---



GREAT PANTHER SILVER LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER
31, 2012 and 2011

Expressed in Canadian Dollars

---

GREAT PANTHER SILVER LIMITED

MANAGEMENT’S STATEMENT OF RESPONSIBILITY FOR FINANCIAL REPORTING

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

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards.  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, 2012, based on the framework set forth in Internal Control­Integrated 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, 2012.

KPMG LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2012, as stated in their report which appears herein.

|“Robert A. Archer”      | “Jim A. Zadra”         
|----------------------- | -----------------------
|Chief Executive Officer | Chief Financial Officer
|March 13, 2013          | March 13, 2013         

2

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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 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, 2012 and December 31, 2011,
the consolidated statements of comprehensive income, changes in shareholders
equity and cash flows for each of the years in the two-year period ended
December 31, 2012, and notes, comprising a summary of significant accounting
policies and other explanatory information.

Managements Responsibility for the Consolidated Financial
Statements

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

Auditors Responsibility

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

An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the
assessment of the risks of material misstatement of the 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.

Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the consolidated financial position of Great
Panther Silver Limited as at December 31, 2012 and December 31, 2011, and its
consolidated financial performance and its consolidated cash flows for each of
the years in the two-year period ended December 31, 2012 in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board.

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

3

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


Other Matter

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), Great Panther Silver
Limiteds internal control over financial reporting as of December 31, 2012,
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 13, 2013 expressed an unqualified opinion on
the effectiveness of Great Panther Silver Limiteds internal control over
financial reporting.



/s/ KPMG LLP

KPMG LLP

Chartered Accountants

Vancouver, Canada March 13, 2013

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

4

---



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

The Board of Directors and Shareholders

Great Panther Silver Limited:

We have audited Great Panther Silver Limiteds internal control
over financial reporting as of December 31, 2012, based on criteria established
in Internal Control  Integrated Frameworkissued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Great Panther Silver
Limiteds management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying report titled
Managements Responsibility for Financial Reporting. Our responsibility is to
express an opinion on the Companys internal control over financial reporting
based on our audit.

We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing
such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Great Panther Silver Limited maintained, in all
material respects, effective internal control over financial reporting as of
December 31, 2012, based on criteria established in Internal Control 
Integrated Frameworkissued by the Committee of Sponsoring Organizations of
the Treadway Commission.

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

5

---



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


We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the consolidated
statements of financial position of Great Panther Silver Limited as of December
31, 2012 and December 31, 2011, and the related consolidated statements of
comprehensive income, changes in shareholders equity and cash flows for each of
the years in the two-year period ended December 31, 2012, and our report dated
March 13, 2013 expressed an unqualified opinion on those consolidated financial
statements.



/s/ KPMG LLP

KPMG LLP

Chartered Accountants

Vancouver, Canada March 13, 2013

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

6

---

|GREAT PANTHER SILVER LIMITED                 
|---------------------------------------------
|                                             
|CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|(Expressed in thousands of Canadian dollars) 
|                                             
|December 31, 2012
      and 2011             

|                                                             |   | December 31, |   |   | December 31, |  
|------------------------------------------------------------ | - | ------------ | - | - | ------------ | -
|                                                             |   | 2012         |   |   | 2011         |  
|                                                             |   |              |   |   |              |  
|                                                             |   |              |   |   | Recast       |  
|                                                             |   |              |   |   | (note 5      | )
|Assets                                                       |   |              |   |   |              |  
|                                                             |   |              |   |   |              |  
|Current assets:                                              |   |              |   |   |              |  
|Cash and cash
      equivalents                              | $ | 20,735       |   | $ | 34,437       |  
|Short term investments (note 6)                              |   | 5,164        |   |   | 5,080        |  
|Trade and other
      receivables (notes 7 and 24)           |   | 18,099       |   |   | 14,076       |  
|Income taxes recoverable                                     |   | 130          |   |   | 374          |  
|Inventories (note 8)                                         |   | 6,927        |   |   | 4,591        |  
|Prepaid expenses, deposits and advances                      |   | 1,995        |   |   | 1,732        |  
|                                                             |   | 53,050       |   |   | 60,290       |  
|Non-current assets:                                          |   |              |   |   |              |  
|Mineral
      properties, plant and equipment (note 9)       |   | 55,451       |   |   | 38,078       |  
|Exploration and evaluation
      assets (notes 10 and 25(b)) |   | 7,270        |   |   | 3,868        |  
|Intangible
      assets (note 11)                            |   | 705          |   |   | 708          |  
|Deferred tax asset (note 23)                                 |   | 253          |   |   | -            |  
|                                                             | $ | 116,729      |   | $ | 102,944      |  
|                                                             |   |              |   |   |              |  
|Liabilities and Shareholders Equity                         |   |              |   |   |              |  
|                                                             |   |              |   |   |              |  
|Current liabilities:                                         |   |              |   |   |              |  
|Trade and other payables (notes
      12 and 24)             | $ | 8,111        |   | $ | 6,350        |  
|Finance lease
      obligations                              |   | -            |   |   | 130          |  
|Current tax liability (note 23)                              |   | 400          |   |   | -            |  
|                                                             |   | 8,511        |   |   | 6,480        |  
|Non-current liabilities:                                     |   |              |   |   |              |  
|Reclamation and
      remediation provision (note 14)        |   | 2,447        |   |   | 2,154        |  
|Deferred tax liability (note 23)                             |   | 5,746        |   |   | 1,824        |  
|                                                             |   | 16,704       |   |   | 10,458       |  
|                                                             |   |              |   |   |              |  
|Shareholders equity:                                        |   |              |   |   |              |  
|Share capital (note 15)                                      |   | 122,444      |   |   | 121,536      |  
|Reserves                                                     |   | 7,586        |   |   | 6,465        |  
|Deficit                                                      |   | (30,005      | ) |   | (35,515      | )
|                                                             |   | 100,025      |   |   | 92,486       |  
|                                                             | $ | 116,729      |   | $ | 102,944      |  

Nature of operations (note 1)Commitments and contingencies
(notes 24 and 25)

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

7

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|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, 2012 and 2011                     

|                                                                                       |   | 2012   |   |   | 2011   |  
|-------------------------------------------------------------------------------------- | - | ------ | - | - | ------ | -
|                                                                                       |   |        |   |   |        |  
|Revenue                                                                                | $ | 61,139 |   | $ | 57,818 |  
|Cost of sales (note 16)                                                                |   |        |   |   |        |  
|Production costs                                                                       |   | 32,864 |   |   | 25,475 |  
|Amortization and depletion                                                             |   | 8,684  |   |   | 4,465  |  
|Share-based payments                                                                   |   | 385    |   |   | 962    |  
|                                                                                       |   | 41,933 |   |   | 30,902 |  
|                                                                                       |   |        |   |   |        |  
|Gross profit                                                                           |   | 19,206 |   |   | 26,916 |  
|                                                                                       |   |        |   |   |        |  
|General and administrative expenses (note 17)                                          |   |        |   |   |        |  
|Administrative expenses                                                                |   | 8,808  |   |   | 7,222  |  
|Amortization and depletion                                                             |   | 206    |   |   | 97     |  
|Share-based payments                                                                   |   | 1,071  |   |   | 1,248  |  
|                                                                                       |   | 10,085 |   |   | 8,567  |  
|                                                                                       |   |        |   |   |        |  
|Exploration and evaluation expenses (note 18)                                          |   |        |   |   |        |  
|Exploration and
      evaluation expenses                                              |   | 2,309  |   |   | 928    |  
|Share-based payments                                                                   |   | 73     |   |   | -      |  
|                                                                                       |   | 2,382  |   |   | 928    |  
|                                                                                       |   |        |   |   |        |  
|Income before the undernoted                                                           |   | 6,739  |   |   | 17,421 |  
|                                                                                       |   |        |   |   |        |  
|Finance and other income (expense)                                                     |   |        |   |   |        |  
|Interest income                                                                        |   | 442    |   |   | 435    |  
|Finance costs (note 19)                                                                |   | (34    | ) |   | (324   | )
|Foreign exchange gain (loss)                                                           |   | 2,828  |   |   | (4,572 | )
|Other (expense) income                                                                 |   | (265   | ) |   | 531    |  
|                                                                                       |   | 2,971  |   |   | (3,930 | )
|                                                                                       |   |        |   |   |        |  
|Income before income taxes                                                             |   | 9,710  |   |   | 13,491 |  
|                                                                                       |   |        |   |   |        |  
|Income tax expense (note 23)                                                           |   |        |   |   |        |  
|Current                                                                                |   | (592   | ) |   | (108   | )
|Deferred                                                                               |   | (3,608 | ) |   | (1,877 | )
|                                                                                       |   | (4,200 | ) |   | (1,985 | )
|Net income for
      the year                                                          | $ | 5,510  |   | $ | 11,506 |  
|                                                                                       |   |        |   |   |        |  
|Other comprehensive income (loss), net of tax                                          |   |        |   |   |        |  
|Foreign currency
      translation                                                     |   | 1      |   |   | (352   | )
|Change in fair value of
      available-for-sale financial
      
              assets |   | (8     | ) |   | (103   | )
|                                                                                       |   | (7     | ) |   | (455   | )
|Total
      comprehensive income for the year                                          | $ | 5,503  |   | $ | 11,051 |  
|                                                                                       |   |        |   |   |        |  
|Earnings per share (note 15(f))                                                        |   |        |   |   |        |  
|Basic                                                                                  | $ | 0.04   |   | $ | 0.09   |  
|Diluted                                                                                | $ | 0.04   |   | $ | 0.08   |  

See accompanying notes to the consolidated financial
statements.

8

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|GREAT PANTHER SILVER LIMITED                              
|----------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
|(Expressed in thousands of Canadian dollars)              
|                                                          
|For the years
      ended December 31, 2012 and 2011      

|                                                                     |  | Share Capital |  |   |            |  |   | Reserves     |   |   |                 |   |   |                 |   |   |           |     |   |           |  
|-------------------------------------------------------------------- |  | ------------- |  | - | ---------- |  | - | ------------ | - | - | --------------- | - | - | --------------- | - | - | --------- | --- | - | --------- | -
|                                                                     |  | Number        |  |   |            |  |   | Share        |   |   |                 |   |   |                 |   |   |           |     |   |           |  
|                                                                     |  | of            |  |   |            |  |   | options      |   |   | **Foreign**     |   |   |                 |   |   |           |     |   |           |  
|                                                                     |  | shares        |  |   |            |  |   | and          |   |   | currency        |   |   | **Convertible** |   |   | **Fair**  |     |   |           |  
|                                                                     |  | **(000s)**   |  |   | **Amount** |  |   | **warrants** |   |   | **translation** |   |   | **loan notes**  |   |   | **value** |     |   | **Total** |  
|Balance at January 1, 2011                                           |  | 119,914       |  | $ | 83,470     |  | $ | 9,470        |   | $ | (3,796          | ) | $ | 1,966           |   | $ | (33       | )   | $ | 7,607     |  
|Warrants exercised (note 15(e))                                      |  | 6,856         |  |   | 6,409      |  |   | (239         | ) |   | -               |   |   | -               |   |   | -         |     |   | (239      | )
|Share options exercised (note
      15(d))                           |  | 3,089         |  |   | 3,670      |  |   | (1,362       | ) |   | -               |   |   | -               |   |   | -         |     |   | (1,362    | )
|Extinguishment of convertible
      
        loan notes (note 13(b)) |  | 1,800         |  |   | 5,859      |  |   | -            |   |   | -               |   |   | (1,966          | ) |   | -         |     |   | (1,966    | )
|Short form prospectus
      financing 
        (note 15(c))          |  | 5,750         |  |   | 22,128     |  |   | 384          |   |   | -               |   |   | -               |   |   | -         |     |   | 384       |  
|Share-based payments                                                 |  | -             |  |   | -          |  |   | 2,496        |   |   | -               |   |   | -               |   |   | -         |     |   | 2,496     |  
|Comprehensive income (loss)                                          |  | -             |  |   | -          |  |   | -            |   |   | (352            | ) |   | -               |   |   | (103      | )   |   | (455      | )
|Balance at December 31, 2011                                         |  | 137,409       |  | $ | 121,536    |  | $ | 10,749       |   | $ | (4,148          | ) | $ | -               |   | $ | (136      | )   | $ | 6,465     |  
|                                                                     |  |               |  |   |            |  |   |              |   |   |                 |   |   |                 |   |   |           |     |   |           |  
|Balance at January 1, 2012                                           |  | 137,409       |  | $ | 121,536    |  | $ | 10,749       |   | $ | (4,148          | ) | $ | -               |   | $ | (136      | )   | $ | 6,465     |  
|Share options exercised (note
      15(d))                           |  | 451           |  |   | 908        |  |   | (401         | ) |   | -               |   |   | -               |   |   | -         |     |   | (401      | )
|Share-based payments                                                 |  | -             |  |   | -          |  |   | 1,529        |   |   | -               |   |   | -               |   |   | -         |     |   | 1,529     |  
|Comprehensive income (loss)                                          |  | -             |  |   | -          |  |   | -            |   |   | 1               |   |   | -               |   |   | (8        | )   |   | (7        | )
|Balance at December 31, 2012                                         |  | 137,860       |  | $ | 122,444    |  | $ | 11,877       |   | $ | (4,147          | ) | $ | -               |   | $ | (144      | ) $ |   | 7,586     |  

See accompanying notes to the consolidated financial
statements.

9

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|GREAT PANTHER SILVER LIMITED                        
|----------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS               
|(Expressed in thousands of Canadian dollars)        
|                                                    
|For the years
      ended December 31, 2012 and 2011

|                                                                                    |   | 2012    |   |   | 2011    |  
|----------------------------------------------------------------------------------- | - | ------- | - | - | ------- | -
|                                                                                    |   |         |   |   |         |  
|                                                                                    |   |         |   |   | Recast  |  
|                                                                                    |   |         |   |   | (note 5 | )
|Cash flows from operating activities                                                |   |         |   |   |         |  
|Net income for the year                                                             | $ | 5,510   |   | $ | 11,506  |  
|                                                                                    |   |         |   |   |         |  
|Items not involving cash:                                                           |   |         |   |   |         |  
|Amortization and depletion                                                          |   | 8,890   |   |   | 4,561   |  
|Unrealized
      foreign exchange (gains) losses (note 22)                          |   | (2,860  | ) |   | 3,849   |  
|Income tax expense                                                                  |   | 4,200   |   |   | 1,985   |  
|Share-based
      payments                                                          |   | 1,529   |   |   | 2,210   |  
|Other non-cash items                                                                |   | (391    | ) |   | (223    | )
|                                                                                    |   | 16,878  |   |   | 23,888  |  
|                                                                                    |   |         |   |   |         |  
|Interest received                                                                   |   | 384     |   |   | 378     |  
|Interest paid                                                                       |   | (6      | ) |   | (171    | )
|Income taxes paid                                                                   |   | (202    | ) |   | (267    | )
|Net cash from
      operating activities before changes in non-cash working capital |   | 17,054  |   |   | 23,828  |  
|                                                                                    |   |         |   |   |         |  
|Changes in non-cash working capital:                                                |   |         |   |   |         |  
|Trade and other
      receivables                                                   |   | (3,963  | ) |   | (4,384  | )
|Income taxes recoverable                                                            |   | 244     |   |   | (135    | )
|Inventories                                                                         |   | (1,924  | ) |   | (1,821  | )
|Prepaid expenses, deposits and
      advances                                       |   | (263    | ) |   | (599    | )
|Trade and other
      payables                                                      |   | 1,982   |   |   | 2,070   |  
|Current tax liability                                                               |   | 10      |   |   | 140     |  
|Net cash from operating activities                                                  |   | 13,140  |   |   | 19,099  |  
|                                                                                    |   |         |   |   |         |  
|Cash flows from investing
      activities:                                         |   |         |   |   |         |  
|Purchase of intangible assets                                                       |   | (811    | ) |   | (627    | )
|Purchase of
      mineral properties, plant and equipment                           |   | (26,712 | ) |   | (23,459 | )
|Proceeds from disposal of
      mineral properties, plant and equipment             |   | 86      |   |   | 149     |  
|Purchase of
      short term investments (note 5)                                   |   | (85     | ) |   | (5,000  | )
|Restricted cash                                                                     |   | -       |   |   | 151     |  
|Net cash used in investing
      activities                                         |   | (27,522 | ) |   | (28,786 | )
|                                                                                    |   |         |   |   |         |  
|Cash flows from financing
      activities:                                         |   |         |   |   |         |  
|Repayment of capital lease
      obligations                                        |   | (130    | ) |   | (367    | )
|Repayment of
      promissory notes (note 13(a))                                    |   | -       |   |   | (450    | )
|Repayment of convertible loan
      notes (note 13(b))                              |   | -       |   |   | (62     | )
|Proceeds from
      exercise of options (note 15(d))                                |   | 507     |   |   | 2,309   |  
|Proceeds from exercise of
      warrants (note 15(e))                               |   | -       |   |   | 6,170   |  
|Issuance of shares for cash, net of
      issue costs                               |   | -       |   |   | 22,512  |  
|Net cash from financing activities                                                  |   | 377     |   |   | 30,112  |  
|                                                                                    |   |         |   |   |         |  
|Effect of
      foreign currency translation on cash                                |   | 303     |   |   | 45      |  
|                                                                                    |   |         |   |   |         |  
|Increase (decrease) in cash and cash equivalents                                    |   | (13,702 | ) |   | 20,470  |  
|Cash and cash equivalents, beginning of year                                        |   | 34,437  |   |   | 13,967  |  
|Cash and cash
      equivalents, end of year                                        | $ | 20,735  |   | $ | 34,437  |  

See accompanying notes to the consolidated financial
statements.

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, 2012 and 2011                 

|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 the NYSE Amex stock exchange in the United States under the
trading symbol GPL. The NYSE Amex stock exchange was renamed to NYSE MKT on
May 14, 2012. The address of the Companys head office is Suite 800  333
Seymour Street, Vancouver, British Columbia, Canada, V6B 5A6.

The Companys current activities focus
on the mining of precious metals from its operating mines in Mexico, as well as
the acquisition, exploration and development of mineral properties within Latin
America. The Company wholly owns two producing mines, Topia and Guanajuato. In
addition, the Company has published a NI 43-101 compliant resource estimate for
its San Ignacio property and the Company is currently evaluating the technical
feasibility and commercial viability of extracting the resource. The Company
also has two other mineral property interests, Santa Rosa and El Horcon. These
properties are in the exploration stage and the Company has not yet determined
whether they contain ore reserves which 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
|-- | ---------------------

These 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 consolidated financial statements
were approved by the Board of Directors on March 13, 2013.

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

The accounting policies set out below
have been applied consistently by the Company's entities and to all years
presented in these consolidated financial statements:

| | (a) | 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., and Great Panther Silver Peru S.A.C. All
      intercompany balances and transactions are eliminated on
    consolidation.
| |     |                                                                                                                                                                                                                                                                                                                                                                              
| | (b) | Basis of measurement                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                              
| |     | These consolidated financial statements have been
      prepared on the historical cost basis except for the following material
      items in the statement of financial position:                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                              

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

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, 2012 and 2011                 

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

Translation of subsidiary results
into the presentation currency

The operating results and statements
of financial position of the Companys Mexican subsidiaries are translated into
the presentation currency as follows:

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

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

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

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

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

Mineral properties

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

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

Plant and equipment

Plant and equipment is originally
recorded at cost at the time of construction, purchase, or acquisition, and is
subsequently measured at cost less accumulated amortization and impairment. Cost
includes all costs required to bring the item into its intended use.

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

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, 2012 and 2011                 

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

Amortization and depletion

Mineral properties are depleted using
the straight-line method over the estimated remaining life of the mine. The
Company estimates the remaining life of its producing mineral properties on an
annual basis using a combination of quantitative and qualitative factors
including historical results, mineral resource estimates, and managements
intent to operate the property.

The Company does not have sufficient
reserve information to form a basis for the application of the
units-of-production method.

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

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

Computer equipment
    straight-line over the estimated useful life of
      3 yearsFurniture and fixtures
    straight-line over the estimated useful life of
      5 yearsOffice equipment
    straight-line over the estimated useful life of
      5 yearsLeasehold improvements
    straight-line over the term of the lease


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

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

Exploration properties

Exploration properties represent
properties for which the Company has not yet performed sufficient exploration
work to determine whether significant mineralization exists. Exploration
properties are carried at the cost of acquisition and included in exploration
and evaluation assets. Exploration expenditures incurred on such properties are
expensed as incurred as exploration expenditures in the statement of
comprehensive income. Examples of exploration expenditures that are expensed
under this policy include: topographical, geological, geochemical and
geophysical studies; exploratory drilling; trenching; and sampling. The Company
considers its Santa Rosa and El Horcon Projects to be exploration properties as
at December 31, 2012.

Evaluation properties

Evaluation properties represent
properties for which the Company has identified a mineral resource of such
quantity and grade or quality that it has reasonable prospects for economic
extraction. A mineral resource is considered to have reasonable prospects for
economic extraction when it is expected that the Company has sufficient
information to determine that extraction is viable and feasible at expected
long-term metal prices. Expenditures made in relation to evaluating the
technical feasibility and commercial viability of extracting a mineral resource
are capitalized and included in exploration and evaluation assets. Evaluation
expenditures include the costs of drilling, sampling and other costs related to
defining and delineating the mineral deposit. The Company considers its San
Ignacio Project to be an evaluation property as at December 31, 2012.

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

The Companys capitalized exploration
and evaluation assets are classified as intangible assets.

Amortization and depletion

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

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

Leases in which the Company assumes
substantially all risks and rewards of ownership are classified as finance
leases. Finance leases are recognized at the lower of the fair value and the
present value of the minimum lease payments at inception of the lease.
Subsequent to initial recognition, the asset is accounted for in accordance with
the accounting policy applicable to that asset. Other leases are operating
leases and are not recognized in the Companys statement of financial
position.

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, 2012 and 2011                 

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

| | (i) | 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 cost of sales or general
      and administrative expenses in the statement of comprehensive income on a straight
      line basis over the estimated useful lives of the intangible assets. The
      estimated useful life for computer software is 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (j) | Impairment of non-financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Exploration and evaluation assets are tested for
      impairment when circumstances indicate that the carrying value may not be
      recoverable. When facts and circumstances suggest that the carrying amount
      of an asset exceeds its recoverable amount, the Company performs an
      impairment test by comparing the net present value of the estimated future
      cash flows to the carrying amount of the relevant exploration and
      evaluation property. When the carrying value exceeds the recoverable
      amount of the relevant exploration and evaluation property, an impairment
      charge is recorded and the property is written down to its recoverable
      amount. In addition, exploration and evaluation assets are tested for
      impairment at the date they are transferred to mineral properties, plant
      and equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Companys mineral properties, plant and equipment are
      reviewed for any indication of impairment at each financial reporting date
      or at any time if an indicator of impairment is considered to exist. If
      any such indication exists, an estimate of the recoverable amount is
      undertaken, being the higher of an assets fair value less costs to sell
      and the assets value in use. If the assets carrying amount exceeds its
      recoverable amount then an impairment loss is recognized in net income or
      loss for the period, and the carrying value of the asset on the statement
      of financial position is reduced to its recoverable amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Fair value is determined as the amount that would be
      obtained from the sale of the asset in an arms length transaction between
      knowledgeable and willing parties. Fair value of mineral properties is
      generally determined as the present value of the estimated future cash
      flows expected to arise from the continued use of the asset, including any
      expansion prospects, discounted by an appropriate pre-tax discount rate to
      arrive at a net present value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Value in use is determined as the present value of the
      estimated future cash flows expected to arise from the continued use of
      the asset in its present form and from its ultimate disposal. Value in use
      is determined by applying assumptions specific to the Companys continued
      use and cannot take into account future development. As such, these
      assumptions differ from those used in calculating fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | In testing for indicators of impairment and performing
      impairment calculations, assets are grouped in cash-generating units,
      which are identified as the smallest identifiable group of assets that
      generates cash inflows that are largely independent of the cash inflows
      from other assets. The estimates of future discounted cash flows are
      subject to risks and uncertainties including estimated production and
      grades, future metals prices, discount rates and exchange rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Non-financial assets other than goodwill that have
      suffered an impairment are evaluated for possible reversal of the
      impairment whenever events or changes in circumstances indicate that the
      impairment may have reversed. When a reversal of a previous impairment is
      recorded, the reversal amount is adjusted for depreciation that would have
      been recorded had the impairment not been recorded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (k) | Share-based 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (l) | 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. 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 initial recognition date and the
      actual final sales price at the settlement date caused by changes in the
      market metal prices results in an embedded derivative in the related trade
      accounts receivable balance. The embedded derivative is recorded at fair
      value each period until final settlement occurs with changes in fair value
      classified as a component of revenue.

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, 2012 and 2011                 

|3. | Significant accounting policies continued
|-- | ------------------------------------------
|   |                                           
|   | (m)                                       

The Company's mining and exploration
activities are subject to various laws and regulations governing the protection
of the environment. The Company recognizes the cost of future reclamation and
remediation as a liability when: the Company has a legal or constructive
obligation as a result of past events; it is probable that an outflow of
resources will be required to settle the obligation; and a reasonable estimate
of the obligation can be made. The liability is measured initially by
discounting expected costs to the net present value using pre-tax rates and risk
assumptions specific to the liability. The resulting cost is capitalized to the
carrying value of the related assets. In subsequent periods, the liability is
adjusted for accretion of the discount with the offsetting amount charged to
profit or loss as 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 amount charged to the carrying value of the assets 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.

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

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

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

Available-for-sale financial
assets

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

Loans and receivables

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

Financial liabilities at fair value
through profit or loss

A financial liability is classified at
fair value through profit or loss if it is classified as held for trading in the
near future or is designated as such upon initial recognition. The Companys
derivative liabilities are classified as fair value through profit or loss. They
are initially and subsequently recorded at fair value and changes in fair value
are recognized in profit or loss. In the case of cash flow hedge transactions
that qualify for hedge accounting treatment, gains and losses would be
recognized in other comprehensive income if designated as hedges for accounting
purposes. The Company has elected not to apply hedge accounting to these
instruments.

Financial liabilities at amortized
cost

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

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, 2012 and 2011                 

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

Compound financial
instruments

The liability component of a compound
financial instrument is recognized initially at the fair value of a similar
liability that does not have an equity conversion option. The equity component
is recognized initially as the difference between the fair value of the compound
financial instrument as a whole and the fair value of the liability component.
Any directly attributable transaction costs are allocated to the liability and
equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the
liability component of a compound financial instrument is measured at amortized
cost using the effective interest method. The equity component of a compound
financial instrument is not remeasured subsequent to initial recognition.

Interest and losses and gains relating
to the financial liability are recognized in profit or loss. On conversion, the
financial liability is reclassified to equity; no gain or loss is recognized on
conversion.

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.

| | (o) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Income tax is recognized in net income or loss except to
      the extent that it relates to items recognized directly in equity, in
      which case it is recognized directly in equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Deferred tax assets and liabilities are determined based
      on differences between the financial statement carrying values of existing
      assets and liabilities and their respective income tax bases (temporary
      differences), and tax loss carry forwards. Deferred tax assets and
      liabilities are measured using enacted or substantively enacted tax rates
      expected to be in effect when the temporary differences are likely to be
      recovered or settled. The effect on deferred tax assets and liabilities of
      a change in tax rates is included in net income in the period in which the
      change is substantively enacted. The amount of deferred tax assets
      recognized is limited to the amount that is, in managements estimation,
      probable that future taxable profits will be available against which the
      asset can be utilized.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Deferred tax assets and liabilities are offset when there
      is a legally enforceable right to set off current tax assets against
      current tax liabilities and when they relate to income taxes levied by the
      same taxation authority and the Company intends to settle its current tax
      assets and liabilities on a net basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (p) | Earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Earnings per share is calculated based on the weighted
      average number of shares outstanding during the period. The Company
      follows the treasury stock method for the calculation of diluted earnings
      per share. Under this method, dilution is calculated based upon the net
      number of common shares issued should in-the-money options and warrants
      be exercised and the proceeds be used to repurchase common shares at the
      average market price in the year. Dilution from convertible securities is
      calculated based on the number of shares to be issued after taking into
      account the reduction of the related after-tax interest expense.                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Basic earnings per share is computed by dividing net
      income by the weighted average number of common shares outstanding during
      the reporting period. Diluted earnings per share is computed similar to
      basic earnings per share except that the weighted average shares
      outstanding are increased to include additional shares from the assumed
      exercise of share options and warrants, if
dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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, 2012 and 2011                 

|3. | Significant accounting policies continued
|-- | ------------------------------------------
|   |                                           
|   | (q)                                       

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

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

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

Presentation of other comprehensive
income (OCI)

IAS 1 Presentation of Financial
Statements will be 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.

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 does not expect this standard to have significant impact on its
consolidated financial statements.

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, 2012 and 2011                 

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

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; and, 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.

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 does not expect this standard to have any impact on its consolidated
financial statements.

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

The preparation of the consolidated
financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions which affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. The Company is not required to make
any significant judgments in the application of its accounting policies.

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

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

Useful lives of mineral properties,
plant and equipment

The Company estimates the remaining
lives of its producing mineral properties using a combination of quantitative
and qualitative factors including historical results, mineral resources reported
under National Instrument 43-101 (NI 43-101), estimates of ore production from
areas not included in the NI 43-101 reports, and managements intent to operate
the property. The estimated remaining lives of the producing mineral properties
are used to calculate amortization and depletion expense, assess impairment
charges and the carrying values of assets, and for forecasting the timing of the
payment of reclamation and remediation costs.

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

Reclamation and remediation
provision

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

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, 2012 and 2011                 

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

Review of asset carrying values and
assessment of impairment

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

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

Allocation of costs between mine
development and production

The Company performs capital mine
development and production activities within the same areas of the Guanajuato
mine. Therefore, the Company is required to allocate costs between mine
development and production. The Company allocates costs between mine development
and production using the percentage of cubic metres of material moved. The
allocation requires estimates about the nature of the work performed and the
volume of material moved. Actual costs could vary from the estimated costs.

Revenue from concentrate
sales

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

Income taxes and recoverability of
deferred tax assets

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

|5. | Re-classification affecting cash and cash equivalents
      and short term investments
|-- | --------------------------------------------------------------------------------------

During the year ended December 31,
2012, the Company determined that one of the Companys guaranteed investment
certificates (GIC) should have been classified as a short term investment
instead of as cash and cash equivalents at December 31, 2011, in accordance with
the Companys accounting policy for cash and cash equivalents (note 3(d)). The
GIC is non-redeemable prior to its maturity date and was invested for a one-year
term commencing in April 2011 and rolled over under the same terms in April
2012. As a result, the Company has recast the statement of financial position
and statement of cash flows for the year ended December 31, 2011 to correct this
immaterial item.

The impact of the change on the
Companys statement of financial position as at December 31, 2011 was a decrease
in cash and cash equivalents and an increase in short term investments of
$5,000. The impact on the Companys statement of cash flows for the year ended
December 31, 2011 was a cash outflow of $5,000 in investing activities and a
decrease of $5,000 in the ending cash position. This re-classification had no
impact on the statement of comprehensive income or earnings per share for the
year ended December 31, 2011.

|6. | Short-term investments
|-- | ----------------------

| |                                    |   | December 31, |  |   | December 31, | 
| | ---------------------------------- | - | ------------ |  | - | ------------ | 
| |                                    |   | 2012         |  |   | 2011         | 
| | Guaranteed investment certificates | $ | 5,085        |  | $ | 5,000        | 
| | Marketable
      securities        |   | 79           |  |   | 80           | 
| |                                    | $ | 5,164        |  | $ | 5,080        | 

The GIC is held with a Canadian
chartered bank at an interest rate of 1.71% per annum and is non-redeemable
until its maturity date on April 25, 2013. Short term investments for the year
ended December 31, 2011 have been re-stated for comparability with the current
year (note 5).

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, 2012 and 2011                 

|7. | Trade and other
receivables
|-- | ---------------------------

| |                                |   | December 31, |   |   | December 31, |  
| | ------------------------------ | - | ------------ | - | - | ------------ | -
| |                                |   | 2012         |   |   | 2011         |  
| | Trade accounts receivable      | $ | 12,311       |   | $ | 11,180       |  
| | Value added tax receivable     |   | 5,803        |   |   | 2,902        |  
| | Other                          |   | 216          |   |   | 214          |  
| |                                |   | 18,330       |   |   | 14,296       |  
| | Allowance for doubtful amounts |   | (231         | ) |   | (220         | )
| |                                | $ | 18,099       |   | $ | 14,076       |  

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.

|8. | Inventories
|-- | -----------

| |                        |   | December 31, |  |   | December 31, | 
| | ---------------------- | - | ------------ |  | - | ------------ | 
| |                        |   | 2012         |  |   | 2011         | 
| | Concentrate            | $ | 3,432        |  | $ | 2,748        | 
| | Ore stockpile          |   | 417          |  |   | 115          | 
| | Materials and supplies |   | 2,858        |  |   | 1,503        | 
| | Silver bullion         |   | 220          |  |   | 225          | 
| |                        | $ | 6,927        |  | $ | 4,591        | 

The amount of inventory recognized as
an expense for the years ended December 31, 2012 and December 31, 2011 includes
production costs and amortization and depletion directly attributable to the
inventory production process.

The amount of write-down of inventories
to net realizable value for the year ended December 31, 2012 was $5 (2011 - $45)
relating to silver bullion and $16 (2011 - $20) relating to materials and
supplies, which were recognized as expenses in the year the write-downs or
losses occurred.

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, 2012 and 2011                 

|9. | Mineral properties, plant and
  equipment
|-- | -----------------------------------------

At December 31, 2012, the Company had
mineral properties, plant and equipment assets of $55.5 million compared to
$38.1 million at December 31, 2011. The Company invested primarily in mine
development and purchase of capital assets at its Guanajuato and Topia
mines.

| | The
      Companys mineral properties, plant and equipment comprise the following:
| | -----------------------------------------------------------------------------------
| |                                                                                    
| |                                                                                    
| |                                                                                    
| | Cost                                                                               
| | Balance, January 1, 2011                                                           
| | Additions                                                                          
| | Disposals                                                                          
| | Foreign exchange                                                                   
| | Balance, December 31, 2011                                                         
| | Additions                                                                          
| | Change in rehabilitation provision                                                 
| | Disposals                                                                          
| | Foreign exchange                                                                   
| | Balance, December
      31, 2012                                                   
| |                                                                                    
| | Accumulated depreciation                                                           
| | Balance, January 1, 2011                                                           
| | Amortization and depletion                                                         
| | Disposals                                                                          
| | Foreign exchange                                                                   
| | Balance, December 31, 2011                                                         
| | Amortization and depletion                                                         
| | Disposals                                                                          
| | Foreign exchange                                                                   
| | Balance, December 31, 2012                                                         
| |                                                                                    
| | Net book value                                                                     
| | December 31, 2011                                                                  
| | December 31, 2012                                                                  

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).

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.

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, 2012 and 2011                 

|10. | Exploration and evaluation
assets
|--- | ---------------------------------

At December 31, 2012, the Company had
exploration and evaluation assets of $7.3 million compared to $3.9 million at
December 31, 2011. Exploration and evaluation assets are not currently being
depleted.

The Companys exploration and
evaluation assets comprise the following:

| |                            |   | San
      Ignacio |   |   | Santa
      Rosa |   |   | El
      Horcon |  |   |       |  
| | -------------------------- | - | ----------------- | - | - | ---------------- | - | - | --------------- |  | - | ----- | -
| |                            |   | Property          |   |   | Property         |   |   | Property        |  |   | Total |  
| | Cost                       |   |                   |   |   |                  |   |   |                 |  |   |       |  
| | Balance, January 1, 2011   | $ | 273               |   | $ | -                |   | $ | -               |  | $ | 273   |  
| | Additions                  |   | 2,480             |   |   | 1,452            |   |   | -               |  |   | 3,932 |  
| | Foreign exchange           |   | (220              | ) |   | (117             | ) |   | -               |  |   | (337  | )
| | Balance, December 31, 2011 |   | 2,533             |   |   | 1,335            |   |   | -               |  |   | 3,868 |  
| | Additions                  |   | 1,583             |   |   | -                |   |   | 1,579           |  |   | 3,162 |  
| | Foreign exchange           |   | 147               |   |   | 71               |   |   | 22              |  |   | 240   |  
| | Balance, December 31, 2012 | $ | 4,263             |   | $ | 1,406            |   | $ | 1,601           |  | $ | 7,270 |  

San Ignacio Project

The San Ignacio property was acquired
as part of the Guanajuato mine acquisition in 2005. Evaluation activities
relating to San Ignacio commenced in 2010.

Santa Rosa Project

During 2011, the Company acquired
rights to a new silver-gold project, the Santa Rosa Project, in Guanajuato,
Mexico, for $1,452.

El Horcon Project

On September 5, 2012, the Company
purchased 100% interest in the El Horcon Silver-Gold Project, in Jalisco State,
Mexico, for total cash consideration of US$1,600 (C$1,579).

|11. | Intangible assets
|--- | -----------------

At December 31, 2012, the Company had
intangible assets of $0.7 million compared to $0.7 million at December 31, 2011.
Intangible assets consist of computer software purchased by the Company in the
normal course of business and costs of computer software customization and
implementation.

| |                             |   | 2012  |  |   | 2011 |  
| | --------------------------- | - | ----- |  | - | ---- | -
| | Cost                        |   |       |  |   |      |  
| | Balance, January 1          | $ | 941   |  | $ | 383  |  
| | Additions                   |   | 811   |  |   | 627  |  
| | Foreign exchange            |   | 37    |  |   | (69  | )
| | Balance, December
      31  | $ | 1,789 |  | $ | 941  |  
| |                             |   |       |  |   |      |  
| | Accumulated depreciation    |   |       |  |   |      |  
| | Balance, January 1          | $ | 233   |  | $ | 109  |  
| | Amortization and depletion  |   | 838   |  |   | 135  |  
| | Foreign exchange            |   | 13    |  |   | (11  | )
| | Balance, December
      31  |   | 1,084 |  |   | 233  |  
| | Net book value, December 31 | $ | 705   |  | $ | 708  |  

22

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|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, 2012 and 2011                 

|12. | Trade and other
payables
|--- | ------------------------

| |                            |   | December 31, |  |   | December 31, | 
| | -------------------------- | - | ------------ |  | - | ------------ | 
| |                            |   | 2012         |  |   | 2011         | 
| | Accrued liabilities        | $ | 2,977        |  | $ | 1,447        | 
| | Trade and account payables |   | 3,102        |  |   | 3,207        | 
| | Value added tax payable    |   | 1,632        |  |   | 1,346        | 
| | Other payables             |   | 400          |  |   | 350          | 
| |                            | $ | 8,111        |  | $ | 6,350        | 

Included in trade and other payables
are amounts due to related parties which are disclosed in note 24.

|13. | Long-term debt
|--- | --------------
|    |               
|    | (a)           
|    |               
|    |               
|    |               
|    | (b)           
|    |               
|    |               
|    |               
|    |               
|    |               
|    |               

|14. | 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. A reconciliation of the reclamation and remediation provision
      is as follows:

| |                                  |   | December 31, |   |   | December 31, | 
| | -------------------------------- | - | ------------ | - | - | ------------ | 
| |                                  |   | 2012         |   |   | 2011         | 
| | Balance, beginning of year       | $ | 2,154        |   | $ | 1,955        | 
| | Revision in estimates            |   | 340          |   |   | -            | 
| | Accretion expense                |   | 28           |   |   | 47           | 
| | Effect of foreign
      exchange |   | (75          | ) |   | 152          | 
| | Balance, end of year             | $ | 2,447        |   | $ | 2,154        | 

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

| |  | The total undiscounted estimated cash flows, before
      estimated inflation, required to settle the Companys estimated
      obligations is US$2,378 (2011  US$2,039).                                                                        
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                   
| |  | The expected timing of payments totaling US$2,815 (including estimated inflation) is estimated as follows: US$1,052 in 2017, US$69 in 2018, US$71 in 2019, US$30 in each of 2020 and 2021, US$1,063 in 2022, and a total of US$500 due after 2022.
| |   |                                                                                                                                                                                                                                                   
| |  | A risk-free rate of 2.04% for Topia and 0.88% for
      Guanajuato (2011  1.89% and 0.83% respectively) has been used to discount
      the cash flows.                                                                                          

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, 2012 and 2011                 

|14. | Reclamation and remediation provision -continued
|--- | ------------------------------------------------

At December 31, 2012, the Company
re-valued the reclamation and remediation provision as a result of new
information provided by a third party contracted by the Company to undertake a
review of the provision. The net result was an increase to the provision and an
increase to the related asset of US$340. The primary changes from the Companys
previous estimate were an increase in the total estimated cash flows required to
settle the estimated obligations, and changes in the timing of the expected
payments. The Company has accounted for this as a change in accounting estimate
and has therefore accounted for it on a prospective basis as of December 31,
2012.

|15. | Share capital
|--- | -------------

| | (a) | Authorized:                                                                                                                                                                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                        
| |     | Unlimited number of common shares without par
  value                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                        
| |     | Unlimited number of Class A preferred shares without par
      value, issuable in series                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                        
| |     | Unlimited number of Class B preferred shares without par
      value, issuable in series                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                        
| | (b) | Issued and fully paid:                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                        
| |     | Common shares: 137,860,052 (December 31, 2011 
      137,408,912)                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                        
| |     | Preferred shares: nil (December 31, 2011  nil)                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                        
| | (c) | Financing                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                        
| |     | On April 12, 2011, the Company closed a bought deal
      financing with a syndicate of underwriters for $22,512 in proceeds, net of
      issuance costs of $1,638, including $384 in warrants issued to the
      underwriters (note 15(e)). 5,750,000 common shares were issued at a price
      of $4.20 per share.
| |     |                                                                                                                                                                                                                                                                                                                        
| | (d) | Share options                                                                                                                                                                                                                                                                                                          

The Company is authorized to grant
incentive share options (options) to officers, directors, employees and
consultants as incentive for their services, subject to limits with respect to
insiders. Pursuant to the Companys 2007 Amended and Restated Incentive Share
Option Plan (the 2007 Plan), options are non-transferable, subject to
permitted transferees, and the aggregate may not exceed 10% of the outstanding
shares at the time of an option grant and the aggregate to any one person may
not exceed 5% of the outstanding shares. The exercise price of options is
determined by the Board of Directors but shall not be less than the closing
price of the common shares on the Toronto Stock Exchange on the last business
day immediately preceding the date of grant. Grant date share price is the
closing market price on the day the options were granted.

Options have expiry dates of no later
than 10 years after the date of grant and will cease to be exercisable 30 days
following the termination of the participants employment or engagement.

The continuity of share options for
the years ended December 31, 2012 and 2011 are as follows:

| |                                 |                   | Balance      |           |           |              | Balance     
| | ------------------------------- | ----------------- | ------------ | --------- | --------- | ------------ | ------------
| | Exercise                        |                   | December 31, |           |           |              | December 31,
| | Price                           | Expiry date       | 2011         | Granted   | Forfeited | Exercised    | 2012        
| | $ 0.45                          | February 8, 2014  | 805,000      | -         | -         | (200,000)    | 605,000     
| | $ 0.70                          | September 3, 2014 | 315,000      | -         | -         | (15,000)     | 300,000     
| | $ 0.90                          | December 2, 2014  | 162,000      | -         | -         | -            | 162,000     
| | $ 0.90                          | July 11, 2015     | 118,000      | -         | -         | (10,000)     | 108,000     
| | $ 1.15                          | October 17, 2015  | 51,500       | -         | -         | (50,000)     | 1,500       
| | $ 1.90                          | November 21, 2015 | 90,000       | -         | -         | -            | 90,000      
| | $ 2.40                          | December 5, 2016  | 2,705,000    | -         | (240,000) | (230,000)(1) | 2,235,000   
| | $ 2.25                          | March 15, 2017    | -            | 170,000   | -         | -            | 170,000     
| | $ 1.76                          | May 17, 2017      | -            | 315,000   | -         | (75,000)(2)  | 240,000     
| | $ 1.71                          | August 17, 2017   | -            | 1,708,500 | (136,600) | (50,800)     | 1,521,100   
| | $
      1.78                    | November 18, 2017 | -            | 277,000   | (72,000)  | -            | 205,000     
| |                                 |                   | 4,246,500    | 2,470,500 | (448,600) | (630,800)    | 5,637,600   
| | Weighted average exercise price | $ 1.78            | $ 1.76       | $ 2.09    | $ 1.49    | $ 1.78      

(1)Includes cashless
exercise of 125,000 options.(2)Includes cashless exercise of
75,000 options.

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, 2012 and 2011                 

|15. | Share capitalcontinued
|--- | -----------------------

| |                                 |                   | Balance      |           |           |             | Balance     
| | ------------------------------- | ----------------- | ------------ | --------- | --------- | ----------- | ------------
| | Exercise                        |                   | December 31, |           |           |             | December 31,
| | Price                           | Expiry date       | 2010         | Granted   | Forfeited | 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 | -         | -           | 2,705,000   
| |                                 |                   | 4,630,500    | 2,705,000 |           | (3,089,000) | 4,246,500   
| | Weighted average exercise price | $ 0.73            | $ 2.40       | -         | $ 0.75    | $ 1.78     

The Companys weighted average share
price on the date the options were exercised during the year ended December 31,
2012 is $2.27 (2011  $3.43).

As at December 31, 2012, the following
stock options were outstanding and exercisable:

| |                       | Stock options outstanding | Stock options exercisable
| | --------------------- | ------------------------- | -------------------------
| |                       |                           | Weighted average         
| |                       |                           | remaining                
| |                       | Stock options             | contractual life         
| | Exercise
      prices | outstanding               | (years)                  
| | $0.45 to $0.90        | 1,175,000                 | 1.49                     
| | $1.15 to $1.71        | 1,522,600                 | 4.62                     
| | $1.76 to $1.78        | 445,000                   | 4.61                     
| | $1.90 to $2.25        | 260,000                   | 3.75                     
| | $2.40                 | 2,235,000                 | 3.93                     
| |                       | 5,637,600                 | 3.65                     

During the year ended December 31,
2012, the Company recorded compensation expense for the fair value of share
options of $1,529 (2011 - $2,496) for share options that were granted during the
year. The weighted average fair value of options granted during 2012 was $0.72
(2011 - $0.92).

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:

| |                         |  | 2012       |  |  | 2011       | 
| | ----------------------- |  | ---------- |  |  | ---------- | 
| | Risk-free interest rate |  | 1.19%      |  |  | 0.88%      | 
| | Expected life           |  | 2.00 years |  |  | 1.94 years | 
| | Annualized volatility   |  | 75%        |  |  | 79%        | 
| | Dividend rate           |  | -          |  |  | -          | 

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

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, 2012 and 2011                 

|15. | Share capitalcontinued
|--- | -----------------------

| | (e) | Warrants:
| | --- | ---------

The continuity of warrants for the
years ended December 31, 2012 and 2011 are as follows:

| |                                       |          |  |  |                      |   |      | Balance,     |   |      |         |   |      |            |   |      |         |   |      | Balance,     | 
| | ------------------------------------- | -------- |  |  | -------------------- | - | ---- | ------------ | - | ---- | ------- | - | ---- | ---------- | - | ---- | ------- | - | ---- | ------------ | 
| |                                       | Exercise |  |  |                      |   |      | December 31, |   |      |         |   |      |            |   |      |         |   |      | December 31, | 
| | Series                                | price    |  |  | Expiry date          |   |      | 2011         |   |      | Issued  |   |      | Exercised  |   |      | Expired |   |      | 2012         | 
| | Underwriters warrants                | $ 4.20   |  |  | April 12, 2013       |   |      | 316,250      |   |      | -       |   |      | -          |   |      | -       |   |      | 316,250      | 
| |                                       |          |  |  |                      |   |      |              |   |      |         |   |      |            |   |      |         |   |      |              | 
| |                                       |          |  |  |                      |   |      | Balance,     |   |      |         |   |      |            |   |      |         |   |      | Balance,     | 
| |                                       | Exercise |  |  |                      |   |      | December 31, |   |      |         |   |      |            |   |      |         |   |      | December 31, | 
| | Series                                | price    |  |  | Expiry date          |   |      | 2010         |   |      | Issued  |   |      | Exercised  |   |      | Expired |   |      | 2011         | 
| | SFPO(1)warrants                       | $ 0.90   |  |  | Nov 17, 2011         |   |      | 6,315,650    |   |      | -       |   |      | (6,307,150 | ) |      | (8,500  | ) |      | -            | 
| | Agent warrants                        | $ 0.90   |  |  | Nov 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 15(c)) were valued at $384 using the Black
Scholes model during the year ended December 31, 2011. 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. No warrants were granted
during 2012.

| | (f) | Earnings per share and diluted earnings per
  share                    
| | --- | -----------------------------------------------------------------------
| |     |                                                                        
| |     | Earnings per share and diluted earnings per share are as
      follows:

| |                                                       |   | 2012        |  |   | 2011        | 
| | ----------------------------------------------------- | - | ----------- |  | - | ----------- | 
| | Earnings per share                                    |   |             |  |   |             | 
| | Basic                                                 | $ | 0.04        |  | $ | 0.09        | 
| | Diluted                                               | $ | 0.04        |  | $ | 0.08        | 
| |                                                       |   |             |  |   |             | 
| |                                                       |   |             |  |   |             | 
| |                                                       |   | 2012        |  |   | 2011        | 
| | Net income for the year                               | $ | 5,510       |  | $ | 11,506      | 
| |                                                       |   |             |  |   |             | 
| |                                                       |   |             |  |   |             | 
| |                                                       |   | 2012        |  |   | 2011        | 
| | Shares outstanding, January 1                         |   | 137,408,912 |  |   | 119,913,766 | 
| | Effect of share options exercised                     |   | 244,601     |  |   | 2,292,166   | 
| | Effect of warrants exercised                          |   | -           |  |   | 3,253,708   | 
| | 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   |   | 137,653,513 |  |   | 131,072,380 | 
| | Effect of dilutive share options                      |   | 1,056,273   |  |   | 1,811,979   | 
| | Effect of dilutive
      warrants                     |   | -           |  |   | 2,516,754   | 
| | Diluted weighted average number of shares outstanding |   | 138,709,786 |  |   | 135,401,113 | 

For the year ended December 31, 2012
there were 2,721,250 (2011  90,610) potentially dilutive shares that have not
been included in the diluted earnings per share calculation for the year
presented because the effect of including these shares would be
anti-dilutive.

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, 2012 and 2011                 

|15. | Share capitalcontinued
|--- | -----------------------

| | (g) | Shareholder Rights Plan
| | --- | -----------------------

On April 17, 2012, the Board of
Directors approved the adoption of a new Shareholder Rights Plan (the 2012
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. The
2012 Plan was ratified by the shareholders of the Company at the June 28, 2012
annual and special general meeting of shareholders and became immediately
effective after the expiration of the previous plan on June 29, 2012. The 2012
Plan maintains the same terms and conditions as the previous plan and will
continue until the annual and special general meeting of shareholders in
2016.

To implement the 2012 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 June 29, 2012.
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 2012 Plan. Under the 2012 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.

|16. | Cost of sales by
nature
|--- | -----------------------

| |                                         |   | 2012   |  |   | 2011   | 
| | --------------------------------------- | - | ------ |  | - | ------ | 
| | Contractors, services and other charges | $ | 11,673 |  | $ | 9,348  | 
| | Amortization and depletion              |   | 8,684  |  |   | 4,465  | 
| | Materials                               |   | 7,254  |  |   | 4,939  | 
| | Salaries, wages and benefits            |   | 7,135  |  |   | 5,265  | 
| | Other expenses                          |   | 4,785  |  |   | 4,037  | 
| | Power                                   |   | 2,017  |  |   | 1,886  | 
| | Share-based payments                    |   | 385    |  |   | 962    | 
| |                                         | $ | 41,933 |  | $ | 30,902 | 

|17. | General and administrative expenses by
    nature
|--- | -------------------------------------------------

| |                                  |   | 2012   |  |   | 2011  | 
| | -------------------------------- | - | ------ |  | - | ----- | 
| | Professional and consulting fees | $ | 2,810  |  | $ | 2,421 | 
| | Salaries, wages and benefits     |   | 2,538  |  |   | 1,835 | 
| | Administrative expenses          |   | 2,269  |  |   | 2,128 | 
| | Share-based payments             |   | 1,071  |  |   | 1,248 | 
| | Travel expenses                  |   | 659    |  |   | 571   | 
| | Rent expenses                    |   | 532    |  |   | 267   | 
| | Amortization and depletion       |   | 206    |  |   | 97    | 
| |                                  | $ | 10,085 |  | $ | 8,567 | 

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, 2012 and 2011                 

|18. | Exploration and evaluation expenses by
      nature
|--- | ---------------------------------------------------

| |                                  |   | 2012  |  |   | 2011 | 
| | -------------------------------- | - | ----- |  | - | ---- | 
| | Salaries, wages and benefits     | $ | 1,127 |  | $ | 482  | 
| | Professional and consulting fees |   | 430   |  |   | 188  | 
| | Services                         |   | 345   |  |   | 23   | 
| | Other expenses                   |   | 240   |  |   | 121  | 
| | Travel expenses                  |   | 167   |  |   | 114  | 
| | Share-based payments             |   | 73    |  |   | -    | 
| |                                  | $ | 2,382 |  | $ | 928  | 

|19. | Finance costs
|--- | -------------

| |                                                          |   | 2012 |  |   | 2011 | 
| | -------------------------------------------------------- | - | ---- |  | - | ---- | 
| | Accretion on reclamation and remediation
      provision | $ | 28   |  | $ | 47   | 
| | Lease interest                                           |   | 6    |  |   | 38   | 
| | Interest accretion on convertible loan notes             |   | -    |  |   | 239  | 
| |                                                          | $ | 34   |  | $ | 324  | 

|20. | 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.                                                                                          

In assessing the capital structure of
the Company, management includes in its assessment the components of
shareholders equity and debt, net of cash and cash equivalents and short term
investments. 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, 2012, 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, 2012, the Company is not subject to externally imposed
capital requirements.

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, 2012 and 2011                 

|21. | Fair value of financial instruments
|--- | -----------------------------------

The Companys financial instruments
include cash and cash equivalents, short term investments, marketable
securities, trade and other receivables, and trade and other payables. The
carrying values of cash and cash equivalents, short term investments, 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, 2012. As 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.

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 table illustrates the
valuation method of the Companys financial instruments carried at fair value as
at December 31, 2012:

| |                                                      |   |              |  |   |             |  |   | Other       |   |   |        |   |  |            | 
| | ---------------------------------------------------- | - | ------------ |  | - | ----------- |  | - | ----------- | - | - | ------ | - |  | ---------- | 
| |                                                      |   |              |  |   |             |  |   | financial   |   |   |        |   |  |            | 
| |                                                      |   | Held at fair |  |   | Loans and   |  |   | assets and  |   |   |        |   |  | Fair value | 
| |                                                      |   | value        |  |   | receivables |  |   | liabilities |   |   | Total  |   |  | hierarchy  | 
| | Financial Assets                                     |   |              |  |   |             |  |   |             |   |   |        |   |  |            | 
| | Cash and cash equivalents                            | $ | -            |  | $ | 20,735      |  | $ | -           |   | $ | 20,735 |   |  | n/a        | 
| | Short term investments  GIC                         |   | -            |  |   | 5,085       |  |   | -           |   |   | 5,085  |   |  | n/a        | 
| | Short term investments - Marketable
      securities |   | 79           |  |   | -           |  |   | -           |   |   | 79     |   |  | Level 1    | 
| | Trade and other
      receivables                    |   | -            |  |   | 18,099      |  |   | -           |   |   | 18,099 |   |  | n/a        | 
| |                                                      |   | 79           |  |   | 43,919      |  |   | -           |   |   | 43,998 |   |  |            | 
| | Financial Liabilities                                |   |              |  |   |             |  |   |             |   |   |        |   |  |            | 
| | Trade and other payables                             |   | -            |  |   | -           |  |   | (8,111      | ) |   | (8,111 | ) |  | n/a        | 
| |                                                      | $ | 79           |  | $ | 43,919      |  | $ | (8,111      | ) | $ | 35,887 |   |  |            | 

During the year ended December 31,
2012, a mark-to-market loss of $8 (2011  $103) 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, 2012, receivables of
$231 (2011 - $220) were impaired and provided for.

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, 2012 and 2011                 

|22. | 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.

The types of risk exposure and the way
in which such exposures are managed are as follows:

| | (a) | Concentration risk
| | --- | ------------------

Concentration risk exists in cash and
cash equivalents and short term investments because significant balances are
maintained with four financial institutions. To mitigate the risk, the Company
diversifies its cash and cash equivalents and short term investments by holding
guaranteed investment certificates and similar securities with a number of
different financial institutions. The primary investment products include, but
are not limited to high interest savings accounts and guaranteed investment
certificates.

Concentration risk also exists in
trade accounts receivable because the Companys revenues are currently
substantially derived from sales to four customers. To mitigate the risk, the
Company continues to seek other viable customers for the sale of its metal
concentrates.

| | (b) | Credit risk
| | --- | -----------

Credit risk primarily arises from the
Companys cash and cash equivalents, short term investments and trade and other
receivables. The risk exposure is limited to their carrying amounts at the
balance sheet date. The risk is mitigated by holding cash and cash equivalents
and short term investments with highly rated Canadian and Mexican financial
institutions. The Company does not invest in asset-backed deposits or
investments and does not expect any credit losses. The Company periodically
assesses the quality of its investments and is satisfied with the credit rating
of the financial institutions and the investment grade of its guaranteed
investment certificates.

Trade and other receivables primarily
consist of trade accounts receivable and value added tax recoverable (VAT). To
reduce credit risk, the Company regularly reviews the collectability of its
trade and other receivables and establishes an allowance based on its best
estimate of potentially uncollectible amounts. Trade receivables are due from
large, multinational corporations that have conducted business in Mexico for a
number of years. At December 31, 2012, the trade accounts receivable balance
totaled $12,311 (2011 - $11,180). The Company historically has not had
difficulty collecting receivables from its customers, nor have customers
defaulted on any payments.

The average credit period of sales is
4 months. The Company has the right to request up to a 90% advance on payment,
payable up to 75 days subsequent to sale. The Company has financial risk
management policies in place to ensure that all receivables are received within
the pre-agreed credit terms.

The aging of trade accounts
receivables at each reporting date are as follows:

| |                      |   | December 31, |  |   | December 31, | 
| | -------------------- | - | ------------ |  | - | ------------ | 
| |                      |   | 2012         |  |   | 2011         | 
| | Less than 30 days    | $ | 8,167        |  | $ | 7,583        | 
| | Within 31 to 60 days |   | 3,298        |  |   | 596          | 
| | Within 61 to 90 days |   | 520          |  |   | 190          | 
| | More than 90 days    |   | 326          |  |   | 2,811        | 
| |                      | $ | 12,311       |  | $ | 11,180       | 

| | (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.

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, 2012 and 2011                 

|22. | Financial risk exposure and risk management continued
|--- | ------------------------------------------------------

The Companys financial liabilities
consist of trade and other payables which are due within one year. The aging of
trade accounts payable at each reporting date are as follows:

| |                   |   | December 31, |  |   | December 31, | 
| | ----------------- | - | ------------ |  | - | ------------ | 
| |                   |   | 2012         |  |   | 2011         | 
| | Less than 1 month | $ | 8,111        |  | $ | 4,663        | 
| | 1 to 3 months     |   | -            |  |   | 323          | 
| | 3 to 6 months     |   | -            |  |   | 1,312        | 
| | Over 6 months     |   | -            |  |   | 52           | 
| |                   | $ | 8,111        |  | $ | 6,350        | 

| | (d) | Market risk:
| | --- | ------------

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

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

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

The Companys exploration, development
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, | 
| | ------------------------------ | - | ------------ |  | - | ------------ | 
| |                                |   | 2012         |  |   | 2011         | 
| | MXN peso per CDN dollar        | $ | 13.0310      |  | $ | 13.7212      | 
| | US dollar per CDN
      dollar | $ | 1.0051       |  | $ | 0.9833       | 

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.

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.

A 10% change in the US dollar exchange
rate to the Canadian dollar listed above would have the following impact on the
Companys earnings:

| |                                                                              |   | 10%
      decrease in |  |   | 10%
      increase in |  
| | ---------------------------------------------------------------------------- | - | --------------------- |  | - | --------------------- | -
| |                                                                              |   | the U.S. dollar       |  |   | the U.S. dollar       |  
| | Decrease (increase) in net income for the year ended December
      31, 2012 | $ | 1,184                 |  | $ | (261                  | )

A 10% change in the Mexican peso
exchange rate to the Canadian dollar listed above would have the following
impact on the Companys earnings:

| |                                                                              |   | 10%
      decrease in |  |   | 10%
      increase in |  
| | ---------------------------------------------------------------------------- | - | --------------------- |  | - | --------------------- | -
| |                                                                              |   | the Mexican peso      |  |   | the Mexican peso      |  
| | Decrease (increase) in net income for the year ended December
      31, 2012 | $ | 5,685                 |  | $ | (5,685                | )

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, 2012 and 2011                 

|22. | Financial risk exposure and risk management
      continued
|--- | ------------------------------------------------------------

| | (ii)  | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | The Companys approach is to invest cash in high interest
      savings accounts and guaranteed investment certificates at fixed or
      floating rates of interest in order to maintain liquidity, while achieving
      a satisfactory return for shareholders. The Company manages risk by
      monitoring changes in interest rates and by maintaining a relatively short
      duration for its portfolio of cash equivalent securities. Many of these
      instruments can be immediately redeemed and those of a fixed term do not
      exceed one year. As at December 31, 2012, the Company held $15,581 (2011 -
      $35,845) in high interest savings accounts and guaranteed investment
      certificates.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | For the year ended December 31, 2012, an increase or
      decrease in interest rate of 1% would have increased or decreased net
      income and comprehensive income for the year by $95.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iii) | Commodity price risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | The Company is subject to price risk from fluctuations in
      the market prices of silver, gold, lead and zinc. At December 31, 2012,
      market prices were US$30/ounce (2011  US$28/ounce) for silver,
      US$1,664/ounce (2011 - US$1,564/ounce) for gold, US$2,340/tonne (2011 -
      US$1,980/tonne) for lead, and US$2,035/tonne (2011  US$1,828/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 prices of these metals, as is the ability of the
      Company to develop its other properties. 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 did not hedge silver and
      gold prices and has a stated policy that it will not engage in long term
      hedging of silver prices. The Company has entered into option contracts to
      mitigate the price risk associated with a portion of the sales of its lead
      by-products. As of December 31, 2012, the Company had 100 tonnes remaining
      in a zero cost put- call collar contract, with a floor price of US$1,975
      per tonne of lead and a ceiling price of US$2,550 per tonne of
  lead.                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | A 10% change in the average commodity price for silver
      for the year, with all other variables held constant, would result in an
      impact to the Companys 2012 net income and comprehensive income of
      $3,415. A 10% change in the average commodity price for gold for the year,
      with all other variables held constant, would result in an impact to the
      Companys 2012 net income and comprehensive income of $1,303.                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iv)  | Exchange risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       | The fair value of marketable securities is based on
      quoted market prices which the shares of the investments can be exchanged
      for. The exchange price of the shares may fluctuate significantly
      depending on various other market factors. To mitigate the risk, the
      Companys approach is to maintain minimal investments in marketable
      securities.                                                                                                                                                                                                                                                                                                                                          

|23. | Income taxes
|--- | ------------

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

Income tax expense included in the
consolidated financial statements is as follows:

| |                                   |   | 2012  |  |   | 2011  | 
| | --------------------------------- | - | ----- |  | - | ----- | 
| | Current income tax expense        | $ | 592   |  | $ | 108   | 
| | Deferred income
      tax expense |   | 3,608 |  |   | 1,877 | 
| | Income tax expense                | $ | 4,200 |  | $ | 1,985 | 

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

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, 2012 and 2011                 

|23. | Income taxes continued
|--- | -----------------------

| |                                                                           |   | 2012  |   |   | 2011   |  
| | ------------------------------------------------------------------------- | - | ----- | - | - | ------ | -
| | Net income before tax                                                     | $ | 9,710 |   | $ | 13,491 |  
| | Canadian statutory income tax rate                                        |   | 25.0% |   |   | 26.5%  |  
| |                                                                           |   |       |   |   |        |  
| | Income tax expense at the statutory income tax rate                       | $ | 2,428 |   | $ | 3,575  |  
| | Difference in statutory tax rates in
      foreign jurisdictions          |   | 480   |   |   | 295    |  
| | Effect of changes in future income tax rates                              |   | 434   |   |   | -      |  
| | Non-deductible expenses                                                   |   | 1,143 |   |   | 1,175  |  
| | Benefit of tax attributes not previously recognized and
      other items |   | (277  | ) |   | (3,060 | )
| | Non-taxable items                                                         |   | (8    | ) |   | -      |  
| | Income tax expense                                                        | $ | 4,200 |   | $ | 1,985  |  

The Canadian federal corporate tax
rate decreased from 16.5% to 15% in 2012, resulting in a decrease in the
Companys statutory tax rate from 26.5% to 25%.

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

Deferred tax assets and liabilities on
the consolidated statements of financial position consist of:

| |                                       |   | December 31, |   |   | December 31, |  
| | ------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                       |   | 2012         |   |   | 2011         |  
| | Deferred income tax assets            | $ | 253          |   | $ | -            |  
| | Deferred income
      tax liabilities |   | (5,746       | ) |   | (1,824       | )
| |                                       | $ | (5,493       | ) | $ | (1,824       | )

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

| |                                            |   | December 31, |   |   | December 31, |  
| | ------------------------------------------ | - | ------------ | - | - | ------------ | -
| |                                            |   | 2012         |   |   | 2011         |  
| | Tax losses carried forward                 | $ | 4,902        |   | $ | 3,723        |  
| | Provision for mine closure and restoration |   | 702          |   |   | 276          |  
| | Property, plant and equipment              |   | (11,405      | ) |   | (5,886       | )
| | Other deductible temporary differences     |   | 308          |   |   | 63           |  
| | Net deferred income tax liabilities        | $ | (5,493       | ) | $ | (1,824       | )

As at December 31, 2012, the Company
had tax operating losses in Mexico of approximately $16,706 expiring between
2017 and 2022.

Unrecognized deferred tax assets:

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

| |                                               |   | December 31, |  |   | December 31, | 
| | --------------------------------------------- | - | ------------ |  | - | ------------ | 
| |                                               |   | 2012         |  |   | 2011         | 
| | Tax losses carried forward                    | $ | 2,549        |  | $ | 2,934        | 
| | Property, plant and equipment                 |   | 324          |  |   | 264          | 
| | Other deductible  temporary differences       |   | 377          |  |   | 552          | 
| | Unrecognized
      deferred income tax assets | $ | 3,250        |  | $ | 3,750        | 

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

As at December 31, 2012, the Company
had tax operating losses of approximately $9,370 in Canada expiring between 2026
and 2031.

As at December 31, 2012, gross
unrecognized deductible temporary differences totaled $12,997.

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, 2012 and 2011                 

|24. | Related party
transactions
|--- | --------------------------

| |                                                                                                           |   | 2012  |  |   | 2011  | 
| | --------------------------------------------------------------------------------------------------------- | - | ----- |  | - | ----- | 
| | Consulting fees paid or accrued to
      companies controlled by directors of the Company                 | $ | 1,045 |  | $ | 781   | 
| | Consulting fees paid or accrued to companies controlled by
      officers of the Company                  |   | -     |  |   | 290   | 
| | Director fees paid or accrued                                                                             |   | 233   |  |   | 189   | 
| | Cost recoveries received or accrued from a company with a
      common director of the Company            |   | 34    |  |   | -     | 
| | Office and administration fees paid or accrued to a company
      controlled by a director of the Company |   | 21    |  |   | 85    | 
| |                                                                                                           | $ | 1,333 |  | $ | 1,345 | 

As at December 31, 2012, $30 (2011 -
$42) 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 $17 (2011 - $24) and were included in trade and other
receivables.

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

Compensation of key management
personnel

The remuneration of directors and other
members of key management personnel during the years ended December 31, 2012 and
2011 were as follows:

| |                         |   | 2012  |  |   | 2011  | 
| | ----------------------- | - | ----- |  | - | ----- | 
| | Short-term benefits (i) | $ | 2,523 |  | $ | 2,509 | 
| | Termination benefits    |   | 1,132 |  |   | -     | 
| | Share-based payments    |   | 898   |  |   | 969   | 
| |                         | $ | 4,553 |  | $ | 3,478 | 

(i)Short-term benefits
include salaries and benefits, consulting and management fees.

Key management includes the Companys
directors, the President, the Chief Executive Officer, the Chief Financial
Officer and the Vice Presidents. The Company is committed to making severance
payments amounting to approximately $2,811 to certain officers and management in
the event that there is a change of control of the Company.

|25. | Commitments and
contingencies
|--- | -----------------------------

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

As of December 31, 2012 the Company
had the following commitments:

| |                                                    |   | Total |  |   | 1 year |  |   | 2-3 years |  |   | 4-5 years | 
| | -------------------------------------------------- | - | ----- |  | - | ------ |  | - | --------- |  | - | --------- | 
| | Operating lease payments                           | $ | 1,333 |  | $ | 528    |  | $ | 805       |  | $ | -         | 
| | Drilling services                                  |   | 293   |  |   | 293    |  |   | -         |  |   | -         | 
| | Equipment purchases with third party
      vendors |   | 216   |  |   | 216    |  |   | -         |  |   | -         | 
| | Environmental
      program                        |   | 32    |  |   | 32     |  |   | -         |  |   | -         | 
| | Total commitments                                  | $ | 1,874 |  | $ | 1,069  |  | $ | 805       |  | $ | -         | 

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

As of December 31, 2012, the Company
had not fully secured mineral property titles for approximately 5,000 of its
7,908 hectares related to the El Horcon Project. Certain of the Companys title
claims have been cancelled due to what the Company believes is an administrative
error on the part of the government agency which manages mineral claims in
Mexico. The Company is currently in the process of attempting to reinstate the
claims. Neither the status of the claims or the process to reinstate the claims
has affected the Companys permitting and drilling programs. The Company expects
to be successful in reinstating the claims and therefore has not recorded any
provision against the carrying value of the El Horcon Project.

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, 2012 and 2011                 

|26. | 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.

| | 2012                                         |   | Mexico     |  |   | Canada |  |   |         |  
| | -------------------------------------------- | - | ---------- |  | - | ------ |  | - | ------- | -
| |                                              |   | Guanajuato |  |   | Topia  |  |   | Other(1 | )
| | External mineral sales                       | $ | 44,104     |  | $ | 17,035 |  | $ | -       |  
| | Amortization and depletion                   |   | 6,590      |  |   | 2,094  |  |   | -       |  
| | Share-based payments                         |   | 339        |  |   | 46     |  |   | -       |  
| | Interest income                              |   | -          |  |   | -      |  |   | -       |  
| | Finance costs                                |   | 9          |  |   | 19     |  |   | -       |  
| | Income (loss) before income taxes            |   | 11,445     |  |   | 2,270  |  |   | (457    | )
| | Net income (loss) for the year               |   | 11,208     |  |   | 2,169  |  |   | (457    | )
| | Capital expenditures                         |   | 16,384     |  |   | 6,787  |  |   | 3,162   |  
| |                                              |   |            |  |   |        |  |   |         |  
| | Total assets                                 |   | 44,063     |  |   | 23,323 |  |   | 7,270   |  
| | Total liabilities                            |   | 6,457      |  |   | 1,981  |  |   | -       |  
| | Mineral properties, plant and 
    equipment |   | 35,817     |  |   | 19,456 |  |   | -       |  
| | Exploration and evaluation assets            | $ | -          |  | $ | -      |  | $ | 7,270   |  

(1) Includes the Companys exploration
and evaluation assets of San Ignacio, Santa Rosa and El Horcon.

| | 2011                                         |   |            |  |   |        |  |   | Mexico  |   |   |           |   |   |        |  |   | Canada    |   |   |         | 
| | -------------------------------------------- | - | ---------- |  | - | ------ |  | - | ------- | - | - | --------- | - | - | ------ |  | - | --------- | - | - | ------- | 
| |                                              |   | Guanajuato |  |   | Topia  |  |   | Other(1 | ) |   | Corporate |   |   | Total  |  |   | Corporate |   |   | Total   | 
| | External mineral sales                       | $ | 39,096     |  | $ | 18,722 |  | $ | -       |   | $ | -         |   | $ | 57,818 |  | $ | -         |   | $ | 57,818  | 
| | Amortization and depletion                   |   | 3,270      |  |   | 1,195  |  |   | -       |   |   | -         |   |   | 4,465  |  |   | 97        |   |   | 4,562   | 
| | Share-based payments                         |   | 821        |  |   | 141    |  |   | -       |   |   | 67        |   |   | 1,029  |  |   | 1,181     |   |   | 2,210   | 
| | Interest income                              |   | -          |  |   | -      |  |   | -       |   |   | 103       |   |   | 103    |  |   | 332       |   |   | 435     | 
| | Finance costs                                |   | 29         |  |   | 17     |  |   | -       |   |   | 39        |   |   | 85     |  |   | 239       |   |   | 324     | 
| | Income (loss) before income taxes            |   | 18,766     |  |   | 7,634  |  |   | (2      | ) |   | (5,709    | ) |   | 20,689 |  |   | (7,198    | ) |   | 13,491  | 
| | Net income (loss) for the year               |   | 18,685     |  |   | 7,607  |  |   | (2      | ) |   | (7,586    | ) |   | 18,704 |  |   | (7,198    | ) |   | 11,506  | 
| | Capital expenditures                         |   | 14,979     |  |   | 4,428  |  |   | 3,932   |   |   | -         |   |   | 23,339 |  |   | 61        |   |   | 23,400  | 
| |                                              |   |            |  |   |        |  |   |         |   |   |           |   |   |        |  |   |           |   |   |         | 
| | Total assets                                 |   | 30,233     |  |   | 21,888 |  |   | 3,868   |   |   | 6,706     |   |   | 62,695 |  |   | 40,249    |   |   | 102,944 | 
| | Total liabilities                            |   | 5,306      |  |   | 1,405  |  |   | -       |   |   | 2,574     |   |   | 9,285  |  |   | 1,173     |   |   | 10,458  | 
| | Mineral properties, plant and 
    equipment |   | 24,144     |  |   | 13,841 |  |   | -       |   |   | -         |   |   | 37,985 |  |   | 93        |   |   | 38,078  | 
| | Exploration and evaluation assets            | $ | -          |  | $ | -      |  | $ | 3,868   |   | $ | -         |   | $ | 3,868  |  | $ | -         |   | $ | 3,868   | 

(1) Includes the Companys exploration
and evaluation assets of San Ignacio, Santa Rosa and El Horcon.

For the years ended December 31, 2012
and 2011, the Company had revenue from the following product mixes:

| |                              |   | 2012   |   |   | 2011   |  
| | ---------------------------- | - | ------ | - | - | ------ | -
| | Silver                       | $ | 45,888 |   | $ | 46,165 |  
| | Gold                         |   | 17,234 |   |   | 11,601 |  
| | Zinc                         |   | 2,109  |   |   | 1,900  |  
| | Lead                         |   | 1,772  |   |   | 1,880  |  
| | Copper                       |   | -      |   |   | 6      |  
| | Ore processing revenues      |   | 701    |   |   | 842    |  
| | Smelter and refining charges |   | (6,565 | ) |   | (4,576 | )
| |                              | $ | 61,139 |   | $ | 57,818 |  

35

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|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, 2012 and 2011                 

|26. | Operating segments continued
|--- | -----------------------------

For the years ended December 31, 2012
and 2011, the Company had four customers that accounted for the majority total
revenues as follows:

| | Customer        |  | Segment    |  |   | 2012   |  |   | 2011   | 
| | --------------- |  | ---------- |  | - | ------ |  | - | ------ | 
| | Customer C      |  | Guanajuato |  | $ | 27,128 |  | $ | -      | 
| | Customer B      |  | Topia      |  |   | 16,245 |  |   | 18,659 | 
| | Customer A      |  | Guanajuato |  |   | 13,826 |  |   | 14,401 | 
| | Customer D      |  | Guanajuato |  |   | 1,709  |  |   | 17,152 | 
| | Other customers |  |            |  |   | 2,231  |  |   | 7,606  | 
| |                 |  |            |  | $ | 61,139 |  | $ | 57,818 | 

The trade accounts receivable balance
of $12,311 at December 31, 2012 (2011  11,180) relates to four customers (note
7).

36

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