---

Exhibit 99.3



Consolidated Financial
Statements(in thousands of
United States Dollars, unless otherwise stated)





December 31, 2014

---



Managements Responsibility for Financial ReportingThe accompanying consolidated financial statements of AuRico Gold Inc.
(the Company) and the information in this annual report are the responsibility
of management and have been reviewed and approved by the Companys board of
directors (the Board of Directors). The consolidated financial statements have
been prepared by management in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board. In
preparation of these consolidated financial statements, estimates are sometimes
necessary when transactions affecting the current accounting period cannot be
finalized with certainty until future periods. Management believes that such
estimates, which have been properly reflected in the accompanying consolidated
financial statements, are based on the best estimates and judgements of
management. Management has prepared the financial information presented
elsewhere in the annual report and has ensured that it is consistent with that
in the consolidated financial statements.

To discharge its responsibilities for financial reporting and
safeguarding of assets, management depends on the Companys systems of internal
control over financial reporting. These systems are designed to provide
reasonable assurance that the financial records are reliable and form a proper
basis for the timely and accurate preparation of financial statements. The Chief
Executive Officer and Chief Financial Officer have assessed and concluded on the
design and operating effectiveness of internal control over financial reporting.

The Board of Directors oversees managements responsibilities
for the consolidated financial statements primarily through the activities of
its Audit Committee, which is composed solely of directors who are neither
officers nor employees of the Company. This Committee meets with management and
the Companys independent auditors, KPMG LLP, to ensure that management is
properly fulfilling its financial reporting responsibilities, review the
consolidated financial statements, and recommend approval by the Board of
Directors. The Audit Committee provides full and unrestricted access to the
independent auditors and also meets with the independent auditors, without the
presence of management, to discuss the scope and results of their audit, the
adequacy of internal control over financial reporting, and the quality of
financial reporting.

The consolidated financial statements have been audited by KPMG
LLP, an independent registered public accounting firm, in accordance with
Canadian generally accepted auditing standards and in accordance with the
standards of the Public Company Accounting Oversight Board (United States).

|                                      |                                                           
|------------------------------------- | ----------------------------------------------------------
|Scott Perry                           | Robert Chausse                                            
|President and Chief Executive Officer | Executive Vice President and Chief Financial
      Officer
|                                      |                                                           
|February 19, 2015                     |                                                           

---

| |                           |                         
| | ------------------------- | ------------------------
| | KPMG LLP                  | Telephone (416) 777-8500
| | Bay Adelaide Centre       | Fax (416) 777-8818      
| | 333 Bay Street Suite 4600 | Internet www.kpmg.ca    
| | Toronto ON M5H 2S5        |                         
| | Canada                    |                         

INDEPENDENT AUDITORS REPORT OFREGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of AuRico Gold Inc.

We have audited the accompanying consolidated financial
statements of AuRico Gold Inc., which comprise the consolidated balance sheets
as at December 31, 2014 and December 31, 2013, the consolidated statements of
operations, comprehensive income, shareholders equity and cash flows for the
years then ended, and notes, comprising a summary of significant accounting
policies and other explanatory information.

Managements Responsibility for theConsolidated
Financial Statements

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

AuditorsResponsibility

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

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

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

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


---

Page 2

Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the consolidated financial position of AuRico
Gold Inc. as at December 31, 2014 and December 31, 2013, and its consolidated
financial performance and its consolidated cash flows for the years then ended
in accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board.

Comparative Information

Without modifying our opinion, we draw attention to Note 3 to
the consolidated financial statements which indicates that the comparative
information presented for the year ended December 31, 2013 has been restated.

Other Matter

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), AuRico Gold Inc.s
internal control over financial reporting as of December 31, 2014, based on the
criteria established in Internal Control  Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and
our report dated February 19, 2015 expressed an unqualified opinion on the
effectiveness of AuRico Gold Inc.s internal control over financial reporting.

Chartered Professional Accountants, Licensed Public
Accountants

Toronto, Canada February 19, 2015

---

| |                           |                         
| | ------------------------- | ------------------------
| | KPMG LLP                  | Telephone (416) 777-8500
| | Bay Adelaide Centre       | Fax (416) 777-8818      
| | 333 Bay Street Suite 4600 | Internet www.kpmg.ca    
| | Toronto ON M5H 2S5        |                         
| | Canada                    |                         

REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of AuRico Gold Inc.

We have audited AuRico Gold Inc.s internal control over
financial reporting as of December 31, 2014, based on criteria established in
Internal Control  Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). AuRico Gold Inc.s
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, appearing under the heading Controls and
Procedures in Managements Discussion and Analysis for the year ended December
31, 2014. Our responsibility is to express an opinion on the Companys internal
control over financial reporting based on our audit.

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

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

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


---

Page 2

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

In our opinion, AuRico Gold Inc. maintained, in all material
respects, effective internal control over financial reporting as of December 31,
2014, based on criteria established in Internal Control  Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).

We also have audited, in accordance with Canadian generally
accepted auditing standards and the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of AuRico Gold
Inc. as of December 31, 2014 and 2013, and the related consolidated statements
of operations, comprehensive income, shareholders equity, and cash flows for
each of the years in the two-year period ended December 31, 2014, and our report
dated February 19, 2015 expressed an unqualified opinion on those consolidated
financial statements.

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Canada February 19, 2015

---

|                                                                             |   |             |   |   |             |  
|---------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|CONSOLIDATED BALANCE SHEETS                                                  |   |             |   |   |             |  
|(in
      thousands of United States dollars)                                |   |             |   |   |             |  
|                                                                             |   | December 31 |   |   | December 31 |  
|As
      at                                                                  |   | 2014        |   |   | 2013        |  
|                                                                             |   |             |   |   |             |  
|ASSETS                                                                       |   |             |   |   |             |  
|Current assets                                                               |   |             |   |   |             |  
|Cash and cash equivalents (Note
      25)                                    | $ | 89,031      |   | $ | 142,652     |  
|Restricted cash (Note 16(b))                                                 |   | -           |   |   | 2,204       |  
|Receivables (Note 6)                                                         |   | 14,076      |   |   | 29,254      |  
|Current income tax receivable                                                |   | 5,166       |   |   | 27,936      |  
|Inventories (Note 7)                                                         |   | 73,116      |   |   | 84,643      |  
|Prepaids and deposits                                                        |   | 2,565       |   |   | 5,250       |  
|                                                                             |   | 183,954     |   |   | 291,939     |  
|                                                                             |   |             |   |   |             |  
|Non-current assets                                                           |   |             |   |   |             |  
|Investments (Note 8)                                                         |   | 184         |   |   | 15,551      |  
|Long-term inventories (Note 7)                                               |   | 103,156     |   |   | 93,696      |  
|Investments in associate and
      joint venture (Note 9)                    |   | 23,434      |   |   | 17,930      |  
|Other long-term assets (Note 10)                                             |   | 51,042      |   |   | 71,988      |  
|Property, plant and equipment
      & mining interests (Notes 11 and 13)     |   | 1,638,730   |   |   | 1,675,955   |  
|Intangible assets (Notes 12 and
      13)                                    |   | 39,633      |   |   | 53,656      |  
|Goodwill (Notes 12 and 13)                                                   |   | 241,693     |   |   | 241,693     |  
|                                                                             | $ | 2,281,826   |   | $ | 2,462,408   |  
|                                                                             |   |             |   |   |             |  
|LIABILITIES                                                                  |   |             |   |   |             |  
|Current liabilities                                                          |   |             |   |   |             |  
|Trade payables and accrued
      liabilities                                 | $ | 42,046      |   | $ | 76,923      |  
|Dividend payable (Note 18(b))                                                |   | -           |   |   | 9,960       |  
|Current income tax liability                                                 |   | 407         |   |   | 3,966       |  
|Derivative liabilities (Note 25)                                             |   | 447         |   |   | -           |  
|Current portion of debt and
      equipment financing obligations (Note 14)  |   | 6,308       |   |   | 7,355       |  
|Obligation to renounce
      flow-through exploration expenditures (Note 15) |   | 857         |   |   | -           |  
|Current portion of provisions
      (Note 16)                                |   | 2,056       |   |   | 15,955      |  
|                                                                             |   | 52,121      |   |   | 114,159     |  
|                                                                             |   |             |   |   |             |  
|Non-current liabilities                                                      |   |             |   |   |             |  
|Debt and equipment financing
      obligations (Note 14)                     |   | 308,064     |   |   | 244,194     |  
|Option component of convertible
      senior notes (Note 14)                 |   | -           |   |   | 413         |  
|Provisions (Note 16)                                                         |   | 29,529      |   |   | 28,580      |  
|Deferred income tax liability
      (Note 17)                                |   | 260,902     |   |   | 287,180     |  
|                                                                             |   | 650,616     |   |   | 674,526     |  
|                                                                             |   |             |   |   |             |  
|SHAREHOLDERS' EQUITY                                                         |   |             |   |   |             |  
|Capital stock (Note 18)                                                      |   | 2,029,991   |   |   | 2,021,837   |  
|Contributed surplus                                                          |   | 62,316      |   |   | 55,945      |  
|Deficit                                                                      |   | (460,848    | ) |   | (284,632    | )
|Accumulated other comprehensive loss                                         |   | (249        | ) |   | (5,268      | )
|                                                                             |   | 1,631,210   |   |   | 1,787,882   |  
|                                                                             | $ | 2,281,826   |   | $ | 2,462,408   |  
|                                                                             |   |             |   |   |             |  

Commitments and contingencies (Notes 11 and 24) Events
after the reporting period (Note 28)

|Signed on behalf of the Board: | /s/ Scott Perry       |  | /s/ Ronald Smith       | 
|------------------------------ | --------------------- |  | ---------------------- | 
|                               | Scott Perry, Director |  | Ronald Smith, Director | 

|See accompanying notes to the consolidated financial
      statements | 1
|--------------------------------------------------------------------- | -

---

|                                                                        |   |             |   |   |             |  
|----------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|CONSOLIDATED STATEMENTS OF
      OPERATIONS                             |   |             |   |   |             |  
|(in
      thousands of United States dollars, except per share amounts) |   |             |   |   |             |  
|                                                                        |   | 2014        |   |   | 2013        |  
|                                                                        |   |             |   |   | Restated    |  
|For
      the years ended December 31                                   |   |             |   |   | (Note 3     | )
|                                                                        |   |             |   |   |             |  
|Revenue from mining operations                                          | $ | 291,182     |   | $ | 227,631     |  
|                                                                        |   |             |   |   |             |  
|Cost of sales:                                                          |   |             |   |   |             |  
|Production costs (Note 7)                                               |   | 199,309     |   |   | 147,981     |  
|Refining costs                                                          |   | 595         |   |   | 526         |  
|Amortization and depletion (Note
      7)                               |   | 121,468     |   |   | 65,529      |  
|Reclamation, care and
      maintenance costs                           |   | 5,971       |   |   | 4,417       |  
|Total cost of sales                                                     |   | 327,343     |   |   | 218,453     |  
|                                                                        |   |             |   |   |             |  
|General and administrative                                              |   | 25,921      |   |   | 27,677      |  
|Exploration and business development                                    |   | 1,001       |   |   | 1,014       |  
|Impairment charges (Note 13)                                            |   | 91,622      |   |   | 158,574     |  
|Loss from operations (Note 19)                                          |   | (154,705    | ) |   | (178,087    | )
|                                                                        |   |             |   |   |             |  
|Finance costs                                                           |   | (19,910     | ) |   | (2,928      | )
|Foreign exchange loss                                                   |   | (6,639      | ) |   | (4,289      | )
|Other (loss) / income (Note 20)                                         |   | (17,201     | ) |   | 10,167      |  
|Equity in loss of associate and joint venture
      (Note 9)            |   | (171        | ) |   | (2,533      | )
|Loss before income taxes                                                |   | (198,626    | ) |   | (177,670    | )
|                                                                        |   |             |   |   |             |  
|Deferred income tax recovery (Note 17)                                  |   | (26,278     | ) |   | (760        | )
|Current income tax recovery (Note 17)                                   |   | (2,700      | ) |   | (140        | )
|                                                                        |   | (28,978     | ) |   | (900        | )
|                                                                        |   |             |   |   |             |  
|Net
      loss                                                          | $ | (169,648    | ) | $ | (176,770    | )
|                                                                        |   |             |   |   |             |  
|                                                                        |   |             |   |   |             |  
|Loss per share (Note 21)                                                |   |             |   |   |             |  
|Basic loss per share                                                    | $ | (0.68       | ) | $ | (0.71       | )
|Diluted loss per share                                                  | $ | (0.68       | ) | $ | (0.72       | )
|Weighted average shares outstanding (Note 21)                           |   |             |   |   |             |  
|Basic                                                                   |   | 248,889,636 |   |   | 250,398,043 |  
|Diluted                                                                 |   | 248,889,636 |   |   | 265,729,061 |  
|                                                                        |   |             |   |   |             |  

|See accompanying notes to the consolidated financial
      statements | 2
|--------------------------------------------------------------------- | -

---

|                                                                                 |   |          |   |   |          |  
|-------------------------------------------------------------------------------- | - | -------- | - | - | -------- | -
|CONSOLIDATED STATEMENTS OF
      COMPREHENSIVE INCOME                            |   |          |   |   |          |  
|(in
      thousands of United States dollars)                                    |   |          |   |   |          |  
|For
      the years ended December 31                                            |   | 2014     |   |   | 2013     |  
|Net loss                                                                         | $ | (169,648 | ) | $ | (176,770 | )
|Items that may be reclassified subsequently
      to net loss:                   |   |          |   |   |          |  
|Unrealized gain / (loss) on
      investments (Note 8)                           |   | 2,512    |   |   | (5,331   | )
|Reclassification of accumulated losses on
      investments to net loss (Note 8) |   | 2,507    |   |   | 168      |  
|Total other comprehensive income / (loss)                                        |   | 5,019    |   |   | (5,163   | )
|Comprehensive loss                                                               | $ | (164,629 | ) | $ | (181,933 | )
|                                                                                 |   |          |   |   |          |  

|See accompanying notes to the consolidated financial
      statements | 3
|--------------------------------------------------------------------- | -

---

|                                                                                          |   |          |   |   |          |  
|----------------------------------------------------------------------------------------- | - | -------- | - | - | -------- | -
|CONSOLIDATED STATEMENTS OF CASH
      FLOWS                                               |   |          |   |   |          |  
|(in
      thousands of United States dollars)                                             |   |          |   |   |          |  
|For
      the years ended December 31                                                     |   | 2014     |   |   | 2013     |  
|                                                                                          |   |          |   |   |          |  
|OPERATING ACTIVITIES                                                                      |   |          |   |   |          |  
|Net loss                                                                                  | $ | (169,648 | ) | $ | (176,770 | )
|Proceeds from settlement of
      derivative liabilities                                  |   | -        |   |   | (528     | )
|Payments to settle other
      liabilities                                                |   | -        |   |   | (2,750   | )
|Payments to settle provisions                                                             |   | (3,924   | ) |   | (3,628   | )
|Non-cash adjustments to
      reconcile net loss to operating cash flows (Note 22)        |   | 238,281  |   |   | 261,755  |  
|Change in non-cash operating
      working capital (Note 22)                              |   | (4,295   | ) |   | (14,813  | )
|Operating cash flows                                                                      |   | 60,414   |   |   | 63,266   |  
|                                                                                          |   |          |   |   |          |  
|INVESTING ACTIVITIES                                                                      |   |          |   |   |          |  
|Expenditures on property, plant
      and equipment, mining interests & intangible assets |   | (188,829 | ) |   | (249,422 | )
|Proceeds from retained interest
      royalty (Note 12)                                   |   | 2,463    |   |   | -        |  
|Decrease / (increase) in
      restricted cash                                            |   | 14,778   |   |   | (1,686   | )
|Purchase of investments (Note 8)                                                          |   | -        |   |   | (21,272  | )
|Sale of investments (Note 8)                                                              |   | 23,284   |   |   | -        |  
|Investment in associate (Note
      9(b))                                                 |   | (5,674   | ) |   | -        |  
|Proceeds received on transfer of
      litigation claim (Note 20(a))                      |   | 3,177    |   |   | -        |  
|Investing cash flows                                                                      |   | (150,801 | ) |   | (272,380 | )
|                                                                                          |   |          |   |   |          |  
|FINANCING ACTIVITIES                                                                      |   |          |   |   |          |  
|Repayment of debt and equipment
      financing obligations (Note 14)                     |   | (254,143 | ) |   | (4,866   | )
|Proceeds from debt and equipment
      financing obligations (Note 14)                    |   | 309,982  |   |   | 79,813   |  
|Payment of financing fees on
      debt                                                   |   | (7,838   | ) |   | -        |  
|Payment of dividends (Note
      18(b))                                                   |   | (14,443  | ) |   | (27,720  | )
|Proceeds from exercise of stock
      options                                             |   | 2        |   |   | 3,094    |  
|Shares repurchased and cancelled
      (Note 18(a))                                       |   | -        |   |   | (301,066 | )
|Proceeds from issuance of
      flow-through shares (Note 15)                             |   | 4,566    |   |   | -        |  
|Financing cash flows                                                                      |   | 38,126   |   |   | (250,745 | )
|Impact of foreign exchange on cash                                                        |   | (1,360   | ) |   | (890     | )
|                                                                                          |   |          |   |   |          |  
|Net decrease in cash                                                                      |   | (53,621  | ) |   | (460,749 | )
|                                                                                          |   |          |   |   |          |  
|Cash and cash equivalents, beginning of
      period                                      |   | 142,652  |   |   | 603,401  |  
|Cash and cash equivalents, end of period                                                  | $ | 89,031   |   | $ | 142,652  |  
|                                                                                          |   |          |   |   |          |  

|See accompanying notes to the consolidated financial
      statements | 4
|--------------------------------------------------------------------- | -

---

|                                                                               |   |           |   |   |           |  
|------------------------------------------------------------------------------ | - | --------- | - | - | --------- | -
|CONSOLIDATED STATEMENTS OF
      SHAREHOLDERS EQUITY                          |   |           |   |   |           |  
|(in
      thousands of United States dollars)                                  |   |           |   |   |           |  
|For
      the years ended December 31                                          |   | 2014      |   |   | 2013      |  
|                                                                               |   |           |   |   |           |  
|Capital stock                                                                  |   |           |   |   |           |  
|Balance, beginning of period                                                   | $ | 2,021,837 |   | $ | 2,307,978 |  
|Shares repurchased and cancelled
      (Note 18(a))                            |   | -         |   |   | (295,536  | )
|Shares issued through dividend
      reinvestment plan                         |   | 1,924     |   |   | 1,969     |  
|Shares issued on redemption of
      restricted share units                    |   | 445       |   |   | -         |  
|Shares issued through employee
      share purchase plan                       |   | 2,323     |   |   | 2,008     |  
|Shares issued on redemption of
      deferred share units                      |   | 359       |   |   | 499       |  
|Shares issued for cash pursuant
      to exercise of stock options             |   | 2         |   |   | 3,094     |  
|Fair value of share-based
      compensation on stock options exercised        |   | 4         |   |   | 1,825     |  
|Shares issued through
      flow-through share agreement (Note 15)             |   | 3,097     |   |   | -         |  
|Balance, end of period                                                         | $ | 2,029,991 |   | $ | 2,021,837 |  
|                                                                               |   |           |   |   |           |  
|                                                                               |   |           |   |   |           |  
|Contributed surplus                                                            |   |           |   |   |           |  
|Balance, beginning of period                                                   | $ | 55,945    |   | $ | 50,881    |  
|Fair value of restricted share
      units redeemed                            |   | (445      | ) |   | -         |  
|Fair value of deferred share
      units redeemed                              |   | (359      | ) |   | (499      | )
|Fair value of share-based
      compensation on stock options exercised        |   | (4        | ) |   | (1,825    | )
|Share-based compensation                                                       |   | 7,179     |   |   | 7,388     |  
|Balance, end of period                                                         | $ | 62,316    |   | $ | 55,945    |  
|                                                                               |   |           |   |   |           |  
|                                                                               |   |           |   |   |           |  
|Deficit                                                                        |   |           |   |   |           |  
|Balance, beginning of period                                                   | $ | (284,632  | ) | $ | (62,917   | )
|Dividends declared (Note 18(b))                                                |   | (6,568    | ) |   | (39,592   | )
|Premium on shares repurchased
      and cancelled (Note 18(a))                 |   | -         |   |   | (5,353    | )
|Net loss                                                                       |   | (169,648  | ) |   | (176,770  | )
|Balance, end of period                                                         | $ | (460,848  | ) | $ | (284,632  | )
|                                                                               |   |           |   |   |           |  
|                                                                               |   |           |   |   |           |  
|Accumulated other comprehensive loss from
      available-for-sale investments |   |           |   |   |           |  
|Balance, beginning of period                                                   | $ | (5,268    | ) | $ | (105      | )
|Other comprehensive income /
      (loss)                                      |   | 5,019     |   |   | (5,163    | )
|Balance, end of period                                                         | $ | (249      | ) | $ | (5,268    | )
|                                                                               |   |           |   |   |           |  
|                                                                               |   |           |   |   |           |  
|Total shareholders' equity                                                     | $ | 1,631,210 |   | $ | 1,787,882 |  
|                                                                               |   |           |   |   |           |  

|See accompanying notes to the consolidated financial
      statements | 5
|--------------------------------------------------------------------- | -

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|1. | Corporate information
|-- | ---------------------

AuRico Gold Inc. and its subsidiaries (collectively, the
Company or AuRico Gold) are engaged in the mining, development and
exploration of resource properties. AuRico Gold Inc. is a publicly traded
company with common shares listed on the Toronto Stock Exchange (TSX: AUQ) and
the New York Stock Exchange (NYSE: AUQ). The Company is incorporated and
domiciled in Canada and its head office and registered office is located at 110
Yonge Street, Suite 1601, Toronto, Ontario, M5C 1T4.

The consolidated financial statements of the Company and its
subsidiaries were authorized for issue in accordance with a resolution of the
Board of Directors dated February 19, 2015.

|   |                                                       
|-- | ------------------------------------------------------
|2. | Basis of preparation and statement of
      compliance

These consolidated financial statements are prepared in
accordance with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB), effective for the year
ended December 31, 2014.

These consolidated financial statements have been prepared
using the historical cost convention, other than for certain financial
instruments, which are measured in accordance with the policy disclosed in note
4(t).

|   |                                                                
|-- | ---------------------------------------------------------------
|3. | Change in accounting policy and retrospective
      restatement

The consolidated financial statements reflect the retrospective
application of a voluntary change in accounting policy adopted in 2014 to
classify, in the Consolidated Statements of Operations, foreign exchange gains
and losses arising on the translation of deferred income tax assets and
liabilities within deferred income tax recovery instead of within foreign
exchange losses, as previously reported. The change in accounting policy has
been adopted in accordance with IAS 12, Income Taxes,which provides a
policy choice to classify exchange differences arising from translation of
deferred income tax assets and liabilities within deferred income tax expense /
(recovery). The Company considers the classification of these exchange
differences within deferred income tax recovery in the Consolidated Statements
of Operations to be the most useful to financial statement users and,
consequently, that this presentation results in reliable and more relevant
information.

The following table outlines the effect of this accounting
policy change for the years ended December 31, 2014 and 2013:

|                                         |   | Prior to    |   |   | Restatement |   |   | Subsequent to |  
|---------------------------------------- | - | ----------- | - | - | ----------- | - | - | ------------- | -
|For the year ended December 31, 2014:    |   | restatement |   |   | Impact      |   |   | Restatement   |  
|Foreign exchange gains / (losses)        | $ | 18,729      |   | $ | (25, 368    | ) | $ | (6,639        | )
|Deferred income tax recovery             |   | 910         |   |   | 25, 368     |   |   | 26,278        |  
|Net loss                                 |   | (169,648    | ) |   | -           |   |   | (169,648      | )
|                                         |   |             |   |   |             |   |   |               |  
|For the year ended December 31, 2013:    |   | Reported    |   |   | Restatement |   |   | Restated      |  
|Foreign exchange gains / (losses)        | $ | 10,927      |   | $ | (15,216     | ) | $ | (4,289        | )
|Deferred income tax (expense) / recovery |   | (14,456     | ) |   | 15,216      |   |   | 760           |  
|Net loss                                 |   | (176,770    | ) |   | -           |   |   | (176,770      | )
|                                         |   |             |   |   |             |   |   |               |  

|4.  | Summary of significant accounting policies
|--- | ------------------------------------------
|    |                                           
|(a) | Adoption of new accounting standards      

The Company adopted the following accounting standards and
amendments to accounting standards, effective January 1, 2014:

IFRIC 21, Levies, sets out criteria for the recognition
of liabilities for levies imposed by governments. IFR IC 21 identifies the
obligating event for the recognition of a liability as the activity that
triggers the payment of the levy in accordance with the relevant legislation.
There was no impact on the Companys consolidated financial statements upon the
adoption of this interpretation.

Amendments to IAS 32, Financial Instruments: Presentation,clarify situations in which an entity has a legally enforceable right to
set-off a financial liability and financial asset. The amendments to IAS 32 also
clarify when a settlement mechanism provides for net settlement or gross settlement that
is equivalent to net settlement. There was no impact on the Companys
consolidated financial statements upon the adoption of these amendments.

6

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

Amendments to IAS 36, Impairment of assets,address the
circumstances in which the recoverable amount of assets or cash-generating units
is required to be disclosed, clarify the disclosures required, and introduce a
requirement to disclose the discount rate used in determining impairment (or
reversals) where the recoverable amount (based on fair value less costs of
disposal) is determined using a present value technique. There was no impact on
the Companys consolidated financial statements upon the adoption of these
amendments.

|(b) | Basis of consolidation
|--- | ----------------------

These consolidated financial statements include the accounts of
the Company and the following subsidiaries:

|Company                                                |  | Principal activity      |  |  | Country of incorporation
|------------------------------------------------------ |  | ----------------------- |  |  | ------------------------
|AuRicoGold Chihuahua, S.A. de C.V., SOFOM
      E.N.R. |  | Administrative services |  |  | Mexico                  
|AuRico Gold Holdings Inc.                              |  | Holding company         |  |  | Canada                  
|AuRico Gold Nova Scotia Ltd.                           |  | Administrative services |  |  | Canada                  
|AuRico Gold (USA), Inc.                                |  | Administrative services |  |  | United States of America
|Capital Gold Corporation                               |  | Holding company         |  |  | United States of America
|Leadville Mining & Milling Holding
      Corporation   |  | Holding company         |  |  | United States of America
|Minera Santa Rita, S. de R.L. de C.V.                  |  | Gold and silver mining  |  |  | Mexico                  
|Nayarit Gold Inc.                                      |  | Holding company         |  |  | Canada                  
|Oro de Altar, S.A. de C.V.                             |  | Holding company         |  |  | Mexico                  

These subsidiaries are controlled by the Company, and are
wholly-owned. Control exists when the Company is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee.

The Company also consolidates the accounts of Caborca
Industrial S.A. de C.V., a Mexican corporation wholly-owned by two senior
officers of the Company, which provides mining support services to the Companys
El Chanate mine. This entity is consolidated in accordance with IFRS 10,
Consolidated Financial Statements.

All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.

|(c) | Investments in associates and joint
  ventures
|--- | ----------------------------------------------

The Company accounts for investments in associates and joint
ventures using the equity method of accounting. The carrying value of the
Companys investments in associates and joint ventures represents the cost of
the investment, including the Companys share of retained earnings and losses
subsequent to formation. At the end of each reporting period, the Company
assesses its investments for any indicators of impairment.

|(d) | Foreign currency
|--- | ----------------

Functional and presentation currency

These consolidated financial statements are expressed in United
States dollars (US dollars), which is the functional currency of the Company
and the presentation currency of the consolidated financial statements. The
functional currency of all of the Companys subsidiaries is also the US
dollar.

Translation of transactions and balances into the
functional currency

Transactions in currencies other than an entitys functional
currency (foreign currencies) are recognized at the rates of exchange
prevailing at the dates of the transactions. At the end of each reporting
period, monetary assets and liabilities denominated in foreign currencies are
translated at the rates prevailing at that date. Foreign currency non-monetary
items that are measured in terms of historical cost are not retranslated.

Exchange differences are recognized in net loss in the period
in which they arise. Exchange differences on deferred foreign tax assets and
liabilities are presented as deferred tax expense / (recovery) on the
Consolidated Statements of Operations. Unrealized gains and losses due to
movements in exchange rates on cash and cash equivalents held in foreign
currencies are shown separately on the Consolidated Statements of Cash Flows.

|(e) | Revenue recognition
|--- | -------------------

Revenue from the sale of gold, silver and doré, including
by-product revenue, is recognized when persuasive evidence of a sale arrangement
exists, the risks and rewards of ownership pass to the purchaser, including
title risk, the selling price is measurable, and collectability is probable. The risks and
rewards of ownership are considered to have been transferred when title passes
to the customer. Revenue from the sale of gold, silver and doré is measured at
the fair value of the consideration received or receivable, and may be subject
to adjustment once final weights and assays are determined.

7

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|(f) | Cash and cash equivalents
|--- | -------------------------

The Company considers deposits in banks, certificates of
deposits, and short-term investments with original maturities of three months or
less from the acquisition date as cash and cash equivalents.

|(g) | Inventories
|--- | -----------

Supplies inventory

Supplies inventory consists of mining supplies and consumables
used in the operation of the mines, and is valued at the lower of average cost
and net realizable value.

Ore stockpiles inventory

Stockpiles represent ore that has been mined and is available
for further processing. Stockpiles are measured by estimating the number of
tonnes added and removed from the stockpile, the number of contained ounces
(based on assay data) and the estimated metallurgical recovery rates (based on
the expected processing method). Stockpile ore tonnages are verified by periodic
surveys. Costs are allocated to stockpiles based on the current mining cost per
tonne incurred up to the point of stockpiling the ore, including applicable
overhead, depletion and amortization relating to mining operations, to the
extent determined recoverable, and are removed at the average cost per tonne.
Ore stockpiles inventory is measured at the lower of cost and net realizable
value.

Ore in process inventory

The recovery of gold and silver is achieved through milling and
heap leaching processes. Costs are added to ore on leach pads and in the mill
based on the current stockpiled mining cost and current processing cost,
including applicable overhead, depletion and amortization relating to mining and
processing operations. Costs are removed from ore on leach pads and in the mill
as ounces are recovered, based on the average cost per recoverable ounce of gold
and silver in ore in process inventory. Ore in process inventory is measured at
the lower of cost and net realizable value.

Finished goods inventory

Finished goods inventory consists of gold, silver and doré
bars, and is valued at the lower of cost and net realizable value.

For all classes of ore inventory, net realizable value is
calculated as the difference between the estimated future metal revenue based on
prevailing and / or long-term metal prices as appropriate, and estimated costs
to complete production into a saleable form.

|(h) | Long-lived assets
|--- | -----------------

Property, plant and equipment

Property, plant and equipment is recorded at cost less
accumulated amortization and accumulated impairment losses. The initial cost of
an asset is comprised of its purchase price or construction cost, any costs
directly attributable to bringing the asset into operation, the initial estimate
of any reclamation obligation, and for qualifying assets, borrowing costs. The
purchase price or construction cost is the aggregate amount paid and the fair
value of any other consideration given to acquire the asset. The capitalized
value of a finance lease is also included within property, plant and equipment,
and is measured at the lower of the present value of the minimum lease payments
and the fair value of the leased asset.

Subsequent costs are included in the assets carrying amount
when it is probable that future economic benefits associated with the asset will
flow to the Company, and the costs can be measured reliably. This would include
costs related to the refurbishment or replacement of major components of an
asset, when the refurbishment results in a significant extension in the physical
life of the component. All other repairs and maintenance costs are recognized in
net loss as incurred.

8

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The cost of property, plant and equipment, less any applicable
residual value, is allocated over the estimated useful life of the asset on a
straight-line basis, or on a unit-of-production basis if that method is more
reflective of the allocation of benefits among periods. Amortization commences
on an asset when it has been fully commissioned and is available for use.
Amortization rates applicable to each category of property, plant and equipment,
with the exception of land, are as follows:

|Asset                                |  | Useful life       
|------------------------------------ |  | ------------------
|Leasehold improvements               |  | 3 years           
|Mobile equipment                     |  | 2-10 years        
|Other equipment                      |  | 2-20 years        
|Processing plant                     |  | 2-20 years        
|Shaft and underground infrastructure |  | Unit-of-production
|Vehicles                             |  | 3-6 years         
|Buildings                            |  | 7-20 years        
|Office equipment                     |  | 2-8 years         

When components of an item of property, plant and equipment
have different useful lives than those noted above, they are accounted for as
separate items of property, plant and equipment. Each asset or components
estimated useful life is determined considering its physical life limitations;
however this physical life cannot exceed the remaining life of the mine at which
the asset is utilized. Estimates of remaining useful lives and residual values
are reviewed annually. Any changes in estimates of useful lives are accounted
for prospectively from the date of the change.

Exploration and evaluation assets

Expenditures incurred prior to the Company obtaining the right
to explore are expensed in the period in which they are incurred.

Exploration and evaluation expenditures include costs such as
exploratory drilling, sample testing, costs of pre-feasibility studies, and for
qualifying assets, borrowing costs. Subsequent to obtaining the legal right to
explore, these costs are capitalized on a project-by-project basis pending
determination of the technical feasibility and commercial viability of the
project. All capitalized exploration and evaluation expenditures are monitored
for indications of impairment, to ensure that exploration activities related to
the property are continuing and/or planned for the future. If an exploration
property does not prove viable, all unrecoverable costs associated with the
project are expensed in the period in which that determination is made.

Exploration and evaluation assets are not depleted. These
amounts are reclassified from exploration and evaluation assets to mining
interests once the work completed to date supports the future development of the
property and management intends to develop the property. Prior to being
reclassified to mining interests, exploration and evaluation assets are assessed
for impairment.

Mining interests

All expenditures to ready the property for production are
capitalized within mining interests, other than those costs related to the
construction of related property, plant and equipment, which are capitalized
within construction in progress. Expenditures capitalized to mining interests
include all costs directly related to development activity and a proportion of
overhead costs related to development activity. Any proceeds from the sale of
metals during the development and commissioning phase of a project are netted
against the expenditures being capitalized. The development and commissioning
phase ceases upon the commencement of commercial production.

Subsequent to the commencement of commercial production,
further development expenditures incurred with respect to a mining interest are
capitalized as part of the mining interest, when it is probable that additional
future economic benefits associated with the expenditure will flow to the
Company. Otherwise, such expenditures are classified as a cost of production.

Upon commencement of commercial production, mining interests
are depleted over the life of the mine using the unit-of-production method based
on estimated proven and probable reserves of the mine and the portion of
mineralization from measured, indicated and inferred resources expected to be
classified as reserves. The Company determines the portion of mineralization
expected to be classified as reserves by considering the degree of confidence in
the economic extraction of the resource, which is affected by long-term metal
price assumptions, cut-off grade assumptions, and drilling results. These
assessments are made on a mine-by-mine basis.

9

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The expected useful lives used in depletion calculations are
determined based on the facts and circumstances associated with the mining
interest. Any changes in estimates of useful lives are accounted for
prospectively from the date of the change.

Commercial production

Commercial production is reached when an open pit or
underground mine is in the condition necessary for it to be capable of operating
in the manner intended by management. The Company considers a range of factors
when determining whether commercial production has been reached, which may
include the completion of all required major capital expenditures, the
demonstration of continuous production near the level required by the design
capacity of the processing facilities, and the demonstration of continuous
throughput levels at or above a target percentage of the design capacity. The
Company assesses the ability to sustain production and throughput over a period
of approximately one to three months, depending on the complexity of the
operation, prior to declaring that commercial production has been reached.

Capitalized stripping costs

Pre-production stripping costs are capitalized as part of the
cost of constructing a mine.

Mining costs associated with stripping activities during the
production phase of a mine are capitalized only if the Company can identify the
component of the ore body for which access is obtained, the costs associated
with the related stripping activities can be measured reliably, and the
activities represent a future benefit to the mining interest, in that access is
gained to sources of reserves and resources that will be produced in future
periods that would otherwise not have been accessible. Production stripping
costs are allocated between inventory and capital based on the expected volume
of waste extracted for a given volume of ore production. The expected volume of
waste to be allocated to inventory is determined with reference to the life of
mine stripping ratio of a particular mine or deposit, with the remaining amount
allocated to capital. The amount of waste capitalized is calculated by
multiplying the stripping tonnes mined during the period by the current mining
cost per tonne in the open pit.

Capitalized stripping costs are depleted over the expected
reserves and resources benefiting from the stripping activity using the
unit-of-production method based on estimated proven and probable reserves, and
the portion of mineralization expected to be classified as reserves.

Investment tax credits

Investment tax credits are earned as a result of incurring
eligible exploration and development expenses prior to commercial production.
Investment tax credits are accounted for as a reduction to property, plant and
equipment or mining interests. Investment tax credits also arise as a result of
incurring eligible research and development expenses and these credits are
recorded as a reduction to the related expenses.

Derecognition

Upon replacement of a major component, or upon disposal or
abandonment of a long-lived asset, the carrying amounts of the assets are
derecognized with any associated gains or losses recognized in net loss.

|(i) | Intangible assets
|--- | -----------------

Identifiable intangible assets are recorded at fair value on
the date of acquisition. Subsequent to initial recognition, they are recorded at
cost less accumulated amortization and accumulated impairment losses.
Identifiable intangible assets with a finite useful life are amortized on a
straight-line basis over their expected useful life, unless another method
represents a more accurate allocation of the expense over their useful life.
Amortization of the retained interest royalty is determined using the
unit-of-production method based on the ounces of production that are expected to
generate the cash flows that will be attributable to the Company, and commenced
once the Company became entitled to receive cash flows. Amortization expense
resulting from intangible assets, other than the retained interest royalty, is
included in amortization and depletion expense on the Consolidated Statements of
Operations. Amortization and depletion for the retained interest royalty is
included in other (loss) / income on the Consolidated Statements of Operations.
The estimated useful lives of the Companys intangible assets with a finite
useful life are as follows:

|Asset                     |  | Useful life        
|------------------------- |  | -------------------
|Transmission rights       |  | 7-20 years         
|Software                  |  | 1-3 years          
|Retained interest royalty |  | Units of production

10

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|(j) | Goodwill
|--- | --------

Goodwill represents the difference between the consideration
transferred in a business combination and the fair value of the identifiable net
assets acquired, and is not amortized. Goodwill, upon acquisition, is allocated
to the cash-generating unit (CGU) or group of CGUs expected to benefit from
the related business combination for the purposes of impairment testing. A CGU
is defined as the smallest identifiable group of assets that generates cash
inflows, which are largely independent of the cash inflows from other assets.
Each of the Companys operating mines is a CGU for purposes of goodwill
impairment testing.

|(k) | Impairment of non-financial assets and
    goodwill
|--- | ---------------------------------------------------

The carrying amounts of non-financial assets, excluding
inventories and deferred income tax assets, are reviewed for impairment at each
reporting date, or whenever events or changes in circumstances indicate the
carrying amounts may not be recoverable. If there are indicators of impairment,
a review is undertaken to determine whether the carrying amounts are in excess
of their recoverable amounts. Reviews are undertaken on an asset-by-asset basis,
except where the recoverable amount for an individual asset cannot be
determined, in which case the review is undertaken at the CGU level.

On an annual basis, the Company evaluates the carrying amount
of CGUs to which goodwill has been allocated to determine whether such carrying
amount may be impaired. To accomplish this, the Company compares the recoverable
amount of a CGU to its carrying amount. This evaluation is performed more
frequently if there is an indication that a CGU may be impaired.

If the carrying amount of a CGU or non-financial asset exceeds
the recoverable amount, being the higher of its fair value less costs to sell
and its value-in-use, an impairment loss is recognized in net loss as the excess
of the carrying amount over the recoverable amount. With respect to CGUs,
impairment losses are allocated first to reduce the carrying amount of any
goodwill allocated to the CGUs, and then to reduce the carrying amounts of the
other assets in the CGU on a pro-rata basis.

Where the recoverable amount is assessed using discounted cash
flow techniques, the estimates are based on detailed mine or production plans.
The mine plan is the basis for forecasting production output in each future year
and for forecasting production costs. For value-in-use calculations, production
costs and output in the mine plan may be revised to reflect the continued use of
the asset in its present form.

Non-financial assets that have previously been impaired are
tested for a possible reversal of the impairment whenever events or changes in
circumstances indicate that the impairment may have reversed, or may have
partially reversed. In these instances, the impairment loss is reversed to the
recoverable amount but not beyond the carrying amount, net of amortization, that
would have arisen if the prior impairment loss had not been recognized. Goodwill
impairments are not reversed.

|(l) | Impairment of financial
assets
|--- | ------------------------------

At each reporting date, the Company assesses whether there is
any objective evidence that a financial asset or a group of financial assets,
other than those classified as fair value through profit or loss, is impaired.
Financial assets include receivables and investments. A financial asset or a
group of financial assets is deemed to be impaired if there is objective
evidence of impairment as a result of one or more events that have occurred
after the initial recognition of the asset that negatively impact the estimated
future cash flows of the financial asset or the group of financial assets.

|(m) | Impairment of investments in associate and joint
      venture
|--- | --------------------------------------------------------------

The carrying amounts of investments in associate and joint
venture are reviewed for impairment at each reporting date, or whenever events
or changes in circumstances indicate the carrying amounts may not be
recoverable. If there are indicators of impairment, a review is undertaken to
determine whether the carrying amounts are in excess of their recoverable
amounts. Indicators of impairment include observable data suggesting a
measurable decrease in the estimated future cash flows of the joint venture or
associate operations. If the carrying amount of an associate or joint venture
exceeds the recoverable amount, being the higher of its fair value less costs to
sell and its value-in-use, an impairment loss is recognized in net loss as the
excess of the carrying amount over the recoverable amount.

|(n) | Flow-through shares
|--- | -------------------

The Company may issue flow-through common shares to finance its
Canadian exploration program. Pursuant to the Canadian Income Tax Act and the
terms of the flow-through share agreements, these shares transfer the tax
deductibility of qualifying resource expenditures to investors. Proceeds
received from flow-through share agreements are separated into a liability and
share capital. The liability, which represents the obligation to renounce
flow-through exploration expenditures, is calculated as the excess of cash
consideration received over the market price of the Companys shares on the
agreements closing date. Upon qualifying exploration expenditures being
incurred, the Company derecognizes the liability and recognizes it as other
income. The related deferred tax expense is also recognized at the time the
expenditures are incurred.

The Company may also be subject to a Part XII.6 tax on
flow-through proceeds renounced, in accordance with the Canadian Income Tax Act
flow-through regulations. When applicable, the estimated tax payable is accrued
until paid.

11

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|(o) | Provisions
|--- | ----------

Reclamation provisions

The Companys mining and exploration activities are subject to
various governmental laws and regulations relating to the protection of the
environment. These environmental regulations are continually changing, and the
Company has made, and intends to make in the future, expenditures to comply with
such laws and regulations. The timing of these expenditures is dependent upon a
number of factors including the life of the mine, the operating licence
conditions, and the laws, regulations, and environment in which the mine
operates.

Reclamation provisions are recognized at the time an
environmental disturbance occurs and are measured at the Companys best estimate
of the expected future cash flows required to reclaim the disturbance for each
mine operation, which are adjusted to reflect inflation, and discounted to their
present value. The inflation rate used is determined based on external forecasts
for inflation in the country in which the related mine operates. Expected future
cash flows reflect the risks and probabilities that alternative estimates of
cash flows could be required to settle the obligation. The discount rate used is
a pre-tax rate that reflects current market assessments of the time value of
money specific to the currency in which the cash flows are expected to be paid.
The discount rate does not reflect risks for which the cash flows have been
adjusted. Significant estimates are involved in forming expectations of future
activities and the amount and timing of the associated cash flows. Those
expectations are based on existing environmental and regulatory requirements or,
if more stringent, Company policies that give rise to a constructive
obligation.

Upon initial recognition of a reclamation provision, the
corresponding cost is capitalized as an asset, representing part of the cost of
acquiring the future economic benefits of the operation. The capitalized cost of
reclamation and rehabilitation activities is recognized in mining interests and
depreciated in accordance with the Company's policy for the related asset. The
provision is progressively increased over the life of the operation as the
effect of discounting unwinds, creating an expense included in finance costs on
the Consolidated Statements of Operations.

Reclamation provisions are adjusted for changes in estimates.
Such adjustments, which are not the result of the current production of
inventory, are accounted for as a change in the corresponding capitalized cost,
except where a reduction in the provision is greater than the unamortized
capitalized cost of the related assets. In instances where the capitalized cost
of the related assets is nil, or will be reduced to nil, the remaining
adjustment is recognized as a gain or loss in reclamation, care and maintenance
costs on the Consolidated Statements of Operations. If reclamation and
restoration costs are incurred as a consequence of the production of inventory,
the costs are recognized as a cost of that inventory. Factors influencing such
changes in estimates include revisions to estimated reserves, resources and
lives of mines; developments in technologies; regulatory requirements and
environmental management strategies; changes in estimated costs of anticipated
activities, including the effects of inflation and movements in foreign exchange
rates; and movements in interest rates affecting the discount rate applied.

Other provisions

Provisions are recognized when the Company has a present
obligation (legal or constructive), as a result of past events, and it is
probable that an outflow of resources that can be reliably estimated will be
required to settle the obligation. Provisions are measured at the present value
of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the obligation. The increase in the provision due to
the passage of time is recognized as interest expense and included in finance
costs on the Consolidated Statements of Operations.

|(p) | Employee benefits
|--- | -----------------

Short-term employee benefits

The Company accrues liabilities for short-term employee
benefits such as wages, salaries, bonuses, paid vacation, and other benefits
expected to be settled within 12 months from the end of the reporting period.
The liabilities for short-term benefits are measured on an undiscounted basis at
the amounts expected to be paid when the liabilities are settled. These amounts
are recognized in trade payables and accrued liabilities, with offsetting
charges to cost of sales (production costs) or general and administrative
expense.

12

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

Termination benefits

The Company accrues liabilities for involuntary termination and
severance benefits when the termination has been communicated to the employee,
and the employee acknowledges receipt. The liabilities for termination benefits
are measured on an undiscounted basis at the amounts expected to be paid when
the liabilities are settled.

|(q) | Share-based compensation
|--- | ------------------------

The Company measures all equity-settled share-based awards made
to employees and others providing similar services (collectively, employees)
based on the fair value of the options or units on the date of grant.

The grant date fair value of options is estimated using an
option pricing model and is recognized as compensation expense over the vesting
period, based on the number of options that are expected to vest. A
corresponding increase is recognized in equity. The fair values of the Companys
deferred share units, performance share units, and equity-settled restricted
share units are determined based on the market value of the Companys shares on
the date of grant, and is expensed over the vesting period based on the
estimated number of awards that are expected to vest.

The Company awards cash-settled share-based compensation to
certain employees in the form of restricted share units. In accounting for these
awards, the Company recognizes the fair value of the amount payable to employees
as compensation expense as they are earned, based on the estimated number of
units that are expected to vest. The corresponding liability is re-measured at
fair value on each reporting date and upon settlement, with changes in fair
value recognized in net loss for the period. The fair value of restricted share
units is determined by reference to the Companys share price when the units are
awarded or re-measured.

The Company also maintains an employee share purchase plan.
Under this plan, contributions by the Companys employees are matched to a
specific percentage by the Company and are recognized as an expense when the
Companys obligation to contribute arises.

Share-based arrangements in which the Company receives goods or
services as consideration for its own equity instruments are accounted for as
equity-settled share-based payment transactions regardless of how the equity
instruments are obtained by the Company. These share-based arrangements are
measured at the fair value of goods or services received unless the fair value
of the goods or services cannot be reliably measured, in which case they are
measured at the fair value of the equity instruments issued.

|(r) | Income taxes
|--- | ------------

Income tax expense is comprised of current and deferred income
tax. Current and deferred income taxes are recognized in net loss except to the
extent that they relate to a business combination, or to items recognized
directly in equity or other comprehensive income.

Current income taxes

Current income tax expense represents the income tax expected
to be payable on the Companys taxable earnings for the year using rates that
are enacted or substantively enacted at the balance sheet date. Taxable earnings
differ from accounting earnings reported in the Consolidated Statements of
Operations due to differences in timing of amounts deductible or taxable for tax
purposes and due to exclusions of items that are not taxable or deductible.
Current income tax includes adjustments for tax expense expected to be payable
or recoverable in respect of previous periods.

Deferred income taxes

Deferred income tax assets and liabilities represent income
taxes expected to be payable or recoverable on differences between the carrying
amount of assets and liabilities in the Companys consolidated financial
statements and the corresponding tax basis used in the computation of taxable
earnings. Deferred income tax assets also represent income taxes expected to be
recoverable on unused tax losses and tax credits carried forward. Deferred
income tax is calculated using the liability method on temporary differences
between the tax basis of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.

Deferred income taxes are measured using the enacted or
substantively enacted tax rates at the balance sheet date that are expected to
be in effect when the differences reverse or when unclaimed losses are utilized.
Deferred income tax liabilities are generally recognized for all taxable
temporary differences, with some exceptions described below. Deferred income tax
assets are recognized to the extent that it is probable that taxable earnings
will be available against which deductible temporary differences, unused tax
losses and tax credits can be used. Neither deferred income tax liabilities, nor
deferred income tax assets, are recognized as a result of temporary differences
that arise from (a) the initial recognition of goodwill, (b) a transaction,
other than a business combination, that affects neither accounting earnings nor
taxable earnings, or (c) differences relating to investments in subsidiaries to
the extent that it is probable that they will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset
to the extent there is a legally enforceable right to offset current income tax
liabilities and assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities, but the
entity intends to settle current income tax liabilities and assets on a net
basis or their tax assets and liabilities will be realized simultaneously.

13

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The carrying amount of deferred income tax assets is reviewed
at the end of each reporting period and adjusted to the extent that it is no
longer probable that sufficient taxable earnings will be available to allow the
benefit, or all or part of the asset, to be utilized. To the extent that an
asset not previously recognized fulfils the criteria for asset recognition, a
deferred income tax asset is recognized.

|(s) | Loss per share
|--- | --------------

Basic loss per share is calculated based on the weighted
average number of common shares and common share equivalents outstanding for the
period. Diluted loss per share is calculated using the treasury method, except
when assessing the dilution impact of convertible senior notes, restricted share
units and performance shares units, where the if-converted method is used. The
treasury method assumes that outstanding stock options and warrants with an
average exercise price below the market price of the underlying shares, are
exercised and the assumed proceeds are used to repurchase common shares of the
Company at the average market price of the common shares for the period. The
if-converted method assumes that all convertible senior notes, restricted share
units, and performance share units have been converted in determining fully
diluted loss per share if they are in-the-money, except where such conversion
would be anti-dilutive.

|(t) | Financial instruments
|--- | ---------------------

Financial instruments are measured at fair value on initial
recognition of the instrument. Measurement in subsequent periods depends on
whether the financial instrument has been classified as financial assets at
fair value through profit or loss, available-for-sale financial assets,
held-to-maturity investments, loans and receivables, financial liabilities
at fair value through profit or loss, or other financial liabilities.

The Companys financial instruments are classified and
subsequently measured as follows:

|Asset / Liability                            |  | Classification                    |  | Subsequent Measurement
|-------------------------------------------- |  | --------------------------------- |  | ----------------------
|Cash and cash equivalents                    |  | Fair value through profit or loss |  | Fair value            
|Receivables                                  |  | Loans and receivables             |  | Amortized cost        
|Prepayment option embedded derivative        |  | Fair value through profit or loss |  | Fair value            
|Contingent consideration                     |  | Fair value through profit or loss |  | Fair value            
|Investments                                  |  | Available-for-sale                |  | Fair value            
|Warrants held                                |  | Fair value through profit or loss |  | Fair value            
|Payables, provisions and other liabilities   |  | Other financial liabilities       |  | Amortized cost        
|Debt and equipment financing obligations     |  | Other financial liabilities       |  | Amortized cost        
|Option component of convertible senior notes |  | Fair value through profit or loss |  | Fair value            
|Derivatives                                  |  | Fair value through profit or loss |  | Fair value            

Financial assets and financial liabilities classified as fair
value through profit or loss are measured at fair value with changes in those
fair values recognized in net loss. Financial assets classified as
available-for-sale are measured at fair value, with changes in those fair values
recognized in other comprehensive income (OCI).

Investments in equity securities classified as
available-for-sale financial assets are accounted for at their fair value, which
is determined based on the last quoted market price. Changes in the market value
of available-for-sale equity securities as well as the related foreign exchange
and tax impact, if any, are accounted for in accumulated other comprehensive
income until the equity securities are sold or are determined to be
other-than-temporarily impaired. When available-for-sale equity securities are
sold or are determined to be other-than-temporarily impaired, the related
accumulated change in accumulated other comprehensive income is reclassified to
net loss.

The senior secured notes represent a financial liability with
an embedded derivative. The debt component of the senior secured notes is
presented within debt and equipment financing obligations on the Consolidated
Balance Sheets. The embedded derivative, which is an option that represents a
derivative asset to the Company, will be recognized as an offset to debt and
equipment financing obligations on the Consolidated Balance Sheets. The debt
component is initially recognized as the difference between the fair value of
the financial instrument as a whole and the fair value of the embedded
derivative. Subsequently, the debt component is recognized at amortized cost
using the effective interest rate method. The embedded derivative represents the
prepayment option and is classified as a financial asset at fair value through
profit or loss. The embedded derivative is subsequently recognized at fair value
with changes in fair value recognized in net loss. Interest expense relating to the debt component is also recognized in
net loss, with the exception of interest expense capitalized as borrowing costs
in accordance with note 4(h).

14

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

Convertible senior notes, under the terms of which the Company
has the right to settle all or part of the instrument in cash on the conversion
date, represent a financial liability with an embedded derivative. The debt
component of the convertible senior notes is presented within debt and equipment
financing obligations on the Consolidated Balance Sheets, and is initially
recognized as the difference between the fair value of the financial instrument
as a whole and the fair value of the embedded derivative. The debt component is
subsequently recognized at amortized cost using the effective interest rate
method. The embedded derivative represents the conversion feature and is
classified as a financial liability at fair value through profit or loss. The
embedded derivative is subsequently recognized at fair value with changes in
fair value recognized in net loss. Interest expense relating to the debt
component is also recognized in net loss, with the exception of interest expense
capitalized as borrowing costs in accordance with note 4(h).

Fair values are based on quoted market prices where available,
or where no active market exists, fair values are estimated using a variety of
valuation techniques and models. These valuation techniques and models include
recent arms length market transactions for similar instruments, reference to
current market value of another instrument which is substantially the same,
discounted cash flow analysis, and option pricing models.

Transaction costs, other than those related to financial
instruments classified as fair value through profit or loss, which are expensed
as incurred, are combined with the fair value of the financial asset or
financial liability on initial recognition and amortized using the effective
interest rate method. If modifications are made to a financial liability that
are not considered to be substantial, the transaction costs related to this
modification are combined with the carrying amount, and amortized over the life
of the instrument using the effective interest rate method. If modifications are
made that are considered to be substantial, the transaction costs related to the
modification are expensed.

All derivative instruments, including embedded derivatives, are
recorded on the balance sheet at fair value unless exempted from derivative
treatment as an own-use instrument. All changes in fair value are recorded in
net loss unless they are designated in a valid cash flow hedging relationship
(note 4(u)), in which case changes in fair value are recorded in accumulated
other comprehensive income.

Financial assets are derecognized when the rights to receive
cash flows from the asset have expired or have been transferred and the Company
has transferred substantially all of the risks and rewards of ownership.
Financial liabilities are derecognized when they have been settled by the
Company, or when an obligation expires. In instances where a financial liability
is replaced by another from the same lender on substantially different terms, or
the terms of the existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original liability and the
recognition of a new liability, with any difference recognized in the
Consolidated Statements of Operations.

Financial assets and financial liabilities are offset and the
net amount reported in the Consolidated Balance Sheets only if there is an
enforceable legal right to offset the recognized amounts and the intention is to
settle on a net basis, or to realize the assets and settle the liabilities
simultaneously.

|(u) | Hedges
|--- | ------

Hedging relationships that meet documentation requirements, and
that can be proven to be effective both at the inception and over the term of
the relationship qualify for hedge accounting. At the inception of the
transaction, the Company documents the relationship between hedging instruments
and hedged items, the method for assessing effectiveness, as well as its risk
management objective and strategy for undertaking various hedge transactions.
The Company makes an assessment, both at the inception of the hedge and on an
ongoing basis, of whether the derivatives that are used in hedging transactions
have been and will continue to be highly effective in offsetting changes in fair
values or cash flows of hedged items.

The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow hedges are recognized
as other comprehensive income and are presented within equity as accumulated
other comprehensive income. The gain or loss relating to the ineffective portion
is recognized immediately in net loss. Amounts accumulated in equity are
recycled to net loss in the period in when the hedged item will affect net loss.
However, when the forecasted transaction that is hedged results in the
recognition of a non-financial asset or liability, the gains and losses
previously deferred in equity are transferred from equity and included in the
measurement of the initial cost or carrying amount of the related asset or
liability.

When a hedging instrument expires or is sold or terminated, or
when a hedge no longer meets the criteria for hedge accounting, any cumulative
gain or loss existing in equity at that time remains in equity and is recognized
when the forecasted transaction is ultimately recognized in net loss. When a
forecasted transaction is no longer expected to occur, the cumulative gain or
loss existing in accumulated other comprehensive income is immediately charged
to net loss.

15

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|(v) | Segment reporting
|--- | -----------------

Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the
Chief Executive Officer. The Companys operating segments, before aggregation,
have been identified as the Companys individual operating and development stage
mines. Aggregation of one or more operating segments into a single operating
segment is permitted if aggregation is consistent with the core principle of the
standard, the operating segments have similar economic characteristics, and the
operating segments have a number of other similarities, including similarities
in the nature of their products, production processes, and regulatory
environment. The Companys reportable segments are consistent with the
identified operating segments and consist of the geographical regions in which
the Company operates.

|(w) | Standards issued but not yet
  adopted
|--- | --------------------------------------

For the purposes of preparing and presenting the Companys
consolidated financial statements, the Company has adopted all applicable
standards and interpretations issued other than those discussed below. These
standards have not been adopted because they are not effective for the Company
until subsequent to December 31, 2014. Standards and interpretations issued, but
not yet adopted include:

|                                                                         | Effective for the Company
|------------------------------------------------------------------------ | -------------------------
|Amendments to IAS 19, Employee Benefits                                  | January 1, 2015          
|Amendments to IAS 16, Property, Plant and
      Equipment                | January 1, 2016          
|Amendments to IAS 28, Investments in
      Associates and Joint Ventures | January 1, 2016          
|Amendments to IAS 38, Intangibles                                        | January 1, 2016          
|Amendments to IFRS 10, Consolidated
      Financial Statements           | January 1, 2016          
|Amendments to IFRS 11, Joint Arrangements                                | January 1, 2016          
|IFRS 15, Revenue from Contracts with
      Customers                     | January 1, 2017          
|IFRS 9, Financial Instruments                                            | January 1, 2018          

In November 2013, the IASB issued amendments to IAS 19,
Employee Benefits,which clarify benefit and medical cost actuarial
assumptions used in calculation of the present value of defined benefit
obligations and current service cost. These amendments are effective for annual
periods beginning on or after July 1, 2014. This amendment is not anticipated to
impact the Companys consolidated financial statements as there are no defined
benefit obligations.

In May 2014, the IASB issued amendments to IAS 16, Property,
Plant and Equipmentand IAS 38, Intangibles.These amendments
prohibit the use of revenue-based depreciation methods for property, plant and
equipment and limit the use of revenue-based amortization for intangible assets.
These amendments are effective for annual periods beginning on or after January
1, 2016 and are to be applied prospectively. These amendments are not
anticipated to impact the Companys consolidated financial statements as
revenue-based depreciation or amortization methods are not used.

In September 2014, the IASB issued amendments to IAS 28,
Investments in Associates and Joint Ventures,and IFRS 10,
Consolidated Financial Statements. These amendments address a conflict
between IAS 28 and IFRS 10 and clarify that in a transaction involving an
associate or joint venture the extent of gain or loss recognition depends on
whether the assets sold or contributed constitute a business. These amendments
are effective for annual periods beginning on or after January 1, 2016. The
Company is currently evaluating the impact of this standard on the consolidated
financial statements.

In May 2014, the IAS issued amendments to IFRS 11, Joint
Arrangements. The amendments clarify the accounting for acquisitions of an
interest in a joint operation when the operation constitutes a business. The
amendments are effective for annual periods beginning on or after January 1,
2016, with earlier application being permitted. The Company is currently
evaluating the impact of this standard on the consolidated financial
statements.

In May 2014, the IASB issued IFRS 15, Revenue from Contracts
with Customers. The standard replaces IAS 11, Construction Contracts;IAS 18, Revenue;IFRIC 13, Customer Loyalty Programmes;IFRIC
15, Agreements for the Construction of Real Estate;IFRIC 18, Transfer
of Assets from Customers; andSIC 31, Revenue  Barter Transactions
Involving Advertising Services. This standard establishes principles for
reporting the nature, amount, timing, and uncertainty of revenue and cash flows
arising from an entitys contract with customers. This standard is effective for
annual periods beginning on or after January 1, 2017, and permits early
adoption. The Company is currently evaluating the impact of this standard on the
consolidated financial statements.

In July 2014, the IASB issued IFRS 9, Financial
Instruments, which will replace IAS 39, Financial Instruments:
Recognition and Measurement. The replacement standard provides a new model
for the classification and measurement of financial instruments. The IASB has determined the revised effective date
for IFRS 9 will be for annual periods beginning on or after January 1, 2018. The
Company will evaluate the impact of the change to the consolidated financial
statements based on the characteristics of financial instruments outstanding at
the time of adoption.

16

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|   |                                               
|-- | ----------------------------------------------
|5. | Critical accounting estimates and
  judgements

Many of the amounts included in the Consolidated Balance Sheets
require management to make estimates and judgements. Accounting estimates and
assumptions are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Revisions to accounting estimates are
recognized in the period in which the estimates are revised.

Critical accounting estimates

The following is a list of the accounting estimates that the
Company believes are critical, due to the degree of uncertainty regarding the
estimates or assumptions involved and the magnitude of the asset, liabilities,
revenue or expense being reported. Actual results may differ from these
estimates.

−
    The Company makes estimates of gold and silver
      recoverable from ore stacked on leach pads in the determination of ore in
      process inventory. The quantities of recoverable gold and silver placed on
      the leach pads are reconciled to the quantities of gold and silver
      actually recovered (metallurgical balancing), by comparing the estimate of
      contained ounces placed on the leach pads to actual ounces recovered. The
      nature of the leaching process inherently limits the ability to precisely
      monitor inventory levels. As a result, the metallurgical balancing process
      is constantly monitored and the engineering estimates are refined based on
      actual results over time. The ultimate recovery of gold and silver from a
      pad will not be known until the leaching process is completed. Leach pad
      recovery estimates are used in the determination of the Companys
      inventories.−
    The Company values inventory at the lower of cost and net
      realizable value. The calculation of net realizable value relies on
      forecasted gold prices, estimated grades of ore on stockpiles and heap
      leach pads, forecasted exchange rates, and estimated costs to complete the
      processing of ore inventory.−
    The Company makes estimates of the quantities of proven
      and probable reserves of the mine and the portion of mineralization
      expected to be classified as reserves. The estimation of quantities of
      reserves and resources is complex, requiring significant subjective
      assumptions that arise from the evaluation of geological, geophysical,
      engineering and economic data for a given ore body. This data could change
      over time as a result of numerous factors, including new information
      gained from development activities, evolving production history and a
      reassessment of the viability of production under different economic
      conditions. Reserve estimates are used in the calculation of depletion
      expense and to calculate the recoverable amount of a CGU, and to forecast
      the life of the mine. The Company has forecasted a mine life of 9 years
      for El Chanate and 20 years for Young-Davidson.−
    The Company forecasts prices of commodities, exchange
      rates, production costs, discount rates, and recovery rates. These
      estimates may change the economic status of reserves and may result in
      reserves and resources being revised. In addition, these estimates are
      used to calculate the recoverable amount of a CGU for the purpose of
      impairment testing.−
    The Company amortizes its property, plant and equipment,
      net of residual value, over the estimated useful life of each asset, not
      to exceed the life of the mine at which the asset is utilized. The
      physical life of these assets, and related components, may differ from the
      Companys estimate, which would impact amortization and depletion expense.−
    The Company makes estimates of the likelihood of whether
      or not all or some portion of each deferred income tax asset and
      investment tax credits will be realized, which is impacted by
      interpretation of tax laws and regulations, historic and future expected
      levels of taxable income, timing of reversals of taxable temporary timing
      differences, and tax planning initiatives. Levels of future taxable income
      are affected by, among other things, market gold prices, production costs,
      quantities of proven and probable gold reserves, interest rates, and
      foreign currency exchange rates.−
    The Company makes estimates of the timing and amount of
      expenditures required to settle the Companys reclamation provisions. The
      principal factors that can cause expected future expenditures to change
      are: the construction of new processing facilities; changes in the
      quantities of material in reserves and a corresponding change in the life
      of mine plan; changing ore characteristics that ultimately impact the
      environment; changes in water quality that impact the extent of water
      treatment required; and changes in laws and regulations governing the protection of the environment. In general, as the end of
      the mine life nears, the reliability of expected cash flows increases, but
      earlier in the mine life, the estimation of a reclamation provision is
      inherently more subjective.−
    The Company makes estimates of future cash flows in order
      to calculate the recoverable amount of the retained interest royalty for
      the purpose of impairment testing. Future cash flows are impacted by
      future gold prices, future production from the Fosterville and Stawell
      mines in Victoria, Australia, future foreign exchange rates, as well as
      related operating and capital expenditures required to sustain that
      production.


17

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

| | 
| | 

Critical accounting judgements

The following are critical judgements that management has made
in the process of applying accounting policies that may have a significant
impact on the amounts recognized in the consolidated financial statements.

|− | The Company makes judgements about whether or not
      indicators of impairment, or indicators of a reversal of impairment, exist
      at each reporting period. For all assets, this determination impacts
      whether or not a detailed impairment assessment is performed at December
      31, 2014 and 2013. These judgements did not impact cash generating units
      that contain goodwill at December 31, 2014, or 2013, as these are required
      to be tested for impairment regardless of whether or not an indicator
      exists.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|− | The Company is subject to income taxes in different
      jurisdictions. Significant judgment is required in determining the
      provision for income taxes, due to the complexity of legislation.                                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|− | The Company makes judgements about which indicators to
      consider when evaluating whether a mine has reached commercial production,
      which may impact the timing and amount of depreciation and depletion, the
      amount of revenue recognized in the Consolidated Statements of Operations,
      and the amount of costs capitalized to mine development during 2013.                                                                                                                                                                   

|   |            
|-- | -----------
|6. | Receivables

|                           |   | December 31 |  |   | December 31 | 
|-------------------------- | - | ----------- |  | - | ----------- | 
|                           |   | 2014        |  |   | 2013        | 
|Trade receivables          | $ | 396         |  | $ | 1,012       | 
|Value-added tax receivable |   | 10,814      |  |   | 14,888      | 
|Advances                   |   | 767         |  |   | 1,658       | 
|Other                      |   | 2,099       |  |   | 11,696      | 
|                           | $ | 14,076      |  | $ | 29,254      | 

Included in value-added tax receivable was $3,535 and $7,279
collectible from the Government of Canada and Government of Mexico,
respectively, at December 31, 2014 (December 31, 2013 - $7,340 and $7,548,
respectively).

Included in other receivables at December 31, 2014 is a
receivable from the Companys joint venture (see note 9) of $2,099 (December 31,
2013 - $1,442). In the prior year, other receivables also included an insurance
receivable of $10,254 relating to the settlement of a lawsuit (see note 16(b)).

The Company has not recorded a provision for doubtful trade
receivables as there is no indication that the debtors will not meet their
payment obligations.

|   |            
|-- | -----------
|7. | Inventories

|                            |   | December 31 |   |   | December 31 |  
|--------------------------- | - | ----------- | - | - | ----------- | -
|                            |   | 2014        |   |   | 2013        |  
|Supplies                    | $ | 20,286      |   | $ | 17,391      |  
|Ore stockpiles              |   | 22,025      |   |   | 35,122      |  
|Ore in process              |   | 132,035     |   |   | 117,984     |  
|Finished goods              |   | 1,926       |   |   | 7,842       |  
|                            |   | 176,272     |   |   | 178,339     |  
|Less: Long-term inventories |   | (103,156    | ) |   | (93,696     | )
|                            | $ | 73,116      |   | $ | 84,643      |  

During the years ended December 31, 2014 and 2013, the carrying
value of the El Chanate ore in process heap leach inventory and the
Young-Davidson low grade stockpile inventory exceeded their net realizable
values. As a result, the Company recognized net realizable value adjustments, which
impacted production costs and amortization and depletion. Ore stockpile and ore
in process inventories include mining and processing costs, along with
amortization and depletion related to mining and processing operations. The net
realizable value adjustments totaling $23,534 for the year ended December 31,
2014 (2013 - $42,069) have been allocated on a pro-rata basis between production
costs and amortization and depletion based on their relative values at December
31, 2014 and 2013.

18

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The impact on production costs and amortization and depletion
is as follows:

|                                     |   | Year ended  | 
|------------------------------------ | - | ----------- | 
|                                     |   | December 31 | 
|                                     |   | 2014        | 
|Operating production costs           | $ | 182,085     | 
|Net realizable value adjustment      |   |             | 
|El Chanate                           |   | 13,885      | 
|Young-Davidson                       |   | 3,339       | 
|Production costs                     | $ | 199,309     | 
|                                     |   |             | 
|Operating amortization and depletion | $ | 115,158     | 
|Net realizable value adjustment      |   |             | 
|El Chanate                           |   | 4,139       | 
|Young-Davidson                       |   | 2,171       | 
|Amortization and depletion           | $ | 121,468     | 

Ore inventories carried at net realizable value totalled
$141,038 at December 31, 2014 (December 31, 2013 - $74,074).

|Ore in process inventory at December 31, 2014 included
      $3,383 (December 31, 2013 - $6,095) related to the excess of the fair
      value of El Chanate inventory over its carrying value at the acquisition
      date, which is being charged to net loss as the related inventory is sold.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                  

19

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|8. | Investments
|-- | -----------

|                                                     |   |                   |  |   |             |  |   |                   |   |   | Year ended     |  
|---------------------------------------------------- | - | ----------------- |  | - | ----------- |  | - | ----------------- | - | - | -------------- | -
|                                                     |   |                   |  |   |             |  |   | December 31, 2014 |  
|                                                     |   |                   |  |   |             |  |   |                   |   |   | Realized &     |  
|                                                     |   |                   |  |   |             |  |   | Unrealized        |   |   | unrealized     |  
|                                                     |   |                   |  |   |             |  |   | gains/(losses)    |   |   | gains/(losses) |  
|                                                     |   | December 31, 2014 |  |   | included in |  |   | included in       |  
|                                                     |   | Cost              |  |   | Fair value  |  |   | OCI               |   |   | net loss       |  
|Securities - available for sale                      | $ | 1,964             |  | $ | 184         |  | $ | 2,512             |   | $ | 6,631          |  
|Reclassification to net loss                         |   | -                 |  |   | -           |  |   | 2,507             |   |   | (2,507         | )
|                                                     | $ | 1,964             |  | $ | 184         |  | $ | 5,019             |   | $ | 4,124          |  
|Securities - fair value through profit or
      loss |   | 235               |  |   | -           |  |   | -                 |   |   | -              |  
|Warrants - fair value through profit or loss         |   | 494               |  |   | -           |  |   | -                 |   |   | (42            | )
|                                                     | $ | 2,693             |  | $ | 184         |  | $ | 5,019             |   | $ | 4,082          |  
|                                                     |   |                   |  |   |             |  |   |                   |   |   |                |  
|                                                     |   |                   |  |   |             |  |   |                   |   |   |                |  
|                                                     |   |                   |  |   |             |  |   |                   |   |   | Year ended     |  
|                                                     |   |                   |  |   |             |  |   | December 31, 2013 |  
|                                                     |   |                   |  |   |             |  |   |                   |   |   | Realized &     |  
|                                                     |   |                   |  |   |             |  |   | Unrealized        |   |   | unrealized     |  
|                                                     |   |                   |  |   |             |  |   | gains/(losses)    |   |   | gains/(losses) |  
|                                                     |   | December 31, 2013 |  |   | included in |  |   | included in       |  
|                                                     |   | Cost              |  |   | Fair value  |  |   | OCI               |   |   | net loss       |  
|Securities - available for sale                      | $ | 20,948            |  | $ | 15,510      |  | $ | (5,331            | ) | $ | -              |  
|Reclassification to net loss                         |   | -                 |  |   | -           |  |   | 168               |   |   | (168           | )
|                                                     | $ | 20,948            |  | $ | 15,510      |  | $ | (5,163            | ) | $ | (168           | )
|Securities - fair value through profit or
      loss |   | 235               |  |   | -           |  |   | -                 |   |   | (47            | )
|Warrants - fair value through profit or loss         |   | 494               |  |   | 41          |  |   | -                 |   |   | (450           | )
|                                                     | $ | 21,677            |  | $ | 15,551      |  | $ | (5,163            | ) | $ | (665           | )

During the year ended December 31, 2014, the Company sold
shares in various publicly listed entities for total proceeds of $23,284.

|During the year ended December 31, 2013, the Company
      purchased shares and warrants with a total cost of $21,272. The cost of
      the shares and warrants were determined based on their fair value on the
      date of acquisition.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                            

20

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|9.  | Investments in associate and joint venture
|--- | ------------------------------------------
|    |                                           
|(a) | Orion development project                 

The Company and Minera Frisco S.A. de C.V. (Minera Frisco)
each own shares representing a 50% ownership interest in Nayarit Gold de Mexico,
S.A. de C.V., an entity with ownership of the Orion development project. The
Company and Minera Frisco have joint control over the joint venture company.

The following table contains selected financial information for
a 100% interest in the joint venture at December 31, 2014 and 2013:

|                                                       |   | December 31 |   |   | December |  
|------------------------------------------------------ | - | ----------- | - | - | -------- | -
|                                                       |   | 2014        |   |   | 2013     |  
|Current assets                                         |   | 338         |   |   | 308      |  
|Property, plant and equipment & mining
      interests |   | 55,828      |   |   | 54,836   |  
|Total assets                                           | $ | 56,166      |   | $ | 55,144   |  
|                                                       |   |             |   |   |          |  
|Current liabilities                                    |   | 2,343       |   |   | 1,467    |  
|Deferred income tax liability                          |   | 18,219      |   |   | 17,817   |  
|Total liabilities                                      | $ | 20,562      |   | $ | 19,284   |  
|                                                       |   |             |   |   |          |  
|Net assets of joint venture                            | $ | 35,604      |   | $ | 35,860   |  
|Ownership interest                                     |   | 50%         |   |   | 50%      |  
|Net investment in joint venture                        | $ | 17,802      |   | $ | 17,930   |  
|                                                       |   |             |   |   |          |  
|Net investment, beginning of year                      | $ | 17,930      |   | $ | 20,463   |  
|Share of net loss during the period                    |   | (128        | ) |   | (2,533   | )
|Net investment, end of year                            | $ | 17,802      |   | $ | 17,930   |  

Included in current liabilities of the joint venture at
December 31, 2014 was a payable due to the Company of $2,099(December
31, 2013 - $1,442). The Company has included a corresponding amount in
receivables on the Consolidated Balance Sheets at December 31, 2014 and 2013.

At December 31, 2014, the Company did not have any significant
commitments or contingent liabilities related to this joint venture.

|(b) | Investment in Carlisle Goldfields Limited
      (Carlisle)
|--- | ------------------------------------------------------------

On November 11, 2014, the Company announced that it had formed
a strategic partnership with Carlisle on properties within the Lynn Lake Gold
Camp in northern Manitoba, Canada. As part of this partnership, the Company
subscribed to 70,600,000 common shares of Carlisle, representing approximately
19.9% of the issued and outstanding common shares, for total consideration of
$4,993 (CAD $5,648). After including transaction fees, the total opening cost
base of the investment was $5,674. In addition, the Company entered into a
separate agreement with respect to the Lynn Lake development project, and
acquired a 25% interest in the project for $4,415 (CAD $5,000). These amounts
have been recognized within property, plant and equipment & mining interests
on the Consolidated Balance Sheets. The Company has the option to earn up to an
additional 35% interest by funding CAD $20,000 on the development of the project
and delivering a feasibility study within a three-year time period.

21

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The Company has concluded that it has significant influence
over the financial and operating policy decisions of Carlisle and, therefore,
has used the equity method of accounting for this investment in associate. The
following table contains the continuity of the Companys investment in Carlisle
at December 31, 2014:

|                                      |   | December 31 |  
|------------------------------------- | - | ----------- | -
|                                      |   | 2014        |  
|Net investment, beginning of year     |   | -           |  
|Investment in associate during period |   | 5,674       |  
|Share of net loss during the period   |   | (42         | )
|Net investment, end of year           | $ | 5,632       |  
|                                      |   |             |  

|10. | Other long-term assets
|--- | ----------------------

|                                                                      |   | December 31 |  |   | December 31 | 
|--------------------------------------------------------------------- | - | ----------- |  | - | ----------- | 
|                                                                      |   | 2014        |  |   | 2013        | 
|Restricted cash in closure bonds                                      | $ | 16,007      |  | $ | 26,249      | 
|Other restricted cash                                                 |   | 717         |  |   | 5,230       | 
|Investment tax credits recoverable                                    |   | 33,347      |  |   | 36,508      | 
|Deposits on property, plant and equipment,
      and mining interests |   | 971         |  |   | 4,001       | 
|                                                                      | $ | 51,042      |  | $ | 71,988      | 

Restricted cash in closure bonds consists of cash and
short-term deposits pledged by the Company relating to site closure and
reclamation obligations at Kemess South, a mine in the decommissioning stage. At
December 31, 2013, restricted cash in closure bonds also included an amount
related to reclamation obligations at Young-Davidson (note 24).

At December 31, 2014, other restricted cash included amounts
relating to the repayment of the convertible senior notes (note 14(c)). At
December 31, 2013, other restricted cash consisted of letters of credit issued
against certain of the Companys bank accounts relating to site infrastructure,
site closure, and other mine activities. During the year ended December 31,
2014, the Company provided other forms of security against these letters of
credit.

The Companys investment tax credits (ITC) recoverable relate
to ITCs earned primarily on expenditures at Young-Davidson. These ITCs will be
used to reduce income taxes payable in the future and have been netted against
the cost of the related items of property, plant and equipment.

|Included in deposits on property, plant, and equipment,
      and mining interests at December 31, 2014 is an advance of $788 (December
      31, 2013 - $nil) to Carlisle relating to ongoing work on the Lynn Lake
      development project (see note 9).
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                            

22

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|11. | Property, plant and equipment & mining
      interests
|--- | ------------------------------------------------------

Mining interestsPlant
    
    
    
    
    
    
    
    
    Explorationand
    
    
    
    
    
    Non-
    
    
    andequipment
    
    
    Depletable
    
    
    depletable
    
    
    evaluation
    
    
    TotalCostAt December 31, 2012
    $
    543,825
    
    $
    197,168
    
    $
    806,025
    
    $
    66,410
    
    $
    1,613,428Additions
    
    123,133
    
    
    62,516
    
    
    71,238
    
    
    6,237
    
    
    263,124Reclassifications
    
    -
    
    
    853,408
    
    
    (853,408
    )
    
    -
    
    
    -Disposals
    
    (5,792
    )
    
    -
    
    
    -
    
    
    -
    
    
    (5,792
    )At December 31, 2013
    $
    661,166
    
    $
    1,113,092
    
    $
    23,855
    
    $
    72,647
    
    $
    1,870,760Additions
    
    64,328
    
    
    85,706
    
    
    7,271
    
    
    20,252
    
    
    177,557Reclassifications
    
    -
    
    
    11,775
    
    
    (11,775
    )
    
    -
    
    
    -Disposals
    
    (7,758
    )
    
    -
    
    
    -
    
    
    -
    
    
    (7,758
    )At December 31, 2014
    $
    717,736
    
    $
    1,210,573
    
    $
    19,351
    
    $
    92,899
    
    $
    2,040,559Accumulated amortization and
      depletion and impairment chargesAt December 31, 2012
    $
    (18,462
    )
    $
    (36,260
    )
    $
    -
    
    $
    -
    
    $
    (54,722
    )Amortization and depletion
    
    (27,789
    )
    
    (62,441
    )
    
    -
    
    
    -
    
    
    (90,230
    )Impairment charges
    
    (12,279
    )
    
    (35,200
    )
    
    (4,574
    )
    
    -
    
    
    (52,053
    )Disposals
    
    2,200
    
    
    -
    
    
    -
    
    
    -
    
    
    2,200At December 31, 2013
    $
    (56,330
    )
    $
    (133,901
    )
    $
    (4,574
    )
    $
    -
    
    $
    (194,805
    )Amortization and depletion
    
    (32,798
    )
    
    (86,808
    )
    
    -
    
    
    -
    
    
    (119,606
    )Impairment charges
    
    (22,316
    )
    
    (67,684
    )
    
    (1,006
    )
    
    (616
    )
    
    (91,622
    )Disposals
    
    4,204
    
    
    -
    
    
    -
    
    
    -
    
    
    4,204At December 31, 2014
    $
    (107,240
    )
    $
    (288,393
    )
    $
    (5,580
    )
    $
    (616
    )
    $
    (401,829
    )Carrying valueAt December 31, 2013
    $
    604,836
    
    $
    979,191
    
    $
    19,281
    
    $
    72,647
    
    $
    1,675,955At December 31, 2014
    $
    610,496
    
    $
    922,180
    
    $
    13,771
    
    $
    92,283
    
    $
    1,638,730


The carrying values by component are as follows:

Mining interestsPlant
    
    
    
    
    
    
    
    
    Explorationand
    
    
    
    
    
    Non-
    
    
    andequipment
    
    
    Depletable
    
    
    depletable
    
    
    evaluation
    
    
    TotalEl Chanate
    $
    9,403
    
    $
    29,173
    
    $
    1,304
    
    $
    -
    
    $
    39,880Young-Davidson
    
    573,485
    
    
    893,007
    
    
    12,467
    
    
    -
    
    
    1,478,959Corporate and other
    
    27,608
    
    
    -
    
    
    -
    
    
    92,283
    
    
    119,891At December 31, 2014
    $
    610,496
    
    $
    922,180
    
    $
    13,771
    
    $
    92,283
    
    $
    1, 638,730El Chanate
    $
    35,307
    
    $
    84,975
    
    $
    10,945
    
    $
    -
    
    $
    131,227Young-Davidson
    
    540,537
    
    
    894,216
    
    
    8,336
    
    
    -
    
    
    1,443,089Corporate and other
    
    28,992
    
    
    -
    
    
    -
    
    
    72,647
    
    
    101,639At December 31, 2013
    $
    604,836
    
    $
    979,191
    
    $
    19,281
    
    $
    72,647
    
    $
    1,675,955


During the year ended December 31, 2014, $5,286 (year ended
December 31, 2013 - $8,409) of borrowing costs associated with capital projects
were capitalized within property, plant and equipment & mining interests on
the Consolidated Balance Sheets. The applicable capitalization rate for general
borrowings was 8.09% (year ended December 31, 2013 - 5.82%) .

23

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The carrying value of equipment pledged as security for related
equipment financing obligations at December 31, 2014 was $23,945 (December 31,
2013 - $22,175).

The carrying value of construction in progress at December 31,
2014 was $57,057 (December 31, 2013 - $70,025).

The Company has made commitments to acquire property, plant and
equipment totaling $9,189 at December 31, 2014 (December 31, 2013 - $10,981).

|    |                               
|--- | ------------------------------
|12. | Intangible assets and
goodwill

Included in intangible assets are the rights to use the
capacity of power lines connecting the El Chanate and Young-Davidson mines to
national / provincial electricity grids (transmission rights), software
assets, and the retained interest royalty.

Intangible assetsRetained
    
    
    
    
    
    
    
    
    Totalinterest
    
    
    Transmission
    
    
    
    
    
    intangibleGoodwill
    
    
    royalty
    
    
    rights
    
    
    Software
    
    
    assets
    
    
    TotalCostAt December 31, 2012
    $
    475,214
    
    $
    34,004
    
    $
    21,018
    
    $
    2,239
    
    $
    57,261
    
    $
    532,475Additions
    
    -
    
    
    -
    
    
    -
    
    
    370
    
    
    370
    
    
    370At December 31, 2013
    
    475,214
    
    
    34,004
    
    
    21,018
    
    
    2,609
    
    
    57,631
    
    
    532,845Additions
    
    -
    
    
    -
    
    
    254
    
    
    321
    
    
    575
    
    
    575At December 31, 2014
    $
    475,214
    
    $
    34,004
    
    $
    21,272
    
    $
    2,930
    
    $
    58,206
    
    $
    533,420Accumulated amortization and
      impairment chargesAt December 31, 2012
    $
    (127,000
    )
    $
    -
    
    $
    (1,110
    )
    $
    (1,326
    )
    $
    (2,436
    )
    $
    (129,436
    )Amortization
    
    -
    
    
    -
    
    
    (847
    )
    
    (692
    )
    
    (1,539
    )
    
    (1,539
    )Impairment charges
    
    (106,521
    )
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (106,521
    )At December 31, 2013
    
    (233,521
    )
    
    -
    
    
    (1,957
    )
    
    (2,018
    )
    
    (3,975
    )
    
    (237,496
    )Amortization
    
    -
    
    
    (13,288
    )
    
    (1,044
    )
    
    (266
    )
    
    (14,598
    )
    
    (14,598
    )At December 31, 2014
    $
    (233,521
    )
    $
    (13,288
    )
    $
    (3,001
    )
    $
    (2,284
    )
    $
    (18,573
    )
    $
    (252,094
    )Carrying valueAt December 31, 2013
    $
    241,693
    
    $
    34,004
    
    $
    19,061
    
    $
    591
    
    $
    53,656
    
    $
    295,349At December 31, 2014
    $
    241,693
    
    $
    20,716
    
    $
    18,271
    
    $
    646
    
    $
    39,633
    
    $
    281,326


As part of the consideration received from the sale of the
Fosterville and Stawell mines (collectively, the Australian Operations) on May
4, 2012 to Crocodile Gold Corporation (Crocodile Gold), the Company received a
retained interest royalty. Per the agreement, once the cumulative free cash flow
generated by the mines subsequent to closing reached CAD $60 million, the
Company would receive 100% of the next CAD $30 million of cumulative free cash
flow in excess of CAD $60 million, and 50% of the next CAD $30 million of
cumulative free cash flow in excess of CAD $90 million. In addition, the Company
would receive 20% of any cumulative free cash flow in excess of CAD $120
million.

During 2014, the Company was notified that the Australian
Operations had generated in excess of CAD $60 million and, as a result, received
proceeds of $2,463 from Crocodile Gold (year ended December 31, 2013 - $nil).
Consistent with the Companys accounting policy, amortization of the retained
interest royalty commenced once the Company became entitled to receive cash
flows under this arrangement. During the year ended December 31, 2014, the
Company recognized amortization expense of $13,288 on the retained interest
royalty, which reduced the carrying value of this asset to $20,716.

24

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

On December 22, 2014, the Company announced that it had entered
into an agreement with Crocodile Gold to amend the original purchase and sale
agreement, subject to regulatory approvals, such that the retained interest
royalty intangible asset would be terminated. As consideration for the
termination of the retained interest royalty, the Company will receive a CAD $20
million payment in cash upon closing and will be granted a net smelter return
royalty of 2% from the Fosterville mine and 1% from the Stawell mine. The Fosterville royalty will commence
upon closing and the Stawell mine royalty will commence on the earlier of
January 1, 2016 or the date immediately following the production of 10,000
ounces from the Big Hill Project. The agreement was finalized on January 14,
2015 following the receipt of regulatory approval (see note 28).

|    |           
|--- | ----------
|13. | Impairment

Non-financial assets and CGUs are tested for impairment or a
reversal of impairment whenever there are indicators that an impairment has
occurred or should be reversed. CGUs containing goodwill are tested for
impairment each year at December 31. For the purpose of testing for impairment,
or a reversal of impairment, the recoverable amounts for non-financial assets
and CGUs are based on fair value less costs of disposal (FVLCD) calculations.
When observable market prices are not available for the asset, FVLCD is
calculated using a discounted cash flow methodology taking into account the
assumptions that would be made by market participants. Management projects cash
flows over the remaining life of each mine using forecasted production and costs
per the Companys life of mine plans and the long-term forecasted price of gold
to project future revenues. The Company does not use growth rates in determining
cash flow projections. The fair value of these non-financial assets are based on
unobservable inputs (level 3 of fair value hierarchy, refer to note 25).

The key assumptions used in determining FVLCD at December 31,
2014 were gold prices, discount rates, operating costs, capital expenditures,
foreign exchange rates and net asset value (NAV) multiples. Of these
assumptions, reasonably possible changes in gold prices, discount rates,
operating costs, and NAV multiples could have caused the carrying value of the
Companys Young-Davidson CGU to exceed their recoverable amounts, as outlined
below in (b).

The Company develops long-term gold price forecasts by
reference to numerous external analyst forecasts. The long-term gold pricing
used in the impairment tests approximated the mean of these forecasts, after
adjusting for outliers. The Company used a gold price range of $1,250 to $1,300
per ounce for all future production in its impairment tests (December 31, 2013 -
$1,300 per ounce).

The Company forecasts production, operating costs and capital
expenditures based on expected life of mine plans developed from technical
reports and historical experience.

The discount rates used by the Company in calculating FVLCD
were based on the weighted average cost of capital applicable to each property.
The rates chosen reflect a market participants view of the risk inherent in the
cash flows associated with each property.

The discount rates used for each test are summarized as
follows:

|                   |  | December 31 |  |  | December 31 | 
|------------------ |  | ----------- |  |  | ----------- | 
|                   |  | 2014        |  |  | 2013        | 
|El Chanate CGU     |  | 6.75%       |  |  | 6.50%       | 
|Young-Davidson CGU |  | 5.50%       |  |  | 5.25%       | 

Gold companies can trade at a market capitalization greater
than their estimated discounted cash flows. This NAV multiple represents the
multiple applied to the estimated discounted cash flows to arrive at the trading
price. The NAV multiple is generally understood to take into account a variety
of additional value factors such as the exploration potential of the mineral
property, namely the ability to find and produce more metal than what is
currently included in the life of mine plan, and the benefit of gold price
optionality. A NAV multiple of 1.0 and 1.05 (December 31, 2013  1.0 and 1.05)
was applied to the estimated discounted cash flows for El Chanate and
Young-Davidson, respectively.

The results of impairment evaluations conducted are summarized
as follows:

|(a) | El Chanate CGU
|--- | --------------

The El  Chanate CGU is comprised of all assets and liabilities related to the El  Chanate mine.  At December 31, 2014, the  Company updated its mine plan at El Chanate. The revised mine plan contained a  decrease in  gold reserve  estimates, an increase in strip ratio, which  indicates an increase in  the amount of waste tonnes required to access a tonne of ore, and an increase in future processing costs on a  per ounce basis. Reserve estimates decreased and the strip ratio  increased primarily due to a reduction in overall slope angles. The reduction in planned slope angles came after  an  external geotechnical review of geotechnical drilling, mapping,  and slope performance. This change was considered an indicator of impairment and resulted in  the Company performing an impairment test at December 31, 2014. At  December 31, 2014, the carrying value of the El Chanate CGU exceeded its  recoverable amount by $90,000,  which resulted in an impairment charge. This charge consisted of a reduction in property, plant and equipment  and mining interests of $90,000. The related income tax impact was a deferred  tax recovery of $28,647.



25

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

At December 31, 2013, the carrying value of the El Chanate CGU
exceeded its recoverable amount by $74,000, which resulted in an impairment
charge. This charge consisted of a reduction of goodwill of $26,521 and a
reduction in property, plant and equipment and mining interests of $47,479. The
related income tax impact was a deferred tax recovery of $15,373.

At June 30, 2013, the carrying value of the El Chanate CGU
exceeded its recoverable amount by $80,000, which resulted in recognizing an
impairment charge related entirely to goodwill. The primary contributors to the
impairment charges in 2013 were the revised short-term and long-term gold price
assumptions.

The total impairment charge recorded for the year ended
December 31, 2013 was $154,000.

|(b) | Young-Davidson CGU
|--- | ------------------

The carrying value of goodwill resulting from the acquisition
of Northgate Minerals Corporation has been allocated to the Young-Davidson CGU,
which is comprised of all assets and liabilities related to the Young-Davidson
mine. At December 31, 2014, the recoverable amount of the Young-Davidson CGU
exceeded its carrying value by $194,793 (December 31, 2013 - $140,695).

It is estimated that the following reasonably possible changes
in key assumptions would cause the carrying value of the Young-Davidson CGU to
exceed its recoverable amount:

|− | Increase in discount rate to 6.96%         
|- | -------------------------------------------
|− | 6.89% decline in gold price assumptions    
|− | 14.68% strengthening of the Canadian dollar
|− | 19.67% increase in operating costs         
|− | Decrease in NAV multiple to 0.93           

|(c) | Retained interest royalty
|--- | -------------------------

At December 31, 2014, there were no indicators of impairment of
the retained interest royalty held by the Company, and therefore, no impairment
test was performed.

At June 30, 2013, the carrying value of the retained interest
royalty exceeded its recoverable amount of $15,316 by $18,688, which resulted in
an impairment charge. As a result of the impairment charge, the Company also
recorded a deferred tax recovery of $2,186. The primary contributors to this
impairment charge were the revised short-term and long-term gold price
assumptions used in the June 30, 2013 test.

At December 31, 2013, due to the receipt of an updated life of
mine plan from Crocodile Gold, the Company determined that an indicator of
impairment reversal existed and conducted an impairment test at that date.
Utilizing the updated life of mine plan, adjusted for the Companys gold price
and foreign exchange rate assumptions, it was determined that the recoverable
amount of this asset exceeded its original carrying value of $34,004 and, as a
result, an impairment reversal of $18,688 was recorded. The Company also
recorded a deferred tax expense of $2,103 related to this reversal.

During the year ended December 31, 2013, the impairment charge
recognized on June 30, 2013 and its subsequent reversal did not have an impact
on net loss, other than the difference in deferred tax expense/recovery noted
above.

|(d) | Other
|--- | -----

During the year ended December 31, 2014, the Company
discontinued various brownfield exploration programs, and recognized an
impairment charge of $1,622 and a deferred tax recovery of $475.

During the year ended December 31, 2013, the Company impaired
various brownfield exploration assets due to unsuccessful drilling results
during the year. As a result, the Company recognized an impairment charge of
$4,574 in the Consolidated Statements of Operations, which also impacted the
carrying value of non-depletable mining interests at December 31, 2013.

---

26

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|14. | Debt and equipment financing
  obligations
|--- | ------------------------------------------

|    |                                                                         |   | December 31 |   |   | December 31 |  
|--- | ----------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|    |                                                                         |   | 2014        |   |   | 2013        |  
|(a) | Revolving credit facility                                               | $ | -           |   | $ | 75,000      |  
|(b) | Senior secured notes                                                    |   | 296,755     |   |   | -           |  
|(c) | Convertible senior notes                                                |   | 624         |   |   | 157,133     |  
|(d) | Equipment financing obligations                                         |   | 16,525      |   |   | 17,522      |  
|(e) | Other                                                                   |   | 468         |   |   | 1,894       |  
|    |                                                                         |   | 314,372     |   |   | 251,549     |  
|    | Less: Current portion of debt and equipment
      financing obligations |   | (6,308      | ) |   | (7,355      | )
|    |                                                                         | $ | 308,064     |   | $ | 244,194     |  

The estimated future minimum payments under debt and equipment
financing obligations are as follows:

|2015                | $ | 31,282  | 
|------------------- | - | ------- | 
|2016                | $ | 29,649  | 
|2017                | $ | 27,939  | 
|2018                | $ | 26,675  | 
|2019                | $ | 25,339  | 
|2020 and thereafter | $ | 327,206 | 

|(a) | Revolving credit facility
|--- | -------------------------

The Company has access to a $150,000 revolving credit facility
that carries an interest rate of LIBOR plus 2.25% to 3.50%, depending on the
leverage ratio of the Company. The facility matures on April 25, 2016 and may be
extended upon mutual agreement by all parties. No payments under the facility
are due until the maturity date.

The credit facility contains various covenants that include (a)
an interest coverage ratio of at least 3:1, (b) a leverage ratio of no more than
3:1, (c) a minimum tangible net worth, and (d) proven and probable reserves of
at least 2,000,000 ounces. The facility is secured by a first-ranking lien on
all present and future assets, property and undertaking of the Company. At
December 31, 2014, the Company was in compliance with all covenants.

During the year ended December 31, 2014, the Company made a
repayment of $75,000 (year ended December 31, 2013 - $nil).

|(b) | Senior secured notes
|--- | --------------------

On March 27, 2014, the Company completed an offering of
$315,000 senior secured notes (the secured notes), secured by a second-ranking
lien on all present and future assets, property and undertaking of the Company.
These secured notes were sold at 96.524% of par, resulting in total proceeds of
$304,051. The secured notes pay interest in semi-annual installments on April 1
and October 1 of each year, commencing on October 1, 2014, at a rate of 7.75%
per annum, and mature on April 1, 2020. The Company incurred transaction costs
of $7,838, which have been offset against the carrying amount of the secured
notes and are amortized using the effective interest rate method. These notes
contain transaction-based restrictive covenants that limit the Companys ability
to incur additional indebtedness in certain circumstances. There are no
covenants that are based on the Companys historical financial performance.

The senior secured notes indenture grants the Company the
option to prepay the notes prior to the maturity of the instruments, and
specifies a premium during each applicable time period. These prepayment options
have been accounted for as embedded derivatives, and are outlined below:

|− | Subsequent to April 1, 2017, the secured notes
      may be repurchased at 103.875% of par value
|- | ------------------------------------------------------------------------------------------------
|− | Subsequent to April 1, 2018, the secured notes
      may be repurchased at 101.938% of par value
|− | Subsequent to April 1, 2019, the secured notes
      may be repurchased at 100% of par value    

27

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The fair value of the prepayment option embedded derivative was
$5,954 at March 27, 2014, and was offset against the carrying amount of the
secured notes. The model used to calculate this fair value is described in note
25. The initial fair value was calculated using the following assumptions:

|               |  | March 27 | 
|-------------- |  | -------- | 
|               |  | 2014     | 
|Volatility     |  | 32%      | 
|Credit spreads |  | 5.54%    | 

Changes in these assumptions would have the following impact on
net loss for the year ended December 31, 2014:

|                                |   | March 27 |  
|------------------------------- | - | -------- | -
|                                |   | 2014     |  
|2% increase in volatility       | $ | 567      |  
|2% decrease in volatility       | $ | (567     | )
|0.5% increase in credit spreads | $ | (756     | )
|0.5% decrease in credit spreads | $ | 851      |  

At December 31, 2014, the fair value of the prepayment option
embedded derivatives of $6,741 (refer to note 25) was offset against the
carrying amount of the secured notes. The difference between the fair value at
December 31, 2014 and March 27, 2014 is recognized in in other (loss) / income
(refer to note 20).

|(c) | Convertible senior notes
|--- | ------------------------

On March 6, 2014, the Company announced a cash tender offer to
redeem all of the outstanding convertible senior notes (convertible notes).
The consideration offered was $1.04 per $1.00 note plus accrued and unpaid
interest to the payment date. The Company received tender offers for $166,354 of
the $167,000 principal amount outstanding. This was considered a substantial
modification of the existing arrangement with the holders of the Companys
convertible notes. As a result, the Company de-recognized the convertible notes
on the date of substantial modification. The convertible notes were
re-recognized at their fair value on the same date. This resulted in a loss on
modification of $15,645, which has been included in other (loss) / income on the
Consolidated Statement of Operations for the year ended December 31, 2014 (refer
to note 20). On April 3, 2014, the Company paid $173,041 including $32 of
accrued interest, to complete the cash tender offer to redeem the outstanding
convertible notes tendered.

At December 31, 2014, convertible notes with a principal amount
of $646 (December 31, 2013 - $167,000) remained outstanding at a carrying value
of $624 (December 31, 2013 - $157,133) for the debt component and $nil (December
31, 2013 - $413) for the option component. These notes pay interest
semi-annually at a rate of 3.5% per annum, and mature on October 1, 2016.

The holders of the notes may, within specified time periods,
convert their notes prior to July 1, 2016 under the following circumstances: (1)
the closing sale price of the Companys shares exceeds 130% of the conversion
price for at least 20 trading days in the 30 consecutive trading days ending on
the last trading day of the immediately preceding quarter; (2) the trading price
per $1,000 principal amount of the convertible note is equal to or less than 97%
of the product of the closing sale price of the Companys common shares and the
applicable conversion rate; (3) the convertible notes are called for redemption
by the Company; (4) upon the occurrence of specified corporate transactions; and
(5) a delisted event occurs and is continuing. In addition, the notes will be
unconditionally convertible at the option of the holder from July 1, 2016 to the
business day immediately preceding the maturity date of the notes. Following the
payment of dividends on December 1, 2014, the conversion rate is 94.3882 common
shares per $1,000 principal amount of notes, which represents a conversion price
of approximately $10.59 per share. Upon conversion, the Company may settle the
obligation either in common shares, or in cash at an equivalent value.

As required by conditions surrounding the completion of the
secured notes offering, at December 31, 2014, the Company has restricted $680 of
proceeds from the secured notes offering for repayment of all principal and
interest relating to any convertible notes that were not tendered. These
restricted proceeds are included within other long-term assets on the
Consolidated Balance Sheets at December 31, 2014.

|(d) | Equipment financing
obligations
|--- | -------------------------------

|The Company has entered into financing obligations for
      equipment, which expire at various dates between 2015 and 2019 and that
      are secured by the financed assets. Interest payable on the various
      obligations ranges from fixed rates of 2.71% to 5.77%. During the year
      ended December 31, 2014, the Company received proceeds of $5,931 (year
      ended December 31, 2013 - $4,813) from equipment financing arrangements.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       

28

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|(e) | Other
|--- | -----

During 2013, the Company purchased land near the El Chanate
mine and entered into loan agreements as part of the consideration. During the
year ended December 31, 2014, the Company made repayments of $1,426 on these
loan agreements (year ended December 31, 2013 - $nil).

|    |                    
|--- | -------------------
|15. | Flow-through shares

On September 17, 2014, the Company completed a flow-through
financing for gross proceeds of $4,566 ($5,000 CAD). As a result, the Company
issued 833,334 common shares at a price of CAD $6.00 per share.

Pursuant to the terms of the flow-through agreement, the
Company is required to incur and renounce $5,000 CAD in qualifying Canadian
Exploration Expenses to subscribers by December 31, 2015. As at December 31,
2014, $3,091 CAD in exploration expenses are remaining to be incurred.

Of the $4,566 in proceeds received, $3,097 was recorded as
share capital and $1,469 was recorded as an obligation to renounce flow-through
exploration expenditures on the Consolidated Balance Sheets. The following is a
continuity schedule of the liability portion of the flow-through share issuance:

|                                                                   |   | December 31, 2014 |  
|------------------------------------------------------------------ | - | ----------------- | -
|Obligation to renounce flow-through
      exploration expenditures | $ | 1,469             |  
|Reduction of obligation upon incurring
      expenses              |   | (612              | )
|Balance, end of year                                               | $ | 857               |  
|                                                                   |   |                   |  

|16. | Provisions
|--- | ----------

|    |                                     |   | December 31 |   |   | December 31 |  
|--- | ----------------------------------- | - | ----------- | - | - | ----------- | -
|    |                                     |   | 2014        |   |   | 2013        |  
|(a) | Reclamation provisions              | $ | 29,178      |   | $ | 28,245      |  
|(b) | Provision for lawsuit               |   | -           |   |   | 12,458      |  
|    | Other                               |   | 2,407       |   |   | 3,832       |  
|    |                                     |   | 31,585      |   |   | 44,535      |  
|    | Less: Current portion of provisions |   | (2,056      | ) |   | (15,955     | )
|    |                                     | $ | 29,529      |   | $ | 28,580      |  

|(a) | Reclamation provisions
|--- | ----------------------

The Companys reclamation provisions consist of reclamation and
rehabilitation costs for each of the Companys operating mines and Kemess South.
The present value of the combined provision is currently estimated at $29,178
(December 31, 2013 - $28,245), reflecting ongoing payments relating to Kemess
South, and future payments that will commence in 9 - 20 years for the Companys
operating mines. The undiscounted value of the reclamation provision at December
31, 2014 is $38,903 (December 31, 2013 - $42,263). Significant reclamation
activities include land rehabilitation, demolition and decontamination of mine
facilities, monitoring, and other costs.

The Company estimates the costs to conduct significant
reclamation activities based on the most recent experience and cost data
available for the applicable mine. These expected expenditures are then
risk-adjusted by considering the time remaining until reclamation activities
commence, recent industry experience in the region, and other relevant factors.
This current cost estimate is then inflated to the estimated date of settlement
using the rate disclosed below, and then discounted to present value.

29

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The discount and inflation rates used are summarized as
follows:

|                |  | December 31 |  |  | December 31 | 
|--------------- |  | ----------- |  |  | ----------- | 
|                |  | 2014        |  |  | 2013        | 
|Discount rates  |  |             |  |  |             | 
|El Chanate      |  | 5.90%       |  |  | 6.33%       | 
|Young-Davidson  |  | 2.41%       |  |  | 3.24%       | 
|Kemess South    |  | 1.34%       |  |  | 1.95%       | 
|                |  |             |  |  |             | 
|Inflation rates |  |             |  |  |             | 
|El Chanate      |  | 3.25%       |  |  | 3.10%       | 
|Young-Davidson  |  | 2.00%       |  |  | 2.00%       | 
|Kemess South    |  | 2.00%       |  |  | 2.00%       | 

Changes to the reclamation and closure cost obligation balance
during the year were as follows:

|                                                      |   | December 31 |  
|----------------------------------------------------- | - | ----------- | -
|                                                      |   | 2014        |  
|Reclamation provisions, beginning of period           | $ | 28,245      |  
|Obligations incurred and revisions to
      estimates |   | 570         |  
|Accretion expense                                     |   | 851         |  
|Reclamation expenditures                              |   | (488        | )
|Reclamation provisions, end of period                 |   | 29,178      |  
|Less: Current portion                                 |   | (424        | )
|                                                      | $ | 28,754      |  

Of the $570 of adjustments made to reclamation provisions
during the year, $1,175 was capitalized and included in property, plant and
equipment & mining interests on the Consolidated Balance Sheets and $605 was
recognized as a recovery in reclamation, care and maintenance costs on the
Consolidated Statements of Operations.

|(b) | Provision for lawsuit
|--- | ---------------------

|The Company was named as a defendant in a claim
      originally filed by Ed J. McKenna, which was certified as a class action
      lawsuit with damages sought ranging from $80 million to $160 million. On
      October 5, 2012, the Company reached an agreement to settle this class
      action lawsuit, subject to approval of the court and the right of the
      Company to terminate the agreement under certain circumstances. At
      December 31, 2013, the net settlement amount was held in escrow pending
      settlement of the lawsuit, and was included in restricted cash on the
      Consolidated Balance Sheets. Following the completion of the claims
      administration process which was conducted pursuant to a court-approved
      settlement agreement, funds related to this lawsuit were distributed by an
      administrator to eligible class members in April 2014. At the settlement
      payment date, the Company reduced the current portion of provisions on the
      Consolidated Balance Sheets by $12,016, which was partially offset by a
      corresponding decrease in receivables of $9,890 and restricted cash of
      $2,126, the latter of which represents the net settlement amount paid by
      the Company.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

30

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|17. | Income taxes
|--- | ------------

The following table represents the major components of income
tax recovery recognized in the Consolidated Statements of Operations
for the years ended December 31, 2014 and 2013:

|                             |   |             |   |   | December 31 |  
|---------------------------- | - | ----------- | - | - | ----------- | -
|                             |   |             |   |   | 2013        |  
|                             |   | December 31 |   |   | Restated    |  
|                             |   | 2014        |   |   | (Note 3     | )
|Current income tax recovery  | $ | (2,700      | ) | $ | (140        | )
|Deferred income tax recovery |   | (26,278     | ) |   | (760        | )
|Provision for income taxes   | $ | (28,978     | ) | $ | (900        | )

Included  within deferred income tax recovery for the year ended December 31, 2014 is a  foreign exchange gain of $25,368 (year ended December 31, 2013 – foreign  exchange gain of $15,216)  that arose on the translation of deferred tax assets and liabilities.

The following table reconciles the expected income tax recovery at the statutory income tax rate to the amounts recognized in the
Consolidated Statements of Operations for the years ended December 31, 2014 and
2013:

|                                                                         |   |             |   |   | December 31 |  
|------------------------------------------------------------------------ | - | ----------- | - | - | ----------- | -
|                                                                         |   |             |   |   | 2013        |  
|                                                                         |   | December 31 |   |   | Restated    |  
|                                                                         |   | 2014        |   |   | (Note 3     | )
|Loss before income taxes                                                 | $ | (198,626    | ) | $ | (177,670    | )
|Income tax rate                                                          |   | 25.21%      |   |   | 25.20%      |  
|Expected income tax recovery based on above
      rates                  |   | (50,074     | ) |   | (44,773     | )
|Effect of higher tax rates in foreign
      jurisdictions                |   | (5,413      | ) |   | (14,643     | )
|Non-deductible stock option expense                                      |   | 1,470       |   |   | 1,583       |  
|Non-deductible loss on settlement of debt                                |   | 2,251       |   |   | -           |  
|Effect of non-deductible goodwill impairment                             |   | -           |   |   | 37,513      |  
|Impact of local mining taxes                                             |   | (2,242      | ) |   | 7,037       |  
|Impact of changes in tax rates applicable to
      temporary differences |   | -           |   |   | 3,207       |  
|Permanent differences                                                    |   | (399        | ) |   | (1,185      | )
|Change in unrecognized temporary differences                             |   | 959         |   |   | -           |  
|Impact of foreign exchange                                               |   | 24,470      |   |   | 10,361      |  
|Provision for income taxes                                               | $ | (28,978     | ) | $ | (900        | )

The statutory tax rate for 2014 was 25.21% (2013  25.20%),
which is consistent with the prior year.

The following reflects the deferred income tax liability at
December 31, 2014 and December 31, 2013:

|                                                                                       |   | December 31 |   |   | December 31 |  
|-------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                                       |   | 2014        |   |   | 2013        |  
|Accounting value of mineral properties and
      capital assets in excess of tax value | $ | 251,49      |   | $ | 281,457     |  
|Accounting value of inventories in excess of
      tax value                           |   | 38,147      |   |   | 34,670      |  
|Unrealized foreign exchange loss                                                       |   | -           |   |   | (619        | )
|Other taxable temporary differences                                                    |   | 2,974       |   |   | 883         |  
|Non-capital losses carried forward                                                     |   | (31,368     | ) |   | (29,211     | )
|Deferred income tax liability                                                          | $ | 260,902     |   | $ | 287,180     |  

31

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The change in deferred income tax liability is explained as
follows:

|                                                                    |   |             |   |   | December 31 |  
|------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                    |   |             |   |   | 2013        |  
|                                                                    |   | December 31 |   |   | Restated    |  
|                                                                    |   | 2014        |   |   | (Note 3     | )
|Balance, beginning of year                                          | $ | 287,180     |   | $ | 288,131     |  
|Deferred income tax recovery recognized in
      net loss           |   | (26,278     | ) |   | (760        | )
|Deferred income tax liability recognized in
      retained earnings |   | -           |   |   | (191        | )
|Deferred income tax liability                                       | $ | 260,902     |   | $ | 287,180     |  

The Company has tax loss carryforwards expiring in the
following years:

|                     |   | Canada  |  |   | Mexico |  |   | United States |  |   | Total   | 
|-------------------- | - | ------- |  | - | ------ |  | - | ------------- |  | - | ------- | 
|2023                 |   | -       |  |   | 5,514  |  |   | -             |  |   | 5,514   | 
|2024                 |   | 862     |  |   | 13,367 |  |   | -             |  |   | 14,229  | 
|2025                 |   | 6,679   |  |   | -      |  |   | -             |  |   | 6,679   | 
|2026                 |   | 14,388  |  |   | -      |  |   | -             |  |   | 14,388  | 
|2027                 |   | 5,474   |  |   | -      |  |   | 1,448         |  |   | 6,922   | 
|2028                 |   | 25,242  |  |   | -      |  |   | 5,760         |  |   | 31,002  | 
|2029                 |   | 11,858  |  |   | -      |  |   | 7,831         |  |   | 19,689  | 
|2030                 |   | 5,223   |  |   | -      |  |   | 5,248         |  |   | 10,471  | 
|2031                 |   | 12,940  |  |   | -      |  |   | -             |  |   | 12,940  | 
|2032                 |   | 26,417  |  |   | -      |  |   | -             |  |   | 26,417  | 
|At December 31, 2014 | $ | 109,083 |  | $ | 18,881 |  | $ | 20,287        |  | $ | 148,251 | 

The Company has unrecognized deferred income tax assets in
respect of aggregate loss carryforwards, deductible temporary differences and
unused tax credits of $60,743 (December 31, 2013 - $28,649).

|At December 31, 2014, the Company has unrecognized
      deferred income tax liabilities on taxable temporary differences of
      $167,919 (December 31, 2013 - $174,485) for taxes that would be payable on
      the unremitted earnings of certain subsidiaries of the Company.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                   

32

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|18. | Shareholders equity
|--- | --------------------
|    |                     
|(a) | Capital stock       

Authorized:

Unlimited number of common shares. The Companys shares
have no par value.

Issued and outstanding:

|                                                                        |  | December 31, 2014 |  |   | December 31, 2013 | 
|----------------------------------------------------------------------- |  | ----------------- |  | - | ----------------- | 
|                                                                        |  | Number of         |  |   |                   | 
|                                                                        |  | common            |  |   | Ascribed          | 
|                                                                        |  | shares            |  |   | value             | 
|Balance, beginning of period                                            |  | 247,569,811       |  | $ | 2,021,837         | 
|Shares repurchased and cancelled                                        |  | -                 |  |   | -                 | 
|Shares issued through dividend reinvestment
      plan                  |  | 488,253           |  |   | 1,924             | 
|Shares issued through employee share purchase
      plan                |  | 594,690           |  |   | 2,323             | 
|Shares issued on redemption of restricted
      share units             |  | 109,916           |  |   | 445               | 
|Shares issued on redemption of deferred share
      units               |  | 52,065            |  |   | 359               | 
|Shares issued on exercise of stock options                              |  | 548               |  |   | 2                 | 
|Fair value of share-based compensation on
      stock options exercised |  | -                 |  |   | 4                 | 
|Shares issued through flow-through financing
      (Note 15)            |  | 833,334           |  |   | 3,097             | 
|Balance, end of period                                                  |  | 249,648,617       |  | $ | 2,029,991         | 

During the year ended December 31, 2013, the Company
repurchased and cancelled 36,144,578 common shares under a modified Dutch
auction substantial issuer bid, for a total purchase price of $301,066,
including transaction costs. Of the $301,066 paid, $295,536 was recognized in
capital stock to reduce the book value of the shares repurchased, the premium
paid, including transaction costs, of $5,353 was recognized in deficit, and $177
was recognized as deferred tax.

|(b) | Dividends
|--- | ---------

Commencing in 2014, quarterly dividends representing 20% of
operating cash flow generated in the preceding quarter were declared and paid as
follows:

|- | On May 8, 2014, the Companys Board of Directors approved a dividend of
  $0.02 per share, payable to shareholders of record on May 20, 2014, and paid
  on June 3, 2014.                 
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                           
|- | On August 7, 2014, the Companys Board of Directors approved a dividend of
  $0.00375 per share, payable to shareholders of record on August 18, 2014, and
  paid on September 2, 2014.   
|  |                                                                                                                                                                                           
|- | On November 6, 2014, the Companys Board of Directors approved a dividend
  of $0.00225 per share, payable to shareholders of record on November 17, 2014,
  and paid on December 1, 2014.

The fourth quarter dividend was declared on February 19, 2015
(refer to note 28).

In 2013, the Company declared an annual dividend of $0.16 per
share ($0.04 paid quarterly).

|(c) | Stock options (in Canadian
  dollars)
|--- | -------------------------------------

The Company has a long-term incentive plan under which
share-based compensation, including stock options, deferred share units,
performance share units, and restricted share units may be granted to directors,
officers, employees, and consultants of the Company. The maximum number of
common shares that may be reserved and set aside for issuance under the plan is
6.5% of the common shares outstanding at the time of granting the award (on a
non-diluted basis). Stock options are generally exercisable for a maximum period
of five to seven years from the grant date, and have vesting periods of three to
four years or as determined by the Companys Board of Directors.

Stock option disclosures are in Canadian dollars as the
Canadian dollar is the source currency of the Companys stock option grants.

33

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The fair value of the options granted during the years ended
December 31, 2014 and 2013 were calculated using the Black-Scholes
option-pricing model with the following weighted average assumptions:

|                        |   | December 31 |  |   | December 31 | 
|----------------------- | - | ----------- |  | - | ----------- | 
|                        |   | 2014        |  |   | 2013        | 
|Dividend yield          |   | 2.57%       |  |   | 2.27%       | 
|Expected volatility     |   | 56.13%      |  |   | 55.06%      | 
|Risk free interest rate |   | 1.04%       |  |   | 1.25%       | 
|Expected life           |   | 2.76 years  |  |   | 2.98 years  | 
|Exercise price          | $ | 4.03        |  | $ | 4.90        | 
|Share price             | $ | 3.83        |  | $ | 4.92        | 
|Grant date fair value   | $ | 1.14        |  | $ | 1.62        | 

Expected volatility was determined based on historical share
price volatility over the expected life of the option granted.

|                                   |  | December 31, 2014 |   |   | December 31, 2013 | 
|---------------------------------- |  | ----------------- | - | - | ----------------- | 
|                                   |  |                   |   |   | Weighted          | 
|                                   |  | Options           |   |   | average price     | 
|Outstanding, beginning of period   |  | 11,313,300        |   | $ | 7.29              | 
|Granted                            |  | 3,349,645         |   | $ | 4.03              | 
|Forfeited                          |  | (117,917          | ) | $ | 7.02              | 
|Expired                            |  | (770,795          | ) | $ | 10.73             | 
|Exercised                          |  | (548              | ) | $ | 2.85              | 
|Outstanding, end of period         |  | 13,773,685        |   | $ | 6.42              | 
|Options exercisable, end of period |  | 7,144,059         |   | $ | 7.61              | 

During the year ended December 31, 2014, employees,
consultants, officers and directors of the Company exercised 548 options (year
ended December 31, 2013 - 458,168) for total proceeds of $2 (year ended December
31, 2013 - $3,091). The weighted average share price at the date of exercise for
stock options exercised during the year ended December 31, 2014 was $5.05 (year
ended December 31, 2013 - $7.39) .

Set forth below is a summary of the outstanding options to
purchase common shares as at December 31, 2014:

Options outstanding
    
    
    Options exercisableNumber Weighted
      average
    
    
    Average life
    
    
    Number
    
    
    Weighted averageOption Price
    
    outstanding
    
    
    exercise price
    
    
    (yrs)
    
    
    exercisable
    
    
    exercise price$
    2.51 - 4.00
    
    325,136
    
    $
    3.01
    
    
    1.47
    
    
    285,136
    
    $
    2.88$
    4.01 - 6.00
    
    5,689,523
    
    $
    4.04
    
    
    4.51
    
    
    819,731
    
    $
    4.10$
    6.01 - 7.00
    
    1,491,500
    
    $
    6.70
    
    
    2.87
    
    
    1,251,500
    
    $
    6.69$
    7.01 - 7.50
    
    888,226
    
    $
    7.15
    
    
    3.01
    
    
    501,466
    
    $
    7.20$
    7.51 - 9.00
    
    3,235,507
    
    $
    8.11
    
    
    3.01
    
    
    2,454,592
    
    $
    8.10$
    9.01 - 9.50
    
    722,500
    
    $
    9.29
    
    
    3.84
    
    
    554,375
    
    $
    9.29$
    9.51 - 10.00
    
    771,543
    
    $
    9.74
    
    
    2.12
    
    
    730,009
    
    $
    9.75$
    10.01 - 10.50
    
    150,000
    
    $
    10.09
    
    
    3.30
    
    
    112,500
    
    $
    10.09$
    10.51 - 11.00
    
    250,000
    
    $
    10.95
    
    
    3.87
    
    
    187,500
    
    $
    10.95$
    11.01 - 12.50
    
    249,750
    
    $
    11.61
    
    
    2.43
    
    
    247,250
    
    $
    11.61Total
    
    13,773,685
    
    
    
    
    
    
    
    
    7,144,059


|(d) | Employee share purchase
plan
|--- | ----------------------------

The Company has an Employee Share Purchase Plan which enables
employees to purchase Company shares through payroll deduction. Employees can
contribute up to 10% of their annual base salary, and the Company will match 75%
of the employees contributions. The common shares are purchased based on the
volume weighted average closing price of the last five days prior to the end of
the quarter. During the year ended December 31, 2014, the Company recognized
$1,061 as an expense (year ended December 31, 2013 - $781) related to this plan.
At December 31, 2014, $278 of the expense was payable by the Company (December
31, 2013 - $217).

34

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The following is a summary of the Deferred Share Units
(DSUs), Performance Share Units (PSUs), and share-settled Restricted Share
Units (RSUs) outstanding during the years ended December 31, 2014 and 2013:

|                                                      |   | Year ended  | 
|----------------------------------------------------- | - | ----------- | 
|                                                      |   | December 31 | 
|                                                      |   | 2014        | 
|Deferred Share Units (e)                              |   |             | 
|Granted                                               |   | 52,599      | 
|Grant date fair value                                 | $ | 228         | 
|Dividend-equivalent units
      granted               |   | 4,080       | 
|Dividend-equivalent units grant
      date fair value | $ | 28          | 
|Redeemed                                              |   | 52,065      | 
|Performance Share Units (f)                           |   |             | 
|Granted                                               |   | 270,082     | 
|Grant date fair value                                 | $ | 959         | 
|Dividend-equivalent units
      granted               |   | 7,107       | 
|Dividend-equivalent units grant
      date fair value | $ | 28          | 
|Expense                                               | $ | 546         | 
|Redeemed                                              |   | -           | 
|Restricted Share Units (g)                            |   |             | 
|Granted                                               |   | 392,764     | 
|Grant date fair value                                 | $ | 1,349       | 
|Dividend-equivalent units
      granted               |   | 6,590       | 
|Dividend-equivalent units grant
      date fair value | $ | 29          | 
|Expense                                               | $ | 1,076       | 
|Redeemed                                              |   | 109,916     | 

|(e) | Deferred share unit plan
|--- | ------------------------

The Company awards Deferred Share Units as an alternative form
of compensation for employees, officers, consultants, and members of the
Companys Board of Directors. Each unit entitles the participant to receive one
common share of the Company from treasury upon redemption. DSUs are measured on
the grant date using the volume weighed average closing share price of the last
five days prior to that date. At December 31, 2014, 253,210 DSUs were vested and
outstanding (December 31, 2013 - 248,596).

|(f) | Performance share unit
plan
|--- | ---------------------------

The Company awards Performance Share Units as an alternative
form of compensation for employees, officers, consultants, and members of the
Companys Board of Directors. Each unit entitles the participant to receive a
cash payment equal to the market price of one share as of the PSU vesting date,
one share, or any combination of cash and shares equal to the market price of
one share as of the PSU vesting date, assuming certain performance conditions
are met. PSUs are measured using the volume weighted average closing share price
of the last five days prior to granting of the units. At December 31, 2014,
625,223 PSUs were outstanding (December 31, 2013 - 348,040). At December 31,
2014, no outstanding PSUs had vested (December 31, 2013 - nil).

|(g) | Restricted share unit
plan
|--- | --------------------------

|The Company awards Restricted Share Units as an alternative
      form of compensation for employees, officers, consultants, and members of
      the Companys Board of Directors. Each unit entitles the participant to
      receive a cash payment equal to the market price of one share as of the
      RSU vesting date, one share, or any combination of cash and shares equal
      to the market price of one share as of the RSU vesting date. The Company
      records RSUs that will be cash-settled as liabilities and RSUs that will
      be share-settled within shareholders equity. RSUs are measured using the
      volume weighted average closing share price of the last five days prior to
      granting of the units. At December 31, 2014, 636,769 RSUs were outstanding
      (December 31, 2013 - 356,155). At December 31, 2014, 82,395 of the
      outstanding RSUs had vested (December 31, 2013 - 35,843).
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

35

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|19. | Loss from operations
|--- | --------------------

The Companys loss from operations includes the following
expenses presented by function:

|                                     |   | Year ended  | 
|------------------------------------ | - | ----------- | 
|                                     |   | December 31 | 
|                                     |   | 2014        | 
|Cost of sales                        | $ | 417,343     | 
|General and administrative           |   | 25,921      | 
|Exploration and business development |   | 2,623       | 
|                                     | $ | 445,887     | 

Cost of sales for the year ended December 31, 2014 includes
impairment charges of $90,000 relating to the El Chanate mine (year ended
December 31, 2013 - $154,000). These impairment charges are discussed further in
note 13.

Included in general and administrative expense for the year
ended December 31, 2014 is $7,179 of share-based compensation expense (year
ended December 31, 2013 - $7,388).

Included in exploration and business development for the year
ended December 31, 2014 are impairment charges of $1,622 related to exploration
properties. Included in exploration and business development for the year ended
December 31, 2013 are impairment charges of $4,574 related to brownfield
exploration properties included in non-depletable mining interests. These
impairment charges are discussed further in note 13.

The following employee benefits expenses are included in cost
of sales, general and administrative, and exploration and business development
expenses:

|                         |   | Year ended  | 
|------------------------ | - | ----------- | 
|                         |   | December 31 | 
|                         |   | 2014        | 
|Salaries and benefits    | $ | 42,021      | 
|Share-based compensation |   | 8,151       | 
|Other                    |   | 173         | 
|                         | $ | 50,345      | 

36

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|20. | Other (loss) / income
|--- | ---------------------

|                                                                                            |   | Year ended  |  
|------------------------------------------------------------------------------------------- | - | ----------- | -
|                                                                                            |   | December 31 |  
|                                                                                            |   | 2014        |  
|Loss on modification of
    convertible notes (Note 14(c))                                  | $ | (15,645     | )
|Amortization expense from
    retained interest royalty (Note 12)                           |   | (13,288     | )
|Income from retained
    interest royalty (Note 12)                                         |   | 2,463       |  
|Unrealized and realized
    gains / (losses) on investments (Note 8)                        |   | 6,589       |  
|Reclassification of
    accumulated losses on available-for-sale investments (Note 8)       |   | (2,507      | )
|Income from transfer of
    litigation claim (a)                                            |   | 3,177       |  
|Interest income                                                                             |   | 1,063       |  
|Fair value adjustment on
    option component of convertible senior notes (Note 25)         |   | 413         |  
|Unrealized loss on
    contingent consideration                                             |   | -           |  
|Unrealized and realized
    losses / (gains) on derivative assets and liabilities (Note 25) |   | (447        | )
|Reduction of obligation to
    renounce flow-through exploration expenditures (Note 15)     |   | 612         |  
|Fair value adjustment on
    prepayment option embedded derivative (Note 25)                |   | 788         |  
|Other                                                                                       |   | (419        | )
|                                                                                            | $ | (17,201     | )

|(a) | Income from transfer of litigation
  claim
|--- | ------------------------------------------

During the year ended December 31, 2014, the Company
transferred its claim in bankruptcy proceedings that resulted from past losses
on auction-rate securities for net proceeds of $3,177.

|    |               
|--- | --------------
|21. | Loss per share

Net loss and basic weighted average shares outstanding are
reconciled to diluted net loss and diluted weighted average shares outstanding,
respectively, as follows:

|                                            |   | Year ended  |  
|------------------------------------------- | - | ----------- | -
|                                            |   | December 31 |  
|                                            |   | 2014        |  
|Net loss                                    | $ | (169,648    | )
|Dilution adjustments:                       |   |             |  
|Convertible senior notes                    |   | -           |  
|                                            |   |             |  
|Diluted net loss                            | $ | (169,648    | )
|                                            |   |             |  
|Basic weighted average shares outstanding   |   | 248,889,636 |  
|Dilution adjustments:                       |   |             |  
|Convertible senior notes                    |   | -           |  
|Diluted weighted average shares outstanding |   | 248,889,636 |  

The following items were excluded from the computation of
diluted weighted average shares outstanding for the years ended December 31,
2014 and 2013 because their effect would have been anti-dilutive:

|                         |  | Year ended  | 
|------------------------ |  | ----------- | 
|                         |  | December 31 | 
|                         |  | 2014        | 
|Stock options            |  | 13,773,685  | 
|Convertible senior notes |  | 60,974      | 
|Restricted share units   |  | 554,374     | 
|Performance share units  |  | 625,223     | 
|                         |  |             | 

37

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|22. | Supplemental cash flow
  information
|--- | ------------------------------------

|                                                                                    |   | Year ended  |  
|----------------------------------------------------------------------------------- | - | ----------- | -
|                                                                                    |   |             |  
|                                                                                    |   |             |  
|                                                                                    |   | December 31 |  
|Non-cash adjustments to reconcile net loss to
      operating cash flows:           |   | 2014        |  
|Impairment charges                                                                  | $ | 91,622      |  
|Amortization and
      depletion                                                    |   | 121,468     |  
|Loss on
      modification of convertible notes                                     |   | 15,645      |  
|Amortization of
      retained interest royalty                                     |   | 13,288      |  
|Unrealized foreign
      exchange loss                                              |   | 5,238       |  
|Unrealized and
      realized (gains) / losses on investments                       |   | (6,589      | )
|Share-based
      compensation, net of forfeitures                                  |   | 7,179       |  
|Net realizable
      value adjustments                                              |   | 17,224      |  
|Reclassification
      of accumulated losses on available-for-sale investments      |   | 2,507       |  
|Income from
      retained interest royalty                                         |   | (2,463      | )
|Deferred income
      tax recovery                                                  |   | (26,278     | )
|Fair value
      adjustment on option component of convertible senior notes         |   | (413        | )
|Reduction of
      obligation to renounce flow-through exploration expenditures     |   | (612        | )
|Equity in loss of
      associate and joint venture                                 |   | 171         |  
|Unrealized loss on
      contingent consideration                                   |   | -           |  
|Unrealized and
      realized losses / (gains) on derivative assets and liabilities |   | 447         |  
|Fair value
      adjustment on prepayment option embedded derivative                |   | (788        | )
|Other non-cash
      items                                                          |   | 635         |  
|                                                                                    | $ | 238,281     |  
|Change in non-cash operating working capital:                                       |   |             |  
|Receivables                                                                         | $ | 2,176       |  
|Current income tax receivable                                                       |   | 22,014      |  
|Prepaids and deposits                                                               |   | 2,359       |  
|Inventories                                                                         |   | (15,090     | )
|Trade payables and accrued
      liabilities                                        |   | (12,515     | )
|Current income tax liability                                                        |   | (3,239      | )
|                                                                                    | $ | (4,295      | )
|                                                                                    |   |             |  
|Supplemental information:                                                           |   |             |  
|Interest paid                                                                       | $ | 17,048      |  
|Interest received                                                                   | $ | 870         |  
|Income taxes paid                                                                   | $ | 1,999       |  
|.                                                                                   |   |             |  

|23. | Related party disclosures
|--- | -------------------------

Related party transactions in 2014 included the compensation of
the Companys key management personnel, a receivable from the joint venture that
holds the Orion development project, and an advance to the associate entity that
holds the Lynn Lake development project, as disclosed in notes 9 and 10.

Related party transactions in 2013 included the compensation of
the Companys key management personnel and a receivable from the joint venture
that holds the Orion development project.

38

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The Companys key management personnel include the Companys
executives and members of the Board of Directors. The compensation of key
management personnel was as follows:

|                             |   | Year ended  | 
|---------------------------- | - | ----------- | 
|                             |   | December 31 | 
|                             |   | 2014        | 
|Short-term employee benefits | $ | 5,349       | 
|Long-term benefits           |   | 101         | 
|Termination benefits         |   | 1,306       | 
|Share-based compensation     |   | 4,746       | 
|                             | $ | 11,502      | 
|.                            |   |             | 

|24. | Commitments and
contingencies
|--- | -----------------------------

Commitments

Young-Davidson royalty agreements

The Company is subject to two royalty agreements on certain
claims on the Young-Davidson property. The first royalty agreement requires the
Company to pay a minimum of $1.50 per tonne of ore mined and processed. The
second royalty agreement requires the Company to pay $1.00 per tonne of ore
mined and processed, as well as an additional royalty of 5% of the increase in
gold price per ounce recovered above the base price of gold of $270.00 per ounce
for each ounce recovered. The Company recognized $1,377 and $870 relating to
these arrangements in the years ended December 31, 2014 and 2013. Total royalties recognized during 2014 were based  upon
400,886 ore tonnes processed.

Surety bond

The Company has indemnified a third-party company providing a
surety bond required as security for closure plans at Young-Davidson. The
Company is obligated to replace this security in an event of default, and is
obligated to repay any reclamation or closure costs due. The Companys guarantee
under the surety bond expires on completion of these closure obligations, which
is estimated to be in 20 years, consistent with the estimated remaining life of
the Young-Davidson mine.

Contingencies

|The Company is also involved in legal proceedings arising
      in the ordinary course of its business. In the opinion of management, the
      ultimate liability with respect to these actions will not materially
      affect the Companys financial position, results of operations or cash
      flows.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                              

39

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|25. | Financial instruments and risk
  management
|--- | -------------------------------------------

Fair values of financial instruments

The following table sets forth the Companys financial assets
and liabilities that are measured at fair value on a recurring basis by level
within the fair value hierarchy. The Company does not have any non-recurring
fair value measurements other than those disclosed in note 13. Levels 1 to 3 are
defined based on the degree to which fair value inputs are observable or
unobservable, as follows:

|- | Level 1 inputs are quoted prices (unadjusted)
      in active markets for identical assets or liabilities;                                                           
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | Level 2 inputs are based on inputs which have a
      significant effect on fair value that are observable, either directly or
      indirectly from market data; and
|- | Level 3 inputs are unobservable (supported by
      little or no market activity).                                                                                   

|                                                                 |   | December 31, 2014 |  |   | December 31, 2013 |  
|---------------------------------------------------------------- | - | ----------------- |  | - | ----------------- | -
|                                                                 |   | Level 1           |  |   | Level 2           |  
|Cash                                                             | $ | 89,031            |  | $ | -                 |  
|Short term deposits                                              |   | -                 |  |   | -                 |  
|Financial assets at fair value through profit
      or loss      |   |                   |  |   |                   |  
|Warrants held (a)                                                |   | -                 |  |   | -                 |  
|Prepayment option embedded
      derivative (b)                  |   | -                 |  |   | 6,741             |  
|Available-for-sale financial assets                              |   |                   |  |   |                   |  
|Equity investments (c)                                           |   | 184               |  |   | -                 |  
|Financial liabilities at fair value through
      profit or loss |   |                   |  |   |                   |  
|Option component of convertible
      senior notes (d)           |   | -                 |  |   | -                 |  
|Currency options (e)                                             |   | -                 |  |   | (447              | )
|                                                                 | $ | 89,215            |  | $ | 6,294             |  

The methods of measuring each of these financial assets and
liabilities have not changed during 2014. The Company does not have any
financial assets or liabilities measured at fair value based on unobservable
inputs (Level 3).

The fair values of financial instruments measured at amortized
cost, except for the senior secured notes, approximate their carrying amounts at
December 31, 2014. The fair value of the senior secured notes was $289,800 at
December 31, 2014 compared to a carrying value of $296,755, which includes the
value of the prepayment option embedded derivative included in the table above.
The fair value of this liability was determined using a market approach with
reference to observable market prices for identical assets traded in an active
market.

|(a) | Warrants held
|--- | -------------

The fair value of warrants held that are not traded on an
active market is determined using a Black-Scholes pricing model based on
assumptions that are supported by observable current market conditions and as
such are classified within Level 2 of the fair value hierarchy.

|(b) | Prepayment option embedded
  derivative
|--- | ---------------------------------------

The secured notes (as discussed in note 14) contain prepayment
options which represent embedded derivatives that require bifurcation from the
host contract. The prepayment options are measured at fair value and offset
against the carrying value of the secured notes on the Consolidated Balance
Sheets, with changes in the fair value recognized as unrealized gains / (losses)
in other (loss) / income on the Consolidated Statements of Operations (note
20).

40

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

The Company measures the fair value of the secured note
embedded derivative using the Black-Karasinski model of interest rate
uncertainty within a FinCAD callable / puttable bond model. Because the
valuation is dependent on inputs derived from observable market data, the
embedded derivative component of the secured notes is classified within Level 2
of the fair value hierarchy. The fair value was calculated using the following
assumptions:

|               |  | December 31 | 
|-------------- |  | ----------- | 
|               |  | 2014        | 
|Volatility     |  | 41%         | 
|Credit spreads |  | 6.78%       | 

Changes in these assumptions would have the following impact on
net loss for the year ended December 31, 2014:

|                                |   | December 31 |  
|------------------------------- | - | ----------- | -
|                                |   | 2014        |  
|2% increase in volatility       | $ | 473         |  
|2% decrease in volatility       | $ | (473        | )
|0.5% increase in credit spreads | $ | (693        | )
|0.5% decrease in credit spreads | $ | 788         |  

|(c) | Equity investments
|--- | ------------------

The Companys available-for-sale equity investments are valued
using quoted market prices in active markets and as such are classified within
Level 1 of the fair value hierarchy. The fair value of investment securities is
calculated as the closing market price of the investment equity security
multiplied by the quantity of shares held by the Company.

|(d) | Option component of convertible senior
  notes
|--- | ----------------------------------------------

The Company calculates the fair value of the option component
of convertible senior notes using a convertible bond valuation model, which uses
inputs, including the Companys share price, volatility of the notes, and credit
spreads. Because the valuation is dependent on inputs derived from observable
market data, the option component of the convertible senior notes is classified
within Level 2 of the fair value hierarchy. The fair value of the option
component of convertible senior notes at December 31, 2014 is $nil. The fair
value at December 31, 2013 was calculated using the following assumptions:

|               |  | December 31 | 
|-------------- |  | ----------- | 
|               |  | 2013        | 
|Volatility     |  | 30%         | 
|Credit spreads |  | 4.70%       | 

For the year ended December 31, 2013, changes in these
assumptions would have the following impact on net loss:

|                                |   | December 31 |  
|------------------------------- | - | ----------- | -
|                                |   | 2013        |  
|5% increase in volatility       | $ | (557        | )
|5% decrease in volatility       | $ | 298         |  
|0.5% increase in credit spreads | $ | (29         | )
|0.5% decrease in credit spreads | $ | 27          |  

|(e) | Currency options
|--- | ----------------

The fair value of option contracts is determined using a market
approach with reference to observable market prices for identical assets traded
in an active market. These are classified within Level 2 of the fair value
hierarchy. The use of reasonably possible alternative assumptions would not
significantly affect the Companys results.

Risks

In the normal course of operations, the Company is exposed to
credit risk, liquidity risk and the following market risks: commodity price,
market price, interest rate and foreign currency exchange rate. The Company has
developed a risk management process to identify, analyze and assess these and
other risks, and has formed a Risk Committee to monitor all significant risks to
the Company. The Board of Directors has overall responsibility for the oversight
of the Companys risk management framework, and receives regular reports from
the Risk Committee.

41

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

Commodity price risk

The profitability of the Companys mining operations will be
significantly affected by changes in the market price for gold. Gold prices
fluctuate on a daily basis and are affected by numerous factors beyond the
Companys control. The supply and demand for gold, the level of interest rates,
the rate of inflation, investment decisions by large holders of gold, including
governmental reserves, and the stability of exchange rates can all cause
significant fluctuations in gold prices. Such external economic factors are in
turn influenced by changes in international investment patterns and monetary
systems, and political developments. From time to time, the Company will enter
into zero cost collars or other financial instruments to manage short term
commodity price fluctuations. At December 31, 2014 and 2013, the Company did not
have any commodity-related financial instruments outstanding.

Market price risk

The Company is exposed to fluctuations in the fair value of
investments made in equity securities and warrants. A 10% increase or reduction
in each companys share price at December 31, 2014 would have increased or
reduced other comprehensive loss by $18 (December 31, 2013 - $1,555).

Interest rate risk

When amounts are drawn under its credit facility, the Company
is exposed to interest rate risk on this variable rate debt. At December 31,
2014, the Company had no variable rate debt outstanding. If interest rates had
been 0.5% higher during the year ended December 31, 2013, net loss would have
increased by $44. This analysis assumes that other variables remain constant (a
50 basis points decrease in interest rates would have had the equal but opposite
effect) and that none of the additional interest is capitalized to capital
projects.

The fair value of the prepayment option embedded derivative is
also impacted by fluctuations in interest rates. Refer to the previous
discussion on the fair value of these options for a sensitivity of the fair
value of these notes to changes in significant assumptions.

Foreign currency exchange rate risk

Metal sales revenues for the Company are denominated in US
dollars. The Company is exposed to currency fluctuations relative to the US
dollar on expenditures that are denominated in Canadian dollars and Mexican
pesos. These potential currency fluctuations could have a significant impact on
production costs and thereby, the profitability of the Company. The Company is
also exposed to the impact of currency fluctuations on its monetary assets and
liabilities.

At December 31, 2014, the Companys balance sheet exposure to
foreign currency exchange rate risk in Canadian dollars (CAD) and Mexican
pesos (MXN) was as follows:

|                                         |   | CAD      |   |   | MXN      |  
|---------------------------------------- | - | -------- | - | - | -------- | -
|Cash and cash equivalents                | $ | 29,135   |   | $ | 3,862    |  
|Receivables                              |   | 4,559    |   |   | 112,067  |  
|Current income tax receivable            |   | 815      |   |   | 65,839   |  
|Investments                              |   | 213      |   |   | -        |  
|Other long-term assets                   |   | 59,184   |   |   | -        |  
|Payables and accrued liabilities         |   | (33,760  | ) |   | (39,990  | )
|Current income tax liability             |   | (86      | ) |   | (4,907   | )
|Debt and equipment financing obligations |   | (2,072   | ) |   | (2,760   | )
|Provisions                               |   | (2,734   | ) |   | (754     | )
|Deferred income tax liability            |   | (266,493 | ) |   | (460,091 | )
|Net balance sheet exposure               | $ | (211,239 | ) | $ | (326,734 | )

42

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

At December 31, 2013, the Companys balance sheet exposure to
foreign currency exchange rate risk in Canadian dollars (CAD), Mexican pesos
(MXN) was as follows:

|                                         |   | CAD      |   |   | MXN      |  
|---------------------------------------- | - | -------- | - | - | -------- | -
|Cash and cash equivalents                | $ | 23,118   |   | $ | 24,932   |  
|Restricted cash                          |   | 2,345    |   |   | -        |  
|Receivables                              |   | 18,954   |   |   | 101,094  |  
|Current income tax receivable            |   | 25,899   |   |   | 46,977   |  
|Investments                              |   | 16,540   |   |   | -        |  
|Other long-term assets                   |   | 72,328   |   |   | -        |  
|Payables and accrued liabilities         |   | (72,787  | ) |   | (34,063  | )
|Dividend payable                         |   | (2,236   | ) |   | -        |  
|Current income tax liability             |   | (3,351   | ) |   | (5,549   | )
|Debt and equipment financing obligations |   | (13,519  | ) |   | -        |  
|Provisions                               |   | (17,266  | ) |   | (754     | )
|Deferred income tax liability            |   | (242,720 | ) |   | (772,525 | )
|Net balance sheet exposure               | $ | (192,695 | ) | $ | (639,888 | )

A 10% strengthening of these currencies against the US dollar
at each balance sheet date would have impacted net losses by the amounts shown
below. This analysis assumes that other variables, in particular interest rates,
remain constant.

|                                |   | December 31 |   |   | December 31 |  
|------------------------------- | - | ----------- | - | - | ----------- | -
|                                |   | 2014        |   |   | 2013        |  
|Translation of net CAD exposure | $ | (18,209     | ) | $ | (18,117     | )
|Translation of net MXN exposure |   | (2,215      | ) |   | (4,885      | )

As at December 31, 2014, the Company held option contracts to
protect against the risk of an increase in the value of the Canadian dollar and
Mexican peso versus the US dollar. Details of these option contracts for the
purchase of local currencies and sale of US dollars, which settle on a monthly
basis, are summarized in the table below.

|                            |  |          |  |  | Local    |  |  | Local currency |  |  | Local currency |  |  | Call option |  |  | Put option | 
|--------------------------- |  | -------- |  |  | -------- |  |  | -------------- |  |  | -------------- |  |  | ----------- |  |  | ---------- | 
|Period covered              |  | Contract |  |  | Currency |  |  | per month      |  |  | total          |  |  | per USD     |  |  | per USD    | 
|30-Jan-15         31-Dec-15 |  | Collar   |  |  | CAD      |  |  | 7,500          |  |  | 90,000         |  |  | 1.1111      |  |  | 1.2246     | 
|30-Jan-15         31-Dec-15 |  | Collar   |  |  | MXN      |  |  | 30,000         |  |  | 360,000        |  |  | 14.00       |  |  | 15.71      | 

These contracts had a negative fair value of $447 at December
31, 2014, all of which has been recognized in other (loss) / income within the
Consolidated Statements of Operations (note 20).

During 2013, the Company held forward contracts to protect
against the risk of an increase in the value of the Mexican peso versus the US
dollar. During the year ended December 31, 2013, a gain of $112 was recognized
in net loss on settlement of these forward contracts.

Credit risk

Credit risk relates to receivables and other contracts, and
arises from the possibility that any counterparty to an instrument fails to
perform. For cash and cash equivalents, restricted cash, and receivables, the
Companys credit risk is limited to the carrying amount on the balance sheet.
The Company manages credit risk by transacting with highly-rated counterparties
and establishing a limit on contingent exposure for each counterparty based on
the counterpartys credit rating. Exposure on receivables is limited as the
Company sells its products to a small number of organizations, on which the
historical level of defaults is minimal.

Liquidity risk

Liquidity risk is the risk that the Company will encounter
difficulty in meeting obligations associated with financial liabilities that are
settled by delivering cash or another financial asset. The Company manages this
risk through regular monitoring of its cash flow requirements to support ongoing
operations and expansionary plans. The Company ensures that there are sufficient
committed loan facilities to meet its business requirements, taking into account
anticipated cash flows from operations and holdings of cash and cash
equivalents.

43

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|The contractual maturities of financial liabilities are
      outlined in note 14.
|----------------------------------------------------------------------------------

|    |                   
|--- | ------------------
|26. | Capital management

The primary objective of managing the Companys capital is to
ensure that there is sufficient available capital to support the long-term
growth strategy of the Company in a way that optimizes the cost of capital and
shareholder returns, and ensures that the Company remains in a sound financial
position. There were no changes to the Companys overall capital management
approach during the current year.

The capital of the Company consists of items included in
shareholders equity and debt and equipment financing obligations. The Company
manages and makes adjustments to the capital structure as opportunities arise in
the market place, as and when borrowings mature, or when funding is required.
This may take the form of raising equity or debt, or may result in the Company
repurchasing equity or debt.

The Company monitors capital through the gross debt to total
equity ratio, and targets a ratio of less than 25%. As at December 31, 2014, the
ratio of gross debt to total equity was 19.27% (December 31, 2013 - 14.07%),
calculated as follows:

|                                                                  |   | December 31 |  |   | December 31 | 
|----------------------------------------------------------------- | - | ----------- |  | - | ----------- | 
|                                                                  |   | 2014        |  |   | 2013        | 
|Current portion of debt and equipment
      financing obligations | $ | 6,308       |  | $ | 7,355       | 
|Debt and equipment financing obligations                          |   | 308,064     |  |   | 244,194     | 
|Gross debt                                                        |   | 314,372     |  |   | 251,549     | 
|Shareholders' equity                                              | $ | 1,631,210   |  | $ | 1,787,882   | 
|Gross debt / Shareholders' equity                                 |   | 19.27%      |  |   | 14.07%      | 
|.                                                                 |   |             |  |   |             | 

|27. | Segmented information
|--- | ---------------------

The Companys reportable segments are consistent with the
Companys operating segments and consist of the geographical regions in which
the Company operates. In determining the Companys segment structure, the
Company considered the basis on which management, including the chief operating
decision maker, reviews the financial and operational performance of the
Company, and whether any of the Companys mining operations share similar
economic, operational and regulatory characteristics. The Company has two
reportable segments, as follows:

|− | Mexico: El Chanate mine    
|- | ---------------------------
|− | Canada: Young-Davidson mine

Corporate and other consists of the Companys corporate offices
and exploration properties.

The following are the operating results by reportable segment:

|                                                                                          |   | Year ended December 31, 2014 |  
|----------------------------------------------------------------------------------------- | - | ---------------------------- | -
|                                                                                          |   |                              |  
|                                                                                          |   | Mexico                       |  
|                                                                                          |   |                              |  
|Revenue from mining operations                                                            | $ | 86,259                       |  
|                                                                                          |   |                              |  
|Production costs                                                                          |   | 61,150                       |  
|Refining costs                                                                            |   | 400                          |  
|Amortization and depletion                                                                |   | 23,262                       |  
|Reclamation, care and maintenance costs                                                   |   | -                            |  
|General and administrative                                                                |   | 919                          |  
|Exploration and business development                                                      |   | -                            |  
|Impairment charges                                                                        |   | 90,771                       |  
|                                                                                          |   | 176,502                      |  
|Loss from operations                                                                      | $ | (90,243                      | )
|Expenditures on property, plant and
      equipment, mining interests & intangible assets | $ | 29,611                       |  

44

---

|                                                                     
|---------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       
|(in thousands of
      United States dollars unless otherwise stated)

|                                                                                          |   | Year ended December 31, 2013 |  
|----------------------------------------------------------------------------------------- | - | ---------------------------- | -
|                                                                                          |   |                              |  
|                                                                                          |   | Mexico                       |  
|                                                                                          |   |                              |  
|Revenue from mining operations                                                            | $ | 103,192                      |  
|                                                                                          |   |                              |  
|Production costs                                                                          |   | 71,625                       |  
|Refining costs                                                                            |   | 367                          |  
|Amortization and depletion                                                                |   | 17,836                       |  
|Reclamation, care and maintenance costs                                                   |   | -                            |  
|General and administrative                                                                |   | 1,371                        |  
|Exploration and business development                                                      |   | -                            |  
|Impairment charges                                                                        |   | 155,625                      |  
|                                                                                          |   | 246,824                      |  
|Loss from operations                                                                      | $ | (143,632                     | )
|Expenditures on property, plant and
      equipment, mining interests & intangible assets | $ | 44,088                       |  

The following are total assets by reportable segment:

|                                  |   |         |  |   |           |  |   | Corporate |  |   |           | 
|--------------------------------- | - | ------- |  | - | --------- |  | - | --------- |  | - | --------- | 
|                                  |   | Mexico  |  |   | Canada    |  |   | and other |  |   | Total     | 
|Total assets at December 31, 2014 | $ | 183,075 |  | $ | 1,833,404 |  | $ | 265,347   |  | $ | 2,281,826 | 
|Total assets at December 31, 2013 | $ | 265,028 |  | $ | 1,822,533 |  | $ | 374,847   |  | $ | 2,462,408 | 

Total non-current assets, excluding long-term financial assets,
by geographical region, are as follows:

|       |   | December 31 |  |   | December 31 | 
|------ | - | ----------- |  | - | ----------- | 
|       |   | 2014        |  |   | 2013        | 
|Mexico | $ | 151,774     |  | $ | 217,294     | 
|Canada |   | 1,889,240   |  |   | 1,865,636   | 
|       | $ | 2,041,014   |  | $ | 2,082,930   | 

Goodwill recognized in the Canada reportable segment totalled
$241,693 at December 31, 2014, and relates to the Young-Davidson CGU.

The Companys revenue is derived from the sale of gold and
silver in Mexico and Canada, as disclosed above. The Company sells all gold and
silver produced to two customers. The Company is not economically dependent on
these customers for the sale of its product because gold and silver can be sold
through numerous commodity market traders worldwide.

|    |                                         
|--- | ----------------------------------------
|28. | Events after the reporting period       
|    |                                         
|(a) | Termination of retained interest royalty

On January 14, 2015, the Company finalized the agreement to
terminate the retained interest royalty from Crocodile Gold and received CAD $20
million in cash consideration, along with net smelter royalties on future
production from the Fosterville and Stawell mines. Refer to note 12 for further
information.

|(b) | Declaration of
dividend
|--- | -----------------------

|On February 19, 2015, the Companys Board of Directors
      approved a dividend of $0.023 per share, payable to shareholders of record
      on March 2, 2015.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                               

45

---