year
ended December 31, 2011, a 46% increase compared to US$7.43 for the same period
in 2010. Cash costs per ounce increased at both mines over 2010 due to higher
operating costs, lower grades and a lower value of the US dollar against the
Canadian dollar. In addition, higher smelter and refining charges from third
party refiners of the companys concentrates contributed to the increase in cash
costs per ounce. These increases were partially offset by higher gold prices
which increased by-product credits.

Amortization and depletion of mineral properties, plant and
equipment included in cost of sales for the year ended December 31, 2011 was
$4.5 million, which compared to amortization expense of $4.1 million included in
cost of sales in 2010. The increase in amortization expense during 2011 is the
result of an increase in capitalized mine development costs compared to the
prior year, partially offset by extensions in the mine lives of both Guanajuato
and Topia to 5 and 10 years respectively (from 2 and 6 years) in 2010.

Share-based payments included in cost of sales for the year
ended December 31, 2011 were $1.0 million, compared to $0.5 million in 2010. The
increase is due to an increase in share options granted during 2011.

General and administrative expenses were $9.1 million for the
year ended December 31, 2011, compared to $6.4 million for the same period in
2010. The increase was primarily due to increased share-based payments expense
of $0.9 million combined with higher business development activity, additional
costs associated with the Companys listing on the NYSE Amex stock exchange,
expansion of the Companys investor relations program, addition of various
senior level positions, and the conversion to IFRS.

Finance and other expenses increased by $2.8 million for the
year ended December 31, 2011 as compared to the same period in 2010. The
increase is primarily attributable to an increased foreign exchange loss of $4.3
million due to the weakening of the Mexican peso compared to the Canadian and US
dollar. This amount was offset by a finance cost decrease of $0.8 million due to
the extinguishment of the convertible loan notes, an increase in interest income
of $0.3 million and a $0.3 million increase in other income.

The Company recorded an income tax expense of $2.0 million for
the year ended December 31, 2011 compared to an income tax recovery of $2.1
million for the same period in 2010. The increase is primarily attributable to
an increase in the deferred tax liability of the Mexican operation. The increase
in the deferred tax liability relates primarily to mine development and
exploration costs which are depreciated faster for tax purposes than for
accounting purposes, and the utilization of tax losses in Mexico to offset
taxable income during the year.

---

- 55 -

Net income for the year ended December 31, 2011 was $11.5
million, compared to $10.7 million for the same period in 2010. The increase in
net income is primarily attributable to a significant improvement in gross
profit as a result of higher metal prices. The increase in net income was
partially offset by an increase in foreign exchange loss of $4.3 million
resulting from the strengthening of both the Canadian dollar and US dollar
against the Mexican peso, and a $1.3 million increase in share-based payments
expense included in cost of sales and general and administrative expenses. In
addition, net income for the year ended December 31, 2011 reflects deferred
income tax expense of $1.9 million, compared to a recovery of $2.1 million in
2010.

|B. | Liquidity and Capital
  Resources
|-- | ---------------------------------

At December 31, 2011, the Company had working capital of $53.8
million and cash and cash equivalents of $39.4 million compared to working
capital of $18.8 million and cash and cash equivalents of $14.0 million at
December 31, 2010. The increase in liquidity in 2011 resulted from a $7.8
million increase in cash generated by operating activities to $19.1 million in
2011 from 11.3 million in 2010. During 2011, the Company also issued shares for
cash and received $22.5 million net of issue costs, and received $8.5 million in
proceeds from the exercise of options and warrants compared to $5.9 million in
2010. These inflows were partially offset by capital expenditures of $24.1
million in 2011 compared to $15.1 million in 2010.

The Company 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. The Company plans to produce 2.5 to 2.75 million Ag eq oz in 2012 and
invest $19.3 million in capital expenditures, including $8.6 million in mineral
property exploration expenditures. These investments in 2012 will include the
purchase of new, more efficient mobile mining equipment, plant upgrades,
significantly furthering mine development and ramping up exploratory drilling.
The objective of these expenditures is to increase production and grow
resources.

At the date of this 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, 2011, cash flow provided by
operating activities was $19.1 million. This compares to cash flows provided by
operating activities of $11.3 million in 2010. The year-over-year improvement
was largely attributable to higher gross profit from increased metal prices and
partially offset by an increase in amounts receivable due to an increase in the
number of unsettled shipments and shipments in transit; and higher inventories
at the end of December 2011 compared to December 2010.

Before changes in non-cash working capital, the Company
generated $24.2 million in operating cash flow during the year ended December
31, 2011, compared to $14.6 million during the same period in 2010. This year
over year improvement is largely attributable to higher gross profit from
increased metal prices.

---

- 56 -

Investing Activities

For the year ended December 31, 2011, the Company had net cash
outflows from investing activities of $23.8 million compared to $15.2 million in
2010. The outflows were primarily used for the development of mineral properties
of $4.9 million, purchase of capital assets of $11.3 million and capitalized
exploration of $7.3 million. During 2011, the Company also acquired the rights
to a new silver-gold project, the Santa Rosa Project, for $1.5 million, which is
included in capitalized exploration.

Financing Activities

Cash flows provided by financing activities were $30.1 million
for the year ended December 31, 2011 compared to $4.7 million in 2010. On April
12, 2011, the Company closed a bought deal financing with a syndicate of
underwriters for net proceeds of $22.5 million. During 2011, the Company also
received proceeds from the exercise of warrants and options in the amount of
$8.5 million compared to $5.9 million in 2010. These proceeds were partially
offset by a repayment of the Companys capital lease obligations and remaining
balance of the promissory notes.

2012 Outlook

For 2012, the Company expects metal production to grow to 2.50
to 2.75 million silver equivalent ounces, an increase of approximately 20% year
on year. There are a number of positive developments that support the growth
estimate as follows:

- During the fourth quarter of 2011 the Company saw a marked improvement in
  grades at Guanajuato through the development of the high grade Deep Cata and
  gold-rich Santa Margarita ore bodies. Further expansion of production from
  these areas are planned for 2012.
- Guanajuato saw a 17% increase in ore mined and processed in 2011 to almost
  170,000 tonnes, and the plan for 2012 is to increase throughput to 200,000
  tonnes. The plant at Guanajuato has capacity for over 300,000 tonnes.
- Ore mined and processed at Topia in 2011 increased by 23% to almost 47,000
  tonnes (plus 13,000 tonnes for custom milling). The plan for 2012 includes a
  further increase of 17% to 57,000 tonnes (plus 13,000 tonnes for custom
  milling). Improvement modifications, including additional flotation cells,
  have been completed to facilitate and increase in capacity to in excess of
  75,000 tonnes.

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- 57 -

2012 Production and Cash Cost per Ounce Guidance

|                                |   |             |  |   | 2012
      Guidance |  |   | 2012
      Guidance | 
|------------------------------- | - | ----------- |  | - | ------------------- |  | - | ------------------- | 
|                                |   | 2011 Actual |  |   | Low Case            |  |   | High Case           | 
|Tonnes milled                   |   | 216,181     |  |   | 230,000             |  |   | 250,000             | 
|                                |   |             |  |   |                     |  |   |                     | 
|Silver ounces                   |   | 1,495,372   |  |   | 1,720,000           |  |   | 1,900,000           | 
|Gold ounces                     |   | 8,016       |  |   | 10,000              |  |   | 11,000              | 
|Lead tonnes                     |   | 941         |  |   | 1,130               |  |   | 1,270               | 
|Zinc tonnes                     |   | 1,314       |  |   | 1,500               |  |   | 1,630               | 
|                                |   |             |  |   |                     |  |   |                     | 
|Silver equivalent ounces        |   | 2,200,012   |  |   | 2,500,000           |  |   | 2,750,000           | 
|                                |   |             |  |   |                     |  |   |                     | 
|Cash cost per
      ounce (USD) | $ | 10.84       |  | $ | 10.50               |  | $ | 9.50                | 

In terms of contained metals, the Company's estimated ranges
for 2012 are as follows: 1.72 to 1.90 million ounces of silver, up from 1.495
million ounces in 2011; 10,000 to 11,000 ounces of gold, up from 8,016 ounces in
2011; 1,134 to 1,270 tonnes of lead, up from 939 tonnes in 2011; and 1,497 to
1,633 tonnes of zinc, up from 1,315 tonnes in 2011.

Exploration and Development

A NI 43-101 compliant initial Mineral Resource Estimate of 4.5
million Ag eq oz was released for San Ignacio in October 2011 after drilling 24
diamond core holes. Metres drilled have more than doubled to date and a resource
update is expected by the end of the second quarter of 2012. The San Ignacio
Project is expected to realize its potential during 2012 with an intensive
exploration and mine development program being planned which the Company expects
will add to growth in 2013. The present surface drill program includes 9,600
metres of drilling at San Ignacio.

At Santa Rosa surface drilling of a 2,000 metre program
commenced in January 2012, and is expected to be completed in March 2012.

At the Topia mine, 2012 exploration will include 2,400 metres
of underground drilling focused on the Don Benito, Recompensa, Oliva,
Cantarranas, San Jorge, La Prieta and La Dura, while 3,900 metres of surface
drilling will focus on the San Gregorio, El Rosario, Higueras, Cantarranas, and
Argentina veins.

At the Guanajuato mine approximately 30,000 metres of
underground drilling is planned for the Santa Margarita, Cata, Valenciana, and
Guanajuatito areas.

|A. | International Financial Reporting Standards
      (IFRS):
|-- | -----------------------------------------------------------

In February 2008, the Canadian Accounting Standards Board
(AcSB) announced the changeover from Canadian GAAP ("GAAP") to International
Financial Reporting Standards (IFRSs) for publicly accountable enterprises and
listed entities, for the annual periods beginning on or after January 1,
2011.

---

- 58 -

The Company prepared its first consolidated financial
statements in accordance with IFRS for the year ending December 31, 2011. The
guidance for the first time adoption of IFRS is set out in IFRS 1. IFRS 1
provides for certain mandatory exceptions and optional exemptions for first time
adopters of IFRS. The Company elected to apply the following optional
exemptions:

- IFRS 3, Business Combinations,has not been applied to acquisitions
  of subsidiaries or of interests in associates and joint ventures that occurred
  before January 1, 2010.
- IFRS 2, Share-Based Payments, has not been applied to equity
  instruments granted after November 7, 2002 which had not vested as of the
  transition date.
- The Company has applied the transitional provision in IFRIC 4,
  Determining whether an Arrangement contains a lease, and has
  assessed all arrangements as at the date of transition.
- IFRIC 1, Changes in Existing Decommissioning, Restoration and Similar
  Liabilities, has not been applied to decommissioning liabilities included
  in mineral properties, plant and equipment that occurred before the Transition
  Date to IFRS. In accordance with this IFRS 1 optional exemption,
  decommissioning and restoration liabilities of the Company are measured at the
  Transition Date under IAS 37, Provisions, Contingent Liabilities and
  Contingent Assets, and the amount to be included in the cost of the
  related asset is estimated by discounting the liabilities to the date at which
  the liabilities first arose. The Company did this using the best estimate of
  the historical discount rates that would have applied for that liability in
  the intervening period, and recalculating the accumulated depreciation using
  the depreciation policy adopted by the Company in accordance with IFRS.

The following items outline significant GAAP-IFRS adjustments
affecting the Companys financial position and financial performance (in
thousands of Canadian dollars):

- Mine development costsUnder IFRS, the Company has elected to
  capitalize costs relating to the development of mineral resources once the
  technical feasibility and the commercial viability of the extraction of
  mineral resources in an area of interest are demonstrable and management has
  made a decision to proceed with the development of a property. Previously
  under GAAP the Company elected to expense these costs. This resulted in the
  following increases to Mineral properties, plant and equipment: $4,150 at
  January 1, 2010 and $9,518 at December 31, 2010.
- Reclamation and remediation provision (asset retirement
  obligations)Under GAAP, asset retirement obligations are measured at
  fair value, incorporating market assumptions and discount rates based on the
  Companys credit-adjusted risk-free rate. Adjustments are made to asset
  retirement obligations for changes in the timing or amount of the cash flows
  and the unwinding of the discount. However, changes in discount rates alone do
  not result in a re-measurement of the provision. Changes in estimates that
  decrease the liability are discounted using the discount rate applied upon
  initial recognition of the liability while changes that increase the liability
  are discounted using the current discount rate.Under IFRS, reclamation
  and remediation provisions are measured based on managements best estimate of
  the expenditures that will be made and adjustments to the provisions are made
  in each period for changes in the timing or amount of cash flow, changes in
  the discount rate, and the accretion of the provision to fair value (unwinding
  the discount).

---

- 59 -



- Intangible assets reclassificationThe Company, under GAAP, had
  included certain intangible assets relating to capitalized software costs
  under Mineral properties, plant and equipment. Under IFRS, intangible assets
  including capitalized software costs should be disclosed separately in the
  statement of financial position. This resulted in a reclassification of $102
  on transition date and $274 at December 31, 2010.
- Convertible loan notes revaluationUnder GAAP, the Company valued
  the equity and liability components of its convertible loan note by first
  valuing the equity component which is then deducted from the fair value of the
  instrument as a whole. The residual amount is assigned to the liability
  component. Under IFRS, a similar bifurcation into equity and liability is
  required; however, the liability component is valued first by reference to the
  fair value of a similar liability that does not have a conversion option and
  the equity component is valued as the residual amount. This resulted in a
  decrease to convertible loan notes of $253 on transition date and $76 at
  December 31, 2010 and an increase to finance costs of $179 for the year ended
  December 31, 2010. On March 8, 2011, the convertible loan notes were
  converted.
- Income taxa. Calculation of deferred tax on non-monetary
  items
  Under GAAP, the Company calculated deferred tax balances related
  to asset and liabilities measured in a foreign currency in the currency in
  which the taxes are paid and then converted to the presentation currency at
  the current exchange rate. Under IFRS, deferred taxes related to assets and
  liabilities measured in a foreign currency are determined by comparing the
  accounting basis calculated at historical rate for non-monetary items to the
  tax basis converted at the current exchange rate. Deferred tax adjustments
  arise from this different treatment when an entitys functional currency
  differs from that in which the entity

---

- 60 -

calculates and pays tax. The Companys
adjustments for this difference primarily relate to the Mexican subsidiaries
which have significant mineral property, plant and equipment balances recorded
and had different functional and tax currencies prior to January 1, 2010. This
resulted in a decrease to deferred tax liability of $602 on the transition date.

b. Deferred tax classification

Under previous GAAP deferred taxation
assets were classified between current and non-current based on the
classification of the underlying assets and liabilities that gave rise to the
differences. IAS 12 requires that deferred taxation amounts be classified as
non-current assets or liabilities.

c. Other Deferred tax adjustments

Deferred taxes have also been adjusted
for the changes to net book values arising as a result of the adjustments for
first time adoption of IFRS as discussed above. This resulted in an increase to
deferred income tax recovery of $346 for the year ended December 31, 2010.

|B. | 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 $1.1 million on due diligence for various other mining properties.

|C. | 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.

|D. | Off-balance Sheet
  Arrangements
|-- | --------------------------------

We do not have any off-balance sheet arrangements at December
31, 2011.

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- 61 -

|E. | Tabular Disclosure of Contractual
      Obligations
|-- | ---------------------------------------------------

The following table outlines the contractual obligations of the
Company at December 31, 2011 (in thousands of dollars):

|                         |   | Total |  |   | 1 year |  |   | 2-3 years |  |   | 4-5 years | 
|------------------------ | - | ----- |  | - | ------ |  | - | --------- |  | - | --------- | 
|Purchase obligations (1) | $ | 3,761 |  | $ | 3,598  |  | $ | 163       |  | $ | -         | 
|Operating lease          |   | 260   |  |   | 154    |  |   | 106       |  |   | -         | 
|Environmental program(2) |   | 69    |  |   | 69     |  |   | -         |  |   | -         | 
|Consulting               |   | 25    |  |   | 25     |  |   | -         |  |   | -         | 
|Total obligations        | $ | 4,115 |  | $ | 3,846  |  | $ | 269       |  | $ | -         | 

|(1) | Purchase obligations include commitments for consulting,
      laboratory, drilling, maintenance and equipment purchases.                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                      
|(2) | 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.

|F. | Safe Harbor
|-- | -----------

Not applicable.

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- 62 -

|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:

Name
    Present Position Great
      Panther Silver Limited
    Present Position Minera
      Mexicana el Rosario, S.A. de C.V.
    Present Position Metalicos
      de Durango, S.A. de C.V.
    Present Position Minera
      de Villa Seca, S.A. de C.V.
    Present Position Great
      Panther Silver Perú S.A.C.Robert A. Archer
    President, CEO, Director
    President, Director
    President, Director
    President, Director
    DirectorJohn T. Kopcheff
    Director
    n/a
    n/a
    n/a
    n/aR.W. (Bob) Garnett
    Independent Chairman, Director
    n/a
    n/a
    n/a
    n/aKenneth W. Major
    Director
    n/a
    n/a
    n/a
    n/aMartin B. Carsky
    Executive Vice President and CFO
    Secretary, CFO, Director
    Secretary, CFO, Director
    Secretary, CFO, Director
    DirectorWendy M. Ratcliffe
    Corporate Secretary
    n/a
    n/a
    n/a
    n/aCharles Brown
    Chief Operating Officer
    n/a
    n/a
    n/a
    n/aFrancisco Ramos Sanchez
    Vice President, Business Development
    Director
    Director
    Director
    General ManagerRobert Brown
    Vice President, Exploration
    n/a
    n/a
    n/a
    DirectorJim A. Zadra
    Vice President, Finance
    n/a
    n/a
    n/a
    n/aDavid R. Asher
    Vice President, Technical Services
    n/a
    n/a
    n/a
    n/aEnriqueta Hernandez Dominguez
    n/a
    Vice President, Accounting and
      Administration (Mexico)
    Vice President, Accounting and
      Administration (Mexico)
    Vice President, Accounting and
      Administration (Mexico)
    n/aEduardo Ortiz Briones
    Vice President, Corporate Relations
    n/a
    n/a
    n/a
    n/a


---

- 63 -

Business Experience, Function and Area of Experience

Robert A. Archer

As our President, Chief Executive Officer and a director since
April 2004, Mr. Archer is responsible for the day-to-day operations of the
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.

Mr. Archer is a resident of British Columbia, Canada and has
more than 31 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.

John T. Kopcheff

Mr. Kopcheff is a resident of Western Australia and has been a
director of the 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.

Mr. Kopcheff is a geologist and acquired a Bachelor of Science
(Honours) degree from the University of Adelaide in 1970 in geology and
geophysics. Following graduation, he has gained over 36 years of extensive
petroleum exploration experience in Australia, Southeast Asia, USA, South
America and the North Sea, both in the field of geological operations and
management. For 26 years Mr. Kopcheff served as Managing Director of Victoria
Petroleum NL, renamed Senex Energy Limited, an oil and gas company publicly
listed on the main board of the Australian Stock Exchange. He recently retired
from the board and has retained the role of Special Advisor to the board. Mr.
Kopcheff is also a non-executive director of Greenearth Energy Limited, a
geothermal exploration company publicly listed on the main board of the
Australian Stock Exchange.

R.W. (Bob) Garnett

Mr. Garnett is a resident of British Columbia, Canada and was
appointed a director of the Company in May 2011 and Independent Chairman in
February 2012. As non-executive director, Mr. Garnett is Chairman of the Audit
Committee, a member of the Compensation Committee and the Nominating and
Corporate Governance Committee.

Mr. Garnett is a Chartered Accountant in the Province of
British Columbia (1973) and obtained a Bachelor of Arts (Commerce) from Simon
Fraser University in 1973. Until recently, he was the Vice-Chair of the South
Coast British Columbia Transportation Authority (Translink) and chaired their
Audit Committee. Mr. Garnett currently serves on the board of VRX Worldwide Inc.
and is chair of the Audit Committee. From 2009 to 2010, he was a director and
member of the Audit Committee of Central 1 Credit Union which is the liquidity
provider to credit unions in Ontario and British Columbia. In 2007, Mr. Garnett
completed the Certified Directors Program with the Institute of Corporate
Directors earning his ICD.D certification.

---

- 64 -

Kenneth W. Major

Mr. Major is a resident of British Columbia, Canada and was
appointed a director of the Company in March 2011. As a non-executive director,
Mr. Major is the Chairman of the Nominating and Corporate Governance Committee
and a member of the Audit Committee and the Compensation Committee.

Mr. Major graduated from McGill University with a degree in
Metallurgical Engineering in 1976. He brings to the Company more than 36 years
of experience in the mining industry, including operations and management with
Sherritt Gordon Mines and Newmont Mining. In 1987, Mr. Major joined Kilborn
Engineering in Vancouver as a Senior Process Engineer and Project Manager. In
1994, he became an owner/partner in the start of Rescan Engineering Ltd., an
engineering company providing feasibility study and detailed engineering
services to the mining industry. Rescan Engineering Ltd. was subsequently
acquired by HATCH Engineers and became the global hum for the development of
mining and mineral processing engineering opportunities. In 2006, Mr. Major left
HATCH Engineers to become an independent processing consultant, KWM Consulting
Inc., and has continued to provide services to the mining community, including
major companies such as Newmont Mining, Goldcorp and Agnico-Eagle.

Martin B. Carsky

Mr. Carsky is a resident of British Columbia, Canada and was
appointed Executive Vice President and Chief Financial Officer in June 2011 upon
stepping down as a director of the Company. He was a director, Chairman of the
Audit Committee and a member of the Compensation Committee and the Nominating
and Corporate Governance Committee from February 2009 through May 2011 and Lead
Director from January 2011 through May 2011.

Mr. Carsky is a Chartered Accountant in the Province of British
Columbia (1992) and obtained a Bachelor of Science from the University of
British Columbia in 1989. He is an experienced financial executive with
extensive experience in capital markets, mergers and acquisitions,
restructuring, and corporate governance. Currently, he is a director and also
serves as a director and the Chairman of the Audit Committee of Cangold
Limited.

From 2006 to 2010, Mr. Carsky held various executive and
directorship positions, with Anthem Capital Corp. as Executive Vice President
from 2006 to 2008, as Executive Chairman and a director of MetroBridge Networks
International Inc. from 2007 to 2008, and with Amato Exploration Ltd. as Chief
Financial Officer and a director from 2008 to 2011. Mr Carksy was Chief
Executive Officer, President, Chief Financial Officer, Secretary and a director
of Cryopak Industries Inc. (Cryopak) in October 2006 when Cryopak was placed
into receivership. Mr. Carsky was also a director of Cryopak Corporation Ltd.
when it filed for bankruptcy protection in October 2006. All of the assets of
Cryopak Industries Inc. and Cryopak Corporation Ltd. were sold to a third
party.

Cryopak failed to file its annual financial statements for the
year ended March 31, 2006. On October 5, 2006, the British Columbia Securities
Commission issued a cease trade against Cryopak and its insiders and control
persons prohibiting Cryopak, its insiders and control person from trading in any
securities of Cryopak until the cease trade order is lifted. The cease trade
order remains in effect.

Wendy Ratcliffe

Ms. Ratcliffe is a resident of British Columbia, Canada and has
been the 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.

---

- 65 -

Charles Brown

Mr. Brown is a resident of British Columbia, Canada and has
been Chief Operating Officer of the Company 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 36 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.

Ing. Francisco Ramos Sanchez

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

Prior to that, Ing. Ramos was Vice President, Operations of the
Companys subsidiary MMR, since June 1998. With more than 31 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, Operations of Cangold Limited.

Robert Brown

Mr. Brown is a resident of British Columbia, Canada and has
been our Vice President, Exploration since April 30, 2004. He is responsible for
overseeing all exploration activities undertaken by the 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 37 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 16 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.

Jim A. Zadra

Mr. Zadra is a resident of British Columbia, Canada and was
appointed Vice President, Finance in September 2011. He is responsible for
corporate finance, including financial reporting, planning & forecasting,
taxation, and treasury. Mr. Zadra has over 15 years of experience in senior
corporate finance roles with significant experience in the areas of financial
reporting, taxation, strategic planning, capital markets, M&A and corporate
governance.

---

- 66 -

Mr. Zadra is a Chartered Accountant in the Province of British
Columbia and holds a Masters of Business Administration from Queens University
and a Bachelor of Commerce degree from the University of British Columbia.

Prior to joining the Company, Mr. Zadra served over three years
as Chief Financial Officer and Corporate Secretary of DDS Wireless International
Inc. From 2003 to 2008, he was Vice President of Finance, North America, at
Sophos, a leading global information technology security company with offices in
19 countries. Mr. Zadra has also held senior roles at ActiveState Corporation,
Canaccord Capital and Deloitte, and has served as a director for several venture
stage public companies.

David R. Asher

Mr. Asher is a resident of Idaho, United States and was
appointed Vice President, Technical Services in November 2011. He is responsible
for managing all information systems related matters. Mr. Asher has over 20
years of IT and business management experience in both the public and private
sectors.

Mr. Asher is a certified Project Management Professional (PMP)
and holds a Master of Business Administration from the University of Washington
and a Bachelors degree in Management Information Systems from Gonzaga
University.

Prior to joining Great Panther, Mr. Asher managed various IT,
finance and M&A consulting projects for numerous mining companies including
Electrum Strategic Resources, Behre Dolbear Capital, Hecla Mining Company and
FLSmidth Minerals. From 1999 to 2009, Mr. Asher served in several roles at Coeur
dAlene Mines Corporation, including Director of Corporate Development and
Enterprise Systems Manager.

Enriqueta Hernandez Dominguez

Enriqueta Hernandez Dominguez is a resident of Guanajuato,
Mexico and was appointed Vice President of Accounting and Administration
(Mexico) in July 2010. Ms. Hernandez previously served as Regional Controller of
the Companys Mexican operations in 2009. Enriqueta has more than 25 years of
experience in financial and tax fields in different kind of industries both in
Mexico and Canada. Prior to joining the Company, Ms. Hernandez was the
Subsidiary Accountant for West Timmins Mining Company. Ms. Hernandez holds a
Bachelor Degree in Accounting and a Master Degree in Business Administration,
with honours, both from the National University of Mexico.

Eduardo Ortiz Briones

Eduardo Ortiz Briones is a resident of Guanajuato, Mexico and
was appointed Vice President, Corporate Relations in January 2011. He is
responsible for the Companys government and community relations and media
communication in Mexico. Prior to joining the Company, Mr. Ortiz was Development
and Relations Manager for Minera Rio Panuco S.A. de C.V. and Real de Panuco S.A.
de C.V. México as well as a business advisor to Residencial Villas de Tultitlan
S.A. de C.V.

Mr. Ortiz holds a Bachelor in Business Administration from the
University National of Mexico.

Family Relationships

Two officers of the Company, Ms. Enriqueta Dominguez and Mr.
Eduardo Ortiz, are married to each other.

---

- 67 -

Other Relationships

Except as disclosed in Item 7B  Related PartyTransactions, 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.

Conflicts of Interest

To the best of the Companys knowledge, and other than as
disclosed herein, there are no known existing or potential conflicts of interest
between the Company (or a Subsidiary of the Company) and any director or office
of the Company (or a Subsidiary of the Company), except that certain of the
directors and officers serve as directors, officers or members of management of
other public companies and therefore it is possible that a conflict may arise
between their duties as a director or officer of the Company and their duties as
a director, officer, promoter or member of management of such other
companies.

The directors and officers of the Company are aware of the
existence of laws governing accountability of directors and officers for
corporate opportunity and requiring disclosure by directors of conflicts of
interest and the Company relies upon such laws in respect of any directors and
officers conflicts of interest or in respect of any breaches of duty by any of
its directors and officers. All such conflicts have been disclosed by such
directors and officers in accordance with the Canada Business Corporations
Actand they have governed themselves in respect thereof to the best of
their ability in accordance with the obligations imposed upon them by law.

---

- 68 -

|B. | Compensation
|-- | ------------

Other than as set forth in the table below, none of our
executive officers was paid or earned compensation for performing his/her duties
during the fiscal year ended December 31, 2011. 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                  
|Kaare G. Foy            | Executive Chairman Director                                           | April 27, 2004 June 23, 1994        | February 6, 2012 February 6, 2012
|Malcolm A. Burne        | Director                                                              | June 3, 1987                        | March 17, 2011                   
|John T. Kopcheff        | Director                                                              | August 16, 2001                     | Present                          
|Martin B. Carsky        | Director Executive Vice
      President and Chief Financial Officer   | February 9, 2009 June 1,
      2011 | May 3, 2011 Present              
|R.W. (Bob) Garnett      | Director                                                              | May 3, 2011                         | Present                          
|Kenneth W. Major        | Director                                                              | March 17, 2011                      | Present                          
|Raakel S. Iskanius      | Chief Financial Officer                                               | May 22, 2007                        | May 31, 2011                     
|Charles Brown           | Chief Operating Officer                                               | August 15, 2007                     | 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                          
|Jim Zadra               | Vice
      President, Finance                                         | September 5, 2011                   | Present                          

---

- 69 -

Summary Compensation Table

The following table sets forth compensation paid during the
year ended December 31, 2011 to the Companys Directors, the Chief Executive
Officer, the Chief Financial Officer, and each of the three most
highly-compensated executive officers, other than the Chief Executive Officer
and the Chief Financial Officer, whose total annual salary and bonus exceeded
C$150,000.

Annual
      Compensation
    Long Term CompensationAwards
    PayoutsName
    Year
    Salary ($)
    Bonus ($)
    Other ($)
    SecuritiesUnder
      Options Granted (#)
    **Restricted**
      Shares or Restricted Share Units
      ($)
    LTIP Payouts
      ($)
    All Other
      Compensation ($)Robert A. Archer, President, CEO, Director
    2011
    30,000(1)
    125,000
    nil
    nil
    nil
    n/a
    383,863(2)Malcolm Burne, Former Director(3)
    2011
    7,389(1)
    nil
    nil
    nil
    nil
    n/a
    nilKaare G. Foy, Former Executive Chairman, Former
      Director(4)
    2011
    30,000(1)
    75,000
    nil
    nil
    nil
    n/a
    312,941(5)John T. Kopcheff, Director
    2011
    41,000(1)
    nil
    nil
    nil
    nil
    n/a
    nilMartin B. Carsky, Executive Vice President, CFO,
      Former Director (6)
    2011
    38,750(7)
    30,000
    nil
    250,000
    nil
    n/a
    159,328(8)R.W. (Bob) Garnett, Independent Chairman, Director
    2011
    31,484(1)
    nil
    nil
    200,000
    nil
    n/a
    nilKenneth W. Major, Director
    2011
    32,060(1)
    nil
    nil
    200,000
    nil
    n/a
    nilFrancisco Ramos Sánchez, Vice President  Business
      Development
    2011
    185,039
    25,000
    nil
    nil
    nil
    n/a
    nilRobert F. Brown, Vice President - Exploration
    2011
    185,000
    30,000
    nil
    nil
    nil
    n/a
    nilCharles Brown, Chief Operating Officer
    2011
    240,000
    25,000
    nil
    nil
    nil
    n/a
    nilRaakel S. Iskanius, Former CFO(9)
    2011
    131,250
    20,000
    nil
    nil
    nil
    n/a
    nil


---

- 70 -

|(1) | Directors' fees.                                                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Consulting fees and other benefits paid to Platoro
      Resource Corp., a company controlled by Robert A. Archer in consideration
      of Mr. Archers services as President and Chief Executive
  Officer.                                 
|(3) | Effective March 17, 2011, ceased to be a director of
      Great Panther Silver Limited.                                                                                                                                                      
|(4) | Mr. Foy retired as Executive Chairman and resigned as a
      director subsequent to the year end, on February 6, 2012.                                                                                                                       
|(5) | Of this amount, $227,442 was paid for consulting and
      other benefits and $85,499 was paid for rent and other services to Oceanic
      Management Limited, a company controlled by Kaare G. Foy.                                         
|(6) | Effective May 3, 2011, ceased to be a director of Great
      Panther Silver Limited. Effective June 1, 2011, Martin B. Carsky was
      appointed Executive Vice President & Chief Financial Officer with an
      annual salary of $334,880.
|(7) | $16,854 was for directors fees and $21,896 was for
      salaries.                                                                                                                                                                           
|(8) | Consulting fees and other benefits paid to Embeecee
      Capital Management, a company controlled by Martin B. Carsky in
      consideration of Mr. Carskys services as Executive Vice President and
      Chief Financial Officer.         
|(9) | Resigned from the Company effective May 31,
  2011.                                                                                                                                                                                           

Compensation of Directors

During the financial year ended December 31, 2011, 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
    $
    7,389John T. Kopcheff
    $
    41,000Martin B. Carsky
    $
    16,854R.W. (Bob) Garnett
    $
    31,484Kenneth W. Major
    $
    32,060


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, 2011 as outlined in the Summary Compensation Table.
Subsequent to December 31, 2011 a payment in the amount of $676,000 was made to
an executive and director in connection with his retirement and resignation from
the board of directors.

|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, 2011.

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-appointed at a directors' meeting following
each annual general meeting.

---

- 71 -

The members of our audit committee included R.W. (Bob) Garnett
(Chairman), John T. Kopcheff and Kenneth W. Major. 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 Kenneth W. Major (Chairman), John T. Kopcheff and R.W. (Bob)
Garnett. 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 John T.
Kopcheff (Chairman), R.W. (Bob) Garnett and Kenneth W. Major. 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.

|D. | Employees
|-- | ---------

During the fiscal years ended December 31, 2011, December 31,
2010 and December 31, 2009, we had direct employees as outlined below:

Company
    
    2011
    
    
    2010
    
    
    2009Great Panther Silver Limited.
    
    20
    
    
    17
    
    
    14Minera Mexicana el Rosario, S.A. de C.V.
    
    nil
    
    
    nil
    
    
    nilMetalicos de Durango, S.A. de C.V.
    
    153
    
    
    109
    
    
    81Minera de Villa Seca, S.A. de C.V.
    
    99
    
    
    80
    
    
    63Exploraciones Mineras el Rosario, S.A. de
      C.V. 1
    
    nil
    
    
    nil
    
    
    nilGreat Panther
      Silver Perú S.A.C.
    
    nil
    
    
    nil
    
    
    nilTOTAL
    
    272
    
    
    206
    
    
    158


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.

---

- 72 -

|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 February 29, 2012, the
number of securities beneficially owned by our directors, officers and senior
management, 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                |  | 1,576,300            |  |  | 1.11%              | 
|David R. Asher                  |  | 150,000              |  |  | 0.11%              | 
|Charles P. Brown                |  | 548,000              |  |  | 0.39%              | 
|Robert F. Brown                 |  | 212,500              |  |  | 0.15%              | 
|Martin B. Carsky                |  | 250,000              |  |  | 0.18%              | 
|R.W. (Bob) Garnett              |  | 200,000              |  |  | 0.14%              | 
|Enriqueta Hernandez Dominguez   |  | 50,000               |  |  | 0.03%              | 
|John T. Kopcheff                |  | 280,000              |  |  | 0.20%              | 
|Kenneth W. Major                |  | 200,000              |  |  | 0.14%              | 
|Eduardo Ortiz-Briones           |  | 100,000              |  |  | 0.07%              | 
|Francisco Ramos Sanchez         |  | 1,296,000            |  |  | 0.91%              | 
|Wendy M. Ratcliffe              |  | 205,000              |  |  | 0.14%              | 
|Jim A. Zadra                    |  | 150,000              |  |  | 0.11%              | 

|(1) | Based on the following securities issued and outstanding
      as at February 29, 2012:
|--- | ---------------------------------------------------------------------------------------
|    |                                                                                        
|    |                                                                                        
|    |                                                                                        

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

As at February 29, 2012, our directors, officers and senior
management held, as a group, directly or indirectly, an aggregate of 3,071,800
common shares, 2,146,000 options exercisable within 60 days and nil warrants
exercisable within 60 days.

---

- 73 -

The total number of options outstanding as at February 29,
2012, all exercisable within 60 days, granted to our directors, officers and
senior management are set out below:

|Name                          |  | Number of Options |  |   | Exercise Price |  |  | Expiry Date       | 
|----------------------------- |  | ----------------- |  | - | -------------- |  |  | ----------------- | 
|                              |  | Outstanding       |  |   |                |  |  |                   | 
|Robert A. Archer              |  | 150,000           |  | $ | 0.45           |  |  | February 8, 2014  | 
|                              |  | 175,000           |  | $ | 0.70           |  |  | September 3, 2014 | 
|David R. Asher                |  | 150,000           |  | $ | 2.40           |  |  | December 5, 2016  | 
|Charles P. Brown              |  | 25,000            |  | $ | 0.70           |  |  | September 3, 2014 | 
|                              |  | 75,000            |  | $ | 0.90           |  |  | December 2, 2014  | 
|Robert F. Brown               |  | 150,000           |  | $ | 0.45           |  |  | February 8, 2014  | 
|                              |  | 50,000            |  | $ | 0.90           |  |  | December 2, 2014  | 
|Martin B. Carsky              |  | 250,000           |  | $ | 2.40           |  |  | December 5, 2016  | 
|R.W. (Bob) Garnett            |  | 200,000           |  | $ | 2.40           |  |  | December 5, 2016  | 
|Enriqueta Hernandez Dominguez |  | 25,000            |  | $ | 0.90           |  |  | December 2, 2014  | 
|                              |  | 25,000            |  | $ | 1.90           |  |  | November 21, 2015 | 
|John T. Kopcheff              |  | nil               |  |   |                |  |  |                   | 
|Kenneth W. Major              |  | 200,000           |  | $ | 2.40           |  |  | December 5, 2016  | 
|Eduardo Ortiz-Briones         |  | 100,000           |  | $ | 2.40           |  |  | December 5, 2016  | 
|Francisco Ramos Sanchez       |  | 221,000           |  | $ | 0.45           |  |  | February 8, 2014  | 
|Wendy M. Ratcliffe            |  | 200,000           |  | $ | 0.45           |  |  | February 8, 2014  | 
|Jim A. Zadra                  |  | 150,000           |  | $ | 2.40           |  |  | December 5, 2016  | 

The total number of warrants outstanding as at February 29,
2012, all exercisable within 60 days, issued to our directors, officers and
senior management is nil.

Stock Option Plan

We have an incentive share option plan that provides for the
grant of incentive stock options to our directors, officers, employees and
consultants as incentive for their services, subject to limits with respect to
insiders. Our share option plan is administered by our board of directors. The
aggregate maximum number of our common shares which may be reserved for issuance
under our plan may not exceed 10% of the number of common shares outstanding at
the time of an option grant. The aggregate number of common shares reserved for
issuance to any one person may not exceed 5% of the outstanding issue. The
exercise price of an option will be determined by the board of directors at the
time each option is granted but shall not be less than the closing price of the
common shares on the Toronto Stock Exchange on the last business day immediately
preceding the date of the grant. Options granted must be exercised no later than
10 years after the date of grant of the option or such lesser period as may be
determined by our board of directors. Options will cease to be exercisable 30
days after the participants termination date.

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.

---

- 74 -

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 February 29,
2012, granted to our directors and executive officers as a group, to our
non-executive officers and senior management as a group, to our employees as a
group and to our consultants as a group, are set out below:

|                           |  | Number of Options |  |   |                |  |  |                   | 
|-------------------------- |  | ----------------- |  | - | -------------- |  |  | ----------------- | 
|Name                       |  | Outstanding       |  |   | Exercise Price |  |  | Expiry Date       | 
|                           |  |                   |  |   |                |  |  |                   | 
|Directors and Executive    |  | 521,000           |  | $ | 0.45           |  |  | February 8, 2014  | 
|Officers                   |  | 200,000           |  | $ | 0.70           |  |  | September 3, 2014 | 
|                           |  | 125,000           |  | $ | 0.90           |  |  | December 2, 2014  | 
|                           |  | 650,000           |  | $ | 2.40           |  |  | December 5, 2016  | 
|                           |  |                   |  |   |                |  |  |                   | 
|Non-executive Officers and |  | 200,000           |  | $ | 0.45           |  |  | February 8, 2014  | 
|Senior Management          |  | 25,000            |  | $ | 0.90           |  |  | December 2, 2014  | 
|                           |  | 50,000            |  | $ | 1.15           |  |  | October 17, 2015  | 
|                           |  | 25,000            |  | $ | 1.90           |  |  | November 21, 2015 | 
|                           |  | 400,000           |  | $ | 2.40           |  |  | December 5, 2016  | 
|                           |  |                   |  |   |                |  |  |                   | 
|Employees                  |  | 14,000            |  | $ | 0.45           |  |  | February 8, 2014  | 
|                           |  | 15,000            |  | $ | 0.70           |  |  | September 3, 2014 | 
|                           |  | 12,000            |  | $ | 0.90           |  |  | December 2, 2014  | 
|                           |  | 118,000           |  | $ | 0.90           |  |  | July 11, 2015     | 
|                           |  | 1,500             |  | $ | 1.15           |  |  | October 17, 2015  | 
|                           |  | 65,000            |  | $ | 1.90           |  |  | November 21, 2015 | 
|                           |  | 1,275,000         |  | $ | 2.40           |  |  | December 5, 2016  | 
|                           |  |                   |  |   |                |  |  |                   | 
|Consultants                |  | 70,000            |  | $ | 0.45           |  |  | February 8, 2014  | 
|                           |  | 100,000           |  | $ | 0.70           |  |  | September 3, 2014 | 
|                           |  | 150,000           |  | $ | 2.40           |  |  | December 5, 2016  | 

---

- 75 -

|ITEM 7 | Major Shareholders and Related Party
      Transactions
|------ | -------------------------------------------------------

|A. | Major Shareholders
|-- | ------------------

As of February 29, 2012, Computershare Investor Services Inc.,
the Companys registrar and transfer agent reported that the Company had
137,525,919 common shares issued and outstanding. Of those common shares,
127,077,233 common shares were registered to Canadian residents (32
shareholders); 9,356,022 common shares were registered to residents of the
United States (108 shareholders); and 1,092,664 common shares were registered to
residents of other foreign countries (19 shareholders). There are no persons
known to the Company to be the beneficial owners of more than five (5%) of those
common shares.

To the best of the Companys knowledge, the Company is 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 the Company, the operation
of which may at a subsequent date result in a change in the control of the
Company.

|B. | Related Party
Transactions
|-- | --------------------------

Other than as disclosed below or elsewhere in this annual
report, to the best of the Companys knowledge, there have been no material
transactions or loans from the commencement of the 2011 fiscal year to the date
of this annual report between the Company and: (a) enterprises that directly or
indirectly through one or more intermediaries, control or are controlled by, or
are under common control with, the Company; (b) associates; (c) individuals
owning, directly or indirectly, an interest in the voting power of the Company
that gives them significant influence over the Company, and close members of any
such individual's family; (d) key management personnel of the Company, including
directors and senior management of the 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.

---

- 76 -

During the year ended December 31, 2011, we entered into the
following transactions with related parties (in thousands of dollars):

|               |  |                                     |  |  | 2011 |   |  | 2010 |   |  | 2009 |  
|-------------- |  | ----------------------------------- |  |  | ---- | - |  | ---- | - |  | ---- | -
|               |  |                                     |  |  |      |   |  |      |   |  |      |  
|R. A. Archer   |  | Consulting
      fees1              |  |  | 384  |   |  | 432  |   |  | 343  |  
|               |  | Cost recoveries2                    |  |  | (5   | ) |  | (51  | ) |  | (80  | )
|               |  |                                     |  |  |      |   |  |      |   |  |      |  
|K. G. Foy      |  | Consulting fees3                    |  |  | 302  |   |  | 270  |   |  | 290  |  
|               |  | Director
      fees4                |  |  | -    |   |  | 30   |   |  | 30   |  
|               |  | Office & administration
      fees5 |  |  | 85   |   |  | 86   |   |  | 69   |  
|               |  |                                     |  |  |      |   |  |      |   |  |      |  
|M. B. Carsky   |  | Director fees6                      |  |  | 17   |   |  | 40   |   |  | 52   |  
|               |  | Consulting
      fees7              |  |  | 159  |   |  | -    |   |  | -    |  
|               |  |                                     |  |  |      |   |  |      |   |  |      |  
|F.
      Ramos |  | Consulting fees8                    |  |  | 210  |   |  | 215  |   |  | 171  |  

|1  | The Company engaged the consulting services of Platoro
      Resource Corp., a company controlled by Robert A. Archer, President, Chief
      Executive Officer and Director of the Company.                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2  | Cost recoveries received or accrued from Altair, a
      company of which Robert A. Archer is a Director.                                                                                                                      
|3  | The Company engaged the consulting services of Oceanic
      Management Limited, a company controlled by Kaare G. Foy, Executive
      Chairman and Director of the Company.                                                   
|4  | Amounts paid to Oceanic Management Limited, a company
      controlled by Kaare G. Foy, Executive Chairman and Director of the
      Company, for Board of Director retainer fees.                                             
|5  | The Company paid for office and administrative fees for
      the use of office space provided by Oceanic Management Limited, a company
      controlled by Kaare G. Foy, Executive Chairman and Director of the
      Company.
|6  | Amounts paid to Embeecee Capital Management Limited, a
      company controlled by Martin B. Carsky, Director of the Company, for Board
      of Director retainer fees and special board committee fees.                      
|7  | The Company engaged in the consulting services of
      Embeecee Capital Management, a company controlled by Martin B.
    Carsky.                                                                                             
|8. | The Company engaged in the consulting services of
      Francisco Ramos Sanchez, Vice President, Business Development of the
      Company.                                                                                    

As at December 31, 2011, $42 (2010  $167) was due to companies
controlled by officers and directors of the Company and was included in accounts
payable. Amounts due from companies with common directors were $24 (2010  $75)
and were included in trade and other receivables.

The above transactions occurred in the normal course of
operations and are measured at fair value.

|C. | Interests of Experts and Counsel
|-- | --------------------------------
|   |                                 
|1. | KPMG LLP                        

KPMG LLP was engaged as the Companys financial auditors and
provided the Independent Auditors Report contained within this Form.

|2. | Scott Wilson Roscoe Postle Associates
  Inc.
|-- | --------------------------------------------

Scott Wilson Roscoe Postle Associates Inc. was engaged to
provide the technical report under NI 43-101 on the Guanajuato mine.

|3. | Roscoe Postle Associates Inc.
|-- | -----------------------------

Roscoe Postle Associates Inc. was engaged to provide the
technical report under NI 43-101 on the Topia mine.

The experts above do not own directly or indirectly any
outstanding common shares of the Company.

---

- 77 -

|ITEM 8 | Financial Information
|------ | ---------------------

Our financial statements are stated in Canadian dollars and are
prepared in accordance with International Financial Reporting Standards
(IFRS). 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 18 Financial Statements:

- Report of Independent Registered Public Accounting Firm dated March 9,
  2012.
- Consolidated statements of financial position as at December 31, 2011,
  December 31, 2010 and January 1, 2010.
- Consolidated statements of comprehensive income for the years ended
  December 31, 2011 and 2010.
- Consolidated statements of changes in shareholders equity for the years
  ended December 31, 2011 and 2010.
- Consolidated statements of cash flows for the years ended December 31, 2011
  and 2010.
- Notes to consolidated financial statements

Legal Proceedings and Regulatory Actions

During the financial year ended December 31, 2011, the Company
was not and is not currently a party to, nor is any of its property the subject
of, any legal proceedings for which the outcome is expected by management to
have a material adverse affect on the Company, nor, to the Companys knowledge,
is the Company to be a party to any contemplated legal proceedings, the outcome
of which could have a material adverse affect on the Company.

There have been no penalties or sanctions imposed against the
Company by a court relating to securities legislation or by a securities
regulatory authority during the financial year ended December 31, 2011, or any
other time that would likely be considered important to a reasonable investor
making an investment decision in the Company, and the Company has not entered
into any settlement agreements before a court relating to securities legislation
or with a securities regulatory authority during the financial year ended
December 31, 2011.

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.

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, 2011.

---

- 78 -

|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.

On February 8, 2011, the Companys shares were listed on NYSE
Amex stock exchange in the United States under the trading symbol GPL.

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

Year Ended
    High
    LowDecember 31, 2006
    $2.79
    $0.80December 31, 2007
    $2.53
    $1.07December 31, 2008
    $1.72
    $0.18December 31, 2009
    $1.25
    $0.23December 31, 2010
    $2.90
    $0.67December 31, 2011
    $4.90
    $1.79


---

- 79 -

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

Quarter Ended
    High
    LowMarch 31, 2010
    $1.14
    $0.73June 30, 2010
    $0.96
    $0.73September 30, 2010
    $1.04
    $0.67December 31, 2010
    $2.90
    $0.97March 31, 2011
    $4.90
    $1.79June 30, 2011
    $4.25
    $2.47September 30, 2011
    $3.92
    $2.56December 31, 2011
    $2.97
    $1.83


The high and low market prices for our common shares traded on
the TSX for each of the most recent six months, from September, 2011 through
February, 2012 were as follows:

Month Ended
    High
    LowSeptember 30, 2011
    $3.53
    $2.56October 31, 2011
    $2.94
    $2.05November 30, 2011
    $2.97
    $2.18December 31, 2011
    $2.41
    $1.83January 31, 2012
    $2.80
    $2.08February 29, 2012
    $2.91
    $2.36


The annual high and low market prices for our common shares
traded on NYSE Amex for the past year was as follows:

Year Ended
    High
    LowDecember 31, 2011
    $5.04
$1.78


The high and low market prices for our common shares traded on
NYSE Amex for each full financial quarter for the most recent full fiscal year
were as follows:

---

- 80 -

Quarter Ended
    High
    LowFebruary 8 to March 31, 2011
    $5.04
    $2.51June 30, 2011
    $4.40
    $2.52September 30, 2011
    $4.09
    $2.45December 31, 2011
    $2.93
    $1.78


The high and low market prices for our common shares traded on
NYSE Amex stock exchange for each of the most recent six months, from September,
2011 through February, 2012 were as follows:

Month Ended
    High
    LowSeptember 30, 2011
    $3.59
    $2.45October 31, 2011
    $2.90
    $1.99November 30, 2011
    $2.93
    $2.07December 31, 2011
    $2.40
    $1.78January 31, 2012
    $2.80
    $2.05February 29, 2012
    $2.94
    $2.35


The transfer of our common shares is managed by our transfer
agent, Computershare Investor Services Inc.

|B. | Plan of
Distribution
|-- | --------------------

Not applicable.

|C. | Markets
|-- | -------

Our common shares trade on the Toronto Stock Exchange (TSX) and
the NYSE Amex Equities Exchange, trading under the symbols "GPR and GPL
effective November 14, 2006 and February 8, 2011 respectively. Our CUSIP number
is 39115V 101.

|D. | Selling
Shareholders
|-- | --------------------

Not applicable.

|E. | Dilution
|-- | --------

Not applicable

---

- 81 -

|F. | Expenses of the
Issue
|-- | ---------------------

Not applicable.

|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 April 12, 2011, we closed an equity offering of
      5,750,000 common shares of the Company at a price of $4.20 per common
      share to raise gross proceeds of $24.15 million. The Company authorized
      and created 316,250 non-transferable share purchase warrants (the
      Underwriters Warrants) to purchase up to 316,250 common shares in the
      Company. Each Underwriters Warrant entitles the holder to purchase one
      common share of the Company at a price of $4.20 until April 12,
    2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | On July 18, 2011, we announced the acquisition of four
      mining concessions, totalling 1,514 hectares, approximately 10 to 15
      kilometres northeast of Guanajuato (collectively called the Santa Rosa
      Project). The four claims were purchased from Minera Blanca Alicia, S.A.
      de C.V., a private Mexican company, for US$1.5 million with 50% payable on
      signing of the purchase agreement and 50% on the registration of the
      contract with the Direccion General de Minas (Mexico), which is now
      complete. A royalty of 1.3% is payable from ore produced from the four
      claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | On January 1, 2011, the Company entered into an Executive
      Consulting Services Agreement with Platoro Resource Corp. (Platoro), a
      company controlled by Robert A. Archer, the President, Chief Executive
      Officer and a director of the Company, which replaced an earlier Executive
      Consulting Services Agreement between the parties dated March 22, 2006.
      Under the agreement, Platoro has agreed to continue to provide to the
      Company the services of Robert A. Archer as President and Chief Executive
      Officer, to devote so much of his time and attention and abilities as is
      reasonably necessary for the proper performance of his duties, which shall
      not be less than 180 days per year. The agreement has a term of 5 years.
      As compensation for the services provided, the Company has agreed to pay
      Platoro a fee, payable monthly, of $1,500 (the daily fee) for each day
      devoted by Mr. Archer exclusively to the interests of the Company (the
      daily fee in effect since January 1, 2010 under the earlier Executive
      Consulting Services Agreement was $1,305). Platoro is entitled to a bonus
      based on the performance of Mr. Archer. The criteria for and the awarding
      of a performance bonus is exclusively within the discretion of the
      Companys compensation committee or its independent directors, if there is
      no compensation committee.

---

- 82 -



- On January 1, 2011, the Company entered into an Executive Consulting
  Services Agreement with Oceanic Management Limited (Oceanic), a company
  controlled by Kaare G. Foy, the Executive Chairman and a director of the
  Company, which replaced an earlier Executive Consulting Services Agreement
  between the parties dated March 22, 2006. Under the agreement Oceanic has
  agreed to continue to provide to the Company the services of Kaare G. Foy as
  Executive Chairman, to devote so much of his time and attention and abilities
  as is reasonably necessary for the proper performance of his duties, which
  shall not be less than 180 days per year. The agreement has a term of 5 years.
  As compensation for the services provided, the Company has agreed to pay
  Oceanic a fee, payable monthly, of $1,300 (the daily fee) for each day
  devoted by Mr. Foy exclusively to the interests of the Company (the daily fee
  in effect since January 1, 2010 under the earlier Executive Consulting
  Services Agreement was $1,215). Oceanic is entitled to a bonus based on the
  performance of Mr. Foy. The criteria for and the awarding of a performance
  bonus is exclusively within the discretion of the Companys compensation
  committee or its independent directors, if there is no compensation committee.
  The amount of a performance bonus in any year will be up to a maximum of 100%
  of the total daily fees paid to Oceanic in that year. Subsequent to December
  31, 2011, on February 6, 2012, the Company entered into an Executive
  Consulting Services Termination Agreement with Oceanic terminating the
  services of Mr. Foy in connection with his retirement and resignation as an
  executive and director. Under the agreement, the Company paid Oceanic
  $676,000, and agreed to retain Oceanic and pay a monthly consulting fee of
  $2,500 per month for a period of not less than one year commencing at the end
  of February 2012.
- On January 1, 2011 the Company entered into an Executive Consulting
  Services Agreement with Francisco Ramos Sánchez, the Vice President, Business
  Development of the Company, which replaced an earlier Executive Consulting
  Services Agreement between the parties dated March 22, 2006. Under the
  agreement the Company continues the engagement of Mr. Ramos as Vice President,
  Business Development, to devote so much of his time and attention and
  abilities as is reasonably necessary for the proper performance of his duties,
  which shall not be less than 180 days per year. The agreement has a term of 5
  years. As compensation for the services provided, the Company has agreed to
  pay Mr. Ramos a fee, payable monthly, of $895 (the daily fee) for each day
  devoted by Mr. Ramos exclusively to the interests of the Company (the daily
  fee in effect since January 1, 2010 under the earlier Executive Consulting
  Services Agreement was $850). Mr. Ramos is entitled to a bonus based on his
  performance. The criteria for and the awarding of a performance bonus is
  exclusively within the discretion of the Companys compensation committee or
  its independent directors, if there is no compensation committee. The amount
  of a performance bonus in any year will be up to a maximum of 100% of the
  total daily fees paid to Mr. Ramos in that year.
- On August 7, 2007 (amended July 11, 2008), the Company entered into an
  Employment agreement with Charles P. Brown, the Chief Operating Officer. The
  Company agreed to pay Mr. Brown a starting salary of $15,000 per month and
  adjusted to $16,000 per month effective January 1, 2008. Pursuant to the
  employment agreement, in the event of termination without cause, Mr. Brown is
  entitled to 12 months salary. In the event of a change of control of the
  Company, or the involuntary termination of the agreement without cause, or
  other fundamental change resulting in Mr. Brown ceasing to be the Chief
  Operating Officer of the Company, then Mr. Brown is entitled to receive from
  the Company a payment equal to 12 months salary, 2 times the average of any
  performance bonus awarded in the previous 2 years and the equivalent of 2
  years of other compensation, if any.

---

- 83 -

- On August 23, 2007 (amended July 11, 2008), the Company entered into an
  Employment Agreement with Raakel Iskanius, the Chief Financial Officer. The
  Company agreed to pay Ms. Iskanius a starting salary of $11,000 per month and
  adjusted to $12,500 per month effective January 1, 2008. Pursuant to the
  employment agreement, in the event of termination without cause, Ms. Iskanius
  was entitled to 12 months salary. In the event of a change of control of the
  Company, or the involuntary termination of the agreement without cause, or
  other fundamental change resulting in Ms. Iskanius ceasing to be the Chief
  Financial Officer of the Company, then Ms. Iskanius was entitled to receive
  from the Company a payment equal to 12 months salary, 2 times the average of
  any performance bonus awarded in the previous 2 years and the equivalent of 2
  years of other compensation, if any. Ms. Iskanius resigned on May 31, 2011 and
  as such the agreement was terminated.
- On July 11, 2008, the Company entered into an Employment agreement with
  Robert Brown, the Vice President, Exploration, effective September 1, 2007.
  The Company agreed to pay Mr. Brown a salary of $12,450 per month. Pursuant to
  the employment agreement, in the event of termination without cause, Mr. Brown
  is entitled to 12 months salary. In the event of a change of control of the
  Company, or the involuntary termination of the agreement without cause, or
  other fundamental change resulting in Mr. Brown ceasing to be the Vice
  President, Exploration of the Company, then Mr. Brown is entitled to receive
  from the Company a payment equal to 12 months salary.
- On April 20, 2011, the Company entered into an Executive Consulting
  Services Agreement, effective June 1, 2011, with Embeecee Capital Management
  Ltd. (Embeecee), a company controlled by Martin B. Carsky, the Executive
  Vice President and Chief Financial Officer of the Company. Under the agreement
  Embeecee has agreed to provide to the Company the services of Martin B. Carsky
  as Executive Vice President and Chief Financial Officer, to devote so much of
  his time and attention and abilities as is reasonably necessary for the proper
  performance of his duties, which shall not be less than 180 days per year. The
  agreement had a term of 5 years. As compensation for the services provided,
  the Company has agreed to pay Embeecee a fee, payable monthly, of $1,155 (the
  daily fee) for each day devoted by Mr. Carsky exclusively to the interests
  of the Company. Embeecee is entitled to a bonus based on the performance of
  Mr. Carsky. The criteria for and the awarding of a performance bonus is
  exclusively within the discretion of the Companys compensation committee or
  its independent directors, if there is no compensation committee. The amount
  of a performance bonus in any year will be up to a maximum of 100% of the
  total daily fees paid to Carsky in that year. On December 1, 2011, the
  Executive Consulting Services Agreement with Embeecee was terminated and was
  replaced by an Employment Agreement between the Company and Martin B. Carsky.
  The Company agreed to pay Mr. Carsky a starting salary, payable monthly, of
  $1,288 per day (the daily fee). Mr. Carsky is entitled to a bonus based on
  the performance. In the event of a change of control of the Company, or the
  involuntary termination of the agreement without cause, or other fundamental
  change resulting in Mr. Carsky ceasing to be the Executive Vice President and
  Chief Financial Officer of the Company, then Mr. Carsky is entitled to receive
  from the Company a payment equal to 12 months salary, 2 times the average of
  any performance bonus awarded in the previous 2 years and the equivalent of 2
  years of other compensation, if any.

|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.

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There is no limitation imposed by Canadian law or by the
charter or other constituent documents of the Company on the right of a
non-resident to hold or vote common shares of the Company. However, the
Investment Canada Act(Canada) (the Investment Act) has rules regarding
certain acquisitions of shares by non-residents, along with other requirements
under that legislation.

The following discussion summarizes the principal features of
the Investment Act for a non-resident who proposes to acquire common shares of
the Company. The discussion is general only; it is not a substitute for
independent legal advice from an investors own advisor; and it does not
anticipate statutory or regulatory amendments.

The Investment Act is a federal statute of broad application
regulating the establishment and acquisition of Canadian businesses by
non-Canadians, including individuals, governments or agencies thereof,
corporations, partnerships, trusts or joint ventures (each an entity).
Investments by non-Canadians to acquire control over existing Canadian
businesses or to establish new ones are either reviewable or notifiable under
the Investment Act. If an investment by a non-Canadian to acquire control over
an existing Canadian business is reviewable under the Investment Act, the
Investment Act generally prohibits implementation of the investment unless,
after review, the Minister of Industry, is satisfied that the investment is
likely to be of net benefit to Canada.

A non-Canadian would acquire control of the Company for the
purposes of the Investment Act through the acquisition of common shares if the
non-Canadian acquired a majority of the common shares of the Company.

Further, the acquisition of less than a majority but one-third
or more of the common shares of the Company would be presumed to be an
acquisition of control of the Company unless it could be established that, on
the acquisition, the Company was not controlled in fact by the acquirer through
the ownership of common shares.

For a direct acquisition that would result in an acquisition of
control of the Company, subject to the exception for WTO-investors that are
controlled by persons who are resident in World Trade Organization (WTO)
member nations (there are currently 153 WTO members), a proposed investment
would be reviewable where the value of the acquired assets is CAD $5 million or
more, or if an order for review was made by the federal cabinet on the grounds
that the investment related to Canadas cultural heritage or national identity,
where the value of the acquired assets is less than CAD $5 million.

For a proposed indirect acquisition that is not a so-called WTO
transaction and that would result in an acquisition of control of the Company
through the acquisition of a non-Canadian parent entity, the investment would be
reviewable where (a) the value of the Canadian assets acquired in the
transaction is CAD $50 million or more, or (b) the value of the Canadian assets
is greater than 50% of the value of all of the assets acquired in the
transaction and the value of the Canadian assets is CAD $5 million or more.

In the case of a direct acquisition by or from a WTO
investor, the threshold is significantly higher, and is adjusted for inflation
each year. The 2012 threshold is CAD$330 million. Other than the exception noted
below, an indirect acquisition involving a WTO investor is not reviewable under
the Investment Act.

The higher WTO threshold for direct investments and the
exemption for indirect investments do not apply where the relevant Canadian
business is carrying on a cultural business. The acquisition of a Canadian
business that is a cultural business is subject to lower review thresholds
under the Investment Act because of the perceived sensitivity of the cultural
sector.

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In 2009, amendments were enacted to the Investment Act
concerning investments that may be considered injurious to national security. If
the Industry Minister has reasonable grounds to believe that an investment by a
non-Canadian could be injurious to national security, the Industry Minister
may send the non-Canadian a notice indicating that an order for review of the
investment may be made. The review of an investment on the grounds of national
security may occur whether or not an investment is otherwise subject to review
on the basis of net benefit to Canada or otherwise subject to notification under
the Investment Canada Act. To date, there is neither legislation nor guidelines
published, or anticipated to be published, on the meaning of injurious to
national security. Discussions with government officials suggest that very few
investment proposals will cause a review under these new sections.

Certain transactions, except those to which the national
security provisions of the Investment Act may apply, relating to common shares
of the Company are exempt from the Investment Act, including

| | (a) | acquisition of common shares of the Company by a person
      in the ordinary course of that persons business as a trader or dealer in
      securities,                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                      
| | (b) | acquisition of control of the Company in connection with
      the realization of security granted for a loan or other financial
      assistance and not for a purpose related to the provisions on the
      Investment Act, and                                                   
| |     |                                                                                                                                                                                                                                                                                      
| | (c) | acquisition of control of the Company by reason of an
      amalgamation, merger, consolidation or corporate reorganization following
      which the ultimate direct or indirect control in fact of the Company,
      through the ownership of common shares, remained
  unchanged.

|E. | Taxation
|-- | --------

Certain Canadian Federal Income Tax
Considerations

General

We consider that the following general summary fairly describes
the principal Canadian federal income tax consequences applicable to a holder of
our common shares who, at all material times and for all relevant purposes (i)
is a resident of the United States, (ii) is not and is not deemed to be a
resident of Canada, (iii) deals at arms length with and is not affiliated with
our company, (iv) holds the common shares of our company as capital property,
(v) has never been resident in Canada, and (vi) does not use or hold, and is not
deemed to use or hold, our common shares in connection with carrying on a
business in Canada, or otherwise in connection with or in respect of a business
or permanent establishment in Canada (the latter within the 12 month period
preceding the date of sale or other alienation of any common shares). A holder
who meets all of the foregoing requirements is referred to in this summary as a
Nonresident Holder, and this summary only addresses such Non-resident Holders.
In addition, this summary does not apply to a registered non-resident insurer
or an authorized foreign bank within the meaning of the Income Tax Act
(Canada) (the ITA) and the regulations thereunder (the Regulations), and
does not apply to any other holder of special status or subject to special
circumstances (including a Nonresident Holder as defined above).

This summary is based on the current provisions of the ITA, the
Regulations, our understanding of the current administrative and assessing
policies of the Canada Revenue Agency as of the date hereof, and all specific
proposals (the Tax Proposals) to amend the ITA and the Regulations publicly
announced by the Minister of Finance (Canada) before the date hereof. This
summary assumes that the Tax Proposals will be enacted in their form proposed as
of the date hereof, although no assurance in this regard can be given. This
summary, except for the Tax Proposals, does not take into account or anticipate
any changes in law,

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- 86 -

including retroactive amendments, whether by legislative, government or judicial action, nor does it take into account provincial, territorial, or foreign tax considerations which may differ significantly from those discussed herein.

This summary is of a general nature only, is not exhaustive of
all possible Canadian federal income tax considerations and is not intended to
be, nor should it be construed to be, legal or tax advice to any particular
Non-resident Holder.

Dividends

Dividends paid or credited, or deemed paid or credited, to a
Non-resident Holder on our common shares (if any) will be subject to Canadian
withholding tax under the ITA at the rate of 25% of the gross amount of the
dividends unless the holder can substantiate a lower rate of withholding tax
under an applicable income tax treaty or convention. The Canada-US Income Tax
Convention (1980), as amended, (the Treaty) will in general reduce the 25%
withholding tax rate under the ITA on such dividends to (i) 15% where the
beneficial owner of the dividends is a resident of the United States and
otherwise entitled to Treaty benefits, and (ii) 5% where the beneficial owner of
the dividends is a corporation that is a resident of the United States which
owns at least 10% of our voting shares and is otherwise entitled to Treaty
benefits. Certain look-through rules, not reviewed in this summary, will apply
for Non-resident Holders that are considered fiscally transparent entities under
United States law, in determining whether the beneficial owner is resident in
the United States and whether the 10% threshold is met. Not all persons who are
residents of the United States will qualify for the benefits under the Treaty. A
Non-resident Holder is advised to consult his own tax advisors in this regard.

Dispositions

A Non-resident Holder of our common shares will generally not
be subject to tax under the ITA in respect of a capital gain realized on the
disposition or deemed disposition thereof, unless the common shares represent
taxable Canadian property to the Non-resident Holder and the Non-resident
Holder is not entitled to relief under the Treaty.

Provided that our common shares are listed on a designated
stock exchange as defined under the ITA (which currently includes the TSX) at
the time of disposition, the common shares will generally not constitute
taxable Canadian property to the Non-resident Holder unless, at any particular
time during the 60-month period that ends at that time: (i) 25% or more of the
issued shares of any class of the capital stock of our company were owned by or
belonged to the Non-Resident Holder and/or persons with whom the Non-Resident
Holder did not deal at arms length AND (ii) more than 50% of the fair market
value of the common shares was derived directly or indirectly from one or any
combination of real or immovable property situated in Canada, Canadian resource
properties or timber resource properties as defined for purposes of the ITA, or
options or interests in respect of any of the foregoing. Our common shares may
also be taxable Canadian property to a Non-Resident Holder if acquired
pursuant to certain tax-deferred transactions.

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- 87 -

Where a Non-resident Holder realizes a capital gain on a
disposition or deemed disposition of common shares that do constitute taxable
Canadian property, the Treaty in general terms can relieve the Nonresident
Holder from liability for Canadian income tax on such capital gain unless (i)
the value of the common shares is derived principally from real property
situated in Canada, including the right to explore for or exploit natural
resources and rights to amounts computed by reference to production from natural
resources, or (ii) the Non-Resident Holder is not eligible for benefits under
the Treaty for other reasons. Non-resident Holders who may hold our shares as
taxable Canadian property should consult with their own tax advisors in this
regard, and with respect to the related Canadian compliance requirements under
the ITA.

Certain United States Federal Income Taxation
Considerations

The following is a general summary of certain material U.S.
federal income tax considerations applicable to a U.S. Holder (as defined below)
arising from and relating to the acquisition, ownership, and disposition of our
acquired pursuant to this Form 20-F.

This summary is for general information purposes only and does
not purport to be a complete analysis or listing of all potential U.S. federal
income tax considerations that may apply to a U.S. Holder arising from and
relating to the acquisition, ownership, and disposition of common shares. In
addition, this summary does not take into account the individual facts and
circumstances of any particular U.S. Holder that may affect the U.S. federal
income tax consequences to such U.S. Holder, including without limitation
specific tax consequences to a U.S. Holder under an applicable tax treaty.
Accordingly, this summary is not intended to be, and should not be construed as,
legal or U.S. federal income tax advice with respect to any U.S. Holder. This
summary does not address the U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and foreign tax consequences to U.S.
Holders of the acquisition, ownership, and disposition of common shares. Each
prospective U.S. Holder should consult its own tax advisor regarding the U.S.
federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S.
state and local, and foreign tax consequences relating to the acquisition,
ownership, and disposition of common shares.

No legal opinion from U.S. legal counsel or ruling from the
Internal Revenue Service (the IRS) has been requested, or will be obtained,
regarding the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of common shares. This summary is not binding on the
IRS, and the IRS is not precluded from taking a position that is different from,
and contrary to, the positions taken in this summary. In addition, because the
authorities on which this summary is based are subject to various
interpretations, the IRS and the U.S. courts could disagree with one or more of
the conclusions described in this summary.

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Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), Treasury Regulations (whether final, temporary, or
proposed), published rulings of the IRS, published administrative positions of
the IRS, the Convention Between Canada and the United States of America with
Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended
(the Canada-U.S. Tax Convention), and U.S. court decisions that are applicable
and, in each case, as in effect and available, as of the date of this document.
Any of the authorities on which this summary is based could be changed in a
material and adverse manner at any time, and any such change could be applied on
a retroactive or prospective basis which could affect the U.S. federal income
tax considerations described in this summary. This summary does not discuss the
potential effects, whether adverse or beneficial, of any proposed legislation
that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a
beneficial owner of common shares that is for U.S. federal income tax
purposes:

- an individual who is a citizen or resident of the U.S.;
- a corporation (or other entity taxable as a corporation for U.S. federal
  income tax purposes) organized under the laws of the U.S., any state thereof
  or the District of Columbia;
- an estate whose income is subject to U.S. federal income taxation
  regardless of its source; or
- a trust that (1) is subject to the primary supervision of a court within
  the U.S. and the control of one or more U.S. persons for all substantial
  decisions or (2) has a valid election in effect under applicable Treasury
  Regulations to be treated as a U.S. person.

Non-U.S. Holders

For purposes of this summary, a non-U.S. Holder is a
beneficial owner of common shares that is not a U.S. Holder. This summary does
not address the U.S. federal income tax consequences to non-U.S. Holders arising
from and relating to the acquisition, ownership, and disposition of common
shares. Accordingly, a non-U.S. Holder should consult its own tax advisor
regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and foreign tax consequences (including
the potential application of and operation of any income tax treaties) relating
to the acquisition, ownership, and disposition of common shares.

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U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed

This summary does not address the U.S. federal income tax
considerations applicable to U.S. Holders that are subject to special provisions
under the Code, including, but not limited to, the following: (a) U.S. Holders
that are tax-exempt organizations, qualified retirement plans, individual
retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are
financial institutions, underwriters, insurance companies, real estate
investment trusts, or regulated investment companies; (c) U.S. Holders that are
broker-dealers, dealers, or traders in securities or currencies that elect to
apply a mark-to-market accounting method; (d) U.S. Holders that have a
functional currency other than the U.S. dollar; (e) U.S. Holders that own
common shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one
position; (f) U.S. Holders that acquired common shares in connection with the
exercise of employee stock options or otherwise as compensation for services;
(g) U.S. Holders that hold common shares other than as a capital asset within
the meaning of Section 1221 of the Code (generally, property held for investment
purposes); or (h) U.S. Holders that own or have owned (directly, indirectly, or
by attribution) 10% or more of the total combined voting power of the
outstanding shares of the Company. This summary also does not address the U.S.
federal income tax considerations applicable to U.S. Holders who are: (a) U.S.
expatriates or former long-term residents of the U.S.; (b) persons that have
been, are, or will be a resident or deemed to be a resident in Canada for
purposes of the Tax Act; (c) persons that use or hold, will use or hold, or that
are or will be deemed to use or hold common shares in connection with carrying
on a business in Canada; (d) persons whose common shares constitute taxable
Canadian property under the Tax Act; or (e) persons that have a permanent
establishment in Canada for the purposes of the Canada-U.S. Tax Convention. U.S.
Holders that are subject to special provisions under the Code, including, but
not limited to, U.S. Holders described immediately above, should consult their
own tax advisor regarding the U.S. federal, U.S. federal alternative minimum,
U.S. federal estate and gift, U.S. state and local, and foreign tax consequences
relating to the acquisition, ownership and disposition of common shares.

If an entity or arrangement that is classified as a partnership
(or other pass-through entity) for U.S. federal income tax purposes holds
common shares, the U.S. federal income tax consequences to such entity and the
partners (or other owners) of such entity generally will depend on the
activities of the entity and the status of such partners (or owners). This
summary does not address the tax consequences to any such owner. Partners (or
other owners) of entities or arrangements that are classified as partnerships or
as pass-through entities for U.S. federal income tax purposes should consult
their own tax advisors regarding the U.S. federal income tax consequences
arising from and relating to the acquisition, ownership, and disposition of
common shares.

Ownership and Disposition of Common Shares

The following discussion is subject to the rules described
below under the heading Passive Foreign Investment Company Rules.

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Taxation of Distributions

A U.S. Holder that receives a distribution, including a
constructive distribution, with respect to a common share will be required to
include the amount of such distribution in gross income as a dividend (without
reduction for any foreign income tax withheld from such distribution) to the
extent of the current or accumulated earnings and profits of the Company, as
computed for U.S. federal income tax purposes. To the extent that a distribution
exceeds the current and accumulated earnings and profits of the Company, such
distribution will be treated first as a tax-free return of capital to the extent
of a U.S. Holder's tax basis in the common shares and thereafter as gain from
the sale or exchange of such common shares (see  Sale or Other Taxable
Disposition of common shares below). However, the Company may not maintain the
calculations of earnings and profits in accordance with U.S. federal income tax
principles, and each U.S. Holder should therefore assume that any distribution
by the Company with respect to the common shares will constitute ordinary
dividend income. Dividends received on common shares generally will not
constitute qualified dividend income eligible for the dividends received
deduction.

For tax years beginning before January 1, 2013, a dividend paid
by the Company to a U.S. Holder who is an individual, estate or trust generally
will be taxed at the preferential tax rates applicable to long-term capital
gains if the Company is a qualified foreign corporation (QFC) and certain
holding period requirements for the common shares are met. The Company generally
will be a QFC as defined under Section 1(h)(11) of the Code if the Company is
eligible for the benefits of the Canada - U.S. Tax Convention or its shares are
readily tradable on an established securities market in the U.S. However, even
if the Company satisfies one or more of these requirements, the Company will not
be treated as a QFC if the Company is a passive foreign investment company (or
PFIC, as defined below) for the tax year during which it pays a dividend or
for the preceding tax year. See the section below under the heading Passive
Foreign Investment Company Rules below.

If a U.S. Holder is not eligible for the preferential tax rates
discussed above, a dividend paid by the Company to a U.S. Holder generally will
be taxed at ordinary income tax rates (and not at the preferential tax rates
applicable to long-term capital gains). The dividend rules are complex, and each
U.S. Holder should consult its own tax advisor regarding the application of such
rules.

Sale or Other Taxable Disposition of Common Shares

A U.S. Holder will recognize gain or loss on the sale or other
taxable disposition of common shares in an amount equal to the difference, if
any, between (a) the amount of cash plus the fair market value of any property
received and (b) such U.S. Holders tax basis in such common shares sold or
otherwise disposed of. Any such gain or loss generally will be capital gain or
loss, which will be long-term capital gain or loss if, at the time of the sale
or other disposition, such common shares are held for more than one year.

Preferential tax rates apply to long-term capital gains of a
U.S. Holder that is an individual, estate, or trust. There are currently no
preferential tax rates for long-term capital gains of a U.S. Holder that is a
corporation. Deductions for capital losses are subject to significant
limitations under the Code.

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Passive Foreign Investment Company Rules

If the Company were to constitute a PFIC for any year during a
U.S. Holders holding period, then certain potentially adverse rules would
affect the U.S. federal income tax consequences to a U.S. Holder resulting from
the acquisition, ownership and disposition of common shares. The Company does
not believe that it was a PFIC for its tax year ended December 31, 2011.
However, PFIC classification is fundamentally factual in nature, generally
cannot be determined until the close of the tax year in question, and is
determined annually. Additionally, the analysis depends, in part, on the
application of complex U.S. federal income tax rules, which are subject to
differing interpretations. Consequently, there can be no assurance that the
Company has never been and will not become a PFIC for any tax year during which
U.S. Holders hold common shares.

In addition, in any year in which the Company is classified as
a PFIC, such holder would be required to file an annual report with the IRS
containing such information as Treasury Regulations and/or other IRS guidance
may require. U.S. Holders should consult their own tax advisors regarding the
requirements of filing such information returns under these rules, including the
requirement to file a IRS Form 8621.

The Company generally will be a PFIC under Section 1297 of the
Code if, for a tax year, (a) 75% or more of the gross income of the Company for
such tax year is passive income (the income test) or (b) 50% or more of the
value of the Companys assets either produce passive income or are held for the
production of passive income (the asset test), based on the quarterly average
of the fair market value of such assets. Gross income generally includes all
sales revenues less the cost of goods sold, plus income from investments and
from incidental or outside operations or sources, and passive income generally
includes, for example, dividends, interest, certain rents and royalties, certain
gains from the sale of stock and securities, and certain gains from commodities
transactions. Active business gains arising from the sale of commodities
generally are excluded from passive income if substantially all (85% or more) of
a foreign corporations commodities are stock in trade or inventory, depreciable
property used in a trade or business or supplies regularly used or consumed in a
trade or business and certain other requirements are satisfied.

In addition, for purposes of the PFIC income test and asset
test described above, if the Company owns, directly or indirectly, 25% or more
of the total value of the outstanding shares of another corporation, the Company
will be treated as if it (a) held a proportionate share of the assets of such
other corporation and (b) received directly a proportionate share of the income
of such other corporation. In addition, for purposes of the PFIC income test and
asset test described above, passive income does not include any interest,
dividends, rents, or royalties that are received or accrued by the Company from
a related person (as defined in Section 954(d)(3) of the Code), to the extent
such items are properly allocable to the income of such related person that is
not passive income.

Under certain attribution rules, if the Company is a PFIC, U.S.
Holders will be deemed to own their proportionate share of any subsidiary of the
Company which is also a PFIC (a Subsidiary PFIC), and will be subject to
U.S. federal income tax on (i) a distribution on the shares of a Subsidiary PFIC
or (ii) a disposition of shares of a Subsidiary PFIC, both as if the holder
directly held the shares of such Subsidiary PFIC.

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If the Company were a PFIC in any tax year and a U.S. Holder
held common shares, such holder generally would be subject to special rules with
respect to excess distributions made by the Company on the common shares and
with respect to gain from the disposition of common shares. An excess
distribution generally is defined as the excess of distributions with respect
to the common shares received by a U.S Holder in any tax year over 125% of the
average annual distributions such U.S. Holder has received from the Company
during the shorter of the three preceding tax years, or such U.S. Holders
holding period for the common shares. Generally, a U.S. Holder would be required
to allocate any excess distribution or gain from the disposition of the common
shares ratably over its holding period for the common shares. Such amounts
allocated to the year of the disposition or excess distribution would be taxed
as ordinary income, and amounts allocated to prior tax years would be taxed as
ordinary income at the highest tax rate in effect for each such year and an
interest charge at a rate applicable to underpayments of tax would apply.

While there are U.S. federal income tax elections that
sometimes can be made to mitigate these adverse tax consequences (including,
without limitation, the QEF Election under Section 1295 of the Code and the
Mark-to-Market Election under Section 1296 of the Code), such elections are
available in limited circumstances and must be made in a timely manner.

U.S. Holders should be aware that, for each tax year, if any,
that the Company is a PFIC, the Company can provide no assurances that it will
satisfy the record keeping requirements of a PFIC, or that it will make
available to U.S. Holders the information such U.S. Holders require to make a
QEF Election with respect to the Company or any Subsidiary PFIC. U.S. Holders
are urged to consult their own tax advisors regarding the potential application
of the PFIC rules to the ownership and disposition of common shares, and the
availability of certain U.S. tax elections under the PFIC rules.

Additional Considerations

Additional Tax on Passive Income

For tax years beginning after December 31, 2012, certain
individuals, estates and trusts whose income exceeds certain thresholds will be
required to pay a 3.8% Medicare surtax on net investment income including,
among other things, dividends and net gain from disposition of property (other
than property held in a trade or business). U.S. Holders should consult with
their own tax advisors regarding the effect, if any, of this tax on their
ownership and disposition of common shares.

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign
currency, or on the sale, exchange or other taxable disposition of common
shares, generally will be equal to the U.S. dollar value of such foreign
currency based on the exchange rate applicable on the date of receipt
(regardless of whether such foreign currency is converted into U.S. dollars at
that time). A U.S. Holder will have a basis in the foreign currency equal to its
U.S. dollar value on the date of receipt. Any U.S. Holder who converts or
otherwise disposes of the foreign currency after the date of receipt may have a
foreign currency exchange gain or loss that would be treated as ordinary income
or loss, and generally will be U.S. source income or loss for foreign tax credit
purposes. Each U.S. Holder should consult its own U.S. tax advisor regarding the
U.S. federal income tax consequences of receiving, owning, and disposing of
foreign currency.

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Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder that
pays (whether directly or through withholding) Canadian income tax with respect
to dividends paid on the common shares generally will be entitled, at the
election of such U.S. Holder, to receive either a deduction or a credit for such
Canadian income tax. Generally, a credit will reduce a U.S. Holders U.S.
federal income tax liability on a dollar-for-dollar basis, whereas a deduction
will reduce a U.S. Holders income subject to U.S. federal income tax. This
election is made on a year-by-year basis and applies to all foreign taxes paid
(whether directly or through withholding) by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including
the general limitation that the credit cannot exceed the proportionate share of
a U.S. Holders U.S. federal income tax liability that such U.S. Holders
foreign source taxable income bears to such U.S. Holders worldwide taxable
income. In applying this limitation, a U.S. Holders various items of income and
deduction must be classified, under complex rules, as either foreign source or
U.S. source. Generally, dividends paid by a foreign corporation should be
treated as foreign source for this purpose, and gains recognized on the sale of
stock of a foreign corporation by a U.S. Holder should be treated as U.S. source
for this purpose, except as otherwise provided in an applicable income tax
treaty, and if an election is properly made under the Code. However, the amount
of a distribution with respect to the common shares that is treated as a
dividend may be lower for U.S. federal income tax purposes than it is for
Canadian federal income tax purposes, resulting in a reduced foreign tax credit
allowance to a U.S. Holder. In addition, this limitation is calculated
separately with respect to specific categories of income. The foreign tax credit
rules are complex, and each U.S. Holder should consult its own U.S. tax advisor
regarding the foreign tax credit rules.

Backup Withholding and Information Reporting

Under U.S. federal income tax law and Treasury Regulations,
certain categories of U.S. Holders must file information returns with respect to
their investment in, or involvement in, a foreign corporation. For example, U.S.
return disclosure obligations (and related penalties) are imposed on individuals
who are U.S. Holders that hold certain specified foreign financial assets in
excess of $50,000. The definition of specified foreign financial assets includes
not only financial accounts maintained in foreign financial institutions, but
also, unless held in accounts maintained by a financial institution, any stock
or security issued by a non-U.S. person, any financial instrument or contract
held for investment that has an issuer or counterparty other than a U.S. person
and any interest in a foreign entity. U. S. Holders may be subject to these
reporting requirements unless their common shares are held in an account at a
domestic financial institution. Penalties for failure to file certain of these
information returns are substantial. U.S. Holders should consult with their own
tax advisors regarding the requirements of filing information returns under
these rules, including the requirement to file an IRS Form 8938.

---

- 94 -

Payments made within the U.S. or by a U.S. payor or U.S.
middleman, of dividends on, and proceeds arising from the sale or other taxable
disposition of, common shares will generally be subject to information reporting
and backup withholding tax, at the rate of 28% (increasing to 31% for payments
made after December 31, 2012), if a U.S. Holder (a) fails to furnish such U.S.
Holders correct U.S. taxpayer identification number (generally on Form W-9),
(b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified
by the IRS that such U.S. Holder has previously failed to properly report items
subject to backup withholding tax, or (d) fails to certify, under penalty of
perjury, that such U.S. Holder has furnished its correct U.S. taxpayer
identification number and that the IRS has not notified such U.S. Holder that it
is subject to backup withholding tax. However, certain exempt persons generally
are excluded from these information reporting and backup withholding rules.
Backup withholding is not an additional tax. Any amounts withheld under the U.S.
backup withholding tax rules will be allowed as a credit against a U.S. Holders
U.S. federal income tax liability, if any, or will be refunded, if such U.S.
Holder furnishes required information to the IRS in a timely manner. Each U.S.
Holder should consult its own tax advisor regarding the information reporting
and backup withholding rules.

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.

|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, the Company has five
wholly-owned subsidiaries: (i) Minera Mexicana el Rosario, S.A. de C.V.; (ii)
Metalicos de Durango, S.A. de C.V.; (iii) Minera de Villa Seca, S.A. de C.V.,
(iv) New Age Investments Inc. and (v) Great Panther Silver Perú S.A.C.

|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.

(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.

---

- 95 -

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 are as follows: |   |                   |  |   |                   | 
|-------------------------------------------------------------------------- | - | ----------------- |  | - | ----------------- | 
|                                                                           |   | December 31, 2011 |  |   | December 31, 2010 | 
|                                                                           |   |                   |  |   |                   | 
|MXN Peso per CDN Dollar                                                    | $ | 13.7212           |  | $ | 12.4100           | 
|US Dollar per CDN
      Dollar                                             | $ | 0.9833            |  | $ | 1.0054            | 

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 the foreign currency risk exposure on
those receivables 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 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, 2011, the
Company held approximately $35.8 million (2010 - $13.0 million) in high interest
savings accounts and guaranteed investment certificates.

(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, 2011, market prices were US$27.80/oz (2010 US$30.63/oz) for
silver, US$1,564.45/oz (2010 - US$1,410/oz) for gold, US$1,979.75/tonne (2010
-US$2,586/tonne) for lead, and US$1,827.50/tonne (2010  US$2,432/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, imports, exports, supply, industrial and retail demand, forward
sales by producers and speculators, levels of worldwide production and
short-term changes in supply and demand because of speculative hedging
activities. The value of trade receivables depends on changes in metal prices
over the quotation 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.

During the year, the Company held derivative financial
instruments to mitigate certain fluctuations in lead and zinc prices.

---

- 96 -

(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 change of +1%/-1% from the prevailing market interest rates on deposits
  as of December 31, 2011.
- Proportional foreign exchange movement of -10% (depreciation of CDN Dollar)
  and +10% (appreciation of CDN Dollar) against the US Dollar, from the December
  31, 2011 CDN Dollar to US Dollar exchange rate of 0.9833.
- Proportional foreign exchange movement of -10% (depreciation of CDN Dollar)
  and +10% (appreciation of CDN Dollar) against the Mexican Peso, from the
  December 31, 2011 CDN Dollar to Mexican Peso exchange rate of 13.7212.
- A change of +10%/-10% from the prevailing commodity prices of US$27.80/oz
  for silver, US$1,564.45/oz for gold, US$1,979.75/tonne for lead, and
  US$1,827.50/tonne for zinc as of December 31, 2011.

---

- 97 -

If these movements were to occur, the impact on the
consolidated net income for each category of financial instrument held at
December 31, 2011 and December 31, 2010 are as follows (in thousands of Canadian
dollars):

|                                |   |          |  |   | Interest Rate Risk |   |   | Currency Rate Risk |  |   | Commodity Price Risk |  
|------------------------------- | - | -------- |  | - | ------------------ | - | - | ------------------ |  | - | -------------------- | -
|                                |   |          |  |   | -1%                |   |   | +1%                |  |   | -10%                 |  
|                                |   | Carrying |  |   |                    |   |   |                    |  |   |                      |  
|                                |   | Amount   |  |   | Income             |   |   | Income             |  |   | Income               |  
|Financial assets                |   |          |  |   |                    |   |   |                    |  |   |                      |  
|                                |   |          |  |   |                    |   |   |                    |  |   |                      |  
|Cash and cash equivalents       |   |          |  |   |                    |   |   |                    |  |   |                      |  
|CDN dollars                     | $ | 27,685   |  | $ | (277               | ) | $ | 277                |  | $ | -                    |  
|US dollars                      |   | 4,270    |  |   | (43                | ) |   | 43                 |  |   | 474                  |  
|Mexican Pesos                   |   | 7,482    |  |   | (75                | ) |   | 75                 |  |   | 688                  |  
|                                |   |          |  |   |                    |   |   |                    |  |   |                      |  
|Accounts receivable             |   |          |  |   |                    |   |   |                    |  |   |                      |  
|US dollars                      |   | 8,116    |  |   | -                  |   |   | -                  |  |   | 902                  |  
|                                |   |          |  |   |                    |   |   |                    |  |   |                      |  
|Inter-company loans receivable  |   |          |  |   |                    |   |   |                    |  |   |                      |  
|CDN dollars                     |   | 50,796   |  |   | -                  |   |   | -                  |  |   | 5,644                |  
|                                |   |          |  |   |                    |   |   |                    |  |   |                      |  
|Financial liabilities           |   |          |  |   |                    |   |   |                    |  |   |                      |  
|                                |   |          |  |   |                    |   |   |                    |  |   |                      |  
|Trade and other payables        |   |          |  |   |                    |   |   |                    |  |   |                      |  
|US dollars                      |   | 1,846    |  |   | -                  |   |   | -                  |  |   | (205                 | )
|                                |   |          |  |   |                    |   |   |                    |  |   |                      |  
|Inter-company loans payable     |   |          |  |   |                    |   |   |                    |  |   |                      |  
|US dollars                      |   | 4,735    |  |   | -                  |   |   | -                  |  |   | (508                 | )
|                                |   |          |  |   |                    |   |   |                    |  |   |                      |  
|Capital lease obligation        |   |          |  |   |                    |   |   |                    |  |   |                      |  
|US dollars                      |   | 130      |  |   | -                  |   |   | -                  |  |   | (15                  | )
|Total increase
      (decrease) |   |          |  | $ | (395               | ) | $ | 395                |  | $ | 6,980                |  

---

- 98 -

|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.

|ITEM 15 | Controls and Procedures
|------- | -----------------------

Disclosure Controls and Procedures

Disclosure controls and procedures are defined in Rule
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange
Act) to mean controls and other procedures of an issuer that are designed to
ensure that information required to be disclosed by the issuer in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SECs rules
and forms and includes, without limitation, controls and procedures designed to
ensure that such information is accumulated and communicated to the issuers
management, including its principal executive and principal financial officers,
or persons performing similar functions, 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 of December 31, 2011. 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, 2011.

---

- 99 -

Managements Annual Report on Internal Controls over
Financial Reporting

Management is responsible for establishing and maintaining
adequate internal control over financial reporting. The Exchange Act in Rule
13a-15(f ) and 15d-15(f ) defines this as a process designed by, or under the
supervision of, the companys principal executive and principal financial
officers and effected by the companys board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:

- pertain to the maintenance of records that, in reasonable detail,
  accurately and fairly reflect the transactions and dispositions of the assets
  of the company;
- 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
- provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use or disposition of the companys assets that may
  have a material effect on the financial statements.

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, 2011, 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, 2011.

Our internal control system is designed to provide reasonable
assurance to our management and board of directors regarding the preparation and
fair presentation of published financial statements. All internal control
systems, no matter how well designed, have inherent limitations. Therefore, even
those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation. Further,
because of changes in conditions, the effectiveness of internal control may vary
over time.

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, 2011. 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, 2011, 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.

---

- 100 -

|ITEM 16  | Reserved                        
|-------- | --------------------------------
|         |                                 
|ITEM 16A | Audit Committee Financial Expert

The members of our audit committee included R.W. (Bob) Garnett
(Chairman), John T. Kopcheff and Kenneth W. Major. 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.

Our board of directors has determined that the Chairman of the
Company's Audit Committee, Mr. R.W. (Bob) Garnett, CA, ICD.D, qualifies as an
"audit committee financial expert" as that term is defined in Item 16A(b) of
Form 20-F.

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

Mr. Garnett qualifies as "independent" as the term is used in
Section 803 of the NYSE Amex Company Guide.

Relevant Education and Experience

Disclosure regarding education and experience of the Audit
Committee can be found in Item 6 A. Directors, Officers and Senior Management.
As a result of their education and experience, each member of the Audit
Committee has familiarity with, an understanding of, or experience in:

- the accounting principles used by the Company to prepare its financial
  statements, and the ability to assess the general application of those
  principles in connection with estimates, accruals and reserves;
- reviewing or evaluating financial statements that present a breadth and
  level of complexity of accounting issues that are generally comparable to the
  breadth and complexity of issues that can reasonably be expected to be raised
  by the Companys financial statements; and
- internal controls and procedures for financial reporting.

---

- 101 -

|ITEM 16B | Code of Ethics
|-------- | --------------

Code of Ethics

Effective June 30, 2005 the Company's Board of Directors
adopted a Code of Ethic and Business Conduct (the Code) that applies to, among
other persons, the 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 was amended and updated on September 24, 2010 for
minor changes.

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, 2011. At the date of this report, the aggregate
fees billed by KPMG LLP, Chartered Accountants, for professional services
rendered for the audit of our 2011 annual financial statements included in this
annual report for the year ended December 31, 2011 are $257,600, of which
$225,000 relates to the audit of the 2011 annual financial statements and
$32,600 relates to a review of the IFRS conversion. In addition, the Company
estimates that additional amounts of $45,000 and $17,400 will be billed by KPMG
relating to the audit of the 2011 annual financial statements and review of the
IFRS transition respectively. An additional $35,000 has been billed relating to
the review of our financial statements for the quarter ended September 30, 2011.
For the year ended December 31, 2010, the audit fees were $291,000, of which
$260,000 related to the audit of the 2010 annual financial statements and
$31,000 related to a review of interim periods in connection with the short form
prospectus.

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 $5,400 for the year ended December 31, 2011
and $6,500 for the year ended December 31, 2010.

Tax Fees

The aggregate fees billed for tax compliance, tax advice and
tax planning by KPMG LLP, Chartered Accountants, were $nil for the year ended
December 31, 2011, compared to $7,500 for the year ended December 31, 2010.

---

- 102 -

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 $nil for the year ended December 31, 2011 and $nil for the year
ended December 31, 2010.

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:

| | a. | Approved by our audit committee; or                                                                                                                                                                                                                                                                                                                                                 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                     
| | b. | 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.

|ITEM 16G | Corporate Governance
|-------- | --------------------

The Companys common shares are listed for trading on the NYSE
Amex Equities Exchange. Section 110 of the NYSE Amex company guide permits NYSE
Amex to consider the laws, customs and practices of foreign issuers in relaxing
certain NYSE Amex listing criteria, and to grant exemptions from NYSE Amex
listing criteria based on these considerations. A company seeking relief under
these provisions is required to provide written certification from independent
local counsel that the non-complying practice is not prohibited by home country
law.

Upon listing, the Company received an exemption from its quorum
requirements for meetings of shareholders. Under the NYSE Amex listing
standards, the quorum requirement is a minimum of one third of shareholders
entitled to vote for U.S. domestic companies. The Company does not meet this
requirement and has been granted relief from this listing standard.

The Companys governance practices differ from those followed
by U.S. domestic companies pursuant to NYSE Amex listing standards in the
following manner:

---

- 103 -

Board Meetings

Section 802 (c) of the Amex Company Guide requires that the
Board of Directors hold meetings on at least a quarterly basis. The Board of
Directors of the Company is not required to meet on a quarterly basis under the
laws of the Province of British Columbia.

Solicitation of Proxies

NYSE Amex requires the solicitation of proxies and delivery of
proxy statements for all shareholder meetings, and requires that these proxies
shall be solicited pursuant to a proxy statement that conforms to applicable SEC
proxy rules. The Company is a foreign private issuer as defined in Rule 3b-4
under the United States Securities Exchange Act of 1934, as amended (the
Exchange Act), and the equity securities of the Company are accordingly exempt
from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the
Exchange Act. The Company solicits proxies in accordance with applicable rules
and regulations in Canada.

Shareholders Approval for Dilutive Private Placement
Financings

Section 713 of the NYSE Amex Company Guide requires that the
Company obtain the approval of its shareholders for share issuances equal to 20
percent or more of presently outstanding shares for a price which is less than
the greater of book or market value of the shares. This requirement does not
apply to public offerings. There is no such requirement under British Columbia
law or under the Companys home stock exchange rules (Toronto Stock Exchange)
unless the dilutive financing results in a change of control. The Company will
seek a waiver from NYSE Amexs section 713 requirements should a dilutive
private placement financing trigger the NYSE Amex shareholders approval
requirement in circumstances where the same financing does not trigger such a
requirement under British Columbia law or under the Companys home country stock
exchange rules.

Quorum Requirements

Section 123 of the NYSE Amex Company Guide recommends that the
quorum for meetings of shareholders of a listed company be not less than 33-1/3%
of the issued and outstanding shares entitled to vote at a meeting of
shareholders.

The Companys quorum requirement is specified in its corporate
charter as two persons who are, or who represent by proxy, shareholders.

---

- 104 -

PART III

|ITEM 17 | Financial Statements
|------- | --------------------

Not applicable.

|ITEM 18 | Financial Statements
|------- | --------------------

Financial Statements Filed as Part of the Annual
Report:

- Report of Independent Registered Public Accounting Firm dated March 9,
  2012.
- Consolidated statements of financial position as at December 31, 2011,
  December 31, 2010 and January 1, 2010.
- Consolidated statements of comprehensive income for the years ended
  December 31, 2011 and 2010.
- Consolidated statements of changes in shareholders equity for the years
  ended December 31, 2011 and 2010.
- Consolidated statements of cash flows for the years ended December 31, 2011
  and 2010.
- Notes to consolidated financial statements



---

- 105 -

|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).                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                              
|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.                                                                                                                                                                                                                                      

---

- 106 -

|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 (incorporated by
      reference from our Registration Statement on Form 20-F, filed on March 24,
      2010).  
|      |                                                                                                                                                                                                                                       
|4.14* | Acquisition Agreement dated July 12, 2011 between our Company and Compañia Minera Blanca Alicia, S.A. de C.V.                                                                                                                         
|      |                                                                                                                                                                                                                                       
|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.                                                                                                                                                                                                    
|      |                                                                                                                                                                                                                                       
|8.5   | Great Panther Silver Perú S.A.C.                                                                                                                                                                                                      
|      |                                                                                                                                                                                                                                       
|11.   | Code of Ethics                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                       
|11.1  | Code of Ethics (incorporated by reference from our
      Registration Statement on Form 20-F, filed on July 15, 2005, updated
      August 2007, September 2008 and September 2010).                                                  
|      |                                                                                                                                                                                                                                       
|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 Martin B. Carsky.                                                                                                                                                
|      |                                                                                                                                                                                                                                       
|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 Martin B. Carsky.                                                                                                                                                

---

- 107 -

|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.
|- | ---------------

---

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign 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/ Martin B. Carsky                                           | 
|-------------------------------------------------------------- | 
|Martin B. Carsky                                               | 
|Chief Financial Officer                                        | 
|(Principal Financial Officer and Principal Accounting Officer) | 

Date: March 14, 2012

---



GREAT PANTHER SILVER LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED
   DECEMBER 31, 2011 and 2010

Expressed 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 International Financial Reporting Standards. 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, 2011, 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, 2011.

KPMG LLP, an independent registered public accounting firm, has
  audited the effectiveness of our internal control over financial reporting as of
  December 31, 2011, as stated in their report which appears herein.

|"Robert A. Archer"      | "Martin B. Carsky"     
|----------------------- | -----------------------
|Chief Executive Officer | Chief Financial Officer
|                        |                        
|March 9, 2012           | March 9, 2012          

---

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


INDEPENDENT AUDITORS REPORT OF REGISTERED
  PUBLIC ACCOUNTING FIRM

To Shareholders & Board of Directors of Great Panther
  Silver Limited

We have audited the accompanying consolidated financial
  statements of Great Panther Silver Limited, which comprise the consolidated
  statements of financial position as at December 31, 2011, December 31, 2010 and
  January 1, 2010, the consolidated statements of comprehensive income, changes in
  equity and cash flows for the years ended December 31, 2011 and December 31,
  2010, and notes, comprising a summary of significant accounting policies and
  other explanatory information.

Management's Responsibility for the consolidatedFinancial Statements

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

Auditors Responsibility

Our responsibility is to express an opinion on these
  consolidated financial statements based on our audits. We conducted our audits
  in accordance with Canadian generally accepted auditing standards and the
  standards of the Public Company Accounting Oversight Board (United States).
  Those standards require that we comply with ethical requirements and plan and
  perform the audit to obtain reasonable assurance about whether the consolidated
  financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit
  evidence about the amounts and disclosures in the consolidated financial
  statements. The procedures selected depend on our judgment, including the
  assessment of the risks of material misstatement of the consolidated financial
  statements, whether due to fraud or error. In making those risk assessments, we
  consider internal control relevant to the entity's preparation and fair
  presentation of the consolidated financial statements in order to design audit
  procedures that are appropriate in the circumstances. An audit also includes
  evaluating the appropriateness of accounting policies used and the
  reasonableness of accounting estimates made by management, as well as evaluating
  the overall presentation of the consolidated financial statements.

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

KPMG LLP is a Canadian
  limited liability partnership and a member firm of the KPMGnetwork of independent member firms affiliated with KPMG International
    Cooperative(KPMG International), a Swiss
    entity.KPMG Canada provides services to KPMG LLP.

---

Opinion

In our opinion, the consolidatedfinancial statements
  present fairly, in all material respects, the financial position of Great
  Panther Silver Limited as at December 31, 2011, December 31, 2010 and January 1,
  2010 and its consolidatedresults of operations and its consolidatedcash flows for the years ended December 31, 2011 and December 31, 2010, in
  accordance with International Financial Reporting Standards.

Other Matter

We also have audited, in accordance with the standards of the
  Public Company Accounting Oversight Board (United States), Great Panther
  Limited's internal control over financial reporting as of December 31, 2011,
  based on the criteria established in Internal Control  Integrated Framework
  issued by the Committee of Sponsoring Organizations of the Treadway Commission
  (COSO), and our report dated March 9, 2012expressed an unmodified
  opinion on the effectiveness of Great Panther Silvers internal control over
  financial reporting.

Chartered Accountants

March 9, 2012 
  Vancouver, Canada

2

---

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 Shareholders and Board of Directors Great Panther Silver
  Limited

We have audited Great Panther Silver Limiteds ("the Company")
  internal control over financial reporting as of December 31, 2011 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. Our responsibility is to express an opinion
  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.

KPMG LLP is a Canadian
  limited liability partnership and a member firm of the KPMGnetwork of independent member firms affiliated with KPMG International
    Cooperative(KPMG International), a Swiss
    entity.KPMG Canada provides services to KPMG LLP.

---

In our opinion, the Company maintained, in all material
  respects, effective internal control over financial reporting as of December 31,
  2011, 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
  statements of financial position as at December 31, 2011, December 31, 2010
  and January 1, 2010, and the consolidated statements of comprehensive income,
  changes in equity and cash flows for the years ended December 31, 2011 and December
  31, 2010, and our report dated March 9, 2012 expressed an unqualified opinion
  on those consolidated financial statements.

Chartered Accountants

March 9, 2012 
  Vancouver, Canada

2

---

|GREAT PANTHER SILVER LIMITED                 
|---------------------------------------------
|CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|(Expressed in thousands of Canadian dollars) 
|                                             
|December 31, 2011
      and 2010             

|                                                       |   | December 31, |   |   | December 31, |   |   | January 1, |  
|------------------------------------------------------ | - | ------------ | - | - | ------------ | - | - | ---------- | -
|                                                       |   | 2011         |   |   | 2010         |   |   | 2010       |  
|                                                       |   |              |   |   | (note 22     | ) |   | (note 22   | )
|Assets                                                 |   |              |   |   |              |   |   |            |  
|                                                       |   |              |   |   |              |   |   |            |  
|Current assets:                                        |   |              |   |   |              |   |   |            |  
|Cash and cash equivalents                              | $ | 39,437       |   | $ | 13,967       |   | $ | 13,312     |  
|Restricted cash (note
      15)                        |   | -            |   |   | 151          |   |   | -          |  
|Marketable securities                                  |   | 80           |   |   | 200          |   |   | 23         |  
|Trade and other
      receivables (note 4)             |   | 14,076       |   |   | 9,635        |   |   | 5,539      |  
|Income taxes recoverable                               |   | 374          |   |   | 239          |   |   | 342        |  
|Inventories (note 5)                                   |   | 4,591        |   |   | 2,615        |   |   | 1,438      |  
|Prepaid expenses, deposits and advances                |   | 1,732        |   |   | 1,240        |   |   | 1,585      |  
|                                                       |   | 60,290       |   |   | 28,047       |   |   | 22,239     |  
|Non-current assets:                                    |   |              |   |   |              |   |   |            |  
|Mineral
      properties, plant and equipment (note 6) |   | 41,946       |   |   | 27,130       |   |   | 19,212     |  
|Intangible assets (note 7)                             |   | 708          |   |   | 274          |   |   | 102        |  
|                                                       |   | 42,654       |   |   | 27,404       |   |   | 19,314     |  
|                                                       | $ | 102,944      |   | $ | 55,451       |   | $ | 41,553     |  
|                                                       |   |              |   |   |              |   |   |            |  
|Liabilities and Shareholders Equity                   |   |              |   |   |              |   |   |            |  
|                                                       |   |              |   |   |              |   |   |            |  
|Current liabilities:                                   |   |              |   |   |              |   |   |            |  
|Trade and other
      payables (note 8)                | $ | 6,350        |   | $ | 4,758        |   | $ | 2,631      |  
|Finance lease obligations                              |   | 130          |   |   | 369          |   |   | 801        |  
|Promissory notes
      (note 9a)                       |   | -            |   |   | 373          |   |   | 122        |  
|Convertible loan notes (note 9b)                       |   | -            |   |   | 3,716        |   |   | -          |  
|Current tax liability (note 18)                        |   | -            |   |   | 19           |   |   | 27         |  
|                                                       |   | 6,480        |   |   | 9,235        |   |   | 3,581      |  
|Non-current liabilities:                               |   |              |   |   |              |   |   |            |  
|Finance lease obligations                              |   | -            |   |   | 128          |   |   | 63         |  
|Promissory notes
      (note 9a)                       |   | -            |   |   | 77           |   |   | 118        |  
|Convertible loan notes (note 9b)                       |   | -            |   |   | -            |   |   | 3,103      |  
|Reclamation and
      remediation provision (note 10)  |   | 2,154        |   |   | 1,955        |   |   | 2,086      |  
|Deferred tax liability (note 18)                       |   | 1,824        |   |   | -            |   |   | 2,162      |  
|                                                       |   | 3,978        |   |   | 2,160        |   |   | 7,532      |  
|Shareholders equity:                                  |   |              |   |   |              |   |   |            |  
|Share capital
      (note 11)                          |   | 121,536      |   |   | 83,470       |   |   | 75,910     |  
|Reserves                                               |   | 6,465        |   |   | 7,607        |   |   | 12,211     |  
|Deficit                                                |   | (35,515      | ) |   | (47,021      | ) |   | (57,681    | )
|                                                       |   | 92,486       |   |   | 44,056       |   |   | 30,440     |  
|                                                       | $ | 102,944      |   | $ | 55,451       |   | $ | 41,553     |  

Nature of operations (note 1). 
  Commitments and
  contingencies (note 20). 
  See accompanying notes to the consolidated
  financial statements.

Approved by the Board of Directors

|Robert A. Archer         |  | Robert W. Garnett        
|-------------------------- |  | ---------------------------
|Robert A. Archer, Director |  | Robert W. Garnett, Director

1

---

|GREAT PANTHER SILVER LIMITED                                             
|-------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                          
|(Expressed in thousands of Canadian dollars, except per
      share data)
|                                                                         
|For the years
      ended December 31, 2011 and 2010                     

|                                                                  |   | 2011        |   |   | 2010        |  
|----------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                  |   |             |   |   | (note 22    | )
|                                                                  |   |             |   |   |             |  
|Revenue                                                           | $ | 57,818      |   | $ | 42,206      |  
|Cost of sales:                                                    |   |             |   |   |             |  
|Production costs                                                  |   | 25,475      |   |   | 21,161      |  
|Amortization and depletion                                        |   | 4,465       |   |   | 4,117       |  
|Share-based payments                                              |   | 962         |   |   | 481         |  
|                                                                  |   | 30,902      |   |   | 25,759      |  
|                                                                  |   |             |   |   |             |  
|Gross profit                                                      |   | 26,916      |   |   | 16,447      |  
|                                                                  |   |             |   |   |             |  
|General and administrative expenses (note 12)                     |   | 9,106       |   |   | 6,369       |  
|                                                                  |   |             |   |   |             |  
|Finance and other income (expense):                               |   |             |   |   |             |  
|Interest income                                                   |   | 435         |   |   | 115         |  
|Finance costs (note 13)                                           |   | (324        | ) |   | (1,154      | )
|Foreign exchange
      loss (note 17)                             |   | (4,572      | ) |   | (299        | )
|Other income (expense)                                            |   | 142         |   |   | (163        | )
|                                                                  |   | (4,319      | ) |   | (1,501      | )
|                                                                  |   |             |   |   |             |  
|Income before income taxes                                        |   | 13,491      |   |   | 8,577       |  
|                                                                  |   |             |   |   |             |  
|Income tax recovery (expense) (note 18):                          |   |             |   |   |             |  
|Current                                                           |   | (108        | ) |   | (113        | )
|Deferred                                                          |   | (1,877      | ) |   | 2,196       |  
|                                                                  |   | (1,985      | ) |   | 2,083       |  
|Net income for the year                                           | $ | 11,506      |   | $ | 10,660      |  
|                                                                  |   |             |   |   |             |  
|Other comprehensive loss                                          |   |             |   |   |             |  
|Foreign currency translation                                      |   | (352        | ) |   | (3,796      | )
|Change in fair value of
      available-for-sale financial assets |   | (103        | ) |   | (10         | )
|                                                                  |   | (455        | ) |   | (3,806      | )
|Total comprehensive income for the year                           | $ | 11,051      |   | $ | 6,854       |  
|                                                                  |   |             |   |   |             |  
|Earnings per share                                                |   |             |   |   |             |  
|Basic                                                             | $ | 0.09        |   | $ | 0.09        |  
|Diluted                                                           | $ | 0.08        |   | $ | 0.09        |  
|                                                                  |   |             |   |   |             |  
|Weighted average number of common shares
      (note 11f)         |   |             |   |   |             |  
|Basic                                                             |   | 131,072,380 |   |   | 114,422,226 |  
|Diluted                                                           |   | 135,401,113 |   |   | 118,932,620 |  
|                                                                  |   |             |   |   |             |  

See accompanying notes to the consolidated financial
  statements.

2

---

|GREAT PANTHER SILVER LIMITED                              
|----------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
|(Expressed in thousands of Canadian dollars)              
|                                                          
|For the years
      ended December 31, 2011 and 2010      

|                                                                   |  | Share
      Capital |   |   | Reserves |   |   |          |   |   |                 |  
|------------------------------------------------------------------ |  | ------------------- | - | - | -------- | - | - | -------- | - | - | --------------- | -
|                                                                   |  | Number              |   |   |          |   |   | Share    |   |   |                 |  
|                                                                   |  | of                  |   |   |          |   |   | option   |   |   | Foreign         |  
|                                                                   |  | shares              |   |   |          |   |   | and      |   |   | currency        |  
|                                                                   |  | (000s              | ) |   | Amount   |   |   | warrants |   |   | **translation** |  
|Balance at January 1, 2010                                         |  | 111,240             |   | $ | 75,910   |   | $ | 10,268   |   | $ | -               |  
|Warrants exercised (note 11e)                                      |  | 4,155               |   |   | 4,721    |   |   | (190     | ) |   | -               |  
|Share options exercised 
        
      (note 11d)                 |  | 4,519               |   |   | 2,871    |   |   | (1,477   | ) |   | -               |  
|Share issuance cost                                                |  | -                   |   |   | (32      | ) |   | -        |   |   | -               |  
|Share-based payments                                               |  | -                   |   |   | -        |   |   | 869      |   |   | -               |  
|Comprehensive income                                               |  | -                   |   |   | -        |   |   | -        |   |   | (3,796          | )
|Balance at December 31, 2010                                       |  | 119,914             |   | $ | 83,470   |   | $ | 9,470    |   | $ | (3,796          | )
|                                                                   |  |                     |   |   |          |   |   |          |   |   |                 |  
|Balance at January 1, 2011                                         |  | 119,914             |   | $ | 83,470   |   | $ | 9,470    |   | $ | (3,796          | )
|Warrants exercised (note 11e)                                      |  | 6,856               |   |   | 6,409    |   |   | (239     | ) |   | -               |  
|Share options exercised 
        
      (note 11d)                 |  | 3,089               |   |   | 3,670    |   |   | (1,362   | ) |   | -               |  
|Extinguishment of convertible loan
          notes
      (note 9b) |  | 1,800               |   |   | 5,859    |   |   | -        |   |   | -               |  
|Short form prospectus financing 
        
      (note 11c)         |  | 5,750               |   |   | 22,128   |   |   | 384      |   |   | -               |  
|Share-based payments                                               |  | -                   |   |   | -        |   |   | 2,496    |   |   | -               |  
|Comprehensive income                                               |  | -                   |   |   | -        |   |   | -        |   |   | (352            | )
|Balance at December 31, 2011                                       |  | 137,409             |   | $ | 121,536  |   | $ | 10,749   |   | $ | (4,148          | )

See accompanying notes to the consolidated financial
  statements.

3

---

|GREAT PANTHER SILVER LIMITED                        
|----------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS               
|(Expressed in thousands of Canadian dollars)        
|                                                    
|For the years
      ended December 31, 2011 and 2010

|                                                                         |   | 2011    |   |   | 2010     |  
|------------------------------------------------------------------------ | - | ------- | - | - | -------- | -
|                                                                         |   |         |   |   | (note 22 | )
|Cash flows from operating activities                                     |   |         |   |   |          |  
|Net income for the year                                                  | $ | 11,506  |   | $ | 10,660   |  
|                                                                         |   |         |   |   |          |  
|Items not involving cash:                                                |   |         |   |   |          |  
|Amortization and depletion
      expense                                 |   | 4,561   |   |   | 4,169    |  
|Unrealized
      foreign exchange (gains) losses (note 17)               |   | 3,849   |   |   | 8        |  
|Deferred income taxes                                                    |   | 1,877   |   |   | (2,196   | )
|Accretion on
      reclamation and remediation provision (note 10)       |   | 47      |   |   | 41       |  
|Share-based payments (note 12)                                           |   | 2,210   |   |   | 869      |  
|Interest
      accretion on convertible loan notes (note 13)             |   | 239     |   |   | 939      |  
|Loss (gain) on disposal of
      mineral properties, plant and equipment |   | (112    | ) |   | 138      |  
|Shares received for mineral property
      and capital expenditures      |   | -       |   |   | (23      | )
|                                                                         |   | 24,177  |   |   | 14,605   |  
|                                                                         |   |         |   |   |          |  
|Changes in non-cash working capital:                                     |   |         |   |   |          |  
|Trade and other
      receivables                                        |   | (4,441  | ) |   | (4,263   | )
|Income taxes recoverable                                                 |   | (135    | ) |   | 103      |  
|Inventories                                                              |   | (1,821  | ) |   | (905     | )
|Prepaid expenses, deposits and
      advances                            |   | (599    | ) |   | 339      |  
|Trade and other
      payables                                           |   | 1,937   |   |   | 1,382    |  
|Current tax liability                                                    |   | (19     | ) |   | (8       | )
|Net cash from operating activities                                       |   | 19,099  |   |   | 11,253   |  
|                                                                         |   |         |   |   |          |  
|Cash flows from investing activities:                                    |   |         |   |   |          |  
|Intangible assets                                                        |   | (627    | ) |   | (224     | )
|Mineral
      properties, plant and equipment                            |   | (23,459 | ) |   | (14,899  | )
|Proceeds from disposal of
      capital assets                           |   | 149     |   |   | 37       |  
|Restricted cash                                                          |   | 151     |   |   | (151     | )
|Net cash used in investing activities                                    |   | (23,786 | ) |   | (15,237  | )
|                                                                         |   |         |   |   |          |  
|Cash flows from financing activities:                                    |   |         |   |   |          |  
|Repayment of
      capital lease obligations                             |   | (367    | ) |   | (938     | )
|Repayment of promissory notes
      (note 9a)                            |   | (450    | ) |   | (292     | )
|Repayment of
      convertible loan notes (note 9b)                      |   | (62     | ) |   | -        |  
|Proceeds from exercise of
      options (note 11d)                       |   | 2,309   |   |   | 2,871    |  
|Proceeds from
      exercise of warrants (note 11e)                      |   | 6,170   |   |   | 3,054    |  
|Issuance of shares for cash, net of issue costs                          |   | 22,512  |   |   | (32      | )
|Net cash from financing activities                                       |   | 30,112  |   |   | 4,663    |  
|                                                                         |   |         |   |   |          |  
|Effect of foreign currency translation on cash                           |   | 45      |   |   | (24      | )
|                                                                         |   |         |   |   |          |  
|Increase in cash and cash equivalents                                    | $ | 25,470  |   | $ | 655      |  
|Cash and cash
      equivalents, beginning of year                       |   | 13,967  |   |   | 13,312   |  
|Cash and cash equivalents, end of year                                   | $ | 39,437  |   | $ | 13,967   |  
|                                                                         |   |         |   |   |          |  
|Supplemental cash flow information                                       |   |         |   |   |          |  
|                                                                         |   |         |   |   |          |  
|                                                                         |   | 2011    |   |   | 2010     |  
|Interest received                                                        | $ | 378     |   | $ | 116      |  
|Interest paid                                                            | $ | 171     |   | $ | 436      |  
|Income taxes paid                                                        | $ | 267     |   | $ | 112      |  

See accompanying notes to the consolidated financial
  statements.

4

---

|GREAT PANTHER SILVER LIMITED                                         
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(Expressed in thousands of Canadian dollars, except share
      data)
|                                                                     
|For the years
      ended December 31, 2011 and 2010                 

|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 was involved and the common shares of the
      Company trade on the Toronto Stock Exchange under the symbol GPR. On
      February 8, 2011, the Companys shares were listed on NYSE Amex stock
      exchange in the United States under the trading symbol GPL. The address
      of the Companys registered office is Suite 2100, 1177 West Hastings
      Street, Vancouver, British Columbia, Canada, V6E 2K3.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company is in the business of acquisition,
      development, 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. In addition, the Company has a
      development stage property, San Ignacio, for which the Company has
      published a NI43-101 compliant resource estimate. The Companys other
      mineral property interests, Santa Rosa, is in the exploration stage and it
      has not yet been determined as to whether this property contains ore
      reserves that are economically viable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Based on the Companys current cash flow and future
      projections, 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. | Basis of presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | (a) | Statement of compliance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The consolidated financial statements have been prepared
      in accordance with International Accounting Standards 1, Presentation
        of financial statements(IAS 1) using accounting policies consistent
      with International Financial Reporting Standards (IFRS) as issued by the
      International Accounting Standards Board (IASB) and interpretations of
      the International Financial Reporting Interpretations Committee (IFRIC).
      These are the Companys first consolidated financial statements prepared
      in accordance with IFRS and IFRS 1, First-time Adoption of
        International Financial Reporting Standards("IFRS 1"), has been
      applied. Previously, the Company prepared its consolidated annual
      financial statements in accordance with Canadian generally accepted
      accounting principles (GAAP).
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Reconciliations between the Companys previously reported
      statement of financial position, statement of comprehensive income (loss),
      and statement of cash flow under GAAP and those reported under IFRS are
      presented in note 22.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | These consolidated financial statements were approved by
      the Board of directors on March 8, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| | (b) | Basis of consolidation                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | These consolidated financial statements include the
      accounts of the Company and its wholly-owned 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., Great Panther Silver Peru S.A.C., and New Age
      Investments Inc. All inter-company balances and transactions are
      eliminated on consolidation.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                           
| | (c) | Basis of measurement                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | These consolidated financial statements have been
      prepared on the historical cost basis except for the following material
      items in the statement of financial position:                                                                                                                                                                                                                       

| |  | derivative financial instruments
      are measured at fair value                          
| | - | -------------------------------------------------------------------------------------------
| |   |                                                                                            
| |  | financial instruments at fair
      value through profit or loss are measured at fair value
| |   |                                                                                            
| |  | available-for-sale financial
      assets are measured at fair value                       

| | (d) | Functional and presentation currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | These consolidated financial statements are presented in
      Canadian dollars which is the Companys presentation currency and
      functional currency. The functional currency of the Companys Mexican
      subsidiaries is the Mexican Peso and these subsidiaries have been
      translated to the Canadian dollar in accordance with IAS 21, The
        Effects of Changes in Foreign Exchange Rates("IAS 21"). These
      guidelines require that assets and liabilities be translated using the
      exchange rate at period end, and income, expenses and cash flow items are
      translated using the exchange rate at the dates of the transactions. All
      resulting exchange differences are reported as a separate component of
      shareholders equity as foreign currency translation reserve.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Prior to January 1, 2010, the functional currency of the
      Companys Mexican subsidiaries was the Canadian dollar. Therefore, no
      amounts were recorded in the foreign currency translation reserve prior to
      January 1, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

5

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|2. | Basis of presentation- continued                                                                                                                                                                                                                                                                                               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                
|   | (e)                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                
|   | (f)                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                
|3. | Significant accounting policies                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                
|   | The accounting policies set out below have been applied
      consistently by the Company's entities and to all periods presented in
      these consolidated financial statements and in preparing the opening IFRS
      statement of financial position at January 1, 2010 for the purposes of the
      transition to IFRS:
|   |                                                                                                                                                                                                                                                                                                                                
|   | (a)                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                
|   | (b)                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                

| |  | Ore stockpiles and concentrate inventories which are
      valued at the lower of weighted average cost and net realizable value.
      Costs include production costs, amortization and depletion, and
      share-based payments directly attributable to the inventory production
      process.                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | 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 which approximates net realizable value. Major spare parts and
      standby equipment are included in property, plant, and equipment when they
      are expected to be used during more than one period and if they can only
      be used in connection with an item of property, plant, and equipment.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Silver bullion, to be minted and sold as coins and bars,
      is recorded at lower of cost and net realizable value.                                                                                                                                                                                                                                                                                                                                                                                                                         

| | (c) | Exploration and evaluation expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The fair value at acquisition date of property or
      exploration rights acquired either through a business combination or asset
      acquisition is capitalized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Exploration expenditures incurred on grassroots projects
      and on new mineral properties are expensed as incurred as mineral property
      exploration expenditures in the statement of comprehensive income.
      Examples of exploration expenditures that are expensed under this policy
      include: topographical, geological, geochemical and geophysical studies;
      exploratory drilling; trenching; and sampling. Such expenditures will
      continue to be expensed until a mineral resource is identified of such
      quantity and grade or quality that it has reasonable prospects for
      economic extraction.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Activities in relation to evaluating the technical
      feasibility and commercial viability of extracting a mineral resource are
      capitalized and included in mineral properties on the statement of
      financial position. Such expenditures will continue to be capitalized
      until the technical feasibility and commercial viability of the extraction
      of mineral resources in an area of interest are demonstrable and
      management has made a decision to proceed with development of the
      property.                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Capitalized acquisition and evaluation expenditures are
      classified as intangible assets within mineral properties, plant and
      equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

6

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|3. | Significant accounting policies-
      continued
|-- | ------------------------------------------------
|   |                                                 
|   | (d)                                             
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 

Effect of December 31, 2010 change in mine life2011
      
      
      2012
      
      
      2013
      
      
      2014
      
      
      2015
      
      
      Later(Decrease) increase in amortization and depletion
      $

      (1,838
      )
      $
      (1,838
      )
      $
      (1,838
      )
      $
      2,422
      
      $
      2,422
      
      $
      670


Effect of December 31, 2011 change in mine life2012
      
      
      2013
      
      
      2014
      
      
      2015
      
      
      2016
      
      
      Later(Decrease) increase in amortization and depletion
      $
      (1,433
      )
      $
      (1,433
      )
      $
      (1,433
      )
      $
      (1,433
      )
      $
      4,968
      
      $
      764


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 income.

Equipment held at the Companys head
  office are recorded at cost less accumulated depreciation, calculated using the
  following basis:

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

| | (e) | Leased assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Leases in which the Company assumes substantially all
      risks and rewards of ownership are classified as finance leases. Finance
      leases are recognized at the lower of the fair value and the present value
      of the minimum lease payments at inception of the lease. Subsequent to
      initial recognition, the asset is accounted for in accordance with the
      accounting policy applicable to that asset. Other leases are operating
      leases and are not recognized in the Companys statement of financial
      position.  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (f) | Intangible assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Intangible assets that are acquired by the Company, which
      includes computer software and costs of computer software customization
      and implementation, are stated at cost less accumulated amortization and
      impairment losses. Amortization is recorded in general and administrative
      in the statement of comprehensive income on a straight line basis over the
      estimated useful lives of the intangible assets. The estimated useful life
      for the computer software is 3 years.                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (g) | Impairment of non-financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Companys mineral properties, plant and equipment are
      reviewed for an indication of impairment at each financial reporting date
      or at any time if an indicator of impairment is considered to exist. If
      any such indication exists an estimate of the recoverable amount is
      undertaken, being the higher of an assets fair value less costs to sell
      and value in use. If the assets carrying amount exceeds its recoverable
      amount then an impairment loss is recognized in profit or loss for the
      period.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Fair value is determined as the amount that would be
      obtained from the sale of the asset in an arms length transaction between
      knowledgeable and willing parties. Fair value of mineral assets is
      generally determined as the present value of the estimated future cash
      flows expected to arise from the continued use of the asset, including any
      expansion prospects.                                                                                                                                                   

7

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

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

| |     | Value in use is determined as the present value of the
      estimated future cash flows expected to arise from the continued use of
      the asset in its present form and from its ultimate disposal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Impairment is normally assessed at the level of
      cash-generating units, which are identified as the smallest identifiable
      group of assets that generates cash inflows that are largely independent
      of the cash inflows from other assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Non-financial assets other than goodwill that have
      suffered an impairment are evaluated for possible reversal of the
      impairment whenever events or changes in circumstances indicate that the
      impairment may have reversed. When a reversal of a previous impairment is
      recorded, the reversal amount is adjusted for depreciation that would have
      been recorded had the impairment not been recorded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (h) | Share-based payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Equity-settled share-based payment arrangements such as
      the Companys stock option plan are measured at fair value at the date of
      grant and recorded within equity. The fair value at grant date of all
      share-based payments is recognized as compensation expense over the
      vesting period, with a corresponding credit to shareholders equity. The
      Company estimates the fair value of share options granted using the
      Black-Scholes option pricing model. Where awards are forfeited because
      non-market based vesting conditions are not satisfied, the expense
      previously recognized is reversed in the period the forfeiture
      occurs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (i) | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | The Company recognizes revenue from the sale of
      concentrates upon delivery when it is probable that the economic benefits
      associated with the transaction will flow to the Company, the risks and
      rewards of ownership are transferred to the customer and the revenue can
      be reliably measured. This is generally the shipment date. Revenue is
      based on market metal prices and mineral content. Revenue is recorded in
      the consolidated statements of comprehensive income 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. Variations between the sales price
      recorded at the shipment date and the actual final sales price at the
      settlement date caused by changes in the market metal prices results in an
      embedded derivative in the related trade accounts receivable balance. The
      embedded derivative is recorded at fair value each period until final
      settlement occurs with changes in fair value classified as a component of
      revenue.      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (j) | Reserve estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | The Company estimates its ore reserves and mineral
      resources based on information compiled by Qualified Persons as defined in
      accordance with Canadian Securities Administrators National Instrument
      43-101 Standards of Disclosure for Mineral Projects. Reserves and mineral
      resources are used in assessing life of mine for the calculation of
      depreciation and amortization, impairment assessment, assessment of life
      of mine stripping ratios, determination of exploration and evaluation
      assets, and for forecasting the timing of payment of rehabilitation costs.
      There are numerous uncertainties inherent in estimating ore reserves, and
      assumptions that are valid at the time of estimation may change
      significantly when new information becomes available. Changes in the
      forecast prices of commodities, exchange rates, production costs or
      recovery rates may change the economic status of reserves and may,
      ultimately, result in the reserves and resources being adjusted.                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (k) | Reclamation and remediation provisions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | The Company's mining and exploration activities are
      subject to various laws and regulations governing the protection of the
      environment. The Company recognizes the cost of future reclamation and
      remediation as a liability in the period in which it incurs a legal or
      constructive obligation associated with the retirement of tangible mineral
      property, plant and equipment assets that results from the acquisition,
      construction, development, or normal use of the asset, if a reasonable
      estimate of the obligation can be made. The liability is measured
      initially by discounting such costs to the net present value using pre-tax
      rates and risk assumptions specific to the liability 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 profit or loss as a finance
      cost, and any change in the amount or timing of the underlying cash flows
      with the offsetting amount recorded as an adjustment to the reclamation
      and remediation provision cost included in mineral properties. The
      reclamation and remediation provision 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, changes in remediation technology and changes in
      discount rates. The Company reviews its reclamation and remediation
      provision at least annually and as evidence becomes available indicating
      that its remediation and reclamation liabilities may have changed. Any
      such changes in costs could materially impact the future amounts charged
      to operations for reclamation and remediation obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Changes in the reclamation and remediation provision
      subsequent to the related asset reaching the end of its useful life and
      any excess of actual reclamation and remediation costs over the amount of
      initially estimated reclamation and remediation provision are recognized
      in the statement of comprehensive income when
      determined.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

8

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|3. | Significant accounting policies-
      continued
|-- | ------------------------------------------------
|   |                                                 
|   | (l)                                             
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 
|   |                                                 

9

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

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

Impairment of financial
  instruments

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

| |  | For available-for-sale financial assets, an impairment
      loss is established when there is a significant or prolonged decline in
      fair value of the investment or when there is objective evidence that the
      carrying amount of the investment may not be recovered. The amount of the
      impairment loss is measured as the difference between the acquisition cost
      and the current fair value, less any impairment loss on that financial
      asset previously recognized in profit or loss. Any amounts related to that
      asset are removed from losses accumulated in the fair value reserve
      recognized in shareholders equity and are included in profit or loss.
      Reversals in respect of available-for-sale financial assets are not
      reversed through profit or loss. Any increase in fair value subsequent to
      an impairment loss is recognized directly in other comprehensive income
      until the assets are disposed of.                                                                                                                                                          
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | For loans and receivables, a provision for impairment is
      established when there is objective evidence that the Company will not be
      able to collect all amounts due according to the original terms of the
      receivables. Significant financial difficulties of the debtor or
      delinquency in payments are considered indicators that a trade receivable
      is impaired. The amount of the provision is the difference between the
      assets carrying amount and the present value of estimated future cash
      flows, discounted at the assets original effective interest rate. The
      carrying amount of the asset is reduced through the use of provision
      account and the amount of the loss is recognized in the statement of
      comprehensive income within general and administrative expenses. When a
      trade receivable is uncollectible, it is written off against the allowance
      account for trade receivables. Subsequent recoveries of amounts previously
      written off are credited against general and administrative expenses in
      the statement of comprehensive income.

| | (m) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Income tax is recognized in profit or loss except to the
      extent that it relates to items recognized directly in equity, in which
      case it is recognized directly in equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Deferred tax assets and liabilities are determined based
      on differences between the financial statement carrying values of existing
      assets and liabilities and their respective income tax bases (temporary
      differences), and tax loss carry forwards. Deferred tax assets and
      liabilities are measured using enacted or substantively enacted tax rates
      expected to be in effect when the temporary differences are likely to be
      recovered or settled. The effect on deferred tax assets and liabilities of
      a change in tax rates is included in operations in the period in which the
      change is substantively enacted. The amount of deferred tax assets
      recognized is limited to the amount that is, in managements estimation,
      probable that future taxable profits will be available against which the
      asset can be utilized.                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Deferred tax assets and liabilities are offset when there
      is a legally enforceable right to set off current tax assets against
      current tax liabilities and when they relate to income taxes levied by the
      same taxation authority and the Company intends to settle its current tax
      assets and liabilities on a net basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (n) | Earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Earnings per share is calculated based on the weighted
      average number of shares outstanding during the period. The Company
      follows the treasury stock method for the calculation of diluted earnings
      per share. Under this method, dilution is calculated based upon the net
      number of common shares issued should in-the-money options and warrants
      be exercised and the proceeds be used to repurchase common shares at the
      average market price in the year. Dilution from convertible securities is
      calculated based on the number of shares to be issued after taking into
      account the reduction of the related after-tax interest expense.                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Basic earnings per share is computed by dividing net
      income by the weighted average number of common shares outstanding during
      the reporting period. Diluted earnings per share is computed similar to
      basic earnings per share except that the weighted average shares
      outstanding are increased to include additional shares from the assumed
      exercise of share options and warrants, if dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (o) | Segment reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company has identified its operating segments based
      on the internal reports that are reviewed and used by the chief executive
      office and the executive management team (the chief operating decision
      maker or CODM) in assessing performance and in determining allocation of
      resources. The CODM considers the business from both a geographic and
      product perspective and assesses the performance of the operating segments
      based on measures such as net property, plant and equipment as well as
      operating results. All operating segments operating results are reviewed
      regularly by the Companys senior management to make decisions about
      resources to be allocated to the segment and to assess its performance,
      and for which discrete financial information is available. The Company has
      determined the operating segments based on this information.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Segment results that are reported to senior management
      include items directly attributable to a segment as well as those that can
      be allocated on a reasonable basis. Unallocated items comprise mainly of
      corporate office expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

10

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|4. | Trade and other
      receivables
|-- | ---------------------------------

| |                                |   | December 31, |   |   | December 31, |   |   | January 1, |  
| | ------------------------------ | - | ------------ | - | - | ------------ | - | - | ---------- | -
| |                                |   | 2011         |   |   | 2010         |   |   | 2010       |  
| | Trade accounts receivable      | $ | 11,180       |   | $ | 5,151        |   | $ | 3,472      |  
| | Value added tax receivable     |   | 2,902        |   |   | 4,399        |   |   | 2,024      |  
| | Other                          |   | 214          |   |   | 317          |   |   | 251        |  
| |                                |   | 14,296       |   |   | 9,867        |   |   | 5,747      |  
| | Allowance for doubtful amounts |   | (220         | ) |   | (232         | ) |   | (208       | )
| |                                | $ | 14,076       |   | $ | 9,635        |   | $ | 5,539      |  

|   | The Company, through its Mexican subsidiaries, pays value
      added tax on the purchase and sale of goods and services at a rate of 16%.
      The net amount paid or payable is recoverable, but such recovery is
      subject to review and assessment by local tax authorities.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                      
|5. | Inventories                                                                                                                                                                                                                                                                          

| |                        |   | December 31, |  |   | December 31, |  |   | January 1, | 
| | ---------------------- | - | ------------ |  | - | ------------ |  | - | ---------- | 
| |                        |   | 2011         |  |   | 2010         |  |   | 2010       | 
| | Concentrate            | $ | 2,748        |  | $ | 831          |  | $ | 410        | 
| | Ore stockpile          |   | 115          |  |   | 370          |  |   | 80         | 
| | Materials and supplies |   | 1,503        |  |   | 993          |  |   | 681        | 
| | Silver bullion         |   | 225          |  |   | 421          |  |   | 267        | 
| |                        | $ | 4,591        |  | $ | 2,615        |  | $ | 1,438      | 

The amount of inventory recognized as
  an expense for the years ended December 31, 2011 and December 31, 2010 includes
  production costs, amortization and depletion and share-based payments directly
  attributable to the inventory production process.

The amount of write-down of inventories
  to net realizable value for the year ended December 31, 2011 was $45 (2010 -
  $nil) relating to silver bullion and $20 (2010 - $nil) relating to materials and
  supplies, which were recognized as expenses in the period the write-downs or
  losses occurred.

11

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|6. | Mineral properties, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | At December 31, 2011, the Company has mineral properties,
      plant and equipment assets of $41.9 million compared to $27.1 million at
      December 31, 2010. The company invested primarily in mine development,
      evaluation of mineral resources and purchase of capital assets at its
      Guanajuato and Topia mines. Given the geographic proximity of the San
      Ignacio and Santa Rosa properties to Guanajuato, management included
      acquisition and evaluation of the properties together with Guanajuato. At
      December 31, 2011, the Company had mineral property expenditures totalling
      $2,761 (2010 - $277) for San Ignacio and $1,459 (2010 - $nil) for Santa
      Rosa with $nil accumulated depreciation for each.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The major components of the Company's mineral properties,
      plant and equipment for Guanajuato and Topia mines and head office are as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Guanajuato mineMine
      
      
      LeaseholdBuildings
      
      
      
      
      
      reclamation
      
      
      improvementsMineral
      
      
      Plant and
      
      
      and mobile
      
      
      
      
      
      and
      
      
      and otherproperties
      
      
      equipment
      
      
      equipment
      
      
      Land
      
      
      remediation
      
      
      equipment
      
      
      TotalCostJanuary 1, 2010
      $
      4,418
      
      $
      7,954
      
      $
      1,771
      
      $
      2,845
      
      $
      569
      
      $
      -
      
      $
      17,557Additions
      
      5,784
      
      
      4,509
      
      
      506
      
      
      -
      
      
      -
      
      
      -
      
      
      10,799Change in rehabilitation
        provision
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (196
      )
      
      -
      
      
      (196
      )Disposals
      
      (69
      )
      
      (173
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (242
      )Foreign exchange
      
      (1,034
      )
      
      (1,503
      )
      
      (427
      )
      
      (645
      )
      
      (66
      )
      
      -
      
      
      (3,675
      )December 31, 2010
      
      9,099
      
      
      10,787
      
      
      1,850
      
      
      2,200
      
      
      307
      
      
      -
      
      
      24,243Additions
      
      11,086
      
      
      7,495
      
      
      330
      
      
      -
      
      
      -
      
      
      -
      
      
      18,911Change in rehabilitation provision
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      148
      
      
      -
      
      
      148Disposals
      
      -
      
      
      (161
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (161
      )Foreign exchange
      
      (1,678
      )
      
      (1,438
      )
      
      (208
      )
      
      (210
      )
      
      (28
      )
      
      -
      
      
      (3,562
      )December 31, 2011
      $
      18,507
      
      $
      16,683
      
      $
      1,972
      
      $
      1,990
      
      $
      427
      
      $
      -
      
      $
      39,579Accumulated
        depreciationJanuary 1, 2010
      $
      2,625
      
      $
      3,903
      
      $
      1,051
      
      $
      -
      
      $
      320
      
      $
      -
      
      $
      7,899Depreciation
      
      1,198
      
      
      1,715
      
      
      259
      
      
      -
      
      
      31
      
      
      -
      
      
      3,203Disposals
      
      -
      
      
      (135
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (135
      )Foreign exchange
      
      (568
      )
      
      (825
      )
      
      (237
      )
      
      -
      
      
      (72
      )
      
      -
      
      
      (1,702
      )December 31, 2010
      
      3,255
      
      
      4,658
      
      
      1,073
      
      
      -
      
      
      279
      
      
      -
      
      
      9,265Depreciation
      
      1,671
      
      
      1,627
      
      
      183
      
      
      -
      
      
      31
      
      
      -
      
      
      3,512Disposals
      
      -
      
      
      (126
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (126
      )Foreign exchange
      
      (365
      )
      
      (536
      )
      
      (118
      )
      
      -
      
      
      (65
      )
      
      -
      
      
      (1,084
      )December 31, 2011
      $
      4,561
      
      $
      5,623
      
      $
      1,138
      
      $
      -
      
      $
      245
      
      $
      -
      
      $
      11,567Net book valueJanuary 1, 2010
      $
      1,793
      
      $
      4,051
      
      $
      720
      
      $
      2,845
      
      $
      249
      
      $
      -
      
      $
      9,658December 31, 2010
      $
      5,844
      
      $
      6,129
      
      $
      777
      
      $
      2,200
      
      $
      28
      
      $
      -
      
      $
      14,978December 31, 2011
      $
      13,946
      
      $
      11,060
      
      $
      834
      
      $
      1,990
      
      $
      182
      
      $
      -
      
      $
      28,012


12

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|6. | Mineral properties, plant and equipment-
      continued
|-- | --------------------------------------------------------

Topia mineMine
      
      
      LeaseholdBuildings
      
      
      
      
      
      reclamation
      
      
      improvementsMineral
      
      
      Plant and
      
      
      and mobile
      
      
      
      
      
      and
      
      
      and otherproperties
      
      
      equipment
      
      
      equipment
      
      
      Land
      
      
      remediation
      
      
      equipment
      
      
      TotalCostJanuary 1, 2010
      $
      9,163
      
      $
      5,989
      
      $
      402
      
      $
      34
      
      $
      232
      
      $
      -
      
      $
      15,820Additions
      
      2,392
      
      
      2,798
      
      
      10
      
      
      3
      
      
      -
      
      
      -
      
      
      5,203Change in rehabilitation provision
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      266
      
      
      -
      
      
      266Foreign exchange
      
      (1,598
      )
      
      (1,155
      )
      
      (96
      )
      
      (23
      )
      
      (30
      )
      
      -
      
      
      (2,902
      )December 31, 2010
      
      9,957
      
      
      7,632
      
      
      316
      
      
      14
      
      
      468
      
      
      -
      
      
      18,387Additions
      
      1,619
      
      
      1,902
      
      
      907
      
      
      -
      
      
      
      
      
      -
      
      
      4,428Change in rehabilitation provision
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      242
      
      
      -
      
      
      242Foreign exchange
      
      (1,152
      )
      
      (915
      )
      
      (57
      )
      
      (2
      )
      
      (48
      )
      
      -
      
      
      (2,174
      )December 31, 2011
      $
      10,424
      
      $
      8,619
      
      $
      1,166
      
      $
      12
      
      $
      662
      
      $
      -
      
      $
      20,883Accumulated depreciationJanuary 1, 2010
      $
      2,923
      
      $
      3,030
      
      $
      217
      
      $
      -
      
      $
      187
      
      $
      -
      
      $
      6,357Depreciation
      
      727
      
      
      465
      
      
      17
      
      
      -
      
      
      3
      
      
      -
      
      
      1,212Foreign exchange
      
      (510
      )
      
      (652
      )
      
      (49
      )
      
      -
      
      
      (42
      )
      
      -
      
      
      (1,253
      )As at December 31, 2010
      
      3,140
      
      
      2,843
      
      
      185
      
      
      -
      
      
      148
      
      
      -
      
      
      6,316Depreciation
      
      674
      
      
      578
      
      
      18
      
      
      -

      
      
      34
      
      
      -
      
      
      1,304Foreign exchange
      
      (237
      )
      
      (305
      )
      
      (19
      )
      
      -
      
      
      (17
      )
      
      -
      
      
      (578
      )December 31, 2011
      $
      3,577
      
      $
      3,116
      
      $
      184
      
      $
      -
      
      $
      165
      
      $
      -
      
      $
      7,042Net book valueJanuary 1, 2010
      $
      6,240
      
      $
      2,959
      
      $
      185
      
      $
      34
      
      $
      45
      
      $
      -
      
      $
      9,463December 31, 2010
      $
      6,817
      
      $
      4,789
      
      $
      131
      
      $
      14
      
      $
      320
      
      $
      -
      
      $
      12,071December 31, 2011
      $
      6,847
      
      $
      5,503
      
      $
      982
      
      $
      12
      
      $
      497
      
      $
      -
      
      $
      13,841


13

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|6. | Mineral properties, plant and equipment-
      continued
|-- | --------------------------------------------------------

Head officeMine
      
      
      LeaseholdBuildings
      
      
      
      
      
      reclamation
      
      
      improvementsMineral
      
      
      Plant and
      
      
      and mobile
      
      
      
      
      
      and
      
      
      and otherproperties
      
      
      equipment
      
      
      equipment
      
      
      Land
      
      
      remediation
      
      
      equipment
      
      
      TotalCostJanuary 1, 2010
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      341
      
      $
      341Additions
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      19
      
      
      19Disposals
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (2
      )
      
      (2
      )December 31, 2010
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      358
      
      
      358Additions
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      61
      
      
      61Disposals
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (7
      )
      
      (7
      )December 31, 2011
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      412
      
      $
      412Accumulated
        depreciationJanuary 1, 2010
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      250
      
      $
      250Depreciation
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      29
      
      
      29Disposals
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (2
      )
      
      (2
      )December 31, 2010
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      277
      
      
      277Depreciation
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      47
      
      
      47Disposals
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (5
      )
      
      (5
      )December 31, 2011
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      319
      
      $
      319Net book valueJanuary 1, 2010
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      91
      
      $
      91December 31, 2010
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      81
      
      $
      81December 31, 2011
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      93
      
      $
      93


ConsolidatedMine
      
      
      LeaseholdBuildings
      
      
      
      
      
      reclamation
      
      
      improvementsMineral
      
      
      Plant and
      
      
      and mobile
      
      
      
      
      
      and
      
      
      and otherproperties
      
      
      equipment
      
      
      equipment
      
      
      Land
      
      
      remediation
      
      
      equipment
      
      
      TotalNet book valueJanuary 1, 2010
      $
      8,033
      
      $
      7,010
      
      $
      905
      
      $
      2,879
      
      $
      294
      
      $
      91
      
      $
      19,212December 31, 2010
      $
      12,661
      
      $
      10,918
      
      $
      908
      
      $
      2,214
      
      $
      348
      
      $
      81
      
      $
      27,130December 31, 2011
      $
      20,793
      
      $
      16,563
      
      $
      1,816
      
      $
      2,002
      
      $
      679
      
      $
      93
      
      $
      41,946


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).

During 2011, the Company acquired
  rights to a new silver-gold project, the Santa Rosa Project, in Guanajuato,
  Mexico, for $1,459, and is included in Guanajuatos mineral properties. The
  Company added $2,484 (2010 - $277) to Guanajuatos mineral properties relating
  to San Ignacio in 2011, resulting in total costs of $2,761.

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.

14

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|7. | Intangible assets
|-- | -----------------

| |                             |   | 2011 |   |   | 2010 |  
| | --------------------------- | - | ---- | - | - | ---- | -
| | Cost                        |   |      |   |   |      |  
| | Balance, January 1          | $ | 383  |   | $ | 176  |  
| | Additions                   |   | 627  |   |   | 224  |  
| | Foreign exchange            |   | (69  | ) |   | (17  | )
| | Balance, December
      31  | $ | 941  |   | $ | 383  |  
| |                             |   |      |   |   |      |  
| | Accumulated depreciation    |   |      |   |   |      |  
| | Balance, January 1          | $ | 109  |   | $ | 74   |  
| | Depreciation                |   | 135  |   |   | 44   |  
| | Foreign exchange            |   | (11  | ) |   | (9   | )
| | Balance, December
      31  |   | 233  |   |   | 109  |  
| | Net book value, December 31 | $ | 708  |   | $ | 274  |  

|8. | Trade and other payables                                                                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                         
|   | Trade and other payables of the Company are principally
      comprised of amounts outstanding for trade purchases relating to mining
      and exploration activities. The usual credit period taken for trade
      purchases is between 0 to 30 days.
|   |                                                                                                                                                                                                                                                         
|   | The following is an aged analysis of the trade and other
      payables:                                                                                                                                                                                

| |                   |   | December 31, |  |   | December 31, |  |   | January 1, | 
| | ----------------- | - | ------------ |  | - | ------------ |  | - | ---------- | 
| |                   |   | 2011         |  |   | 2010         |  |   | 2010       | 
| | Less than 1 month | $ | 4,663        |  | $ | 3,459        |  | $ | 1,523      | 
| | 1 to 3 months     |   | 323          |  |   | -            |  |   | -          | 
| | 3 to 6 months     |   | 1,312        |  |   | -            |  |   | -          | 
| | Over 6 months     |   | 52           |  |   | 1,299        |  |   | 1,108      | 
| |                   | $ | 6,350        |  | $ | 4,758        |  | $ | 2,631      | 

|   | Included in trade and other payables are amounts due to
      related parties which are disclosed in note 19.
|-- | -------------------------------------------------------------------------------------------------------------
|   |                                                                                                              
|9. | Long-term debt                                                                                               

| | (a) | Promissory notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | During the year ended December 31, 2010, the Company
      purchased equipment financed by two promissory notes requiring equal
      blended monthly payments of $11 for 24 months, commencing on the first day
      of the month after delivery of the equipment. The promissory notes bore
      interest at 6% per annum, compounded and calculated semi-annually and were
      secured by the equipment. On April 29, 2011, the Company extinguished its
      promissory notes relating to equipment purchase and the remaining accrued
      interest was paid in cash. The total interest paid on the promissory notes
      for the year ended December 31, 2011 was $8 (2010 -
      $29).

| | (b) | Convertible loan notes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | On July 13, 2007, the Company completed financing
      agreements for cash proceeds of $4,050. 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 fair value of the liability
      component of the convertible note was $2,084. The liability component was
      valued using a company specific interest rate assuming no conversion
      feature existed.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The debt component was accreted to its fair value over
      the term to maturity as a non-cash interest charge and the equity
      component is presented in convertible loan notes reserves as a separate
      component of shareholders equity.                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | On March 8, 2011, the note holders exercised their option
      to convert the two convertible notes into equity. In accordance with the
      financing agreement, the Company issued 1,800,000 fully paid common shares
      at the conversion price of $2.25 per common share.                                                                                                                                                                                                                                                                              

15

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|10. | Reclamation and remediation provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Companys reclamation and remediation provision
      relates to site restoration, clean-up and ongoing treatment and monitoring
      of the Topia and Guanajuato mines. Although the ultimate amount of the
      rehabilitation provision is uncertain, the fair value of these obligations
      is based on information currently available which is reviewed at each
      reporting date to take into account any material changes to the
      information. The timing of rehabilitation is likely to depend on when the
      mines cease to produce at economically viable rates which will depend upon
      future metal prices and are inherently uncertain. A reconciliation of the
      reclamation and remediation provision is as
      follows:

| |                            |   | December 31, |  |   | December 31, |  
| | -------------------------- | - | ------------ |  | - | ------------ | -
| |                            |   | 2011         |  |   | 2010         |  
| | Balance, beginning of year | $ | 1,955        |  | $ | 2,086        |  
| | Revision in estimates      |   | 152          |  |   | (172         | )
| | Accretion expense          |   | 47           |  |   | 41           |  
| | Balance, end of
      year | $ | 2,154        |  | $ | 1,955        |  

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

| |  | The total undiscounted estimated cash flows required to
      settle the Companys estimated obligations is US$2,039 (2010  US$2,039).                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | The increase in mine life (note 3d) at both the
      Guanajuato and Topia mines had the effect of decreasing the asset
      retirement obligations and their corresponding assets. The decrease was
      offset by decreases in the interest rate used to discount the cash flows
      and the weakening of the Canadian dollar against the US dollar during the
      year ended December 31, 2011. The resulting effect is a revision in
      estimate of the reclamation and remediation provision for the Guanajuato
      and Topia mines, increasing by $43 and $109, respectively.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | The expected timing of payments totaling US$2,039 is
      estimated as follows: US$756 in 2017, US$125 in 2018, US$125 in 2019,
      US$783 in 2022, US$125 in 2023 and US$125 in 2024. This timing matches the
      estimated remaining life of the mines, which is 5 years for Guanajuato and
      10 years for Topia.                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | A risk-free rate of 1.89% for Topia and 0.83% for
      Guanajuato (2010  3.3% and 1.02% respectively) has been used to discount
      the cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                       

|11. | Share capital
|--- | -------------
|    |              
|    | (a)          
|    |              
|    |              
|    |              
|    |              
|    |              
|    |              
|    |              
|    | (b)          
|    |              
|    |              
|    |              
|    |              
|    |              
|    | (c)          
|    |              
|    |              
|    |              
|    | (d)          
|    |              
|    |              
|    |              
|    |              

16

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|11. | Share capital-
      continued
|--- | ------------------------------

The continuity of share options for
  the year ended December 31, 2011 is as follows:

Balance
      
      
      
      
      BalanceExercise
      
      December 31,
      
      
      
      
      December 31,Price
      Expiry date
      2010
      Granted
      Cancelled
      Expired
      Exercised
      2011$ 0.90
      January 5, 2011
      125,000
      -
      -
      -
      (125,000)
      -$ 0.45
      February 8, 2014
      1,988,000
      -
      -
      -
      (1,183,000)
      805,000$ 0.45
      February 29, 2012
      160,000
      -
      -
      -
      (160,000)
      -$ 0.52
      March 25, 2011
      200,000
      -
      -
      -
      (200,000)
      -$ 0.70
      September 3, 2014
      965,000
      -
      -
      -
      (650,000)
      315,000$ 0.90
      February 29, 2012
      90,000
      -
      -
      -
      (90,000)
      -$ 0.90
      December 2, 2014
      337,500
      -
      -
      -

      (175,500)
      162,000$ 0.90
      July 11, 2015
      245,000
      -
      -
      -
      (127,000)
      118,000$ 1.15
      October 17, 2015
      105,000
      -
      -
      -
      (53,500)
      51,500$ 1.90
      November 21, 2015
      415,000
      -
      -
      -
      (325,000)
      90,000$ 2.40
      December 5, 2016
      -
      2,705,000
      -
      -
      -
      2,705,0004,630,500
      2,705,000
      
      -
      (3,089,000)
      4,246,500Weighted average exercise price
      $ 0.73
      $ 2.40
      -
      -
      $ 0.75
      $ 1.78


As at December 31, 2011, all share
  options are fully vested. The weighted average remaining contractual life of the
  options outstanding as at December 31, 2011 is 4.08 years.

The continuity of share options for
  the year ended December 31, 2010 is as follows:

Balance
      
      
      
      
      BalanceExercise
      
      January 1,
      
      
      
      
      December 31,Price
      Expiry date
      2010
      Granted
      Cancelled
      Expired
      Exercised
      2010$ 0.45
      February 27, 2010
      125,000
      -
      -
      -
      (125,000)
      -$ 0.45
      July 26, 2010
      400,000
      -
      -
      -
      (400,000)
      -$ 0.90
      January 5, 2011
      830,000
      -
      -
      -
      (705,000)
      125,000$ 0.45
      February 8, 2014
      3,944,125
      -
      -
      -
      (1,956,125)
      1,988,000$ 0.45
      February 29, 2012
      160,000
      -
      -
      -
      -
      160,000$ 0.52
      March 25, 2011
      310,000
      -
      -
      -
      (110,000)
      200,000$ 0.70
      September 3, 2014
      1,290,000
      -
      -
      -
      (325,000)
      965,000$ 0.90
      December 3, 2010
      185,000
      -
      -
      -
      (185,000)
      -$ 0.90
      February 29, 2012
      90,000
      -
      -
      -
      -
      90,000$ 0.90
      December 2, 2014
      580,000
      -
      -
      -
      (242,500)
      337,500$ 0.90
      July 11, 2015
      -
      670,000
      (65,000)
      -
      (360,000)
      245,000$ 1.15
      October 17, 2015
      -
      240,000
      (25,000)
      -
      (110,000)
      105,000$ 1.90
      November 21, 2015
      -
      415,000
      -
      -
      -
      415,0007,914,125
      1,325,000
      (90,000)
      -
      (4,518,625)
      4,630,500Weighted average exercise price
      $ 0.59
      $ 1.24
      $ 0.93
      -
      $ 0.64
      $ 0.73


As at December 31, 2010, all share
  options were fully vested. The weighted average remaining contractual life of
  the options outstanding as at December 31, 2010 was 3.25 years.

During the year ended December 31,
  2011, the Company recorded compensation expense for the fair value of share
  options of $2,496 (2010 - $869) for share options that were granted during the
  period. The weighted average fair value of options granted during 2011 was $0.92
  (2010 - $0.61) .

17

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|11. | Share capital-
      continued
|--- | ------------------------------

The fair value per option granted was
  determined using the following weighted average assumptions at the time of the
  grant using the Black Scholes option pricing model as follows:

| |                         |  | 2011       |  |  | 2010      | 
| | ----------------------- |  | ---------- |  |  | --------- | 
| | Risk-free interest rate |  | 0.88%      |  |  | 1.6%      | 
| | Expected life           |  | 1.94 years |  |  | 2.1 years | 
| | Annualized volatility   |  | 79%        |  |  | 108.3%    | 
| | Dividend rate           |  | -          |  |  | -         | 

| | (e) | Warrants:                                                                           
| | --- | ------------------------------------------------------------------------------------
| |     |                                                                                     
| |     | The continuity of warrants for the year ended December
      31, 2011 is as follows:

| |                                 |   |          |  |                   |      | Balance,     |   |      |         |   |      |            |   |      |         |   |  | Balance,     | 
| | ------------------------------- | - | -------- |  | ----------------- | ---- | ------------ | - | ---- | ------- | - | ---- | ---------- | - | ---- | ------- | - |  | ------------ | 
| |                                 |   | Exercise |  |                   |      | December 31, |   |      |         |   |      |            |   |      |         |   |  | December 31, | 
| | Series                          |   | price    |  | Expiry date       |      | 2010         |   |      | Issued  |   |      | Exercised  |   |      | Expired |   |  | 2011         | 
| | SFPO(1)warrants                 | $ | 0.90     |  | November 17, 2011 |      | 6,315,650    |   |      | -       |   |      | (6,307,150 | ) |      | (8,500  | ) |  | -            | 
| | Agent warrants                  | $ | 0.90     |  | November 17, 2011 |      | 548,996      |   |      | -       |   |      | (548,996   | ) |      | -       |   |  | -            | 
| | Underwriters warrants          | $ | 4.20     |  | April 12, 2013    |      | -            |   |      | 316,250 |   |      | -          |   |      | -       |   |  | 316,250      | 
| |                                 |   |          |  |                   |      | 6,864,646    |   |      | 316,250 |   |      | (6,856,146 | ) |      | (8,500  | ) |  | 316,250      | 
| | Weighted average exercise price | $ | 0.90     |  | $                 | 4.20 |              | $ | 0.90 |         | $ | 0.90 |            | $ | 4.20 |        

(1) Short Form Prospectus
  Offering, SFPO

The Underwriters warrants associated
  with the bought deal financing (note 11c) were valued at $384 using the Black
  Scholes model. The assumptions used for the valuation of the Underwriters
  warrants were a risk-free interest rate of 1.85%, volatility of 76.7%, dividends
  paid of nil, exercise price of $4.20 per share, and an expected life of the
  warrants of 1.24 years. The weighted average fair value of warrants issued
  during 2011 was $1.21 (2010  nil).

The continuity of warrants for the
  year ended December 31, 2010 was as follows:

| |                                       |   |          |  |                   |   | Balance,   |   |      |        |  |   |            |   |      |         |  |  | Balance,     | 
| | ------------------------------------- | - | -------- |  | ----------------- | - | ---------- | - | ---- | ------ |  | - | ---------- | - | ---- | ------- |  |  | ------------ | 
| |                                       |   | Exercise |  |                   |   | January 1, |   |      |        |  |   |            |   |      |         |  |  | December 31, | 
| | Series                                |   | price    |  | Expiry date       |   | 2010       |   |      | Issued |  |   | Exercised  |   |      | Expired |  |  | 2010         | 
| | Series L                            |   |          |  |                   |   |            |   |      |        |  |   |            |   |      |         |  |  |              | 
| | Warrants                              | $ | 0.35     |  | January 22, 2010  |   | 1,177,500  |   |      | -      |  |   | (1,177,500 | ) |      | -       |  |  | -            | 
| | Finders                              | $ | 0.35     |  | January 22, 2010  |   | 70,756     |   |      | -      |  |   | (70,756    | ) |      | -       |  |  | -            | 
| | Warrants                              |   |          |  |                   |   |            |   |      |        |  |   |            |   |      |         |  |  |              | 
| | SFPO Warrants                         | $ | 0.90     |  | November 17, 2011 |   | 8,808,750  |   |      | -      |  |   | (2,493,100 | ) |      | -       |  |  | 6,315,650    | 
| | Agent Warrants                        | $ | 0.90     |  | November 17, 2011 |   | 963,150    |   |      | -      |  |   | (414,154   | ) |      |         |  |  | 548,996      | 
| |                                       |   |          |  |                   |   | 11,020,156 |   |      | -      |  |   | (4,155,510 | ) |      | -       |  |  | 6,864,646    | 
| | Weighted
      average exercise price | $ | 0.80     |  |                   | - |            | $ | 0.64 |        |  | - |            | $ | 0.90 |        

18

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|11. | Share capital- continued
|--- | ------------------------
|    |                         
|    | (f)                     
|    |                         
|    |                         

| |                                                       |  | 2011        |  |  | 2010        | 
| | ----------------------------------------------------- |  | ----------- |  |  | ----------- | 
| | Shares outstanding at January 1                       |  | 119,913,766 |  |  | 111,239,631 | 
| | Effect of share options exercised                     |  | 2,292,166   |  |  | 1,632,168   | 
| | Effect of warrants exercised                          |  | 3,253,708   |  |  | 1,550,427   | 
| | Effect of extinguishment of convertible notes         |  | 1,469,589   |  |  | -           | 
| | Effect of short form prospectus offering              |  | 4,143,151   |  |  | -           | 
| | Basic weighted average number of shares outstanding   |  | 131,072,380 |  |  | 114,422,226 | 
| | Effect of dilutive share options                      |  | 1,811,979   |  |  | 2,836,319   | 
| | Effect of dilutive
      warrants                     |  | 2,516,754   |  |  | 1,674,075   | 
| | Diluted weighted average number of shares outstanding |  | 135,401,113 |  |  | 118,932,620 | 

| |     | For the year ended December 31, 2011 there were 90,610
      (2010  35,609) potentially dilutive shares that have not been included in
      the diluted earnings per share calculation for the period
      presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (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. | General and administrative
      expenses
|--- | -----------------------------------------

| |                               |   | 2011  |  |   | 2010  | 
| | ----------------------------- | - | ----- |  | - | ----- | 
| | Administrative expenses       | $ | 7,761 |  | $ | 5,929 | 
| | Amortization and depreciation |   | 97    |  |   | 52    | 
| | Share-based payments          |   | 1,248 |  |   | 388   | 
| |                               | $ | 9,106 |  | $ | 6,369 | 

|13. | Finance costs
|--- | -------------

| |                                                          |   | 2011 |  |   | 2010  | 
| | -------------------------------------------------------- | - | ---- |  | - | ----- | 
| | Interest accretion on convertible loan
      notes       | $ | 239  |  | $ | 939   | 
| | Interest expense                                         |   | -    |  |   | 92    | 
| | Lease interest                                           |   | 38   |  |   | 82    | 
| | Accretion on
      reclamation and remediation provision |   | 47   |  |   | 41    | 
| |                                                          | $ | 324  |  | $ | 1,154 | 

19

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|14. | Capital management                                          
|--- | ------------------------------------------------------------
|    |                                                             
|    | The Companys objectives when managing capital are
      to:

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

|    | The Topia and Guanajuato mines are in production, but
      exploration activities are also performed at these properties in order to
      identify further resources. The Company plans to use funds from the sale
      of concentrates to fund operations 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, 2011,
      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.                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Companys capital structure is dependent on expected
      business growth and changes in the business environment. As at December
      31, 2011, the Company is not subject to externally imposed capital
      requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|15. | Derivative financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On July 22, 2010, the Company entered into a zinc put and
      call option contract (the 2010 Zinc Contract) for 500 metric tonnes with
      a contract period from July 2010 to December 2010. The floor and cap price
      per metric tonne is US$1,800 and US$1,975, respectively. Under the terms
      of the 2010 Zinc Contract, the Company received the prevailing market zinc
      price while within the price range. Outside of the price range, the
      Company received a minimum of the floor price or a maximum of the cap
      price if the market price is below the floor price and above the cap
      price, respectively. The 2010 Zinc Contract was settled in early January
      2011.                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On November 3, 2010, the Company entered into a lead put
      and call option contract (the Lead Contract) for a total of 500 metric
      tonnes which are settled equally over ten monthly contract periods from
      December 2010 to September 2011. The floor and cap price per metric tonne
      is US$1,800 and US$3,100, respectively. Under the terms of the Lead
      Contract, the Company received the prevailing market lead price while
      within the price range. Outside the price range, the Company received a
      minimum of the floor price or a maximum of the cap price if the market is
      below the floor price and above the cap price, respectively. Also under
      the terms of the Lead Contract, the Company pledged $101 (US$100) as cash
      collateral. Accordingly, this amount was also classified as restricted
      cash. As at December 31, 2011, the cash collateral from the Lead Contract
      is $nil (2010 - $101) and the liability under the Lead Contract is $nil
      (2010 - $23).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On August 30, 2011 the Company entered into a zinc put
      and call option contract (the 2011 Zinc Contract) for 50 metric tonnes
      with a contract period from August 2011 to November 2011. The floor and
      cap price per metric tonne were US$2,000 and US$2,525 respectively. Under
      the terms of the 2011 Zinc Contract, the Company was entitled to receive
      prevailing market zinc prices while within the floor and cap range.
      Outside of the price range, the Company was entitled to receive a minimum
      of the floor price or a maximum of the cap price if the market price was
      below the floor price and above the cap price, respectively. The 2011 Zinc
      Contract was closed in October 2011 as the counter-party became
      insolvent.                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company determined that these contracts are
      derivative financial instruments that should be measured at fair value at
      each reporting period with any gains or losses recognized in profit or
      loss in the period in which they arise. During the year ended December 31,
      2011, the Company recorded a mark-to-market gain of $24 (2010  $148
      loss).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

20

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|16. | Fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The carrying values of cash and cash equivalents, trade
      and other receivables, and trade and other payables approximate their fair
      values due to the short-term nature of the items. The fair values of
      marketable securities are based on current bid prices at December 31,
      2011. 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, 2011.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In evaluating fair value information, considerable
      judgment is required to interpret the market data used to develop the
      estimates. The use of different market assumptions and valuation
      techniques may have a material effect on the estimated fair value amounts.
      Accordingly, the estimates of fair value presented herein may not be
      indicative of the amounts that could be realized in a current market
      exchange.                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | IFRS requires disclosures about the inputs to fair value
      measurements, including their classification within a hierarchy that
      prioritizes the inputs to fair value measurement. The three levels of the
      fair value hierarchy are:                                                                                                                                                                                                                                                   

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

The following tables illustrate the
  valuation method of the Companys financial instruments carried at fair value as
  at December 31, 2011 and 2010:

Financial Assets:

Financial assets at fair value as at
  December 31, 2011

| |                       |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total | 
| | --------------------- |  | ------- |  |  | ------- |  |  | ------- |  |  | ----- | 
| | Marketable securities |  | 80      |  |  | -       |  |  | -       |  |  | 80    | 

Financial assets at fair value as at
  December 31, 2010

| |                       |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total | 
| | --------------------- |  | ------- |  |  | ------- |  |  | ------- |  |  | ----- | 
| | Marketable securities |  | 200     |  |  | -       |  |  | -       |  |  | 200   | 

Financial Liabilities:

There were no financial liabilities at
  fair value as at December 31, 2011.

Financial liabilities at fair value as
  at December 31, 2010

| |                                 |   | Level 1 |  |   | Level 2 |  |   | Level 3 |  |   | Total | 
| | ------------------------------- | - | ------- |  | - | ------- |  | - | ------- |  | - | ----- | 
| | Derivative instrument liability | $ | -       |  | $ | 53      |  | $ | -       |  | $ | 53    | 

|    | During the year ended December 31, 2011, a mark-to-market
      loss of $103 (2010  $10 loss) 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 during the year. At December 31, 2011, receivables
      of $220 (2010 - $232) were impaired and provided for.                                                                                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|17. | 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 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.

21

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|17. | Financial risk exposure and risk management-
      continued                                    
|--- | ------------------------------------------------------------------------------------------------
|    |                                                                                                 
|    | The types of risk exposure and the way in which such
      exposures are managed are as follows:
|    |                                                                                                 
|    | (a)                                                                                             
|    |                                                                                                 
|    |                                                                                                 
|    |                                                                                                 
|    | (b)                                                                                             
|    |                                                                                                 
|    |                                                                                                 
|    |                                                                                                 
|    |                                                                                                 
|    |                                                                                                 
|    |                                                                                                 
|    |                                                                                                 
|    |                                                                                                 

| |                      |   | December 31, |  |   | December 31, |  |   | January 1, | 
| | -------------------- | - | ------------ |  | - | ------------ |  | - | ---------- | 
| |                      |   | 2011         |  |   | 2010         |  |   | 2010       | 
| | Less than 30 days    | $ | 7,583        |  | $ | 4,097        |  | $ | 2,541      | 
| | Within 31 to 60 days |   | 596          |  |   | 654          |  |   | 776        | 
| | Within 61 to 90 days |   | 190          |  |   | 400          |  |   | 155        | 
| | More than 90 days    |   | 2,811        |  |   | -            |  |   | -          | 
| |                      | $ | 11,180       |  | $ | 5,151        |  | $ | 3,472      | 

| | (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. A key management goal is to maintain an
      optimal level of liquidity through the active management of the Companys
      assets, liabilities and cash flows. The Company prepares annual budgets
      which are approved by the Board of Directors and prepares cash flows and
      liquidity forecasts on a quarterly basis.                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | For the year ended December 31, 2011, cash flows provided
      by operations, receipt of trade and VAT receivables, proceeds from the
      issuance of shares, and proceeds from warrants and options exercised
      during the year 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 Companys financial liabilities consist of trade and
      other payables and capital lease obligations, and are due within one
      year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (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.

22

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|17. | Financial risk exposure and risk management-
      continued
|--- | ------------------------------------------------------------

The Companys exploration, development
  and 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 are as follows:

| |                                |   | December 31, |  |   | December 31, | 
| | ------------------------------ | - | ------------ |  | - | ------------ | 
| |                                |   | 2011         |  |   | 2010         | 
| | MXN Peso per CDN Dollar        | $ | 13.7212      |  | $ | 12.4100      | 
| | US Dollar per CDN
      Dollar | $ | 0.9833       |  | $ | 1.0054       | 

The Company has significant
  inter-company loans receivable from and loans payable to one of its Mexican
  subsidiaries, denominated in Canadian and US dollars. Since the loans receivable
  have fixed repayment dates and are expected to be repaid to the parent Company,
  they are not considered to be permanently invested in the foreign operation.
  Therefore, unrealized gains and losses on these loans are reflected in the
  consolidated net income of the Company for the reporting period. During the year
  ended December 31, 2011, the Company recorded a net foreign exchange loss of
  $4,040 (2010 - $415 gain) relating to the inter-company loans receivable and
  payable due to the rise in the Canadian dollar and US dollar against the Mexican
  Peso.

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 the foreign currency risk exposure on those receivables 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 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, 2011, the Company held $35,845 (2010 - $12,957)
      in high interest savings accounts and guaranteed investment
      certificates.                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (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, 2011, market prices were US$27.80/oz (2010
       US$30.63/oz) for silver, US$1,564.45/oz (2010 - US$1,410/oz) for gold,
      US$1,979.75/tonne (2010 - US$2,586/tonne) for lead, and US$1,827.50/tonne
      (2010  US$2,432/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, imports, exports, supply, industrial and retail
      demand, forward sales by producers and speculators, levels of worldwide
      production and short-term changes in supply and demand because of
      speculative hedging activities. The value of trade receivables depends on
      changes in metal prices over the quotation 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.                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       | During the year, the Company held derivative financial
      instruments to mitigate certain fluctuations in lead and zinc prices (note
      15).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (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 change of +1%/-1% from the prevailing market interest
      rates on deposits as of December 31, 2011.                                                                                                                                     
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                              
| |  | Proportional foreign exchange movement of -10%
      (depreciation of CDN Dollar) and +10% (appreciation of CDN Dollar) against
      the US Dollar, from the December 31, 2011 CDN Dollar to US Dollar exchange
      rate of 0.9833.       
| |   |                                                                                                                                                                                                                                              
| |  | Proportional foreign exchange movement of -10%
      (depreciation of CDN Dollar) and +10% (appreciation of CDN Dollar) against
      the Mexican Peso, from the December 31, 2011 CDN Dollar to Mexican Peso
      exchange rate of 13.7212.
| |   |                                                                                                                                                                                                                                              
| |  | A change of +10%/-10% from the prevailing commodity
      prices of US$27.80/oz for silver, US$1,564.45/oz for gold,
      US$1,979.75/tonne for lead, and US$1,827.50/tonne for zinc as of December
      31, 2011.                         

23

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|17. | Financial risk exposure and risk management-
      continued
|--- | ------------------------------------------------------------

If these movements were to occur, the
  impact on the consolidated net income (loss) for each category of financial
  instrument held at December 31, 2011 and December 31, 2010 are as follows:

December 31, 2011
      
      
      
      
      Interest Rate Risk
      
      
      Currency Rate Risk
      
      
      Commodity Price Risk-1%
      
      
      +1%
      
      
      -10%
      
      
      +10%
      
      
      -10%
      
      
      +10%CarryingAmount
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      IncomeFinancial assetsCash and cash equivalentsCDN dollars
      $
      27,685
      
      $
      (277
      )
      $
      277
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -US dollars
      
      4,270
      
      
      (43
      )
      
      43
      
      
      474
      
      
      (388
      )
      
      -
      
      
      -Mexican Pesos
      
      7,482
      
      
      (75
      )
      
      75
      
      
      688
      
      
      (563
      )
      
      -
      
      
      -Accounts receivable 
            
        US dollars
      
      8,116
      
      
      -
      
      
      -
      
      
      902
      
      
      (738
      )
      
      (812
      )
      
      812Inter-company loans 
            
        receivable CDN dollars
      
      50,796
      
      
      -
      
      
      -
      
      
      5,644
      
      
      (4,618
      )
      
      -
      
      
      -Financial liabilitiesTrade and other payables 
            
        US dollars
      
      1,846
      
      
      -
      
      
      -
      
      
      (205
      )
      
      168
      
      
      -
      
      
      -Inter-company loans 
            
        payable US dollars
      
      4,735
      
      
      -
      
      
      -
      
      
      (508
      )
      
      445
      
      
      -
      
      
      -Capital lease obligation
              US
        dollars
      
      130
      
      
      -
      
      
      -
      
      
      (15
      )
      
      12
      
      
      -
      
      
      -Total increase (decrease)
      
      
      
      $
      (395
      )
      $
      395
      
      $
      6,980
      
      $
      (5,682
      )
      $
      (812
      )
      $
      812


24

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|17. | Financial risk exposure and risk management-
      continued
|--- | ------------------------------------------------------------

December 31, 2010
      
      
      
      
      Interest Rate Risk
      
      
      Currency Rate Risk
      
      
      Commodity Price Risk-1%
      
      
      +1%
      
      
      -10%
      
      
      +10%
      
      
      -10%
      
      
      +10%CarryingAmount
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      Income
      
      
      IncomeFinancial assetsCash and cash equivalentsCDN dollars
      $
      11,436
      
      $
      (114
      )
      $
      114
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -US dollars
      
      2,336
      
      
      (23
      )
      
      23
      
      
      260
      
      
      (212
      )
      
      -
      
      
      -Accounts receivable 
            
        US dollars
      
      5,159
      
      
      -
      
      
      -
      
      
      573
      
      
      (469
      )
      
      (515
      )
      
      515Inter-company loans 
            
        receivable CDN dollars
      
      29,369
      
      
      -
      
      
      -
      
      
      3,263
      
      
      (2,670
      )
      
      -
      
      
      -Financial liabilitiesTrade and other payables 
            
        US dollars
      
      158
      
      
      -
      
      
      -
      
      
      (18
      )
      
      14
      
      
      -
      
      
      -Inter-company loans 
            
        payable US dollars
      
      1,740
      
      
      -
      
      
      -
      
      
      (187
      )
      
      163
      
      
      -
      
      
      -Capital lease obligation 
             US dollars
      
      497
      
      
      -
      
      
      -
      
      
      (55
      )
      
      45
      
      
      -
      
      
      -Total increase (decrease)
      
      
      
      $
      (137
      )
      $
      137
      
      $
      3,836
      
      $
      (3,129
      )
      $
      (515
      )
      $
      515


At December 31, 2011, if the Canadian
  dollar had weakened or strengthened against the Mexican Peso by 10%, the
  additional net effect to shareholders' equity would be an increase of $404 or
  decrease of $331 respectively. At December 31, 2011, if commodity prices had
  decreased or increased by 10%, the additional net effect to shareholders' equity
  would be a decrease or increase of $306 respectively.

|18. | Income taxes                                                                                                                                                  
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                               
|    | (a) Recovery of (provision for) income taxes:                                                                                                                 
|    |                                                                                                                                                               
|    | Income tax recovery (expense) differs from the amount
      which would result from applying the statutory Canadian tax rates for the
      following reasons:

| |                                                            |   | 2011   |   |  | 2010   |  
| | ---------------------------------------------------------- | - | ------ | - |  | ------ | -
| | Net income before tax                                      | $ | 13,491 |   |  | 8,577  |  
| | Canadian income tax rate                                   |   | 26.50% |   |  | 28.50% |  
| |                                                            |   |        |   |  |        |  
| | Income tax expense expected                                |   | (3,575 | ) |  | (2,444 | )
| | Permanent differences                                      |   | (1,175 | ) |  | (828   | )
| | Different in tax rates                                     |   | (295   | ) |  | (150   | )
| | Reversal of Mexican flat tax liability                     |   | -      |   |  | 1,708  |  
| | Benefit of tax
      attributes recognized and other items |   | 3,060  |   |  | 3,797  |  
| | Total income tax (expense) recovery                        | $ | (1,985 | ) |  | 2,083  |  

25

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|18. | Income taxes- continued                                                              
|--- | -------------------------------------------------------------------------------------
|    |                                                                                      
|    | (b) Unrecognized deferred tax assets:                                                
|    |                                                                                      
|    | Deferred tax assets have not been recognized in respect
      of the following items:

| |                                            |   | 2011  |  |   | 2010  | 
| | ------------------------------------------ | - | ----- |  | - | ----- | 
| | Deductible (taxable) temporary differences | $ | 1,690 |  | $ | 1,297 | 
| | Tax losses                                 |   | 2,958 |  |   | 5,003 | 
| |                                            | $ | 4,648 |  | $ | 6,300 | 

At December 31, 2011, the Company had
  operating loss carry forwards of $20,454 (2010 - $34,134) and capital loss carry
  forwards of $1,683 (2010  $1,683). The operating loss carry forwards at
  December 31, 2011 includes $10,910 (2010 - $18,610) in Canada and $9,544 (2010 
  $15,524) in Mexico. The capital losses are without expiry, and the operating
  losses expire at various dates to 2029.

(c) Movements in temporary differences
  during 2010 and 2011 were as follows:

Mineral
      
      
      
      
      
      
      
      
      Reclamationproperties,
      
      
      
      
      
      Financial
      
      
      and
      
      
      Tax lossplant and
      
      
      Loans and
      
      
      liabilities at
      
      
      remediation
      
      
      carry2010
      
      equipment
      
      
      receivables
      
      
      amortized cost
      
      
      provision
      
      
      forwards
      
      
      TotalBalance, January 1, 2010
      $
      (2,098
      )
      $
      (618
      )
      $
      -
      
      $
      339
      
      $
      215
      
      $
      (2,162
      )Recognized in
        profit or loss
      
      (2,532
      )
      
      589
      
      
      -
      
      
      (339
      )
      
      4,444
      
      
      2,162Balance, December 31, 2010
      $
      (4,630
      )
      $
      (29
      )
      $
      -
      
      $
      -
      
      $
      4,659
      
      $
      -


The Company had deferred tax assets
  relating to one of its Mexican subsidiaries at December 31, 2010 that were not
  recognized. At December 31, 2011, the same subsidiary had a deferred tax
  liability and this amount was recognized in the statement of financial position
  at December 31, 2011.

Mineral
      
      
      
      
      
      
      
      
      Reclamationproperties,
      
      
      
      
      
      Financial
      
      
      and
      
      
      Tax lossplant and
      
      
      Loans and
      
      
      liabilities at
      
      
      remediation
      
      
      carryequipment
      
      
      receivables
      
      
      amortized cost
      
      
      provision
      
      
      forwards
      
      
      TotalBalance, January 1, 2011
      $
      (4,630
      )
      $
      (29
      )
      $
      -
      
      $
      -
      
      $
      4,659
      
      $
      -Recognized in
        profit or loss
      
      (417
      )
      
      68
      
      
      35
      
      
      305
      
      
      (1,815
      )
      
      (1,824
      )Balance, December 31, 2011
      $
      (5,047
      )
      $
      39
      
      $
      35
      
      $
      305
      
      $
      2,844
      
      $
      (1,824
      )


|19. | Related party
      transactions
|--- | --------------------------------

| |                                                                                                           |   | 2011  |  |   | 2010  |  
| | --------------------------------------------------------------------------------------------------------- | - | ----- |  | - | ----- | -
| | Consulting fees paid or accrued to
      companies controlled by directors of the Company                 | $ | 781   |  | $ | 702   |  
| | Consulting fees paid or accrued to companies controlled by
      officers of the Company                  |   | 290   |  |   | 215   |  
| | Director fees paid or accrued                                                                             |   | 189   |  |   | 160   |  
| | Cost recoveries received or accrued from a company with a
      common director of the Company            |   | -     |  |   | (51   | )
| | Office and administration fees paid or accrued to a company
      controlled by a director of the Company |   | 85    |  |   | 86    |  
| |                                                                                                           | $ | 1,345 |  | $ | 1,112 |  

As at December 31, 2011, $42 (2010 -
  $167) was due to companies controlled by officers and directors of the Company
  and was included in accounts payable. Amounts due from companies with common
  directors were $24 (2010 - $75) and were included in trade and other
  receivables.

The above transactions occurred in the
  normal course of operations and are measured at fair value.

26

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|19. | Related party transactions-
      continued                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                           
|    | Compensation of key management personnel                                                                                                                  
|    |                                                                                                                                                           
|    | The remuneration of directors and other members of key
      management personnel during the years ended December 31, 2011 and 2010
      were as follows:

| |                                 |   | 2011  |  |   | 2010  | 
| | ------------------------------- | - | ----- |  | - | ----- | 
| | Short-term benefits (i)         | $ | 2,509 |  | $ | 2,246 | 
| | Share-based
      payments (ii) |   | 969   |  |   | 118   | 
| |                                 | $ | 3,478 |  | $ | 2,364 | 

| | (i)  | Short-term benefits include salaries and benefits,
      consulting and management fees.                                                  
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) | Share-based payments are the fair value of options
      granted to key management personnel under the stock option plan (note
      11d).

|    | The Company is committed to making severance payments
      amounting to approximately $3,352 to certain officers and management in
      the event that there is a change of control of the Company.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                      
|    | Subsequent to December 31, 2011 a payment in the amount
      of $676 was made to an executive and director in connection with his
      retirement and resignation from the board of directors.     
|    |                                                                                                                                                                                                      
|20. | Commitments                                                                                                                                                                                          
|    |                                                                                                                                                                                                      
|    | As of December 31, 2011 the Company had the following
      commitments:                                                                                                                             

| |                                                               |   | Total |  |   | 1 year |  |   | 2-3 years |  |   | 4-5 years | 
| | ------------------------------------------------------------- | - | ----- |  | - | ------ |  | - | --------- |  | - | --------- | 
| | Laboratory, equipment
      maintenance and drilling services | $ | 1,365 |  | $ | 1,202  |  | $ | 163       |  | $ | -         | 
| | Operating lease payments(1)                                   |   | 260   |  |   | 154    |  |   | 106       |  |   | -         | 
| | Equipment purchases with
      third party vendors(2)         |   | 2,396 |  |   | 2,396  |  |   | -         |  |   | -         | 
| | Environmental program(3)                                      |   | 69    |  |   | 69     |  |   | -         |  |   | -         | 
| | Consulting                                                    |   | 25    |  |   | 25     |  |   | -         |  |   | -         | 
| | Total commitments                                             | $ | 4,115 |  | $ | 3,846  |  | $ | 269       |  | $ | -         | 

| | (1) | Lease payments were recognized as an expense in the
      period.                                                                                                                                                                                    
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | The Company expects to fulfill these capital expenditure
      commitments in fiscal 2012.                                                                                                                                                           
| | (3) | 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.

|21. | Operating segments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | 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.

2011Mexico
      
      
      CanadaGuanajuato
      
      
      Topia
      
      
      Other
      
      
      Corporate
      
      
      Total
      
      
      Corporate
      
      
      TotalExternal mineral sales
      $
      39,096
      
      $
      18,722
      
      $
      -
      
      $
      -
      
      $
      57,818
      
      $
      -
      
      $
      57,818Amortization and depletion
      
      3,270
      
      
      1,195
      
      
      -
      
      
      -
      
      
      4,465
      
      
      96
      
      
      4,561Share-based payments
      
      821
      
      
      141
      
      
      -
      
      
      67
      
      
      1,029
      
      
      1,181
      
      
      2,210Interest revenue
      
      -
      
      
      -
      
      
      -
      
      
      103
      
      
      103
      
      
      332
      
      
      435Finance costs
      
      29
      
      
      17
      
      
      -
      
      
      39
      
      
      85
      
      
      239
      
      
      324Income (loss) before income
      
      18,764
      
      
      7,634
      
      
      -
      
      
      (5,709
      )
      
      20,689
      
      
      (7,198
      )
      
      13,491taxesIncome (loss) for the year
      
      18,683
      
      
      7,607
      
      
      -
      
      
      (7,586
      )
      
      18,704
      
      
      (7,198
      )
      
      11,506Capital expenditures
      
      18,911
      
      
      4,428
      
      
      -
      
      
      -
      
      
      23,339
      
      
      61
      
      
      23,400Total assets
      $
      34,101
      
      $
      21,888
      
      $
      -
      
      $
      6,706
      
      $
      62,695
      
      $
      40,249
      
      $
      102,944


27

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|21. | Operating segments-
      continued
|--- | -----------------------------------

2010Mexico
      
      
      CanadaGuanajuato
      
      
      Topia
      
      
      Other
      
      
      Corporate
      
      
      Total
      
      
      Corporate
      
      
      TotalExternal mineral sales
      $
      27,983
      
      $
      14,223
      
      $
      -
      
      $
      -
      
      $
      42,206
      
      $
      -
      
      $
      42,206Amortization and depletion
      
      2,853
      
      
      1,264
      
      
      -
      
      
      -
      
      
      4,117
      
      
      52
      
      
      4,169Share-based payments
      
      444
      
      
      37
      
      
      -
      
      
      -
      
      
      481
      
      
      388
      
      
      869Interest revenue
      
      -
      
      
      -
      
      
      -
      
      
      37
      
      
      37
      
      
      78
      
      
      115Finance costs
      
      -
      
      
      -
      
      
      -
      
      
      215
      
      
      215
      
      
      939
      
      
      1,154Income (loss) before income
      
      4,472
      
      
      1,680
      
      
      (69
      )
      
      3,918
      
      
      10,001
      
      
      (1,424
      )
      
      8,577taxesIncome (loss) for the year
      
      4,472
      
      
      1,680
      
      
      (69
      )
      
      6,001
      
      
      12,084
      
      
      (1,424
      )
      
      10,660Capital expenditures
      
      10,799
      
      
      5,203
      
      
      -
      
      
      -
      
      
      16,002
      
      
      19
      
      
      16,021Total assets
      $
      19,441
      
      $
      15,500
      
      $
      -
      
      $
      5,638
      
      $
      40,579
      
      $
      14,872
      
      $
      55,451


Product Revenue

| |                              |   | 2011   |   |   | 2010   |  
| | ---------------------------- | - | ------ | - | - | ------ | -
| | Silver                       | $ | 46,165 |   | $ | 31,665 |  
| | Gold                         |   | 11,601 |   |   | 8,366  |  
| | Lead                         |   | 1,880  |   |   | 2,231  |  
| | Zinc                         |   | 1,900  |   |   | 1,612  |  
| | Copper                       |   | 6      |   |   | -      |  
| | Ore processing revenues      |   | 842    |   |   | 630    |  
| | Smelter and refining charges |   | (4,576 | ) |   | (2,298 | )
| |                              | $ | 57,818 |   | $ | 42,206 |  

For the years ended December 31, 2011
  and December 31, 2010, the Company had four customers that accounted for the
  majority total revenues as follows:

| | Customer        | Segment    |   | 2011   |  |   | 2010   | 
| | --------------- | ---------- | - | ------ |  | - | ------ | 
| | Customer A      | Guanajuato | $ | 17,152 |  | $ | -      | 
| | Customer B      | Guanajuato |   | 14,401 |  |   | 18,851 | 
| | Customer C      | Guanajuato |   | 4,078  |  |   | -      | 
| | Customer C      | Topia      |   | 18,659 |  |   | -      | 
| | Customer D      | Guanajuato |   | -      |  |   | 9,592  | 
| | Customer D      | Topia      |   | -      |  |   | 13,763 | 
| | Other customers |            |   | 3,528  |  |   | -      | 
| |                 |            | $ | 57,818 |  | $ | 42,206 | 

The trade accounts receivable balance
  of $11,180 at December 31, 2011 (2010  5,151) relates to three customers (note
  4).

28

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|22. | Transition to IFRS                                                                                                                                                                                                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | An explanation of how the transition from Canadian GAAP
      to IFRS has affected the Companys financial position, financial
      performance and cash flow is set out in the following tables and the notes
      that accompany the tables.                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | The accounting policies in note 3 have been applied in
      preparing the consolidated financial statements for the year ended
      December 31, 2011, the comparative information for the year ended December
      31, 2010 and the preparation of an opening IFRS statement of financial
      position on the transition date, being January 1, 2010.
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | In preparing the consolidated financial statements for
      the year ended December 31, 2011, comparative information for the year
      ended December 31, 2010 have been adjusted from amounts reported
      previously in the financial statements prepared in accordance with
      GAAP.                                                            
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | The guidance for the first time adoption of IFRS is set
      out in IFRS 1. IFRS 1 provides for certain mandatory exceptions and
      optional exemptions for first time adopters of IFRS. The Company elected
      to apply the following optional exemptions:                                                                                         

| |  | IFRS 3, Business Combinations,has not been
      applied to acquisitions of subsidiaries or of interests in associates and
      joint ventures that occurred before January 1, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | IFRS 2, Share-Based Payments, has not been applied
      to equity instruments granted after November 7, 2002 which had not vested
      as of the transition date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | The Company has applied the transitional provision in
      IFRIC 4, Determining whether an Arrangement contains a lease, and
      has assessed all arrangements as at the date of transition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | IFRIC 1, Changes in Existing Decommissioning,
      Restoration and Similar Liabilities, has not been applied to
      decommissioning liabilities included in mineral properties, plant and
      equipment that occurred before the Transition Date to IFRS. In accordance
      with this IFRS 1 optional exemption, decommissioning and restoration
      liabilities of the Company are measured at the Transition Date under IAS
      37, Provisions, Contingent Liabilities and Contingent Assets, and
      the amount to be included in the cost of the related asset is estimated by
      discounting the liabilities to the date at which the liabilities first
      arose. The Company did this using the best estimate of the historical
      discount rates that would have applied for that liability in the
      intervening period, and recalculating the accumulated depreciation using
      the depreciation policy adopted by the Company in accordance with IFRS.

29

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|22. | Transition to IFRS-
      continued
|--- | -----------------------------------

Reconciliation from Canadian GAAP to IFRS

|Reconciliation of assets, liabilities and equity
      as at January 1, 2010 |         |   |               |  
|---------------------------------------------------------------------------- | ------- | - | ------------- | -
|                                                                             | Note    |   | Canadian GAAP |  
|                                                                             |         |   |               |  
|Assets                                                                       |         |   |               |  
|Current assets:                                                              |         |   |               |  
|Cash and cash equivalents                                                    |         | $ | 13,312        |  
|Restricted cash                                                              |         |   | 23            |  
|Marketable securities                                                        |         |   | 5,539         |  
|Trade and other receivables                                                  |         |   | 342           |  
|Income taxes recoverable                                                     |         |   | 1,438         |  
|Inventories                                                                  |         |   | 1,585         |  
|Prepaid expenses, deposits and advances                                      |         |   | 22,239        |  
|                                                                             |         |   |               |  
|Non-current assets:                                                          |         |   |               |  
|Mineral properties,
      plant and equipment                                | a,b,c   |   | 14,935        |  
|Intangible assets                                                            | c       |   | -             |  
|                                                                             |         |   | 14,935        |  
|                                                                             |         | $ | 37,174        |  
|                                                                             |         |   |               |  
|Liabilities and Shareholders Equity                                         |         |   |               |  
|Current liabilities:                                                         |         |   |               |  
|Trade and other payables                                                     |         | $ | 2,631         |  
|Capital lease obligations                                                    |         |   | 801           |  
|Promissory notes                                                             |         |   | 122           |  
|Convertible loan notes                                                       | d       |   | -             |  
|Current tax liability                                                        |         |   | 27            |  
|Deferred tax liability                                                       | e       |   | 506           |  
|                                                                             |         |   | 4,087         |  
|Non-current liabilities:                                                     |         |   |               |  
|Capital lease obligations                                                    |         |   | 63            |  
|Promissory notes                                                             |         |   | 118           |  
|Convertible loan notes                                                       | d       |   | 3,356         |  
|Reclamation and remediation
      provision                                  | b       |   | 1,382         |  
|Deferred
      tax liability                                                 | e       |   | 1,312         |  
|                                                                             |         |   | 6,231         |  
|Shareholders equity:                                                        |         |   |               |  
|Share Capital                                                                |         |   | 75,910        |  
|Reserves                                                                     | a,b,d   |   | 11,808        |  
|Deficit                                                                      | a,b,d,e |   | (60,862       | )
|                                                                             |         |   | 26,856        |  
|                                                                             |         | $ | 37,174        |  

30

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|22. | Transition to IFRS-
      continued
|--- | -----------------------------------

|Reconciliation of Consolidated Statements of Financial
      Position as at December 31, 2010 |         |   |               |  
|--------------------------------------------------------------------------------------------- | ------- | - | ------------- | -
|                                                                                              | Note    |   | Canadian GAAP |  
|Assets                                                                                        |         |   |               |  
|Current assets:                                                                               |         |   |               |  
|Cash and cash equivalents                                                                     |         | $ | 13,967        |  
|Restricted cash                                                                               |         |   | 151           |  
|Marketable securities                                                                         |         |   | 200           |  
|Trade and other receivables                                                                   |         |   | 9,635         |  
|Income taxes recoverable                                                                      |         |   | 239           |  
|Inventories                                                                                   |         |   | 2,615         |  
|Prepaid
      expenses, deposits and advances                                                 |         |   | 1,240         |  
|                                                                                              |         |   | 28,047        |  
|Non-current assets:                                                                           |         |   |               |  
|Mineral properties, plant
      and equipment                                                 | a,b,c   |   | 17,538        |  
|Intangible
      assets                                                                       | c       |   | -             |  
|                                                                                              |         |   | 17,538        |  
|                                                                                              |         | $ | 45,585        |  
|                                                                                              |         |   |               |  
|Liabilities and Shareholders Equity                                                          |         |   |               |  
|Current liabilities:                                                                          |         |   |               |  
|Trade and other payables                                                                      |         | $ | 4,758         |  
|Capital lease obligations                                                                     |         |   | 369           |  
|Promissory notes                                                                              |         |   | 373           |  
|Convertible loan notes                                                                        | d       |   | 3,792         |  
|Current
      tax liability                                                                   |         |   | 19            |  
|                                                                                              |         |   | 9,311         |  
|Non-current liabilities:                                                                      |         |   |               |  
|Capital lease obligations                                                                     |         |   | 128           |  
|Promissory notes                                                                              |         |   | 77            |  
|Convertible loan notes                                                                        | d       |   | -             |  
|Reclamation
      and remediation provision                                                   | b       |   | 516           |  
|                                                                                              |         |   | 721           |  
|Shareholders equity:                                                                         |         |   |               |  
|Share Capital                                                                                 |         |   | 83,470        |  
|Reserves                                                                                      | a,b,d   |   | 7,975         |  
|Deficit                                                                                       | a,b,d,e |   | (55,892       | )
|                                                                                              |         |   | 35,553        |  
|                                                                                              |         | $ | 45,585        |  

31

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|22. | Transition to IFRS-
      continued
|--- | -----------------------------------

|Reconciliation of Consolidated Statements of Comprehensive
      Income for the year ended December 31, 2010 |       |   |               |  
|------------------------------------------------------------------------------------------------------------ | ----- | - | ------------- | -
|                                                                                                             | Note  |   | Canadian GAAP |  
|Revenue                                                                                                      |       | $ | 42,206        |  
|Cost of sales:                                                                                               |       |   |               |  
|Cost of sales                                                                                                |       |   | 21,161        |  
|Amortization and depletion                                                                                   | a,b   |   | 2,362         |  
|Share-based payments                                                                                         |       |   | 481           |  
|                                                                                                             |       |   | 24,004        |  
|Gross profit                                                                                                 |       |   | 18,202        |  
|                                                                                                             |       |   |               |  
|Expenses:                                                                                                    |       |   |               |  
|Amortization and depreciation                                                                                |       |   | 52            |  
|Accretion on reclamation
      and remediation provision                                                     | b     |   | 206           |  
|Mineral property exploration expenditures                                                                    | a     |   | 7,110         |  
|General and administrative                                                                                   |       |   | 5,858         |  
|Share-based payments                                                                                         |       |   | 388           |  
|                                                                                                             |       |   | 13,614        |  
|                                                                                                             |       |   | 4,588         |  
|Income (expenses):                                                                                           |       |   |               |  
|Interest income                                                                                              |       |   | 115           |  
|Interest expense                                                                                             | b     |   | (934          | )
|Finance costs                                                                                                | b,d   |   | -             |  
|Foreign exchange
      loss                                                                                  | b     |   | (373          | )
|Loss on disposal of capital assets                                                                           |       |   | (16           | )
|Loss on derivative instruments                                                                               |       |   | (147          | )
|                                                                                                             |       |   | (1,355        | )
|Income before income taxes                                                                                   |       |   | 3,233         |  
|                                                                                                             |       |   |               |  
|Income tax recovery (expense):                                                                               |       |   |               |  
|Current                                                                                                      |       |   | (113          | )
|Deferred                                                                                                     | e     |   | 1,850         |  
|Income for the
      period                                                                                  |       | $ | 4,970         |  
|                                                                                                             |       |   |               |  
|Other comprehensive income (loss), net of tax:                                                               |       |   |               |  
|Foreign currency
      translation                                                                           | a,b,e |   | (3,025        | )
|Change in fair value of available-for-sale financial assets                                                  |       |   | (10           | )
|Total comprehensive income for the year                                                                      |       | $ | 1,935         |  

32

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|22. | Transition to IFRS-
      continued
|--- | -----------------------------------

|Reconciliation of Consolidated Statements of Cash
      Flows for the year ended December 31, 2010 |       |   |               |  
|-------------------------------------------------------------------------------------------------- | ----- | - | ------------- | -
|                                                                                                   | Note  |   | Canadian GAAP |  
|                                                                                                   |       |   |               |  
|Cash flows from by operating activities:                                                           |       |   |               |  
|Income for the period                                                                              |       | $ | 4,970         |  
|Items not involving cash:                                                                          |       |   |               |  
|Amortization and depletion expenses                                                                | a,b   |   | 2,414         |  
|Unrealized foreign
      exchange (gains) losses                                                   | b     |   | 50            |  
|Deferred tax liability                                                                             | e     |   | (1,853        | )
|Accretion on reclamation
      and remediation provision                                           | b     |   | 206           |  
|Share-based payments                                                                               |       |   | 869           |  
|Interest accretion
      on convertible loan notes                                                 | d     |   | 436           |  
|Loss (gain) on disposal of capital
      assets                                                    |       |   | 138           |  
|Shares received for
      mineral property and capital expenditures                                |       |   | (23           | )
|                                                                                                   |       |   | 7,207         |  
|Changes in non-cash operating working capital:                                                     |       |   |               |  
|Trade and other receivables                                                                        |       |   | (4,263        | )
|Income taxes recoverable                                                                           |       |   | 112           |  
|Inventories                                                                                        |       |   | (1,086        | )
|Prepaid expenses,
      deposits and advances                                                      |       |   | 327           |  
|Trade and other payables, including
      derivatives                                              |       |   | 1,926         |  
|Current tax liability                                                                              |       |   | (8            | )
|Net cash provided by operating activities                                                          |       |   | 4,215         |  
|                                                                                                   |       |   |               |  
|Cash flows used in investing activities:                                                           |       |   |               |  
|Intangible assets                                                                                  |       |   | (25           | )
|Mineral properties and capital expenditures                                                        | a,b,c |   | (8,011        | )
|Proceeds from disposal
      of capital assets                                                     |       |   | 37            |  
|Restricted cash                                                                                    |       |   | (151          | )
|Net cash used in investing activities                                                              |       |   | (8,150        | )
|                                                                                                   |       |   |               |  
|Cash flows from financing activities:                                                              |       |   |               |  
|Repayment of capital lease obligations                                                             |       |   | (938          | )
|Repayment of promissory
      notes                                                                |       |   | (292          | )
|Proceeds from exercise of options                                                                  |       |   | 2,871         |  
|Proceeds from exercise
      of warrants                                                           |       |   | 3,054         |  
|Issuance of shares for cash, net of issue costs                                                    |       |   | (32           | )
|Net cash provided by financing activities                                                          |       |   | 4,663         |  
|Effect of foreign
      currency translation on cash                                               |       |   | (73           | )
|Increase in cash and cash equivalents                                                              |       |   | 655           |  
|Cash and cash
      equivalents, beginning of period                                               |       |   | 13,312        |  
|Cash and cash equivalent, end of period                                                            |       | $ | 13,967        |  

33

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|22. | Transition to IFRS- continued
|--- | -----------------------------
|    |                              
|    | Notes to the reconciliations 
|    |                              
|    | (a)                          
|    |                              
|    |                              
|    |                              
|    | (b)                          
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    | (c)                          
|    |                              
|    |                              
|    |                              
|    | (d)                          
|    |                              
|    |                              

34

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|22. | Transition to IFRS- continued
|--- | -----------------------------
|    |                              
|    | (e)                          
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              
|    |                              

|    | Material adjustments to the Statement of Cash Flows
      for 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Consistent with the Companys accounting policy choice,
      as discussed in note 22(a), capitalized mine evaluation costs have been
      reclassified from operating to investing activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|23. | Changes in accounting standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Presentation of items of other comprehensive income
      (OCI)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | IAS 1 is amended to change the disclosure of items
      presented in OCI, including a requirement to separate items presented in
      OCI into two groups based on whether or not they may be recycled to profit
      or loss in the future. This amendment is effective for annual periods
      beginning on or after July 1, 2012. The Company is currently evaluating
      the impact the final standard is expected to have on its consolidated
      financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The IASB intends to replace IAS 39 Financial Instruments:
      Recognition and Measurement (IAS 39) in its entirety with IFRS 9
      Financial Instruments (IFRS 9) in three main phases. IFRS 9 will be the
      new standard for the financial reporting of financial instruments that is
      principles-based and less complex than IAS 39, and is effective for annual
      periods beginning on or after January 1, 2015, with earlier adoption
      permitted. IFRS 9 requires that all financial assets be classified as
      subsequently measured at amortized cost or at fair value based on the
      Companys business model for managing financial assets and the contractual
      cash flow characteristics of the financial assets. Financial liabilities
      are classified as subsequently measured at amortized cost except for
      financial liabilities classified as at fair value through profit or loss,
      financial guarantees and certain other exceptions.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | In December 2011, the IASB amended the IFRS 7 (Financial
      Instruments: Disclosures) requiring additional disclosures on offsetting
      of financial assets and financial liabilities. This amendment is effective
      for annual periods beginning on or after January 1, 2013. This standard
      also requires additional disclosures about the initial application of IFRS
      9. This amendment is effective for annual periods beginning on or after
      January 1, 2015 (or otherwise when IFRS 9 is first applied). IAS 32
      (Financial Instruments: Presentation) was amended in December 2011
      relating to application guidance on the offsetting of financial assets and
      financial liabilities. This standard is effective for annual periods
      beginning on or after January 1, 2014.                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company is currently evaluating the impact these
      standards are expected to have on its consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

35

---

|GREAT PANTHER SILVER LIMITED                                   
|---------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 
|(Expressed in thousands of Canadian dollars, except share data)
|                                                               
|For the years ended
      December 31, 2011 and 2010           

|23. | Changes in accounting standards-
      continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | IFRS 10 Consolidated Financial Statements establishes
      principles for the presentation and preparation of consolidated financial
      statements when an entity controls one or more other entities. This
      standard (i) requires a parent entity (an entity that controls one or more
      other entities) to present consolidated financial statements; (ii) defines
      the principle of control, and establishes control as the basis for
      consolidation; (iii) sets out how to apply the principle of control to
      identify whether an investor controls an investee and therefore must
      consolidate the investee; and (iv) sets out the accounting requirements
      for the preparation of consolidated financial statements. IFRS 10
      supersedes IAS 27 Consolidated and Separate Financial Statements and
      SIC-12 Consolidation  Special Purpose Entities and is effective for
      annual periods beginning on or after January 1, 2013, with early
      application permitted. IAS 27 and IAS 28  Investments in Associates were
      revised and reissued as IAS 27  Separate Financial Statements and IAS 28
       Investments in Associates and Joint Ventures to align with the new
      consolidation guidance. The Company is currently evaluating the impact the
      final standard is expected to have on its consolidated financial
      statements.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Joint Arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | IFRS 11 Joint Arrangements establishes the core principle
      that a party to a joint arrangement determines the type of joint
      arrangement in which it is involved by assessing its rights and
      obligations and accounts for those rights and obligations in accordance
      with that type of joint arrangement. This standard is effective for annual
      periods beginning on or after January 1, 2013, with early application
      permitted. The Company is currently evaluating the impact the final
      standard is expected to have on its consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Disclosure of Involvement with Other
      Entities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | IFRS 12 Disclosure of Involvement with Other Entities
      requires the disclosure of information that enables users of financial
      statements to evaluate the nature of, and risks associated with, its
      interests in other entities and the effects of those interests on its
      financial position, financial performance and cash flows. This standard is
      effective for annual periods beginning on or after January 1, 2013, with
      early application permitted. The Company is currently evaluating the
      impact the final standard is expected to have on its consolidated
      financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Fair Value Measurement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | IFRS 13 Fair Value Measurement defines fair value, sets
      out in a single IFRS a framework for measuring fair value and requires
      disclosures about fair value measurements. IFRS 13 applies when another
      IFRS requires or permits fair value measurements or disclosures about fair
      value measurements (and measurements, such as fair value less costs to
      sell, based on fair value or disclosures about those measurements), except
      for: share-based payment transactions within the scope of IFRS 2
      Share-based Payment; leasing transactions within the scope of IAS 17
      Leases; measurements that have some similarities to fair value but that
      are not fair value, such as net realizable value in IAS 2 Inventories or
      value in use in IAS 36 Impairment of Assets. This standard is effective
      for annual periods beginning on or after January 1, 2013, with early
      application permitted. The Company is currently evaluating the impact the
      final standard is expected to have on its consolidated financial
      statements.                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | IAS 12 was amended in December 2010 to remove
      subjectivity in determining on which basis an entity measures the deferred
      tax relating to an asset. The amendment introduces a presumption that an
      entity will assess whether the carrying value of an asset will be
      recovered through the sale of the asset. The amendment to IAS 12 is
      effective for reporting periods beginning on or after January 1, 2012. The
      Company is assessing the effect of the changes to IAS 12 on its financial
      results and financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Stripping Costs in the Production Phase of a
      Mine                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | In October of 2011, the IASB issued IFRIC 20  Stripping
      Costs in the Production Phase of a Mine, which clarifies the requirements
      for accounting for costs of stripping activities in the production phase
      when two benefits accrue: (1) usable ore that can be used to produce
      concentrate inventory and (2) improved access to further quantities of
      material that will be mined in future periods. IFRIC 20 is effective for
      annual reporting periods beginning on or after January 1, 2013 with
      earlier application permitted and includes guidance on transition for
      pre-existing stripping costs. The Company is currently evaluating the
      impact IFRIC 20 is expected to have on its consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

36

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