---

Exhibit 99.4

RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES DECEMBER 31, 2010(in thousands of United States Dollars
except per share data, unless otherwise noted)

---

The following represents additional information to the
consolidated financial statements of Gammon Gold Inc. (the Company) that were
prepared in accordance with accounting principles generally accepted in Canada
(Canadian GAAP). Set out below are the material adjustments to net (loss) /
earnings for the years ending December 31, 2010 and 2009, and to shareholders
equity at December 31, 2010, and December 31, 2009 in order to conform to
accounting principles generally accepted in the United States of America (US
GAAP).

---

Consolidated Statements of Operations and Comprehensive
Loss:

|                                                                                                             |   | Year ended        |   |   | Year ended        |  
|------------------------------------------------------------------------------------------------------------ | - | ----------------- | - | - | ----------------- | -
|                                                                                                             |   | December 31, 2010 |   |   | December 31, 2009 |  
|                                                                                                             |   |                   |   |   |                   |  
|Net (loss) / earnings based on Canadian GAAP                                                                 | $ | (147,487          | ) | $ | 8,205             |  
|Impairment charge (Note 1(a))                                                                                |   | 9,520             |   |   | -                 |  
|Exploration costs, net of depletion
    (Note 1(b))                                                          |   | (21,695           | ) |   | (11,801           | )
|Stripping costs, net of depletion
    (Note 1(c))                                                            |   | (13,557           | ) |   | (7,817            | )
|Depletion of mining properties (Note 1(d))                                                                   |   | (6,604            | ) |   | (5,373            | )
|Net realizable value adjustments (Note 1(g))                                                                 |   | 91                |   |   | (170              | )
|Reversal of tax on financial assets
    (Note 1(h))                                                          |   | (1,498            | ) |   | -                 |  
|Future income taxes on US GAAP differences                                                                   |   | 8,651             |   |   | 7,221             |  
|                                                                                                             |   |                   |   |   |                   |  
|Net loss based on US GAAP                                                                                    | $ | (172,579          | ) | $ | (9,735            | )
|                                                                                                             |   |                   |   |   |                   |  
|                                                                                                             |   |                   |   |   |                   |  
|Other comprehensive income based on Canadian GAAP,
      net of tax of $1,498                                |   | 8,164             |   |   | -                 |  
|Reversal of tax on financial assets
    (Note 1(h))                                                          |   | 1,498             |   |   | -                 |  
|Amortization of actuarial gains from AOCI to net
      loss, net of tax of $63 (2009 - $6) (Note
      1(f)) |   | 396               |   |   | 14                |  
|Change in funded status of employee benefit plans, net of tax of $204 (2009 - $343)
    (Note
      1(f))    |   | (746              | ) |   | (849              | )
|                                                                                                             |   |                   |   |   |                   |  
|Other comprehensive income / (loss) based on US GAAP                                                         | $ | 9,312             |   | $ | (835              | )
|                                                                                                             |   |                   |   |   |                   |  
|Comprehensive loss based on US GAAP                                                                          | $ | (163,267          | ) | $ | (10,570           | )
|                                                                                                             |   |                   |   |   |                   |  
|Loss per share                                                                                               |   |                   |   |   |                   |  
|Basic                                                                                                        | $ | (1.25             | ) | $ | (0.08             | )
|Diluted                                                                                                      | $ | (1.25             | ) | $ | (0.08             | )

---

Consolidated Statements of Shareholders Equity:

Deficit:

|                                                                        |   | December 31, 2010 |   |   | December 31, 2009 |  
|----------------------------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                                                        |   |                   |   |   |                   |  
|Deficit based on Canadian GAAP                                          | $ | (252,173          | ) | $ | (104,686          | )
|Change in deficit due to reporting currency
      translation           |   | 7,623             |   |   | 7,623             |  
|Exploration costs, net of depletion
    (Notes 1(a), (b)
      and (e)) |   | (86,174           | ) |   | (73,999           | )
|Amortization of mineral rights(Note 1(b))                               |   | (10,941           | ) |   | (10,941           | )
|Stripping costs, net of depletion
    (Note 1(c))                       |   | (25,936           | ) |   | (12,379           | )
|Depletion of mining interests (Note 1(d))                               |   | (16,551           | ) |   | (9,947            | )
|Net realizable value adjustment reversals
    (Note
      1(g))         |   | (79               | ) |   | (170              | )
|Reversal of tax on financial assets
    (Note 1(h))                     |   | (1,498            | ) |   | -                 |  
|Future income tax adjustments                                           |   | 29,754            |   |   | 21,103            |  
|Deficit based on US GAAP                                                | $ | (355,975          | ) | $ | (183,396          | )

1

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RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES DECEMBER 31, 2010(in thousands of United States Dollars
except per share data, unless otherwise noted)

---

Accumulated other comprehensive income
(AOCI):

|                                                                                                              |   | December 31, 2010 |   |   | December 31, 2009 |  
|------------------------------------------------------------------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                                                                                              |   |                   |   |   |                   |  
|AOCI based on Canadian GAAP                                                                                   | $ | 14,598            |   | $ | 6,434             |  
|Change in AOCI due to reporting currency translation                                                          |   | (7,623            | ) |   | (7,623            | )
|Reversal of tax on financial assets
    (Note 1(h))                                                           |   | 1,498             |   |   | -                 |  
|Change in funded status of employee benefit plans, net of tax of $744 (2009 - $540)
    (Note
      1(f))     |   | (2,102            | ) |   | (1,356            | )
|Amortization of actuarial gains from AOCI to net
      loss, net of tax of $97 (2009 - $34) (Note
      1(f)) |   | 481               |   |   | 85                |  
|AOCI based on US GAAP                                                                                         | $ | 6,852             |   | $ | (2,460            | )

---

Consolidated Balance Sheets:

The following material balance sheet differences exist between
Canadian and US GAAP:

|Inventories:                                                    |   |                   |   |   |                   |  
|--------------------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                                                |   | December 31, 2010 |   |   | December 31, 2009 |  
|                                                                |   |                   |   |   |                   |  
|Reported under Canadian GAAP                                    | $ | 88,979            |   | $ | 71,682            |  
|Exploration costs (Note 1(b))                                   |   | (2,679            | ) |   | (1,566            | )
|Stripping costs(Note 1(c))                                      |   | 16,166            |   |   | 9,808             |  
|Depletion of mining interests (Note 1(d))                       |   | 2,433             |   |   | 1,639             |  
|Net realizable value adjustment reversals
    (Note
      1(g)) |   | (79               | ) |   | (170              | )
|                                                                |   |                   |   |   |                   |  
|Reported under US GAAP                                          | $ | 104,820           |   | $ | 81,393            |  
|                                                                |   |                   |   |   |                   |  
|                                                                |   |                   |   |   |                   |  
|                                                                |   |                   |   |   |                   |  
|Mining interests and related deferred
      costs:              |   |                   |   |   |                   |  
|                                                                |   | December 31, 2010 |   |   | December 31, 2009 |  
|                                                                |   |                   |   |   |                   |  
|Reported under Canadian GAAP                                    | $ | 387,279           |   | $ | 434,509           |  
|Impairment charge(Note 1(a))                                    |   | 9,520             |   |   | -                 |  
|Exploration costs, net of depletion
    (Note 1(b), (e))        |   | (93,015           | ) |   | (72,433           | )
|Stripping costs, net of depletion(Note 1(c))                    |   | (42,102           | ) |   | (22,187           | )
|Amortization of mineral rights (Note 1(b))                      |   | (10,941           | ) |   | (10,941           | )
|Depletion of mining interests (Note 1(d))                       |   | (18,984           | ) |   | (11,586           | )
|                                                                |   |                   |   |   |                   |  
|Reported under US GAAP                                          | $ | 231,757           |   | $ | 317,362           |  
|                                                                |   |                   |   |   |                   |  
|                                                                |   |                   |   |   |                   |  
|                                                                |   |                   |   |   |                   |  
|Future income tax liability:                                    |   |                   |   |   |                   |  
|                                                                |   | December 31, 2010 |   |   | December 31, 2009 |  
|                                                                |   |                   |   |   |                   |  
|Reported under Canadian GAAP                                    | $ | 67,283            |   | $ | 80,566            |  
|Future income tax adjustments                                   |   | (30,401           | ) |   | (21,609           | )
|                                                                |   |                   |   |   |                   |  
|Reported under US GAAP                                          | $ | 36,882            |   | $ | 58,957            |  

2

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RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES DECEMBER 31, 2010(in thousands of United States Dollars
except per share data, unless otherwise noted)

---

|Employee future benefits:                                                |   |                   |  |   |                   | 
|------------------------------------------------------------------------ | - | ----------------- |  | - | ----------------- | 
|                                                                         |   | December 31, 2010 |  |   | December 31, 2009 | 
|                                                                         |   |                   |  |   |                   | 
|Reported under Canadian GAAP                                             | $ | 1,983             |  | $ | 1,635             | 
|Adjustment for funded status of employee benefit
      plans (Note 1(f)) |   | 2,268             |  |   | 1,777             | 
|                                                                         |   |                   |  |   |                   | 
|Reported under US GAAP                                                   | $ | 4,251             |  | $ | 3,412             | 

Consolidated Statements of Cash Flows:

As a result of the treatment of mining interests and stripping
costs under Notes 1 (b) and (c) below, cash expended for exploration and
stripping costs would be classified as operating rather than investing,
resulting in the following totals under US GAAP:

|                                              |   | Year ended        |   |   | Year ended        |  
|--------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                              |   | December 31, 2010 |   |   | December 31, 2009 |  
|Cash from operations based on Canadian GAAP   | $ | 97,583            |   | $ | 78,218            |  
|Exploration costs (Note 1(b))                 |   | (26,591           | ) |   | (15,152           | )
|Stripping costs(Note 1(c))                    |   | (26,030           | ) |   | (18,162           | )
|Cash from operations based on US GAAP         | $ | 44,962            |   | $ | 44,904            |  
|                                              |   |                   |   |   |                   |  
|Cash used in investing based on Canadian GAAP | $ | (118,414          | ) | $ | (77,462           | )
|Exploration costs(Note 1(b))                  |   | 26,591            |   |   | 15,152            |  
|Stripping costs (Note 1(c))                   |   | 26,030            |   |   | 18,162            |  
|Cash used in investing based on US GAAP       | $ | (65,793           | ) | $ | (44,148           | )

---

Notes to the Reconciliation with United States Generally
Accepted Accounting Principles

Note 1  Adjustments from Canadian generally accepted
accounting principles

(a)     Impairment charge

In June 2010, the Company recorded an impairment charge under
CICA Section 3063, Impairment of Long-Lived Assets,in relation to the El
Cubo mine. Consistent with ASC section 360-10-35, Impairment or Disposal of
Long-Lived Assets, the impairment charge was measured as the difference
between the fair value of the El Cubo reporting unit and its carrying value.
However, the carrying value of the El Cubo reporting unit differs under US GAAP,
thereby impacting the impairment charge recorded on June 30, 2010.

(b)     Mining interests and related deferred costs

In March 2002, the Emerging Issues Committee of the CICA issued
EIC 126  Accounting by Mining Enterprises for Exploration Costs,updated
byEIC 174  Mining Exploration Costsin March 2009, which affects
mining companies with respect to the deferral of exploration costs. EIC 174
refers to CICA Handbook Section 3061, Property, Plant and Equipment,
paragraph .21 which states that for a mining property, the cost of the asset
includes exploration costs if the enterprise considers that such costs have the
characteristics of property, plant and equipment.

Under Canadian GAAP, the Company considers certain exploration
costs to have characteristics of property, plant and equipment and, accordingly,
defers such costs.

Under United States GAAP, exploration costs incurred in
locating areas of potential mineralization are expensed as incurred. Commercial
feasibility is established in compliance with the US Securities and Exchange
Commission Industry Guide 7, and consists of identifying that part of a mineral
deposit that can be economically and legally extracted or produced at the time
of the reserve determination. After an area of interest has been assessed as
commercially feasible, expenditures specific to the area of interest for further
development are capitalized.

3

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RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES DECEMBER 31, 2010(in thousands of United States Dollars
except per share data, unless otherwise noted)

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(c)     Stripping costs

In March 2006, the Emerging Issues Committee of the CICA issued
EIC 160  Stripping Costs Incurred in the Production of a Mining Operation,which addresses the treatment of stripping costs under Canadian GAAP. EIC
160 indicates that Stripping costs should be accounted for according to the
benefit received by the entity. Generally, stripping costs should be accounted
for as variable production costs that should be included in the costs of the
inventory produced (that is, extracted) during the period that the stripping
costs are incurred. However, stripping costs should be capitalized if the
stripping activity can be shown to represent a betterment to the mineral
property. A betterment occurs when the stripping activity provides access to
sources of reserves and resources that will be produced in future periods that
would not have otherwise been accessible in the absence of this activity.

Under Canadian GAAP, stripping costs are capitalized when
access is gained to sources of reserves and resources that will be produced in
future periods, that would otherwise not have been accessible.

ASC subtopic 930-330 addresses the treatment of stripping costs
under US GAAP and indicates that stripping costs incurred during the production
phase of a mine are variable production costs that should be included in the
costs of inventory produced during the period that the stripping costs are
incurred. In November 2007, a mining industry position paper was issued that
concluded that it was the intent of ASC subtopic 930-330 that pre-production
stripping costs incurred to develop each pit within a mining complex to access a
single or multiple ore bodies should generally be capitalized and separately
amortized if certain operational, geological and other factors specific to the
mining complex are met. As a result of this guidance, for United States GAAP,
the Company has capitalized stripping costs relating to one pit for which there
are no future plans to combine the pit with other pits that are currently in
production. All other stripping costs have been included in the costs of
inventory produced.

(d)     Depletion of mining interests

Effective April 1, 2008, the Company changed its estimate, for
Canadian GAAP purposes, of the useful lives of its mines to be based on proven
and probable reserves of the mine and the portion of mineralization expected to
be classified as reserves. Previously, the Company estimated the useful life
based on proven and probable reserves to be mined. There is limited guidance
under Canadian GAAP regarding the depletion of mineral interests, however
Section 3061, Property, Plant & Equipment, defines mining
properties as items of property, plant and equipment represented by the
capitalized costs of acquired mineral rights and the costs associated with
exploration for and development of mineral reserves. Therefore, mining
properties are considered property, plant & equipment under Canadian
GAAP. With respect to amortization of property, plant and equipment, Section
3061 indicates that amortization should be recognized in a rational and
systematic manner appropriate to the nature of an item of property, plant and
equipment with a limited life and its use by the enterprise.The Companydetermined that the useful life of its mines is better represented by also
including a portion of mineralization expected to be classified as reserves, as
opposed to only proven and probable reserves.

The United States Securities and Exchange Commission indicated
in Industry Guide 7 that disclosure of reserve information is limited to proven
and probable reserves. Consequently, in December 1996 the American Institute of
Certified Public Accountants International Practices Task Force indicated that
because disclosure of possible reserves is prohibited by SEC rules, under US
GAAP, the base used for the depletion calculation also cannot include these
amounts.

(e)Fair value of long-term debt

In consideration for the Soyopa claims acquired in November,
2001, the Company entered into a non-interest bearing loan agreement. Commencing
in 2006, the loan was presented at its fair value under Canadian GAAP. Under US
GAAP, interest must be imputed on this loan in accordance with ASC topic 470,
Debt. The reduction in the principal amount of the loan as a result of
imputing a market rate of interest also reduced the carrying values of the
Company's mineral properties accordingly. This loan is no longer outstanding.

During the periods subsequent to November 2001, the interest
imputed on the loan was recorded as a period expense for US GAAP. For Canadian
GAAP, the imputed interest was added to the cost of the mineral properties and
is depleted over the useful life of the mine.

4

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RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES DECEMBER 31, 2010(in thousands of United States Dollars
except per share data, unless otherwise noted)

---

(f)     Employee future benefits

The Company follows ASC topic 715, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans, which requires the
recognition of the funded status of a benefit plan in the Companys financial
statements. ASC topic 715 also requires that the plan assets and benefit
obligations be measured as of the date of the Companys fiscal year-end. Under
ASC topic 715, the Company is required to recognize unamortized actuarial gains
and losses, prior service cost and remaining transitional amounts not recognized
under Canadian GAAP, and to recognize changes in the funded status, through
other comprehensive income, in the year in which the changes occur.

(g)     Inventory net realizable value adjustments

CICA Section 3031, Inventories, requires that previous
write-downs of inventories be reversed when there is a subsequent increase in
the net realizable value of the inventories. ASC topic 330, Inventory,
addresses the accounting for net realizable value adjustments for US GAAP and
indicates that when inventories have been written down below cost at the close
of a fiscal year, such reduced amount is to be considered the cost for
subsequent accounting purposes, and therefore no future reversal of the
write-down is permitted. ASC topic 270, Interim Reporting, however,
indicates that recoveries of inventory losses from market declines in later
interim periods of the same fiscal year should be recognized as a reversal of
the original write-down.

During the first quarter of 2009, the Company recognized a net
realizable value adjustment reversal of $295. At December 31, 2010, $79 of this
reversal remained within inventory under Canadian GAAP, with the remainder
expensed to production cost during the periods subsequent to March 31, 2009. The
higher value inventories under Canadian GAAP would have been expensed to
production costs during the period. Therefore, the impact of this difference
under US GAAP is to increase net earnings by $91 (2009  ($170)) and to decrease
inventories at December 31, 2010 by $79 (2009  $170).

(h)Reversal of tax on financial assets

EIC 172, Income Statement Presentation of a Tax Loss
Carryforward Recognized Following an Unrealized Gain Recorded in Other
Comprehensive Income,requires the tax benefit from the recognition of
previously unrecognized tax loss carryforwards as a result of unrealized gains
on financial assets to be recognized in net loss. Under US GAAP, these amounts
are recognized in other comprehensive income. The impact of this adjustments is
an increase in net loss and an increase in accumulated other comprehensive
income of $1,498.

---

Note 2  Stock options (in Canadian dollars, except where
otherwise noted)

The intrinsic value of options exercised during 2010 is $4,340
(2009 - $9,370). As at December 31, 2010 and 2009, the aggregate intrinsic value
of options outstanding is $2,103 and $17,354 respectively, while the aggregate
intrinsic value of the options currently exercisable is $710 and $11,491,
respectively. In 2010 and 2009, the 760,000 and 1,067,750 options that vested
had a fair value of $2,888 and $5,825, respectively.

The weighted average remaining contractual life for options
exercisable as at December 31, 2010 and 2009 is 2.54 years and 1.91 years
respectively.

As at December 31, 2010 there was $5,513 USD (2009  $3,491
USD) in unrecognized compensation cost related to options which have not yet
vested. This expense is expected to be recognized over a weighted average period
of 3.07 years (2009  2.53 years).

The tax benefit realized from stock options exercised during
the years ended December 31, 2010 and December 31, 2009 was $Nil.

Under Canadian GAAP, the Company accounts for the impact of
forfeitures as they occur, whereas under ASC Topic 718, Compensation - Stock
Compensation, forfeitures are required to be estimated. The Company has
determined that the impact of the difference on accounting for stock-based
compensation under Canadian GAAP and US GAAP is not material.

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5

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RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES DECEMBER 31, 2010(in thousands of United States Dollars
except per share data, unless otherwise noted)

---

Note 3  Employee future benefits

The funded status of the Companys plans as at December 31,
2010 and 2009 is ($4,251) and ($3,412) respectively. The accumulated benefit
obligation of the Companys plans as at December 31, 2010 and 2009 is $2,021 and
$1,967 respectively.

Amounts recorded in accumulated other comprehensive income as
at December 31, 2010 and 2009 are as follows:

|                                                    |   | December 31, 2010 |  |   | December 31, 2009 | 
|--------------------------------------------------- | - | ----------------- |  | - | ----------------- | 
|                                                    |   |                   |  |   |                   | 
|Net loss, net of tax of $589 (2009 - $385)          | $ | 1,470             |  | $ | 961               | 
|Prior service cost, net of tax of $58 (2009 - $121) |   | 151               |  |   | 310               | 

The amount recognized in accumulated other comprehensive income
expected to be recognized as a component of net periodic benefit cost during the
year ended December 31, 2011 is $55.

The Company used a discount rate of 8.25% (2008  9.00%) when
calculating is employee future benefit obligation. This rate was determined by
matching the cash flows underlying the employee future benefit obligation with
the returns available on Mexican Government bonds over similar durations.

The estimated future benefits payments are as follows:

|2011                | $ | 245   | 
|------------------- | - | ----- | 
|2012                | $ | 179   | 
|2013                | $ | 199   | 
|2014                | $ | 225   | 
|2015                | $ | 227   | 
|2016 and thereafter | $ | 1,857 | 

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Note 4  Income taxes

The income tax effects of differences between the accounting
value and the tax value of assets and liabilities are as follows:

|                                                                    |   | December 31, 2010 |   |   | December 31, 2009 |  
|------------------------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|Deferred tax liabilities                                            |   |                   |   |   |                   |  
|Accounting value of mineral properties
      in excess of tax value | $ | 27,990            |   | $ | 62,042            |  
|Accounting value of inventories in
      excess of tax value        |   | 24,194            |   |   | 18,151            |  
|                                                                    |   | 52,184            |   |   | 80,193            |  
|                                                                    |   |                   |   |   |                   |  
|Deferred tax assets                                                 |   |                   |   |   |                   |  
|Deductible share issue costs                                        |   | 1,912             |   |   | 2,865             |  
|Employee future benefits                                            |   | 647               |   |   | 964               |  
|Unrealized foreign exchange losses                                  |   | 3,206             |   |   | 2,608             |  
|Other                                                               |   | 5,465             |   |   | 2,796             |  
|Non-capital losses carried forward                                  |   | 42,392            |   |   | 58,253            |  
|                                                                    |   | 53,622            |   |   | 67,486            |  
|Valuation allowance                                                 |   | (38,320           | ) |   | (46,250           | )
|                                                                    |   | 15,302            |   |   | 21,236            |  
|                                                                    |   |                   |   |   |                   |  
|Net deferred tax liabilities                                        | $ | 36,882            |   | $ | 58,957            |  

ASC topic 740, Income Taxes,prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return, and provides guidance on accounting and disclosure based on whether it is more likely than not that an uncertain tax
position will be sustained on review by taxation authorities. The Company did
not have any unrecognized tax benefits at December 31, 2010, and no adjustments
were recognized for uncertain tax benefits during the year.

6

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RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES DECEMBER 31, 2010(in thousands of United States Dollars
except per share data, unless otherwise noted)

---

The Company recognizes interest and penalties related to income
taxes in interest expense.

The Company and its subsidiaries are subject income tax in
Canada, the United States, and Mexico. In Canada, years ranging from 2006
through 2010, as applicable, are subject to examination by the taxing
authorities in the respective jurisdictions where returns are filed. In the
United States, years ranging from 2007 through 2010 are subject to examination
by taxing authorities. All years are subject to examination by the taxing
authorities in Mexico.

The Company earns income and is subject to tax in the following
jurisdictions:

|                                                   |   | Year ended        |   |   | Year ended        |  
|-------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                                   |   | December 31, 2010 |   |   | December 31, 2009 |  
|Provision / (recovery) for income taxes:           |   |                   |   |   |                   |  
|Current                                            |   |                   |   |   |                   |  
|Canada                                             | $ | 294               |   | $ | -                 |  
|Foreign                                            |   | (1,810            | ) |   | 5,041             |  
|Future                                             |   |                   |   |   |                   |  
|Canada                                             |   | -                 |   |   | -                 |  
|Foreign                                            |   | (26,247           | ) |   | (610              | )
|                                                   |   |                   |   |   |                   |  
|Geographic components of loss before income taxes: |   |                   |   |   |                   |  
|Canada                                             | $ | (3,769            | ) | $ | (4,982            | )
|Foreign                                            |   | (196,573          | ) |   | (321              | )
|                                                   | $ | (200,342          | ) | $ | (5,303            | )
|                                                   |   |                   |   |   |                   |  
|                                                   |   |                   |   |   |                   |  
|Note 5  Receivables                               |   |                   |   |   |                   |  
|                                                   |   | December 31, 2010 |   |   | December 31, 2009 |  
|                                                   |   |                   |   |   |                   |  
|Trade                                              | $ | 724               |   | $ | 281               |  
|Taxes receivable                                   |   | 1,628             |   |   | -                 |  
|Advances                                           |   | 1,029             |   |   | -                 |  
|Other                                              |   | 392               |   |   | 1,693             |  
|                                                   | $ | 3,773             |   | $ | 1,974             |  
|                                                   |   |                   |   |   |                   |  
|                                                   |   |                   |   |   |                   |  
|Note 6  Accounts payable and accruals             |   |                   |   |   |                   |  
|                                                   |   | December 31, 2010 |   |   | December 31, 2009 |  
|                                                   |   |                   |   |   |                   |  
|Trade payables                                     | $ | 21,799            |   | $ | 22,224            |  
|Accruals                                           |   | 6,903             |   |   | 7,328             |  
|Taxes payable                                      |   | -                 |   |   | 422               |  
|Accrued payroll                                    |   | 9,037             |   |   | 5,049             |  
|Other                                              |   | 262               |   |   | 1,996             |  
|                                                   | $ | 38,001            |   | $ | 37,019            |  

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Note 7  Recent US accounting pronouncements

In December 2010, the FASB issued ASU 2010-29, Business
Combinations (Topic 805), Disclosure of Supplementary Pro Forma Information
for Business Combinations.The amendments in this ASU affect any public
entity as defined by Topic 805, Business Combinations, that enters into business
combinations that are material on an individual or aggregate basis. The
amendments in this ASU specify that if a public entity presents comparative
financial statements, the entity should disclose revenue and earnings of the
combined entity as though the business combination that occurred during the current year had occurred as of the
beginning of the comparable prior annual reporting period. The amendments also
expand the supplemental pro-forma adjustments directly attributable to the
business combination included in the reported pro-forma revenue and earnings.
The amendments are effective prospectively for business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2010. The Company is still assessing
the potential impact of this ASU on its future disclosure requirements.

7

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RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES DECEMBER 31, 2010(in thousands of United States Dollars
except per share data, unless otherwise noted)

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In April 2010, the Financial Accounting Standards Board
(FASB) issued ASU 2010-13, Compensation  Stock Compensation (Topic 718),
Effect of Denominating the Exercise Price of a Share-Based Payment Award in
the Currency of the Market in Which the Underlying Equity Security Trades.
This ASU provides amendments to Topic 718 to clarify that an employee
share-based payment award with an exercise price denominated in the currency of
a market in which a substantial portion of the entitys equity securities trades
should not be considered to contain a condition that is not a market,
performance, or service condition. Therefore an entity would not classify such
an award as a liability if it otherwise qualifies as equity. The amendments in
this ASU are effective for fiscal years and interim periods within those fiscal
years beginning on or after December 15, 2010 and are not expected to have a
significant impact on the Companys consolidated financial statements.

In February 2010, the FASB issued ASU 2010-09, Subsequent
Events (Topic 855), Amendments to Certain Recognition and Disclosure
Requirements. This ASU amended the guidance on subsequent events and will no
longer require that an SEC filer disclose the date through which subsequent
events have been evaluated. The amendment is effective upon issuance. The
adoption of this ASU had no impact on the consolidated financial statements.

In January 2010, the FASB issued ASU 2010-06, Improving
Disclosures about Fair Value Measurements, which provides amendments to
Subtopic 820-10, Fair Value Measurements and Disclosures (formerly SFAS
No. 157, Fair Value Measurements). The new disclosures now required by
the amended guidance include the amounts of significant transfers in and/or out
of Level 1 and Level 2 fair value measurements and the reasons for the
transfers, and a reconciliation of the activities in Level 3 fair value
measurements on a gross basis. In addition, this ASU clarifies the existing
disclosure requirements for level of disaggregation, and disclosures about
inputs and valuation techniques. The new disclosures and clarifications of
existing disclosures are effective for annual or interim reporting periods
beginning after December 15, 2009, except for the requirement to provide the
Level 3 activity for purchases, sales, issuances, and settlements on a gross
basis. Those disclosures are effective for fiscal years beginning after December
15, 2010. The adoption of this ASU had no impact on the consolidated financial
statements.

On January 1, 2010, the Company adopted the amended ASC Topic
810, Consolidation (formerly SFAS No. 167, Amendments to FASB
Interpretation No. 46(R)). The amendments were intended to address the
effects on certain provisions of ASC Subtopic 810-10, as a result of the
elimination of the qualifying special-purpose entity concept; and concerns about
the application of certain key provisions of ASC Subtopic 810-10, including
those in which the accounting and disclosures under the Interpretation did not
always provide timely and useful information about an enterprises involvement
in a variable interest entity. The adoption of ASC Topic 810 did not have an
impact on the consolidated financial statements.

On January 1, 2010, the Company adopted the amended ASC Topic
860, Transfers and Servicing, (formerly SFAS No. 166, Accounting for
Transfers of Financial Assets an amendment of FASB Statement No. 140) which
eliminated the concept of a qualifying special purpose entity; clarifying and
amending the derecognition criteria for a transfer to be accounted for as a
sale; amending and clarifying the unit of accounting for sale accounting; and
requiring that a transferor initially measure at fair value and recognize all
assets obtained and liabilities incurred as a result of a transfer of an entire
financial asset or group of financial assets accounted for as a sale. The
adoption of ASC Topic 860 did not have an impact on the consolidated financial
statements.

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8

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