Consolidated Financial Statements

(Expressed in Thousands of Canadian Dollars)

For the years ended December 31, 2012
and 2011











April 1, 2013



Independent Auditor’s Report



To the Shareholders of Exeter Resource Corporation



We have completed integrated auditsof Exeter Resource Corporation’s (the “Company”) 2012 and 2011 consolidated financial
statements and its internal control over financial reporting as at December 31, 2012. Our opinions, based on our audits
are presented below.



Report onthe consolidated
financial statements

We have audited the accompanying consolidated financial statements
of the Company, which comprise the consolidated statements of financial position as at December 31, 2012 and December 31, 2011
and the consolidated statements of loss and comprehensive loss, cash flows and changes in equity for the years ended December 31, 2012
and December 31, 2011 and the related notes, which comprise a summary of significant accounting policies and other explanatory
information.



Management’sresponsibility for the consolidated financial statements

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



Auditor’s responsibility

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



An audit involves performing procedures to obtain audit evidence,
on a test basis, about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on
the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’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 principles and 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
onthe consolidated financial statements.



Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of Exeter Resource Corporation as at December 31, 2012 and
December 31, 2011 and its financial performance and its cash flows for the years then ended in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.



2







Report on internal control over financial reporting

We have also audited Exeter Resource Corporation’s
internal control over financial reporting as at December 31, 2012, based on criteria established in Internal Control
- Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).



Management’s responsibility for internal control over
financial reporting

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 Management’s Report on Internal Control over Financial Reporting.



Auditor’s responsibility

Our responsibility is to express an opinion on the company’s
internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting
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.



An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control, based on the assessed risk, and performing such other
procedures as we consider necessary in the circumstances.



We believe that our audit provides a reasonable basis for our
audit opinion on the Company’s internal control over financial reporting.



Definition of internal control over financial reporting

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: (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) 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.



Inherent limitations

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.



Opinion

In our opinion, Exeter Resource Corporation maintained,
in all material respects, effective internal control over financial reporting as at December 31, 2012, based on criteria
established in Internal Control - Integrated Framework issued by COSO.



/s/ PricewaterhouseCoopers LLP



Chartered Accountants

Vancouver, British Columbia



3







|Exeter Resource Corporation                  
|---------------------------------------------
|Consolidated Statements of Financial Position
|(Expressed in Thousands of Canadian Dollars) 



|                                            |  |           |  | December 31, 2012 |          |   | December 31, 2011 |  
|------------------------------------------- |  | --------- |  | ----------------- | -------- | - | ----------------- | -
|                                            |  |           |  |                   |          |   |                   |  
|Assets                                      |  |           |  |                   |          |   |                   |  
|                                            |  |           |  |                   |          |   |                   |  
|Current                                     |  |           |  |                   |          |   |                   |  
|Cash and cash equivalents                   |  | (Note 7)  |  | $                 | 55,237   |   |                   | $
|Amounts receivable and prepaid expenses     |  |           |  |                   | 829      |   |                   |  
|Due from related parties                    |  | (Note 13) |  |                   | 95       |   |                   |  
|                                            |  |           |  |                   | 56,161   |   |                   |  
|                                            |  |           |  |                   |          |   |                   |  
|Property and equipment                      |  | (Note 8)  |  |                   | 164      |   |                   |  
|                                            |  |           |  | $                 | 56,325   |   |                   | $
|                                            |  |           |  |                   |          |   |                   |  
|Liabilities                                 |  |           |  |                   |          |   |                   |  
|                                            |  |           |  |                   |          |   |                   |  
|Current                                     |  |           |  |                   |          |   |                   |  
|Accounts payable and accrued liabilities    |  |           |  | $                 | 876      |   |                   | $
|Due to related parties                      |  | (Note 13) |  |                   | 50       |   |                   |  
|                                            |  |           |  |                   | 926      |   |                   |  
|                                            |  |           |  |                   |          |   |                   |  
|Shareholders’ Equity                        |  |           |  |                   |          |   |                   |  
|                                            |  |           |  |                   |          |   |                   |  
|Share capital                               |  | (Note 10) |  |                   | 246,089  |   |                   |  
|Contributed surplus                         |  | (Note 12) |  |                   | 40,337   |   |                   |  
|Deficit                                     |  |           |  |                   | (231,043 | ) |                   |  
|Accumulated other comprehensive gain (loss) |  |           |  |                   | 16       |   |                   |  
|                                            |  |           |  |                   | 55,399   |   |                   |  
|                                            |  |           |  | $                 | 56,325   |   |                   | $



|Contractual Obligations | (Note 16)
|----------------------- | ---------
|Subsequent Events       | (Note 19)



Approved by the Directors:



|“Bryce Roxburgh”  |  | Director
|----------------- |  | --------
|                  |  |         
|“Robert Reynolds” |  | Director



See accompanying notes
to the consolidated financial statements



4







|Exeter Resource Corporation                                    
|---------------------------------------------------------------
|Consolidated Statements of Loss and Comprehensive Loss         
|(Expressed in Thousands of Canadian Dollars, Except Share Data)



|For the years ended December 31,                     |  |                  |  | 2012 |            |   | 2011 |  
|---------------------------------------------------- |  | ---------------- |  | ---- | ---------- | - | ---- | -
|Income                                               |  |                  |  |      |            |   |      |  
|Interest income                                      |  |                  |  | $    | 812        |   |      | $
|(Loss) gain on sale of assets                        |  |                  |  |      | (6         | ) |      |  
|                                                     |  |                  |  |      | 806        |   |      |  
|Expenses                                             |  |                  |  |      |            |   |      |  
|Accounting and audit                                 |  |                  |  |      | 150        |   |      |  
|Administration salaries and consulting               |  | (Note 11)        |  |      | 1,483      |   |      |  
|Amortization                                         |  | (Note 8)         |  |      | 116        |   |      |  
|Directors’ fees                                      |  | (Note 11)        |  |      | 2,634      |   |      |  
|Foreign exchange (gain) loss                         |  |                  |  |      | (39        | ) |      |  
|General and administration                           |  | (Note 15)        |  |      | 597        |   |      |  
|Legal fees                                           |  |                  |  |      | 40         |   |      |  
|Management fees                                      |  | (Note 11)        |  |      | 3,690      |   |      |  
|Mineral property exploration expenditures            |  | (Notes 9 and 11) |  |      | 16,565     |   |      |  
|Shareholder communications                           |  |                  |  |      | 691        |   |      |  
|Stock exchange listing and filing fees               |  |                  |  |      | 105        |   |      |  
|                                                     |  |                  |  |      | 26,032     |   |      |  
|                                                     |  |                  |  |      |            |   |      |  
|Net loss for the year                                |  |                  |  |      | (25,226    | ) |      |  
|Other comprehensive income (loss) for the year       |  |                  |  |      | 72         |   |      |  
|Comprehensive loss for the year                      |  |                  |  | $    | (25,154    | ) |      | $
|                                                     |  |                  |  |      |            |   |      |  
|Basic and diluted loss per common share              |  |                  |  | $    | (0.29      | ) |      | $
|                                                     |  |                  |  |      |            |   |      |  
|Weighted average number of common shares outstanding |  |                  |  |      | 88,235,975 |   |      |  



See accompanying notes to the consolidated
financial statements



5







|Exeter Resource Corporation                 
|--------------------------------------------
|Consolidated Statements of Cash Flows       
|(Expressed in Thousands of Canadian Dollars)



|For the years ended December 31,                  |  |           |  | 2012 |         |   | 2011 |  
|------------------------------------------------- |  | --------- |  | ---- | ------- | - | ---- | -
|Operating Activities                              |  |           |  |      |         |   |      |  
|Net loss for the year                             |  |           |  | $    | (25,226 | ) |      | $
|Non-cash items:                                   |  |           |  |      |         |   |      |  
|Amortization                                      |  | (Note 8)  |  |      | 116     |   |      |  
|Loss (gain) on sale of assets                     |  |           |  |      | 6       |   |      |  
|Share-based compensation                          |  | (Note 11) |  |      | 7,489   |   |      |  
|                                                  |  |           |  |      | (17,615 | ) |      |  
|Changes in non-cash working capital items:        |  |           |  |      |         |   |      |  
|Amounts receivable and prepaid expenses           |  |           |  |      | (178    | ) |      |  
|Due from related parties                          |  |           |  |      | (2      | ) |      |  
|Due to related parties                            |  |           |  |      | (76     | ) |      |  
|Accounts payable and accrued liabilities          |  |           |  |      | (957    | ) |      |  
|Cash flows from operating activities              |  |           |  |      | (18,828 | ) |      |  
|Financing Activities                              |  |           |  |      |         |   |      |  
|Issue of share capital                            |  | (Note 10) |  |      | 2,080   |   |      |  
|Cash flows from financing activities              |  |           |  |      | 2,080   |   |      |  
|Investing Activities                              |  |           |  |      |         |   |      |  
|Acquisition of property and equipment             |  |           |  |      | (89     | ) |      |  
|Proceeds from sale of assets                      |  |           |  |      | 31      |   |      |  
|Cash flows from investing activities              |  |           |  |      | (58     | ) |      |  
|                                                  |  |           |  |      |         |   |      |  
|Effect of foreign exchange rate change on cash    |  |           |  |      | 117     |   |      |  
|                                                  |  |           |  |      |         |   |      |  
|Net decrease in cash and cash equivalents         |  |           |  |      | (16,689 | ) |      |  
|Cash and cash equivalents – beginning of the year |  |           |  |      | 71,926  |   |      |  
|Cash and cash equivalents – end of the year       |  |           |  | $    | 55,237  |   |      | $



See accompanying notes to the consolidated
financial statements



6







|Exeter Resource Corporation                 
|--------------------------------------------
|Consolidated Statements of Changes in Equity
|(Expressed in Thousands of Canadian Dollars)



|                                                           |  | Issued Share Capital |            |  |        |   |         |                     |  |   |         |   |  |                                      |         
|---------------------------------------------------------- |  | -------------------- | ---------- |  | ------ | - | ------- | ------------------- |  | - | ------- | - |  | ------------------------------------ | --------
|                                                           |  | Number of Shares     |            |  | Amount |   |         | Contributed Surplus |  |   | Deficit |   |  | Accumulated Other Comprehensive Loss |         
|Balance - January 1, 2011                                  |  |                      | 86,307,503 |  |        | $ | 238,454 |                     |  | $ | 26,467  |   |  | $                                    | (175,246
|Additions during the year:                                 |  |                      |            |  |        |   |         |                     |  |   |         |   |  |                                      |         
|- Exercise of stock options                                |  |                      | 1,018,250  |  |        |   | 2,093   |                     |  |   | -       |   |  |                                      | -       
|- Contributed surplus allocated on
    exercise of options |  |                      | -          |  |        |   | 1,723   |                     |  |   | (1,723  | ) |  |                                      | -       
|- Share-based compensation                                 |  |                      | -          |  |        |   | -       |                     |  |   | 9,843   |   |  |                                      | -       
|- Other comprehensive loss                                 |  |                      | -          |  |        |   | -       |                     |  |   | -       |   |  |                                      | -       
|- Net loss for the year                                    |  |                      | -          |  |        |   | -       |                     |  |   | -       |   |  |                                      | (30,571 
|Balance - December 31, 2011                                |  |                      | 87,325,753 |  |        | $ | 242,270 |                     |  | $ | 34,587  |   |  | $                                    | (205,817
|                                                           |  |                      |            |  |        |   |         |                     |  |   |         |   |  |                                      |         
|Balance - January 1, 2012                                  |  |                      | 87,325,753 |  |        | $ | 242,270 |                     |  | $ | 34,587  |   |  | $                                    | (205,817
|Additions during the year:                                 |  |                      |            |  |        |   |         |                     |  |   |         |   |  |                                      |         
|- Exercise of stock options                                |  |                      | 1,082,000  |  |        |   | 2,080   |                     |  |   | -       |   |  |                                      | -       
|- Contributed surplus allocated on
    exercise of options |  |                      | -          |  |        |   | 1,739   |                     |  |   | (1,739  | ) |  |                                      | -       
|- Share-based compensation                                 |  |                      | -          |  |        |   | -       |                     |  |   | 7,489   |   |  |                                      | -       
|- Other comprehensive income                               |  |                      | -          |  |        |   | -       |                     |  |   | -       |   |  |                                      | -       
|- Net loss for the year                                    |  |                      | -          |  |        |   | -       |                     |  |   | -       |   |  |                                      | (25,226 
|Balance - December 31, 2012                                |  |                      | 88,407,753 |  |        | $ | 246,089 |                     |  | $ | 40,337  |   |  | $                                    | (231,043



See accompanying notes
to the consolidated financial statements



7







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 1. | Nature of Business
| | -- | ------------------



Exeter Resource Corporation
(“Exeter” or the “Company”) is an exploration stage company incorporated under the laws of British Columbia,
Canada with its head office in Vancouver, Canada, and, together with its subsidiaries, it is engaged in the acquisition and exploration
of mineral properties located in Chile. The Company is also evaluating new opportunities with the objective of securing properties
which offer near term discovery potential.



The Company is in the process
of exploring its mineral properties. The continued operations of the Company is dependent upon the existence of economically recoverable
reserves, the ability of the Company to obtain necessary financing to complete the development of such properties, and the profitable
production from or disposition of such properties.



The Company has its
primary listing on the Toronto Stock Exchange and a secondary listing on the NYSE MKT. The Company’s head office is
located at 1660 - 999 West Hastings Street, Vancouver, BC, Canada, V6C 2W2.



| | 2. | Basis of Preparation
| | -- | --------------------



These consolidated financial
statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”). The consolidated financial statements have been prepared under
the historical cost convention, as modified by financial assets and financial liabilities at fair value through profit or loss.
The Company has consistently applied the same accounting policies throughout all periods presented, as if these policies had always
been in effect. The Board of Directors approved the consolidated financial statements on March 26, 2013.



| | 3. | Changes in Accounting Policy
                                                                 and Disclosures
| | -- | -------------------------------------------------------------------------------------------------------------



The IASB have issued the following
standards which have not yet been adopted by the Company: IFRS 9, Financial instruments - Classification and Measurement (IFRS
9), IFRS 10, Consolidated Financial Statements (IFRS 10), IFRS 11, Joint Arrangements (IFRS 11), IFRS 12, Disclosure of Interests
in Other Entities (IFRS 12), IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine (IFRIC 20), IFRS 13, Fair Value
Measurement (IFRS 13). The Company is still assessing the impact of IFRS 9, but IFRS 10 through IFRS 13 and IFRIC 20 are not expected
to have an impact on the Company’s consolidated financial statements.



The following is a brief summary
of the new standards:



IFRS 9-Financial
instruments - classification and measurement



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, and is effective for annual periods beginning on or after January 1, 2015, with earlier adoption permitted. In November
2009 and October 2010, IFRS 9 (2009) and IFRS 9 (2010) were issued, respectively, which address the classification and measurement
of financial assets and financial liabilities. IFRS 9 (2009) 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. IFRS 9 (2010) requires that financial liabilities are classified
as subsequently measured at amortized cost except for financial liabilities classified as fair value through profit or loss, financial
guarantees and certain other exceptions.



8







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 3. | Changes in Accounting Policy
                                                                 and Disclosures(Continued)
| | -- | ------------------------------------------------------------------------------------------------------------------------



IFRS
10-Consolidation



IFRS 10 requires an entity to
consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its control over the investee. Under existing IFRS, consolidation is required when
an entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
IFRS 10 replaces SIC-12 Consolidation—Special Purpose Entities and parts of IAS 27 Consolidated and Separate Financial Statements.
This standard is effective for annual periods beginning on or after January 1, 2013.



IFRS
11-Joint Arrangements



IFRS 11 requires a venturer
to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using
the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities,
revenue and expenses of the joint operation. Under existing IFRS, IAS 31, Interests in Joint Ventures, entities have the choice
to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 is effective for annual periods beginning
on or after January 1, 2013.



IFRS
12-Disclosure of Interests in Other Entities



IFRS 12 establishes disclosure
requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and off balance
sheet vehicles. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements
that address the nature of, and risks associated with, an entity’s interests in other entities. This standard is effective
for annual periods beginning on or after January 1, 2013.



IFRS
13-Fair Value Measurement



IFRS 13 is a comprehensive standard
for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair
value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between
market participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS,
guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and
in many cases does not reflect a clear measurement basis or consistent disclosures. This standard is effective for annual periods
beginning on or after January 1, 2013.



9







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 4. | Summary of Significant Accounting
                                                                 Policies, Judgements and Estimation Uncertainty
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | a) | Basis of Presentation
| | -- | ---------------------



These
consolidated financial statements include the accounts of the following significant subsidiaries:



|                                                    |  | Incorporation |  | Percentage of Ownership |    
|--------------------------------------------------- |  | ------------- |  | ----------------------- | ---
|Sociedad Contractual Minera Eton Chile (“Eton”)     |  | Chile         |  |                         | 100
|Sociedad Contractual Minera Retexe Chile (“Retexe”) |  | Chile         |  |                         | 100



All intercompany
transactions, balances and unrealized gains and losses from intercompany transactions are eliminated on consolidation.



| | b) | Mineral property costs
| | -- | ----------------------



Mineral properties
consist of exploration and mining concessions, options and contracts. Acquisition costs are capitalized and deferred until such
time as the property is put into production or the property is disposed of, either through sale or abandonment or becomes impaired.
If a property is put into production the costs of acquisition are expensed over the life of the property based on estimated economic
reserves. Proceeds received from the sale of any interest in a property will be credited against the carrying value of the property
with any excess recognized in the income statement. If a property is abandoned, the acquisition costs will be written off to the
income statement.



Although the Company has taken
steps that it considers adequate to verify title to mineral properties in which it has an interest, these procedures do not guarantee
the Company’s title. Title to mineral properties in foreign jurisdictions is subject to uncertainty and consequently, such
properties may be subject to prior undetected agreements or transfers.



| | c) | Mineral property exploration
                                                                     expenditures
| | -- | --------------------------------------------------------------------------------------------------------------



The Company
expenses mineral property exploration expenditures when incurred. When it has established that a mineral deposit is commercially
mineable and following a decision to commence development, the costs subsequently incurred to develop a mine on the property prior
to the start of mining operations are capitalized and will be amortized against production following commencement of commercial
production, or written off if the property is sold, allowed to lapse or abandoned.



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



The Company considers cash
and cash equivalents to include amounts held in banks and highly liquid investments with an initial term to maturity of 90 days
or less.



10







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 4. | Summary of Significant Accounting
                                                                 Policies, Judgements and Estimation Uncertainty (Continued)
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | Translation of foreign
                                                                        currencies
| | -- | ---------------------------------------------------------------------------------------------------------



(i) Presentation
currency



The consolidated
financial statements are presented in Canadian dollars.



(ii) Functional
currency



The financial
statements of each entity in the Company group are measured using the currency of the primary economic environment in which the
entity operates (the “functional currency”).



The functional
currency of the parent company is the Canadian dollar and the functional currency of the Company’s Chilean subsidiaries,
Eton and Retexe, is the Chilean Peso. The financial statements of these subsidiaries (“foreign operations”) are translated
into the Canadian dollar presentation currency as follows:



| | · | Assets
                                                                                                              and liabilities
                                                                                                              – at the closing
                                                                                                              rate at the date
                                                                                                              of the statement
                                                                                                              of financial position.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Income
                                                                                                              and expenses –
                                                                                                              at the average rate
                                                                                                              of the period (as
                                                                                                              this is considered
                                                                                                              a reasonable approximation
                                                                                                              to actual rates).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | All
                                                                                                              resulting changes
                                                                                                              are recognized in
                                                                                                              Other Comprehensive
                                                                                                              Income (“OCI”)
                                                                                                              as cumulative translation
                                                                                                              adjustments.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



When the settlement of a monetary
item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange
gains and losses arising from conversion of the item from functional to reporting currency are considered to form part of the
net investment in the foreign operation and are recognized in OCI.



When an entity disposes of
its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation,
the foreign currency gains or losses accumulated in OCI related to the foreign operation are recognized in profit or loss. If
an entity disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign
currency gains or losses accumulated in OCI related to the subsidiary are reallocated between controlling and non-controlling
interests.



(iii) Transactions and balances



Foreign currency transactions
are translated into the functional currency of an entity using the exchange rates prevailing at the dates of the transactions.
Generally, foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in currencies other than an entity’s functional
currency are recognized in the statement of income.



| | f) | Earnings (loss) per
                                                                        share
| | -- | -------------------------------------------------------------------------------------------------



Basic earnings (loss) per share
is calculated using the weighted average number of common shares outstanding during the period. The Company uses the treasury
stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method the dilutive effect
on earnings per share is calculated presuming the exercise of outstanding options, warrants and similar instruments. It assumes
that the proceeds of such exercise would be used to repurchase common shares at the average market price during the period. However,
the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that
would be anti-dilutive.



11







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 4. | Summary of Significant Accounting
                                                                 Policies, Judgements and Estimation Uncertainty (Continued)
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g) | Property and equipment
| | -- | ----------------------



Property and equipment are
carried at cost less accumulated amortization and accumulated impairment losses. Cost includes expenditures that are directly
attributable to the acquisition of the asset. Amortization is calculated at the following annual rates:



|Computer equipment           | Straight-line              -  3-6
    years              
|---------------------------- | ---------------------------------------------------------
|Computer software            | Straight-line              -  2 years                    
|Equipment including vehicles | Straight-line              -  3-7 years                  
|Leasehold improvements       | Straight-line              -  5 years
    (term of lease)
|Office equipment             | Straight-line              -  3-7 years                  



| | h) | Share-based compensation
| | -- | ------------------------



The Company has adopted an
incentive stock option plan. Stock options usually vest in tranches over a period of 1 to 2 years (50 - 100% per year), and expire
after 5 years. All share-based awards are measured and recognized using the fair-value method as determined by the Black-Scholes
option pricing model. Awards that the Company has the ability to settle with stock are recorded as equity. Share-based compensation
expense is recognized over the tranche’s vesting period, in earnings or capitalized as appropriate, based on the number
of options expected to vest.



| | i) | Income taxes
| | -- | ------------



Income tax expense comprises
current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized
either in OCI or directly in equity, in which case it is recognized in OCI or in equity respectively.



Current tax is the expected
tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.



Deferred income tax is recognised,
using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements.



However, deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when
the related deferred income tax asset is realized or the deferred income tax liability is settled.



A deferred tax asset is recognized
to the extent that it is probable that future taxable profits will be available against which the temporary difference can be
utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realized.



| | j) | Use of estimates and judgements
| | -- | -------------------------------



The preparation of the consolidated
financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. Areas of estimates include assumptions used in
the accounting for share based compensation, amortization rates, and contingent liabilities. Actual results may differ from these
estimates.



Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and in any future periods affected.



12







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 4. | Summary of Significant Accounting
                                                                 Policies, Judgements and Estimation Uncertainty (Continued)
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | k) | Financial instruments
| | -- | ---------------------



Financial assets and liabilities
are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized
when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially
all risks and rewards of ownership.



Financial assets and liabilities
are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.



At initial recognition, the
Company classifies its financial instruments in the following categories depending on the purpose for which the instruments were
acquired:



| | · | 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 loans
                                                                                                             and receivables are
                                                                                                             comprised of cash
                                                                                                             and cash equivalents,
                                                                                                             accounts receivable,
                                                                                                             and amounts due from
                                                                                                             related parties,
                                                                                                             and are included
                                                                                                             in current assets
                                                                                                             due to their short-term
                                                                                                             nature.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Loans
and receivables are initially recognized at the amount expected to be received less, when material, a discount to reduce the loans
and receivables to fair value. Subsequently, loans and receivables are measured at amortized cost using the effective interest
method less a provision for impairment.



| | · | Financial
                                                                                                             liabilities at amortized
                                                                                                             cost: Financial liabilities
                                                                                                             at amortized cost
                                                                                                             include accounts
                                                                                                             payable and accrued
                                                                                                             liabilities and amounts
                                                                                                             due to related parties.
                                                                                                             Accounts payable
                                                                                                             are initially recognized
                                                                                                             at the amount required
                                                                                                             to be paid less,
                                                                                                             when material, a
                                                                                                             discount to reduce
                                                                                                             the payables to fair
                                                                                                             value. Financial
                                                                                                             liabilities are classified
                                                                                                             as current liabilities
                                                                                                             as payment is due
                                                                                                             within twelve months.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | l) | Royalty payments
| | -- | ----------------



The Company expenses all advance
royalty payments to mineral property exploration costs. Once a decision on development of mineral properties has been made, the
Company will capitalize the advance royalty payments until the commencement of production at which time they will be charged to
operations.



| | m) | Segmented reporting
| | -- | -------------------



Operating segments are reported
in a manner consistent with the internal reporting provided to the chief-operating decision maker. The chief operating decision-makers
responsible for allocating resources and assessing performance of the operating segments, has been identified as the senior management
team, who are tasked with making strategic decisions.



13







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 5. | Management
                                                                                     of Capital
| | -- | ----------------------------------------------------------------------------------------------------------



The Company’s objectives
when managing capital are to safeguard its ability to continue as a going concern in order to pursue the development of its mineral
properties and to maintain a flexible capital structure which optimizes the cost of capital at an acceptable risk.



In the management of capital,
the Company includes the components of shareholders’ equity.



The Company manages the capital
structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying
assets. To maintain or adjust its capital structure, the Company may attempt to issue new shares, issue debt and acquire or dispose
of assets.



In order to facilitate the management
of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various
factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved
by the Board of Directors.



In order to maximize ongoing
development efforts, the Company does not pay dividends.



The Company’s investment
policy is to limit investments to guaranteed investment certificates, banker’s acceptance notes, investment savings accounts
or money market funds with high quality financial institutions in Canada and treasury bills, selected with regards to the expected
timing of expenditures from operations.



| | 6. | Financial Instruments
| | -- | ---------------------



| | a) | Fair Value
| | -- | ----------



The carrying amount of amounts
receivable, accounts payable and accrued liabilities and due to and from related parties approximates fair value due to the short
term of these financial instruments.



| | b) | Financial Risk Management
| | -- | -------------------------



The Company’s activities
potentially expose it to a variety of financial risks, including credit risk, foreign exchange currency risk, liquidity and interest
rate risk.



Credit risk



Credit risk is the risk that
one party to a financial instrument, will fail to discharge an obligation and cause the other party to incur a financial loss.
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and amounts receivable.
The Company deposits the majority of its cash and cash equivalents with high credit quality financial institutions in Canada and
holds balances in banks in Chile as required to meet current expenditures. The carrying amount of financial assets recorded in
the financial statements, net of any allowances for losses, represents the Company’s maximum exposure to credit risk.



14







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 6. | Financial Instruments(Continued)
| | -- | --------------------------------



Currency risk



The Company operates in a number
of countries, including Canada and Chile, and it is therefore exposed to foreign exchange risk arising from transactions denominated
in a foreign currency.



The Company’s cash and
cash equivalents, accounts receivable, accounts payable and accrued liabilities are held in several currencies (mainly Canadian
Dollars, Chilean Pesos, US Dollars and Australian Dollars). Such foreign currency balances, which are held in the Canadian parent,
are subject to fluctuation against the Canadian Dollar. Such foreign currency balances, which are held in the Chilean subsidiary,
are subject to fluctuation against the Chilean Peso.



The Canadian parent company had
the following balances in foreign currencies as at December 31, 2012 and 2011:



|2012                                    
|----------------------------------------
|(in thousands)                          
|                                        
|Cash and cash equivalents               
|Accounts payable and accrued liabilities
|Net balance                             
|Equivalent in Canadian Dollars          
|Rate to convert to $ CDN                



|2011                                    
|----------------------------------------
|(in thousands)                          
|                                        
|Cash and cash equivalents               
|Accounts payable and accrued liabilities
|Net balance                             
|Equivalent in Canadian Dollars          
|Rate to convert to $ CDN                





Based on the above net exposures
as at December 31, 2012, and assuming that all other variables remain constant, a 10% depreciation or appreciation of the US dollar
and Australian dollar against the Canadian dollar would result in an increase/decrease of $74,300 and $11,400 respectively (2011
- $600 and $21,100 respectively) in the Company’s net loss.



15







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 6. | Financial Instruments(Continued)
| | -- | --------------------------------



Interest rate risk



Interest rate risk is the risk
that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The
Company’s interest rate risk mainly arises from the interest rate impact on the cash and cash equivalents. Cash and cash
equivalents earn interest based on current market interest rates, which at December 31, 2012 ranged between 1.25% and 1.45%.



Based on the amount of cash and
cash equivalents held at December 31, 2012, and assuming that all other variables remain constant, a 0.5% change in the applicable
interest rate would result in an increase/decrease of $276,000 in the interest earned by the Company per annum.



Liquidity risk



Liquidity risk is the risk that
the Company will not be able to meet its financial obligations as they fall due. The Company manages its liquidity risk by forecasting
cash flows required by operations and anticipated investing and financing activities. The Company had cash at December 31, 2012
in the amount of $55,237,000 in order to meet short-term business requirements. At December 31, 2012, the Company had current
liabilities of $926,000 which are due on demand or within 30 days.



| | 7. | Cash and Cash Equivalents
| | -- | -------------------------



|(in thousands)                     |  | December
                                                                                                         31,
                                                                                2012 |        |  | December 31,
    2011 |  
|---------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ |  | --------------------- | -
|Cash                               |  |                                                                                                                                                                                                            |        |  |                       |  
|Investment savings accounts        |  | $                                                                                                                                                                                                          | 23,175 |  |                       | $
|Guaranteed investment certificates |  |                                                                                                                                                                                                            | 32,062 |  |                       |  
|Total                              |  | $                                                                                                                                                                                                          | 55,237 |  |                       | $



16







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 8. | Property and Equipment
| | -- | ----------------------



|(in thousands)                        |  | Computer Equipment |      |   | Computer Software |   |     | Equipment including
    Vehicles |  |   | Leasehold Improvements |   |  | Office equipment |     |   | Total |  
|------------------------------------- |  | ------------------ | ---- | - | ----------------- | - | --- | -------------------------------- |  | - | ---------------------- | - |  | ---------------- | --- | - | ----- | -
|Cost                                  |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|As at January 1, 2011                 |  | $                  | 111  |   |                   | $ | 15  |                                  |  | $ | 327                    |   |  | $                | -   |   |       | $
|Additions                             |  |                    | -    |   |                   |   | -   |                                  |  |   | 6                      |   |  |                  | 31  |   |       |  
|Disposals                             |  |                    | -    |   |                   |   | -   |                                  |  |   | (41                    | ) |  |                  | -   |   |       |  
|Effect of movements in exchange rates |  |                    | -    |   |                   |   | -   |                                  |  |   | (11                    | ) |  |                  | -   |   |       |  
|Balance as at December 31, 2011       |  | $                  | 111  |   |                   | $ | 15  |                                  |  | $ | 281                    |   |  | $                | 31  |   |       | $
|                                      |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|Amortization                          |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|As at January 1, 2011                 |  | $                  | (78  | ) |                   | $ | (14 | )                                |  | $ | (155                   | ) |  | $                | -   |   |       | $
|Charged for the year                  |  |                    | (10  | ) |                   |   | -   |                                  |  |   | (34                    | ) |  |                  | (3  | ) |       |  
|Eliminated on disposal                |  |                    | -    |   |                   |   | -   |                                  |  |   | 41                     |   |  |                  | -   |   |       |  
|Effect of movements in exchange rates |  |                    | -    |   |                   |   | -   |                                  |  |   | (1                     | ) |  |                  | -   |   |       |  
|Balance as at December 31, 2011       |  | $                  | (88  | ) |                   | $ | (14 | )                                |  | $ | (149                   | ) |  | $                | (3  | ) |       | $
|                                      |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|Net carrying value                    |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|As at January 1, 2011                 |  | $                  | 33   |   |                   | $ | 1   |                                  |  | $ | 172                    |   |  | $                | -   |   |       | $
|As at December 31, 2011               |  | $                  | 23   |   |                   | $ | 1   |                                  |  | $ | 132                    |   |  | $                | 28  |   |       | $
|                                      |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|Cost                                  |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|As at January 1, 2012                 |  | $                  | 111  |   |                   | $ | 15  |                                  |  | $ | 281                    |   |  | $                | 31  |   |       | $
|Additions                             |  |                    | -    |   |                   |   | -   |                                  |  |   | 98                     |   |  |                  | (9  | ) |       |  
|Disposals                             |  |                    | -    |   |                   |   | -   |                                  |  |   | (97                    | ) |  |                  | -   |   |       |  
|Effect of movements in exchange rates |  |                    | -    |   |                   |   | -   |                                  |  |   | 13                     |   |  |                  | -   |   |       |  
|Balance as at December 31, 2012       |  | $                  | 111  |   |                   | $ | 15  |                                  |  | $ | 295                    |   |  | $                | 22  |   |       | $
|                                      |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|Amortization                          |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|As at January 1, 2012                 |  | $                  | (88  | ) |                   | $ | (14 | )                                |  | $ | (149                   | ) |  | $                | (3  | ) |       | $
|Charged for the year                  |  |                    | (23  | ) |                   |   | (1  | )                                |  |   | (50                    | ) |  |                  | (7  | ) |       |  
|Eliminated on disposal                |  |                    | -    |   |                   |   | -   |                                  |  |   | 61                     |   |  |                  | -   |   |       |  
|Effect of movements in exchange rates |  |                    | -    |   |                   |   | -   |                                  |  |   | (5                     | ) |  |                  | -   |   |       |  
|Balance as at December 31, 2012       |  | $                  | (111 | ) |                   | $ | (15 | )                                |  | $ | (143                   | ) |  | $                | (10 | ) |       | $
|                                      |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|Net carrying value                    |  |                    |      |   |                   |   |     |                                  |  |   |                        |   |  |                  |     |   |       |  
|As at January 1, 2012                 |  | $                  | 23   |   |                   | $ | 1   |                                  |  | $ | 132                    |   |  | $                | 28  |   |       | $
|As at December 31, 2012               |  | $                  | -    |   |                   | $ | -   |                                  |  | $ | 152                    |   |  | $                | 12  |   |       | $



17







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 9. | Mineral Properties - Acquisition and Exploration Costs
| | -- | ------------------------------------------------------



| | a) | Acquisition Costs
| | -- | -----------------



Caspiche



By an agreement dated October
11, 2005 and subsequently amended, the Company acquired the right to review a number of properties in the Maricunga region of
Chile. Under the terms of the agreement, the Company had the right to earn a 100% interest in the properties by incurring aggregate
expenditures of US$2.55 million over five years including conducting 15,500 meters (“m”) of drilling with the vendor
retaining a 3% net smelter royalty (“NSR”) in the properties.



Having met the requirements to
earn its interest in the properties, effective February 14, 2011 the Company exercised its option and acquired the properties
subject to the NSR and the vendor’s buy back right by re-paying certain of the Company’s expenditures incurred on
the property if the property is not put into production within 15 years of exercising the option. In addition, the Company will
be required to pay a further 0.08% NSR from production pursuant to an agreement with a private entity. The Company is required
to make an advance annual royalty payment of US$250,000 up until March 31, 2020 (US$500,000 paid to December 31, 2012) and thereafter
US$1 million annually for the period March 31, 2021 to March 31, 2025 or until commencement of commercial production, should production
commence prior to March 31, 2025, at which time the advance royalty will cease and NSR will be payable.



Sideral project



On March 1, 2011 the Company
announced it had entered into an option agreement to acquire 100% of the Sideral project adjacent to its Caspiche project. The
agreement provides for the Company to acquire 100% of the Sideral property by meeting escalating annual drilling requirements,
to a total of 15,000 m, within four years. After the 15,000 m of drilling is completed, the vendor has a once only back in right
to acquire a 60% interest in the property, provided the discovery of a deposit of greater than 100 million tons at a grade of
+0.5% copper has been made. Should the vendor elect to back in, it will be required to repay the Company three times its expenditure
on the property, alternatively its interest will revert to a 2% NSR. The Company has the right to purchase 50% of the NSR for
$10 million.



Water rights option



On February 4, 2011
the Company entered into an option to acquire water rights to a total volume of 300 litres per second from a private
Chilean company. The rights relate to surface water flows and are consumptive in nature. The option agreement, as subsequently
amended, provides  for option payments which are deductible from a purchase price of US$13.0 million. Option payments
incurred to December 31, 2012 total US$880,000. The Company can withdraw from the option at any time without penalty.



Future options payments are as
follows:



US$220,000
by January 4, 2013 (completed subsequent to December 31, 2012);

US$300,000
by July 4, 2013;

US$2,500,000
by January 4, 2014;

US$350,000
by July 4, 2014; and

US$350,000
by January 4, 2015.



In the event that the Company
exercises the option, the full purchase price must be paid by July 4, 2015.



18







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 9. | Mineral Properties - Acquisition and Exploration Costs
                                                                   (Continued)
| | -- | -------------------------------------------------------------------------------------------------------------------------------------



| | b) | Exploration Costs
| | -- | -----------------



The tables below shows the Company’s
exploration expenditures for the years ended December 31, 2012 and 2011.



|(in thousands)               |  | 2012 |        |  | 2011 |  
|---------------------------- |  | ---- | ------ |  | ---- | -
|Assays                       |  | $    | 122    |  |      | $
|Consultants and contractors  |  |      | 2,643  |  |      |  
|Drilling                     |  |      | 3,826  |  |      |  
|Engineering and geological*  |  |      | 1,664  |  |      |  
|Environmental                |  |      | 91     |  |      |  
|Field camp                   |  |      | 1,947  |  |      |  
|IVA tax                      |  |      | 1,326  |  |      |  
|Legal and title              |  |      | 587    |  |      |  
|Metallurgical *              |  |      | 1,036  |  |      |  
|Office operations            |  |      | 269    |  |      |  
|Resource development         |  |      | 92     |  |      |  
|Travel                       |  |      | 885    |  |      |  
|Wages and benefits *         |  |      | 1,617  |  |      |  
|Water rights option          |  |      | 460    |  |      |  
|Exploration costs            |  | $    | 16,565 |  |      | $
|Cumulative exploration costs |  | $    | 80,146 |  |      | $



* Includes share-based compensation as reflected
below:



|(in thousands)             |  | 2012 |       |  | 2011 |  
|-------------------------- |  | ---- | ----- |  | ---- | -
|Engineering and geological |  | $    | 476   |  |      | $
|Metallurgical              |  |      | 505   |  |      |  
|Wages and benefits         |  |      | 412   |  |      |  
|Total                      |  | $    | 1,393 |  |      | $



19







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 10. | Share Capital
| | --- | -------------



The Company is authorized to
issue an unlimited number of common shares without par value and an unlimited number of preferred shares.



The Company has issued shares
of its capital stock as follows:



|                              |  | December
    31, 2012 |            |  | December 31, 2011     |  
|----------------------------- |  | --------------------- | ---------- |  | --------------------- | -
|                              |  | Number of Shares      |            |  | Amount (in thousands) |  
|Balance, beginning of year    |  |                       | 87,325,753 |  |                       | $
|Issued during the year for:   |  |                       |            |  |                       |  
|Cash                          |  |                       |            |  |                       |  
|Exercise of options           |  |                       | 1,082,000  |  |                       |  
|Contributed surplus allocated |  |                       |            |  |                       |  
|Exercise of options           |  |                       | -          |  |                       |  
|Balance, end of year          |  |                       | 88,407,753 |  |                       | $



| | 11. | Stock Option Plan
| | --- | -----------------



The Company
has adopted an incentive stock option plan (the “Plan”), the essential elements of which are as follows: The aggregate
number of shares of the Company’s capital stock issuable pursuant to options granted under the Plan, which was approved
by shareholders on March 11, 2010, may not exceed 15% of the issued and outstanding shares of the Company at the time of the option
grant. At December 31, 2012, the maximum number of options issuable under the Plan was 13,261,162. The Plan provides for a limit
on insider participation such that the shares reserved for issuance to insiders does not exceed 10% of the issued and outstanding
shares of the Company. Options granted under the Plan may have a maximum term of ten years, but options granted to date have had
a life of 5 years. Unless subsequently amended, the exercise price of options granted under the Plan will not be less than the
last closing market price of the Company’s shares immediately preceding the grant date. Options granted under the Plan may
be subject to vesting at times as determined by the directors of the Company and the Toronto Stock Exchange.



20







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 11. | Stock Option Plan(Continued)
| | --- | ----------------------------



A summary of the changes in
share options during the year is as follows:



|                                       |  | December 31, 2012 |            |   | December 31, 2011                    |  
|-------------------------------------- |  | ----------------- | ---------- | - | ------------------------------------ | -
|                                       |  |                   |            |   |                                      |  
|                                       |  | Options           |            |   | Weighted Average 
    Exercise Price |  
|Options outstanding, beginning of year |  |                   | 12,428,400 |   |                                      | $
|Granted                                |  |                   | 7,110,000  |   |                                      |  
|Exercised                              |  |                   | (1,082,000 | ) |                                      |  
|Cancelled                              |  |                   | (6,895,000 | ) |                                      |  
|Forfeited/expired                      |  |                   | (1,031,250 | ) |                                      |  
|Options outstanding, end of year       |  |                   | 10,530,150 |   |                                      | $



There were 1,082,000 (2011 – 1,018,250)
options exercised during the year at a weighted average exercise price of $1.92 (2011 - $2.06) and a weighted average trading
price at the time of exercise of $3.28 (2011 - $4.82).



During 2012, option holders voluntarily
surrendered 6,932,500 options and the Company accounted for these as cancellations whereby the unvested balance of the original
fair value was immediately expensed in the amount of $1,185,954 (2011 - $nil).



*During 2012 the Company re-priced 1,238,000
options which ranged in price from $5.27 to $7.00, to an exercise price of $3.64 per option. These re-priced options had a fair
value of approximately $1.04 per option. The Company recognized an additional $756,000 in share-based compensation from the re-pricing
of these options. The Company also re-priced 1,353,000 options which ranged in price from $2.60 to $6.20, to an exercise price
of $1.27 per option. These re-priced options had a fair value of approximately $0.34 per option. The Company recognized an additional
$395,000 in share-based compensation from the re-pricing of these options.



The following table summarizes
information about the stock options outstanding at December 31, 2012.



|Outstanding Options |  | Exercisable Options |           
|------------------- |  | ------------------- | ----------
|Range of Prices ($) |  | Number              |           
|1.01 - 2.00         |  |                     | 7,573,900 
|2.01 - 3.00         |  |                     | 2,045,000 
|3.01 - 4.00         |  |                     | 296,250   
|4.01 - 5.00         |  |                     | 115,000   
|5.01 - 6.00         |  |                     | 500,000   
|                    |  |                     | 10,530,150



For the options granted during
the year, the weighted average fair market value was $1.08 per share.



21







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 11. | Stock Option Plan(Continued)
| | --- | ----------------------------



Share-based Compensation



The fair
value of the 7,110,000 (2011 – 1,385,000) options granted by the Company during the years ended December 31, 2012 and 2011
was estimated at the grant date using the Black-Scholes option pricing model with the following assumptions:



|                           |  | 2012 |              |   | 2011 | 
|-------------------------- |  | ---- | ------------ | - | ---- | 
|Expected annual volatility |  |      | 71           | % |      | 
|Risk-free interest rate    |  |      | 0.96% - 1.37 | % |      | 
|Expected life              |  |      | 5 years      |   |      | 
|Expected dividend yield    |  |      | 0.0          | % |      | 



Share-based compensation expense
of $7,489,000 (2011 - $9,843,000) was recognised in the year and was allocated to contributed surplus.



Share-based compensation expense
for the years ended December 31 has been allocated as follows:



|(in thousands)                            |  | 2012 |       |  | 2011 |  
|----------------------------------------- |  | ---- | ----- |  | ---- | -
|Administration salaries and consulting    |  | $    | 903   |  |      | $
|Directors’ fees                           |  |      | 2,433 |  |      |  
|Management fees                           |  |      | 2,760 |  |      |  
|Mineral property exploration expenditures |  |      | 1,393 |  |      |  
|Total                                     |  | $    | 7,489 |  |      | $



Option pricing models require
the input of highly subjective assumptions including the expected price volatility of the Company’s shares. Changes in input
assumptions can materially affect the fair value estimate, and, therefore, these models do not necessarily provide a reliable
single measure of the fair value of the Company’s stock options.



22







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 12. | Contributed Surplus
| | --- | -------------------



Details are as follows:



|(in thousands)                                             |  |   |       
|---------------------------------------------------------- |  | - | ------
|Balance – January 1, 2011                                  |  | $ | 26,467
|Share-based compensation expense                           |  |   | 9,843 
|Contributed surplus allocated on exercise of stock options |  |   | (1,723
|Balance – December 31, 2011                                |  |   | 34,587
|                                                           |  |   |       
|Share-based compensation expense                           |  |   | 7,489 
|Contributed surplus allocated on exercise of stock options |  |   | (1,739
|Balance – December 31, 2012                                |  | $ | 40,337



| | 13. | Related Party Transactions
| | --- | --------------------------



| | a) | During the year ended December
                                                               31, 2012 total of $1,734,000 (2011 - $1,719,000) was paid or accrued
                                                               for related party transactions with directors or officers of the
                                                               Company for management, consulting, rent and exploration fees.
                                                               Amounts due to related parties of $50,000 at December 31, 2012
                                                               (December 31, 2011 - $126,000) are non-interest bearing and are
                                                               due on demand.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On January 1, 2011, the Company
entered into cost sharing agreement with Extorre Gold Mines Limited (“Extorre”) and Rugby Mining Limited (“Rugby”)
pertaining to costs associated with administrative support, office overhead and travel that the three companies had in common.
The percentage allocation of these costs was such that the Company and Extorre each incurred 40% respectively with Rugby incurring
20%. This agreement remained in place until the purchase of Extorre by Yamana Gold Inc. (“Yamana”) on August 22, 2012.
A new cost sharing agreement between the Company and Rugby, has been approved by the boards of directors of the two companies
such that the Company incurs 60% and Rugby 40% of such costs.



| | b) | The Company, along with Rugby, incurs
                                                              certain expenditures for staff and exploration expenditures on behalf
                                                              of each other. The net amount provided or incurred by the Company
                                                              on behalf of Rugby during the year ended December 31, 2012 was $270,000
                                                              (2011 - $285,000). As at December 31, 2012, the Company had amounts
                                                              receivable of $95,000 (December 31, 2011- $49,000) from Rugby. The
                                                              amounts due from Rugby are non-interest bearing and are due on demand.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | The Company, along with Extorre,
                                                              incurred certain expenditures for staff and exploration expenditures
                                                              on behalf of each other until the purchase of Extorre by Yamana
                                                              on August 22, 2012. The net amount provided or incurred by the Company
                                                              on behalf of Extorre for the period to August 22, 2012 was $324,000
                                                              (2011 - $417,000). As at December 31, 2011, the Company had amounts
                                                              receivable of $44,000 from Extorre. The amounts due from Extorre
                                                              were non-interest bearing and due on demand.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 14. | Executive
                                                                                      Compensation
| | --- | ------------------------------------------------------------------------------------------------------------



Key management personnel are
those persons that have the authority and responsibility for planning, directing and controlling the activities of the Company,
directly or indirectly. Key management personnel of the Company include four (4) executive officers and the four (4) independent
members of the board of directors.



The
following compensation has been provided to key management personnelfor the years ended December 31.



|(in thousands)                   |  | 2012 |       |  | 2011 |  
|-------------------------------- |  | ---- | ----- |  | ---- | -
|Compensation - cash and benefits |  | $    | 1,570 |  |      | $
|Share - based payments           |  |      | 5,193 |  |      |  
|Total                            |  | $    | 6,763 |  |      | $



23







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 15. | Expenses
                                                                                      by Nature
| | --- | --------------------------------------------------------------------------------------------------------



General and administration
expense is made up of the following:



|Year ended December 31, |  |      |     |  |      |  
|----------------------- |  | ---- | --- |  | ---- | -
|(in thousands)          |  | 2012 |     |  | 2011 |  
|Bank charges            |  | $    | 13  |  |      | $
|Office                  |  |      | 208 |  |      |  
|Rent                    |  |      | 137 |  |      |  
|Telecommunications      |  |      | 28  |  |      |  
|Transfer agent          |  |      | 18  |  |      |  
|Travel and promotion    |  |      | 193 |  |      |  
|Total                   |  | $    | 597 |  |      | $



| | 16. | Contractual Obligations
| | --- | -----------------------



The Company leases offices in
Canada and Chile and has expenditure, option payment and advance royalty obligations related to its properties. Option payments
and property expenditure obligations are contingent on exploration results and can be cancelled at any time should exploration
results so warrant. Other financial commitments are summarized in the table below:



|Payments Due by Year       
|---------------------------
|(in thousands)             
|Office and equipment leases
|Property access agreements 
|Advance royalty payment    
|Total                      



| | 17. | Segmented Information
| | --- | ---------------------



The Company’s
activities are all in the one industry segment of mineral property acquisition, exploration and development. Following is a summary
of assets and liabilities and net loss classified by place of business:



|December 31, 2012(in thousands)         |  | Canada |        |   | Chile |   |        | Total | 
|--------------------------------------- |  | ------ | ------ | - | ----- | - | ------ | ----- | 
|Cash and cash equivalents               |  | $      | 54,225 |   |       | $ | 1,012  |       | 
|Amounts receivable and prepaid expenses |  |        | 549    |   |       |   | 280    |       | 
|Due from related party                  |  |        | 95     |   |       |   | -      |       | 
|Property and equipment                  |  |        | 11     |   |       |   | 153    |       | 
|                                        |  |        | 54,880 |   |       |   | 1,445  |       | 
|Current liabilities                     |  |        | (416   | ) |       |   | (510   | )     | 
|                                        |  | $      | 54,464 |   |       | $ | 935    |       | 
|Net loss – year ended December 31, 2012 |  | $      | 8,559  |   |       | $ | 16,667 |       | 



24







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 17. | Segmented Information(Continued)
| | --- | --------------------------------



|December 31, 2011 (in
    thousands)    |  | Canada |        |   | Chile |   |        | Total | 
|--------------------------------------- |  | ------ | ------ | - | ----- | - | ------ | ----- | 
|Cash and cash equivalents               |  | $      | 69,735 |   |       | $ | 2,191  |       | 
|Amounts receivable and prepaid expenses |  |        | 537    |   |       |   | 105    |       | 
|Due from related parties                |  |        | 93     |   |       |   | -      |       | 
|Property and equipment                  |  |        | 102    |   |       |   | 117    |       | 
|                                        |  |        | 70,467 |   |       |   | 2,413  |       | 
|Current liabilities                     |  |        | (718   | ) |       |   | (1,178 | )     | 
|                                        |  | $      | 69,749 |   |       | $ | 1,235  |       | 
|Net loss – year ended December 31, 2011 |  | $      | 9,991  |   |       | $ | 20,580 |       | 



| | 18. | Income Taxes
| | --- | ------------



A reconciliation of consolidated
income taxes at statutory rates with the reported taxes is as follows:



|(in thousands)                                                       |  | 2012 |        |   | 2011 |  
|-------------------------------------------------------------------- |  | ---- | ------ | - | ---- | -
|Net loss for the year before income tax                              |  | $    | 25,226 |   |      | $
|Combined federal and provincial tax rate                             |  |      | 25.00  | % |      |  
|Income tax recovery at statutory rates                               |  | $    | (6,307 | ) |      | $
|Losses and other deductions for which no benefit has been recognized |  |      | 3,034  |   |      |  
|Non-deductible share-based compensation                              |  |      | 1,873  |   |      |  
|Non-deductible mineral property exploration costs                    |  |      | 551    |   |      |  
|Foreign exchange rate and tax rate differences                       |  |      | 649    |   |      |  
|Other                                                                |  |      | 200    |   |      |  
|Income tax recovery                                                  |  | $    | Nil    |   |      | $





The significant components of
the Company’s consolidated future tax assets are as follows:



|(in thousands)                           |  | 2012 |        |  | 2011 |  
|---------------------------------------- |  | ---- | ------ |  | ---- | -
|Non-capital loss carry forwards – Canada |  | $    | 4,738  |  |      | $
|Non-capital loss carry forwards – Chile  |  |      | 851    |  |      |  
|Exploration and development deductions   |  |      | 10,655 |  |      |  
|Property and equipment – Canada          |  |      | 32     |  |      |  
|Share issue costs                        |  |      | 323    |  |      |  
|Other                                    |  |      | 47     |  |      |  
|Unrecognised deferred tax asset          |  | $    | 16,646 |  |      | $



25







|Exeter Resource Corporation                   
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|For the years ended December 31, 2012 and 2011



| | 18. | Income Taxes(Continued)
| | --- | -----------------------



The Company has available non-capital
losses for Canadian income tax purposes which may be carried forward to reduce taxable income in future years. If not utilized,
the non-capital losses in the amount of $19 million expire as follows:



|     |  | (in thousands) |       
|---- |  | -------------- | ------
|2026 |  | $              | 2,242 
|2027 |  |                | 2,001 
|2028 |  |                | 2,424 
|2029 |  |                | 4,038 
|2031 |  |                | 4,083 
|2032 |  |                | 4,166 
|     |  | $              | 18,954



At December 31, 2012, the Company
also has tax loss carry forwards in Chile totaling $4.3 million, which are available to offset future taxable income.



Tax benefits
have not been recorded as it is not considered more likely than not that they will be utilized.



| | 19. | Subsequent Events
| | --- | -----------------



On March 4, 2013, the Company
announced that it had entered into two option and joint venture agreements with Canadian company, San Marco Resources Inc., for
the exploration of the Angeles and La Buena gold-silver properties located in Mexico.



The Angeles Agreement



Exeter can earn an initial 51%
in the Angeles property by staged expenditures totalling $10.0 million over 4 years and an additional 19%, over the next 3 years,
for a total of 70%, by spending an additional $10.0 million in exploration expenditures. Exeter will also make cash payments totaling
$950,000 staged over 7 years. All cash payments are to be made by way of a private placement purchase of San Marco’s
common shares at a price equal to a premium of 25% to the 20 day volume weighted average price (“VWAP”) of San Marco’s
shares on the TSX Venture Exchange.



Exeter has committed to first
year expenditures of $1.0 million at Angeles, which is largely related to 2,500 m of drilling at the La Bonanza and La Verde target
areas.



The La Buena Agreement



Exeter has the right to earn
60% in the La Buena property by spending $15.0 million in exploration expenditures and by making cash payments of $650,000 staged
over 5 years. All cash payments are to be made by way of a private placement purchase of San Marco’s common shares
at a price equal to a premium of 25% to the 20 day VWAP.



Exeter has committed to first
year expenditures of $1.4 million, which includes 2,500 m of drilling.



26