---

**Exhibit 99.2**





|                                                         
|---------------------------------------------------------
|                                                         
|                                                         
|Managements Discussion and Analysis                     
|(in United States Dollars, unless otherwise
      stated)

For the year ended December 31, 2014



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|                                          
|------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS      
|FOR THE YEAR ENDED
      DECEMBER 31, 2014

TABLE OF CONTENTS

|OVERVIEW OF THE BUSINESS                                  | 3 
|--------------------------------------------------------- | --
|HIGHLIGHTS                                                | 4 
|OUTLOOK AND STRATEGY                                      | 5 
|YOUNG-DAVIDSON                                            | 6 
|EL CHANATE                                                | 8 
|EXPLORATION REVIEW                                        | 10
|SUMMARIZED FINANCIAL AND OPERATING RESULTS                | 11
|SUMMARY OF QUARTERLY FINANCIAL AND OPERATING RESULTS      | 15
|CONSOLIDATED EXPENSES                                     | 16
|CONSOLIDATED INCOME TAX EXPENSE                           | 17
|FINANCIAL CONDITION                                       | 18
|LIQUIDITY AND CAPITAL RESOURCES                           | 19
|CONTRACTUAL OBLIGATIONS                                   | 21
|OUTSTANDING SHARE DATA                                    | 21
|OFF-BALANCE SHEET ARRANGEMENTS                            | 21
|FINANCIAL INSTRUMENTS                                     | 21
|TRANSACTIONS WITH RELATED PARTIES                         | 22
|EVENTS AFTER THE REPORTING PERIOD                         | 22
|NON-GAAP MEASURES                                         | 22
|RISKS AND UNCERTAINTIES                                   | 25
|CRITICAL ACCOUNTING ESTIMATES, POLICIES AND
      CHANGES | 29
|CONTROLS AND PROCEDURES                                   | 32
|CAUTIONARY NOTE TO U.S. INVESTORS                         | 33
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS      | 33

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

This Managements Discussion and Analysis (MD&A),
dated February 19, 2015, 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 years
ended December 31, 2014 and 2013, and notes thereto.The consolidated
financial statements for the years ended December 31, 2014 and 2013 have been
prepared in accordance with International Financial Reporting Standards (IFRS
or GAAP). All results are presented in United States dollars (US dollar or
$), 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.

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 33.

|OVERVIEW
OF THE BUSINESS
|------------------------

AuRico Gold Inc. is a Canadian gold producer with mines and
projects in North America. The Companys operations include the Young-Davidson
mine in Ontario, Canada and the El Chanate mine in Sonora, Mexico. The Companys
project pipeline also includes exploration and development opportunities in
Canada and Mexico.

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 the Annual Information Form for the year ended December 31,
2014, available on SEDAR at www.sedar.com, on
EDGAR at www.sec.gov, and on the Companys
website at www.auricogold.com.

The Companys performance is largely dependent on the price of
gold, which directly affects the Companys profitability and cash flow. The
price of gold is subject to volatile price movements during short periods of
time and is 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 2014, the London PM Fix price of gold averaged
$1,266 per ounce, a 10% decrease from the London PM Fix average of $1,411 during
2013. During 2014, daily London PM Fix prices ranged between $1,142 and $1,385
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 and cash flow. The Mexican peso and Canadian dollar averaged approximately
13.3 to 1.0 US dollar and 1.1 to 1.0 US dollar, respectively, in 2014, compared
to average rates of 12.8 to 1.0 US dollar and 1.03 to 1.0 US dollar,
respectively, in 2013.

For additional information on the factors that affect the
Company, see the discussion of Risks and Uncertainties on page 25.

| | 3
| | -

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|HIGHLIGHTS
|----------

|(in thousands, except ounces, all-in
      sustaining costs and total cash costs)                                |  
|---------------------------------------------------------------------------------------------------------------- | -
|                                                                                                                 |  
|                                                                                                                 |  
|                                                                                                                 |  
|Gold ounces produced(1)                                                                                          |  
|Pre-production gold ounces produced(1)                                                                           |  
|Total gold ounces
      produced                                                                                 |  
|Revenue from mining operations                                                                                   | $
|Loss from operations                                                                                             | $
|Net loss from operations                                                                                         | $
|Operating cash
      flow                                                                                        | $
|Cash costs per gold ounce, net of by-product revenues and
      NRV adjustments(1)(2)(3)(4)                      | $
|All-in sustaining
      costs per gold ounce sold, net of by-product revenues and NRV
      adjustments(1)(2)(4) | $

(1)
    The Young-Davidson underground mine declared
      commercial production on October 31, 2013, and therefore, all underground
      ounces are excluded from consolidated cash costs and consolidated all-in
      sustaining costs prior to this date. Pre-production ounces produced and
      sold are excluded from consolidated ounces produced and sold as the
      revenue from these ounces was credited against capitalized project
      costs.(2)
    See the Non-GAAP Measures section on page
    22.(3)
    For 2014, cash costs per gold ounce are calculated
      using gold ounces sold at the El Chanate and Young-Davidson mines. For
      2013, cash costs per gold ounce were calculated using gold ounces sold at
      the El Chanate mine and ounces produced at the Young-Davidson
    mine.(4)
    For further discussion on the net realizable value
      ("NRV") adjustments recognized on ore inventories at the Young-Davidson
      and El Chanate mines during the quarter and annual periods, refer to pages
      7 and 9, respectively.


ANNUAL DEVELOPMENTS

|- | On February 19, 2015, the Company reported proven and
      probable reserves of 6.3 million gold ounces, a 0.2 million ounce decrease
      from the 6.5 million gold ounces reported in 2013. The decrease is due to
      mining depletion at all operating mines and a reduction in overall slope
      angles at El Chanate, partially offset by an increase in underground
      ounces at Young- Davidson.                                                                                                                                                                                                                                          
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | On February 19, 2015, the Companys Board of Directors
      approved a dividend of $0.023 per share, payable to shareholders of record
      on March 2, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | On January 21, 2015, the Company announced an initial
      National Instrument 43-101 compliant indicated resource of 2.1 million
      gold equivalent ounces and an inferred resource of 3.4 million gold
      equivalent ounces at the Kemess East deposit, located one kilometre east
      of the previously delineated Kemess Underground deposit and 6.5 kilometres
      north of the Kemess mill facility. The Kemess Property is located in
      north-central British Columbia, Canada, approximately 430 kilometres
      northwest of Prince George.                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | On January 14, 2015, the Company finalized the agreement
      to terminate the deferred cash payment arrangement (retained interest
      royalty) with Crocodile Gold Corporation. As consideration for this
      termination, the Company received $20 million Canadian dollars (CAD) in
      cash and net smelter royalties on future production from the Fosterville
      and Stawell mines of 2% and 1%, respectively.                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | On November 20, 2014, the Company completed a private placement with
      Carlisle Goldfields Limited (Carlisle) in which the Company invested CAD
      $5.6 million in exchange for 19.9% of the outstanding common shares of
      Carlisle. In conjunction with the private placement, the Company entered
      into an agreement on November 11, 2014 with respect to Carlisles Lynn
      Lake Gold Camp (Lynn Lake Project), located in Lynn Lake, Manitoba,
      pursuant to which the Company acquired a 25% interest in the Lynn Lake
      Project for an initial cash contribution of CAD $5.0 million.                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | On November 6, 2014, the Companys Board of Directors
      approved a dividend of $0.00225 per share, payable to shareholders of
      record on November 17, 2014, and paid on December 1, 2014. On August 7,
      2014, the Companys Board of Directors approved a dividend of $0.00375 per
      share, payable to shareholders of record on August 18, 2014, and paid on
      September 2, 2014. On May 8, 2014, the Companys Board of Directors
      approved a dividend of $0.02 per share, payable to shareholders of record
      on May 20, 2014, and paid on June 3, 2014.                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | On April 3, 2014, the Company paid $173.0 million,
      including $0.03 million of accrued interest, to complete the cash tender
      offer initially announced on March 6, 2014 to redeem the
      outstanding convertible senior notes. The consideration offered and paid
      was $1,040 per $1,000 note outstanding plus accrued and unpaid interest to
      the payment date. The Company received tender offers for $166.4 million of
    the $167.0 million principal amount outstanding.                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | On March 27, 2014, the Company completed an offering of
      $315.0 million senior secured notes due 2020. The notes were issued with a
      coupon of 7.75% and sold at 96.524% of par, resulting in net proceeds to
      the Company of $304.1 million. The Company repaid the $75.0 million drawn against the credit
facility on March 28, 2014 after the completion of the senior secured notes
offering. The completion of this offering enabled the Company to extend the
maturity date of outstanding debt and provides additional cash for general
corporate purposes, which may include funding capital expenditures to support
organic growth.

| |  
| | -
| | 4

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|OUTLOOK
AND STRATEGY
|--------------------

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, exploration, accretive industry
consolidation, 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 is on the production of high
margin ounces combined with a disciplined approach to cost containment and
capital spending along with a commitment to shareholder value creation.

In 2014, the Company continued to advance underground
development at Young-Davidson to optimize the exploitation of ore reserves,
which is expected to position the mine for sustainable, period-over-period,
productivity increases in 2015 and beyond. The shaft hoisting system has, and
will continue to, facilitate significant increases in underground activities and
corresponding cost efficiencies. During the year, accelerated capital investment
initiatives supported higher than expected productivity throughout the
underground operation and resulted in Young-Davidson exceeding the year-end
target of 4,000 tonnes per day (TPD). With productivity remaining ahead of
schedule, the operation is well positioned to achieve the 2015 year-end target
of 6,000 TPD and an ultimate productivity level of 8,000 TPD at the end of 2016.
During 2015, Young-Davidson is anticipated to produce between 160,000 and
180,000 ounces, a 2% to 15% increase over 2014 production. Capital expenditures
are expected to decrease by up to 37% in 2015, and will continue to focus on
advancing underground development.

Young-Davidson open pit mining operations ceased during the
second quarter of 2014 as the short-life open pit was fully depleted. As of
December 31, 2014, approximately 2.5 million tonnes of open pit ore, at an
average grade of 0.75 grams per tonne, was stockpiled ahead of the mill facility
for future processing. Going forward, mill feed from the underground mine will
be supplemented by the stockpiled ore while underground mining levels ramp up to
mill capacity.

Production from the El Chanate mine is expected to be between
65,000 and 75,000 ounces in 2015, consistent with production in 2014. Capital
expenditures are anticipated to decrease by up to 33% in 2015, reflecting
reduced year-over-year open pit stripping requirements.

During 2015, the Company expects to produce 225,000 to 255,000
ounces of gold on a consolidated basis at all-in sustaining costs of
approximately $1,000 to $1,100 per gold ounce, representing up to a 14% increase
over 2014 production. Mine site
capital expenditures for 2015 are forecasted to be approximately $102.5 million
to $115.0 million, a decline of up to 36% from 2014. Consolidated operating cash
flows are expected to improve in 2015, mainly driven by forecasted margin
improvements at Young-Davidson due to the ramp up of the underground mine and a
weak Canadian dollar.

The Company expects to spend approximately $12.0 million to
$23.0 million on exploration during 2015. The exploration program will focus on
upgrading and increasing mineral resources at the Companys Kemess and Lynn Lake
projects, in addition to the Companys existing operations.

During 2014, the London PM Fix price of gold averaged $1,266
per ounce, a 10% decrease from the London PM Fix average of $1,411 during 2013.
At current gold prices, operating cash flow from the Companys operating mines
is forecasted to be sufficient to fund all capital expenditures and mine site
exploration. The Company has the ability to fund any shortfall with cash on
hand, and also has the full capacity available under its $150.0 million credit
facility.

On February 19, 2015, the Company provided 2015 guidance for
the El Chanate and Young-Davidson mines. The press release is available on SEDAR
at www.sedar.com, on EDGAR at www.sec.gov, and on the Companys website at www.auricogold.com.

| | 5
| | -

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|YOUNG-DAVIDSON
|--------------

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 totaling 4,733 hectares and is situated on the site of
two past producing mines that produced one million ounces during the 1930s 
1950s. The Young-Davidson open pit mine achieved commercial production on
September 1, 2012, upon the completion of construction activities associated
with surface infrastructure and the processing plant, and upon achieving
sustained targeted daily tonnage rates in both the open pit and mill. On October
31, 2013, the Company declared commercial production at the Young-Davidson
underground mine following the commissioning of the shaft hoisting system.

In January 2014, the Young-Davidson paste backfill plant was
commissioned and completed its first pour. In 2012, the mine plan was
re-engineered to utilize paste backfill to allow for significantly improved
mining recovery and reduced dilution.

In February 2014, the Company received the necessary permits to
increase the daily processing limit of the Young-Davidson mill facility to
10,000 TPD from the previous 8,000 TPD. While the mill facility is expected to
average approximately 8,000 TPD in 2015, this future increase in throughput
capacity will provide considerable flexibility as the underground mine continues
ramping up to its target of 8,000 TPD at the end of 2016. This productivity
upgrade provides organic growth optionality that could permit early treatment of
the longer term stockpile inventory, and potentially enhance the Companys
future cash flow profile.

YOUNG-DAVIDSON
OPERATIONAL REVIEW

|                                             |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|-------------------------------------------- |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                             |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                             |  | 2014          |  |  | 2013          |  |  | 2014        |  |  | 2013        | 
|Underground Operations                       |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore mined                          |  | 380,922       |  |  | 238,321       |  |  | 1,288,295   |  |  | 616,961     | 
|Average grade of
      gold(1)               |  | 3.05          |  |  | 3.10          |  |  | 3.07        |  |  | 2.83        | 
|Metres developed                             |  | 3,438         |  |  | 2,986         |  |  | 14,024      |  |  | 9,992       | 
|Open Pit Operations                          |  |               |  |  |               |  |  |             |  |  |             | 
|Total tonnes mined                           |  | -             |  |  | 3,247,496     |  |  | 3,392,509   |  |  | 12,220,056  | 
|Tonnes of ore mined                          |  | -             |  |  | 730,677       |  |  | 1,343,083   |  |  | 3,202,358   | 
|Average grade of gold(1)                     |  | -             |  |  | 1.04          |  |  | 0.99        |  |  | 1.16        | 
|Tonnes stockpiled ahead of the
      mill    |  | 2,495,739     |  |  | 2,734,347     |  |  | 2,495,739   |  |  | 2,734,347   | 
|Average grade of gold(1)                     |  | 0.75          |  |  | 0.81          |  |  | 0.75        |  |  | 0.81        | 
|Mill Operations                              |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore processed                      |  | 713,676       |  |  | 641,114       |  |  | 2,812,954   |  |  | 2,482,305   | 
|Average grade of
      gold(1)               |  | 1.97          |  |  | 2.04          |  |  | 1.97        |  |  | 1.79        | 
|Average gold recovery rate                   |  | 88%           |  |  | 88%           |  |  | 88%         |  |  | 87%         | 
|Gold ounces produced                         |  | 40,945        |  |  | 29,597        |  |  | 156,753     |  |  | 89,236      | 
|Pre-production gold ounces
      produced(2) |  | -             |  |  | 3,509         |  |  | -           |  |  | 31,502      | 
|Total gold ounces produced                   |  | 40,945        |  |  | 33,106        |  |  | 156,753     |  |  | 120,738     | 
|Gold ounces sold                             |  | 42,143        |  |  | 24,831        |  |  | 161,591     |  |  | 88,878      | 
|Pre-production gold ounces sold(2)           |  | -             |  |  | 3,416         |  |  | -           |  |  | 31,839      | 
|Total gold ounces sold                       |  | 42,143        |  |  | 28,247        |  |  | 161,591     |  |  | 120,717     | 

(1)
    Grams per tonne.(2)
    Includes all underground ounces produced and sold
      prior to declaration of commercial production on October 31,
    2013.


The Company mined 380,922 ore tonnes, or 4,140 TPD, from the
Young-Davidson underground mine during Q4 2014, at a grade of 3.05 gold grams
per tonne, exceeding the year-end target of 4,000 TPD. During the year ended
December 31, 2014, the Company mined 1,288,295 ore tonnes, or 3,530 TPD, at a
grade of 3.07 gold grams per tonne. Mining rates increased significantly from
the 2,590 TPD and 1,690 TPD realized during the quarter and year ended December
31, 2013, respectively, due to the commissioning of the mid-shaft crushing and
hoisting system and the declaration of commercial production in the fourth
quarter of 2013, in addition to planned productivity improvements. Further
productivity improvements in 2015 are anticipated to position the Company to
achieve targets of 6,000 TPD by the end of 2015 and 8,000 TPD by the end of
2016.

The Young-Davidson open pit mine ceased operations in early
June 2014 when it reached the end of its planned life. Prior to ceasing
operations, the Company mined 1,343,083 ore tonnes in the open pit in 2014 at a
grade of 0.99 gold grams per tonne. At the end of Q4 2014, the Company had
2,495,739 tonnes of low grade open pit ore stockpiled ahead of the mill at an
average grade of 0.75 gold grams per tonne.

During Q4 2014, the Company processed 713,676 tonnes, or 7,757
TPD, at the Young-Davidson mill facility, with gold grades averaging 1.97 grams
per tonne, representing an 11% increase over the 641,114 tonnes processed in Q4
2013. The increased throughput resulted from continued operating efficiencies,
and was also enabled by the receipt of the 10,000 TPD permit. Mill recoveries
during the fourth quarter were 88%, consistent with the same period in the prior
year. During the year ended December 31, 2014, the Company processed 2,812,954 tonnes, or
7,707 TPD, at the Young-Davidson mill facility, with gold grades averaging 1.97
grams per tonne. This represents a 13% increase over the 2,482,305 tonnes
processed in the same period of the prior year.

| | 6
| | -

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

Young-Davidson produced 40,945 gold ounces during Q4  2014 compared to 33,106 total ounces produced in Q4 2013. This significant increase in production was  due to the higher mill throughput as described above. The benefit of increased  high grade underground ore processed was partially offset by a decrease in the  grade of open pit stockpiled ore processed. Q4 2014 represents the eleventh consecutive quarterly increase in gold  production at Young-Davidson. During the  year ended December 31, 2014, Young-Davidson produced 156,753 gold ounces  compared to 120,738 produced during the prior year. This result was consistent with the Company’s  2014 guidance for Young-Davidson of 140,000 to 160,000 gold ounces produced  during the year.

YOUNG-DAVIDSON FINANCIAL
REVIEW

|(in thousands, except total cash costs)                                               |  
|------------------------------------------------------------------------------------- | -
|                                                                                      |  
|                                                                                      |  
|                                                                                      |  
|Revenue from mining operations                                                        | $
|Production costs                                                                      | $
|Refining costs                                                                        | $
|Amortization and depletion                                                            | $
|Earnings / (loss) from operations                                                     | $
|Cash flow from operations                                                             | $
|Capital expenditures                                                                  | $
|Net
      free cash flow(1)                                                           | $
|Cash costs per gold ounce, net of by-product
      revenues and NRV adjustments(1)(2) | $
|Cash
      costs per gold ounce, net of by-product revenues(1)(2)                     | $

(1)
    See the Non-GAAP Measures section on page
    22.(2)
    For 2014, cash costs per gold ounce are calculated
      based on ounces sold. For 2013, cash cost per gold ounces are calculated
      based on ounces produced.


During Q4 2014, Young-Davidson recognized revenue of $51.1
million and earnings from operations of $0.1 million compared to revenues of
$31.4 million and a loss from operations of $24.4 million in Q4 2013. Revenues
increased in Q4 2014 as a result of increased gold ounces sold, partially offset
by lower realized gold prices. In addition, in Q4 2013, revenue associated with
underground pre-production ounces sold prior to the declaration of commercial
production on October 31, 2013 was credited against capitalized costs. In 2014,
Young-Davidson recognized revenue of $204.9 million and a loss from operations
of $31.5 million.

Q4 2014 production costs were $30.5 million compared to $30.7
million in the fourth quarter of 2013. In addition, Q4 2014 cash costs per gold
ounce, net of by-product revenues and NRV adjustments, were $719, representing a
15% decrease from the same period in 2013. The decreased cost per ounce was due
primarily to the increase in the underground contribution to overall site
production, and the favourable weakening of the Canadian dollar in the current
quarter as compared to the prior year.

Production costs for the year ended December 31,  2014 were $138.2 million compared to $76.4 million in 2013. Production costs increased due to the  addition of underground costs subsequent to the declaration of commercial  production on October 31, 2013. Prior to  that date, production costs related to underground ounces produced were  capitalized. In 2014, cash costs per  gold ounce, net of by-product revenues and NRV adjustments, were $825; an 11%  increase from 2013 and 3% higher than the Company’s 2014 guidance of $800 per  ounce. The increased cost per ounce was  due primarily to a higher open pit operating strip ratio, higher open pit  mining cost per tonne and lower grade of open pit ore processed, partially  offset by the weakened Canadian dollar during the year.

During the year, the Company recognized net non-cash NRV
adjustments of $5.5 million on low grade long-term stockpile inventory due to a
decline in the price of gold. Of this amount, $3.3 million was recognized in
production costs and $2.2 million was recognized in amortization and depletion.
During 2013, as a result of a decrease in the gold price and higher estimated
future processing costs, the Company recognized an NRV adjustment of $16.6
million, of which $10.0 million was recognized in production costs and $6.6
million was recognized in amortization and depletion.

The loss from operations in the year ended December 31, 2014
resulted from higher production costs and amortization and depletion expense as
compared to the same period in 2013. Amortization and depletion expense
increased due to the addition of depletion expense from the underground mine,
and the depletion of stripping costs capitalized in prior periods as the open
pit approached the end of its mine life. Amortization and depletion expense per
ounce declined in the second half of 2014, subsequent to the cessation of mining
in the open pit.

The Company reported a $21.9 million quarter-over-quarter
increase in operating cash flow driven by the increased production noted
previously, and a decline in operating costs per ounce. During Q4 2014, the
Young-Davidson mine also generated net free cash flow of $9.1 million. Capital
expenditures in Q4 2014 included $9.6 million in site infrastructure, and $13.3
million in underground development. During the year ended December 31,
2014, capital expenditures at Young-Davidson of $137.2 million exceeded
operating cash flow of $63.1 million resulting in negative net free cash flow of
$74.1 million. Capital expenditures in the year ended December 31, 2014 included
$56.5 million in site infrastructure, $78.6 million in underground development,
and $2.1 million in capitalized borrowing costs. During 2014, $17.7 million of
construction-related accounts payable balances from 2013 were paid and included
in capital expenditures.

As a result of accelerated capital investment during the first
nine months of the year the Company increased its 2014 capital expenditure
forecast at Young-Davidson on August 7, 2014, from approximately $110 million to
approximately $135 million. Accelerated capital investment initiatives included
underground development rates exceeding plan and the sinking of the MCM shaft
being ahead of schedule. Full year capital expenditures, after adjusting for
$2.1 million of capitalized borrowing costs, were consistent with the revised
guidance.

| | 7
| | -

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|EL
CHANATE
|----------

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.

EL CHANATE OPERATIONAL
REVIEW

|                                                             |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|------------------------------------------------------------ |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                                             |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                                             |  | 2014          |  |  | 2013          |  |  | 2014        |  |  | 2013        | 
|Open Pit Operations                                          |  |               |  |  |               |  |  |             |  |  |             | 
|Total tonnes mined                                           |  | 8,243,372     |  |  | 9,060,830     |  |  | 34,073,324  |  |  | 35,666,946  | 
|Tonnes of ore mined                                          |  | 1,765,835     |  |  | 2,213,858     |  |  | 8,683,292   |  |  | 9,111,448   | 
|Capitalized stripping tonnes                                 |  | 4,752,524     |  |  | 4,348,728     |  |  | 14,582,767  |  |  | 17,297,066  | 
|Average grade of gold(1)                                     |  | 0.59          |  |  | 0.56          |  |  | 0.50        |  |  | 0.56        | 
|Tonnes stockpiled ahead of the
      heap leach pad          |  | 31,466        |  |  | 194,688       |  |  | 31,466      |  |  | 194,688     | 
|Average grade of gold(1)                                     |  | 0.70          |  |  | 0.60          |  |  | 0.70        |  |  | 0.60        | 
|Crushing and Heap Leach Operations                           |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore crushed and placed
      on the heap leach pad |  | 1,532,859     |  |  | 1,623,098     |  |  | 6,788,223   |  |  | 6,725,081   | 
|Average grade of gold processed(1)                           |  | 0.64          |  |  | 0.69          |  |  | 0.60        |  |  | 0.70        | 
|Tonnes of low grade ore placed on the heap leach pad         |  | 231,836       |  |  | 566,193       |  |  | 2,058,289   |  |  | 2,342,861   | 
|Average grade of gold processed(1)                           |  | 0.20          |  |  | 0.19          |  |  | 0.20        |  |  | 0.19        | 
|Total tonnes of ore processed                                |  | 1,764,695     |  |  | 2,189,291     |  |  | 8,846,512   |  |  | 9,067,942   | 
|Average grade of gold processed(1)                           |  | 0.58          |  |  | 0.56          |  |  | 0.50        |  |  | 0.57        | 
|Gold ounces produced                                         |  | 15,638        |  |  | 16,420        |  |  | 67,279      |  |  | 71,864      | 
|Gold
      ounces sold                                       |  | 16,506        |  |  | 15,024        |  |  | 66,375      |  |  | 72,035      | 

(1)
    Grams per tonne.


During Q4 2014, the Company mined 8,243,372 tonnes at the El
Chanate open pit, including 1,765,835 ore tonnes, at an average grade of 0.59
gold grams per tonne. During 2014, the Company mined 34,073,324 tonnes,
including 8,683,292 ore tonnes, at an average grade of 0.50 gold grams per
tonne. While ore tonnes mined remained relatively consistent year-over-year, the
decrease in average grades during 2014 compared to the prior year was due to
mine sequencing.

Capitalized stripping activities totaled 4,752,524 and
14,582,767 tonnes during Q4 2014 and the year ended December 31, 2014,
respectively, compared to 4,348,728 and 17,297,066 tonnes during the same
periods in 2013, respectively. The decrease during 2014 was due to the
completion of the southeast push-back of the pit in 2013. Stripping activities
at El Chanate represented a capital investment of $7.6 million during the fourth
quarter of 2014, compared to an investment of $6.3 million in Q4 2013.

The Company crushed and placed1,532,859 tonnes of open
pit ore on the heap leach pad in Q4 2014, at an average rate of 16,662 TPD,
compared to the average rate during Q4 2013 of 17,642 TPD. During Q4 2014, the
Company also placed 231,836 tonnes of low grade run-of-mine material on the heap
leach pad. Total tonnes processed in Q4 2014 of 1,764,695 tonnes, or 19,181 TPD,
were lower than total tonnes processed in Q4 2013 of 2,189,291, primarily due to
the decrease in low grade run-of-mine ore. During 2014, the Company crushed and
placed 6,788,223 tonnes of ore at an average rate of 18,598 TPD, consistent with
the 18,425 TPD stacking rate in 2013.

The grade of ore crushed and placed averaged 0.64 gold grams
per tonne during Q4 2014 compared to an average grade of 0.69 gold grams per
tonne in Q4 2013. Annual grades crushed and placed in 2014 averaged 0.60 gold
grams per tonne compared to an average grade of 0.70 gold grams per tonne in
2013. The variances in grades in the current year periods versus prior year
periods were largely due to the effects of mine sequencing. During Q4 2014, the
grade of all material processed, including run-of-mine material, averaged 0.58
grams per tonne placed compared to 0.56 grams per tonne placed in Q4 2013.

During the quarter and year-to-date, El Chanate produced 15,638
and 67,279 gold ounces, respectively, compared to production of 16,420 and
71,864 gold ounces in the same periods of the prior year. The decrease
period-over-period is primarily a result of the lower grade of crushed ore
placed in 2014 as compared to the prior year. Total  2014 production was slightly below the lower end of the Company’s 2014 guidance  of 70,000 ounces produced.

| | 8
| | -

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

EL CHANATE FINANCIAL
REVIEW

|(in thousands, except total cash costs)                                            |  
|---------------------------------------------------------------------------------- | -
|                                                                                   |  
|                                                                                   |  
|                                                                                   |  
|Revenue from mining operations                                                     | $
|Production costs                                                                   | $
|Refining costs                                                                     | $
|Amortization and depletion                                                         | $
|Loss
      from operations(1)                                                      | $
|Cash flow from operations                                                          | $
|Capital expenditures(2)                                                            | $
|Net
      free cash flow(3)                                                        | $
|Cash costs per gold ounce, net of by-product
      revenues and NRV adjustments(3) | $
|Cash
      costs per gold ounce, net of by-product revenues(3)                     | $

(1)
    Earnings from operations includes general and
      administrative expenses and impairment charges.(2)
    Capital expenditures include $3.4 million and $5.1
      million in exploration expenditures for the years ended December 31, 2014
      and 2013, respectively.(3)
    See the Non-GAAP Measures section on page
    22.


The Company recognized revenue at El Chanate of $20.1 million
during Q4 2014, compared to revenue of $19.4 million in Q4 2013. During the year
ended December 31, 2014, the Company recognized revenue at El Chanate of $86.3
million, compared to revenue of $103.2 million during the year ended December
31, 2013. This annual decrease in revenue was due to a decline in ounces sold in
2014 and a lower average realized gold price.

The Company recognized a loss from operations at El Chanate of $107.5 million during Q4 2014, compared to a loss from operations of $91.3 million in Q4 2013. Included in the loss from operations in Q4 2014 was an impairment charge of $90.0 million that arose primarily from a decrease in gold reserve estimates, an increase in strip ratio, which indicates an increase in the amount of waste tonnes required to access a tonne of ore, and an increase in future processing costs on a per ounce basis. Reserve estimates decreased and the strip ratio increased primarily due to a reduction in overall slope angles. The reduction in planned slope angles came after an external geotechnical review of geotechnical drilling, mapping, and slope performance. The Company also recorded an impairment charge in Q4 2013 of $74.0 million. The loss from operations in Q4 2014 also included a non-cash NRV adjustment on ore inventory of $16.4 million at December 31, 2014, of which $12.7 million was recognized in production costs and $3.7 million was included in amortization and depletion. The NRV adjustment was caused by a decrease in estimated future gold prices and an increase in future estimated processing costs. In Q4 2013, El Chanate recorded an NRV adjustment of $21.0 million, of which $19.3 million was recognized in production costs and $1.7 million was included in amortization and depletion.

Losses from operations in the year ended December 31, 2014 were
$90.2 million, compared to prior year losses from operations of $143.6 million.
This reduction in losses resulted primarily from larger impairment charges and
NRV adjustments in 2013, offset by lower revenue and production costs. During
the year ended December 31, 2013, the Company recorded total impairment charges
of $154.0 million at El Chanate. During the year ended December 31, 2014, the
Company recorded total NRV adjustments at El Chanate of $18.0 million, compared
to total NRV adjustments of $25.5 million recorded during the year ended
December 31, 2013. Earnings from operations before impairment charges and NRV
adjustments were $18.6 million in 2014 compared to $37.5 million in 2013. This
year-over-year decline is due to a decrease in gold ounces sold, a lower average
realized gold price, and an increase in amortization and depletion recorded
during 2014.

Cash costs per gold ounce, net of by-product revenues and NRV adjustments, were $816 in the fourth quarter of 2014, an increase of 33% over cash costs per gold ounce, net of by-product revenues and NRV adjustments, of $615 in the fourth quarter of 2013. The quarter-over-quarter increase was due to an increase in the average cost of ore inventories, which resulted from lower grades stacked in the first half of the year and an increase in the operating strip ratio. Cash costs per gold ounce, net of by-product revenues and NRV adjustments, were $669 in 2014, an increase of 13% over cash costs per gold ounce, net of by-product revenues and NRV adjustments, of $592 in the same period of prior year. El Chanate’s cash costs were consistent with the Company’s 2014 guidance of between $625 and $725 per ounce.

During Q4 2014, capital expenditures of $8.7 million at El Chanate exceeded operating cash flows of $3.2 million, resulting in negative net free cash flow of $5.5 million. Capital expenditures in Q4 2014 included $7.6 million in capitalized stripping activities, $0.4 million in other sustaining capital and optimization initiatives, and $0.7 million in exploration expenditures. During the year ended December 31, 2014, capital expenditures at El Chanate of $29.6 million exceeded operating cash flows of $15.7 million, resulting in negative free cash flow of $13.9 million. Operating cash flow in 2014 was impacted by a delay in the collection of $3.3 million related to 2013 income taxes receivable. Capital expenditures at El Chanate in 2014 included $23.5 million in capitalized stripping activities, $2.7 million in other sustaining capital and optimization initiatives, and $3.4 million in exploration expenditures. Excluding $3.4 million of exploration expenditures, total capital expenditures at El Chanate were $26.2 million, 5% higher than the Company’s 2014 guidance of approximately $25 million.

| | 9
| | -

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|EXPLORATION REVIEW
|------------------

On February 19, 2015, the Company reported updated reserves and
resources as at December 31, 2014. Further details on the updated reserves and
resources by category can be found in the Companys February 19, 2015press release or in the Companys Annual Information Form, both of which can
be found on the Companys website at www.auricogold.com.

KEMESS

During Q4 2014, the Company continued an exploration program at
Kemess East (located approximately one kilometre from the Kemess Underground
Project). In Q4 2014, the Company completed 251 metres of drilling and an
airborne geophysical survey totaling 1,111 line kilometres.

On January 21, 2015, the Company announced an initial National
Instrument 43-101 compliant indicated resource of 2.1 million gold equivalent
ounces and an inferred resource of 3.4 million gold equivalent ounces at the
Kemess East deposit. Further details can be found in the Companys January 21,
2015 and February 19, 2015 press releases, or in the Companys Annual
Information Form, all of which can be found on the Companys website at www.auricogold.com.

EL CHANATE

During Q4 2014, the Company completed 13 holes consisting of
1,836 metres of reverse circulation drilling, and 6 core holes consisting of
1,663 metres of drilling northwest and southeast of the open pit along the trend
of the El Chanate deposit.

During Q4 2014, geological field work continued on the El
Chanate extension. This work was conducted in connection with the Companys
option to earn a 70% interest in claims along the Chanate Fault to the northwest
of the mine.

LYNN LAKE

On November 11, 2014, the Company announced a strategic
partnership with Carlisle in the Lynn Lake Gold Camp (Lynn Lake Project).
Under the agreement the Company has acquired a 25% interest in the Lynn Lake
Project for an initial cash contribution of CAD $5.0 million and can earn up to
a 60% interest by funding CAD $20.0 million on the project over a three-year
period and delivering a feasibility study within that time period.

LAS LAJAS PROJECT

During Q4 2014, the Company continued geological mapping and
trenching.

SANTA FE PROJECT

During Q4 2014, the Company drilled 12 diamond drill holes
consisting of 1,983 metres. The target on this property is low sulfidation
epithermal gold and silver mineralization typical of this deposit type in the
Sierra Madre region of Mexico.

| | 10
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|SUMMARIZED FINANCIAL AND
OPERATING RESULTS
|------------------------------------------

|(in thousands, except ounces, per share
      amounts, average realized prices, all-in sustaining costs and total cash
      costs) |  
|----------------------------------------------------------------------------------------------------------------------------------- | -
|                                                                                                                                    |  
|                                                                                                                                    |  
|                                                                                                                                    |  
|Continuing operations -
      Young-Davidson mine, El Chanate mine, and Corporate and other                                         |  
|Gold ounces
      produced(1)                                                                                                       |  
|Gold ounces sold(1)                                                                                                                 |  
|Pre-production gold ounces
      produced(1)                                                                                        |  
|Pre-production gold ounces sold(1)                                                                                                  |  
|Cash costs per gold ounce,
      net of by-product revenues and NRV adjustments(1)(2)(3)(4)                                         | $
|Cash costs per gold ounce, net
      of by-product revenues(1)(2)(3)(4)                                                             | $
|All-in sustaining costs per
      gold ounce sold, net of by-product revenues and NRV
      adjustments(1)(3)(4)                    | $
|All-in sustaining costs per gold ounce sold,
      net of by-product revenues(1)(3)(4)                                              | $
|Revenue from mining operations                                                                                                      | $
|Production
      costs(2)(5)                                                                                                        | $
|Loss from
      operations(2)                                                                                                       | $
|Net loss(2)                                                                                                                         | $
|Net loss per share,
      basic(2)                                                                                                  | $
|Net loss per share,
      diluted(2)                                                                                                | $
|Earnings before interest, taxes, depreciation, and
      amortization(3)                                                            | $
|Operating cash
      flow(2)                                                                                                        | $
|Net free cash flow(3)                                                                                                               | $
|Discontinued operations - Ocampo
      mine, El Cubo mine, and Australian Operations(6)                                             |  
|Gold ounces produced                                                                                                                |  
|Silver ounces produced                                                                                                              |  
|Gold ounces sold                                                                                                                    |  
|Silver ounces sold                                                                                                                  |  
|Cash costs per gold ounce, net
      of by-product revenues, co-product revenues and NRV
      adjustments(3)                       | $
|Cash costs per gold ounce, net of by-product and
      co-product revenues(3)                                                       | $
|Revenue from mining operations                                                                                                      | $
|Production costs(5)                                                                                                                 | $
|Earnings from operations                                                                                                            | $
|Net earnings                                                                                                                        | $
|Net earnings per share, basic                                                                                                       | $
|Net earnings per share, diluted                                                                                                     | $
|Operating cash flow                                                                                                                 | $
|Net free cash flow(3)                                                                                                               | $

| | 11
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|                                                                                            |   | Year Ended  |   |   | Year Ended  |   |   | Year Ended  |  
|------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                                                            |   | December 31 |   |   | December 31 |   |   | December 31 |  
|                                                                                            |   | 2014        |   |   | 2013        |   |   | 2012        |  
|Total                                                                                       |  
|Gold ounces produced(1)                                                                     |   | 224,032     |   |   | 161,100     |   |   | 223,485     |  
|Silver ounces produced                                                                      |   | -           |   |   | -           |   |   | 2,983,924   |  
|Gold ounces sold(1)                                                                         |   | 227,966     |   |   | 160,913     |   |   | 217,735     |  
|Silver ounces sold                                                                          |   | -           |   |   | -           |   |   | 2,807,754   |  
|Pre-production gold ounces
      produced(1)                                                |   | -           |   |   | 31,502      |   |   | 26,999      |  
|Pre-production gold ounces sold(1)                                                          |   | -           |   |   | 31,839      |   |   | 17,505      |  
|Average realized gold price per ounce                                                       | $ | 1,265       |   | $ | 1,395       |   | $ | 1,678       |  
|Average realized silver price per ounce                                                     | $ | -           |   | $ | -           |   | $ | 31.16       |  
|Cash costs per gold ounce, net of by-product
      revenues and NRV adjustments(1)(2)(3)(4) | $ | 779         |   | $ | 676         |   | $ | 503         |  
|Cash
      costs per gold ounce, net of by-product revenues(1)(2)(3)(4)                     | $ | 847         |   | $ | 837         |   | $ | 551         |  
|Revenue from mining operations                                                              | $ | 291,182     |   | $ | 227,631     |   | $ | 457,367     |  
|Production costs(2)(5)                                                                      | $ | 199,309     |   | $ | 147,981     |   | $ | 217,519     |  
|Loss from operations(2)                                                                     | $ | (154,705    | ) | $ | (178,087    | ) | $ | (40,564     | )
|Net (loss) / earnings(2)                                                                    | $ | (169,648    | ) | $ | (176,770    | ) | $ | 31,273      |  
|Net (loss) / earnings per share,
      basic(2)                                             | $ | (0.68       | ) | $ | (0.71       | ) | $ | 0.11        |  
|Net
      (loss) / earnings per share, diluted(2)                                           | $ | (0.68       | ) | $ | (0.72       | ) | $ | 0.11        |  
|Operating cash flow(2)                                                                      | $ | 60,414      |   | $ | 63,266      |   | $ | 71,840      |  
|Net free cash flow(3)                                                                       | $ | (128,415    | ) | $ | (186,156    | ) | $ | (433,180    | )
|Total cash                                                                                  | $ | 89,031      |   | $ | 142,652     |   | $ | 603,401     |  
|Cash
      dividends per share, declared                                                    | $ | 0.026       |   | $ | 0.16        |   | $ | Nil         |  

(1)
    The Young-Davidson open pit mine declared commercial
      production on September 1, 2012, and is therefore excluded from
      consolidated cash costs and consolidated all-in sustaining costs prior to
      this date. The Young-Davidson underground mine declared commercial
      production on October 31, 2013, and therefore, all underground ounces are
      excluded from consolidated cash costs and consolidated all-in sustaining
      costs prior to this date. Pre-production ounces produced and sold are
      excluded from consolidated ounces produced and sold as revenue from these
      ounces was credited against capitalized project costs.(2)
    Certain 2012 information has been restated as a result
      of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a
      Surface Mine, which was applied prospectively to production stripping
      costs incurred on or after January 1, 2012. For further details, refer to
      note 3(a) to the consolidated financial statements for the year ended
      December 31, 2013.(3)
    See the Non-GAAP Measures section on page
    22.(4)
    For the year ended December 31, 2014, cash costs per
      gold ounce are calculated using gold ounces sold at the El Chanate and
      Young-Davidson mines. For the year ended December 31, 2013, cash costs per
      gold ounce are calculated using gold ounces sold at the El Chanate mine
      and gold ounces produced at the Young-Davidson mine. For the year ended
      December 31, 2012, cash costs per gold ounce are calculated using ounces
      sold at the El Chanate, Ocampo, El Cubo, Fosterville and Stawell mines and
      ounces produced at the Young-Davidson mine.(5)
    Production costs do not include amortization and
      depletion or refining costs.(6)
    The Company disposed of the Ocampo, El Cubo,
      Fosterville and Stawell mines in 2012, and reclassified the results from
      these operations as discontinued
operations.


| | 12
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|REVIEW
      OF ANNUAL FINANCIAL RESULTS
|----------------------------------------

2014 versus 2013

During 2014, the Company sold 227,966 gold ounces at
Young-Davidson and El Chanate, compared to sales of 160,913 gold ounces in 2013.
Revenue during 2014 increased to $291.2 million, as compared to $227.6 million
in 2013. This $63.6 million increase in revenue was due to an increase in ounces
sold at the Young-Davidson mine, and was partially offset by lower realized gold
prices in 2014. The Company also sold 31,839 pre-production ounces at
Young-Davidson during 2013, however, the related revenue was credited against
capitalized costs.

The Company recognized a loss from operations of $154.7 million
in 2014, compared to a loss from operations of $178.1 million in 2013. During
the year ended December 31, 2014, the Company recorded an impairment charge of
$90.0 million on property, plant and equipment and mining interests at the El
Chanate mine. During the year ended December 31, 2013, the Company recorded
impairment charges of $154.0 million on goodwill, property, plant and equipment
and mining interests at the El Chanate mine. In addition, the Company recognized
NRV adjustments of $23.5 million during the year ended December 31, 2014
compared to total NRV adjustments of $42.1 million during the year ended
December 31, 2013.

Before impairment charges and NRV adjustments, losses from
operations were $39.5 million in 2014, compared to earnings from operations of
$22.6 million in the same period of 2013. The year-over-year reduction in
earnings from operations resulted from increased cash costs, as discussed below,
and increased amortization and depletion expense during 2014. Amortization and
depletion expense increased due to the addition of depletion expense from the
Young-Davidson underground mine and the depletion of stripping costs capitalized
in prior periods as the Young-Davidson open pit approached the end of its mine
life.

During 2014, consolidated cash costs per gold ounce, net of
by-product revenues and NRV adjustments, were $779, representing a 15% increase
over cash costs per gold ounce of $676 in 2013. This year-over-year increase was
primarily due to a higher open pit operating strip ratio, higher open pit mining
cost per tonne, and lower grade of open pit ore processed at Young-Davidson. In
addition, an increase in the average cost of ore inventories at El Chanate also
contributed to the increased cash costs.

The Company reported a net loss of $169.6 million in 2014,
compared to a net loss from operations of $176.8 million in 2013. Included in
net loss for 2014 was a $28.1 million increase in income tax recovery compared
to 2013. This was offset by a $27.4 million increase in other losses, a $2.4
million increase in foreign exchange losses, and a $17.0 million increase in
finance costs due to interest on the senior secured notes issued in March 2014.
Other losses increased primarily due to a $15.6 million loss on the modification
of the Companys convertible senior notes, which resulted from the cash tender
offer announced during Q1 2014, and amortization on the retained interest
royalty of $13.3 million.

During 2014, consolidated all-in sustaining costs per gold
ounce, net of by-product revenues and NRV adjustments, were $1,200, representing
a 2% increase over all-in sustaining costs per gold ounce, net of by-product
revenues and NRV adjustments, of $1,181 in 2013. The increase was due to higher
Young-Davidson open pit cash costs noted above, partially offset by an increase
in gold ounces sold in 2014. The Company’s consolidated all-in sustaining costs per ounce were consistent  with 2014 guidance.

In 2014, the Company reported EBITDA of negative $44.0 million,
compared to EBITDA of negative $109.2 million in 2013. This increase was
primarily due to lower impairment charges recorded in 2014, as discussed
previously, and a $63.6 million increase in revenue recorded in the current year
resulting from increased ounces sold at the Young-Davidson mine. These items
were offset by increased production costs at Young-Davidson and El Chanate in
2014, as discussed previously.

The Company reported operating cash flow of $60.4 million
during 2014, a decrease of $2.9 million from operating cash flow of $63.3
million in the same period in prior year. This decrease in operating cash flow
arose primarily as a result of a reduction in the operating cash flow contribution from El
Chanate. After deducting capital expenditures of $188.8 million, the Companys
net free cash flow from operations for 2014 was an outflow of $128.4 million.

| | 13
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

2013 versus 2012

During 2013, the Company sold 160,913 gold ounces at
Young-Davidson and El Chanate, compared to sales of 94,422 gold ounces in 2012
when the Young-Davidson open pit mine contributed four months of sales
subsequent to the declaration of commercial production on September 1, 2012.
Revenues from continuing operations during 2013 increased to $227.6 million, as
compared to revenues from continuing operations of $163.6 million in 2012. This
$64.0 million increase in revenue was due to an increase in ounces sold at the
Young-Davidson mine, and was partially offset by lower realized gold prices in
2013. The Company sold 31,839 pre-production ounces at Young-Davidson during
2013, compared to 17,505 pre-production ounces sold during 2012. The related
revenues from pre-production ounces were credited against capitalized costs.

The Company recognized a loss from continuing operations of
$178.1 million in 2013, compared to a loss from continuing operations of $96.9
million in 2012. During 2013, primarily as a result of the impact of lower gold
prices, the Company recorded impairment charges of $154.0 million on goodwill,
property, plant and equipment and mining interests at the El Chanate mine. In
addition, the Company recognized NRV adjustments on ore inventories at El
Chanate and Young-Davidson of $25.5 million and $16.6 million, respectively. In
2012, the Company recorded an impairment charge related to the El Chanate mine
of $127.0 million. Before these impairment charges and NRV adjustments, earnings
from continuing operations were $18.0 million, a 40% decrease compared to 2012.
This decrease was primarily due to reduced realized gold prices during the year,
offset by earnings from a full year of operations at the Young-Davidson open pit
mine, which achieved commercial production on September 1, 2012, and two months
of commercial production from the underground mine which achieved commercial
production on October 31, 2013.

The Company reported a net loss from continuing operations of
$176.8 million in 2013, compared to a net loss from continuing operations of
$99.8 million in 2012. The increase in net loss was due to the higher losses
from continuing operations mentioned above and a $4.1 million increase in
foreign exchange losses, offset by a $10.2 million increase in income tax
recoveries. Foreign exchange gains resulted from the weakening of the Canadian
dollar and Mexican peso relative to the US dollar.

During 2013, consolidated cash costs per gold ounce from
continuing operations, net of by-product revenues and NRV adjustments were $676,
representing a 26% increase over 2012 cash costs per gold ounce of $536. This
year-over-year increase resulted from the addition of cash costs at the
Young-Davidson open pit mine for a full year and higher average ore inventory
costs at El Chanate. The higher costs at El Chanate were due to higher
quantities of solution applied to the leach pad and a reduction in capitalized
stripping costs associated with the adoption of a new accounting standard. In
2012, cash costs per gold ounce included cash costs from the Young-Davison open
pit mine subsequent to the declaration of commercial production on September 1,
2012.

During 2013, all-in sustaining costs per gold ounce from
continuing operations, net of by-product revenues and NRV adjustments, were
$1,181, representing a 6% decrease over 2012 all-in sustaining costs per gold
ounce of $1,259. The decrease is primarily due to decreased general and
administration expenditures per gold ounce sold, offset by the addition of cash
costs from the Young-Davidson open pit mine and increased cash costs at the El
Chanate mine.

In 2013, the Company reported EBITDA of negative $109.2 million
compared to EBITDA of negative $80.0 million in 2012. The decline in EBITDA is
primarily due to the increase in production costs, amortization and depletion
expense, and impairment charges mentioned above. These decreases in EBITDA were
partially offset by an increase in revenues that resulted from a full year of
operations at the Young-Davidson open pit mine.

The Company reported operating cash flow from continuing
operations of $63.3 million during 2013, an increase of $70.5 million from the
prior year cash outflow of $7.2 million. This increase in operating cash flow
arose primarily as a result of additional operating cash flow contributed from
the Young-Davidson mine, partially offset by lower operating cash flow at the El
Chanate mine due to lower realized prices and higher cash costs per ounce. After
deducting capital expenditures of $249.4 million, primarily related to
Young-Davidson, the Companys 2013 net free cash flow from continuing operations
was an outflow of $186.2 million.

| | 14
| | --

---

|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|SUMMARY
      OF QUARTERLY FINANCIAL AND
OPERATING RESULTS
|----------------------------------------------------------

(in thousands, except ounces, per share
      amounts, average realized prices, all-in sustaining costs and total cash
      costs)Q4 2014
    
    
    Q3 2014
    
    
    Q2 2014
    
    
    Q1 2014
    
    
    Q4 2013
    
    
    Q3 2013
    
    
    Q2 2013
    
    
    Q1 2013Gold
      ounces produced
    
    56,583
    
    
    57,037
    
    
    56,198
    
    
    54,214
    
    
    46,017
    
    
    38,456
    
    
    38,186
    
    
    38,441Gold
      ounces sold
    
    58,649
    
    
    56,970
    
    
    58,277
    
    
    54,070
    
    
    39,855
    
    
    40,185
    
    
    41,540
    
    
    39,333Average realized gold price
    $
    1,202
    
    $
    1,280
    
    $
    1,283
    
    $
    1,297
    
    $
    1,257
    
    $
    1,332
    
    $
    1,369
    
    $
    1,627Cash costs per gold ounce, net of by-product
      revenues and NRV adjustments(1)(3)
    $
    746
    
    $
    706
    
    $
    801
    
    $
    870
    
    $
    771
    
    $
    628
    
    $
    655
    
    $
    635Cash costs per gold ounce, net of by-product
      revenues(1)(3)
    $
    935
    
    $
    784
    
    $
    801
    
    $
    870
    
    $
    1,284
    
    $
    497
    
    $
    848
    
    $
    635All-in sustaining costs per gold ounce, sold,
      net of by-product revenues and NRV adjustments(1)
    $
    1,129
    
    $
    1,101
    
    $
    1,191
    
    $
    1,390
    
    $
    1,232
    
    $
    1,210
    
    $
    1,189
    
    $
    1,090All-in sustaining costs per gold ounce, sold, net of by-product
      revenues(1)
    $
    1,317
    
    $
    1,179
    
    $
    1,191
    
    $
    1,390
    
    $
    1,807
    
    $
    1,087
    
    $
    1,382
    
    $
    1,090Revenue from mining operations
    $
    71,194
    
    $
    73,505
    
    $
    75,530
    
    $
    70,953
    
    $
    50,782
    
    $
    54,304
    
    $
    57,660
    
    $
    64,885Production costs(2)
    $
    57,262
    
    $
    45,463
    
    $
    48,691
    
    $
    47,893
    
    $
    59,972
    
    $
    21,079
    
    $
    39,055
    
    $
    27,875(Loss) / earnings from operations
    $
    (115,011
    )
    $
    (7,337
    )
    $
    (16,293
    )
    $
    (16,064
    )
    $
    (104,158
    )
    $
    12,230
    
    $
    (103,674
    )
    $
    17,515Net (loss) / earnings
    $
    (108,259
    )
    $
    (15,722
    )
    $
    (16,776
    )
    $
    (28,891
    )
    $
    (106,412
    )
    $
    14,859
    
    $
    (103,491
    )
    $
    18,274Net (loss) / earnings per share
    $
    (0.43
    )
    $
    (0.06
    )
    $
    (0.07
    )
    $
    (0.12
    )
    $
    (0.43
    )
    $
    0.06
    
    $
    (0.42
    )
    $
    0.07Net (loss) / earnings per share, diluted
    $
    (0.43
    )
    $
    (0.06
    )
    $
    (0.07
    )
    $
    (0.12
    )
    $
    (0.43
    )
    $
    0.04
    
    $
    (0.42
    )
    $
    0.04Earnings before interest, taxes, depreciation and amortization
    $
    (87,309
    )
    $
    22,344
    
    $
    22,904
    
    $
    (1,899
    )
    $
    (80,069
    )
    $
    28,637
    
    $
    (91,432
    )
    $
    33,651Operating cash flow
    $
    28,486
    
    $
    2,788
    
    $
    4,649
    
    $
    24,491
    
    $
    11,954
    
    $
    24,338
    
    $
    13,875
    
    $
    13,099Net
      free cash flow(1)
    $
    (12,938
    )
    $
    (47,889
    )
    $
    (36,467
    )
    $
    (31,121
    )
    $
    (51,618
    )
    $
    (55,734
    )
    $
    (46,399
    )
    $
    (32,405
    )


(1)
    See the Non-GAAP Measures section on page
    22.(2)
    Production costs do not include amortization and
      depletion or refining costs.(3)
    Gold ounces includes ounces sold at the El Chanate.
      For the Young-Davidson mine, gold ounces includes ounces sold in 2014 and
      ounces produced in 2013.


|REVIEW
      OF FOURTH QUARTER FINANCIAL
RESULTS
|------------------------------------------------

During the fourth quarter of 2014, the Company sold 58,649 gold
ounces at the El Chanate and Young-Davidson mines, a 47% increase over 39,855
gold ounces sold in Q4 2013. Revenue increased from $50.8 million in Q4 2013 to
$71.2 million in the fourth quarter of 2014. This $20.4 million increase in
revenue was largely due to the increase in gold ounces sold during Q4 2014,
partially offset by lower realized gold prices. The Company also sold 3,416
underground pre-production ounces at Young-Davidson during the fourth quarter of
2013, however, the related revenue from pre-production ounces sold was credited
against capitalized costs.

The Company recognized a loss from operations of $115.0 million
in the fourth quarter of 2014, compared to a loss from operations of $104.2
million in the same period of 2013. The increase in loss from operations in 2014
was due to impairment charges on the El Chanate mine of $90.0 million compared
to impairment charges of $74.0 million in Q4 2013. During the fourth quarter of
2014, the Company also recognized NRV adjustments on ore in process heap leach
inventory at El Chanate of $16.4 million. Comparatively, in Q4 2013 the Company
recognized NRV adjustments totaling $16.2 million on the low grade long-term
stockpile inventory at Young-Davidson and $21.0 million on the heap leach
inventory at El Chanate. In addition, the increase in loss from operations was
due to increased amortization and depletion costs which were higher in Q4 2014
as compared to Q4 2013 due to the addition of depletion expense from the
Young-Davidson underground mine.

Q4 2014 cash costs per gold ounce, net of by-product revenues
and NRV adjustments, were $746, a 3% decrease from Q4 2013. This
quarter-over-quarter decrease was primarily due to increased underground
contribution to overall site production at Young-Davidson and a weaker Canadian
dollar compared to prior year, partially offset by an increase in average cost
of ore inventories at El Chanate.

The Company reported a net loss of $108.3 million in the fourth
quarter of 2014, compared to a net loss of $106.4 million in Q4 2013. Net loss
increased in the current quarter as a result of the higher loss from operations
discussed previously. This increase was offset by a $14.7 million increase in
income tax recovery as discussed on page 17. In addition, contributing to net
loss in 2014 was a $3.8 million increase in financing costs due to interest
incurred on the senior secured notes issued in March 2014, and a $1.0 million
increase in foreign exchange loss quarter-over-quarter, primarily due to a
weaker Canadian dollar.

In the fourth quarter of 2014, all-in sustaining costs per gold
ounce, net of by-product revenues and NRV adjustments, decreased by 8% to
$1,129, as compared to all-in sustaining costs per gold ounce, net of by-product
revenues and NRV adjustments, of $1,232 in Q4 2013. This decrease was due to
lower general and administrative expenditures and increased gold ounces sold,
partially offset by the higher Young-Davidson open pit cash costs noted
previously.

| | 15
| | --

---

|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

The Company reported EBITDA of negative $87.3 million in Q4
2014, compared to EBITDA of negative $80.1 million in Q4 2013. This
quarter-over-quarter decrease in EBITDA is primarily due to higher impairment
charges recorded in Q4 2014, compared to Q4 2013, as discussed previously. These
items are offset by a $20.4 million quarter-over-quarter increase in revenue
largely due to the increase in gold ounces sold in Q4 2014.

The Company reported operating cash flow of $28.5 million
during the fourth quarter, an increase of $16.5 million over operating cash flow
of $12.0 million in Q4 2013. This increase in operating cash flow was primarily
due to increased gold ounces sold at Young-Davidson resulting in higher revenues
during the current quarter as compared to the prior year. After deducting
capital expenditures of $41.4 million, the Companys Q4 2014 net free cash flow
was negative $12.9 million.

|CONSOLIDATED EXPENSES
|---------------------

|(in thousands)                                                               |  
|---------------------------------------------------------------------------- | -
|                                                                             |  
|                                                                             |  
|                                                                             |  
|Reclamation, care and maintenance costs                                      | $
|General and administrative(2)                                                | $
|Exploration and business development                                         | $
|Impairment charges                                                           | $
|Finance costs                                                                | $
|Foreign exchange loss(3)                                                     | $
|Other loss / (income)                                                        | $
|Equity in loss / (earnings) of associate and jointly-controlled
      entity | $

(1)
    Exclusive of discontinued operations as expenses
      relating to discontinued operations are presented separately in the
      Company's Consolidated Statements of Operations for the year ended
      December 31, 2012.(2)
    General and administrative expense includes
      share-based compensation expense.(3)
    Foreign exchange losses in 2013 and 2012 have been
      restated as a result of the retrospective application of a voluntary
      change in accounting policy related to the presentation of foreign
      exchange gains and losses on deferred tax assets and liabilities. For
      further details, refer to note 3 of the consolidated financial statements
      for the year ended December 31, 2014.


Reclamation, care and maintenance costs in 2014 and 2013 were
comprised of site overhead and other costs relating to activities at Kemess
South, a mine in the decommissioning stage. Facilities at the Kemess site are
being kept on care and maintenance pending the outcome of the Kemess Underground
Project and Kemess East.

General and administrative costs include expenses relating 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, but also include share-based compensation costs for key
employees at all locations. Share-based compensation costs for 2014 were $7.2
million, compared to $7.4 million in 2013. Overall, general and administrative
costs for 2014 decreased by $1.8 million over 2013, as the costs incurred in Q1
2014 related to the corporate restructuring were more than offset by lower
travel expenses and professional fees in 2014. After  excluding share-based compensation costs of $7.2 million and corporate  restructuring costs of $2.0 million, general administrative costs were $16.8  million, lower than the 2014 guidance of $20.0 million, primarily due to lower  travel costs and professional fees than planned.

Exploration and business development costs in 2014 were largely
consistent with the same period in 2013.

During 2014, the Company recognized $91.6 million in
impairment charges, including the $90.0 million impairment charge on the El
Chanate mine, that was previously discussed, and a $1.6 million impairment
charge on exploration properties due to discontinuation of activity at these
properties. During 2013, the Company recognized $158.6 million in impairment
charges, including a $154.0 million impairment charge on the El Chanate mine,
and a $4.6 million impairment charge related to various exploration properties
due to discontinuation of exploration at these properties.

Finance costs increased by $17.0 million in 2014 as compared to
2013 primarily as a result of additional interest incurred by the Company on the
senior secured notes issued in March 2014, and lower capitalized interest due to
fewer ongoing capital projects in 2014.

During 2014, foreign exchange losses increased by $2.4 million
compared to 2013, primarily as a result of a weakening in the Canadian dollar
and Mexican peso during the year. The Company will continue to experience
non-cash foreign currency gains or losses on monetary assets and liabilities,
primarily as a result of fluctuations between the US dollar, and both the
Canadian dollar and Mexican peso.

During 2014, the Company recorded other losses of $17.2 million
compared to other income of $10.2 million in 2013. Other losses in the current
year are primarily due to a $15.6 million loss recognized in Q1 2014 on the
modification of convertible senior notes, amortization of $13.3 million on the
retained interest royalty, and a $2.5 million reclassification of accumulated
losses on available-for-sale investments from other comprehensive income to
earnings. These amounts were partially offset by $6.6 million in unrealized and realized gains on investments,
royalty income of $2.5 million from Crocodile Gold Corporation, and $3.2 million
in net proceeds received on the transfer of a litigation claim. In 2013, other
income was comprised of a $15.6 million unrealized gain on the fair value of the
option component of convertible notes, offset by a $7.4 million unrealized loss
on the fair value of contingent consideration.

| | 16
| | --

---

|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

During 2014, the Company recognized its share of losses
relating to the Lynn Lake and Orion exploration projects, which are accounted
for as an associate and jointly-controlled entity, respectively, using the
equity method.

|CONSOLIDATED INCOME TAX
EXPENSE
|-------------------------------

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 Q4 2014, the Company recognized a current tax recovery
of $3.1 million and a deferred tax recovery of $14.3 million, compared to a
current tax recovery of $3.7 million and a deferred tax expense of $1.1 million
in Q4 2013. The increase in deferred tax recovery during the quarter is due
primarily to a larger deferred tax recovery on impairment charges.

For the  year ended December 31, 2014, the Company recognized a current tax
recovery of $2.7 million and a deferred tax recovery of $26.3 million, compared
to a current tax recovery of $0.1 million and a deferred tax recovery of $0.8
million in 2013. The current year tax recovery is due to the reversal of a
reserve in the current year. The increase in deferred tax recovery is due to a
larger deferred tax recovery on impairment charges, foreign exchange gains on
translation of Canadian dollar and Mexican peso denominated deferred income tax
liabilities, and the accounting amortization of property, plant and equipment
and mining interests exceeding the amortization recognized in the determination
of net income for tax purposes. These increases were offset by the weakening of
the Canadian dollar relative to the US dollar, which caused an increase in
taxable temporary differences.

| | 17
| | --

---

|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|FINANCIAL CONDITION
|-------------------

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

| | 18
| | --

---

|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|LIQUIDITY AND CAPITAL
RESOURCES
|-------------------------------

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, and development programs, the ability
to obtain equity or other sources of financing, the price of gold, and currency
exchange rates. The declaration and payment of dividends is at the discretion of
the Board of Directors and will depend on the Companys financial results, cash
requirements, future prospects, and other factors deemed relevant by the Board.
Refer to the Outlook and Strategy section on page 5 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 21. Management believes that the working capital at December 31, 2014,
together with future cash flows from operations and the available credit
facility, is sufficient to support the Companys planned and foreseeable
commitments, and dividends, if declared.

CASH FLOW

|(in thousands)                                                                      |  
|----------------------------------------------------------------------------------- | -
|                                                                                    |  
|                                                                                    |  
|                                                                                    |  
|Cash flow from / (used in) operating
      activities(1)(2)                         | $
|Cash flow (used in) / from investing
      activities(1)(2)                         |  
|Cash flow from / (used in) financing
      activities(1)                            |  
|Effect of foreign exchange rates on cash(1)                                         |  
|(Decrease) / increase in cash and cash
      equivalents from continuing operations |  
|Decrease in cash 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 Statement of Cash Flows for the year ended December 31,
      2012.(2)
    Certain comparative information has been restated as a
      result of the adoption of IFRIC 20, Stripping Costs in the Production
      Phase of a Surface Mine, which was applied prospectively to production
      stripping costs incurred on or after January 1, 2012. For further details,
      refer to note 3(a) to the consolidated financial statements for the year
      ended December 31, 2013.


In 2014, operating activities contributed cash flows of $60.4
million, as compared to 2013 when operating activities contributed cash of $63.3
million. Operating cash flow decreased in the 2014 primarily as a result of
higher cash costs, interest payments made on the Companys senior secured notes,
the payment of accounts payable at Young-Davidson, and lower operating cash flow
at El Chanate, as discussed previously. These amounts were largely offset by
increased revenues due to higher production in 2014 as compared to the same
period in the prior year and collection of $21.7 million in income taxes
receivable in Q1 2014.

In 2014, investing activities used cash of $150.8 million
compared to $272.4 million used in 2013. Year-to-date, cash flow used in
investing activities was comprised of capital expenditures of $188.8 million,
which was partially offset by a $14.8 million decrease in restricted cash and
$23.3 million in proceeds received from the sale of investments. Cash flow used
in investing activities in 2013 included capital expenditures of $249.4 million
and the purchase of investments of $21.3 million.

In 2014, cash flow contributed by financing activities included
$304.1 million in proceeds from the senior secured notes offering, offset by
$14.4 million in dividend payments and $254.1 million in repayments of long term
debt and equipment financing leases, which included repayments of $75.0 million
on the outstanding credit facility and $173.0 million on the convertible senior
notes. Cash flow used in financing activities in 2013 was largely comprised of
$301.1 million paid to complete a substantial issuer bid and the payment of
$27.7 million in dividends. This was partially offset by proceeds of $75.0
million received on the Companys credit facility.

FLOW-THROUGH
SHARES

On September 17, 2014, the Company completed a flow-through
share issuance for gross proceeds of $4.6 million (CAD $5.0 million). As a
result, the Company issued 833,334 common shares at a price of CAD $6.00 per
share. Pursuant to the terms of the flow-through share agreement, the Company is
required to incur and renounce these expenditures to subscribers by December 31,
2015. All proceeds will be used to fund exploration expenditures at the
Companys Kemess property.

SENIOR SECURED
NOTES

On March 27, 2014, the Company completed an offering of $315.0
million senior secured notes (the secured notes), secured against the assets
of the Company. Proceeds from this offering were used to repay  $166.4 million of the Company’s outstanding convertible senior notes, to repay  $75.0 million drawn under the Company’s credit facility and for general  corporate purposes. These secured notes were sold at 96.524% of par, resulting in
total proceeds of $304.1 million. The secured notes pay interest in semi-annual
installments on April 1 and October 1 of each year, commencing on October 1,
2014, at a rate of 7.75% per annum, and mature on April 1, 2020. No
principal payments are due until the maturity date. These notes contain
transaction-based restrictive covenants that limit the Companys ability to
incur additional indebtedness in certain circumstances. There are no covenants
that are based on the Companys historical financial performance.

| | 19
| | --

---

|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

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

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

The fair value of the prepayment option embedded derivative was
$6.7 million at December 31, 2014, and was offset against the carrying amount of
the secured notes.

CREDIT FACILITY

The Company has access to a $150.0 million revolving credit
facility, which carries an interest rate of LIBOR plus 2.25% to 3.50%, depending
on the net leverage ratio of the Company, and matures on April 25, 2016. No
principal payments are due until the maturity date, which may be extended upon
mutual agreement by all parties. During 2014, the Company repaid the $75.0
million drawn under this facility and, as a result, had no amounts drawn under
this revolving facility at December 31, 2014. The Company was in compliance with
all loan covenants at December 31, 2014.

CONVERTIBLE DEBT

On March 6, 2014, the Company announced a cash tender offer to
redeem all of the outstanding convertible senior notes. The consideration
offered was $1,040 per $1,000 note plus accrued and unpaid interest to the
payment date. On April 3, 2014, the Company paid $173.0 million to complete this
offer, resulting in the redemption of $166.4 million convertible senior notes.
The remaining $0.6 million of convertible senior notes remain outstanding.

At the end of 2014, the Company had $0.6 million in convertible
senior notes which 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. Following the payment of
dividends on December 1, 2014, the conversion rate is 94.3882 common shares per
$1,000 principal amount of notes, which represents a conversion price of
approximately $10.59 per common share.

INVESTMENTS

At December 31, 2014, the Company held investments with a fair
market value of $0.2 million, which consisted primarily of common shares of
publicly traded companies. Investments in common shares of publicly traded
companies are classified as available-for-sale investments. Realized and
unrealized gains on available-for-sale investments totaled $9.1 million for the
year ended December 31, 2014 (year ended December 31, 2013 - unrealized losses
of $5.3 million).

During the year ended December 31, 2014, the Company sold
shares in various publicly listed entities for total proceeds of $23.3 million.

| | 20
| | --

---

|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|CONTRACTUAL OBLIGATIONS
|-----------------------

A summary of the Companys contractual obligations at December
31, 2014 is as follows:

(in thousands)Total
    
    
    **Less
      than**1 year
    
    
    1  3 years
    
    
    3  4 years
    
    
    4  5 years
    
    
    **Greater
      than**5 yearsTrade payables and accrued liabilities
    $
    42,046
    
    $
    42,046
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -Debt
    
    450,429
    
    
    24,685
    
    
    49,712
    
    
    24,413
    
    
    24,413
    
    
    327,206Equipment financing obligations
    
    17,662
    
    
    6,597
    
    
    7,876
    
    
    2,262
    
    
    927
    
    
    -Future purchase
      commitments
    
    9,189
    
    
    9,189
    
    
    -
    
    
    -
    
    
    -
    
    
    -Total
    $
    519,326
    
    $
    82,517
    
    $
    57,588
    
    $
    26,675
    
    $
    25,340
    
    $
    327,206


|OUTSTANDING SHARE
DATA
|----------------------

The Companys share capital was comprised of the following as
at December 31, 2014:

|                                        |  | December 31, 2014 |  |  | December 31, 2013 | 
|--------------------------------------- |  | ----------------- |  |  | ----------------- | 
|Authorized:                             |  |                   |  |  |                   | 
|Unlimited number
      of common shares |  |                   |  |  |                   | 
|Issued:                                 |  |                   |  |  |                   | 
|Common shares                           |  | 249,648,617       |  |  | 247,569,811       | 

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

|                             |  | **February 19, 2015** | 
|---------------------------- |  | --------------------- | 
|Common shares                |  | 249,978,342           | 
|Stock options                |  | 13,094,101            | 
|Deferred share units         |  | 253,210               | 
|Performance share units      |  | 565,216               | 
|Restricted share
      units |  | 629,176               | 
|                             |  | 264,520,045           | 

In addition, the Company had outstanding convertible notes with
an implied conversion price of $10.59 per share that could result in the
issuance of up to 60,974 common shares.

|OFF-BALANCE SHEET
ARRANGEMENTS
|------------------------------

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

|FINANCIAL INSTRUMENTS
|---------------------

During the year ended December 31, 2014, the Company issued
$315.0 million of secured notes, redeemed $166.4 million of convertible notes
and sold investments for total proceeds of $23.3 million. Refer to the Liquidity
and Capital Resources section on page 19 for further information on these
financial instruments.

The Company seeks to manage its exposure to fluctuations in
commodity prices, interest rates and foreign exchange rates by entering into
derivative financial instruments from time to time.

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

Local
    
    
    Local currency
    
    
    Local currency
    
    
    Call option
    
    
    Put optionPeriod
      covered
    
    Contract
    
    
    Currency
    
    
    per month
    
    
    total
    
    
    per USD
    
    
    per USD30-Jan-15    31-Dec-15
    
    Collar
    
    
    CAD
    
    
    7,500
    
    
    90,000
    
    
    1.1111
    
    
    1.224630-Jan-15    31-Dec-15
    
    Collar
    
    
    MXN
    
    
    30,000
    
    
    360,000
    
    
    14.00
    
    
    15.71


| | 21
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

These contracts had a negative fair value of $0.4 million at
December 31, 2014, all of which has been recognized in other (loss) / income
within the Consolidated Statements of Operations for the year ended December 31,
2014.

During 2013, the Company held forward contracts to protect
against the risk of an increase in the value of the Mexican peso versus the US
dollar. During the year ended December 31, 2013, a gain of $0.1 million was
recognized in net loss on settlement of these forward contracts.

|TRANSACTIONS WITH RELATED
PARTIES
|---------------------------------

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
Chief Operating Officer, and is consolidated in accordance with IFRS 10,
Consolidated Financial Statements. The Companys Chief Executive Officer
and Chief Operating Officer 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 joint venture interest in the Orion
exploration project, located in Nayarit, Mexico. Nayarit Gold de Mexico, S.A. de
C.V., a company with ownership of this project, is 50% owned by the Company and
50% owned by Minera Frisco, S.A.B. de C.V., and is accounted for as a
jointly-controlled entity. The Company provides management services and may,
from time to time, contribute cash or other assets to the jointly-controlled
entity. At December 31, 2014, the Company had a receivable from the
jointly-controlled entity of $2.1 million (December 31, 2013 - $1.4 million).

As discussed previously, the Company completed a private
placement with Carlisle in which the Company invested CAD $5.6 million in
exchange for 19.9% of the outstanding common shares of Carlisle. In conjunction
with the private placement, the Company entered into an agreement on November
11, 2014 with respect to Carlisles Lynn Lake Gold Camp. Under the agreement,
the Company has acquired a 25% interest in the Lynn Lake Project and can earn up
to a 60% interest by funding CAD $20.0 million on the project over a three-year
period and delivering a feasibility study within that time period. The Company
will be managing exploration and technical work related to a future feasibility
study on the Lynn Lake Project. At December 31, 2014, the Company has included
an advance of $0.8 million in other long-term assets which relates to ongoing
work on the Lynn Lake Project.

|EVENTS
      AFTER THE REPORTING PERIOD
|---------------------------------------

(a)    Termination of retained interest
royalty

On January 14, 2015, the Company finalized the agreement to
terminate the retained interest royalty from Crocodile Gold and received CAD
$20.0 million in cash consideration, along with net smelter royalties on future
production from the Fosterville and Stawell mines of 2% and 1%, respectively.

(b)    Declaration of dividend

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

|NON-GAAP MEASURES
|-----------------

The Company has included various non-GAAP measures throughout
this document. The Company believes that, in addition to conventional measures
prepared in accordance with GAAP, management, analysts and investors use this
information to evaluate the Companys operating and economic performance.
However, these non-GAAP measures do not have any standardized meaning, and
should not be considered in isolation from or as a substitute for performance
measures prepared in accordance with GAAP. Other companies may calculate these
measures differently.

CASH COST PER OUNCE
CALCULATION

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. This measure is calculated by adjusting production and
refining costs as recorded in the Companys consolidated financial statements
for by-product revenues and NRV adjustments, production costs associated with
unsold ounces, production costs unrelated to current period ounces sold,
production costs associated with acquisition-date fair value adjustments, and
production costs associated with NRV adjustments. The calculation of cash costs
per gold ounce measures the benefit of any by-product silver that is produced
in conjunction with gold as a credit against the cost of producing gold. A
number of other gold producers present their costs net of the contribution from
silver and other non-gold by-product sales. The Company believes that presenting
this measure on this basis allows management, analysts and investors to better
assess performance against other gold producers, and to better understand the
importance of non-gold revenue on the Companys cost structure.

| | 22
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

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

|(in thousands, except ounces and cash cost
      per gold ounce)                     |  
|------------------------------------------------------------------------------------ | -
|                                                                                     |  
|                                                                                     |  
|                                                                                     |  
|Production costs                                                                     | $
|Refining costs                                                                       | $
|Inventory and other adjustments(1)                                                   | $
|Total cash costs                                                                     | $
|Divided by gold equivalent ounces(2)                                                 |  
|Total cash cost per gold equivalent ounce                                            | $
|Total cash costs (per above)                                                         | $
|By-product revenues(3)                                                               | $
|Total cash costs, net of by-product revenues                                         | $
|Divided by gold ounces(4)                                                            |  
|Total cash cost per gold ounce, net of by-product
      revenues                     | $
|Total cash costs, net of by-product revenues
      (per above)                       | $
|NRV
      adjustments(5)                                                             | $
|Total cash costs, net of by-product revenues
      and NRV adjustments               | $
|Divided by gold ounces                                                               |  
|Total cash cost per gold ounce, net of by-product
      revenues and NRV adjustments | $

(1)
    Inventory and other adjustments include amortization
      of the inventory fair value adjustments relating to the El Chanate
      purchase price allocations, costs unrelated to current period ounces sold,
      as well as the movement in costs associated with unsold gold ounces at
      Young-Davidson. The total of these adjustments for the three months and
      years ended December 31, 2014 and 2013 were as
  follows:


El Chanate
    $
    (1,893
    )
    $
    (6,415
    )
    $
    (2,720
    )
    $
    (10,560
    )Young-Davidson
    $
    -
    
    $
    4,280
    
    $
    (1,078
    )
    $
    344$
    (1,893
    )
    $
    (2,135
    )
    $
    (3,798
    )
    $
    (10,216
    )


(2)
    Gold equivalent ounces include silver ounces produced
      / sold converted to gold equivalent based on the ratio of the realized
      sales prices of the commodities.(3)
    By-product revenue is defined as the revenue from a
      secondary metal or mineral that is recovered during processing, and is
      included in revenue from mining operations in the Company's financial
      statements. The total by-product silver revenues adjustments for the three
      months and years ended December 31, 2014 and 2013 were as
    follows:


El Chanate
    $
    (430
    )
    $
    (562
    )
    $
    (2,248
    )
    $
    (2,881
    )Young-Davidson
    $
    (285
    )
    $
    (103
    )
    $
    (667
    )
    $
    (391
    )$
    (715
    )
    $
    (665
    )
    $
    (2,915
    )
    $
    (3,272
    )


(4)
    For the three months and year ended December 31, 2014,
      cash costs per gold ounce are calculated using gold ounces sold at the El
      Chanate and Young-Davidson mines. For the three months and year ended
      December 31, 2013, cash costs per gold ounce are calculated using gold
      ounces sold at the El Chanate mine and gold ounces produced at the
      Young-Davidson mine.(5)
    The total NRV adjustments recognized during the three
      months and years ended December 31, 2014 and 2013 were as
    follows:


El Chanate
    $
    (11,067
    )
    $
    (13,156
    )
    $
    (12,160
    )
    $
    (15,919
    )Young-Davidson
    $
    -
    
    $
    (9,751
    )
    $
    (3,339
    )
    $
    (10,050
    )$
    (11,067
    )
    $
    (22,907
    )
    $
    (15,500
    )
    $
    (25,969
    )


ALL-IN SUSTAINING
COST PER OUNCE CALCULATION

All-in sustaining cost per ounce is a non-GAAP performance
measure developed by the World Gold Council that reflects all of the
expenditures that are required to produce an ounce of gold from current
operations. The World Gold Council is a non-regulatory, non-profit, market
development organization that was established in 1987 whose members include
global senior mining companies. The Company is not a member of the World Gold
Council, and was not involved in the development of the all-in sustaining cost
measure. However, the Company believes that this measure will be useful to
external users in assessing operating performance and the ability to generate
free cash flow from current operations. This measure uses cash costs per ounce
as its basis, and also includes sustaining capital expenditures, general and
administrative expenses, sustaining exploration and evaluation costs, and
accretion and depletion of reclamation provisions at operating sites. As this
measure seeks to reflect the full cost of producing gold at current
operations, it excludes capital expenditures to develop new operations and to
materially enhance production or reserves at existing operations. Certain other
cash expenditures, including tax payments, increases in inventory, dividends and
other financing costs, are also excluded.

| | 23
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

The following provides a reconciliation of all-in sustaining
cost per ounce to the consolidated financial statements:

|(in thousands, except ounces and all-in
      sustaining cost per gold ounce)                          |  
|------------------------------------------------------------------------------------------------------ | -
|                                                                                                       |  
|                                                                                                       |  
|                                                                                                       |  
|Total cash costs, net of by-product revenues (see above)                                               | $
|General and administrative                                                                             | $
|Young-Davidson inventory adjustments                                                                   | $
|Sustaining capital expenditures(1)                                                                     | $
|Accretion and
      depletion of reclamation provisions                                                | $
|Total all-in sustaining costs, net of by-product revenues                                              | $
|Divided by gold
      ounces sold                                                                      |  
|All-in
      sustaining cost per gold ounce sold, net of by-product revenues                           | $
|Total all-in sustaining costs, net of by-product revenues
      (per above)                            | $
|NRV adjustments                                                                                        | $
|Total all-in sustaining costs, net of by-product revenues
      and NRV adjustments                    | $
|Divided by gold
      ounces sold                                                                      |  
|All-in
      sustaining cost per gold ounce sold, net of by-product revenues and
      NRV adjustments | $

(1)
    Sustaining capital expenditures are defined as those
      expenditures which do not increase annual gold ounce production at a mine
      site and exclude all expenditures at growth projects and certain
      expenditures at operating sites which are deemed expansionary in nature.
      Total sustaining capital for the three months and years ended December 31,
      2014 and 2013 is calculated as follows:


Capital expenditures per cash flow
      statement
    $
    41,424
    
    $
    63,572
    
    $
    188,829
    
    $
    249,422Less: Young-Davidson non-sustaining
      capital
    $
    (14,900
    )
    $
    (38,195
    )
    $
    (97,282
    )
    $
    (151,917
    )Less: El Chanate non-sustaining capital
    $
    -
    
    $
    (9,025
    )
    $
    (1,271
    )
    $
    (34,707
    )Less: Corporate and other non-sustaining
      capital
    $
    (9,725
    )
    $
    (4,553
    )
    $
    (21,627
    )
    $
    (10,101
    )$
    16,799
    
    $
    11,799
    
    $
    68,649
    
    $
    52,697


Non-sustaining capital expenditures include Young-Davidson mine
development that is considered to be growth, expenditures associated with
sinking the MCM shaft, additional equipment and infrastructure as the Company
continues to ramp up production at Young-Davidson, and exploration expenditures
at El Chanate.

| | 24
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

EARNINGS BEFORE
INTEREST, TAXES,
DEPRECIATION, AND AMORTIZATION
(EBITDA)

EBITDA represents net earnings before interest, taxes,
depreciation, and amortization. EBITDA is an indicator of the Companys ability
to generate liquidity by producing operating cash flow to fund working capital
needs, service debt obligations, and fund capital expenditures.

The following is a reconciliation of EBITDA to the consolidated
financial statements:

|(in thousands)                                       |  
|---------------------------------------------------- | -
|                                                     |  
|                                                     |  
|                                                     |  
|Net loss                                             | $
|Add back:                                            |  
|Finance costs                                        | $
|Amortization and depletion                           | $
|Amortization included in other
      (loss) / income | $
|Deferred income tax (recovery) /
      expense       | $
|Current income tax recovery                          | $
|EBITDA                                               | $

NET FREE CASH
FLOW

Net free cash flow represents an indication of the Companys
continuing capacity to generate 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.

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

|(in thousands)             |  
|-------------------------- | -
|                           |  
|                           |  
|                           |  
|Operating cash flow        | $
|Less: Capital expenditures | $
|Net free cash flow         | $

|RISKS
AND UNCERTAINTIES
|-----------------------

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, on SEDAR at www.sedar.com, and on EDGAR at www.sec.gov.

NATURE OF MINERAL
EXPLORATION AND MINING

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.

| | 25
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

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.

RESERVE ESTIMATES

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.

EFFECT OF INDEBTEDNESS ON
FINANCIAL CONDITION

The Company has a significant amount of secured indebtedness.
The Companys level of indebtedness, including the secured notes issued on
March 27, 2014, could have material and adverse consequences to the Company and
the Companys securityholders, including:

|- | making it more difficult for the Company to satisfy its
      obligations to pay interest and to pay principal when due;                                                                                                                                                                                                            
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                     
|- | limiting the Companys ability to obtain additional
      financing to repay existing indebtedness, fund future working capital,
      capital expenditures, acquisitions or other general corporate
      requirements, or requiring the Company to make non- strategic
      divestitures;                                        
|  |                                                                                                                                                                                                                                                                                                                                     
|- | requiring a substantial portion of the Companys cash
      flows to be dedicated to debt service payments instead of other purposes,
      thereby reducing the amount of cash flows available for payment of cash
      dividends, working capital, capital expenditures, acquisitions and other
      general corporate purposes;
|  |                                                                                                                                                                                                                                                                                                                                     
|- | increasing the Companys vulnerability to general adverse
      economic and industry conditions;                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                     
|- | limiting the Companys flexibility in planning for and
      reacting to changes in the industry in which it competes;                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                     
|- | placing the Company at a disadvantage compared to other,
      less leveraged competitors; and                                                                                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                     
|- | increasing the Companys cost of borrowing.                                                                                                                                                                                                                                                                                         

The Company may not be able to generate sufficient cash to
service all of its indebtedness, including the secured notes, and may be forced
to take other actions to satisfy its obligations under such indebtedness, which
may not be successful. The Companys ability to make scheduled payments on or
refinance its debt obligations depends on its financial condition and operating
performance, which are subject to prevailing economic and competitive conditions
and to certain financial, business, legislative, regulatory and other factors
beyond its control. The Company may be unable to maintain a level of cash flows
from operating activities sufficient to permit it to pay the principal, premium,
if any, and interest on the Companys indebtedness.

If the Companys cash flows and capital resources are
insufficient to fund its debt service obligations, it could face substantial
liquidity problems and could be forced to reduce or delay investments and
capital expenditures or to dispose of material assets or operations, seek
additional debt or equity capital or restructure or refinance its indebtedness.
The Company may not be able to effect any such alternative measures on
commercially reasonable terms or at all and, even if successful, those
alternatives may not allow the Company to meet its scheduled debt service
obligations. The Companys revolving credit facility and the indenture governing
the secured notes will restrict its ability to dispose of assets and use the
proceeds from those dispositions and may also restrict its ability to raise debt
or equity capital to be used to repay other indebtedness when it becomes due.
The Company may not be able to consummate those dispositions or to
obtain proceeds in an amount sufficient to meet any debt service obligations
then due.

| | 26
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

Should the Company incur additional debt, this could increase
the risks to its financial condition described above.

EFFECT OF INDEBTEDNESS ON THE
COMPANYS CURRENT AND
FUTURE OPERATIONS

The Companys revolving credit facility and the indenture
governing the secured notes contain a number of restrictive covenants that
impose significant operating and financial restrictions on the Company and may
limit its ability to engage in acts that may be in the Companys long-term best
interest. The Companys failure to comply with those covenants could result in
an event of default which, if not cured or waived, could result in a
cross-default under other debt instruments and the acceleration of all its debt.
The restrictions include, without limitation, restrictions on its ability to:

|- | incur additional indebtedness;                                                                
|- | ----------------------------------------------------------------------------------------------
|  |                                                                                               
|- | pay dividends or make other distributions or
      repurchase or redeem its capital stock;    
|  |                                                                                               
|- | prepay, redeem or repurchase certain debt;                                                    
|  |                                                                                               
|- | make loans and investments;                                                                   
|  |                                                                                               
|- | sell, transfer or otherwise dispose of assets;                                                
|  |                                                                                               
|- | incur or permit to exist certain liens;                                                       
|  |                                                                                               
|- | enter into transactions with affiliates;                                                      
|  |                                                                                               
|- | enter into agreements restricting its
      subsidiaries ability to pay dividends; and       
|  |                                                                                               
|- | consolidate, amalgamate, merge or sell all or
      substantially all of the Companys assets.

RATING OF THE COMPANYS
DEBT SECURITIES

The Companys debt currently has a non-investment grade rating,
and any rating assigned could be lowered or withdrawn entirely by a rating
agency, if, in that rating agencys judgment, future circumstances relating to
the basis of the rating, such as adverse changes, so warrant. Any future
lowering of the Companys ratings likely would make it more difficult or more
expensive to obtain additional debt financing.

FOREIGN OPERATIONS

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.

ENVIRONMENTAL LAWS AND
REGULATIONS

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.

| | 27
| | --

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

PROPERTY RIGHTS,
PERMITS AND LICENSING

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 OF TITLE

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.

COMMODITY PRICE
RISK

The profitability of the Companys gold mining operations will
be significantly affected by changes in the market prices for gold. Gold prices
fluctuate on a daily basis and are affected by numerous factors beyond the
Companys control. The supply and demand for gold, the level of interest rates,
the rate of inflation, investment decisions by large holders of gold, including
governmental reserves, and stability of exchange rates can all cause significant
fluctuations in gold prices. Such external economic factors are in turn
influenced by changes in international investment patterns and monetary systems,
and political developments. The prices of gold have fluctuated widely and future
serious price declines could cause continued commercial production to be
impractical. Depending on the prices of gold, 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 prices, revenues from metal sales were to fall
below operating costs, production may be discontinued.

INTEREST RATE RISK

At December 31, 2014, the Company did not have any amount drawn
on its credit facility. If an amount is drawn, the Company is exposed to
interest rate risk on its variable rate debt. The applicable interest rate may
change depending on the Companys leverage ratio during the period, but would
range between LIBOR plus 2.25% to 3.50% for LIBOR loans. The Company has not
entered into any agreements to hedge against unfavourable changes in interest
rates, but may actively manage any exposure to interest rate risk in the future.

FOREIGN CURRENCY EXCHANGE
RATE RISK

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.

CREDIT RISK

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.

DERIVATIVE FINANCIAL
INSTRUMENTS

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.

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|CRITICAL
      ACCOUNTING ESTIMATES, POLICIES
AND CHANGES
|---------------------------------------------------------

ACCOUNTING ESTIMATES

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 NRV. NRV is the difference
between the estimated future realizable gold 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 ounces contained in the ore stacked on leach pads,
assumptions of the amount of gold ounces stacked that is expected to be
recovered from the leach pads, the amount of gold ounces in mill circuits and in
stockpiles, the costs to complete the processing of ore inventory, and an
assumption of the gold prices expected to be realized when the gold 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 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.

Ore on leach pads is ore that is placed on pads where it is
saturated with a chemical solution that dissolves the gold 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 on the leach pad as the
gold is recovered. Estimates of recoverable gold 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 ounces contained on leach pads can vary significantly
from the estimates. The ounces of recoverable gold placed on the leach pads are
reconciled to the balance of gold 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 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
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 prices could make a reserve or resource uneconomic to mine. Variations from
estimates could also occur in actual ore grades and gold 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 prices.

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
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|(iii) | 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 prices, foreign exchange rates,
recovery rates, and discount rates.

|(iv) | Amortization of property, plant and
    equipment
|---- | -------------------------------------------------

The Company amortizes property, plant and equipment, net of
residual value, over the estimated useful life of each asset, not to exceed the
life of the mine at which the asset is utilized. The physical life of these
assets, and related components, may differ from the Companys estimate.

|(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.

Each period, the Company evaluates the likelihood of whether or
not some portion or all of each deferred income tax asset and investment tax
credits 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  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.

| | 30
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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|(vii) | Retained interest royalty
|----- | -------------------------

The Company makes estimates of amounts receivable in order to
value the retained interest royalty. Future amounts receivable under these
arrangements will be impacted by future gold prices, future production from the
Fosterville and Stawell mines in Victoria, Australia, future foreign exchange
rates, as well as related operating and capital expenditures required to sustain
that production.

ACCOUNTING POLICIES AND
CHANGES

The accounting policies applied in the consolidated financial
statements for the year ended December 31, 2014 are consistent with those used
in the Companys Consolidated Financial Statements for the year ended December
31, 2013, with the exception of the following accounting policies adopted on
January 1, 2014:

Foreign exchange gains and losses on deferred tax assets and
liabilities

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

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

|                                                    |   | Prior to    |   |   | Restatement |   |   | Subsequent to |  
|--------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ------------- | -
|For the year ended December 31, 2014 (in millions): |   | restatement |   |   | Impact      |   |   | Restatement   |  
|Foreign exchange gains / (losses)                   | $ | 18.7        |   | $ | (25.4       | ) | $ | (6.6          | )
|Deferred income tax recovery                        |   | 0.9         |   |   | 25.4        |   |   | 26.3          |  
|Net loss                                            |   | (169.6      | ) |   | -           |   |   | (169.6        | )

|For the year ended December 31, 2013 (in millions): |   | Reported |   |   | Restatement |   |   | Restated |  
|--------------------------------------------------- | - | -------- | - | - | ----------- | - | - | -------- | -
|Foreign exchange gains / (losses)                   | $ | 10.9     |   | $ | (15.2       | ) | $ | (4.3     | )
|Deferred income tax (expense) / recovery            |   | (14.5    | ) |   | 15.2        |   |   | 0.8      |  
|Net loss                                            |   | (176.8   | ) |   | -           |   |   | (176.8   | )

Flow-through share financing

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

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

Other changes in accounting policy

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

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

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

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

STANDARDS ISSUED BUT NOT
YET ADOPTED

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, 2014. Standards and interpretations issued, but not yet adopted,
include:

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

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

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

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

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

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

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

|CONTROLS
AND PROCEDURES
|-----------------------

(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, 2014, an evaluation was carried out, under the
supervision of and with the participation of management, including the Chief
Executive Officer and the 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 Certification of Disclosure in
Issuers Annual and Interim Filings 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, 2014, 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.

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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
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(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 2013 Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission to evaluate
the effectiveness of the Companys internal controls over financial reporting
for the year ended December 31, 2014. Based on this evaluation, management
concluded that the Companys internal control over financial reporting was
effective as at December 31, 2014, 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.

There were no  changes in the Company’s  internal control over financial reporting that occurred during the three months  ended December 31, 2014, that have materially affected, or are reasonably  likely to materially affect, the Company’s internal control over financial  reporting.

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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|2014ANNUAL MANAGEMENTS DISCUSSION AND ANALYSIS
|-----------------------------------------------

|CAUTIONARY NOTE TO U.S.
    INVESTORS
|-------------------------------------

Cautionary Note to U.S. Investors Concerning Measured,
Indicated and Inferred Resources:This MD&A uses the terms "measured",
"indicated" or "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.

Cautionary Note to U.S. Investors Concerning International
Financial Reporting Standards: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, 2014). 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.

|CAUTIONARY NOTE REGARDING
    FORWARD-LOOKING STATEMENTS
|--------------------------------------------------------

This MD&A contains forward-looking statements and
forward-looking information as defined under Canadian and U.S. securities laws.
All statements, other than statements of historical fact, are, or may be deemed
to be, forward-looking statements. The words "expect", "believe", "anticipate",
"will", "intend", "estimate", "forecast", "budget" and similar expressions
identify forward-looking statements. Forward-looking statements include
information as to strategy, plans or future financial or operating performance,
such as the Companys expansion plans, project timelines, production plans and
expected sustainable productivity increases, expected increases in underground
activities and corresponding cost efficiencies, expected drilling targets,
expected sustaining costs, expected improvements in cashflows and margins,
expectations of changes in capital expenditures, forecasted cash shortfalls
and the Companys ability to fund them, cost estimates, projected exploration
results, reserve and resource estimates, expected mill production rates and use
of the stockpile inventory, expected mill recoveries, sufficiency of working
capital for future commitments and other statements that express managements
expectations or estimates of future performance.

Forward-looking statements are necessarily based upon a number
of factors and assumptions that, while considered reasonable by management at
the time of making such statements, 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 and assumptions
underlying the forward-looking statements in this document 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 labor;
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, including the necessary licenses, permits,
authorizations and/or approvals from the appropriate regulatory authorities for
the Kemess Underground project; 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, as well
as those factors discussed under Risk Factors in the Companys most recent
Annual Information Form.

Actual results and developments are likely to differ, and may
differ materially, from those expressed or implied by the forward-looking
statements contained herein. Such statements are based on a number of
assumptions which may prove to be incorrect, including assumptions about:
business and economic conditions; commodity prices and the price of key inputs
such as labour, fuel and electricity; credit market conditions and conditions in
financial markets generally; revenue and cash flow estimates, production levels,
development schedules and the associated costs; ability to procure equipment and
supplies and on a timely basis; the timing of the receipt of permits and other
approvals for projects and operations; the ability to attract and retain skilled
employees and contractors for the operations; the accuracy of reserve and
resource estimates; the impact of changes in currency exchange rates on costs
and results; interest rates; taxation; and ongoing relations with employees and
business partners.

In  particular, forward-looking information included in this document includes, but  is not limited to: (1) production estimates and production growth rates, which  assume accuracy of projected ore grade, mining rates, recovery timing and  recovery rate estimates and may be impacted by unscheduled maintenance, labour  and contractor availability; (2) capital expenditures and other cash costs,  which assume foreign exchange rates and accuracy of production estimates, and  may be impacted by unexpected maintenance, the need to hire external resources  and accelerated capital plans; (3) profits and free cash flow, which assume  production and expenditure estimates and may be impacted by gold prices,  production estimates, and the timing of payments, and (4) reserves and  resources which are forward looking statements by their nature involving  implied assessment, and may be impacted by metal  prices, future drilling results, operating costs, mining recoveries and  dilution rates.

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. For additional
  detail regarding risk factors affecting the Company, refer to the Companys
  Annual Information Form for the year ended December 31, 2014.

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