| | Consolidated Financial Statements             
| | ----------------------------------------------
| | (Expressed in Thousands of Canadian Dollars)  
| | For the years ended December 31, 2011 and 2010











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



|                                         |  |                  |  |  | December 31, 2011 |          |   | December 31, 2010 |   |          | January 1, 2010 | 
|---------------------------------------- |  | ---------------- |  |  | ----------------- | -------- | - | ----------------- | - | -------- | --------------- | 
|                                         |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Assets                                   |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|                                         |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Current                                  |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Cash and cash equivalents                |  | (Note 9)         |  |  | $                 | 71,926   |   |                   | $ | 90,608   |                 | 
|Amounts receivable and prepaid expenses  |  |                  |  |  |                   | 642      |   |                   |   | 520      |                 | 
|Due from related parties                 |  | (Note 15)        |  |  |                   | 93       |   |                   |   | 9        |                 | 
|                                         |  |                  |  |  |                   | 72,661   |   |                   |   | 91,137   |                 | 
|                                         |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Property and equipment                   |  | (Note 10)        |  |  |                   | 219      |   |                   |   | 234      |                 | 
|Mineral properties                       |  | (Notes 7 and 11) |  |  |                   | -        |   |                   |   | -        |                 | 
|                                         |  |                  |  |  | $                 | 72,880   |   |                   | $ | 91,371   |                 | 
|                                         |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Liabilities                              |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|                                         |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Current                                  |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Accounts payable and accrued liabilities |  |                  |  |  | $                 | 1,770    |   |                   | $ | 1,578    |                 | 
|Due to related parties                   |  | (Note 15)        |  |  |                   | 126      |   |                   |   | 118      |                 | 
|                                         |  |                  |  |  |                   | 1,896    |   |                   |   | 1,696    |                 | 
|                                         |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Shareholders’ Equity                     |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|                                         |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Share capital                            |  | (Note 12)        |  |  |                   | 242,270  |   |                   |   | 238,454  |                 | 
|Contributed surplus                      |  | (Note 14)        |  |  |                   | 34,587   |   |                   |   | 26,467   |                 | 
|Deficit                                  |  |                  |  |  |                   | (205,817 | ) |                   |   | (175,246 | )               | 
|Accumulated other comprehensive loss     |  |                  |  |  |                   | (56      | ) |                   |   | -        |                 | 
|                                         |  |                  |  |  |                   | 70,984   |   |                   |   | 89,675   |                 | 
|                                         |  |                  |  |  | $                 | 72,880   |   |                   | $ | 91,371   |                 | 
|                                         |  |                  |  |  |                   |          |   |                   |   |          |                 | 
|Contractual Obligations                  |  | (Note 17)        |  |  |                   |          |   |                   |   |          |                 | 



Approved by the Directors:



|“John Simmons”   |  | Director
|---------------- |  | --------
|                 |  |         
|“Bryce Roxburgh” |  | Director



See accompanying
notes to the consolidated financial statements



2







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



|For the years ended December 31,                                                                               |  |  |                   |  | 2011 |   |            | 2010 | 
|-------------------------------------------------------------------------------------------------------------- |  |  | ----------------- |  | ---- | - | ---------- | ---- | 
|                                                                                                               |  |  |                   |  |      |   |            |      | 
|Income                                                                                                         |  |  |                   |  |      |   |            |      | 
|Interest income                                                                                                |  |  |                   |  |      | $ | 977        |      | 
|Gain on sale of assets                                                                                         |  |  |                   |  |      |   | 14         |      | 
|                                                                                                               |  |  |                   |  |      |   |            |      | 
|Expenses                                                                                                       |  |  |                   |  |      |   |            |      | 
|Accounting and audit                                                                                           |  |  |                   |  |      |   | 226        |      | 
|Administration salaries and consulting                                                                         |  |  | (Note 13)         |  |      |   | 1,835      |      | 
|Amortization                                                                                                   |  |  | (Note 10)         |  |      |   | 58         |      | 
|Directors’ fees                                                                                                |  |  | (Note 13)         |  |      |   | 2,924      |      | 
|Foreign exchange loss                                                                                          |  |  |                   |  |      |   | 67         |      | 
|General and administration                                                                                     |  |  |                   |  |      |   | 600        |      | 
|Legal fees                                                                                                     |  |  |                   |  |      |   | 95         |      | 
|Management fees                                                                                                |  |  | (Note 13)         |  |      |   | 4,262      |      | 
|Mineral property exploration expenditures                                                                      |  |  | (Notes 11 and 13) |  |      |   | 20,371     |      | 
|Shareholder communications                                                                                     |  |  | (Note 13)         |  |      |   | 960        |      | 
|Stock exchange listing and filing fees                                                                         |  |  |                   |  |      |   | 164        |      | 
|                                                                                                               |  |  |                   |  |      |   | 31,562     |      | 
|                                                                                                               |  |  |                   |  |      |   |            |      | 
|Loss from continuing operations                                                                                |  |  |                   |  |      | $ | (30,571    | )    | 
|                                                                                                               |  |  |                   |  |      |   |            |      | 
|Gain from discontinued operations                                                                              |  |  | (Note 7)          |  |      |   | -          |      | 
|                                                                                                               |  |  |                   |  |      |   |            |      | 
|Net (loss) income for the year                                                                                 |  |  |                   |  |      | $ | (30,571    | )    | 
|Other comprehensive loss                                                                                       |  |  |                   |  |      |   | (56        | )    | 
|Net (loss) income and comprehensive (loss) income for
    the year                                             |  |  |                   |  |      | $ | (30,627    | )    | 
|                                                                                                               |  |  |                   |  |      |   |            |      | 
|Basic & diluted loss per common share from continuing
    operations                                           |  |  |                   |  |      | $ | (0.35      | )    | 
|Basic (loss) income per common share from net (loss)
    income and comprehensive (loss) income for the year   |  |  |                   |  |      | $ | (0.35      | )    | 
|Diluted (loss) income per common share from net (loss)
    income and comprehensive (loss) income for the year |  |  |                   |  |      | $ | (0.35      | )    | 
|                                                                                                               |  |  |                   |  |      |   |            |      | 
|Weighted average number of common shares outstanding                                                           |  |  |                   |  |      |   | 86,915,354 |      | 



See accompanying notes to the consolidated financial statements



3







|Exeter Resource
    Corporation                                                                                     
|--------------------------------------------------------------------------------------------------------------------
|Consolidated Statements of Cash Flow
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)



|For the years ended December 31,                                    |  |  |           |  | 2011 |   |         | 2010 | 
|------------------------------------------------------------------- |  |  | --------- |  | ---- | - | ------- | ---- | 
|                                                                    |  |  |           |  |      |   |         |      | 
|Operating Activities                                                |  |  |           |  |      |   |         |      | 
|Net loss from continuing operations for the year                    |  |  |           |  |      | $ | (30,571 | )    | 
|Non-cash items:                                                     |  |  |           |  |      |   |         |      | 
|Amortization                                                        |  |  | (Note 10) |  |      |   | 58      |      | 
|Gain on sale of assets                                              |  |  |           |  |      |   | (14     | )    | 
|Donation of shares                                                  |  |  |           |  |      |   | -       |      | 
|Share-based compensation                                            |  |  | (Note 13) |  |      |   | 9,843   |      | 
|                                                                    |  |  |           |  |      |   | (20,684 | )    | 
|Changes in non-cash working capital items:                          |  |  |           |  |      |   |         |      | 
|Amounts receivable and prepaid expenses                             |  |  |           |  |      |   | (131    | )    | 
|Due from related parties                                            |  |  |           |  |      |   | (84     | )    | 
|Due to related parties                                              |  |  |           |  |      |   | 8       |      | 
|Accounts payable and accrued liabilities                            |  |  |           |  |      |   | 278     |      | 
|                                                                    |  |  |           |  |      |   |         |      | 
|Cash flows from the operating activities of continuing operations   |  |  |           |  |      |   | (20,613 | )    | 
|Gain for the year from discontinued operations                      |  |  |           |  |      |   | -       |      | 
|Non cash items:                                                     |  |  |           |  |      |   |         |      | 
|Amortization                                                        |  |  |           |  |      |   | -       |      | 
|Share-based compensation                                            |  |  | (Note 13) |  |      |   | -       |      | 
|Gain on the transfer of assets                                      |  |  |           |  |      |   | -       |      | 
|Changes in non-cash working capital items:                          |  |  |           |  |      |   |         |      | 
|Amounts receivable and prepaid expenses                             |  |  |           |  |      |   | -       |      | 
|Accounts payable and accrued liabilities                            |  |  |           |  |      |   | -       |      | 
|Due to related parties                                              |  |  |           |  |      |   | -       |      | 
|                                                                    |  |  |           |  |      |   |         |      | 
|Cash flows from the operating activities of discontinued operations |  |  |           |  |      |   | -       |      | 
|Cash flows from operating activities                                |  |  |           |  |      |   | (20,613 | )    | 
|                                                                    |  |  |           |  |      |   |         |      | 
|Financing Activities                                                |  |  |           |  |      |   |         |      | 
|Issue of share capital for cash                                     |  |  | (Note 12) |  |      |   | 2,093   |      | 
|Share issue costs                                                   |  |  |           |  |      |   | -       |      | 
|Cash flows from financing activities                                |  |  |           |  |      |   | 2,093   |      | 
|Investing Activities                                                |  |  |           |  |      |   |         |      | 
|Acquisition of property and equipment                               |  |  |           |  |      |   | (56     | )    | 
|Proceeds from sale of assets                                        |  |  |           |  |      |   | 14      |      | 
|Cash flows from investing activities of continued operations        |  |  |           |  |      |   | (42     | )    | 
|Acquisition of property and equipment                               |  |  |           |  |      |   | -       |      | 
|Cash flows from investing activities of discontinued
    operations |  |  |           |  |      |   | -       |      | 
|Cash transferred on Plan of Arrangement                             |  |  |           |  |      |   | -       |      | 
|Effect of foreign exchange rate change on cash                      |  |  |           |  |      |   | (120    | )    | 
|Net decrease in cash and cash equivalents                           |  |  |           |  |      |   | (18,682 | )    | 
|Cash and cash equivalents – beginning of the year                   |  |  |           |  |      |   | 90,608  |      | 
|Cash and cash equivalents – end of the year                         |  |  |           |  |      | $ | 71,926  |      | 



See accompanying notes to the consolidated
financial statements



4







|Exeter Resource Corporation
        Consolidated Statement of Changes in Equity
        (Expressed in Thousands of Canadian Dollars,
        Except Share Data)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                |  | Issued Share Capital |            |  |        |   |         |             |  |   | Accumulated Other |   |  | Total         |         
|--------------------------------------------------------------- |  | -------------------- | ---------- |  | ------ | - | ------- | ----------- |  | - | ----------------- | - |  | ------------- | --------
|                                                                |  | Number of            |            |  |        |   |         | Contributed |  |   |                   |   |  | Comprehensive |         
|                                                                |  | Shares               |            |  | Amount |   |         | Surplus     |  |   | Deficit           |   |  | Loss          |         
|                                                                |  |                      |            |  |        |   |         |             |  |   |                   |   |  |               |         
|Balance - January 1, 2010                                       |  |                      | 73,897,702 |  |        | $ | 174,418 |             |  | $ | 18,265            |   |  | $             | (111,482
|Additions during the year:                                      |  |                      |            |  |        |   |         |             |  |   |                   |   |  |               |         
|- Exercise of warrants                                          |  |                      | 723,551    |  |        |   | 2,306   |             |  |   | -                 |   |  |               | -       
|- Exercise of stock options                                     |  |                      | 2,401,500  |  |        |   | 4,461   |             |  |   | -                 |   |  |               | -       
|- Donation                                                      |  |                      | 10,000     |  |        |   | 86      |             |  |   | -                 |   |  |               | -       
|- Equity financing net of share issue costs                     |  |                      | 9,274,750  |  |        |   | 53,779  |             |  |   | -                 |   |  |               | -       
|- Contributed surplus allocated on exercise of agent’s warrants |  |                      | -          |  |        |   | 818     |             |  |   | (818              | ) |  |               | -       
|- Contributed surplus allocated on exercise of options          |  |                      | -          |  |        |   | 2,586   |             |  |   | (2,586            | ) |  |               | -       
|- Share-based compensation                                      |  |                      | -          |  |        |   | -       |             |  |   | 11,606            |   |  |               | -       
|- Transfer of net assets on Plan of Arrangement                 |  |                      | -          |  |        |   | -       |             |  |   | -                 |   |  |               | (150,000
|- Net income for the year                                       |  |                      | -          |  |        |   | -       |             |  |   | -                 |   |  |               | 86,236  
|                                                                |  |                      |            |  |        |   |         |             |  |   |                   |   |  |               |         
|Balance - December 31, 2010                                     |  |                      | 86,307,503 |  |        | $ | 238,454 |             |  | $ | 26,467            |   |  | $             | (175,246
|                                                                |  |                      |            |  |        |   |         |             |  |   |                   |   |  |               |         
|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



See accompanying
notes to the consolidated financial statements



5







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 1. | Nature of 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 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 Amex. The Company’s head office is located at
1660 - 999 West Hastings Street, Vancouver, BC, Canada, V6C 2W2.



| | 2. | Basis of Preparation and Adoption
                                                                 of IFRS
| | -- | ----------------------------------------------------------------------------------------------------------



The Company prepares its financial
statements in accordance with Canadian generally accepted accounting principles as set out in the Handbook of the Canadian Institute
of Chartered Accountants (“CICA Handbook”). In 2010, the CICA Handbook was revised to incorporate International Financial
Reporting Standards, and required publicly accountable enterprises to apply such standards effective for years beginning on or
after January 1, 2011. Accordingly, the Company commenced reporting on this basis in these consolidated financial statements.
In these financial statements, the term “Canadian GAAP” refers to Canadian GAAP before the adoption of International
Financial Reporting Standards (“IFRS”).



These consolidated financial
statements have been prepared in accordance with IFRS applicable to the preparation of annual financial statements, including
certain optional transitions and mandatory exemptions from retrospective application of IFRS as described in IFRS 1. Subject to
certain elections disclosed in Note 3, the Company has consistently applied the same accounting policies in its opening IFRS statement
of financial position at January 1, 2010 (“the Transition Date”) and throughout all periods presented, as if these
policies had always been in effect. Note 3(b) discloses the impact of the transition to IFRS on the Company’s reported financial
results, including the nature and effect of significant changes in accounting policies from those used in the Company’s
consolidated financial statements for the year ended December 31, 2010.



The accounting policies applied
in these consolidated financial statements are based on IFRS effective for the year ended December 31, 2011, as issued and effective
as of February 23, 2012 the date the Audit Committee of the Board of Directors approved the statements.



| | 3. | Explanation of Transition
                                                                   to IFRS
| | -- | ----------------------------------------------------------------------------------------------------



The accounting policies set
out in Note 4 have been applied in preparing these consolidated financial statements, the comparative information presented for
the year ended December 31, 2010 and in the preparation of an opening IFRS balance sheet at January 1, 2010.



In preparing its opening IFRS
balance sheet, the Company has adjusted certain amounts reported previously in consolidated financial statements prepared in accordance
with Canadian GAAP to comply with IFRS. An explanation of how the transition from Canadian GAAP to IFRS has affected the Company’s
financial position as of January 1 and December 31, 2010 and its cash flows for the year ended December 31, 2010 are disclosed
in Note 3(b) below.



6







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 3. | Explanation
                                                                                     of Transition to IFRS (Continued)
| | -- | ----------------------------------------------------------------------------------------------------------------------------------



Initial elections upon adoption



Set
out below are the applicable IFRS 1 exemptions applied in the conversion from Canadian GAAP to IFRS:



| | a) | IFRS exemption options:
| | -- | -----------------------



Exemption for share-based
payment transactions



An IFRS 1 exemption allows
the Company to not apply IFRS 2, ‘Share-based payment’, to equity instruments granted after November 7, 2002 and vested
before the Transition Date. The Company has elected to take the exemption and, as a result, was only required to recalculate the
impact on any share based payments that had not vested at the Transition Date.



Cumulative
translation differences



An IFRS 1 exemption allows
the Company to set the currency translation adjustment, which is included in accumulated other comprehensive income (“OCI”),
to zero at January 1, 2010 and adjust deficit by the same amount. If, subsequent to the Transition Date, a foreign operation is
disposed of, the translation differences that arose before the Transition Date will not affect the gain or loss on disposal.



Business combinations



IFRS 1 provides the option
to apply IFRS 3R, Business Combinations, retrospectively or prospectively from the Transition Date. The Company elected to adopt
IFRS 3R effective January 1, 2010, and the adoption had no material impact on these consolidated financial statements.



| | b) | Reconciliations of Canadian GAAP to IFRS
| | -- | ----------------------------------------



Upon conversion to IFRS, IFRS
1 requires an entity to reconcile equity, income (loss), and comprehensive income (loss) for prior periods. As the Company’s
adoption of IFRS had an impact on net income (loss) and comprehensive income (loss), the following disclosure and tables represent
the reconciliation from Canadian GAAP to IFRS for the opening balance sheet (January 1, 2010) and the related impact on deficit.



| | i. | There were no differences
                                                                       noted between the Canadian GAAP and IFRS consolidated statements
                                                                       of financial position at January 1, 2010 and December 31,
                                                                       2010.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | A reconciliation between
                                                                        the Canadian GAAP and IFRS net income (loss) and comprehensive
                                                                        income (loss) for the year ended December 31, 2010 is
                                                                        provided below:
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 3. | Explanation
of Transition to IFRS (Continued)
| | -- | ---------------------------------------------



|                                                               |  | Year ended December 31, 2010 |         
|-------------------------------------------------------------- |  | ---------------------------- | --------
|                                                               |  | Canadian GAAP                |         
|                                                               |  |                              |         
|Income                                                         |  |                              |         
|Interest income                                                |  | $                            | 530     
|                                                               |  |                              |         
|Expenses                                                       |  |                              |         
|Accounting and audit                                           |  |                              | 169     
|Administration salaries and consulting                         |  |                              | 2,466   
|Amortization                                                   |  |                              | 64      
|Director’s fees                                                |  |                              | 3,725   
|Foreign exchange loss                                          |  |                              | 34      
|General and administration                                     |  |                              | 574     
|Legal fees                                                     |  |                              | 145     
|Management fees                                                |  |                              | 2,619   
|Mineral property exploration expenditures                      |  |                              | 19,758  
|Shareholder communications                                     |  |                              | 1,152   
|Stock exchange listing and filing fees                         |  |                              | 135     
|                                                               |  |                              | 30,841  
|                                                               |  |                              |         
|Loss from continuing operations                                |  |                              | (30,311 
|Gain (loss) from discontinued operations                       |  |                              | (5,506  
|Net income/(loss) and comprehensive income (loss) for the year |  |                              | (35,817 
|Transfer of net assets on Plan of Arrangement                  |  |                              | (27,947 
|Deficit at beginning of year                                   |  |                              | (111,482
|                                                               |  |                              |         
|Deficit at end of year                                         |  | $                            | (175,246



Notes to the IFRS reconciliation
above:



Adjustment related
to Plan of Arrangement (“Arrangement”), see note 7, whereby the Company transferred all of its Argentine business
to Extorre Gold Mines Limited (“Extorre”) and distributed all of Extorre shares to its shareholders.



| | (i) | Under Canadian GAAP – The
                                                                transfer of non-cash assets in relation to Arrangement was recorded
                                                                at cost.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Under IFRS – The transfer
                                                                 of these non-cash assets in the form of a distribution to Exeter’s
                                                                 shareholders is required to be recorded at the fair value of
                                                                 the non-monetary assets transferred.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | At the date of the Arrangement,
                                                                  the Company estimated the fair value of the Argentine assets
                                                                  that were transferred to Extorre at $150,000. Under Canadian
                                                                  GAAP, the Company had previously recorded the distribution of
                                                                  the net assets at the cost amount of $27,947. Under IFRS the
                                                                  distribution of the Argentine assets is recognized at fair value,
                                                                  consequently following transition to IFRS, the Company has recognized
                                                                  a gain of $122,053 on the net assets distributed and recorded
                                                                  the value of assets distributed of $150,000. The increase in
                                                                  fair value had no impact on the net cash flows of the Company
                                                                  as the gain was a non-cash item, nor did it have any effect
                                                                  on the deficit or shareholder’s equity at December 31,
                                                                  2010.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 4. | Changes in Accounting Policy
                                                                 and Disclosures
| | -- | -------------------------------------------------------------------------------------------------------------



The IASB 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 in its preliminary stage of assessing the impact that the new and amended standards will
have on its consolidated financial statements or whether to early adopt any of the new requirements.



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. IFRS 9 (2009) and IFRS 9 (2010) are effective for annual periods on or after January
1, 2015. Early adoption is permitted and the standard is required to be applied retrospectively.



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, and SIC-13, Jointly Controlled
Entities—Non-monetary Contributions by Venturers, 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. Early adoption
is permitted.



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.



9







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 4. | Changes in Accounting Policy
                                                                 and Disclosures(Continued)
| | -- | ------------------------------------------------------------------------------------------------------------------------



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.



IFRIC
20-Stripping Costs in the Production Phase of a Surface Mine



IFRIC 20 clarifies the requirements
for accounting for stripping costs associated with waste removal in surface mining, including when production stripping costs
should be recognised as an asset, how the asset is initially recognised, and subsequent measurement. This standard does not have
an impact on the Company’s consolidated financial statements as it is currently in its exploration stage. This standard
is effective for annual periods beginning on or after January 1, 2013. Early adoption is permitted.



| | 5. | 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 |  |                         | 
|Sociedad Contractual Minera Retexe Chile (“Retexe”) |  |               | Chile |  |                         | 



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 difference 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 and title may be affected by such instances.



10







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 5. | Summary
                                                                                     of Significant Accounting Policies, Judgements
                                                                                     and Estimation Uncertainty (Continued)
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 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.



| | 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 the item are considered to form part of the net investment in a 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
operation’s functional currency are recognized in the statement of income.



11







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 5. | Summary of Significant Accounting
                                                                 Policies, Judgements and Estimation Uncertainty(Continued)
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 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.



| | 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:



|Canada                       |                  
|---------------------------- | -----------------
|Computer equipment           | Declining balance
|Computer software            | Declining balance
|Equipment                    | Declining balance
|Leasehold improvements       | Straight-line    
|Office equipment             | Declining balance
|                             |                  
|Chile                        |                  
|Computer equipment           | Straight-line    
|Equipment including vehicles | Straight-line    
|Office equipment             | Straight-line    



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



The Company has adopted an
incentive stock option plan. Stock options 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.



12







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 5. | Summary of Significant Accounting Policies, Judgements
and Estimation Uncertainty(Continued)
| | -- | --------------------------------------------------------------------------------------------



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, valuation of future income tax benefits, commencement of capitalization
of exploration expenditures 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.



| | 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 payables
                                                                                                               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) | Discontinued operations
| | -- | -----------------------



Operating results of a Company’s
components disposed of or being classified as held-for-sale are reported as discontinued operations if the operations and cash
flows of those components have been, or will be, eliminated from the Company’s current operations pursuant to the disposal
and if the Company does not have significant continuing involvement in the operations of the component after the disposal transaction.
A component of an enterprise includes operations and cash flows that can be clearly distinguished, operationally and for financial
reporting purposes, from the rest of the Company’s operations and cash flows.



13







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 5. | Summary
                                                                                     of Significant Accounting Policies, Judgements
                                                                                     and Estimation Uncertainty(Continued)
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | m) | 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.



| | 6. | 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.



| | 7. | Discontinued Operations and Transfer of Assets
| | -- | ----------------------------------------------



On March 24, 2010 the Company
completed the Arrangement under the British Columbia Business Corporation Act pursuant to which it transferred its Argentine net
assets to Extorre, a company incorporated by Exeter to facilitate the spin out of the Argentine business to its shareholders.
Under the Arrangement, each shareholder of the Company received one share of Extorre for each share of the Company held. The Company
transferred its wholly owned subsidiaries, Estelar Resources Limited (“Estelar”) and Cognito Limited (“Cognito”)
(together “Argentine Business”), to Extorre. Estelar and Cognito held the Argentine assets which included cash and
working capital balances, and the interest in Cerro Moro, the Don Sixto property, and various other exploration properties.



The Arrangement was approved
by the Company’s board of directors and, among other things, the favourable vote of Exeter’s shareholders at a special
shareholders’ meeting held on March 11, 2010.



At the time of the transfer,
under Canadian GAAP, the Company did not recognize any gain or loss on the disposition of the Argentine Business, which was comprised
of a cash contribution of $25,000 and the Argentine assets and liabilities as at the effective date of the Arrangement. However,
upon transition to IFRS, the Company was required to fair value the net assets that were transferred to Extorre and as such recognized
a gain of $122,053 on the transfer of those assets.



The Company accounted for
the financial results associated with the Argentine Business up to the date of the Arrangement as discontinued operations.



14







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 7. | Discontinued Operations and
                                                                 Transfer of Assets (Continued)
| | -- | ---------------------------------------------------------------------------------------------------------------------------



The gain from discontinued
operations is after accounting for the direct operating results of Estelar and Cognito and an allocation of head office general
and administrative expense and accounting for the fair value of the assets transferred to Extorre. The allocation of head office
general and administrative expense was calculated on the basis of the ratio of costs incurred on the Argentine mineral properties
in each period presented as compared to the costs incurred on all mineral properties of the Company in each of the period.



The fair value of the net
Argentine assets transferred under the Arrangement pursuant to IFRS is summarized in the table below:



|                                                    |  | March 24, 2010 |        
|--------------------------------------------------- |  | -------------- | -------
|                                                    |  |                |        
|Cash and cash equivalents                           |  | $              | 25,498 
|Amounts receivable and prepaid expenses             |  |                | 183    
|Due from related party                              |  |                | 238    
|Long term assets:                                   |  |                |        
|Property and equipment                              |  |                | 169    
|Mineral properties                                  |  |                | 125,407
|Accounts payable and accrued liabilities            |  |                | (1,495 
|                                                    |  |                |        
|Fair value of the net assets transferred to Extorre |  | $              | 150,000



The following table shows the results related to
discontinued operations for the years ended December 31, 2011 and 2010:



|                                         |  | Years ended December 31 |  
|---------------------------------------- |  | ----------------------- | -
|                                         |  | 2011                    |  
|Accounting and audit                     |  | $                       | -
|Administration salaries and consulting   |  |                         | -
|Amortization                             |  |                         | -
|Foreign exchange loss                    |  |                         | -
|Gain on transfer of assets               |  |                         | -
|General and administration               |  |                         | -
|Legal fees                               |  |                         | -
|Management fees                          |  |                         | -
|Mineral property exploration expenditure |  |                         | -
|Shareholder communications               |  |                         | -
|Stock exchange listing and filing fees   |  |                         | -
|Gain from discontinued operations        |  | $                       | -



15







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 7. | Discontinued Operations and
                                                                 Transfer of Assets (Continued)
| | -- | ---------------------------------------------------------------------------------------------------------------------------



Discontinued Operations
Net Income Per Share



|                                               |  | December 31, 2010 |           
|---------------------------------------------- |  | ----------------- | ----------
|                                               |  |                   |           
|Net income from discontinued operations        |  | $                 | 116,547   
|Net income per share:                          |  |                   |           
|Basic                                          |  | $                 | 1.52      
|Diluted                                        |  | $                 | 1.46      
|                                               |  |                   |           
|Weighted average number of shares outstanding: |  |                   |           
|Basic:                                         |  |                   | 76,808,345
|Effect of dilutive shares:                     |  |                   |           
|Stock options                                  |  |                   | 2,399,429 
|Warrants                                       |  |                   | 356,501   
|Diluted                                        |  |                   | 79,564,275



| | 8. | Financial Instruments
| | -- | ---------------------



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



The fair value of financial instruments at December
31, 2011 and December 31, 2010 is summarized as follows:



|                                         |  | 2011            |        |  | 2010       |  
|---------------------------------------- |  | --------------- | ------ |  | ---------- | -
|                                         |  | Carrying amount |        |  | Fair value |  
|Financial Assets                         |  |                 |        |  |            |  
|Loans and receivables                    |  |                 |        |  |            |  
|Cash and cash equivalents                |  | $               | 71,926 |  |            | $
|Amounts receivable – at amortized cost   |  | $               | 86     |  |            | $
|Due from related parties                 |  | $               | 93     |  |            | $
|Financial Liabilities at amortized cost  |  |                 |        |  |            |  
|Accounts payable and accrued liabilities |  | $               | 1,770  |  |            | $
|Due to related parties                   |  | $               | 126    |  |            | $



The carrying amount of amounts
receivable, accounts payable and accrued liabilities and due to and from related parties approximates fair value due to their
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.



16







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 8. | 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, US Dollars, Australian Dollars and Chilean Pesos) and are therefore subject to fluctuation against the Canadian Dollar.



The Company had the following
balances in foreign currency as at December 31, 2011 and 2010:



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



|2010 (in thousands)                     
|----------------------------------------
|                                        
|Cash and cash equivalents               
|Amounts receivable                      
|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, 2011, and assuming that all other variables remain constant, a 10% depreciation or appreciation of the Chilean
peso, US dollar and Australian dollar against the Canadian dollar would result in an increase/decrease of $112, $1 and $21 respectively
(2010 - $6, $12 and $11 respectively) in the Company’s net loss.



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, 2011 ranged between 1.2% and 1.3%.



Based on the amount of cash
and cash equivalents held at December 31, 2011, and assuming that all other variables remain constant, a 0.5% change in the applicable
interest rate would result in an increase/decrease of $360 in the interest earned by the Company per annum.



17







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 8. | Financial Instruments(Continued)
| | -- | --------------------------------



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, 2011
in the amount of $71,926 in order to meet short-term business requirements. At December 31, 2011, the Company had current liabilities
of $1,896 which are due on demand or within 30 days.



| | 9. | Cash and Cash Equivalents
| | -- | -------------------------



|                                   |  | December 31, 2011 |        |  | December 31, 2010 |  
|---------------------------------- |  | ----------------- | ------ |  | ----------------- | -
|Cash                               |  |                   |        |  |                   |  
|Investment savings accounts        |  | $                 | 39,864 |  |                   | $
|Guaranteed investment certificates |  |                   | 32,062 |  |                   |  
|Total                              |  | $                 | 71,926 |  |                   | $



18







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 10. | Property and Equipment
| | --- | ----------------------



|                                          |  | Computer Equipment |     |   | Computer Software |   |     | Equipment including Vehicles |  |   | Leasehold Improvements |   |  | Office equipment |    |   | Total |  
|----------------------------------------- |  | ------------------ | --- | - | ----------------- | - | --- | ---------------------------- |  | - | ---------------------- | - |  | ---------------- | -- | - | ----- | -
|Cost                                      |  |                    |     |   |                   |   |     |                              |  |   |                        |   |  |                  |    |   |       |  
|As at January 1, 2010                     |  | $                  | 138 |   |                   | $ | 58  |                              |  | $ | 623                    |   |  | $                | -  |   |       | $
|Additions                                 |  |                    | 6   |   |                   |   | -   |                              |  |   | 84                     |   |  |                  | -  |   |       |  
|Disposal of assets transferred to Extorre |  |                    | (33 | ) |                   |   | (43 | )                            |  |   | (380                   | ) |  |                  | -  |   |       |  
|Effect of movements in exchange rates     |  |                    | -   |   |                   |   | -   |                              |  |   | -                      |   |  |                  | -  |   |       |  
|Balance as at December 31, 2010           |  | $                  | 111 |   |                   | $ | 15  |                              |  | $ | 327                    |   |  | $                | -  |   |       | $
|                                          |  |                    |     |   |                   |   |     |                              |  |   |                        |   |  |                  |    |   |       |  
|Depreciation                              |  |                    |     |   |                   |   |     |                              |  |   |                        |   |  |                  |    |   |       |  
|As at January 1, 2010                     |  | $                  | (92 | ) |                   | $ | (54 | )                            |  | $ | (326                   | ) |  | $                | -  |   |       | $
|Charged for the period                    |  |                    | (15 | ) |                   |   | -   |                              |  |   | (45                    | ) |  |                  | -  |   |       |  
|Disposal of assets transferred to Extorre |  |                    | 29  |   |                   |   | 40  |                              |  |   | 216                    |   |  |                  | -  |   |       |  
|Effect of movements in exchange rates     |  |                    | -   |   |                   |   | -   |                              |  |   | -                      |   |  |                  | -  |   |       |  
|Balance as at December 31, 2010           |  | $                  | (78 | ) |                   | $ | (14 | )                            |  | $ | (155                   | ) |  | $                | -  |   |       | $
|                                          |  |                    |     |   |                   |   |     |                              |  |   |                        |   |  |                  |    |   |       |  
|Net carrying value                        |  |                    |     |   |                   |   |     |                              |  |   |                        |   |  |                  |    |   |       |  
|As at January 1, 2010                     |  | $                  | 46  |   |                   | $ | 4   |                              |  | $ | 297                    |   |  | $                | -  |   |       | $
|As at December 31, 2010                   |  | $                  | 33  |   |                   | $ | 1   |                              |  | $ | 172                    |   |  | $                | -  |   |       | $
|                                          |  |                    |     |   |                   |   |     |                              |  |   |                        |   |  |                  |    |   |       |  
|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 |   |       | $
|                                          |  |                    |     |   |                   |   |     |                              |  |   |                        |   |  |                  |    |   |       |  
|Depreciation                              |  |                    |     |   |                   |   |     |                              |  |   |                        |   |  |                  |    |   |       |  
|As at January 1, 2011                     |  | $                  | (78 | ) |                   | $ | (14 | )                            |  | $ | (155                   | ) |  | $                | -  |   |       | $
|Charged for the period                    |  |                    | (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 |   |       | $



19







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 11. | 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 paying 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 thousand up until March 31, 2020 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 a 2.5 year option on 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 provides annual option payments which
are deductible from a purchase price of US$15.0 million. The Company can withdraw from the option at any time without penalty.



Options payments are as follows:



US$440
thousand ($498 thousand) (completed);



US$220
thousand ($226 thousand) by January 4, 2012 (completed subsequent to December 31, 2011);



US$220
thousand ($223 thousand) by July 4, 2012;



US$220
thousand ($224 thousand) by January 4, 2013;



In the event that the Company
exercises the option, the full purchase price must be paid by August 4, 2013.



20







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 11. | Mineral Properties - Acquisition and Exploration Costs
                                                                    (Continued)
| | --- | --------------------------------------------------------------------------------------------------------------------------------------



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



The tables below shows the Company’s
exploration expenditures by project for the years ended December 31, 2011 and 2010.



|                             |  | 2011               |        |  |                    |   |        | 2010                    |  |   |        | 
|---------------------------- |  | ------------------ | ------ |  | ------------------ | - | ------ | ----------------------- |  | - | ------ | 
|                             |  | Chilean Properties |        |  | Chilean Properties |   |        | Discontinued Operations |  |   | Total  | 
|Assays                       |  | $                  | 104    |  |                    | $ | 348    |                         |  | $ | 437    | 
|Consultants and contractors  |  |                    | 4,258  |  |                    |   | 993    |                         |  |   | 20     | 
|Drilling                     |  |                    | 3,880  |  |                    |   | 6,776  |                         |  |   | 1,321  | 
|Engineering*                 |  |                    | 2,103  |  |                    |   | 233    |                         |  |   | 123    | 
|Environmental                |  |                    | 54     |  |                    |   | 59     |                         |  |   | 146    | 
|Field camp                   |  |                    | 1,760  |  |                    |   | 2,026  |                         |  |   | 312    | 
|Geological *                 |  |                    | 1,598  |  |                    |   | 2,304  |                         |  |   | 494    | 
|IVA tax                      |  |                    | 1,117  |  |                    |   | 1,842  |                         |  |   | 491    | 
|Legal and title              |  |                    | 492    |  |                    |   | 260    |                         |  |   | 76     | 
|Metallurgical *              |  |                    | 1,350  |  |                    |   | 1,607  |                         |  |   | 116    | 
|Office operations            |  |                    | 438    |  |                    |   | 239    |                         |  |   | 179    | 
|Resource development         |  |                    | 129    |  |                    |   | 123    |                         |  |   | 50     | 
|Travel                       |  |                    | 894    |  |                    |   | 796    |                         |  |   | 221    | 
|Wages and benefits *         |  |                    | 1,696  |  |                    |   | 2,152  |                         |  |   | 467    | 
|Water rights option          |  |                    | 498    |  |                    |   | -      |                         |  |   | -      | 
|Exploration costs            |  | $                  | 20,371 |  |                    | $ | 19,758 |                         |  | $ | 4,453  | 
|Cumulative exploration costs |  | $                  | 63,581 |  |                    | $ | 43,210 |                         |  | $ | 57,190 | 



* Includes share-based compensation as reflected
below:



|                   |  | 2011 |       |  | Chilean  Properties |   |       | Discontinued  Operations |  |   | 2010 | 
|------------------ |  | ---- | ----- |  | ------------------- | - | ----- | ------------------------ |  | - | ---- | 
|Engineering        |  | $    | 207   |  |                     | $ | -     |                          |  | $ | -    | 
|Geological         |  |      | 858   |  |                     |   | 1,412 |                          |  |   | 181  | 
|Metallurgical      |  |      | 209   |  |                     |   | 668   |                          |  |   | 66   | 
|Wages and benefits |  |      | 643   |  |                     |   | 806   |                          |  |   | 58   | 
|Total              |  | $    | 1,917 |  |                     | $ | 2,886 |                          |  | $ | 305  | 



21







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 12. | 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, 2011 |            |  | December 31, 2010 |  
|----------------------------- |  | ----------------- | ---------- |  | ----------------- | -
|                              |  | Number of Shares  |            |  | Amount            |  
|Balance, beginning of year    |  |                   | 86,307,503 |  |                   | $
|Issued during the year for:   |  |                   |            |  |                   |  
|Cash                          |  |                   |            |  |                   |  
|Equity financing              |  |                   | -          |  |                   |  
|Exercise of options           |  |                   | 1,018,250  |  |                   |  
|Exercise of warrants          |  |                   | -          |  |                   |  
|Donation                      |  |                   | -          |  |                   |  
|Contributed surplus allocated |  |                   |            |  |                   |  
|Exercise of options           |  |                   | -          |  |                   |  
|Exercise of agent’s warrants  |  |                   | -          |  |                   |  
|Share issue costs             |  |                   | -          |  |                   |  
|Balance, end of year          |  |                   | 87,325,753 |  |                   | $



| | 13. | 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, 2011, the maximum number of options issuable under the Plan was 13,098,863. 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. 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.



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



|                                       |  | December 31, 2011 |            |   | December 31, 2010               |  
|-------------------------------------- |  | ----------------- | ---------- | - | ------------------------------- | -
|                                       |  | Options           |            |   | Weighted Average Exercise Price |  
|Options outstanding, beginning of year |  |                   | 12,327,900 |   |                                 | $
|Granted                                |  |                   | 1,385,000  |   |                                 |  
|Exercised                              |  |                   | (1,018,250 | ) |                                 |  
|Forfeited                              |  |                   | (266,250   | ) |                                 |  
|Options outstanding, end of year       |  |                   | 12,428,400 |   |                                 | $



There were 1,018,250 (2010 – 2,401,500)
options exercised during the year at an average exercise price of $2.06 (2010 - $1.86).



22







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 13. | Stock Option Plan(Continued)
| | --- | ----------------------------



The following table summarizes
information about the stock options outstanding at December 31, 2011.



|Outstanding Options |  | Exercisable Options |           
|------------------- |  | ------------------- | ----------
|Range of Prices ($) |  | Number              |           
|1.01 - 2.00         |  |                     | 1,892,900 
|2.01 - 3.00         |  |                     | 3,445,000 
|3.01 - 4.00         |  |                     | 130,000   
|4.01 - 5.00         |  |                     | 1,185,000 
|5.01 - 6.00         |  |                     | 965,000   
|6.01 +              |  |                     | 4,810,500 
|                    |  |                     | 12,428,400



For the
options granted during the year, the weighted average fair market value was $2.92 per share.



Share-based Compensation



The fair
value of the 1,385,000 (2010 – 6,038,000) options granted by the Company during the years ended December 31, 2011 and 2010
was estimated at the grant date using the Black-Scholes option pricing model with the following assumptions:



|                           |  | 2011 |              |   | 2010 | 
|-------------------------- |  | ---- | ------------ | - | ---- | 
|Expected annual volatility |  |      | 74           | % |      | 
|Risk-free interest rate    |  |      | 2.26% - 2.31 | % |      | 
|Expected life              |  |      | 3 to 5 years |   |      | 
|Expected dividend yield    |  |      | 0.0          | % |      | 
|Forfeiture rate            |  |      | 0.0          | % |      | 



Share-based compensation expense
of $9,843 (2010 - $11,606) was recognised in the year and was allocated to contributed surplus.



Share-based compensation has
been allocated as follows:



|Years ended December 31,                 
|-----------------------------------------
|                                         
|                                         
|Administration salaries and consulting   
|Directors’ fees                          
|Management fees                          
|Mineral property exploration expenditures
|Shareholder communications               
|Total                                    



23







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 13. | Stock Option Plan(Continued)
| | --- | ----------------------------



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.



| | 14. | Contributed Surplus
| | --- | -------------------



Details are as follows:



|Balance – January 1, 2010                                     |  | $ | 18,265 |  
|------------------------------------------------------------- |  | - | ------ | -
|Share-based compensation expense                              |  |   | 11,606 |  
|Contributed surplus allocated on exercise of agent’s warrants |  |   | (818   | )
|Contributed surplus allocated on exercise of stock options    |  |   | (2,586 | )
|Balance - December 31, 2010                                   |  |   | 26,467 |  
|                                                              |  |   |        |  
|Share-based compensation expense                              |  |   | 9,843  |  
|Contributed surplus allocated on exercise of stock options    |  |   | (1,723 | )
|Balance – December 31, 2011                                   |  | $ | 34,587 |  



| | 15. | Related Party Transactions
| | --- | --------------------------



Amounts due from related parties
of $93 at December 31, 2011 (December 31, 2010 - $9) is for the recovery of common expenditures from two corporations with common
directors. The amounts due from related parties are non-interest bearing and are due upon receipt of an invoice.



Amounts due to related parties
of $126 at December 31, 2011 (December 31, 2010 - $118) is for management, consulting and exploration fees and for expenses incurred
while conducting the Company’s business, and ongoing exploration expenditures payable to a related company. The amounts
due to related parties are non-interest bearing and are due upon receipt of an invoice.



During the year ended December
31, 2011 a total of $1,719 (2010 - $1,608) was paid or accrued for related party transactions as described below:



| | a) | Exploration and consulting fees
                                                                  of $485, which included a bonus of $125 (2010 - $460, which
                                                                  included a bonus of $100) were paid or accrued to a corporation
                                                                  of which the President and CEO of the Company is a principal.
                                                                  As at December 31, 2011, the Company had amounts owing of $8
                                                                  (2010 - $12) to this company.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | Exploration fees of $311, which
                                                                  included a bonus of $50 (2010 - $241, which included a bonus
                                                                  of $50) were paid or accrued to a corporation controlled by
                                                                  the Vice-President, Exploration and Development. As at December
                                                                  31, 2011, the Company had amounts owing of $86 (2010 - $62)
                                                                  to this company.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | Management fees of $250, which
                                                               included a bonus of $75 (2010 - $277, which included a bonus of
                                                               $50) were paid to a corporation controlled by the Chairman of the
                                                               Company. As at December 31, 2011, the Company had amounts owing
                                                               of $15 (2010 - $22) to this company.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | Management fees of $300, which
                                                               included a bonus of $100 (2010 - $328, which included a bonus of
                                                               $75) were paid or accrued to a corporation controlled by the Chief
                                                               Financial Officer of the Company. As at December 31, 2011, the
                                                               Company had amounts owing of $nil (2010 - $nil) to this company.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | Management fees of $300, which
                                                               included a bonus of $100 (2010 - $271) were paid or accrued to
                                                               a corporation controlled by the Vice-President, Corporate Development
                                                               and Legal Counsel. As at December 31, 2011, the Company had amounts
                                                               owing of $nil (2010 - $nil) to this company.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



24







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 15. | Related Party Transactions(Continued)
| | --- | -------------------------------------



| | f) | The Company paid or accrued
                                                                  rent expense of $63 (2010 - $nil) to a company controlled by
                                                                  a director of the Company. Of this amount, $31 was recovered
                                                                  from a corporation with common directors. As at December 31,
                                                                  2011, the Company had amounts owing of $15 (2010 - $nil) to
                                                                  this company.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g) | The Company and Extorre incur
                                                                  certain expenditures for staff and exploration expenditures
                                                                  on behalf of each other. The net amount provided or incurred
                                                                  by the Company on behalf of Extorre during the year ended December
                                                                  31, 2011 was $417. As at December 31, 2011, the Company had
                                                                  amounts receivable of $44 (2010 - the Company had amounts owing
                                                                  of $22 to Extorre).
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | h) | Fees of $10 (2010 - $31) were
                                                                  paid or accrued to a company of which one of the officers of
                                                                  the Company was a former partner for legal services. As at December
                                                                  31, 2011, the Company had amounts owing of $2 (2010 - $nil)
                                                                  to this company.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Upon completion of the Arrangement,
the Company reached an agreement whereby Extorre will reimburse the Company for common expenditures incurred, based upon a mutually
agreed percentage allocation of such expenditures. On January 1, 2011, the Company entered into cost sharing agreement with Extorre
and Rugby Mining Limited (“Rugby”) pertaining to costs associated with administrative support, office overhead and
travel that the three companies have in common. The percentage allocation of these costs is such that the Company and Extorre
each incur 40% respectively with Rugby incurring 20%.



For the year ended December
31, 2011, the Company recovered approximately net $417 (2010 - $391) from Extorre and $285 (2010 - $75) from Rugby.



| | 16. | 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 executive officers and the board of directors.



The
following compensation has been provided to key management personnelfor the years ended December 31, 2011 and 2010.





|                                 |  | 2011 |       |  | 2010 |  
|-------------------------------- |  | ---- | ----- |  | ---- | -
|Compensation - cash and benefits |  | $    | 1,335 |  |      | $
|Share - based payments           |  |      | 6,483 |  |      |  
|Total                            |  | $    | 7,818 |  |      | $





25







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 17. | 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



|                             |  | Total |       |  | 2012 |   |     | 2013 - 2014 |  |   | 2015 - 2016 |  |  | 2017 - 2025 |    
|---------------------------- |  | ----- | ----- |  | ---- | - | --- | ----------- |  | - | ----------- |  |  | ----------- | ---
|Office and equipment leases* |  | $     | 378   |  |      | $ | 88  |             |  | $ | 174         |  |  | $           | 116
|Property access agreements   |  |       | 109   |  |      |   | 91  |             |  |   | 18          |  |  |             | -  
|Advance Royalty Payment      |  |       | 7,373 |  |      |   | 254 |             |  |   | 509         |  |  |             | 509
|Total                        |  | $     | 7,860 |  |      | $ | 433 |             |  | $ | 701         |  |  | $           | 625



*The Company together with two
associated companies has entered into a lease for office premises. The amount reflected above is the Company’s share of
the lease obligation.



| | 18. | 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 classified by place of business:



|December 31, 2011                       |  | Canada |        |   | Chile |   |        | Total | 
|--------------------------------------- |  | ------ | ------ | - | ----- | - | ------ | ----- | 
|Cash and cash equivalents               |  | $      | 69,735 |   |       | $ | 2,191  |       | 
|Amounts receivable and prepaid expenses |  |        | 537    |   |       |   | 105    |       | 
|Due from related party                  |  |        | 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 |       | 



|December 31, 2010                                  |  | Canada |        |   | Chile |   |        | Discontinued Operations |  |   | Total    |  
|-------------------------------------------------- |  | ------ | ------ | - | ----- | - | ------ | ----------------------- |  | - | -------- | -
|Cash and cash equivalents                          |  | $      | 89,857 |   |       | $ | 751    |                         |  | $ | -        |  
|Amounts receivable and prepaid expenses            |  |        | 418    |   |       |   | 111    |                         |  |   | -        |  
|Property and equipment                             |  |        | 73     |   |       |   | 161    |                         |  |   | -        |  
|                                                   |  |        | 90,348 |   |       |   | 1,023  |                         |  |   | -        |  
|Current Liabilities                                |  |        | (772   | ) |       |   | (924   | )                       |  |   | -        |  
|                                                   |  | $      | 89,576 |   |       | $ | 99     |                         |  | $ | -        |  
|Net loss (gain) – for year ended December 31, 2010 |  | $      | 10,469 |   |       | $ | 19,842 |                         |  | $ | (116,547 | )



26







|Exeter Resource
    Corporation                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements
        (Expressed in Thousands of Canadian Dollars, Except
        Share Data)
        For the years ended December 31, 2011 and 2010



| | 19. | Income Taxes
| | --- | ------------



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



|                                                                     |  | 2011 |        |   | 2010 |  
|-------------------------------------------------------------------- |  | ---- | ------ | - | ---- | -
|Net loss (income) for the year before income tax                     |  | $    | 30,571 |   |      | $
|Combined federal and provincial tax rate                             |  |      | 26.50  | % |      |  
|Income tax recovery at statutory rates                               |  | $    | (8,101 | ) |      | $
|Losses and other deductions for which no benefit has been recognized |  |      | 3,849  |   |      |  
|Non-deductible share-based compensation                              |  |      | 2,583  |   |      |  
|Non-deductible mineral property exploration costs                    |  |      | 1,698  |   |      |  
|Gain from discontinued operations                                    |  |      | -      |   |      |  
|Foreign exchange rate and tax rate differences                       |  |      | (657   | ) |      |  
|Expiry of losses                                                     |  |      | 653    |   |      |  
|Impact of tax rate reductions                                        |  |      | (25    | ) |      |  
|Income tax recovery                                                  |  | $    | Nil    |   |      | $



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



|                                         |  | 2011 |        |  | 2010 |  
|---------------------------------------- |  | ---- | ------ |  | ---- | -
|Non-capital loss carry forwards – Canada |  | $    | 3,100  |  |      | $
|Non-capital loss carry forwards – Chile  |  |      | 147    |  |      |  
|Exploration and development deductions   |  |      | 16,354 |  |      |  
|Property and equipment – Canada          |  |      | 12     |  |      |  
|Share issue costs                        |  |      | 755    |  |      |  
|Unrecognised deferred tax asset          |  | $    | 20,368 |  |      | $



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 $12,476 expire as follows:



| | 2026 |  |  | $ | 2,242  | 
| | ---- |  |  | - | ------ | 
| | 2027 |  |  |   | 2,001  | 
| | 2028 |  |  |   | 2,424  | 
| | 2029 |  |  |   | 4,038  | 
| | 2031 |  |  |   | 1,771  | 
| |      |  |  | $ | 12,476 | 



At December 31, 2011, the Company
also has tax loss carry forwards in Chile totaling $420, that 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.



27