---

Exhibit 99.2



MANAGEMENTS DISCUSSION AND
ANALYSIS

For the year ended December 31, 2012

---

|MANAGEMENTS DISCUSSION AND ANALYSIS      
|------------------------------------------
|FOR THE YEAR ENDED
      DECEMBER 31, 2012

TABLE OF CONTENTS

|OVERVIEW OF THE BUSINESS                                   | 1 
|---------------------------------------------------------- | --
|HIGHLIGHTS                                                 | 2 
|OUTLOOK AND STRATEGY                                       | 3 
|SUMMARIZED FINANCIAL AND OPERATING RESULTS                 | 4 
|SUMMARY OF QUARTERLY FINANCIAL AND
      OPERATING RESULTS | 7 
|YOUNG-DAVIDSON                                             | 9 
|EL CHANATE                                                 | 12
|OCAMPO                                                     | 15
|EL CUBO                                                    | 18
|AUSTRALIAN OPERATIONS                                      | 20
|EXPLORATION REVIEW                                         | 22
|CONSOLIDATED EXPENSES                                      | 22
|CONSOLIDATED INCOME TAX EXPENSE                            | 23
|FINANCIAL CONDITION                                        | 24
|KEY ECONOMIC TRENDS                                        | 25
|LIQUIDITY AND CAPITAL RESOURCES                            | 25
|CONTRACTUAL OBLIGATIONS                                    | 27
|OUTSTANDING SHARE DATA                                     | 28
|OFF-BALANCE SHEET ARRANGEMENTS                             | 28
|FINANCIAL INSTRUMENTS AND HEDGING                          | 28
|TRANSACTIONS WITH RELATED PARTIES                          | 29
|EVENTS AFTER THE REPORTING PERIOD                          | 29
|NON-GAAP MEASURES                                          | 30
|RISKS AND UNCERTAINTIES                                    | 31
|RECENT ACCOUNTING PRONOUNCEMENTS                           | 34
|CRITICAL ACCOUNTING POLICIES AND ESTIMATES                 | 35
|CONTROLS AND PROCEDURES                                    | 38
|CAUTIONARY NOTE TO U.S. INVESTORS                          | 39
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING
      STATEMENTS | 39

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

This Managements Discussion and Analysis (MD&A),
dated March 25, 2013, relates to the financial condition and results of the
consolidated operations of AuRico Gold Inc. (the Company), and should be read
in conjunction with the Companys consolidated financial statements for the year
ended December 31, 2012, and notes thereto.The
consolidated financial statements for the year ended December 31, 2012 have been
prepared in accordance with International Financial Reporting Standards (IFRS
or GAAP). All results are presented in United States dollars, unless otherwise
stated.

The first, second, third and fourth quarters of the
Companys fiscal year are referred to as Q1, Q2, Q3 and Q4,
respectively.

Throughout this document, gold equivalent ounces have been
abbreviated as Au(e) and include silver ounces produced and sold converted to
a gold equivalent, based on both the Companys long-term gold equivalency ratio
of 55:1 (Au(e)(55:1)), and the Companys realized
gold equivalency ratio for the relevant period (Au(e)).

Statements are subject to the risks and uncertainties
identified in the Risks and Uncertainties and Cautionary Note regarding
Forward-Looking Statements sections of this document. U.S. investors are also
advised to refer to the section entitled Cautionary Note to U.S. Investors on
page 39.

|OVERVIEW
      OF THEBUSINESS
|-----------------------------

AuRico Gold Inc. is a Canadian gold producer with mines and
projects in North America. The Companys core operations include the
Young-Davidson mine in Ontario, Canada, which declared commercial production on
September 1, 2012, and the El Chanate mine in Sonora, Mexico. The Companys
project pipeline also includes advanced exploration opportunities in Mexico and
Canada.

Throughout this document, reference is made to results from
both continuing and discontinued operations. Current and prior period results
for properties that were sold during 2012 have been reclassified to discontinued
operations. The Companys operations have been classified between continuing and
discontinued operations as follows:

|- | Continuing operations:
      Young-Davidson mine, El Chanate mine, and Corporate and other. Corporate
      and other consists of the Companys corporate offices, the former Kemess
      South mine, and other exploration properties.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                         
|- | Discontinued operations: Ocampo mine
      and Venus and Los Jarros exploration properties, El Cubo mine and
      Guadalupe y Calvo exploration property, and Australian operations.                                                   

The Companys common shares are listed on the Toronto Stock
Exchange (TSX: AUQ) and the New York Stock Exchange (NYSE: AUQ). Further
information about AuRico Gold Inc. can be found in the Companys regulatory
filings, including its Annual Information Form, available on SEDAR at www.sedar.com or on the Companys website at www.auricogold.com.

The profitability and operating cash flow performance of the
Company are affected by numerous factors, including but not limited to, the
prices of gold and silver, the amount of metal production, and the level of
operating costs, capital expenditures, and general and administrative costs. The
Company is also exposed to fluctuations in foreign currency exchange rates,
political risks, and the level of taxation imposed by local and foreign
jurisdictions. While the Company attempts to manage these risks, many of the
factors affecting these risks are beyond the Companys control. For additional
information on the factors that affect the Company, see the discussion of Risks
and Uncertainties on page 31 and in the Companys Annual Information Form.

Metal production and the prices of gold and silver are
significant factors impacting the profitability and operating cash flow of the
Company. The price of gold strengthened during 2012, averaging a London PM Fix
price of $1,669 per ounce, a 6% increase over the average price of $1,572 during
2011. The price of silver weakened during 2012, averaging a London PM Fix price
of $31.15 per ounce, an 11% decrease over the average price of $35.12 during
2011. The price of gold outperformed that of silver over the past year, causing
the London PM Fix silver-to-gold ratio to increase from 45:1 during 2011 to 54:1
during 2012. As a result of the volatility in the gold equivalency ratio during
2011 and 2012, when making annual and quarterly comparisons, the reader may wish
to consider actual gold and silver production and sales, or gold equivalent
production and sales calculated using the Companys long-term gold equivalency
ratio of 55:1.

| | 1
| | -

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|HIGHLIGHTS                                      

|(in thousands, except ounces, per share amounts,
and total cash costs)
|----------------------------------------------------------------------
|                                                                      
|                                                                      
|                                                                      
|Gold ounces produced - continuing operations                          
|Gold ounces produced(5)(6)                                            
|Pre-production gold ounces
      produced(5)                          
|Total gold ounces produced - continuing operations                    
|Gold ounces produced(5)                                               
|Silver ounces produced                                                
|Gold equivalent ounces produced
      (realized)(2)(5)                
|Gold
      equivalent ounces produced (55:1)(3)(5)                    
|Revenue from mining operations                                        
|(Loss) / earnings from operations                                     
|Net earnings                                                          
|Net
      earnings per share, basic                                   
|Total cash                                                            
|Operating cash flow                                                   
|Net
      free cash flow(1)                                           
|Cash costs per gold equivalent ounce
      (realized)(1)(2)(7)(8)     
|Continuing operations(5)(6)                                           
|Discontinued
      operations(6)(9)                                   
|Total operations(5)(9)                                                
|Cash costs per gold equivalent ounce
      (55:1):(1)(3)(7)(8)        
|Continuing operations(5)(6)                                           
|Discontinued
      operations(6)(9)                                   
|Total operations(5)(9)                                                

|(1) | See the Non-GAAP Measures section on page
    30.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Gold equivalent ounces include silver ounces sold
      converted to a gold equivalent, based on the ratio of the realized sale
      prices of the commodities.                                                                                                                                                                                                                                                                                                                                                                                         
|(3) | Gold equivalent ounces include silver ounces sold
      converted to a gold equivalent, based on the long-term gold equivalency
      ratio of 55:1.                                                                                                                                                                                                                                                                                                                                                                                                     
|(4) | Operational data and financial information include the
      results of both continuing and discontinued operations, except where
      indicated.                                                                                                                                                                                                                                                                                                                                                                                                       
|(5) | The Young-Davidson mine declared commercial production
      on September 1, 2012, and is therefore excluded from consolidated cash
      costs prior to this date. In addition, the Young-Davidson underground is
      in the pre-production period, and therefore, all underground ounces are
      excluded from consolidated cash costs for the four months ended December
      31, 2012. Pre-production ounces produced are excluded from consolidated
      ounces produced as these ounces are credited against capitalized project
      costs.
|(6) | Continuing operations include the Companys El Chanate
      and Young-Davidson mines (excluding pre-production ounces). Discontinued
      operations include the Companys Ocampo, El Cubo, Fosterville and Stawell
      mines.                                                                                                                                                                                                                                                                                                                       
|(7) | Gold ounces and gold equivalent ounces used to
      calculate cash costs include ounces sold at the El Chanate, Ocampo, El
      Cubo, Fosterville and Stawell mines, and ounces produced at the
      Young-Davidson mine for the years ended December 31, 2012 and
    2011.                                                                                                                                                                                                                                                                          
|(8) | Cash costs for the Ocampo mine, the El Cubo mine and
      on a consolidated basis are calculated on a per gold equivalent ounce
      basis. Cash costs for the El Chanate, Young-Davidson, Fosterville and
      Stawell mines are calculated on a per gold ounce basis, using by-product
      revenues as a cost credit.                                                                                                                                                                                                                             
|(9) | Cash costs from discontinued operations and on a
      consolidated basis include the net realizable value adjustments recognized
      on ore in process heap leach inventory at the Ocampo mine during the year.
      For further discussion, refer to page 17.                                                                                                                                                                                                                                                                                       

ANNUALDEVELOPMENTS

|- | On March 25, 2013, the Company reported proven
      and probable reserves of 6.8 million gold ounces, an increase of 1.69
      million gold ounces over 2011, which was primarily driven by reserve
      additions at the Kemess Underground Project. The Company also released
      highlights of the Feasibility Study completed for the Kemess Underground
      Project, which outlines the development of an underground block cave
      operation with average annual production of 105,000 gold ounces and 44
      million pounds of copper at cash costs of $213 per gold ounce, net of
      by-product credits, over a 12-year mine life.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | On February 21, 2013, the Company announced an
      inaugural dividend policy, whereby the Company will pay a dividend of
      $0.16 per share in 2013 (payable quarterly). Subsequent to 2013, the
      Companys dividend will be linked to operating cash flow, whereby the
      Company intends to pay out 20% of the operating cash flow generated in the
      preceding quarter.                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | On January 29, 2013, the Company announced the
      successful repurchase and cancellation of 36,144,578 common shares at a
      price of $8.30 per share under the Companys modified Dutch auction
      substantial issuer bid, for a total purchase price of $300 million.                                                                                                                                                                                                                                                                                                                                                                       

| | 2
| | -

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

|- | On December 14, 2012, the Company completed the sale of
      the Ocampo mine and the Venus and Los Jarros exploration properties, as
      well as a 50% interest in the Orion development project, to Minera Frisco,
      S.A.B. de C.V. (Minera Frisco), for cash consideration of $750 million.                                                                                                                                                                                                                                                                                                                                                       
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | On October 5, 2012, the Company reached an agreement to
      settle the class action claim filed by Ed J. McKenna, subject to approval
      of the court and the right of the Company to terminate the agreement under
      certain circumstances. The settlement amount under the agreement is
      estimated at $13.3 million, which is partially offset by an insurance
      receivable of $10.9 million, resulting in a net settlement amount of $2.4
      million.                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | On September 1, 2012, the Young-Davidson mine achieved
      commercial production. Commercial production was declared once the mine
      achieved previously established commissioning thresholds, which included
      the mill averaging a minimum throughput level of 5,100 tonnes per day,
      subsequent to the commissioning of the flotation and gravity circuits, as
      well as the open pit averaging 29,750 tonnes per day of ore and waste
      mining, both over a 30-day period. The Young-Davidson underground mine
      remains in the pre-production period as the Company continues to advance
      underground shaft development.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | On July 13, 2012, the Company completed the sale of the
      El Cubo mine and Guadalupe y Calvo exploration property to Endeavour
      Silver Corp. (Endeavour) and received $100 million in cash and
      11,037,528 Endeavour common shares with a value of $100 million at the
      agreed upon transaction date price of $9.06 per share. The Company is also
      entitled to receive up to $30 million in payments to be paid upon the gold
      price exceeding specified levels during the three years subsequent to July
      13, 2012.                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | On May 4, 2012, the Company completed the sale of the
      Fosterville and Stawell mines to Crocodile Gold Corp. (Crocodile Gold)
      and received CAD $55 million in cash and 20 million Crocodile Gold common
      shares. The Company may also receive payments based on the future
      life-of-mine free cash flows from the Fosterville and Stawell mines.                                                                                                                                                                                                                                                                                      

|OUTLOOK
      ANDSTRATEGY
|-------------------------

AuRico Gold Inc. is committed to being a leading low cost gold
producer focused on growth in North America. The Companys mission is to deliver
superior shareholder value by building a culture of excellence in every aspect
of what we do, through organic growth, and commitment to socially responsible
practices within the communities in which we work. The Company will continue to
optimize its operations to deliver reliable, consistent and sustainable
performance over the life of its mining operations. The Companys focus will be
on the production of high quality, high margin ounces combined with a
disciplined approach to cost containment and capital spending along with a
commitment to shareholder value creation.

During 2013, the Company expects to produce 190,000 to 220,000
ounces of gold at cash costs of approximately $540 to $620 per gold ounce. Cash
flow is expected to increase as the Young-Davidson mine ramps up to peak
production levels in 2016. The Company does not expect to generate free cash
flow in 2013, but expects to begin generating free cash flow starting in 2014
following the completion of non-recurring capital investment programs in late
2013.

Capital expenditures for 2013 are forecast to be approximately
$170-$195 million, which includes $70-$80 million of non-recurring capital
investment at the Young-Davidson mine related to the paste backfill plant and
the shaft and mid-shaft loading and crushing facility. The Company is targeting
significantly lower capital expenditure requirements from both operations in
future years as the majority of non-recurring capital investment programs will
be completed in 2013.

The Company expects to spend approximately $15 million on
exploration during 2013. The 2013 exploration program will continue to focus on
increasing mineral reserves and mineral resources at the Companys existing
operations, as well as continuing to explore new and previously identified
targets at all properties.

On January 18, 2013, the Company provided 2013 guidance for the
Young-Davidson and El Chanate mines. The press release is available on SEDAR at
www.sedar.com or on the Companys website at
www.auricogold.com.

| | 3
| | -

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|SUMMARIZEDFINANCIAL ANDOPERATINGRESULTS         

On May 4, 2012, the Company completed the sale of the
Fosterville and Stawell mines located in Australia (for further discussion,
refer to page 20). On July 13, 2012, the Company completed the sale of the El
Cubo mine and Guadalupe y Calvo exploration property located in Mexico (for
further discussion, refer to page 18). On December 14, 2012, the Company
completed the sale of the Ocampo mine located in Mexico (for further discussion,
refer to page 15). The Company has presented the financial and operating results
of these properties as discontinued operations.

|(in thousands, except ounces, per share amounts,
average realized prices and total cash costs)
|----------------------------------------------------------------------------------------------
|                                                                                              
|                                                                                              
|                                                                                              
|Continuing operations - Young-Davidson
      mine, El Chanate mine, and Corporate and other   
|Gold ounces sold(5)                                                                           
|Gold ounces produced(5)                                                                       
|Pre-production gold ounces
      sold(5)                                                      
|Pre-production gold ounces produced(5)                                                        
|Total cash costs per gold ounce(2)(4)(7)(8)                                                   
|Revenue from mining operations                                                                
|Production costs, excluding
      amortization and depletion                                  
|Loss from operations                                                                          
|Net (loss) / earnings                                                                         
|Net (loss) / earnings per share, basic                                                        
|Net (loss) / earnings per share, diluted                                                      
|Operating cash flow                                                                           
|Net free cash flow(2)                                                                         
|Discontinued operations - Ocampo mine, El
      Cubo mine, and Australian operations          
|Gold ounces sold                                                                              
|Silver ounces sold                                                                            
|Gold equivalent ounces sold
      (realized)(1)                                               
|Gold equivalent ounces sold
      (55:1)(3)                                                   
|Gold ounces produced                                                                          
|Silver ounces produced                                                                        
|Gold equivalent ounces produced
      (realized)(1)                                           
|Gold equivalent ounces produced (55:1)(3)                                                     
|Total cash costs per gold equivalent
      ounce (realized)(1)(2)(4)(6)(8)                    
|Total cash costs per gold
      ounce(2)(4)(6)(8)                                             
|Total cash costs per gold equivalent ounce
      (55:1)(2)(3)(4)(6)(8)                        
|Revenue from mining operations                                                                
|Production costs, excluding
      amortization and depletion                                  
|Earnings / (loss) from operations                                                             
|Net earnings / (loss)                                                                         
|Net earnings / (loss) per share, basic                                                        
|Net earnings / (loss) per share, diluted                                                      
|Operating cash flow                                                                           
|Net free cash flow(2)                                                                         

| | 4
| | -

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

|(in thousands, except ounces, per share amounts, average
realized prices and total cash costs)
|----------------------------------------------------------------------------------------------
|                                                                                              
|                                                                                              
|                                                                                              
|Total                                                                                         
|Gold ounces sold(5)                                                                           
|Silver ounces sold                                                                            
|Gold equivalent ounces sold
      (realized)(1)(5)                                            
|Gold equivalent ounces sold
      (55:1)(3)(5)                                                
|Gold ounces produced(5)                                                                       
|Silver ounces produced                                                                        
|Gold equivalent ounces produced
      (realized)(1)(5)                                        
|Gold equivalent ounces produced (55:1)(3)(5)                                                  
|Pre-production gold ounces
      sold(5)                                                      
|Pre-production gold ounces produced(5)                                                        
|Average realized gold price per ounce                                                         
|Average realized silver price per ounce                                                       
|Total cash costs per gold equivalent
      ounce (realized)(1)(2)(4)(6)(7)(8)                 
|Total cash costs per gold
      ounce(2)(4)(6)(7)(8)                                          
|Total cash costs per gold equivalent ounce
      (55:1)(2)(3)(4)(6)(7)(8)                     
|Revenue from mining operations                                                                
|Production costs, excluding
      amortization and depletion                                  
|(Loss) / earnings from operations                                                             
|Net earnings / (loss)                                                                         
|Net earnings / (loss) per share, basic                                                        
|Net earnings / (loss) per share, diluted                                                      
|Operating cash flow                                                                           
|Net free cash flow(2)                                                                         
|Total cash                                                                                    
|Cash dividends declared                                                                       

|(1) | Gold equivalent ounces include silver ounces sold
      converted to a gold equivalent, based on the ratio of the realized sale
      prices of the commodities.                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | See the Non-GAAP Measures section on page
    30.                                                                                                                                                                                                                                                                                                                                              
|(3) | Gold equivalent ounces include silver ounces sold
      converted to a gold equivalent, based on the long-term gold equivalency
      ratio of 55:1.                                                                                                                                                                                                                                           
|(4) | Cash costs for the Ocampo mine, the El Cubo mine and
      on a consolidated basis are calculated on a per gold equivalent ounce
      basis. Cash costs for the El Chanate, Young-Davidson, Fosterville, and
      Stawell mines are calculated on a per gold ounce basis, using by-product
      revenues as a cost credit.                                                                  
|(5) | Pre-production ounces produced and sold at
      Young-Davidson are excluded from consolidated ounces produced and sold, as
      these ounces are credited against capitalized project costs.                                                                                                                                                                                                 
|(6) | Cash costs from discontinued operations and on a
      consolidated basis include the net realizable value adjustments recognized
      on ore in process heap leach inventory at the Ocampo mine during the year.
      For further discussion, refer to page 17.                                                                                                                             
|(7) | The Young-Davidson mine declared commercial production
      on September 1, 2012, and is therefore excluded from consolidated cash
      costs prior to this date. In addition, the Young-Davidson underground is
      in the pre-production period, and therefore, all underground ounces are
      excluded from consolidated cash costs for the four months ended December
      31, 2012.
|(8) | Gold ounces and gold equivalent ounces used to
      calculate cash costs include ounces sold at the El Chanate, Ocampo, El
      Cubo, Fosterville and Stawell mines, and ounces produced at the
      Young-Davidson mine for the years ended December 31, 2012, 2011 and
      2010.                                                                                                        

| | 5
| | -

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------
|                                               
|REVIEW
      OFANNUALFINANCIALRESULTS          

During 2012, the Company sold 217,735 gold ounces and 2,807,754
silver ounces compared to sales of 180,740 gold ounces and 4,516,975 silver
ounces in 2011. Using the Companys long-term gold equivalency ratio of 55:1,
268,785 gold equivalent ounces were sold in 2012, representing a 2% increase
over sales of 262,867 Au(e)(55:1) in 2011. This increase resulted
from an additional quarter of ounces sold at the El Chanate mine, which was
acquired after Q1 2011, and ounces sold at the Young-Davidson mine subsequent to
the declaration of commercial production on September 1, 2012. These increases
were partially offset by a decline in ounces sold at Ocampo during the year.
Using the realized gold equivalency ratios of 54:1 and 46:1, Au(e) sold in 2012
and 2011 were 270,292 and 282,182, respectively, representing a 4% decrease
year-over-year.

Excluding ounces sold from discontinued operations, the Company
sold 94,422 gold ounces in 2012, a 90% increase over 2011. During the year,
revenues from continuing operations increased to $163.6 million, as compared to
revenues from continuing operations of $83.9 million in 2011. This $79.7
million, or 95%, increase in revenue was due to the increase in ounces sold at
the El Chanate mine and the addition of ounces sold at the Young-Davidson mine.

Loss from operations, which is exclusive of discontinued
operations, was $94.9 million in 2012, compared to a loss from operations of
$6.8 million in 2011. During the year, the Company recorded an impairment charge
related to the El Chanate mine (further discussion is provided on page 13).
Before the impairment charge of $127.0 million, earnings from continuing
operations were $32.1 million in 2012, representing a $38.9 million increase in
earnings over the prior year. This increase was primarily a result of the
increase in revenues mentioned previously, and was partially offset by related
increases in production costs and amortization and depletion, and a $12.0
million increase in reclamation, care and maintenance costs at Kemess South.

The Company reported a net loss from continuing operations of
$97.8 million in 2012, representing a $127.1 million decrease from the Companys
net earnings from continuing operations of $29.3 million in 2011. Before the
impairment charge of $127.0 million, net earnings from continuing operations
were $29.2 million in 2012, representing a decrease of $0.1 million over the
prior year. The decrease in net earnings from continuing operations was
primarily as a result of an $18.9 million decrease in unrealized gains on the
fair value of the option component of convertible senior notes and a $20.3
million increase in foreign exchange losses. These decreases were partially
offset by the increase in earnings from continuing operations discussed above,
an $11.3 million decline in tax expense, and a $6.6 million gain on the sale of
a 50% interest in the Orion advanced development project to Minera Frisco during
the fourth quarter of 2012. Including net earnings from discontinued operations
of $131.1 million, consolidated net earnings were $33.2 million in 2012 compared
to consolidated net earnings of $176.9 million in 2011. Included in net earnings
from discontinued operations is a $69.5 million net gain on the sale of the
Ocampo mine and Venus and Los Jarros exploration properties, a $17.2 million net
gain on the sale of the El Cubo mine and Guadalupe y Calvo exploration property,
and a $4.6 million net loss on the sale of the Australian operations.

During 2012, consolidated cash costs per gold ounce from
continuing operations were $516, representing a 15% increase over 2011 cash
costs of $449. This increase was primarily due to higher cost ounces produced at
Young-Davidson subsequent to the declaration of commercial production on
September 1, 2012, partially offset by a decline in cash costs at El Chanate due
to optimization initiatives completed by the Company subsequent to the
acquisition of the mine in early Q2 2011. Including cash costs from discontinued
operations, total cash costs per Au(e)55:1 were $762 in 2012,
compared to $538 in 2011. The increase in cash costs from discontinued
operations is primarily due to lower production and the net realizable value
adjustments recognized on ore in process heap leach inventory at Ocampo, as well
as higher cost ounces produced at the El Cubo, Fosterville and Stawell mines
during 2012.

The Company reported operating cash flow from continuing
operations of $1.3 million during 2012, an increase of $4.4 million from the
prior year result of negative $3.1 million. This increase in operating cash flow
arose primarily as a result of improved gold prices and additional operating
cash flow contributed from the Young-Davidson and El Chanate mines, partially
offset by increased reclamation expenditures at Kemess South. Operating cash
flow from Young-Davidson includes the build-up of stockpile and ore inventories
during the year. After deducting capital expenditures of $370.1 million,
including capital expenditures of $309.2 million at the Young-Davidson mine, the
Companys 2012 net free cash flow from continuing operations was negative $368.7
million. Further discussion on capital expenditures at Young-Davidson during the
year is provided on page 11.

| | 6
| | -

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS       
|------------------------------------------------------
|                                                      
|SUMMARY
      OFQUARTERLYFINANCIAL ANDOPERATINGRESULTS

(in thousands, except ounces, per share amounts,
average realized prices and total cash costs)

|                                                                               |   | Q4 2012  |   |   | Q3 2012  |   |   | Q2 2012  |   |   | Q1 2012  |   |   | Q4 2011  |   |   | Q3 2011 |   |   | Q2 2011 |   |   | Q1 2011 |  
|------------------------------------------------------------------------------ | - | -------- | - | - | -------- | - | - | -------- | - | - | -------- | - | - | -------- | - | - | ------- | - | - | ------- | - | - | ------- | -
|Gold equivalent ounces sold
      (realized)(1)(6)                             |   | 51,359   |   |   | 45,694   |   |   | 69,769   |   |   | 103,470  |   |   | 92,074   |   |   | 65,429  |   |   | 73,998  |   |   | 50,681  |  
|Gold
      equivalent ounces produced (realized)(1)(6)                         |   | 49,369   |   |   | 51,805   |   |   | 75,667   |   |   | 102,412  |   |   | 92,837   |   |   | 76,630  |   |   | 74,439  |   |   | 49,854  |  
|Gold equivalent ounces sold
      (55:1)(4)(6)                                 |   | 51,086   |   |   | 45,755   |   |   | 69,800   |   |   | 102,144  |   |   | 91,489   |   |   | 60,650  |   |   | 65,419  |   |   | 45,309  |  
|Gold
      equivalent ounces produced (55:1)(4)(6)                             |   | 49,093   |   |   | 51,881   |   |   | 75,666   |   |   | 101,098  |   |   | 92,306   |   |   | 70,658  |   |   | 65,722  |   |   | 44,703  |  
|Average realized gold price(3)                                                 | $ | 1,721    |   | $ | 1,664    |   | $ | 1,616    |   | $ | 1,700    |   | $ | 1,672    |   | $ | 1,704   |   | $ | 1,509   |   | $ | 1,386   |  
|Average realized silver price(3)                                               | $ | 32.79    |   | $ | 29.87    |   | $ | 29.07    |   | $ | 33.02    |   | $ | 30.98    |   | $ | 38.15   |   | $ | 38.36   |   | $ | 32.30   |  
|Total cash costs, per gold equivalent ounce
      (realized)(1)(2)(5)(6)(7)(8) | $ | 858      |   | $ | 553      |   | $ | 822      |   | $ | 770      |   | $ | 681      |   | $ | 487     |   | $ | 372     |   | $ | 382     |  
|Total cash costs, per gold
      ounce(2)(5)(6)(7)(8)                          | $ | 736      |   | $ | 324      |   | $ | 580      |   | $ | 530      |   | $ | 375      |   | $ | (240    | ) | $ | (414    | ) | $ | (572    | )
|Total cash costs per gold equivalent ounce
      (55:1)(2)(4)(5)(6)(7)(8)      | $ | 863      |   | $ | 552      |   | $ | 822      |   | $ | 780      |   | $ | 685      |   | $ | 526     |   | $ | 420     |   | $ | 427     |  
|Revenue from mining operations(6)                                              | $ | 63,119   |   | $ | 39,772   |   | $ | 27,458   |   | $ | 33,273   |   | $ | 29,696   |   | $ | 29,127  |   | $ | 25,109  |   | $ | -       |  
|Production costs, excluding amortization and
      depletion(6)                | $ | 25,549   |   | $ | 13,923   |   | $ | 9,628    |   | $ | 10,541   |   | $ | 9,124    |   | $ | 10,707  |   | $ | 13,081  |   | $ | -       |  
|(Loss) / earnings from operations(6)                                           | $ | (113,207 | ) | $ | 4,375    |   | $ | 4,729    |   | $ | 9,177    |   | $ | (3,761   | ) | $ | 8,470   |   | $ | (5,289  | ) | $ | (6,231  | )
|Net (loss) / earnings from continuing
      operations                         | $ | (134,420 | ) | $ | 43,018   |   | $ | 7,041    |   | $ | (13,460  | ) | $ | 23,027   |   | $ | 20,626  |   | $ | (7,751  | ) | $ | (6,607  | )
|Net earnings / (loss) from discontinued
      operations                       | $ | 108,977  |   | $ | (7,781   | ) | $ | 15,043   |   | $ | 14,813   |   | $ | 54,909   |   | $ | 41,988  |   | $ | 32,274  |   | $ | 18,393  |  
|Total net (loss) / earnings                                                    | $ | (25,443  | ) | $ | 35,237   |   | $ | 22,084   |   | $ | 1,353    |   | $ | 77,936   |   | $ | 62,614  |   | $ | 24,523  |   | $ | 11,786  |  
|Net (loss) / earnings per share from
      continuing operations, basic        | $ | (0.48    | ) | $ | 0.15     |   | $ | 0.03     |   | $ | (0.05    | ) | $ | 0.09     |   | $ | 0.12    |   | $ | (0.04   | ) | $ | (0.04   | )
|Net earnings / (loss) per share from
      discontinued operations, basic      | $ | 0.39     |   | $ | (0.03    | ) | $ | 0.05     |   | $ | 0.05     |   | $ | 0.22     |   | $ | 0.24    |   | $ | 0.19    |   | $ | 0.13    |  
|Total (loss) / earnings per share, basic                                       | $ | (0.09    | ) | $ | 0.12     |   | $ | 0.08     |   | $ | 0.00     |   | $ | 0.31     |   | $ | 0.36    |   | $ | 0.15    |   | $ | 0.09    |  
|Net (loss) / earnings per share from
      continuing operations, diluted      | $ | (0.48    | ) | $ | 0.10     |   | $ | (0.01    | ) | $ | (0.05    | ) | $ | 0.00     |   | $ | 0.12    |   | $ | (0.04   | ) | $ | (0.04   | )
|Net earnings / (loss) per share from
      discontinued operations, diluted    | $ | 0.39     |   | $ | (0.03    | ) | $ | 0.05     |   | $ | 0.05     |   | $ | 0.21     |   | $ | 0.24    |   | $ | 0.19    |   | $ | 0.13    |  
|Total (loss) / earnings per share, diluted                                     | $ | (0.09    | ) | $ | 0.07     |   | $ | 0.04     |   | $ | 0.00     |   | $ | 0.21     |   | $ | 0.36    |   | $ | 0.15    |   | $ | 0.09    |  
|Operating cash flow from continuing
      operations                           | $ | (4,599   | ) | $ | (3,238   | ) | $ | (2,579   | ) | $ | 11,749   |   | $ | (12,032  | ) | $ | 8,976   |   | $ | 5,554   |   | $ | (5,574  | )
|Operating cash flow from discontinued
      operations                         | $ | (528     | ) | $ | 9,408    |   | $ | 16,767   |   | $ | 53,425   |   | $ | 54,109   |   | $ | 42,737  |   | $ | 48,859  |   | $ | 39,195  |  
|Total operating cash flow                                                      | $ | (5,127   | ) | $ | 6,170    |   | $ | 14,188   |   | $ | 65,174   |   | $ | 42,077   |   | $ | 51,713  |   | $ | 54,413  |   | $ | 33,621  |  
|Net free cash flow from continuing
      operations(2)                         | $ | (66,340  | ) | $ | (83,097  | ) | $ | (117,011 | ) | $ | (102,283 | ) | $ | (105,891 | ) | $ | 1,118   |   | $ | (542    | ) | $ | (5,739  | )
|Net free cash flow from discontinued
      operations(2)                       | $ | (23,784  | ) | $ | (20,336  | ) | $ | (22,175  | ) | $ | 1,847    |   | $ | 2,049    |   | $ | 11,133  |   | $ | 20,638  |   | $ | 11,672  |  
|Total net free cash flow(2)                                                    | $ | (90,124  | ) | $ | (103,433 | ) | $ | (139,186 | ) | $ | (100,436 | ) | $ | (103,842 | ) | $ | 12,251  |   | $ | 20,096  |   | $ | 5,933   |  

|(1) | Gold equivalent ounces include silver ounces sold
      converted to a gold equivalent based on the ratio of the realized sales
      prices of the commodities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | See the Non-GAAP Measures section on page
    30.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3) | Average realized prices are on a per ounce
      basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(4) | Gold equivalent ounces include silver ounces sold
      converted to a gold equivalent based on the long-term gold equivalency
      ratio of 55:1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(5) | Cash costs for the Ocampo mine, the El Cubo mine and
      on a consolidated basis are calculated on a per gold equivalent ounce
      basis. Cash costs for the El Chanate, Young-Davidson, Fosterville, and
      Stawell mines are calculated on a per gold ounce basis, using by-product
      revenues as a cost credit. The Young- Davidson mine declared commercial
      production on September 1, 2012, and is therefore excluded from
      consolidated cash costs prior to this date. In addition, the
      Young-Davidson underground is in the pre-production period, and therefore,
      all underground ounces are excluded from consolidated cash costs for the
      four months ended December 31, 2012.
|(6) | Operational data, including ounces produced and sold,
      and cash costs include the results of both continuing and discontinued
      operations. Certain financial information, including revenues, production
      costs, and earnings from operations are exclusive of discontinued
      operations as the financial results of these operations are presented
      separately on the Consolidated Statements of Operations for the years
      ended December 31, 2012 and 2011.                                                                                                                                                                                                                                    
|(7) | Cash costs from discontinued operations and on a
      consolidated basis include the net realizable value adjustments recognized
      on ore in process heap leach inventory at the Ocampo mine during the year.
      For further discussion, refer to page 17.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(8) | Gold ounces and gold equivalent ounces used to
      calculate cash costs include ounces sold at the El Chanate, Ocampo, El
      Cubo, Fosterville and Stawell mines, and ounces produced at the
      Young-Davidson mine for the years ended December 31, 2012 and
    2011.                                                                                                                                                                                                                                                                                                                                                                                                                                               

| | 7
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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|REVIEW
      OFFOURTHQUARTERFINANCIALRESULTS    

During the fourth quarter of 2012, the Company sold 45,385 gold
ounces and 313,575 silver ounces compared to sales of 70,132 gold ounces and
1,174,644 silver ounces in the fourth quarter of 2011. Using the Companys
long-term gold equivalency ratio of 55:1, 51,086 gold equivalent ounces were
sold in the fourth quarter of 2012, representing a 44% decrease over sales of
91,489 Au(e)(55:1) in the fourth quarter of 2011. This decrease
resulted from the decline in ounces sold at Ocampo and El Chanate during the
quarter, and the divestitures of the El Cubo, Fosterville and Stawell mines
earlier in 2012. These decreases were partially offset by gold ounces sold at
Young-Davidson, which achieved commercial production on September 1, 2012. Using
the realized gold equivalency ratios of 52:1 and 54:1, Au(e) sold in the fourth
quarter of 2012 and 2011 were 51,359 and 92,074, respectively, representing a
44% decrease quarter-over-quarter.

Excluding ounces sold from discontinued operations, the Company
sold 36,137 gold ounces in the fourth quarter of 2012 at the El Chanate and
Young-Davidson mines, a 108% increase from Q4 2011 when continuing operations
included the El Chanate mine only. Revenues from continuing operations increased
from $29.7 million in Q4 2011, to $63.1 million in the fourth quarter of 2012.
This $33.4 million or 112% increase in revenue was largely due to ounces sold at
Young-Davidson, as mentioned previously.

Loss from operations, which is exclusive of discontinued
operations, was $113.2 million in the fourth quarter of 2012, compared to a loss
from operations of $3.8 million in the same period of 2011. During the quarter,
the Company recorded an impairment charge related to the El Chanate mine
(further discussion is provided on page 13). Before the impairment charge of
$127.0 million, earnings from continuing operations were $13.8 million in the
fourth quarter of 2012, representing a $17.6 million increase in earnings over
the same period of 2011. This increase was largely due to a $13.4 million
contribution to earnings from operations at Young-Davidson subsequent to
achieving commercial production on September 1, 2012, and a decrease in
exploration and business development expense from the fourth quarter of 2011
when the Company incurred transaction costs associated with the acquisition of
Northgate.

The Company reported a net loss from continuing operations of
$134.4 million in the fourth quarter of 2012, compared to net earnings from
continuing operations of $23.0 million in Q4 2011. Before the impairment charge
of $127.0 million, the net loss from continuing operations was $7.4 million in
the fourth quarter of 2012, representing a $30.4 million decrease in earnings
quarter-over-quarter. The decrease in earnings was primarily as a result of a
decrease in other income associated largely with a $29.2 million decrease in
unrealized gains on the fair value of the option component of convertible senior
notes, $15.9 million in losses on the fair value of equity securities sold
during the quarter, and an increase in foreign exchange losses of $2.5 million.
These decreases were partially offset by the increase in earnings from
continuing operations discussed above, and a $6.6 million gain on the sale of a
50% interest in the Orion advanced development project to Minera Frisco during
the fourth quarter of 2012. Including net earnings from discontinued operations
of $109.0 million, consolidated net loss was $25.4 million in the fourth quarter
of 2012 compared to consolidated net earnings of $77.9 million in Q4 2011.
Included in net earnings from discontinued operations is a $69.5 million net
gain on the sale of the Ocampo mine and the Venus and Los Jarros exploration
properties.

In the fourth quarter of 2012, cash costs per gold ounce from
continuing operations were $628, representing a 57% increase over Q4 2011 cash
costs of $401. This quarter-over-quarter increase resulted from the addition of
cash costs from the Young-Davidson mine, which achieved commercial production on
September 1, 2012, combined with higher cash costs per gold ounce at the El
Chanate mine due to lower grades mined and an increase in low grade run-of-mine
material stacked and leached during 2012. In Q4 2011, cash costs per gold ounce
from continuing operations included cash costs from the El Chanate mine only.
Including cash costs from discontinued operations, total cash costs per
Au(e)(55:1) were $863 in the fourth quarter of 2012, compared to $685
in the fourth quarter of 2011.

The Company reported operating cash flow from continuing
operations of negative $4.6 million during the fourth quarter, an increase of
$7.4 million from the prior year result of negative $12.0 million. This increase
in operating cash flow arose primarily as a result of the operating cash flow
contribution from the Young-Davidson mine during the quarter. After deducting
capital expenditures of $61.7 million, including capital expenditures of $45.0
million at the Young-Davidson mine, the Companys Q4 2012 net free cash flow
from continuing operations was negative $66.3 million. Further discussion on
capital expenditures at Young-Davidson during the period is provided on page 11.

| | 8
| | -

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|YOUNG-DAVIDSON                                  

As a result of the acquisition of Northgate Minerals
Corporation (Northgate) on October 26, 2011, the Company owns the
Young-Davidson mine, located near the town of Matachewan in Northern Ontario,
Canada. The property consists of contiguous mineral leases and claims totalling
4,733 hectares and is situated on the site of two past producing mines that
produced one million gold ounces in the 1930s  1950s.

On September 1, 2012, the Young-Davidson mine achieved
commercial production by completing the following project milestones:

|- | Completion of all construction activities
      related to the infrastructure and processing plant, which included the
      commissioning of the flotation and gravity circuits at the end of July
      2012;                                                                                 
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                 
|- | Completion of the open pit material movement
      test period for declaration of commercial production in June 2012, which
      involved the open pit exceeding 29,750 TPD over a period of 30 days; and                                                                                      
|  |                                                                                                                                                                                                                                                                                                 
|- | Subsequent to the commissioning of the
      flotation and gravity circuits, completion of the mill processing rate
      test period for declaration of commercial production in August 2012, which
      involved the mill processing rate exceeding 5,100 TPD over a period of 30
      days.

The Young-Davidson underground mine is currently in the
pre-production period, and all related revenues generated from ounces sold are
credited against capitalized development costs. During the quarter, the Company
commenced pre-production by trucking ore up the underground ramp. In order to
reach the operating levels deemed feasible in the mine plan, the Company needs
to commission the shaft, the mid-shaft crushing and loading facility, and
various other improvements such as an increase in ventilation capacity. The
underground mine will remain in the pre-production period until the construction
and commissioning of these facilities have occurred. The Company anticipates
that these activities will be completed during the third quarter of 2013.

Underground development at Young-Davidson continues to focus on
access to the mid-shaft ore and waste handling systems at the Northgate shaft.
During the quarter, the Company continued the raise boring of the second leg of
the production shaft, which is targeted to reach a vertical depth of 890 metres,
with a final target of 1,500 vertical metres.

Earlier in 2012, the Company completed a redesign of the
underground mine plan that is expected to improve mining extraction recoveries
and reduce dilution. The underground mine plan changed mining methods from
sub-level caving and long-hole shrinkage to long-hole stoping utilizing paste
backfill. During the quarter, underground production commenced from the Upper
Boundary Zone. In addition, the Company began to remove overburden and clear the
area for the paste backfill plant to be constructed. Construction of the plant
will commence in the second quarter of 2013.

| | 9
| | -

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

YOUNG-DAVIDSONOPERATIONALREVIEW

|                                             |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|-------------------------------------------- |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                             |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                             |  | 2012          |  |  | 2011          |  |  | 2012        |  |  | 2011        | 
|Underground Operations                       |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore mined                          |  | 76,884        |  |  | -             |  |  | 76,884      |  |  | -           | 
|Average grade of gold(1)                     |  | 3.29          |  |  | -             |  |  | 3.29        |  |  | -           | 
|Metres developed                             |  | 1,683         |  |  | -             |  |  | 6,858       |  |  | -           | 
|Open Pit Operations                          |  |               |  |  |               |  |  |             |  |  |             | 
|Total tonnes mined                           |  | 3,180,889     |  |  | -             |  |  | 10,695,861  |  |  | -           | 
|Tonnes of ore mined                          |  | 719,757       |  |  | -             |  |  | 2,803,729   |  |  | -           | 
|Average grade of gold(1)                     |  | 1.22          |  |  | -             |  |  | 1.06        |  |  | -           | 
|Tonnes stockpiled ahead of the mill          |  | 1,397,333     |  |  | -             |  |  | 1,397,333   |  |  | -           | 
|Average grade of gold(1)                     |  | 0.87          |  |  | -             |  |  | 0.87        |  |  | -           | 
|Mill Operations                              |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore processed                      |  | 548,674       |  |  | -             |  |  | 1,483,280   |  |  | -           | 
|Average grade of gold(1)                     |  | 1.69          |  |  | -             |  |  | 1.36        |  |  | -           | 
|Average gold recovery rate                   |  | 89%           |  |  | -             |  |  | 87%         |  |  | -           | 
|Pre-production gold ounces
      produced(2) |  | 7,127         |  |  | -             |  |  | 26,999      |  |  | -           | 
|Pre-production gold ounces sold(2)           |  | 3,595         |  |  | -             |  |  | 17,505      |  |  | -           | 
|Gold ounces produced                         |  | 19,236        |  |  | -             |  |  | 29,139      |  |  | -           | 
|Gold
      ounces sold                       |  | 22,170        |  |  | -             |  |  | 26,169      |  |  | -           | 

|(1) | Grams per tonne.                                                                                                                                                 
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes open pit ounces prior to the declaration of
      commercial production on September 1, 2012 and all underground ounces
      produced and sold in 2012.

The Company began mining underground ore at Young-Davidson on
October 23, 2012, and mined 76,884 ore tonnes, or 1,098 TPD, at a grade of 3.29
gold grams per tonne during the quarter. The mining rate achieved during the
quarter was slightly above the 1,000 TPD forecasted by the Company.

During the quarter, the Company mined 3,180,889 tonnes, or
34,575 TPD, at the Young-Davidson open pit, including 719,757 ore tonnes at a
grade of 1.22 gold grams per tonne. The open pit provided the majority of mill
feed during the quarter, and therefore less low grade ore was mined and stacked
on the long-term stockpile, which will be processed at the end of mine life. The
Company mined 10,695,861 tonnes, or 29,224 TPD, at the Young-Davidson open pit
during 2012. At the end of 2012, the Company had a total of 1,397,333 tonnes of
ore stockpiled ahead of the mill, including 1,120,693 tonnes of low grade ore
averaging 0.83 gold grams per tonne.

During the quarter, the Company processed 548,674 tonnes, or
5,964 TPD, at Young-Davidson, with gold grades averaging 1.69 grams per tonne.
Grades processed increased over the previous quarter due to the contribution of
higher grade underground ore, as well as higher open pit grades processed as
compared to the prior quarter. The Company processed lower grade ore during the
commissioning of the mill facility in the prior quarter, when grades averaged
0.90 gold grams per tonne in July and August, prior to the declaration of
commercial production on September 1, 2012.

During 2012, the Company processed 1,483,280 tonnes, or 5,394
TPD, at Young-Davidson, which was lower than the current mill design capacity of
6,000 TPD, due to lower processing rates in Q2 2012 as the mill ramped up during
the commissioning period. Subsequent to the declaration of commercial
production, the mill averaged 6,183 TPD. During 2012, gold grades at
Young-Davidson averaged 1.36 grams per tonne.

Young-Davidson produced 26,363 gold ounces during the quarter,
including 7,127 pre-production ounces related to underground operations.
Subsequent to completing the first gold pour on April 30, 2012, the mine
produced 56,138 gold ounces, including 26,999 pre-production ounces. Overall
production was in line with the Companys revised guidance that was released on
September 5, 2012, of between 55,000 and 65,000 ounces for 2012.

| | 10
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

YOUNG-DAVIDSONFINANCIALREVIEW

|(in thousands, except total cash costs)
|---------------------------------------
|                                       
|                                       
|                                       
|Revenue from mining operations         
|Production costs                       
|Refining costs                         
|Amortization and depletion             
|Earnings from operations               
|Cash flow from operations              
|Capital expenditures                   
|Net
      free cash flow(1)            
|Total cash costs per gold ounce(1)     

|(1) | See the Non-GAAP Measures section on page
      30.
|--- | ---------------------------------------------------

Subsequent to achieving commercial production on September 1,
2012, the Company recognized revenues of $45.5 million and earnings from
operations of $16.1 million. Earnings from operations included $3.5 million of
amortization and depletion relating to the acquisition date fair value
adjustment on property, plant and equipment and mining interests. Revenue has
been recognized only on ounces sold that were attributable to open pit
production subsequent to achieving commercial production. Revenue associated
with both open pit production prior to the declaration of commercial production
and underground production has been credited against capitalized costs.

During the fourth quarter, capital expenditures at
Young-Davidson of $45.0 million exceeded operating cash flow of $11.1 million,
resulting in negative net free cash flow of $33.8 million. Capital expenditures
in the fourth quarter included $25.8 million in site infrastructure, $17.7
million in underground development, $5.8 million in capitalized stripping
activities and $1.8 million in exploration expenditures, which were partially
offset by $6.1 million in revenue from the sale of pre-production ounces.

During 2012, the Company spent $309.2 million related to the
construction and development of the Young-Davidson mine. Capital expenditures
included $211.3 million in site infrastructure, $108.8 million in underground
development, $11.3 million in capitalized stripping activities and $6.3 million
in exploration expenditures, which were partially offset by $28.5 million in
revenue from the sale of pre-production ounces. 2012 capital expenditures also
included $10.2 million of borrowing costs, which were included in site
infrastructure and underground development capital expenditures.

The 2012 capital expenditure guidance provided by the Company
for Young-Davidson was $240 million, which excluded exploration capital
expenditures, capitalized borrowing costs and capitalized changes in working
capital. After adjusting annual capital expenditures for these amounts, total
capital expenditures incurred at Young-Davidson during 2012 were $231.8 million,
which was largely consistent with the capital expenditure guidance provided for
2012.

Subsequent to the declaration of commercial production, cash
costs per gold ounce at the Young-Davidson mine were $708. Cash costs were
higher than the range of $550 to $650 per gold ounce provided by the Company in
the September 5, 2012 revised guidance due to higher than budgeted milling
costs, including unscheduled maintenance during the quarter, and higher than
expected cyanide and grinding media consumption. In addition, grades processed
at the mill were slightly below those forecasted by the Company (approximately
6%), which impacted total costs per ounce produced.

YOUNG-DAVIDSONEXPLORATION

On March 25, 2013, the Company reported updated reserves and
resources at December 31, 2012, which included 3.8 million gold ounces of proven
and probable reserves at Young-Davidson. Proven and probable reserves at
Young-Davidson remained consistent with those reported at December 31, 2011;
however, reserve grades increased by 1.6% from an average of 2.56 gold grams per
tonne at December 31, 2011 to 2.60 gold grams per tonne at December 31, 2012.
Further details on the updated reserves and resources by category can be found
in the Companys March 25, 2013press release or in the Companys Annual
Information Form, both of which can be found on the Companys website at
www.auricogold.com.

During the fourth quarter, the Company completed 11 drill holes
for 7,120 metres, bringing the year-to-date total to 40 drill holes for 33,182
metres. Year-to-date drilling has focused primarily on the YD West Zone, which
is located west of the Main Zone below the 9,500 metre level, and the West
Shirriff area, which is located immediately to the west of the YD West Zone. The
drilling program has further defined the YD West Zone to the west and at depth
and results from this program show that the YD West Zone remains open in both
directions. In addition, results from the West Shirriff area show anomalous gold
of the same rock type and alteration type as the main zones that make up the
Young-Davidson mine. Further details on these results are highlighted in the
Companys November 6, 2012 press release, which can be found on the Companys
website at www.auricogold.com.

| | 11
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|ELCHANATE                                       

As a result of the acquisition of Capital Gold Corporation
(Capital Gold) on April 8, 2011, the Company owns the El Chanate mine, located
37 kilometres northeast of the town of Caborca in the state of Sonora, Mexico.
El Chanate consists of an open pit mine with heap leach processing facilities.
The open pit will be approximately 1,700 metres long, 780 metres wide, and 280
metres deep at completion.

During the year, the Company continued the expansion program at
El Chanate, which increased the crushing and stacking capacity of the circuit to
21,000 TPD, and included upgrading the conveyor system, commissioning an
intermediate grade solution pond, and commissioning an additional
Adsorption-Desorption-Recovery (ADR) plant. The commissioning of the solution
pond, combined with the upgraded pumps and feed lines has allowed the solution
pumping rates to the leach pads to be increased from 20,000 m3 per
day to 32,000 m3per day, allowing the Company to place more surface
area under leach. The additional ADR plant has allowed the solution treatment
rate to increase from 17,000 m3 per day to 28,000 m3 per
day. In addition, the Company replaced over 6,800 metres of 8 diameter water
distribution pipes with 16 diameter pipes during the year, which has allowed
the Company to increase the area under leach from 67% to over 80%. A decision to
expand production beyond 21,000 TPD will only be made if there is a significant
change in the future design of the El Chanate open pit.

During the fourth quarter of 2012, the Company completed Phase
6 of the leach pad expansion and continued with Phase 7 construction, which is
expected to be completed in the first quarter of 2013.

ELCHANATEOPERATIONALREVIEW

|                                                             |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|------------------------------------------------------------ |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                                             |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                                             |  | 2012          |  |  | 2011          |  |  | 2012        |  |  | **2011(2)** | 
|Open Pit Operations                                          |  |               |  |  |               |  |  |             |  |  |             | 
|Total tonnes mined                                           |  | 9,366,003     |  |  | 6,746,372     |  |  | 35,083,471  |  |  | 17,296,491  | 
|Tonnes of ore mined                                          |  | 2,200,370     |  |  | 2,023,390     |  |  | 9,087,686   |  |  | 5,194,637   | 
|Capitalized stripping tonnes                                 |  | 6,694,122     |  |  | 4,012,875     |  |  | 23,057,610  |  |  | 9,055,536   | 
|Average grade of gold(1)                                     |  | 0.56          |  |  | 0.75          |  |  | 0.57        |  |  | 0.66        | 
|Tonnes stockpiled ahead of the heap
      leach pad          |  | 151,181       |  |  | 114,085       |  |  | 151,181     |  |  | 114,085     | 
|Average grade of gold(1)                                     |  | 0.66          |  |  | 0.74          |  |  | 0.66        |  |  | 0.74        | 
|Crushing and Heap Leach Operations                           |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore crushed and placed on the
      heap leach pad |  | 1,676,909     |  |  | 1,640,638     |  |  | 6,970,007   |  |  | 4,357,006   | 
|Average grade of gold processed(1)                           |  | 0.68          |  |  | 0.86          |  |  | 0.68        |  |  | 0.74        | 
|Low grade ore placed on the heap leach
      pad             |  | 1,239,173     |  |  | 323,092       |  |  | 3,836,061   |  |  | 1,648,556   | 
|Average grade of gold processed(1)                           |  | 0.18          |  |  | 0.18          |  |  | 0.19        |  |  | 0.25        | 
|Total tonnes of ore processed                                |  | 2,916,082     |  |  | 1,963,730     |  |  | 10,806,068  |  |  | 6,005,562   | 
|Average grade of gold processed(1)                           |  | 0.47          |  |  | 0.75          |  |  | 0.50        |  |  | 0.60        | 
|Gold ounces produced                                         |  | 14,782        |  |  | 18,080        |  |  | 71,145      |  |  | 49,395      | 
|Gold
      ounces sold                                       |  | 13,967        |  |  | 17,355        |  |  | 68,253      |  |  | 49,659      | 

|(1) | Grams per tonne.                                                                               
|--- | -----------------------------------------------------------------------------------------------
|(2) | Represents results subsequent to the acquisition of
      the El Chanate mine on April 8, 2011.

During the quarter, the Company mined 9,366,003 tonnes at the
El Chanate open pit, including 2,200,370 ore tonnes. Mining rates increased by
39%, to 101,804 TPD, compared to the average rate during Q4 2011 of 73,330 TPD.
Mining rates continue to improve at El Chanate and have exceeded target mining
rates of 100,000 TPD since Q3 2012. During 2012, the Company mined 35,083,471
tonnes, or 95,856 TPD, an increase of 103% over prior year mining rates.

Stripping activities totaled 6,694,122 tonnes during the fourth
quarter of 2012, compared to 6,288,417 tonnes during Q3 2012. All of the tonnes
stripped during the fourth quarter were mined as part of the southeast push-back
of the pit. Overall, stripping activities at El Chanate represented a capital
investment of $10.6 million during the fourth quarter of 2012, compared to $9.5
million in Q3 2012.

The Company crushed and placed1,676,909 tonnes of ore
from the open pit on the heap leach pad in Q4 2012, at an average rate of 18,227
TPD, with an average grade of 0.68 gold grams per tonne. This represents a 2%
increase in crushing and stacking rates as compared to the average rate during
Q4 2011 of 17,833 TPD. During the quarter, the Company also placed 1,239,173
tonnes, or 13,469 TPD, of low grade run-of-mine material on the heap leach pad.
Total tonnes processed of 2,916,082 tonnes, or 31,697 TPD, represents a 48%
increase over stacking rates in the fourth quarter of 2011 primarily due to the
increase in run-of-mine material stacked from the low grade stockpile.

| | 12
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

Gold grades averaged 0.47 grams per tonne placed during the
fourth quarter, a decline of 37% from the 0.75 grams per tonne placed in the
fourth quarter of 2011, largely due to the 916,081 additional tonnes of low
grade run-of-mine material stacked.

The Company produced 14,782 and 71,145 gold ounces at El
Chanate during the fourth quarter and during 2012, respectively, compared to
18,080 and 49,395 gold ounces produced in the same periods of the prior year.
Fourth quarter production was negatively impacted by the rupture of a pressure
vessel in one of the three separate ADR processing plants on November 14, 2012,
which resulted in the temporary shutdown of two of the three plants for 48 days
during the quarter. The Company replaced portions of ADR plant 1 & 2 in the
first quarter of 2013, and production has since returned to normal levels.
Overall, production at El Chanate was in line with the revised guidance that was
provided in the Companys November 14, 2012 press release, of between 70,000 to
75,000 ounces for 2012.

ELCHANATEFINANCIALREVIEW

|(in thousands, except total cash
costs)
|---------------------------------------
|                                       
|                                       
|                                       
|Revenue from mining operations         
|Production costs                       
|Refining costs                         
|Amortization and depletion             
|(Loss) / earnings from operations      
|Cash flow from operations              
|Capital expenditures                   
|Net
      free cash flow(1)            
|Total cash costs per gold ounce(1)     

|(1) | See the Non-GAAP Measures section on page
    30.                                              
|--- | -----------------------------------------------------------------------------------------------
|(2) | Represents results subsequent to the acquisition of
      the El Chanate mine on April 8, 2011.

El Chanate reported a loss from operations of $112.9 million
during the fourth quarter of 2012, compared to earnings from operations of $17.4
million in Q4 2011. Included in the loss from operations during the fourth
quarter of 2012 was an impairment charge of $127.0 million that arose as a
result of the annual impairment test, where the Company is required to evaluate
whether the carrying amounts of cash-generating units are recoverable. The
Company prepared an updated life-of-mine plan that incorporated the results of
the 2012 drilling and exploration program, whereby the Company did not replace
2012 depletion. In addition, the revised life-of-mine plan reflected revised
operating and economic parameters. The impairment charge related entirely to
goodwill.

Excluding this impairment charge, earnings from operations were
$14.1 million, a decrease of $3.3 million over Q4 2011. This decrease resulted
from a 20% decrease in ounces sold which was partially offset by a 7% increase
in the realized gold price at El Chanate. The decrease in ounces sold is
directly related to the temporary shutdown of two of the three ADR processing
plants, which decreased production in the fourth quarter. Earnings from
operations for the fourth quarter of 2012 included $0.6 million in production
costs and $1.4 million of amortization and depletion relating to the acquisition
date fair value adjustment on heap leach inventory and property, plant and
equipment and mining interests, respectively, compared to $1.5 million and $1.6
million in Q4 2011, respectively.

During 2012, El Chanate reported a $58.7 million loss from
operations, compared to earnings from operations of $43.2 in the prior year.
Excluding the impairment charge of $127.0 million, earnings from operations were
$68.3 million in 2012, a 76% increase over the prior year. The annual increase
in earnings from operations is a result of a 37% increase in ounces sold,
combined with various optimization initiatives completed over the past year,
including upgrades to the conveyor system, commissioning of an intermediate
grade solution pond, and the commissioning of an additional ADR plant, as
mentioned previously.

El Chanate generated $6.4 million in operating cash flow during
the quarter, a decline of $2.7 million from Q4 2011 operating cash flow of $9.1
million, primarily due to the decline in production discussed above. Capital
expenditures of $15.4 million exceeded operating cash flows in the fourth
quarter of 2012, resulting in negative net free cash flow of $9.0 million, a
decrease of $8.7 million from negative net free cash flow of $0.3 million in Q4
2011. Q4 2012 capital expenditures at El Chanate included $10.6 million in
capitalized stripping activities, $3.6 million in expenditures associated with
the heap leach expansion project and $0.8 million in other sustaining capital
and optimization initiatives, and $0.3 million in exploration expenditures.
During 2012, El Chanate capital expenditures of $53.2 million exceeded operating
cash flow of $51.6 million, resulting in negative net free cash flow of $1.6
million. 2012 capital expenditures at El Chanate included $34.6 million in
capitalized stripping activities associated with the southeast push-back in the
open pit, $9.9 million in expenditures associated with the heap leach expansion
project and $5.5 million in other sustaining capital and optimization
initiatives, and $3.2 million in exploration expenditures.

| | 13
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

During the quarter, cash costs per gold ounce at the El Chanate
mine were $468, an increase of 17% over cash costs per gold ounce of $401 in Q4
2011. The increase was as a result of lower grades mined and an increase in low
grade run-of-mine material stacked and leached during 2012. During 2012, cash
costs per gold ounce at the El Chanate mine decreased by 3% over 2011, to $434
due to the optimization initiatives completed during the past year. Overall,
2012 cash costs at the El Chanate mine were in line with the range of $430 to
$460 per gold ounce provided by the Company in the September 5, 2012 revised
guidance.

ELCHANATEEXPLORATION

On March 25, 2013, the Company reported updated reserves and
resources at December 31, 2012, which included 1.2 million gold ounces of proven
and probable reserves at El Chanate. Proven and probable reserves at El Chanate
decreased by 6% over those reported at December 31, 2011; however, reserve
grades increased by 3.1% from an average of 0.65 gold grams per tonne at
December 31, 2011 to 0.67 gold grams per tonne at December 31, 2012. Further
details on the updated reserves and resources by category can be found in the
Companys March 25, 2013 press release or in the Companys Annual Information
Form, both of which can be found on the Companys website at www.auricogold.com.

The Companys 27,000 metre 2012 drilling program focused to the
northwest and southeast of the current pit as well as mineralization discovered
south of the planned heap leach pads. The program focused on infill drilling
below and to the south of the existing reserve pit, in anticipation of
potentially expanding the reserve pit towards these areas. This drilling program
has identified two new discoveries that are directly on trend of the open pit
and the extension of the previously identified North West zone located
approximately 50 metres northwest of the open pit. The newly discovered Rono
zone is approximately 600 metres northwest of the open pit and the Loma Prieta
zone is approximately 1.2 kilometres southeast from the ultimate pit boundary.
Since the second quarter of 2012, one diamond drill and one reverse circulation
drill have been operating on the property. During the fourth quarter, the
Company completed 12 reverse circulation holes for a total of 1,710 metres,
bringing the year-to-date totals to 13 core drill holes for a total of 4,966
metres and 115 reverse circulation holes for a total of 21,315 metres. Further
details on the results to the end of September 30, 2012 for the 2012 drilling
program are highlighted in the Companys October 22, 2012 press release, which
can be found on the Companys website at www.auricogold.com.

| | 14
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|OCAMPO                                          

The Ocampo mine, which commenced commercial production in
January 2007, is located in the Sierra Madre Occidental, Chihuahua State,
Mexico. Ocampo is comprised of four open pits and two underground mines, with
milling and heap leach processing facilities.

On December 14, 2012, the Company completed the sale of the
Ocampo mine and the Venus and Los Jarros exploration properties. The financial
results of these properties have been presented as net earnings from
discontinued operations in the Consolidated Statements of Operations and as a
net decrease in cash and cash equivalents from discontinued operations in the
Consolidated Statements of Cash Flows, respectively, for the years ended
December 31, 2012 and 2011. The disposal of the Ocampo mine has not had a
material impact on the Companys other operations.

OCAMPOOPERATIONALREVIEW

|                                                    |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|--------------------------------------------------- |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                                    |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                                    |  | 2012(4)       |  |  | 2011          |  |  | 2012(4)     |  |  | 2011        | 
|Underground Operations                              |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore mined                                 |  | 94,820        |  |  | 207,223       |  |  | 582,531     |  |  | 735,974     | 
|Average grade of gold(1)                            |  | 1.66          |  |  | 2.24          |  |  | 2.27        |  |  | 2.72        | 
|Average grade of silver(1)                          |  | 40            |  |  | 106           |  |  | 97          |  |  | 130         | 
|Open Pit Operations                                 |  |               |  |  |               |  |  |             |  |  |             | 
|Total tonnes mined                                  |  | 6,602,853     |  |  | 10,549,369    |  |  | 32,631,431  |  |  | 39,450,969  | 
|Tonnes of ore mined                                 |  | 462,901       |  |  | 518,300       |  |  | 3,211,954   |  |  | 2,200,446   | 
|Capitalized stripping and other
      tonnes        |  | 4,682,595     |  |  | 8,792,145     |  |  | 22,136,116  |  |  | 32,338,443  | 
|Average grade of gold(1)                            |  | 0.26          |  |  | 0.28          |  |  | 0.22        |  |  | 0.44        | 
|Average grade of silver(1)                          |  | 14            |  |  | 10            |  |  | 10          |  |  | 20          | 
|Mill Operations                                     |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore processed                             |  | 204,795       |  |  | 292,525       |  |  | 1,075,441   |  |  | 1,145,639   | 
|Average grade of gold
      processed(1)            |  | 1.11          |  |  | 1.78          |  |  | 1.52        |  |  | 2.17        | 
|Average grade of silver
      processed(1)          |  | 35            |  |  | 82            |  |  | 65          |  |  | 102         | 
|Average gold recovery rate                          |  | 97%           |  |  | 97%           |  |  | 97%         |  |  | 97%         | 
|Average silver recovery rate                        |  | 88%           |  |  | 87%           |  |  | 89%         |  |  | 87%         | 
|Gold ounces produced                                |  | 7,000         |  |  | 16,202        |  |  | 50,972      |  |  | 77,687      | 
|Silver ounces produced                              |  | 208,026       |  |  | 672,171       |  |  | 2,009,212   |  |  | 3,254,144   | 
|Heap Leach Operations                               |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore placed                                |  | 392,334       |  |  | 423,403       |  |  | 2,735,503   |  |  | 1,783,291   | 
|Average grade of gold
      processed(1)            |  | 0.15          |  |  | 0.18          |  |  | 0.15        |  |  | 0.27        | 
|Average grade of silver
      processed(1)          |  | 8             |  |  | 7             |  |  | 7           |  |  | 13          | 
|Gold ounces produced                                |  | 2,585         |  |  | 3,707         |  |  | 15,378      |  |  | 21,791      | 
|Silver ounces produced                              |  | 93,925        |  |  | 189,092       |  |  | 550,158     |  |  | 917,628     | 
|Gold ounces produced                                |  | 9,585         |  |  | 19,909        |  |  | 66,350      |  |  | 99,478      | 
|Silver ounces produced                              |  | 301,951       |  |  | 861,263       |  |  | 2,559,370   |  |  | 4,171,772   | 
|Gold equivalent ounces produced
      (realized)(2) |  | 15,351        |  |  | 35,960        |  |  | 114,223     |  |  | 194,208     | 
|Gold
      equivalent ounces produced (55:1)(3)     |  | 15,075        |  |  | 35,568        |  |  | 112,884     |  |  | 175,328     | 
|Gold ounces sold                                    |  | 9,248         |  |  | 19,449        |  |  | 62,867      |  |  | 95,553      | 
|Silver ounces sold                                  |  | 313,575       |  |  | 886,351       |  |  | 2,325,235   |  |  | 4,081,527   | 
|Gold equivalent ounces sold
      (realized)(2)     |  | 15,222        |  |  | 35,986        |  |  | 106,400     |  |  | 188,307     | 
|Gold
      equivalent ounces sold (55:1)(3)         |  | 14,949        |  |  | 35,564        |  |  | 105,143     |  |  | 169,762     | 

|(1) | Grams per tonne.                                                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Gold equivalent ounces include silver ounces produced
      / sold converted to a gold equivalent, based on the ratio of the realized
      sale prices of the commodities.
|(3) | Gold equivalent ounces include silver ounces
      produced / sold converted to a gold equivalent, based on the long-term
      gold equivalency ratio of 55:1.            
|(4) | Represents results prior to disposition on December
      14, 2012.                                                                                                        

| | 15
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

MINING

During the quarter, the Ocampo mine was under the Companys
ownership from October 1, 2012 to December 14, 2012. At the Northeast
underground operation, the Company mined 94,820 tonnes, or 1,281 TPD, of ore
during this period, a decrease of 112,403 tonnes, or 54% over the fourth quarter
of 2011. During the quarter, production continued to be negatively impacted by
the Companys focus on an accelerated development program at the mine to
increase developed ore inventory. During the year-to-date period ending December
14, 2012, the Company mined 582,531 tonnes of ore, or 1,674 TPD, a decrease of
17% over the 2,016 TPD mined in the prior year.

The Company mined 6,602,853 tonnes, or 89,228 TPD, from the
open pits during the fourth quarter, a decrease of 25,439 TPD or 22% from the
114,667 TPD mined in the fourth quarter of 2011. Tonnes mined in the open pit
continued to decline during the quarter due to a decrease in stripping tonnes
mined, as the pre-stripping program at Picacho neared completion. Ore mining
rates increased by 622 TPD, or 11%, to 6,255 TPD during Q4 2012, largely due to
improved access to mineable ore from the progress made on the pushbacks in the
Picacho open pit. During the year-to-date period ending December 14, 2012, the
Company mined 3,211,954 tonnes of ore, or 9,230 TPD, compared 2,200,446 tonnes
of ore, or 6,029 TPD, in 2011.

During the fourth quarter, the Company continued stripping
activities at the Picacho open pit, mining 3,083,418 tonnes compared to
2,710,962 tonnes in the third quarter of 2012. Stripping activities also
continued at the Conico open pit with 1,599,176 tonnes being mined, compared to
1,831,725 tonnes in the previous quarter. Overall, stripping activities at
Ocampo represented a capital investment of $7.6 million during Q4 2012, which
was consistent with the $7.6 million invested in stripping activities in Q3
2012.

PROCESSING

The Ocampo mill circuit processed 204,795 tonnes, or 2,768 TPD,
during the fourth quarter of 2012, a decrease of 412 TPD, or 13%, from ore
processing rates in the fourth quarter of 2011 of 3,180 TPD. During the
year-to-date period ending December 14, 2012, the Company processed 1,075,441
tonnes of ore, or 3,090 TPD, compared to 1,145,639 tonnes of ore, or 3,139 TPD
in 2011.

Gold and silver grades processed at the mill facility declined
from 1.78 and 82 grams per tonne, respectively, in Q4 2011 to 1.11 and 35 grams
per tonne, respectively, in Q4 2012. During the fourth quarter, the mill grades
continued to be negatively impacted by a decline in underground tonnes and
grades that resulted from an increased focus on ore development. Lower
underground production necessitated supplementing the mill feed with lower grade
open pit ore.

During the fourth quarter of 2012, the Company placed 392,334
tonnes of ore on the heap leach pad at an average stacking rate of 5,302 TPD,
representing a 15% increase over the 4,602 TPD placed in Q4 2011. Access to heap
leach ore continued to improve due to the progress made on the pushbacks in the
open pits. During the year-to-date period ending December 14, 2012, the Company
placed 2,735,503 tonnes of ore at an average stacking rate of 7,861 TPD,
compared to 1,783,291 tonnes of ore at an average stacking rate of 4,886 TPD in
2011.

During Q4 2012, gold and silver grades placed on the heap leach
pad were consistent with Q3 2012, but declined slightly from the grades placed
in the fourth quarter of 2011. This decline in grades was primarily due to lower
grade ore being available from the open pits, lower tonnage from the
underground, and a reduction in cutoff grade attributable to higher metal
prices.

During the fourth quarter of 2012, Ocampo produced 15,075
Au(e)(55:1), a decline of 20,493 ounces over production of 35,568
Au(e)(55:1)in Q4 2011. During the year-to-date period ending
December 14, 2012, Ocampo produced 112,884 Au(e)(55:1), compared to
175,328 Au(e)(55:1)produced in 2011. Annual production was slightly
below the lower end of the Ocampo production guidance provided in the Companys
September 5, 2012 press release of 115,000 to 125,000 gold equivalent ounces due
to the sale of the mine on December 14, 2012, which shortened the reporting year
by two weeks.

| | 16
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

OCAMPOFINANCIALREVIEW

|(in thousands, except total cash costs)                          
|-----------------------------------------------------------------
|                                                                 
|                                                                 
|                                                                 
|Revenue from mining operations                                   
|Production costs                                                 
|Refining costs                                                   
|Amortization and depletion                                       
|(Loss) / earnings from operations                                
|Cash flow (used in) / from operations                            
|Capital expenditures                                             
|Net
      free cash flow(2)                                      
|Total cash costs per gold equivalent ounce
      (realized)(2)(3)
|Total cash costs per gold ounce(2)                               
|Total cash costs per gold equivalent ounce
      (55:1)(1)(2)    

|(1) | Gold equivalent ounces include silver ounces produced
      and sold converted to a gold equivalent, based on the long-term gold
      equivalency ratio of 55:1.          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | See the Non-GAAP Measures section on page
    30.                                                                                                                          
|(3) | Gold equivalent ounces include silver ounces produced
      / sold converted to a gold equivalent based on the ratio of the realized
      sales prices of the commodities.
|(4) | Represents results prior to disposition on December
      14, 2012.                                                                                                        

Ocampo recognized a $5.5 million loss from operations in Q4
2012, a decline of $31.1 million from Q4 2011 earnings from operations of $25.6
million. This decline was due to a decrease in ounces sold of 20,615
Au(e)(55:1), and a net realizable value adjustment of $7.8 million,
discussed below. During the year-to-date period ending December 14, 2012,Ocampo recognized $45.5 million in earnings from operations, a 71% decline
from the prior year.

During the fourth quarter of 2012, the Company recognized a
$7.8 million net realizable value adjustment on Ocampo ore in process inventory,
which increased production costs by $5.5 million and amortization and depletion
expense by $2.3 million. This adjustment resulted primarily due to declining
forecasted metal prices and lower grades of ore mined in the fourth quarter.
During the year-to-date period ending December 14, 2012, the Company recognized
total net realizable value adjustments of $16.1 million as the costs of mining
activities added to the leach pad (open pit mining and processing costs,
including applicable overhead, depreciation and amortization) were not expected
to be fully recoverable. These net realizable value adjustments increased
production costs by $10.5 million and amortization and depletion expense by $5.6
million.

Ocampo used cash flow from operations of $0.5 million during
the Companys ownership in Q4 2012, compared to Q4 2011 when the Company
generated operating cash flow of $26.3 million. The decrease in operating cash
flow resulted primarily from the decline in production and ounces sold. After
deducting capital expenditures of $23.3 million, net free cash flow was negative
$23.8 million during Q4 2012. Capital expenditures at Ocampo during this period
included $7.6 million in capitalized stripping activities, $8.9 million in
underground development, $5.1 million in sustaining capital, and $1.7 million in
exploration activities. During the year-to-date period ending December 14, 2012,
Ocampo generated $49.1 million of operating cash flow, and after capital
expenditures of $104.3 million, reported negative net free cash flow of $55.2
million. Capital expenditures at Ocampo during this period included $31.9
million in capitalized stripping activities, $24.6 million in underground
development, and $28.3 million in sustaining capital, and $19.5 million in
exploration activities.

Using the Companys long-term gold equivalency ratio of 55:1,
cash costs per gold equivalent ounce at Ocampo were $1,384 in Q4 2012, compared
to cash costs of $560 per gold equivalent ounce in the fourth quarter of 2011.
This 147% increase was primarily due to the processing of lower grade ore during
the fourth quarter and the recognition of the net realizable value adjustment
discussed above. Cash costs during the year-to-date period ending December 14,
2012 were $749 per Au(e)(55:1), a 63% increase over 2011 cash costs
per Au(e)55:1of $460, but were lower than the revised 2012 cash cost
guidance provided by the Company in the September 5, 2012 press release of $775
- $875 per Au(e)55:1 (including NRV adjustments). The increase in
cash costs year-over-year was due to the processing of lower grade ore and
reduced production from the higher grade underground mine, and the total net
realizable value adjustments of $10.5 million, or $100 per
Au(e)(55:1) mentioned previously.

| | 17
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|ELCUBO                                          

The El Cubo mine is located in the village of El Cubo in the
state of Guanajuato, Mexico, a historic mining district with over 400 years of
production history. The mine is comprised of the original El Cubo underground
mine, which was owned by the Company, and the Las Torres Complex, which was
leased from Industrias Peñoles, S.A.B. de C.V.

On July 13, 2012, the Company completed the sale of the El Cubo
mine and the Guadalupe y Calvo exploration property. The financial results of
these properties have been presented as net earnings from discontinued
operations in the Consolidated Statements of Operations and as a net decrease in
cash and cash equivalents from discontinued operations in the Consolidated
Statements of Cash Flows, respectively, for the years ended December 31, 2012
and 2011. The disposal of the El Cubo mine and the Guadalupe y Calvo exploration
property has not had an impact on the Companys other operations.

ELCUBOOPERATIONALREVIEW

|                                                    |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|--------------------------------------------------- |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                                    |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                                    |  | 2012          |  |  | 2011          |  |  | **2012(4)** |  |  | 2011        | 
|Underground and Mill Operations                     |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore mined                                 |  | -             |  |  | 106,273       |  |  | 212,865     |  |  | 247,190     | 
|Tonnes of ore processed                             |  | -             |  |  | 133,513       |  |  | 210,875     |  |  | 256,150     | 
|Average grade of gold
      processed(1)            |  | -             |  |  | 1.19          |  |  | 1.43        |  |  | 1.24        | 
|Average grade of silver
      processed(1)          |  | -             |  |  | 71            |  |  | 76          |  |  | 80          | 
|Average gold recovery rate                          |  | -             |  |  | 84%           |  |  | 89%         |  |  | 85%         | 
|Average silver recovery rate                        |  | -             |  |  | 81%           |  |  | 82%         |  |  | 84%         | 
|Gold ounces produced                                |  | -             |  |  | 4,272         |  |  | 8,602       |  |  | 8,670       | 
|Silver ounces produced                              |  | -             |  |  | 247,851       |  |  | 424,554     |  |  | 556,379     | 
|Gold equivalent ounces produced
      (realized)(2) |  | -             |  |  | 8,917         |  |  | 16,497      |  |  | 20,277      | 
|Gold
      equivalent ounces produced (55:1)(3)     |  | -             |  |  | 8,778         |  |  | 16,321      |  |  | 18,786      | 
|Gold ounces sold                                    |  | -             |  |  | 4,995         |  |  | 8,827       |  |  | 7,195       | 
|Silver ounces sold                                  |  | -             |  |  | 288,293       |  |  | 482,519     |  |  | 435,448     | 
|Gold equivalent ounces sold
      (realized)(2)     |  | -             |  |  | 10,400        |  |  | 17,851      |  |  | 15,883      | 
|Gold
      equivalent ounces sold (55:1)(3)         |  | -             |  |  | 10,237        |  |  | 17,601      |  |  | 15,113      | 

|(1) | Grams per tonne.                                                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Gold equivalent ounces include silver ounces produced
      / sold converted to a gold equivalent, based on the ratio of the realized
      sale prices of the commodities.
|(3) | Gold equivalent ounces include silver ounces produced
      and sold converted to a gold equivalent, based on the long-term gold
      equivalency ratio of 55:1.          
|(4) | Represents results prior to disposition on July 13,
      2012.                                                                                                            

During 2012, the El Cubo mine was under the Companys ownership
from January 1, 2012 to July 13, 2012 and mined 212,865 tonnes, or 1,092 TPD.

During the year-to-date period ending July 13, 2012, the
Company processed 210,875 tonnes, or 1,081 TPD. Average realized grades
processed by the Company were 2.85 gold equivalent grams per tonne.

El Cubo contributed 8,602 gold ounces and 424,554 silver
ounces, or 16,321 Au(e)55:1, to the Companys consolidated production
profile during 2012. During the year ended December 31, 2011, El Cubo
contributed 18,786 Au(e)55:1 to consolidated production, subsequent
to the resolution of the labour disruption, which halted processing activities
until Q3 2011.

| | 18
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

ELCUBOFINANCIALREVIEW

|(in thousands, except total cash costs)                          
|-----------------------------------------------------------------
|                                                                 
|                                                                 
|                                                                 
|Revenue from mining operations                                   
|Production costs                                                 
|Refining costs                                                   
|Mine standby costs                                               
|Amortization and depletion                                       
|Earnings from operations                                         
|Cash flow from / (used in) operations                            
|Capital expenditures                                             
|Net
      free cash flow(2)                                      
|Total cash costs per gold equivalent ounce
      (realized)(2)(3)
|Total cash costs per gold ounce(2)                               
|Total cash costs per gold equivalent ounce
      (55:1)(1)(2)    

|(1) | Gold equivalent ounces include silver ounces produced
      and sold converted to a gold equivalent, based on the long-term gold
      equivalency ratio of 55:1.          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | See the Non-GAAP Measures section on page
    30.                                                                                                                          
|(3) | Gold equivalent ounces include silver ounces produced
      / sold converted to a gold equivalent based on the ratio of the realized
      sales prices of the commodities.
|(4) | Represents results prior to disposition on July 13,
      2012.                                                                                                            

El Cubo reported earnings from operations of $5.1 million
during the year-to-date period ending July 13, 2012.

During the year-to-date period ending July 13, 2012, El Cubo
reported negative net free cash flow of $9.2 million, comprised of a cash inflow
from operations of $4.1 million offset by capital expenditures of $13.2 million.
Capital expenditures during this period included $11.2 million in capitalized
underground development, $1.1 million in sustaining capital, and $0.9 million in
exploration expenditures.

During the year-to-date period ending July 13, 2012, cash costs
per Au(e)(55:1) were $1,216.

| | 19
| | --

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------
|                                               
|AUSTRALIANOPERATIONS                           

As a result of the acquisition of Northgate on October 26,
2011, the Company owned the Fosterville and Stawell gold mines, which are
located in the state of Victoria, Australia.

On May 4, 2012, the Company completed the sale of the
Australian operations. The financial results of the Australian operations have
been presented as net earnings from discontinued operations in the Consolidated
Statements of Operations and as a net decrease in cash and cash equivalents from
discontinued operations in the Consolidated Statements of Cash Flows,
respectively, for the years ended December 31, 2012 and 2011. The disposal of
the Australian operations has not had an impact on the Companys other
operations.

FOSTERVILLE ANDSTAWELLOPERATIONALREVIEW

|                                         |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|---------------------------------------- |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                         |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                         |  | 2012          |  |  | **2011(3)**   |  |  | 2012(2)     |  |  | **2011(3)** | 
|Fosterville                              |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore mined                      |  | -             |  |  | 121,598       |  |  | 284,098     |  |  | 121,598     | 
|Tonnes of ore processed                  |  | -             |  |  | 125,301       |  |  | 267,966     |  |  | 125,301     | 
|Average grade of gold
      processed(1) |  | -             |  |  | 4.34          |  |  | 3.78        |  |  | 4.34        | 
|Average gold recovery rate               |  | -             |  |  | 84%           |  |  | 80%         |  |  | 84%         | 
|Gold ounces produced                     |  | -             |  |  | 14,682        |  |  | 26,013      |  |  | 14,682      | 
|Gold ounces sold                         |  | -             |  |  | 14,998        |  |  | 27,414      |  |  | 14,998      | 
|                                         |  |               |  |  |               |  |  |             |  |  |             | 
|Stawell                                  |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore mined                      |  | -             |  |  | 137,223       |  |  | 259,798     |  |  | 137,223     | 
|Tonnes of ore processed                  |  | -             |  |  | 146,568       |  |  | 283,296     |  |  | 146,568     | 
|Average grade of gold
      processed(1) |  | -             |  |  | 3.69          |  |  | 2.89        |  |  | 3.69        | 
|Average gold recovery rate               |  | -             |  |  | 87%           |  |  | 84%         |  |  | 87%         | 
|Gold ounces produced                     |  | -             |  |  | 15,198        |  |  | 22,236      |  |  | 15,198      | 
|Gold ounces sold                         |  | -             |  |  | 13,335        |  |  | 24,205      |  |  | 13,335      | 
|                                         |  |               |  |  |               |  |  |             |  |  |             | 
|Total                                    |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore mined                      |  | -             |  |  | 258,821       |  |  | 543,896     |  |  | 258,821     | 
|Tonnes of ore processed                  |  | -             |  |  | 271,869       |  |  | 551,262     |  |  | 271,869     | 
|Average grade of gold
      processed(1) |  | -             |  |  | 3.99          |  |  | 3.32        |  |  | 3.99        | 
|Average gold recovery rate               |  | -             |  |  | 86%           |  |  | 82%         |  |  | 86%         | 
|Gold ounces produced                     |  | -             |  |  | 29,880        |  |  | 48,249      |  |  | 29,880      | 
|Gold ounces sold                         |  | -             |  |  | 28,333        |  |  | 51,619      |  |  | 28,333      | 

|(1) | Grams per tonne.                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------
|(2) | Represents results prior to disposition on May 4,
      2012.                                                     
|(3) | Represents results subsequent to the acquisition
      of the Fosterville and Stawell mines on October 26,
  2011.

During 2012, the Fosterville and Stawell mines were under the
Companys ownership from January 1, 2012 to May 4, 2012. During this period, the
Company mined a total of 543,896 ore tonnes, or 4,351 TPD.

During the year-to-date period ending May 4, 2012, the
Fosterville and Stawell mill circuits processed a total of 551,262 tonnes, or
4,410 TPD. Average grades processed at the mill facilities were 3.32 gold grams
per tonne.

Fosterville and Stawell contributed 48,249 gold ounces to the
Companys consolidated production profile during 2012. During the year ended
December 31, 2011, these mines contributed 29,880 gold ounces to consolidated
production, subsequent to their acquisition on October 26, 2011.

| | 20
| | --

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

FOSTERVILLE ANDSTAWELLFINANCIALREVIEW

|(in thousands, except total cash
costs)                
|-------------------------------------------------------
|                                                       
|                                                       
|                                                       
|Fosterville                                            
|Revenue from mining operations                         
|Production costs                                       
|Refining costs                                         
|Amortization and depletion                             
|Earnings from operations before impairment charge      
|Cash flow from operations                              
|Capital expenditures                                   
|Net free cash flow(1)                                  
|Total cash costs per gold ounce(1)                     
|Stawell                                                
|Revenue from mining operations                         
|Production costs                                       
|Refining costs                                         
|Amortization and depletion                             
|Earnings from operations before impairment charge      
|Cash flow from operations                              
|Capital expenditures                                   
|Net free cash flow(1)                                  
|Total cash costs per gold ounce(1)                     
|Total                                                  
|Revenue from mining operations                         
|Production costs                                       
|Refining costs                                         
|Amortization and depletion                             
|Earnings from operations before
      impairment charge
|Impairment charge                                      
|Earnings from operations                               
|Cash flow from operations                              
|Capital expenditures                                   
|Net free cash flow(1)                                  
|Total cash costs per gold ounce(1)                     

|(1) | See the Non-GAAP Measures section on page
    30.                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------
|(2) | Represents results prior to disposition on May 4,
      2012.                                                     
|(3) | Represents results subsequent to the acquisition of
      the Fosterville and Stawell mines on October 26,
  2011.

During the year-to-date period ending May 4, 2012, the
Fosterville and Stawell mines reported earnings from operations of $5.7 million.
Included in earnings from operations from January 1, 2012 to May 4, 2012 is a
$22.9 million impairment charge that was recognized during the first quarter of
2012 to reduce the carrying values of the Australian operations to their
recoverable amount at March 31, 2012. The recoverable amount was determined in
reference to the final consideration agreed to on May 4, 2012 with Crocodile
Gold.

During the year-to-date period ending May 4, 2012, the
Fosterville and Stawell mines generated $0.2 million in net free cash flow,
including $25.9 million in operating cash flow, net of $25.7 million in capital
expenditures incurred. Capital expenditures at Fosterville and Stawell during
this period included $20.6 million in mine development, $2.6 million in
sustaining capital, and $2.5 million in exploration activities.

During the year-to-date period ending May 4, 2012, the combined
cash costs per gold ounce at Fosterville and Stawell were $1,099.

| | 21
| | --

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------
|                                               
|EXPLORATIONREVIEW                              

KEMESSUNDERGROUNDPROJECTEXPLORATION

During 2012, the Company completed a full Feasibility Study for
the Kemess Underground Project. The results outline the development of an
underground operation that is well suited to block/panel caving. Average annual
production is envisioned to be 105,000 ounces of gold and 44 million pounds of
copper at cash costs of $213 per gold ounce, net of by-product credits, over a
12-year mine life. The envisaged Kemess Underground block cave operation would
leverage the existing infrastructure and mill facilities at the Kemess South
mine, including a permitted area for tailings storage in the Kemess South open
pit.Further details on the results of the Feasibility Study are
highlighted in the Companys March 25, 2013 press release, which can be found on
the Companys website at www.auricogold.com.
The technical report for the Feasibility Study, which is in compliance with NI
43-101, will be available on SEDAR at www.sedar.com and on the Companys website at www.auricogold.com during the second quarter of
2013.

ORIONEXPLORATION

As part of the acquisition of Capital Gold, the Company
acquired the Orion development project in the state of Nayarit, Mexico. This
project consists of a large land position of 114,308 hectares of mineral rights
that cover an extensively drilled vein deposit and numerous vein exploration
targets elsewhere on the property. Capital Gold had contracted SRK consulting to
complete a PEA that was completed in February 2010 and in compliance with NI
43-101. The initial report estimated an underground indicated resource of 1.11
million tonnes grading 3.66 grams per tonne gold plus 309 grams per tonne
silver, or 330,000 gold-equivalent ounces (55:1). In addition, an additional
inferred resource of 0.18 million tonnes grading 3.33 grams per tonne gold plus
95 grams per tonne silver, or 5.05 gold-equivalent grams per tonne (55:1) was
reported.

As part of the sale of the Ocampo mine and Venus and Los Jarros
exploration properties to Minera Frisco on December 14, 2012, the Company sold a
50% interest in the Orion development project to Minera Frisco. During 2012, a
detailed reexamination of all geological information was undertaken along with
field mapping and sampling. This has lead to a proposal for a 10,000 metre drill
program which will be the first program for the joint venture with Minera
Frisco.

|CONSOLIDATEDEXPENSES
|--------------------

|(in thousands)                         
|---------------------------------------
|                                       
|                                       
|                                       
|Reclamation, care and maintenance costs
|General and administrative             
|Exploration and business development   
|Impairment charge                      
|Finance costs                          
|Foreign exchange loss / (gain)         
|Other income                           

|(1) | Exclusive of discontinued operations as expenses
      relating to discontinued operations are presented separately in the
      Companys Consolidated Statements of Operations for the years ended
      December 31, 2012 and 2011.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Reclamation, care and maintenance costs for 2012 included $8.1
million in site overhead and other costs relating to activities at Kemess South,
a mine in the decommissioning stage that was acquired through the Northgate
business combination. During 2012, the Company also recognized a reclamation
expense of $6.0 million related to Kemess South, for reclamation activities that
were not previously provided for. Reclamation, care and maintenance costs for
2011 included $2.1 million in site overhead and other costs relating to
activities at Kemess South for the period October 26, 2011 to December 31, 2011.

General and administrative costs include expenses related to
the overall management of the business that are not part of direct mine
operating costs. These costs are generally incurred at the corporate offices
located in Canada and Mexico, but also include share-based compensation costs
for key employees at all locations. General and administrative costs for 2012
increased by $10.4 million over the prior year period primarily as a result of
increased professional fees, and higher compensation costs resulting from the
increased size of the Company following the acquisitions of Capital Gold and
Northgate.

Exploration and business development fees decreased by $19.6
million during 2012 as compared to the prior year, when the Company incurred
expenditures associated with the acquisitions of Capital Gold and Northgate.

During the fourth quarter of 2012, the Company recognized an
impairment charge of $127.0 million related to the El Chanate mine. As the
impairment charge was recorded entirely to goodwill, there was no associated tax
impact. In addition, the Company discontinued its exploration program on the La
Bandera exploration property during 2012. As a result, the Company recognized an impairment charge of $1.5 million and a tax
recovery of $0.4 million, for a net impairment charge of $1.1 million. During
2011, the Company discontinued its exploration program on the Mezquite
exploration property. As a result, the Company recognized an impairment charge
of $2.2 million and a tax recovery of $0.6 million, for a net impairment charge
of $1.6 million.

| | 22
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

During the year, foreign exchange gains and losses changed by
$20.3 million, from a gain of $9.6 million in 2011 to a loss of $10.7 million in
2012. The primary cause of the loss in the current year was the strengthening of
the Canadian dollar and Mexican peso. The strengthening of these currencies
result in foreign exchange losses, while the weakening of these currencies
result in foreign exchange gains, primarily as a result of the Companys
deferred income tax liabilities which are denominated in Canadian dollars and
Mexican pesos and then translated into US dollars at each balance sheet date.
The Company will continue to experience non-cash foreign currency gains or
losses, primarily as a result of fluctuations between the US dollar, and both
the Canadian dollar and Mexican peso.

During 2012, other income changed by $29.9 million, from income
of $38.7 million in 2011 to income of $8.8 million in 2012 primarily as a result
of a decrease in unrealized gains on the fair value of the option component of
convertible senior notes from $23.0 million in 2011 to $4.0 million in 2012. In
addition, the Company recognized a $3.9 million loss on extinguishment of debt,
a $2.4 million loss on the settlement of a lawsuit, and a $1.9 million loss on
the discontinuance of hedge accounting. The remainder of the variance can be
attributed to $14.8 million in unrealized and realized gains on equity
investments in 2011 compared to $1.4 million in 2012. These decreases in other
income were partially offset by a $6.6 million gain on the sale of a 50%
interest in the Orion advanced development project to Minera Frisco during the
fourth quarter of 2012.

|CONSOLIDATEDINCOMETAXEXPENSE
|----------------------------

The Company is subject to tax in various jurisdictions,
including Mexico and Canada. There are a number of factors that can
significantly impact the Companys effective tax rate including the geographic
distribution of income, varying rates in different jurisdictions, the
non-recognition of tax assets, mining allowances, foreign currency exchange rate
movements, changes in tax laws and the impact of specific transactions and
assessments.

Due to the number of factors that can potentially impact the
effective tax rate and the sensitivity of the tax provision to these factors, as
discussed above, it is expected that the Companys effective tax rate will
fluctuate in future periods.

During 2012, the Company recognized a current tax expense of
$6.6 million and a deferred tax recovery of $7.8 million, compared to a current
tax expense of $10.4 million and a deferred tax recovery of $0.4 million in
2011. This decline in tax expense primarily resulted from the strengthening of
the Canadian dollar relative to the US dollar, which resulted in a reduction in
taxable temporary differences associated with the Company's Canadian property,
plant, and equipment and mining interests and deferred tax recovery. The
Companys tax expense also declined as a result of the deferred tax recovery
from the ongoing amortization of property, plant and equipment and mining
interests acquired as part of the acquisition of Capital Gold and Northgate.

| | 23
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|FINANCIALCONDITION                              

|(in thousands)                       
|-------------------------------------
|                                     
|                                     
|                                     
|Current assets                       
|Long-term assets                     
|Total assets                         
|Total current liabilities            
|Total long-term financial liabilities
|Total other long-term liabilities    
|Total liabilities                    
|Shareholders
      equity           

| | 24
| | --

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------
|                                               
|KEYECONOMICTRENDS                              

The Companys performance is largely dependent on the prices of
gold and silver. The prices of these commodities directly affect the Companys
profitability and cash flow. The prices of gold and silver are subject to
volatile price movements during short periods of time and are affected by
numerous factors, such as the strength of the US dollar, supply and demand,
interest rates, and inflation rates, all of which are beyond the Companys
control. During 2012, the price of gold averaged $1,689 per ounce, with daily
London PM Fix prices between $1,540 and $1,792 per ounce. The price of silver
experienced greater volatility during the year, averaging $31.15 per ounce, with
daily London PM Fix prices between $26.67 and $37.23 per ounce.

At the Companys mine sites, a significant portion of the
operating costs and capital expenditures are denominated in foreign currencies,
including Mexican pesos and Canadian dollars. Therefore, fluctuations in these
foreign currencies against the US dollar can significantly impact the Companys
costs. The Mexican peso and Canadian dollar averaged approximately 13.2 and 1.0,
to 1.0 US dollar, respectively, in 2012.

The Company has been impacted by industry-wide cost pressures,
primarily with respect to energy, labour and other consumables. The Company is
actively managing these cost pressures by increasing mining productivities and
implementing other optimization initiatives at various sites Company-wide.

|LIQUIDITY ANDCAPITALRESOURCES
|-----------------------------

The Companys balance of cash and cash equivalents as at
December 31, 2012 was $603.4 million, a $424.0 million increase from the balance
at the end of 2011 of $179.4 million. Factors that can impact the Companys
liquidity are monitored regularly and include the market prices of gold and
silver, production levels, operating cash costs, capital costs, exploration
expenditures, and currency exchange rates. Refer to the Liquidity Outlook
section on page 26 for near term factors that could influence the Companys cash
balance. Future commitments that could impact the Companys liquidity are
disclosed in the Contractual Obligations section on page 27.

CASHFLOW

|(in thousands)                                                                       
|-------------------------------------------------------------------------------------
|                                                                                     
|                                                                                     
|                                                                                     
|Cash flow from / (used in) operating
      activities(1)                             
|Cash flow from / (used in) investing
      activities(1)                             
|Cash flow (used in) / from financing
      activities(1)                             
|Effect of foreign exchange rates on cash(1)                                          
|Increase / (decrease) in cash and cash
      equivalents from continuing operations  
|(Decrease) / increase in cash and cash equivalents from
      discontinued operations
|Total cash and cash equivalents, beginning of period                                 
|Total cash and cash equivalents, end of period                                       

|(1) | Exclusive of discontinued operations as cash flows
      from discontinued operations is presented separately in the Company's
      Consolidated Statements of Cash Flows for the years ended December 31,
      2012 and 2011.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operating activities from continuing operations contributed
cash flows of $1.3 million during 2012, as compared to 2011 when operating
activities from continuing operations used cash of $3.1 million. The increase in
operating cash flow is primarily due to cash flow contributed from
Young-Davidson subsequent to the declaration of commercial production on
September 1st, as well as a full year contribution from the El
Chanate mine, which was acquired in April 2011. These increases were partially
offset by operating cash outflows associated with the build up of stockpile and
ore in process inventories at Young-Davidson prior to the declaration of
commercial production, and payments of reclamation, care and maintenance costs
at Kemess South in 2012.

During the year, investing activities from continuing
operations contributed cash of $545.7 million, which compared to $20.8 million
used in 2011. The increase in cash provided by investing activities was due to
net proceeds of $641.4 million received on the disposition of Ocampo, net
proceeds of $99.2 million received on the disposition of the El Cubo mine and
Guadalupe y Calvo exploration property, and net proceeds of $44.8 million
received on the disposition of the Australian operations. The Company also
received $100.8 million from the sale of common shares received as part of the
consideration from the disposition of assets during the year, and $27.0 million
from the issuance of shares in a subsidiary that holds the Orion development
project. These cash inflows were partially offset by capital expenditures during
the year, which included $302.9 million in the construction and development of
Young-Davidson, $34.6 million in capitalized stripping activities in the El
Chanate open pits, $15.4 million in sustaining capital, and $17.2 million in
exploration activities.

| | 25
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

Financing activities from continuing operations used cash of
$53.2 million during 2012, as compared to 2011 when financing activities from
continuing operations contributed cash of $51.9 million. The increase in cash
used is primarily due to the $127.8 million repayment of the full amount drawn
on Companys credit facility during the fourth quarter of 2012, which was
partially offset by drawdowns earlier in the year. During 2011, the primary
contribution of cash flow from financing activities was $35.0 million in cash
raised from drawdown on the credit facility and a combined $21.2 million in
proceeds received from the exercises of warrants and stock options.

Cash flows from discontinued operations decreased the Companys
cash balance during the year by $68.8 million, as compared to 2011 when cash
flows from discontinued operations increased the Companys cash balance by $38.2
million. The primary reason for this change is the decrease in the free cash
flow contribution from the Ocampo mine during 2012 versus in the prior year,
which resulted from higher operating costs, a decline in realized silver prices,
and a 64,619 ounce decline in Au(e)(55:1) ounces sold.

CREDITFACILITY

On December 31, 2012, the Company had a revolving credit
facility of $250 million. The credit facility carries an interest rate of LIBOR
plus 2.25% to 3.50%, depending on the leverage ratio of the Company, and matures
on April 25, 2016. No payments are due until the maturity date, which may be
extended upon mutual agreement by all parties. At December 31, 2012, the Company
had no amounts drawn under this revolving facility, and had issued a $1 million
letter of credit against the facility, leaving a total of $249.0 million
available for future funding.

On January 31, 2013, the Company amended the revolving credit
facility, which reduced borrowing capacity from $250 million to $150 million.
The amended credit facility carries the same interest rate and terms as the
previous facility, as described above.

CONVERTIBLEDEBT

The Company has $167.0 million in convertible senior notes that
were originally issued by Northgate in October 2010. These notes pay interest
semi-annually at a rate of 3.50% 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. The
conversion rate following the acquisition of Northgate and the subsequent
amalgamation is 89.41697 common shares per $1,000 principal amount of notes,
which represents a conversion price of approximately $11.18 per common
share.

On February 1, 2013, the Company repurchased and cancelled
36,144,578 common shares under the Companys modified Dutch auction
substantial issuer bid. As a result, the conversion rate following the
completion of the substantial issuer bid has increased to 91.31649 common shares
per $1,000 principal amount of notes, which represents a conversion price of
approximately $10.95 per common share of the Company.

LIQUIDITYOUTLOOK

Liquidity risk is the risk that the Company will encounter
difficulties in meeting obligations associated with its financial liabilities
and other contractual obligations. The Companys strategy for managing liquidity
is based on achieving positive cash flows from operations to internally fund
operating and capital requirements. Material increases or decreases in the
Companys liquidity and capital resources will be substantially determined by
the success or failure of the Companys operations, exploration, development and
construction programs, its ability to obtain equity or other sources of
financing, and the prices of gold and silver.

The Company monitors and manages liquidity risk by preparing
regular periodic cash flow forecasts, and seeking flexibility in financing
arrangements. The Company anticipates that operating cash flows will not be
sufficient to fund capital expenditures at its operating mines in 2013. The
Company expects capital expenditures to exceed operating cash flows in 2013 due
to development expenditures relating to the Young-Davidson underground mine, as
well as capital expenditures on the paste backfill plant at Young-Davidson. The
Company has the ability to fund this forecasted shortfall using cash on hand and
the current capacity available under its credit facility. Net free cash flow
will vary depending on the price of gold, fluctuations in foreign currency
exchange rates, total production and the extent of expenditures on mine
development and other capital projects during the year.

At December 31, 2012, the Company had $603.4 million in cash on
hand, $300 million of which was used to complete the previously announced
substantial issuer bid in January 2013.

| | 26
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

INVESTMENTS

At December 31, 2012, the Company held investments with a
market value of $0.1 million, which consist primarily of common shares in
publicly traded companies. Investments in common shares in publicly traded
companies are classified as either held-for-trading or available-for-sale
investments. Unrealized gains and losses related to held-for-trading investments
are included in net earnings in the period they occur. Unrealized gains and
losses related to available-for-sale investments are excluded from net earnings
and are included in other comprehensive income until such gains or losses are
realized or an other-than-temporary impairment is determined to have occurred.
During the year, the Company sold equity investments, including its entire
equity interest in both Endeavour Silver and Crocodile Gold, for net proceeds of
$108.2 million.

|CONTRACTUALOBLIGATIONS
|----------------------

A summary of the Companys contractual obligations at December
31, 2012 is as follows:

|(in thousands)                        
|--------------------------------------
|                                      
|                                      
|Trade payables and accrued liabilities
|Current income tax liability          
|Debt                                  
|Equipment financing obligations       
|Royalty interests provision           
|Future purchase commitments           
|Other commitments                     
|Total                                 

The Company has entered into forward contracts to purchase
Mexican Pesos, which will settle at various dates between January 1, 2013 and
September 30, 2013. These contracts are described below under Financial
Instruments and Hedging.

| | 27
| | --

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------
|                                               
|OUTSTANDINGSHAREDATA                           

The Companys share capital was comprised of the following as
at December 31, 2012:

|                                                                                                                                                                                                                     |  | December 31, 2012 |  |  | December 31, 2011 | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  |  | ----------------- | 
|Authorized:                                                                                                                                                                                                          |  |                   |  |  |                   | 
|Unlimited number of common shares                                                                                                                                                                                    |  |                   |  |  |                   | 
|Unlimited number of non-cumulative,
      dividends to be determined by the Board of Directors not to exceed 12%,
      non-participating, non-voting, Class A preferred shares, redeemable at
      paid-in value | 
|Unlimited number of non-cumulative, dividends to be determined
      by the Board of Directors not to exceed 13%, non-participating,
      non-voting, Class B preferred shares, redeemable at paid-in value       | 
|Issued:                                                                                                                                                                                                              |  |                   |  |  |                   | 
|Common shares                                                                                                                                                                                                        |  | 282,326,547       |  |  | 281,605,752       | 

The following table sets out the common shares, stock options,
deferred share units and warrants outstanding as at the date of this
MD&A:

|                     |  | March 25, 2013 | 
|-------------------- |  | -------------- | 
|Common shares        |  | 246,743,425    | 
|Stock options        |  | 10,066,947     | 
|Deferred share units |  | 180,802        | 
|Warrants issued      |  | 1,585,000      | 
|                     |  | 258,576,174    | 

Warrants issued are comprised of 750,000 warrants with an
exercise price of CAD $10.13 that expire on April 8, 2013 and 835,000 warrants
with an exercise price of CAD $9.52 that expire on October 26, 2013.

In addition, the Company had outstanding convertible notes with
an implied conversion price of $10.95 per share that could result in the
issuance of 15,249,853 common shares.

The decline in share count between December 31, 2012 and March
25, 2013 was largely due to the completion of the Companys substantial issuer
bid, which resulted in the purchase and cancellation of 36,144,578 common shares
worth $300 million.

|OFF-BALANCESHEETARRANGEMENTS
|----------------------------

The Company does not have any off-balance sheet
arrangements.

|FINANCIALINSTRUMENTS ANDHEDGING
|-------------------------------

The Company seeks to manage its exposure to fluctuations in
commodity prices, interest rates and foreign exchange rates by entering into
derivative financial instrument contracts from time to time. The Companys
exposure with respect to commodity prices, interest rates and foreign exchange
is described under the section entitled Risks and Uncertainties beginning on
page 31.

As at December 31, 2012, the Company held forward contracts to
hedge against the risk of an increase in the value of the Mexican peso versus
the US dollar. The Company has entered into agreements to purchase Mexican pesos
amounting to $28.7 million at exchange rates ranging from 12.44 pesos per US
dollar to 12.68 pesos per US dollar. These currency hedges had been previously
accounted for as cash flow hedges of specified, peso-denominated costs at the
Ocampo mine until hedge accounting was discontinued at September 30, 2012 due to
the forecasted transactions no longer being highly probable as a result of the
proposed disposition of the mine. The remaining forward contracts continue to
have economic purpose, as hedges against the risk of an increase in the rise of
the Mexican peso versus the US dollar at the Companys El Chanate mine, however,
will not be designated as hedging relationships going forward.

The Companys outstanding contracts settle at various dates
between March 22, 2013 and September 30, 2013 and had a negative fair value of
$1.3 million at December 31, 2012. All changes in the fair value of these
contracts, along with any realized gains or losses on settlement, are recognized
in net earnings. Prior to September 30, 2012, these amounts had all been
recognized in other comprehensive income. Upon the discontinuation of hedge
accounting, these amounts were reclassified from other comprehensive income to net earnings. The fair value
of these forward contracts is determined using forward pricing spreads in effect
at the end of the reporting period.

| | 28
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

During the fourth quarter of 2012, a gain of $0.2 million was
recognized in net earnings relating to these forward contracts.

Three forward contracts settled during the first nine months of
2012, prior to the discontinuation of hedge accounting, resulting in a loss of
$2.3 million. The recognition of this hedging loss resulted in a $0.8 million
increase in production costs, a $0.5 million increase in inventory, a $0.1
million increase in general and administrative costs, and a $0.9 million
increase in mineral properties.

The Company also holds certain financial instruments as
investments and therefore is inherently exposed to various risk factors
including currency risk, credit risk, market price risk, and liquidity risk.

|TRANSACTIONS WITHRELATEDPARTIES
|-------------------------------

The Company utilizes a Mexican corporation, Caborca Industrial
S.A. de C.V. (Caborca Industrial), for mining support services at the El
Chanate mine, including the payment of mining salaries and related costs.
Caborca Industrial is 100% owned by the Companys Chief Executive Officer and
Executive Vice President, Corporate Affairs, and is consolidated as a special
purpose entity (SPE) in accordance with the guidance in SIC 12,
Consolidation  Special Purpose Entities. The Companys Chief
Executive Officer and Executive Vice President, Corporate Affairs receive no
financial benefits as a result of their ownership of this entity.

Other than as discussed in the paragraph above, no director,
senior officer, principal holder of securities or any associate or affiliate
thereof of the Company has any interest, directly or indirectly, in material
transactions with the Company or any of its direct or indirect wholly-owned
subsidiaries.

The Company has a Stock Option Plan for directors, officers,
employees and consultants of the Company and its subsidiaries. The purpose of
this plan is to encourage the persons who are primarily responsible for the
management and profitable growth of the Companys business to participate in the
long-term success of the Company, to provide additional incentive for superior
performance, and to attract and retain valued personnel. For the purpose of the
plan, a consultant is defined as an individual who is engaged by the Company,
under a written contract, to provide services on an ongoing basis and who may
spend a significant amount of time on the Companys business and affairs. The
definition of consultant also includes an individual whose services are engaged
through a corporation.

The Company has a Deferred Share Unit Plan for directors and
senior officers of the Company, and a Restricted Share Unit Plan for senior
officers of the Company. The purpose of these plans is to provide directors and
senior officers with the opportunity to acquire deferred share units and
restricted share units in order to allow them to participate in the long-term
success of the Company and to promote a greater alignment of interests between
the Companys directors, senior officers, and shareholders.

|EVENTSAFTER THEREPORTINGPERIOD
|------------------------------

|(a) | Substantial issuer bid
|--- | ----------------------

On January 29, 2013, the Company announced the successful
repurchase and cancellation of 36,144,578 common shares at a price of $8.30 per
share under the Companys modified Dutch auction substantial issuer bid, for a
total purchase price of $300 million.

|(b) | Amendment to credit
facility
|--- | ----------------------------

On January 31, 2013, the Company amended the revolving credit
facility, which reduced the amount available from $250 million to $150 million.
The amended credit facility carries the same interest rate and terms as the
previous facility, as described in the Credit Facility section on page 26.

|(c) | Dividend policy
|--- | ---------------

On February 21, 2013, the Company announced an inaugural
dividend policy, whereby the Company will pay a dividend of $0.16 per share in
2013 (payable quarterly). Subsequent to 2013, the dividend will be linked to
operating cash flow, whereby the Company intends to pay out 20% of the operating
cash flow generated in the preceding quarter.

| | 29
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|NON-GAAP MEASURES                               

TOTALCASHCOST PEROUNCECALCULATION

Total cash cost per ounce is a non-GAAP performance measure
that management uses to better assess the Companys performance for the current
period and its expected performance in the future. The Company believes that, in
addition to conventional measures prepared in accordance with GAAP, certain
investors use this measure to evaluate the Companys performance and cash
generating capabilities. Total cash cost per ounce does not have any
standardized meaning prescribed by GAAP, and should not be considered in
isolation from or as a substitute for performance measures prepared in
accordance with GAAP. Other companies may calculate this measure differently.

The following provides a reconciliation of total cash cost per
ounce to the financial statements:

|(in thousands, except ounces, cash costs and
silver prices)      
|-----------------------------------------------------------------
|                                                                 
|                                                                 
|                                                                 
|Production costs per financial statements                        
|Refining costs per financial statements                          
|Production and refining costs of discontinued
      operations(1)
|By-product revenues(2)                                           
|Inventory and other adjustments(3)                               
|Total cash costs                                                 
|Divided by gold equivalent ounces(4)(5)                          
|Total cash cost per gold equivalent ounce                        
|Total cash costs (per above)                                     
|Silver revenue (see below)                                       
|                                                                 
|Divided by gold ounces(5)                                        
|Total cash cost per gold ounce(6)                                
|Average realized silver price                                    
|Multiplied by silver ounces sold                                 
|Silver revenue                                                   

|(1) | Production and refining costs of discontinued
      operations are presented separately as net earnings from discontinued
      operations in the Consolidated Statements of Operations for the years
      ended December 31, 2012 and 2011.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The total by-product revenues adjustments for the
      three months and year ended December 31, 2012 and 2011 are as
      follows:                                                                                                         

| | El Chanate     | *$* | *(709*) |  | *$* | *(763*) |  | *$* | *(3,763*) |  | *$* | *(2,855*) | 
| | -------------- | --- | ------- |  | --- | ------- |  | --- | --------- |  | --- | --------- | 
| | Young-Davidson | $   | (237)   |  | $   | -       |  | $   | (279)     |  | $   | -         | 
| | Stawell        | $   | -       |  | $   | (218)   |  | $   | (541)     |  | $   | (218)     | 
| |                | $   | (946)   |  | $   | (981)   |  | $   | (4,583)   |  | $   | (3,073)   | 

|(3) | Inventory adjustments include amortization of the
      inventory fair value adjustments relating to the El Chanate and
      Fosterville purchase price allocations as well as the addition of
      production costs at Young-Davidson that are associated with unsold gold
      ounces. The total of these adjustments for the three months and year ended
      December 31, 2012 and 2011 are as follows:
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | El Chanate     | $ | (589)   |  | $ | (1,494) |  | $ | (5,396) |  | $ | (8,064)  | 
| | -------------- | - | ------- |  | - | ------- |  | - | ------- |  | - | -------- | 
| | Young-Davidson | $ | (3,323) |  | $ | -       |  | $ | (435)   |  | $ | -        | 
| | Fosterville    | $ | -       |  | $ | (4,971) |  | $ | -       |  | $ | (4,971)  | 
| |                | $ | (3,912) |  | $ | (6,465) |  | $ | (5,831) |  | $ | (13,035) | 

|(4) | Gold equivalent ounces include silver ounces sold
      converted to a gold equivalent based on the ratio of the realized sale
      prices of the commodities. Consolidated gold equivalent ounces exclude
      by-product silver ounces sold at the El Chanate, Young-Davidson,
      Fosterville, and Stawell mines.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Gold ounces and gold equivalent ounces include ounces
      sold at the El Chanate, Ocampo, El Cubo, Fosterville, and Stawell mines,
      and ounces produced at the Young-Davidson mine for the years ended
      December 31, 2012 and 2011.                                                                         
|(6) | The calculation of total cash cost per gold ounce
      includes the by-product silver sales revenue from the Ocampo and El Cubo
      mines.                                                                                                                                                                           

| | 30
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

NETFREECASHFLOW

Net free cash flow represents an indication of the Companys
continuing capacity to generate discretionary cash flow from operations,
comprising cash flows from operating activities net of total capital
expenditures. It does not necessarily represent the cash flow in the period
available for management to use at its discretion, which may be affected by
other sources and non-discretionary uses of cash. Net free cash flow is intended
to provide additional information, does not have any standardized meaning
prescribed by GAAP and should not be considered in isolation from or as a
substitute for measures of performance prepared in accordance with GAAP. Other
companies may calculate this measure differently.

The following is a reconciliation of net free cash flow to the
financial statements:

|(in thousands)                                              
|------------------------------------------------------------
|                                                            
|                                                            
|                                                            
|Operating cash flow from continuing
      operations(1)     
|Less: Capital expenditures of continuing
      operations(1)
|Net free cash flow from continuing operations               
|Operating cash flow from discontinued
      operations      
|Less: Capital expenditures of discontinued operations       
|Net free cash flow from discontinued operations             
|Operating cash flow                                         
|Less: Capital expenditures                                  
|Net free cash flow                                          

|(1) | Operating cash flow and capital expenditures of
      continuing operations are exclusive of discontinued operations as cash
      flows from discontinued operations are presented separately on the
      Companys Consolidated Statements of Cash Flows for the years ended
      December 31, 2012 and 2011.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|RISKS
      ANDUNCERTAINTIES
|----------------------------

The Companys business contains significant risk due to the
nature of mining, exploration, and development activities. Certain risk factors
listed below are related to the mining industry in general, while others are
specific to the Company. Included in the risk factors below are details on how
management seeks to mitigate these risks wherever possible. For additional
discussion of these and other risk factors, please refer to the Companys Annual
Information Form, which is available on the Companys website at www.auricogold.com or on SEDAR at www.sedar.com.

NATURE OFMINERALEXPLORATION ANDMINING

Because mines have limited lives based on proven and probable
mineral reserves, the Company will be required to continually replace and expand
its mineral reserves as its mines produce gold and silver. The Companys ability
to maintain or increase its annual production of gold and silver in the future
will be dependent in significant part on its ability to identify and acquire
additional commercially viable mineral properties, bring new mines into
production, and expand mineral reserves at existing mines.

Mineral resource exploration and development is a highly
speculative business, characterized by a number of significant risks including,
among others, unprofitable efforts resulting not only from the failure to
discover mineral deposits but also from finding mineral deposits that, though
present, are insufficient in quantity and quality to return a profit from
production. There can be no assurance that the Company will successfully acquire
additional mineral rights. While the discovery of additional ore-bearing
structures may result in substantial rewards, few properties that are explored
are ultimately developed into producing mines. Major expenses may be required to
establish reserves by drilling and to construct mining and processing facilities
at a particular site. It is impossible to ensure that the current exploration
and development programs of the Company will result in profitable commercial
mining operations. The profitability of the Companys operations will be, in
part, directly related to the cost and success of its exploration and
development programs, which may be affected by a number of factors.

Mining is inherently dangerous and subject to conditions or
events beyond the Companys control, which could have a material adverse effect
on the Companys business. Mining involves various types of risks and hazards,
including, but not limited to, environmental hazards; industrial accidents;
metallurgical and other processing problems; unusual or unexpected rock
formations; structural cave-ins or slides; seismic activity; flooding; fires;
periodic interruptions due to inclement or hazardous weather conditions;
variations in grade, deposit size, density and other geological problems;
mechanical equipment performance problems; unavailability of materials and equipment; labour
force disruptions; unanticipated or significant changes in the costs of
supplies; and unanticipated transportation costs. Where considered practical to
do so, the Company maintains insurance against risks in the operation of its
business in amounts which it believes to be reasonable. Such insurance, however,
contains exclusions and limitations on coverage. The Company may suffer a
material adverse effect on its business if it incurs losses related to any
significant events that are not covered by its insurance policies.

| | 31
| | --

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

RESERVEESTIMATES

Mineral resource and reserve figures are based upon estimates
made by Company personnel and independent geologists. These estimates are
imprecise and depend upon geological interpretation and statistical inferences
drawn from drilling and sampling analysis, which may prove to be unreliable.
There can be no assurance that these estimates will be accurate; that reserves,
resources or other mineralization figures will be accurate; or that this
mineralization can be mined or processed profitably. Mineralization estimates
for the Companys properties may require adjustments or downward revisions based
upon further exploration or development work or actual production experience. In
addition, the grade of ore ultimately mined, if any, may differ from that
indicated by drilling results. There can be no assurance that minerals recovered
in small scale tests will be duplicated in large scale tests under on-site
conditions or in-production scale. The reserve and resource estimates have been
determined and valued based on assumed future prices, cut-off grades and
operating costs that may prove to be inaccurate. Extended declines in market
prices for gold and silver may render portions of the Companys mineralization
uneconomic and result in reduced reported mineralization. Any material
reductions in estimates of mineralization, or of the Companys ability to
extract this mineralization, could have a material adverse effect on the
Companys results of operations or financial condition.

FOREIGNOPERATIONS

The Company has foreign property interests located in Mexico
are subject to the laws and regulations of that country. As a result, the
Companys mining investments are subject to the risks normally associated with
the conduct of business in foreign countries. The Company believes the present
attitude of the governments of the country and states in which the property
interests are located to foreign investment and mining to be favourable;
however, any variation from the current regulatory, economic and political
climate could have an adverse effect on the affairs of the Company.

The risks of conducting business in a foreign country may
include, among others, invalidation of governmental orders and permits,
corruption, uncertain political and economic environments, sovereign risk, war
(including in neighbouring states), civil disturbances and terrorist acts,
arbitrary changes in laws or policies of particular countries, the failure of
foreign parties to honour contractual relations, corruption, foreign taxation,
delays in obtaining or the inability to obtain necessary governmental permits,
opposition to mining from environmental or other non-governmental organizations,
limitations on foreign ownership, limitations on the repatriation of earnings,
limitations on gold exports, instability due to economic under-development,
inadequate infrastructure and increased financing costs. In addition, the
enforcement of the Companys legal rights to exploit its properties may not be
recognized by the government of Mexico by its court systems. These risks may
limit or disrupt the Companys operations, restrict the movement of funds or
result in the deprivation of contractual rights or the taking of property by
nationalization or expropriation without fair compensation.

RISKS ANDUNCERTAINTIESASSOCIATED WITHDIVESTITURES

On May 4, 2012, the Company completed the sale of the
Australian operations for consideration of CAD $55 million in cash, 20 million
Crocodile Gold shares, and deferred cash payments based on life-of-mine free
cash flow derived from the Stawell and Fosterville mines. To the extent that the
deferred cash payments are conditional upon free cash flow derived from the
Stawell and Fosterville mines, the Company's ability to derive the full value
from the sale of the Australian operations is dependent on the future
operational performance from the Stawell and Fosterville mines, the price of
gold, the Australian dollar to United States dollar exchange rate, and other
factors outside of the Companys control. During the fourth quarter of 2012, the
Company sold its entire equity interest in Crocodile Gold.

On July 13, 2012, the Company completed the sale of the El Cubo
mine and Guadalupe y Calvo exploration property for consideration of $100
million in cash, 11,037,528 Endeavour shares and deferred cash payments to be
paid upon the gold price exceeding specified levels and upon the occurrence of
certain mine operating performance conditions during the three years following
the closing date of the transaction. The Company's ability to derive the full
value from the sale is dependent on factors outside of its control, which may
affect whether it receives the contingent payments. During the fourth quarter of
2012, the Company sold its entire equity interest in Endeavour.

POTENTIAL FORINCURRINGUNEXPECTEDCOSTS ORLIABILITIES AS ARESULT OFACQUISITIONS

Although the Company has conducted investigations in connection
with the acquisitions of Northgate and Capital Gold in the prior year, risks
remain regarding any undisclosed or unknown liabilities associated with these
acquisitions. The Company may discover that it has acquired undisclosed
liabilities that could have an adverse impact on the Companys business or
financial condition.

| | 32
| | --

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

ENVIRONMENTALLAWS ANDREGULATIONS

The Companys exploration and production activities in Mexico
and Canada are subject to regulation by governmental agencies under various
environmental laws. These laws address emissions into the air, discharges into
water, management of waste, management of hazardous substances, protection of
natural resources, antiquities and endangered species and reclamation of lands
disturbed by mining operations. Environmental legislation in many countries is
evolving and the trend has been towards stricter standards and enforcement,
increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and increasing responsibility for companies and
their officers, directors and employees. Compliance with environmental laws and
regulations may require significant capital outlays on behalf of the Company and
may cause material changes or delays in the Companys intended activities. There
can be no assurance that future changes in environmental regulations will not
adversely affect the Companys business.

PROPERTYRIGHTS,PERMITS ANDLICENSING

The Companys current and anticipated future operations,
including further exploration, development activities and expansion or
commencement of production on the Companys properties, require certain permits
and licenses from various levels of governmental authorities. The Company may
also be required to obtain certain property rights to access, or use, certain of
its properties in order to proceed to development. There can be no assurance
that all licenses, permits or property rights required for the expansion and
construction of mining facilities and the conduct of mining operations will be
obtainable on reasonable terms or in a timely manner, or at all, that such terms
may not be adversely changed, that required extension will be granted, or that
the issuance of such licenses, permits or property rights will not be challenged
by third parties. Delays in obtaining or a failure to obtain such licenses,
permits or property rights or extension thereto; challenges to the issuance of
such licenses, permits or property rights, whether successful or unsuccessful;
changes to the terms of such licenses, permits or property rights; or a failure
to comply with the terms of any such licenses, permits or property rights
obtained; could have a material adverse impact on the Company.

UNCERTAINTIES OFTITLE

The Company cannot guarantee that title to its properties will
not be challenged. Title insurance is generally not available for mineral
properties and the Companys ability to ensure that it has obtained secure claim
to individual mineral properties or mining concessions may be severely
constrained. The Companys mineral properties may be subject to prior
unregistered agreements, transfers or claims, and title may be affected by,
among other things, undetected defects. A successful challenge to the precise
area and location of these claims could result in the Company being unable to
operate on its properties as permitted or being unable to enforce its rights
with respect to its properties.

COMMODITYPRICERISK

The profitability of the Companys gold mining operations will
be significantly affected by changes in the market prices for gold and silver.
Gold and silver prices fluctuate on a daily basis and are affected by numerous
factors beyond the Companys control. The supply and demand for gold and silver,
the level of interest rates, the rate of inflation, investment decisions by
large holders of gold and silver, including governmental reserves, and stability
of exchange rates can all cause significant fluctuations in gold and silver
prices. Such external economic factors are in turn influenced by changes in
international investment patterns and monetary systems, and political
developments. The prices of gold and silver have fluctuated widely and future
serious price declines could cause continued commercial production to be
impractical. Depending on the prices of gold and silver, cash flow from mining
operations may not be sufficient to cover costs of production and capital
expenditures. If, as a result of a decline in gold and silver prices, revenues
from metal sales were to fall below operating costs, production may be
discontinued.

INTERESTRATERISK

The Company is exposed to interest rate risk on its variable
rate debt. At December 31, 2012, the Company had no drawn balances on its credit
facility and therefore was not exposed to the risk of increasing interest rates.
In the event that an amount is drawn against the credit facility, the applicable
interest rate would depend on the Companys leverage ratio during the period,
but would be between a range of LIBOR plus 2.25% to 3.50% for LIBOR loans.

FOREIGNCURRENCYEXCHANGERATERISK

Metal sales revenues for the Company are denominated in US
dollars. The Company is primarily exposed to currency fluctuations relative to
expenditures that are denominated in Canadian dollars and Mexican pesos, such as
payments for labour, operating supplies and property, plant and equipment. These
potential currency fluctuations could have a significant impact on production
costs and capital expenditures and thereby, the net free cash flow of the
Company. The Company is also exposed to the impact of currency fluctuations on
its monetary assets and liabilities.

CREDITRISK

Credit risk relates to accounts receivable and other contracts,
and arises from the possibility that any counterparty to an instrument fails to
perform. The Company only transacts with highly-rated counterparties and a limit
on contingent exposure has been established for each counterparty based on the
counterpartys credit rating.

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

DERIVATIVEFINANCIALINSTRUMENTS

The Company may from time to time employ derivative products in
respect of commodities, interest rates and/or currencies. Derivative products
are generally used to manage the risks associated with, among other things,
changes in commodity prices and foreign currency exchange rates.

The use of derivative instruments involves certain inherent
risk including credit risk, market risk and liquidity risk. For derivatives,
credit risk is created when the fair value is positive. When the fair value of a
derivative is negative, no credit risk is assumed. The Company mitigates credit
risk by entering into derivatives with high quality counterparties, limiting the
amount of exposure to each counterparty, and monitoring the financial condition
of the counterparties. Market risk is the risk that the fair value of a
derivative might be adversely affected by a change in underlying commodity
prices or currency exchange rates, and that this in turn affects the Companys
financial condition. The Company manages market risk by establishing and
monitoring parameters that limit the types and degree of market risk that may be
undertaken. The Company generally mitigates liquidity risk by spreading out the
maturity or its derivatives over time.

|RECENTACCOUNTINGPRONOUNCEMENTS
|------------------------------

For the purposes of preparing and presenting the Companys
consolidated financial statements, the Company has adopted all 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, 2012. Standards and interpretations issued, but not yet adopted,
include:

|                                                                           |  | Effective for the Company | 
|-------------------------------------------------------------------------- |  | ------------------------- | 
|IFRS 9, Financial Instruments                                              |  | January 1, 2015           | 
|IFRS 10, Consolidated Financial Statements                                 |  | January 1, 2013           | 
|IFRS 11, Joint Arrangements                                                |  | January 1, 2013           | 
|IFRS 12, Disclosure of Interests in Other Entities                         |  | January 1, 2013           | 
|IFRS 13, Fair Value Measurement                                            |  | January 1, 2013           | 
|IFRIC 20, Stripping Costs in the Production Phase of a
      Surface Mine  |  | January 1, 2013           | 
|Amendments to IFRS 7, Financial Instruments:
      Disclosures             |  | January 1, 2013           | 
|Amendments to IAS 1, Presentation of Financial
      Statements            |  | January 1, 2013           | 
|Amendments to IAS 19, Employee Benefits                                    |  | January 1, 2013           | 
|Amendments to IAS 27, Consolidated and Separate
      Financial Statements |  | January 1, 2013           | 
|Amendments to IAS 28, Investments in Associates                            |  | January 1, 2013           | 
|Amendments to IAS 32, Financial Instruments:
      Presentation            |  | January 1, 2014           | 
|Annual Improvements, 2009-2011                                             |  | January 1, 2013           | 

IFRS 9, Financial Instruments, proposes to replace IAS
39 Financial Instruments: Recognition and Measurement. The replacement
standard has three main phases, the first of which provides new guidance for the
classification and measurement of financial assets and liabilities, including
elimination of the existing IAS 39 categories of held-to-maturity,
available-for-sale and loans and receivables, in exchange for the classification
of financial assets and liabilities into the categories of either financial
assets measured at amortized cost or financial assets measured at fair value.
The second part, which is currently an exposure draft, provides guidance for
amortized cost and impairment methodology for financial assets. The third part,
which is also currently an exposure draft, proposes a revised general hedge
accounting model. The Company will evaluate the impact of the change to
its consolidated financial statements based on the characteristics of financial
instruments outstanding at the time of adoption.

IFRS 10, Consolidated Financial Statements, replaces the
consolidated financial statements section of IAS 27, Consolidated and
Separate Financial Statements and SIC-12, Consolidation  Special
Purposes Entities in its entirety. IFRS 10 establishes the principles for
the presentation and preparation of consolidated financial statements when an
entity controls one or more other entities, regardless of the nature of
relationship. The new standard introduces a revised definition of control, and
provides additional guidance on how to apply the control principle in a number
of situations. The application of this standard will not have an impact on the
Companys consolidated financial statements as all entities consolidated are
wholly-owned by the Company. In addition, the Company consolidates one special
purpose entity, and it this entity will continue to be consolidated under the
new standard.

IFRS 11, Joint Arrangements, replaces IAS 31,
Interests in Joint Ventures, and requires the Company to classify its
interest in a joint arrangement as either a joint operation or a joint venture.
For a joint venture, the Company will account for its interest in the net assets
of the joint venture using the equity method of accounting. The Company will no
longer have the option to proportionately consolidate its share of the net
assets, revenues and expenses of joint ventures. The application of this
standard will not have an impact on the Companys consolidated financial
statements as the Company currently uses the equity method of accounting for its
joint ventures.

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

IFRS 12, Disclosure of Interests in Other Entities,
outlines the disclosures required surrounding an entitys interests in
subsidiaries, associates, joint arrangements and unconsolidated structured
entities, to enable users of financial statements to evaluate the nature of, and
risks associated with, its interests in other entities, and the effects of those
interests on its financial position, financial performance and cash flows.
Additional disclosures in the Companys consolidated financial statements
surrounding the special purpose entity currently consolidated by the Company
will be required.

IFRS 13, Fair Value Measurement, is a single source of
fair value measurement guidance under IFRS. This new IFRS clarifies the
definition of fair value, provides a clear framework for measuring fair value,
and enhances the disclosures about fair value measurements. IFRS 13 is not only
limited to financial instruments, but also applies to fair value measurement in
other IFRS, such as impairment and employee future benefits. The application of
this standard will not have a material impact on the Companys consolidated
financial statements.

IFRIC 20,Stripping Costs in the Production Phase of a
Surface Mine, provides guidance on the recognition and measurement of
stripping costs associated with surface mining operations. IFRIC 20
differentiates between two benefits that could accrue to an entity from
stripping activities: (1) usable ore that can be used to produce inventory, and
(2) improved access to further quantities of material that will be mined in
future periods. IFRIC 20 provides guidance on when and how to account separately
for these two benefits, as well as how to initially and subsequently measure
them. If the costs of the stripping activity asset versus inventory produced are
not separately identifiable, an entity is required to allocate production
stripping costs between the two based on a relevant production measure. This
guidance recommends a different method of allocating waste between capital and
expense than the method currently used by the Company. IFRIC 20 will be applied
prospectively to the Companys production stripping costs incurred on or after
January 1, 2012, with specific transitional provisions applied to the Companys
stripping assets that existed on transition. The adoption of this interpretation
will result in an increase of $1.8 million in production costs for the year
ended December 31, 2012, and an increase of $6.2 million in inventory and a
decline of $8.0 million in property, plant and equipment & mining interests
at December 31, 2012.

IFRS 7, Financial Instruments: Disclosures and IAS 32,
Financial Instruments: Presentation, were amended to address the issue of
offsetting financial assets and financial liabilities in the financial
statements. The amendments to IAS 32 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. The
amendments to IFRS 7 contain new disclosure requirements for financial assets
and liabilities that are offset in the balance sheet or that are subject to
master netting arrangements or similar arrangements. These amendments will not
have a material impact on the consolidated financial statements.

IAS 1, Presentation of Financial Statements, was amended
to revise the presentation of other comprehensive income, requiring entities to
group items presented in other comprehensive income based on whether they are
potentially reclassifiable to profit or loss subsequently, with subtotals for
each group. This change will not have a significant impact on the presentation
of the Companys Consolidated Statements of Comprehensive Income.

Amendments to IFRS stemming from the 2009 to 2011 cycle of
improvements contains amendments to the following four standards (excluding IFRS
1), with consequential amendments to other standards and interpretations: IAS 1,
Presentation of Financial Statements, IAS 16, Property, Plant and
Equipment, IAS 32, Financial Instruments: Presentation, and IAS 34,
Interim Financial Reporting. The amendments will not have a material
impact on the consolidated financial statements.

The amendments to IAS 19, IAS 27 and IAS 28 referenced above
will not have an impact on the Companys consolidated financial statements.

|CRITICALACCOUNTINGPOLICIES ANDESTIMATES
|---------------------------------------

The preparation of the Companys consolidated financial
statements in accordance with IFRS requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. The following is a list of the accounting
policies that the Company believes are critical, due to the degree of
uncertainty regarding the estimates or assumptions involved and the magnitude of
the asset, liability, revenue or expense being reported.

|(i) | Ore inventories
|--- | ---------------

Finished goods, work-in-process, heap leach ore and stockpile
ore are valued at the lower of the average cost or net realizable value (NRV).
NRV is the difference between the estimated future realizable gold and silver
prices based on prevailing and long-term prices, less estimated costs to
complete production into a saleable form. The assumptions used in the valuation
of work-in-process inventories include estimates of gold and silver ounces
contained in the ore stacked on leach pads, assumptions of the amount of gold
and silver ounces stacked that is expected to be recovered from the leach pads,
the amount of gold and silver ounces in mill circuits and in stockpiles, and an
assumption of the gold and silver prices expected to be realized when the gold
and silver ounces are recovered. Write-downs of ore in stockpiles, ore on leach
pads, in-process and finished metal inventories resulting from NRV impairments
are reported as a component of current period costs. The primary factors that
influence the need to record write-downs include prevailing and long-term gold
and silver prices and prevailing costs for production inputs such as labour,
fuel and energy, and materials and supplies, as well as realized ore grades and
actual production levels. When the circumstances that previously
caused inventories to be written down below cost no longer exist or when there
is clear evidence of an increase in NRV because of changed economic
circumstances, the amount of the write-down or a portion thereof is reversed so
that the new carrying amount is the lower of the cost and the revised NRV. The
reversal is limited to the amount of the original write-down for inventory still
on hand.

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

Ore on leach pads is ore that is placed on pads where it is
saturated with a chemical solution that dissolves the gold and silver contained
in the ore. Costs are attributed to the leach pads based on current mining
costs, including applicable depletion and amortization relating to mining
operations, incurred up to the point of placing the ore on the pad. Costs are
removed from the leach pad based on the average cost per recoverable ounce of
gold and silver on the leach pad as the gold and silver is recovered. Estimates
of recoverable gold and silver ounces on the leach pads are calculated from the
quantities of ore placed on the pads, the grade of ore placed on the leach pads
and an estimated percentage of recovery. Timing and ultimate recovery of gold
and silver ounces contained on leach pads can vary significantly from the
estimates. The ounces of recoverable gold and silver placed on the leach pads
are reconciled to the balance of gold and silver actually recovered
(metallurgical balancing), by comparing the grades of ore 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 ounces from a pad will not be known until the leaching
process is completed.

The allocation of costs to ore in stockpiles, ore on leach pads
and in-process inventories and the determination of NRV involve the use of
estimates. There is a high degree of judgement in estimating future costs,
future production levels, proven and probable mineral reserve estimates, gold
and silver prices, and the ultimate estimated recovery of ore on leach pads.
There can be no assurance that actual results will not differ significantly from
estimates used in the determination of the carrying value of inventories.

|(ii) | Mineral reserves and resources used to measure
      depletion and amortization
|---- | -------------------------------------------------------------------------------

The Company records depletion and amortization expense based on
the estimated useful economic lives of long-lived assets. Property, plant and
equipment are amortized on a straight-line basis over their estimated useful
lives. Mining interests are amortized using the units of production method over
proven and probable reserves of the mine and the portion of mineralization
expected to be classified as reserves. Changes in reserves and resources
estimates are generally calculated at the end of each year and cause
amortization expense to increase or decrease prospectively. 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.
Changes in data and/or assumptions could cause reserves and resources estimates
to substantially change from period to period. Actual production could differ
from amounts expected based on reserves and resources, and an adverse change in
gold and silver prices could make a reserve or resource uneconomic to mine.
Variations from estimates could also occur in actual ore grades and gold and
silver recovery rates. A key trend that could reasonably impact reserves and
resources estimates is rising market mineral prices, because the mineral price
assumption is closely related to the trailing three-year average market price.
As this assumption rises, it could result in an upward revision to reserves and
resources estimates as mineralization not previously classified as a reserve or
resource becomes economic at higher gold and silver prices.

|(iii) | Business combinations
|----- | ---------------------

Acquisitions of businesses are accounted for using the
acquisition method whereby assets and liabilities acquired are recorded at their
fair values as of the date of acquisition and any excess of the purchase price
over such fair value is recorded as goodwill. The purchase price includes the
fair value of the assets transferred and the equity interests issued by the
Company. Significant estimates are made in calculating the fair value of assets
transferred in a business acquisition, including estimates of the mineral
reserves acquired, estimates of gold contained in ore stacked on leach pads,
future gold and silver prices, future costs to produce proven and probable
reserves, foreign exchange rates and discount rates.

|(iv) | Goodwill and non-financial
assets
|---- | ---------------------------------

Goodwill and other non-financial assets are assessed for
impairment at the cash-generating unit level, on at least an annual basis, by
comparing the calculated recoverable amount to the cash-generating units
carrying amount. If the recoverable amount of the cash-generating unit exceeds
its carrying amount, goodwill is considered not to be impaired. If the carrying
amount of a cash-generating unit exceeds its recoverable amount, a potential
impairment exists. Significant estimates are made in calculating the recoverable
amount of a cash-generating unit, including estimates of future costs to produce
proven and probable reserves, future gold and silver prices, foreign exchange
rates and discount rates.

|(v) | Deferred income taxes and valuation
    allowances
|--- | --------------------------------------------------

The Company is periodically required to estimate the tax basis
of assets and liabilities. Where applicable tax laws and regulations are either
unclear or subject to varying interpretations, it is possible that changes in
these estimates could occur that materially affect the amounts of deferred
income tax assets and liabilities recorded in the financial statements. Changes
in deferred tax assets and liabilities generally have a direct impact on
earnings in the period of the changes.

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------

Each period, the Company evaluates the likelihood of whether or
not some portion or all of each deferred tax asset will be realized. This
evaluation is based on historic and future expected levels of taxable income,
the pattern and timing of reversals of taxable temporary timing differences that
give rise to deferred tax liabilities, 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.

|(vi) | Reclamation provisions
|---- | ----------------------

Reclamation provisions arise from the acquisition, development,
construction and normal operation of mining property, plant and equipment, due
to government controls and regulations that protect the environment and public
safety on the closure and reclamation of mining properties. The Company records
the fair value of a reclamation obligation in the financial statements when it
is incurred, and either capitalizes this amount as an increase in the carrying
amount of the related asset or, if the mine is in the decommissioning stage,
records the amount as an expense. The fair values are measured by discounting
the best estimate of the expected value of future cash flows required to reclaim
the property upon mine closure, which are discounted to their present value for
each mine operation. The discount rate used is a pre-tax rate that reflects
current market assessments of the time value of money specific to the country in
which the mine is located. Significant estimates are involved in forming
expectations of future activities and the amount and timing of the associated
cash flows. The Company prepares estimates of the timing and expected value of
future cash flows when the liability is incurred, which are updated to reflect
changes in facts and circumstances. Future changes in regulations, laws or
enforcement could adversely affect operations; and any instances of
non-compliance with laws or regulations that result in fines or injunctions or
delays in projects, or any unforeseen environmental contamination at, or related
to, the mining properties could result in significant costs.

The principal factors that can cause the expected value of
future cash flows 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
estimates of expected cash flows increases, but earlier in the mine life, the
estimation of a reclamation provision is inherently more subjective. Significant
estimates are made in calculating the fair value of reclamation provisions.
Expected cash flows relating to reclamation provisions could occur over periods
up to twenty years and the assessment of the extent of any necessary
environmental remediation work is highly subjective. Considering all of these
factors that go into the determination of a reclamation provision, the fair
value of reclamation provisions can materially change over time.

|(vii) | Contingent consideration
  receivable
|----- | -------------------------------------

The Company makes estimates of amounts receivable under
contingent consideration agreements, which resulted from dispositions completed
during 2012. Future amounts receivable under these arrangements will be impacted
by future gold prices, future production from the Fosterville and Stawell mines
in Victoria, Australia, as well as related operating and capital expenditures
required to sustain that production.

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|2012ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------
|                                               
|CONTROLS
      ANDPROCEDURES                   

|(i) | Evaluation of Disclosure Controls and
      Procedures
|--- | ------------------------------------------------------

The Company maintains disclosure controls and procedures
designed to ensure that information required to be disclosed in annual filings,
interim filings or other reports filed or submitted under provincial and
territorial securities legislation or reports filed or submitted under the U.S.
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the applicable time periods, and that such information is accumulated and
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosures. As of December 31, 2012 an evaluation was carried out, under the
supervision of and with the participation of management, including the Chief
Executive Officer and the Interim Chief Financial Officer, of the effectiveness
of disclosure controls and procedures as defined in Rule 13a-15(e) under the
U.S. Securities Exchange Act of 1934 and in National Instrument 52-109 under the
Canadian Securities Administrators Rules and Policies. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that as at
December 31, 2012 the Companys disclosure controls and procedures were
effective in providing reasonable assurance that the information required to be
disclosed in reports filed or submitted by the Company under United States and
Canadian securities legislation was recorded, processed, summarized and reported
within the time periods specified by the legislation.

|(ii) | Managements Report on Internal Control Over Financial
      Reporting
|---- | ----------------------------------------------------------------------

Management, including the Chief Executive Officer and Chief
Financial Officer, is responsible for establishing and maintaining adequate
internal control over financial reporting, and used the framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) to
evaluate the effectiveness of the Companys controls for the year ended December
31, 2012. Based on this evaluation, management concluded that the Companys
internal control over financial reporting was effective as at December 31, 2012,
and provided reasonable assurance of the reliability of the Companys financial
reporting and preparation of the financial statements. The 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 IFRS. Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.

KPMG LLP, an independent registered public accounting firm, has
audited managements assessment of the effectiveness of internal control over
financial reporting, and have expressed their opinion in their report included
with the Companys annual consolidated financial statements.

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|2012 ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|------------------------------------------------
|                                                
|CAUTIONARYNOTE TOU.S.
      INVESTORS           

Cautionary Note to U.S. Investors Concerning Measured,
Indicated and Inferred Resources:This MD&A uses the terms "measured,"
"indicated " and "inferred resources. We advise investors that while those
terms are recognized and required by Canadian regulations, the United States
Securities and Exchange Commission does not recognize them. Under Canadian
rules, estimates of inferred mineral resources may not form the basis of
feasibility or other economic studies. United States investors are cautioned not
to assume that all or any part of measured or indicated mineral resources will
ever be converted into mineral reserves. United States investors are also
cautioned not to assume that all or any part of an inferred mineral resource
exists, or is economically or legally mineable.

The consolidated financial statements of the Company have been
prepared by management in accordance with International Financial Reporting
Standards, as issued by the International Accounting Standards Board (see note 2
to the consolidated financial statements for the year ended December 31, 2012).
These accounting principles differ in certain material respects from accounting
principles generally accepted in the United States of America. The Companys
reporting currency is the United States dollar unless otherwise noted.

|CAUTIONARYNOTEREGARDINGFORWARD-LOOKINGSTATEMENTS
|------------------------------------------------

Certain information regarding the Company contained herein may
constitute forward-looking statements, including any information as to our
projects, plans and future financial and operating performance. All statements,
other than statements of historical fact, are forward-looking statements. The
words expect, believe, anticipate, will, intend, estimate,
forecast, budget, schedule and similar expressions identify
forward-looking statements. Forward-looking statements are necessarily based
upon a number of factors and assumptions that, while considered reasonable by
management, are inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in the
forward-looking statements.

Such factors include, but are not limited to: changes to
current estimates of mineral reserves and resources; fluctuations in the price
of gold; changes in foreign exchange rates (particularly the Canadian dollar,
Mexican peso and U.S. dollar); the impact of inflation; changes in our credit
rating; any decision to declare a quarterly dividend; employee relations;
litigation; disruptions affecting operations; availability of and increased
costs associated with mining inputs and labour; development delays at the
Young-Davidson mine; operating or technical difficulties in connection with
mining or development activities; inherent risks associated with mining and
mineral processing; the risk that the Young-Davidson and El Chanate mines may
not perform as planned; uncertainty with the Companys ability to secure capital
to execute its business plans; the speculative nature of mineral exploration and
development, including the risks of obtaining necessary licenses and permits;
contests over title to properties; changes in national and local government
legislation in Canada, Mexico and other jurisdictions in which the Company does
or may carry on business in the future; risk of loss due to sabotage and civil
disturbances; the impact of global liquidity and credit availability and the
values of assets and liabilities based on projected future cash flows; risks
arising from holding derivative instruments; business opportunities that may be
pursued by the Company. Many of these uncertainties and contingencies can affect
our actual results and could cause actual results to differ materially from
those expressed or implied in any forward-looking statements made by, or on
behalf of, us. Readers are cautioned that forward-looking statements are not
guarantees of future performance. All of the forward-looking statements made in
this document are qualified by these cautionary statements. Specific reference
is made to the most recent Form 40-F/Annual Information Form on file with the
SEC and Canadian provincial securities regulatory authorities for a discussion
of some of the factors underlying forward-looking statements.

The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise, except as required by applicable law.

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