---

Exhibit 99.2



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



For the year ended December 31, 2013

---

|                                          
|------------------------------------------
|MANAGEMENTS DISCUSSION AND ANALYSIS      
|FOR THE YEAR ENDED
      DECEMBER 31, 2013

TABLE OF CONTENTS

|OVERVIEW OF THE BUSINESS                                   | 3 
|---------------------------------------------------------- | --
|HIGHLIGHTS                                                 | 4 
|OUTLOOK AND STRATEGY                                       | 5 
|SUMMARIZED FINANCIAL AND OPERATING RESULTS                 | 6 
|SUMMARY OF QUARTERLY FINANCIAL AND
      OPERATING RESULTS | 10
|YOUNG-DAVIDSON                                             | 12
|EL CHANATE                                                 | 14
|EXPLORATION REVIEW                                         | 16
|CONSOLIDATED EXPENSES                                      | 17
|CONSOLIDATED INCOME TAX EXPENSE                            | 18
|FINANCIAL CONDITION                                        | 19
|LIQUIDITY AND CAPITAL RESOURCES                            | 20
|CONTRACTUAL OBLIGATIONS                                    | 21
|OUTSTANDING SHARE DATA                                     | 21
|OFF-BALANCE SHEET ARRANGEMENTS                             | 22
|FINANCIAL INSTRUMENTS                                      | 22
|TRANSACTIONS WITH RELATED PARTIES                          | 22
|NON-GAAP MEASURES                                          | 23
|RISKS AND UNCERTAINTIES                                    | 27
|CRITICAL ACCOUNTING ESTIMATES, POLICIES AND CHANGES        | 30
|CONTROLS AND PROCEDURES                                    | 33
|CAUTIONARY NOTE TO U.S. INVESTORS                          | 34
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING
      STATEMENTS | 34

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

This Managements Discussion and Analysis (MD&A),
dated March 3, 2014, relates to the financial condition and results of the
consolidated operations of AuRico Gold Inc. (the Company), and should be read
in conjunction with the Companys consolidated financial statements for the year
ended December 31, 2013, and notes thereto.The consolidated
financial statements for the years ended December 31, 2013 and 2012 have been
prepared in accordance with International Financial Reporting Standards (IFRS
or GAAP). All results are presented in United States dollars, unless otherwise
stated.

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

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 34.

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

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.

Throughout this document, reference is made to results from
both continuing and discontinued operations. Prior period results for properties
that were sold during 2012 have been presented as discontinued operations. The
sale of these properties had no effect on the Companys continuing operations.
The Companys operations have been classified between continuing and
discontinued operations as follows:

|− | Continuing operations: Young-Davidson mine, El Chanate
      mine, and Corporate and other. Corporate and other includes the Companys
      corporate offices, the Kemess mine, and other exploration properties.                                                                                                                                       
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                          
|− | Discontinued operations: Ocampo mine and Venus and Los
      Jarros exploration properties (collectively, the Ocampo mine), El Cubo
      mine and Guadalupe y Calvo exploration property (collectively, the El
      Cubo mine), and Fosterville and Stawell mines and their related
      subsidiaries (collectively, the Australian Operations).

The Companys common shares are listed on the Toronto Stock
Exchange (TSX: AUQ) and the New York Stock Exchange (NYSE: AUQ). Further
information about AuRico Gold Inc. can be found in the Companys regulatory
filings, including the Annual Information Form, 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 2013, the price of gold averaged $1,411 per ounce,
a 15% decrease from the London PM Fix average of $1,669 during 2012. During
2013, daily London PM Fix prices ranged between $1,694 and $1,192 per ounce.

At the Companys mine sites, a significant portion of the
operating costs and capital expenditures are denominated in foreign currencies,
including Mexican pesos and Canadian dollars. Therefore, fluctuations in these
foreign currencies against the US dollar can significantly impact the Companys
costs. The Mexican peso and Canadian dollar averaged approximately 12.8 to 1.0
US dollar and 1.03 to 1.0 US dollar, respectively, in 2013, compared to average
rates of 13.2 to 1.0 US dollar and 1.0 to 1.0 US dollar, respectively, in
2012.

For additional information on the factors that affect the
Company, see the discussion of Risks and Uncertainties on page 27.

| | 3
| | -

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

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

(in thousands, except ounces, per share
      amounts, all-in sustaining costs and total cash costs)Year Ended
    
    
    Year EndedDecember 31
    
    
    December 31
    
    
    Change
    
    
    Change2013
    
    
    2012(1)
    
    
    (#)/($)
    
    
    (%)Gold ounces produced(2)
    
    161,100
    
    
    100,284
    
    
    60,816
    
    
    61%Pre-production gold ounces
      produced(2)
    
    31,502
    
    
    26,999
    
    
    4,503
    
    
    17%Total gold ounces produced
    
    192,602
    
    
    127,283
    
    
    65,319
    
    
    51%Revenue from mining operations
    $
    227,631
    
    $
    163,622
    
    $
    64,009
    
    
    39%Loss from operations(3)
    $
    (178,087
    )
    $
    (96,884
    )
    $
    (81,203
    )
    
    -84%Net loss from continuing
      operations(3)
    $
    (176,770
    )
    $
    (99,779
    )
    $
    (76,991
    )
    
    -77%Net
      loss per share from continuing operations, basic(3)
    $
    (0.71
    )
    $
    (0.35
    )
    $
    (0.36
    )
    
    -103%Total cash
    $
    142,652
    
    $
    603,401
    
    $
    (460,749
    )
    
    -76%Operating cash flow(3)
    $
    63,266
    
    $
    (7,231
    )
    $
    70,497
    
    
    975%Net
      free cash flow(3)(4)
    $
    (186,156
    )
    $
    (368,731
    )
    $
    182,575
    
    
    50%Cash costs per gold ounce, net of by-product
      revenues and NRV adjustments(2)(3)(4)(5)(6)
    $
    676
    
    $
    536
    
    $
    140
    
    
    26%All-in sustaining costs per gold ounce sold, net of by-product
      revenues and NRV adjustments(2)(3)(4)(6)
    $
    1,181
    
    $
    1,259
    
    $
    (78
    )
    
    -6%


(1)
    Operating data and financial information includes the
      results from continuing operations only for the year ended December 31,
      2012.(2)
    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. In addition, 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 these
      ounces were credited against capitalized project costs.(3)
    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 the Critical Accounting Estimates, Policies and Changes section
      on page 30 or note 3(a) to the consolidated financial statements for the
      year ended December 31, 2013.(4)
    See the Non-GAAP Measures section on page
    23.(5)
    Gold ounces used to calculate cash costs include
      ounces sold at the El Chanate mine and ounces produced at the
      Young-Davidson mine for the years ended December 31, 2013 and
    2012.(6)
    For further discussion on the net realizable value
      (NRV) adjustments recognized on ore inventories at the El Chanate and
      Young-Davidson mines during the quarter and annual periods, refer to pages
      13 and 15.


RECENTDEVELOPMENTS

|- | On March 3, 2014, the Company reported proven and
      probable reserves of 6.5 million gold ounces, a 0.3 million ounce decline
      from the 6.8 million gold ounces reported in 2012. This decline is due to
      2013 depletion at El Chanate and at the Young-Davidson open pit. The
      Young-Davidson underground mine replaced all ounces mined during 2013.                                                                                                                                                                                                                                
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | On January 4, 2014, the Company announced the declaration
      of a dividend of $0.04 per share, which was paid on January 29, 2014 to
      shareholders of record at the close of business on January 14, 2014. The
      Company announced its inaugural dividend policy on February 21, 2013
      whereby the Company paid a dividend of $0.16 per share in 2013 (payable
      quarterly). Subsequent to 2013, the Companys dividend will be linked to
      operating cash flow, whereby the Company intends to pay out 20% of the
      operating cash flow generated in the preceding quarter.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | In January 2014, the Young-Davidson paste backfill plant
      was commissioned and completed its first pour. In 2011, the mine plan was
      re-engineered to utilize paste backfill to allow for significantly
      improved mining recovery and reduced dilution.                                                                                                                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | On October 31, 2013, the Company declared commercial
      production at the Young-Davidson underground mine. Commissioning of the
      shaft hoisting system was a key project milestone that will support
      increased underground productivities and favourable unit cost efficiencies
      over the life of the mine.                                                                                                                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | On June 11, 2013, the Company announced a dividend
      reinvestment plan, which commenced with the July 2013 dividend. Common
      shares issued under this plan will be issued at a 5% discount from the
      average market price of the common shares over the five day period
      preceding the relevant dividend payment date. The discount may be adjusted
      at a future date, but cannot exceed 5%.                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | On January 29, 2013, the Company announced the successful
      repurchase and cancellation of 36,144,578 common shares at a price of
      $8.30 per share under the Companys modified Dutch auction substantial
      issuer bid, for a total purchase price of $300 million.                                                                                                                                                                                                                                                                                                                       

| | 4
| | -

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

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

AuRico Gold Inc. is committed to being a leading low cost gold
producer focused on growth in North America. The Companys mission is to deliver
superior shareholder value by building a culture of excellence in every aspect
of what we do, through organic growth, 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.

The Companys primary focus for 2013 was completing the
construction of the mid-shaft hoisting system and advancing underground
development at Young-Davidson. This system was commissioned in October 2013, and
the Company declared commercial production at the Young-Davidson underground
mine on October 31, 2013. The shaft hoisting system has, and will continue to,
facilitate significant increases in underground activities and corresponding
cost efficiencies. In 2013, the Company accelerated underground development
which resulted in 75% of the 2014 mine plan already being laterally accessed and
100% of the 2014 mine plan being vertically accessed. In 2014, the Company will
continue to advance underground development to optimize available ore inventory,
which is expected to position the mine for sustainable, period-over-period,
productivity increases in 2014 and beyond. During 2014, Young-Davidson is
anticipated to produce between 140,000 and 160,000 ounces, a 16% to 33% increase
over 2013 production.

The Young-Davidson open pit will be fully depleted during the
first half of 2014, at which time approximately 3.6 million tonnes of open pit
ore will be stockpiled ahead of the mill facility for future processing.
Subsequent to the cessation of open pit mining, 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 in 2014 is expected to be
between 70,000 and 80,000 ounces, consistent with production in 2013. The
Company is currently exploring extensions to both the northwest and southeast of
the main pit with a goal to increase resources and potentially extend the life
of the mine.

During 2014, the Company expects to produce 210,000 to 240,000
ounces of gold on a consolidated basis at all-in sustaining costs of
approximately $1,100 to $1,200 per gold ounce, a 9% to 25% increase over 2013
production with consistent all-in sustaining costs. Capital expenditures for
2014 are forecast to be approximately $125 - $135 million, a decline of 46% to
42% from 2013. Consolidated operating cash flows will improve over the course of
the year, mainly driven by forecasted margin improvements at Young-Davidson
subsequent to the cessation of mining in the open pit and concurrent ramp up of
production from the underground mine. Capital expenditures are forecasted to decline over the
course of the year due to fewer capital projects in the second half of the year.
Expenditures on underground development will be relatively consistent throughout
the year.

The Company expects to spend approximately $10 million on
exploration during 2014. The 2014 exploration program will continue to focus on
increasing mineral reserves and resources at the Companys existing operations,
as well as continuing to explore new and previously identified targets at all
properties.

During 2013, the London PM fix averaged $1,411 per ounce, but
the price of gold declined steadily throughout the year ending with a final
London PM fix of $1,205 on December 30, 2013. Gold prices have improved in early
2014 which, combined with significant Canadian dollar weakness, has improved the
Companys outlook. Although, the Company expects capital expenditures to exceed
operating cash flows in 2014 at current spot prices, primarily due to additional
capital expenditures required at Young-Davidson in the first half of the year,
the Company anticipates that free cash flow will improve over the course of the
year. The Company has the ability to fund this forecasted shortfall with cash on
hand as well as the remaining capacity under its credit facility.

On February 6, 2014, the Company provided 2014 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
| | -

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

|SUMMARIZEDFINANCIAL ANDOPERATINGRESULTS
|---------------------------------------

|(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) /
      earnings(2)                                                                                                      | $
|Net (loss) / earnings per share,
      basic(2)                                                                                     | $
|Net (loss) / earnings per share,
      diluted(2)                                                                                   | $
|Operating cash
      flow(2)                                                                                                        | $
|Net free cash flow(3)                                                                                                               | $
|Discontinued operations - Ocampo
      mine, El Cubo mine, and Australian Operations                                                |  
|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)                                                                                                               | $

| | 6
| | -

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

|                                                                                                                       |   | Year Ended  |   |   | Year Ended  |   |   | Year Ended  |  
|---------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                                                                                       |   | December 31 |   |   | December 31 |   |   | December 31 |  
|                                                                                                                       |   | 2013        |   |   | 2012        |   |   | 2011        |  
|Total                                                                                                                  |   |             |   |   |             |   |   |             |  
|Gold ounces
      produced(1)                                                                                          |   | 161,100     |   |   | 223,485     |   |   | 187,423     |  
|Silver ounces produced                                                                                                 |   | -           |   |   | 2,983,924   |   |   | 4,728,151   |  
|Gold ounces sold(1)                                                                                                    |   | 160,913     |   |   | 217,735     |   |   | 180,740     |  
|Silver ounces sold                                                                                                     |   | -           |   |   | 2,807,754   |   |   | 4,516,975   |  
|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                                                                            | $ | 1,395       |   | $ | 1,678       |   | $ | 1,599       |  
|Average realized silver price per ounce                                                                                | $ | -           |   | $ | 31.16       |   | $ | 34.97       |  
|Cash costs per gold ounce, net
      of by-product revenues, co-product revenues and NRV
      adjustments(1)(2)(3)(4) | $ | 676         |   | $ | 503         |   | $ | (92         | )
|Cash costs per gold ounce, net of by-product and
      co-product revenues(1)(2)(3)(4)                                 | $ | 837         |   | $ | 551         |   | $ | (92         | )
|Revenue from mining operations                                                                                         | $ | 227,631     |   | $ | 457,367     |   | $ | 450,115     |  
|Production
      costs(2)(5)                                                                                           | $ | 147,981     |   | $ | 217,519     |   | $ | 155,329     |  
|(Loss) / earnings from
      operations(2)                                                                             | $ | (178,087    | ) | $ | (40,564     | ) | $ | 213,275     |  
|Net (loss) /
      earnings(2)                                                                                         | $ | (176,770    | ) | $ | 31,273      |   | $ | 176,859     |  
|Net (loss) / earnings per share,
      basic(2)                                                                        | $ | (0.71       | ) | $ | 0.11        |   | $ | 0.96        |  
|Net (loss) / earnings per share,
      diluted(2)                                                                      | $ | (0.72       | ) | $ | 0.11        |   | $ | 0.82        |  
|Operating cash
      flow(2)                                                                                           | $ | 63,266      |   | $ | 71,840      |   | $ | 181,824     |  
|Net free cash flow(3)                                                                                                  | $ | (186,156    | ) | $ | (433,180    | ) | $ | (65,562     | )
|Total cash                                                                                                             | $ | 142,652     |   | $ | 603,401     |   | $ | 179,444     |  
|Cash dividends per share, declared                                                                                     | $ | 0.16        |   | $ | Nil         |   | $ | 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. In addition, 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 these
      ounces were 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
      the Critical Accounting Estimates, Policies and Changes section on page 30
      or note 3(a) to the consolidated financial statements for the year ended
      December 31, 2013.(3)
    See the Non-GAAP Measures section on page
    23.(4)
    Gold ounces used to calculate cash costs include
      ounces sold at the El Chanate, Ocampo, El Cubo, Fosterville and Stawell
      mines and ounces produced at the Young-Davidson mine for years ended
      December 31, 2013, 2012 and 2011(5)
    Production costs do not include amortization and
      depletion or refining costs.


| | 7
| | -

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

|REVIEW
      OFANNUALFINANCIALRESULTS
|-------------------------------------

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 the year, 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 net realizable value (NRV)
adjustments on ore inventories at El Chanate and Young-Davidson of $25.5 million
and $16.6 million, respectively (further discussion is provided on pages 13 and
15). 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 $15.5 million increase in tax
expense, offset by increases in foreign exchange gains of $21.7 million. 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 over the past year to accelerate
recoveries 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.

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.

| | 8
| | -

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

2012 versus 2011

During 2012, the Company sold 217,735 gold ounces and 2,807,754
silver ounces compared to sales of 180,740 gold ounces and 4,516,975 silver
ounces in 2011. This increase resulted from an additional quarter of gold ounces
sold at the El Chanate mine, which was acquired after Q1 2011, and gold ounces
sold at the Young-Davidson open pit mine subsequent to the declaration of
commercial production on September 1, 2012. These increases were partially
offset by a decline in ounces sold at Ocampo during the year. The decline in
silver ounces sold was due to lower production at Ocampo during 2012.

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

Loss from operations, which is exclusive of discontinued
operations, was $96.9 million in 2012, compared to a loss from operations of
$6.8 million in 2011. During 2012, the Company recorded an impairment charge
related to the El Chanate mine. Before the impairment charge of $127.0 million,
earnings from continuing operations were $30.1 million in 2012, representing a
$36.9 million increase in earnings over the prior year. This increase was
primarily a result of the increase in revenues mentioned previously, and was
partially offset by related increases in production costs and amortization and
depletion, and a $12.0 million increase in reclamation, care and maintenance
costs at Kemess South.

The Company reported a net loss from continuing operations of
$99.8 million in 2012, representing a $129.1 million decrease from the Companys
net earnings from continuing operations of $29.3 million in 2011. Before the
impairment charge of $127.0 million, net earnings from continuing operations
were $27.2 million in 2012, representing a decrease of $2.1 million over the
prior year. The decrease in net earnings from continuing operations was
primarily as a result of an $18.9 million decrease in unrealized gains on the
fair value of the option component of convertible senior notes and a $20.3
million increase in foreign exchange losses. These decreases were partially
offset by the increase in earnings from continuing operations discussed above,
an $11.3 million decline in tax expense, and a $6.6 million gain on the sale of
a 50% interest in the Orion advanced development project to Minera Frisco S.A.B.
de C.V. during the fourth quarter of 2012. Including net earnings from
discontinued operations of $131.1 million, consolidated net earnings were $31.3
million in 2012 compared to consolidated net earnings of $176.9 million in 2011.
Included in net earnings from discontinued operations is a $69.5 million net
gain on the sale of the Ocampo mine and Venus and Los Jarros exploration
properties, a $17.2 million net gain on the sale of the El Cubo mine and
Guadalupe y Calvo exploration property, and a $4.6 million net loss on the sale
of the Australian Operations.

During 2012, consolidated cash costs per gold ounce from
continuing operations were $536, representing a 19% increase over 2011 cash
costs of $449. This increase was primarily due to higher cost ounces produced at
Young-Davidson open pit subsequent to the declaration of commercial production
on September 1, 2012, partially offset by a decline in cash costs at El Chanate
due to optimization initiatives completed by the Company subsequent to the
acquisition of the mine in early Q2 2011. Including cash costs from discontinued
operations, total cash costs per ounce were $551 in 2012, compared to a credit
of $92 per ounce in 2011 (due to co-product revenues exceeding cash costs). The
increase in cash costs from discontinued operations is primarily due to lower
production and the net realizable value adjustments recognized on ore in process
heap leach inventory at Ocampo, as well as higher cost ounces produced at the El
Cubo, Fosterville and Stawell mines during 2012.

The Company reported operating cash flow from continuing
operations of negative $7.2 million during 2012, a decrease of $4.1 million from
the prior year result of negative $3.1 million. This decrease in operating cash
flow arose primarily as a result of increased reclamation expenditures at Kemess
South. Operating cash flow from Young-Davidson includes the build-up of
stockpile and ore inventories during the year. After deducting capital
expenditures of $361.5 million, including capital expenditures of $309.2 million
at the Young-Davidson mine, the Companys 2012 net free cash flow from
continuing operations was negative $368.7 million.

| | 9
| | -

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

|SUMMARY
      OFQUARTERLYFINANCIAL ANDOPERATINGRESULTS
|------------------------------------------------------

|(in thousands, except ounces, per share
      amounts, average realized prices, all-in sustaining costs and total cash
      costs) |  
|----------------------------------------------------------------------------------------------------------------------------------- | -
|                                                                                                                                    |  
|Gold ounces produced(1)                                                                                                             |  
|Silver ounces produced(1)                                                                                                           |  
|Gold ounces sold(1)                                                                                                                 |  
|Silver ounces sold(1)                                                                                                               |  
|Average realized gold price                                                                                                         | $
|Average realized silver price                                                                                                       | $
|Cash costs per gold ounce, net of by-product
      revenues and NRV adjustments(1)(2)(3)(5)                                         | $
|Cash
      costs per gold ounce, net of by-product revenues(1)(2)(3)(5)                                                             | $
|All-in sustaining costs per gold ounce, sold
      net of by-product revenues and NRV adjustments(1)(3)                             | $
|All-in sustaining costs per gold ounce, sold net of by-product
      revenues(1)(3)                                                 | $
|Revenue from mining operations(1)                                                                                                   | $
|Production costs(1)(2)(4)                                                                                                           | $
|(Loss) / earnings from operations(1)(2)                                                                                             | $
|Net (loss) / earnings from continuing
      operations(2)                                                                           | $
|Net earnings / (loss) from discontinued
      operations                                                                            | $
|Total net (loss) / earnings(2)                                                                                                      | $
|Net (loss) / earnings per share from
      continuing operations, basic(2)                                                          | $
|Net earnings / (loss) per share from
      discontinued operations, basic                                                           | $
|Total (loss) / earnings per share, basic(2)                                                                                         | $
|Net (loss) / earnings per share from
      continuing operations, diluted(2)                                                        | $
|Net earnings / (loss) per share from
      discontinued operations, diluted                                                         | $
|Total (loss) / earnings per share, diluted(2)                                                                                       | $
|Operating cash flow from continuing
      operations(2)                                                                             | $
|Operating cash flow from discontinued
      operations                                                                              | $
|Total operating cash flow(2)                                                                                                        | $
|Net free cash flow from continuing
      operations(3)                                                                              | $
|Net free cash flow from discontinued
      operations(3)                                                                            | $
|Total net free cash flow(3)                                                                                                         | $

(1)
    Operational data, including ounces produced and sold,
      and cash costs, include the results of both continuing and discontinued
      operations. Certain financial information, including revenues, production
      costs, and earnings from operations are exclusive of discontinued
      operations as the financial results of these operations are presented
      separately on the Consolidated Statements of Operations for the 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 the Critical Accounting Estimates, Policies and Changes section
      on page 30 or note 3(a) to the consolidated financial statements for the
      year ended December 31, 2013.(3)
    See the Non-GAAP Measures section on page
    23.(4)
    Production costs do not include amortization and
      depletion or refining costs.(5)
    Gold ounces include ounces sold at the El Chanate,
      Ocampo, El Cubo, Fosterville and Stawell mines and ounces produced at the
      Young-Davidson mine, for the year ended December 31, 2013 and
    2012.


| | 10
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

|REVIEW
      OFFOURTHQUARTERFINANCIALRESULTS
|--------------------------------------------

During the fourth quarter of 2013, the Company sold 39,855 gold
ounces at the El Chanate and Young-Davidson mines, a 10% increase over sales of
36,137 gold ounces in Q4 2012. Revenues from continuing operations decreased
from $63.1 million in Q4 2012 to $50.8 million in the fourth quarter of 2013.
This $12.3 million decrease in revenue was largely due to lower realized gold
prices, offset by an increase in gold ounces sold during the fourth quarter of
2013 compared to prior year. The Company also sold 3,416 underground
pre-production ounces at Young-Davidson during the fourth quarter of 2013
compared to 3,595 underground pre-production ounces during the fourth quarter of
2012. The related revenues from pre-production ounces were credited against
capitalized costs.

The Company recognized a loss from continuing operations of
$104.2 million in the fourth quarter of 2013, compared to a loss from continuing
operations of $113.9 million in the same period of 2012. Included in loss from
continuing operations are impairment charges on goodwill, property, plant and
equipment and mining interests at the El Chanate mine of $74.0 million and
$127.0 million in Q4 2013 and Q4 2012, respectively (further discussion is
provided on page 15). During the fourth quarter of 2013, as a result of
declining gold prices and revised additional processing costs, the Company
recognized NRV adjustments on ore inventories at El Chanate and Young-Davidson.
These adjustments totaled $16.2 million at Young-Davidson and $21.0 million at
El Chanate (further discussion is provided on pages 13 and 15). In addition,
amortization and depletion expense was $18.1 million higher in Q4 2013 as
compared to the prior year, due to the NRV adjustments previously discussed,
increased depletion expense in the Young-Davidson open pit, and the addition of
depletion expense in the Young-Davidson underground mine subsequent to the
declaration of commercial production on October 31, 2013.

The Company reported a net loss from continuing operations of
$106.4 million in the fourth quarter of 2013, compared to a net loss of $135.1
million in Q4 2012. The decrease in net loss was primarily as a result of the
decrease in loss from continuing operations discussed previously, an increase in
foreign exchange gains of $3.7 million, an increase of $21.3 million in other
income, partially offset by an increase in tax expense of $3.0 million. The
increase in other income was associated largely with movement on mark-to-market
gains and losses on investments and derivative instruments.

In the fourth quarter of 2013, cash costs per gold ounce from
continuing operations, net of by-product revenues and NRV adjustments, were
$771, representing an 19% increase over Q4 2012 cash costs per gold ounce of
$650. This quarter-over-quarter increase was driven by higher cash costs at
Young-Davidson resulting from a higher open pit operating strip ratio that
resulted from waste movement in the quarter being ineligible for capitalization
given the open pit mine life of less than one year. The stripping ratio during
the quarter was 3.44:1 versus a year-to-date strip ratio of 1.49:1. In addition,
cash costs at the El Chanate mine during the fourth quarter of 2013 were higher
due to an increase in the average ore inventory costs per ounce over the past
year.

In the fourth quarter of 2013, all-in sustaining costs per gold
ounce from continuing operations, net of by-product revenues and NRV
adjustments, were $1,232, representing a 17% decrease over Q4 2012 all-in
sustaining costs per gold ounce of $1,482. This decrease is primarily due to a
decrease in general and administrative expenses and sustaining capital
expenditures per ounce.

The Company reported operating cash flow from continuing
operations of $12.0 million during the fourth quarter, an increase of $19.8
million over the operating cash flow used in continuing operations of $7.8
million in Q4 2012. This increase in operating cash flow arose primarily as a
result of reduced reclamation activities in Q4 2013 and due to $8.5 million in
disposition-related fees paid in Q4 2012. After deducting capital expenditures
of $63.6 million, the Companys Q4 2013 net free cash flow from continuing
operations was negative $51.6 million.

| | 11
| | --

---

|2013ANNUAL 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 in 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. Prior to declaration of commercial production all related
revenues generated from ounces sold were credited against capitalized
development costs.

The paste backfill plant has been commissioned and the first
pour was completed in early January 2014. In 2011, the mine plan was
re-engineered to utilize paste backfill to improve mining recoveries and reduce
dilution.

YOUNG-DAVIDSONOPERATIONALREVIEW

|                                             |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|-------------------------------------------- |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                             |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                             |  | 2013          |  |  | 2012          |  |  | 2013        |  |  | 2012        | 
|Underground Operations                       |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore mined                          |  | 238,321       |  |  | 76,884        |  |  | 616,961     |  |  | 76,884      | 
|Average grade of
      gold(1)               |  | 3.10          |  |  | 3.29          |  |  | 2.83        |  |  | 3.29        | 
|Metres developed                             |  | 2,986         |  |  | 1,683         |  |  | 9,992       |  |  | 6,858       | 
|Open Pit Operations                          |  |               |  |  |               |  |  |             |  |  |             | 
|Total tonnes mined                           |  | 3,247,496     |  |  | 3,180,889     |  |  | 12,220,056  |  |  | 10,695,861  | 
|Tonnes of ore mined                          |  | 730,677       |  |  | 719,757       |  |  | 3,202,358   |  |  | 2,803,729   | 
|Average grade of gold(1)                     |  | 1.04          |  |  | 1.22          |  |  | 1.16        |  |  | 1.06        | 
|Tonnes stockpiled ahead of the
      mill    |  | 2,734,347     |  |  | 1,397,333     |  |  | 2,734,347   |  |  | 1,397,333   | 
|Average grade of gold(1)                     |  | 0.81          |  |  | 0.87          |  |  | 0.81        |  |  | 0.87        | 
|Mill Operations                              |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore processed                      |  | 641,114       |  |  | 548,674       |  |  | 2,482,305   |  |  | 1,483,280   | 
|Average grade of
      gold(1)               |  | 2.04          |  |  | 1.69          |  |  | 1.79        |  |  | 1.36        | 
|Average gold recovery rate                   |  | 88%           |  |  | 89%           |  |  | 87%         |  |  | 87%         | 
|Gold ounces produced                         |  | 29,597        |  |  | 19,236        |  |  | 89,236      |  |  | 29,139      | 
|Pre-production gold ounces
      produced(2) |  | 3,509         |  |  | 7,127         |  |  | 31,502      |  |  | 26,999      | 
|Total gold ounces produced                   |  | 33,106        |  |  | 26,363        |  |  | 120,738     |  |  | 56,138      | 
|Gold ounces sold                             |  | 24,831        |  |  | 22,170        |  |  | 88,878      |  |  | 26,169      | 
|Pre-production gold ounces sold(2)           |  | 3,416         |  |  | 3,595         |  |  | 31,839      |  |  | 17,505      | 
|Total gold ounces sold                       |  | 28,247        |  |  | 25,765        |  |  | 120,717     |  |  | 43,674      | 

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


The Company mined 238,321 ore tonnes, or 2,590 tonnes per day
(TPD), from the Young-Davidson underground mine during the quarter, at a grade
of 3.10 gold grams per tonne. This exceeded year-end targeted levels of 2,000
TPD with mine grades consistent with reserve grade estimates. In November and
December of 2013, subsequent to the declaration of commercial production in the
underground mine, the Company averaged approximately 3,000 TPD. During 2013, the
Company mined 616,961 ore tonnes, or 1,690 TPD, at a grade of 2.83 gold grams
per tonne. Ore grades from the underground mine have been at or above expected
grades for areas developed during 2013. Q1 2014 underground productivity is
expected to be consistent with Q4 2013, at approximately 2,500 TPD, with
productivity increasing throughout the year and targeting an exit rate of 4,000
TPD at the end of the 2014.

During the quarter, the Company mined 3,247,496 tonnes, or
35,299 TPD, at the Young-Davidson open pit, including 730,677 ore tonnes at a
grade of 1.04 gold grams per tonne. Total tonnes mined and ore tonnes mined were
consistent with levels in the prior year. During 2013, the Company mined
3,202,358 ore tonnes at a grade of 1.16 gold grams per tonne, representing a 14%
increase over ore tonnes mined in 2012. Both total tonnes mined and ore tonnes
mined were higher in the current year as the Company was ramping up open pit
operations in early 2012. As anticipated, open pit grades mine in 2013 were
higher than the prior year, except during the fourth quarter when grades
declined due to mine sequencing. At the end of Q4 2013, the Company had
2,734,347 tonnes of mid and low grade ore stockpiled ahead of the mill at an
average grade of 0.81 gold grams per tonne. The majority of the low grade
stockpile is expected to be processed near the end of the mine life.

| | 12
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

During Q4 2013, the Company processed 641,114 tonnes, or 6,969
TPD, at the Young-Davidson mill facility, with gold grades averaging 2.04 grams
per tonne. This represents a 17% increase over the 548,674 tonnes processed in
Q4 2012 due to operational improvements made over the past year. Grades
processed are significantly higher in the current year due to the higher grade
underground ore being processed in 2013, whereas the majority of 2012 production
was from the open pit. During 2013, the Company processed 2,482,305 tonnes, or
6,801 TPD, with gold grades averaging 1.79 grams per tonne. In 2012, the Company
processed 1,483,280 tonnes, or 5,394 TPD, with gold grades averaging 1.36 grams
per tonne. Annual tonnes processed are significantly higher in 2013, as the mill
was not in operation until April 2012.

Young-Davidson produced 33,106 gold ounces during Q4 2013,
including 3,509 pre-production ounces related to underground operations,
compared to 26,363 ounces produced in Q4 2012. The significant increase in
production is due to the higher tonnage processed and improved grades as
compared to Q4 2012. During 2013, Young-Davidson produced 120,738 gold ounces,
including 31,502 pre-production ounces related to underground operations. In
2012, the Company produced 56,138 gold ounces, including 26,999 pre-production
ounces.

YOUNG-DAVIDSONFINANCIALREVIEW

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

|(1) | See the Non-GAAP Measures section on page
    23.
|--- | -------------------------------------------------

During Q4 2013, the Company recognized revenues of $31.4
million and a loss from operations of $24.4 million at Young-Davidson. Revenue
has been recognized only on ounces sold that were attributable to open pit
production and to underground production subsequent to declaration of commercial
production  on October 31, 2013. Revenue associated with
underground pre-production has been credited against capitalized costs. The loss
from operations is primarily due to an NRV adjustment of $16.2 million, as
discussed below, a decline in realized gold prices, an increase in depletion
expense in the open pit, and the addition of depletion expense in the
underground mine subsequent to the declaration of commercial production.

During 2013, the Company recognized revenues of $124.4 million
and a loss from operations of $2.4 million at Young-Davidson compared to
revenues of $45.5 million and earnings from operations of $16.1 million in 2012.
Revenues have increased in 2013 as a result of more gold ounces sold, offset by
lower realized prices per gold ounce. The loss from operations in 2013 resulted
from a full year of amortization and depletion and the NRV adjustments discussed
below.

At December 31, 2013, the Company recognized an NRV adjustment
of $16.2 million on ore inventory, of which $9.8 million was recognized in Q4
production costs and $6.4 million was recognized in Q4 amortization and
depletion. NRV adjustments resulted from the decline in gold prices during the
year and higher estimated future processing costs resulting in the carrying
value of ore inventories exceeding their net realizable value. Continued
declines in the gold price could result in NRV adjustments in future periods.
Should metal prices appreciate, this NRV adjustment could be reversed in future
periods. During 2013, the Company recognized net NRV adjustments of $16.6
million on ore inventory, of which $10.0 million was recognized in production
costs and $6.6 million was recognized in amortization and depletion.

During Q4 2013, capital expenditures at Young-Davidson of $48.7
million exceeded operating cash flow of $10.0 million, resulting in negative net
free cash flow of $38.7 million. Capital expenditures in Q4 2013 included $20.0
million in site infrastructure, $31.3 million in underground development, $0.9
million in exploration expenditures and $1.0 million in capitalized borrowing
costs, which were partially offset by $4.5 million in revenue from the sale of
pre-production underground ounces. During 2013, capital expenditures at
Young-Davidson of $195.2 million exceeded operating cash flow of $56.4 million,
resulting in negative net free cash flow of $138.8 million. Capital expenditures
in 2013 included $112.5 million in site infrastructure, $99.5 million in
underground development, $18.5 million in capitalized stripping activities, $3.9
million in exploration expenditures and $6.2 million in capitalized borrowing
costs, which were partially offset by $45.4 million in revenue from the sale of
pre-production underground ounces.

| | 13
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

During Q4 2013, cash costs per gold ounce at the Young-Davidson
mine, net of by-product revenues and the impact of NRV adjustments, were $850, a
14% increase from Q4 2012. The increase was due primarily to the fourth quarter
open pit operating strip ratio of 3.44:1 versus a year-to-date average of
1.49:1, and lower grades mined in the open pit. During 2013, cash costs per gold
ounce at the Young-Davidson mine were $744 compared to $708 in 2012.

YOUNG-DAVIDSONEXPLORATION

On March 3, 2014, the Company reported updated reserves and
resources at December 31, 2013, which included 3.6 million gold ounces of proven
and probable reserves at Young-Davidson. Proven and probable reserves at
Young-Davidson remained consistent with those reported at December 31, 2012. The
slight decline in proven and probable reserves is entirely attributable to
depletion in the Young-Davidson open pit; the Company replaced all ounces mined
from the underground during 2013. Further details on the updated reserves and
resources by category can be found in the Companys March 3, 2014 press release
or in the Companys Annual Information Form, both of which can be found on the
Companys website atwww.auricogold.com.

During
Q4 2013, the Company completed 5,202 metres of drilling at Young-Davidson
bringing 2013 drilling to 17,789 metres. During the year, the Company carried
out 50 kilometres of induced polarization geophysics on the southern portion of
the property. Mechanical trenching of the anomalies that are close to surface
was completed and two IP anomalies were drill tested.

|ELCHANATE
|---------

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.

ELCHANATEOPERATIONALREVIEW

|                                                             |  | Quarter Ended |  |  | Quarter Ended |  |  | Year Ended  |  |  | Year Ended  | 
|------------------------------------------------------------ |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | ----------- | 
|                                                             |  | December 31   |  |  | December 31   |  |  | December 31 |  |  | December 31 | 
|                                                             |  | 2013          |  |  | 2012          |  |  | 2013        |  |  | 2012        | 
|Open Pit Operations                                          |  |               |  |  |               |  |  |             |  |  |             | 
|Total tonnes mined                                           |  | 9,060,830     |  |  | 9,366,003     |  |  | 35,666,946  |  |  | 35,083,471  | 
|Tonnes of ore mined                                          |  | 2,213,858     |  |  | 2,200,370     |  |  | 9,111,448   |  |  | 9,087,686   | 
|Capitalized stripping
      tonnes(1)                        |  | 4,348,728     |  |  | 4,543,389     |  |  | 17,297,066  |  |  | 17,209,098  | 
|Average grade of gold(2)                                     |  | 0.56          |  |  | 0.56          |  |  | 0.56        |  |  | 0.57        | 
|Tonnes stockpiled ahead of the
      heap leach pad          |  | 194,688       |  |  | 151,181       |  |  | 194,688     |  |  | 151,181     | 
|Average grade of gold(2)                                     |  | 0.60          |  |  | 0.66          |  |  | 0.60        |  |  | 0.66        | 
|Crushing and Heap Leach Operations                           |  |               |  |  |               |  |  |             |  |  |             | 
|Tonnes of ore crushed and placed
      on the heap leach pad |  | 1,623,098     |  |  | 1,676,909     |  |  | 6,725,081   |  |  | 6,970,007   | 
|Average grade of gold processed(2)                           |  | 0.69          |  |  | 0.68          |  |  | 0.70        |  |  | 0.68        | 
|Low grade ore placed on the heap
      leach pad             |  | 566,193       |  |  | 1,239,173     |  |  | 2,342,861   |  |  | 3,836,061   | 
|Average grade of gold processed(2)                           |  | 0.19          |  |  | 0.18          |  |  | 0.19        |  |  | 0.19        | 
|Total tonnes of ore processed                                |  | 2,189,291     |  |  | 2,916,082     |  |  | 9,067,942   |  |  | 10,806,068  | 
|Average grade of gold processed(2)                           |  | 0.56          |  |  | 0.47          |  |  | 0.57        |  |  | 0.50        | 
|Gold ounces produced                                         |  | 16,420        |  |  | 14,782        |  |  | 71,864      |  |  | 71,145      | 
|Gold
      ounces sold                                       |  | 15,024        |  |  | 13,967        |  |  | 72,035      |  |  | 68,253      | 

(1)
    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 the Critical Accounting Estimates, Policies and Changes section
      on page 30 or note 3(a) to the consolidated financial statements for the
      year ended December 31, 2013.(2)
    Grams per tonne.


During Q4 2013, the Company mined 9,060,830 tonnes at the El
Chanate open pit, including 2,213,858 ore tonnes. Mining rates of 98,487 TPD
were higher than the third quarters rate of 87,336 TPD as contractor
availability returned to normal levels. Q4 2013 mining rates were largely
consistent with the average rate achieved during Q4 2012 of 101,804 TPD. During
2013, the Company mined 35,666,946 tonnes, or 97,718 TPD, consistent with 2012
mining rates.

Capitalized stripping activities totaled 4,348,728 tonnes
during the fourth quarter of 2013, compared to 4,543,389 tonnes during Q4 2012.
All of the capitalized stripping tonnes during the fourth quarter were mined as
part of the southeast push-back of the pit. Overall, stripping activities at El
Chanate represented a capital investment of $6.3 million during the fourth
quarter of 2013, compared to $7.2 million in Q4 2012.

The Company crushed and placed1,623,098 tonnes of ore
from the open pit on the heap leach pad in Q4 2013, in line with targeted levels
at an average rate of 17,642 TPD, compared with the average rate during Q4 2012
of 18,227 TPD. During Q4 2013, the Company also placed 566,193 tonnes, or 6,154 TPD, of
low grade run-of-mine material on the heap leach pad. Total tonnes processed of
2,189,291 tonnes, or 23,797 TPD, represents a 25% decrease over stacking rates
in the fourth quarter of 2012, primarily due to a decrease in low-grade
run-of-mine material stacked. During 2013, the Company placed 9,067,942 tonnes
of ore, or 24,844 TPD, a decline of 16% over the prior year-to-date stacking
rates which was also due to a decline in low-grade run-of-mine material stacked.

| | 14
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

The grade of ore crushed and placed averaged 0.69 gold grams
per tonne during Q4 2013, which was consistent with the grade of ore crushed and
placed during Q4 2012. On an annual basis, grades crushed and placed in 2013
were also consistent with those realized in 2012. During the fourth quarter and
the full year, the grade of all material processed, including run-of-mine
material, averaged 0.56 and 0.57 gold grams per tonne, respectively, which were
higher than the same periods of the prior year. The primary reason for the
increase in grades in 2013 was the decline in low grade run-of-mine material
stacked in the current year as compared to the prior year.

The Company produced 16,420 gold ounces at El Chanate during
the fourth quarter of 2013, an 11% increase over the prior year production of
14,782 gold ounces. Q4 2012 production was negatively impacted by a rupture of a
pressure vessel in one of the Adsorption Desorption Refinery processing plants
that caused a temporary shutdown of two of the three plants for 48 days during
the quarter. In 2013, the Company produced 71,864 gold ounces, which was
consistent with the 71,145 gold ounces produced in the prior year.

ELCHANATEFINANCIALREVIEW

|(in thousands, except total cash costs)                                               |  
|------------------------------------------------------------------------------------- | -
|                                                                                      |  
|                                                                                      |  
|                                                                                      |  
|Revenue from mining operations                                                        | $
|Production costs(1)                                                                   | $
|Refining costs                                                                        | $
|Amortization and depletion                                                            | $
|(Loss) from operations(1)                                                             | $
|Cash flow from operations(1)                                                          | $
|Capital expenditures(1)                                                               | $
|Net
      free cash flow(1)(2)                                                        | $
|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)
    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 the Critical Accounting Estimates, Policies and Changes section
      on page 30 or note 3(a) to the consolidated financial statements for the
      year ended December 31, 2013.(2)
    See the Non-GAAP Measures section on page
    23.


The Company recognized a loss from operations at El Chanate of
$91.3 million during the fourth quarter of 2013, compared to a loss from
operations of $113.6 million in Q4 2012. Included in the loss from operations
during Q4 2013 was an impairment charge of $74.0 million that arose primarily as
a result of lower gold price assumptions, an increase in the discount rate, and
higher processing costs in the life of mine plan due to higher quantities of
solution applied to the leach pad in future years. Impairment adjustments
recorded at El Chanate in Q4 2012 were $127.0 million. The loss from operations
in Q4 2013 included an NRV adjustment of $21.0 million at December 31, 2013
caused by a decline in realized gold prices and higher estimated future
processing costs. In 2013, El Chanate recognized a $143.6 million loss from
operations, compared to a loss from operations of $60.7 million in the prior
year. This decline resulted primarily from larger impairment charges in 2013, an
increase in production costs and amortization and depletion, and a decrease in
revenues.

At December 31, 2013, the Company recognized an NRV adjustment
of $21.0 million on low grade ore inventory, of which $19.3 million was
recognized in Q4 production costs and $1.7 million was recognized in Q4
amortization and depletion. NRV adjustments resulted from the decline in gold
prices during the year and higher estimated future processing costs resulting in
the carrying value of ore inventories exceeding their net realizable value. This
adjustment was required for the portion of the heap leach pad where lower grade
run-of-mine material is stacked. Continued declines in the gold price could
result in NRV adjustments in future periods. Should metal prices appreciate,
this NRV adjustment could be reversed in future periods. During 2013, the
Company recognized net NRV adjustments of $25.5 million on ore inventory, of
which $23.4 million was recognized in production costs and $2.1 million was
recognized in amortization and depletion.

During Q4 2013, capital expenditures at El Chanate of $10.3
million exceeded operating cash flow of $4.8 million, resulting in negative net
free cash flow of $5.5 million. Capital expenditures in Q4 2013 included $6.3
million in capitalized stripping activities, $1.3 million in other sustaining
capital and optimization initiatives, $2.0 million in exploration expenditures,
and $0.7 million in capitalized borrowing costs. During 2013, capital
expenditures at El Chanate of $44.1 million exceeded operating cash flow of $33.4 million, resulting in negative net free cash flow
of $10.7 million. Capital expenditures in 2013 included $27.4 million in
capitalized stripping activities, $8.6 million in other sustaining capital and
optimization initiatives, $0.8 million in heap leach expansion, $5.1 million in
exploration expenditures, and $2.2 million in capitalized borrowing costs. Net
free cash flow declined on a year-to-date basis primarily due to the decline in
revenue and an increase in production costs.

| | 15
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

During Q4 2013, cash costs per gold ounce at the El Chanate
mine, net of by-product revenues and the impact of NRV adjustments, were $615,
an increase of 18% over cash costs per gold ounce of $520 in Q4 2012. During
2013, cash costs per gold ounce, net of by-product revenues and the impact of
NRV adjustments, were $592, an increase of 28% over 2012. These increases were
due to higher average inventory costs as a result of higher quantities of
solution applied to the leach pad over the past year to accelerate gold
recoveries and a reduction in capitalized stripping costs associated with the
adoption of a new accounting standard. In Q4 2013, the Company implemented a
cost reduction program at El Chanate, including the renegotiation of contracts
and a reduction in headcount.

ELCHANATEEXPLORATION

On March 3, 2014, the Company reported updated reserves and
resources at December 31, 2013, which included 1.0 million gold ounces of proven
and probable reserves at El Chanate. Proven and probable reserves declined at El
Chanate during 2013 due to depletion. Further details on the updated reserves
and resources by category can be found in the Companys March 3, 2014 press
release or in the Companys Annual Information Form, both of which can be found
on the Companys website at www.auricogold.com.

During Q4 2013, the Company completed 15,202 metres of reverse
circulaton drilling (95 holes) at El Chanate bringing the year-to-date total to
45,697 metres. In addition, five diamond core holes were drilled totaling 980
metres. Fifteen holes were completed in the Rono area (northwest of the pit), 41
holes were completed within the pit, and 39 holes were completed south east of
the pit toward and within the Loma Prieta area.

The Companys September 12, 2013 press release highlights holes
775 and 776 located below the southeastern part of the pit. Subsequent to this
press release, diamond core hole CHD 61, located in the same area as holes 775
and 776, intersected 81.25 metres of 2.12 gold grams per tonne, including 27.45
metres averaging 3.22 gold grams per tonne. The orientation and true thickness
of this zone is unknown and a core drilling program in the early part of 2014
will be testing the orientation of this mineralization.

|EXPLORATIONREVIEW
|-----------------

KEMESSUNDERGROUNDPROJECT

On March 3, 2014, the Company reported updated reserves and
resources at December 31, 2013 which included 1.8 million gold ounces of proven
and probable gold reserves at Kemess, consistent with reserves and resources
reported at December 31, 2012. Further details on the updated reserves and
resources by category can be found in the Companys March 3, 2014 press release
or in the Companys Annual Information Form, both of which can be found on the
Companys website atwww.auricogold.com.

During Q4 2013, the Company drilled 4,116 metres at Kemess East
(located approximately one kilometre from the Kemess Underground Project)
bringing the year to date total to 13,333 metres. The Company will continue this
drill program in 2014. Optimization work on the feasibility study is ongoing and
is anticipated to significantly improve project economics.

ELCHANATEEXTENSION

On June 28, 2013, the Company entered into an option and joint
venture agreement with Highvista Gold Inc., entitling the Company to earn up to
a 70% interest in mineral rights along the Chanate Fault to the northwest of the
El Chanate mine. Drilling this quarter totaled 2,377 metres in eleven holes on
four target areas.

LASLAJASPROJECT

On June 13, 2013, the Company signed an option agreement with
Minera Goldzone S.A. de C.V. to acquire a 100% interest in the Las Lajas
Project, an 8,145 hectare property consisting of 6 contiguous mining concessions
located in southern Sonora State, Mexico. Field work in this quarter consisted
of twelve bulldozer trenches (1,277 metres) in two areas. This work is ongoing
and a drilling program will be initiated toward the end of Q1 2014.

| | 16
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

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

|(in thousands)                                           |  
|-------------------------------------------------------- | -
|                                                         |  
|                                                         |  
|                                                         |  
|Reclamation, care and maintenance costs                  | $
|General and administrative                               | $
|Exploration and business development                     | $
|Impairment charges                                       | $
|Finance costs                                            | $
|Foreign exchange (gain) / loss                           | $
|Other income                                             | $
|Equity in loss / (earnings) of 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.


Reclamation, care and maintenance costs in 2013 and 2012 were
comprised of site overhead and other costs relating to activities at Kemess
South, a mine in the decommissioning stage. Annual reclamation expenses have
declined from the prior year due to lower care and maintenance expenses at the
Kemess site and due to the recognition of a $6.0 million reclamation expense in
the prior year, which was a result of additional reclamation activities
conducted at Kemess South that had not previously been provided for in the
Companys reclamation provision.

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 expense for 2013 was $7.4
million, consistent with the $7.4 million recognized in 2012. Overall, general
and administrative costs for 2013 decreased by $8.1 million over the prior year
period primarily as a result of costs incurred during 2012 associated with the
integration of Northgate Minerals Corporation as well as the weakening of the
Canadian dollar.

During the year, 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. In addition, during Q2 2013 the Company recognized an
$18.7 million impairment charge on the retained interest royalty in the
Australian Operations. The retained interest royalty grants the Company an
interest in future net free cash flows to be generated by the Australian
Operations which were disposed of in 2012. Once the Company updated its fair
value estimate for changes in gold price assumptions at June 30, 2013, the
result was lower than the current carrying value of the asset and an impairment
charge was recognized.At December 31, 2013, due to the receipt of an
updated life-of-mine plan from Crocodile Gold Corporation (Crocodile Gold),
the Company reversed the impairment charge recognized in Q2 2013. The primary
drivers of the increase in fair value at December 31, 2013 were an extension of
mine life at the Fosterville mine and a strengthening of the US dollar versus
the Australian dollar.

During 2013, foreign exchange gains and losses changed by $21.7
million, from a loss of $10.7 million in 2012 to a gain of $10.9 million in
2013. The primary cause of the gain in the current year was the weakening of the
Canadian dollar and Mexican peso, whereas the prior year loss was due primarily
to the strengthening of the Mexican peso. The weakening of these currencies
result in foreign exchange gains, while the strengthening of these currencies
result in foreign exchange losses, primarily as a result of the Companys
deferred income tax liabilities which are denominated in Canadian dollars and
Mexican pesos and then translated into US dollars at each balance sheet date.
The Company will continue to experience non-cash foreign currency gains or
losses, primarily as a result of fluctuations between the US dollar, and both
the Canadian dollar and Mexican peso.

During 2013, other income increased to $10.2 million, from $8.8
million in 2012, primarily as a result of a $15.6 million unrealized gain on the
fair value of the option component of convertible notes, offset by a $7.4M
unrealized loss on the fair value of contingent consideration. Other income in
2012 primarily consisted of a $4.0 million unrealized gain on the option
component of convertible notes, a $6.6 million gain on the sale of 50% interest
in the Orion property, offset by a $3.9 million loss on extinguishment of debt.

During the year, the Company recognized its share of the loss
relating to the Orion exploration project, which is accounted for a
jointly-controlled entity using the equity method. This arrangement was agreed
upon in December of 2012.

| | 17
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

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

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

In December 2013, the Mexican President passed the 2014 tax
reform bill which introduces a Special Mining Duty and a New Extraordinary
Mining Duty, both of which will be payable annually by all holders of productive
mining concessions. The Special Mining Duty will be calculated as 7.5% of
earnings before interest, taxes, depreciation and amortization as determined
under Mexican income tax law, including certain specific deductions. The New
Extraordinary Mining Duty will be computed as 0.5% of gold and silver sales.
Both of these taxes are deductible for the purposes of calculating Mexican
income tax. Other changes introduced with the tax reform bill include (i) the
approval of a permanent 30% corporate income tax rate, (ii) the elimination of
the immediate deduction of fixed assets, (iii) the abolishment of the Single
Rate Tax Law (IETU), and (iv) the introduction of a new 10% dividend withholding
tax to be levied on payments to individuals or foreign shareholders. The Company
expects treaty benefits to be applicable to the 10% dividend withholding tax.
This new tax reform bill resulted in an increase in deferred tax expense of $4.9
million during the fourth quarter of 2013.

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 2013, the Company recognized a current tax recovery of
$0.1 million and a deferred tax expense of $14.5 million, compared to a current
tax expense of $6.6 million and a deferred tax recovery of $7.8 million in 2012.
The decrease in current tax expense primarily resulted from the lower taxable
income at the El Chanate mine. The deferred tax expense recognized during 2013
resulted primarily from the weakening of the Canadian dollar relative to the US
dollar, which caused an increase in taxable temporary differences associated
with the Companys Canadian property, plant and equipment and mining interests.
In the prior year, a strengthening Canadian dollar had the opposite effect,
resulting in a deferred tax recovery. Deferred income tax expense in 2013 was
also higher due to the new Mexican tax reform bill, as discussed above.

| | 18
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

|FINANCIALCONDITION
|------------------

|(in thousands)                 
|-------------------------------
|                               
|                               
|                               
|                               
|Current assets(1)              
|                               
|Long-term assets(1)            
|                               
|Total assets                   
|                               
|Current liabilities            
|                               
|Long-term financial liabilities
|                               
|Other long-term liabilities    
|Total liabilities              
|                               
|Shareholders equity(1)        

(1)
    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 the Critical Accounting Estimates, Policies and Changes section
      on page 30 or note 3(a) to the consolidated financial statements for the
      year ended December 31, 2013.


| | 19
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

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

The Companys strategy for managing liquidity is based on
achieving positive cash flows from operations to internally fund operating and
capital requirements. Material increases or decreases in the Companys liquidity
and capital resources will be substantially determined by the success or failure
of the Companys operations, exploration, development and construction programs,
its ability to obtain equity or other sources of financing, the price of gold,
and currency exchange rates. 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.

CASHFLOW

|(in thousands)                                                 |  
|-------------------------------------------------------------- | -
|                                                               |  
|                                                               |  
|                                                               |  
|Cash flow from / (used in) operating
      activities(1)(2)    | $
|Cash flow (used in) / from investing
      activities(1)(2)    |  
|Cash flow (used in) / from financing
      activities(1)       |  
|Effect of foreign exchange rates on cash(1)                    |  
|(Decrease) / increase in cash from continuing
      operations |  
|Decrease in cash from discontinued operations                  |  
|Total cash, beginning of period                                |  
|Total cash, 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 the Critical Accounting Estimates, Policies and Changes section
      on page 30 or note 3(a) to the consolidated financial statements for the
      year ended December 31, 2013.


In 2013, operating activities contributed cash flows of $63.3
million, as compared to 2012 when operating activities from continuing
operations used cash of $7.2 million. The increase in operating cash flow is
primarily due to cash flow contributed from the Young-Davidson open pit mine for
the full year in 2013 and from the Young-Davidson underground mine for November
and December of 2013. This was partially offset by a decline in year-to-date
operating cash flow due to a decline in the realized prices of gold and
increased production costs at El Chanate during 2013.

In 2013, investing activities used cash of $272.4 million
compared to $554.3 million in investing cash inflows in 2012. Cash flow used in
investing activities in 2013 was largely comprised of the purchase of $21.3
million of investments and capital expenditures of $249.4 million. The
contribution of cash from investing activities in 2012 included $99.2 million in
proceeds received on the disposition of the El Cubo and Guadalupe y Calvo
assets, $641.4 million in proceeds received on the disposition of the Ocampo
assets, $108.2 million in proceeds received on the sale of investments, and
$44.8 million in proceeds received on the disposition of the Australian assets.
These proceeds were offset by capital expenditures of $361.5 million.

In 2013, financing activities used cash of $250.7 million
compared to 2012 when financing activities used $53.2 million. The increase in
cash used was primarily due to the $301.1 million paid to complete the
substantial issuer bid during Q1 2013 and $27.7 million in dividend payments
subsequent to the introduction of a dividend program in early 2013, offset by
proceeds of $75.0 million received on the Companys credit facility. Prior year
financing outflows were primarily due to net payments made on the credit
facility.

In 2012, cash flows from discontinued operations decreased the
Companys cash balance by $68.8 million.

CREDITFACILITY

On January 31, 2013, the Company amended the revolving credit
facility, which reduced the borrowing capacity from $250 million to $150
million. The credit facility 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 payments are due until the maturity date, which may be extended
upon mutual agreement by all parties. At December 31, 2013, the Company had
drawn $75.0 million under this revolving facility.

The Company was in compliance with all loan covenants at
December 31, 2013. At December 31, 2013, the Company amended the leverage ratio
covenant, which is determined as indebtedness compared to annual EBITDA, such
that indebtedness is net of cash held.

| | 20
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

CONVERTIBLEDEBT

The Company has $167.0 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 January 29, 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, 2013, the Company held investments with a fair
market value of $15.6 million, which consisted primarily of common shares of
publicly traded companies. Investments in common shares of publicly traded
companies are classified as either held-for-trading or available-for-sale
investments. Unrealized losses on available-for-sale investments during 2013
totaled $5.3 million (2012 - $0.1 million unrealized loss) which were offset by
$0.2 million in losses reclassified to net earnings (2012 - $nil). Realized and
unrealized gains on equity securities and warrants classified at fair value
through profit or loss during 2013 totaled $0.5 million (2012 - $1.4
million).

During the year ended December 31, 2013, the Company purchased
shares in various publicly listed entities at a total cost of $20.8 million. In
some of these transactions, warrants were also acquired, at a total cost of $0.5
million.

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

A summary of the Companys contractual obligations at December
31, 2013 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
    $
    76,923
    
    $
    76,923
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -Dividend payable
    
    9,960
    
    
    9,960
    
    
    -
    
    
    -
    
    
    -
    
    
    -Current income tax liability
    
    3,966
    
    
    3,966
    
    
    -
    
    
    -
    
    
    -
    
    
    -Debt
    
    261,612
    
    
    7,454
    
    
    254,158
    
    
    -
    
    
    -
    
    
    -Equipment financing obligations
    
    18,746
    
    
    6,492
    
    
    8,991
    
    
    2,316
    
    
    947
    
    
    -Future purchase
      commitments
    
    10,981
    
    
    10,981
    
    
    -
    
    
    -
    
    
    -
    
    
    -Total
    $
    382,188
    
    $
    115,776
    
    $
    263,149
    
    $
    2,316
    
    $
    947
    
    $
    -


|OUTSTANDINGSHAREDATA
|--------------------

The Companys share capital was comprised of the following as
at December 31, 2013:

|                                        |  | December 31, 2013 |  |  | December 31, 2012 | 
|--------------------------------------- |  | ----------------- |  |  | ----------------- | 
|Authorized:                             |  |                   |  |  |                   | 
|Unlimited number
      of common shares |  |                   |  |  |                   | 
|Issued:                                 |  |                   |  |  |                   | 
|Common shares                           |  | 247,569,811       |  |  | 282,326,547       | 

| | 21
| | --

---

|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

The decline in shares outstanding between December 31, 2012 and
December 31, 2013 was due to the completion of a substantial issuer bid, which
resulted in the purchase and cancellation of 36,144,578 common shares worth $300
million.

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:

|                             |  | March 3, 2014 | 
|---------------------------- |  | ------------- | 
|Common shares                |  | 247,983,891   | 
|Stock options                |  | 11,059,807    | 
|Deferred share units         |  | 250,833       | 
|Performance share units      |  | 359,354       | 
|Restricted share
      units |  | 431,889       | 
|                             |  | 260,085,774   | 

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 15,762,829 common shares.

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

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

|FINANCIALINSTRUMENTS
|--------------------

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.

The Company recognized gains of $0.1 million on forward
contracts that settled during the year ended December 31, 2013. At December 31,
2013, the Company had no foreign exchange derivatives outstanding.

As at December 31, 2012, the Company held forward contracts to
hedge against the risk of an increase in the value of the Mexican peso versus
the US dollar. These currency hedges had been previously accounted for as cash
flow hedges of specified, peso-denominated costs at the Ocampo mine until hedge
accounting was discontinued at September 30, 2012 due to the forecasted
transactions no longer being highly probable as a result of the proposed
disposition of the mine. The Company recognized a loss on discontinuance of
hedge accounting of $1.9 million that was included in other income on the
Consolidated Statement of Operations for the year ended December 31, 2012.

During the three months ended December 31, 2012, a gain of $0.2
million was recognized in net earnings relating to these forward contracts. In
addition, three forward contracts settled during the nine months ended September
30, 2012, prior to the discontinuation of hedge accounting, resulting in a net
loss of $2.3 million.

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

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

The Company utilizes a Mexican corporation, Caborca Industrial
S.A. de C.V. (Caborca Industrial), for mining support services at the El
Chanate mine, including the payment of mining salaries and related costs.
Caborca Industrial is 100% owned by the Companys Chief Executive Officer and
Executive Vice President, Corporate Affairs, and is consolidated in accordance
with IFRS 10, Consolidated Financial Statements. The Companys Chief
Executive Officer and Executive Vice President, Corporate Affairs receive no
financial benefits as a result of their ownership of this entity.

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

The Company has a 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, 2013, the Company had a receivable from the
jointly-controlled entity of $1.4 million.

The Company has a long-term incentive plan under which
share-based compensation, including stock options, deferred share units,
performance share units, and restricted share units may be granted to directors,
officers, employees, and consultants of the Company. The purpose of the plan is
to attract, retain and motivate persons of training, experience and leadership
as directors, officers, employees and consultants of the Company
and its subsidiaries, to advance the long-term interests of the Company by
providing such persons with the opportunity and incentive, through equity-based
compensation, to acquire an ownership interest in the Company, and to promote a
greater alignment of interests between such persons and shareholders of the
Company. For the purpose of the plan, a consultant is defined as an individual
who is engaged by the Company, under a written contract, to provide services on
an ongoing basis and who spends a significant amount of time on the Companys
business and affairs. The definition of consultant also includes an individual
whose services are engaged through a corporation.

| | 22
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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

|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.

CASHCOST PEROUNCECALCULATION

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, production costs associated with unsold ounces, and
production costs associated with acquisition-date fair value 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.

| | 23
| | --

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|2013ANNUAL 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)                            |  
|------------------------------------------------------------------------------------------- | -
|                                                                                            |  
|                                                                                            |  
|                                                                                            |  
|Continuing operations - Young-Davidson mine,
      El Chanate mine, and Corporate and other |  
|Production costs (1)                                                                        | $
|Refining costs                                                                              | $
|Inventory and other adjustments(2)                                                          | $
|Total cash costs                                                                            | $
|Divided by gold equivalent ounces(3)                                                        |  
|Total cash cost per gold equivalent ounce                                                   | $
|Total cash costs (per above)                                                                | $
|By-product revenues(4)                                                                      | $
|Total cash costs, net of by-product revenues                                                | $
|Divided by gold ounces(5)                                                                   |  
|Total cash cost per gold ounce, net of by-product
      revenues                            | $
|Total cash costs, net of by-product revenues
      (per above)                              | $
|NRV
      adjustments(6)                                                                    | $
|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)
    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 the Critical Accounting Estimates, Policies and Changes section
      on page 30 or note 3(a) to the consolidated financial statements for the
      year ended December 31, 2013.(2)
    Inventory adjustments include amortization of the
      inventory fair value adjustments relating to the El Chanate purchase price
      allocations (including $7.5 million relating to NRV adjustments for the
      year ended December 31, 2013) 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, 2013 and 2012 were as
      follows:


El Chanate
    $
    (6,415
    )
    $
    (589
    )
    $
    (10,560
    )
    $
    (5,396
    )Young-Davidson
    $
    4,280
    
    $
    (3,323
    )
    $
    344
    
    $
    (435
    )$
    (2,135
    )
    $
    (3,912
    )
    $
    (10,216
    )
    $
    (5,831
    )


(3)
    Gold equivalent ounces include silver ounces produced
      / sold converted to gold equivalent based on the ratio of the realized
      sales prices of the commodities.(4)
    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 year ended December 31, 2013 and 2012 were as
    follows:


El Chanate
    $
    (562
    )
    $
    (709
    )
    $
    (2,881
    )
    $
    (3,763
    )Young-Davidson
    $
    (103
    )
    $
    (237
    )
    $
    (391
    )
    $
    (279
    )$
    (665
    )
    $
    (946
    )
    $
    (3,272
    )
    $
    (4,042
    )


(5)
    Gold ounces include ounces sold at the El Chanate mine
      and ounces produced at the Young-Davidson mine for the three months and
      year ended December 31, 2013 and 2012.(6)
    The NRV adjustments related to production costs
      recognized during the three months and years ended December 31, 2013 and
      2012 were as follows:


El Chanate
    $
    (13,156
    )
    $
    -
    
    $
    (15,919
    )
    $
    -Young-Davidson
    $
    (9,751
    )
    $
    -
    
    $
    (10,050
    )
    $
    -$
    (22,907
    )
    $
    -
    
    $
    (25,969
    )
    $
    -


| | 24
| | --

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

|(in thousands, except ounces and cash cost
      per gold ounce)                                          |  
|--------------------------------------------------------------------------------------------------------- | -
|                                                                                                          |  
|                                                                                                          |  
|                                                                                                          |  
|Discontinued operations -
      Ocampo mine, El Cubo mine, and Australian Operations                      |  
|Production and refining costs(1)                                                                          | $
|Divided by gold equivalent ounces sold(2)                                                                 |  
|Total cash cost per gold equivalent ounce                                                                 | $
|Total production and refining costs (per
      above)                                                     | $
|Stawell by-product revenues                                                                               | $
|Co-product silver revenues(3)                                                                             | $
|Total cash costs, net of by-product and
      co-product revenues                                         | $
|Divided by gold ounces sold                                                                               |  
|Total cash cost per gold ounce, net of by-product and
      co-product revenues                           | $
|Total cash costs, net of by-product and
      co-product revenues (per above)                             | $
|Ocampo NRV adjustments                                                                                    | $
|Total cash costs, net of by-product revenues,
      co-product revenues and NRV adjustments               | $
|Divided by gold ounces sold                                                                               |  
|Total cash cost per gold ounce, net of by-product
      revenues, co-product revenues and NRV adjustments | $

(1)
    Production and refining costs of discontinued
      operations are presented separately as net earnings from discontinued
      operations in the Consolidated Statements of Operations for the year ended
      December 31, 2012.(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)
    Co-product revenue is defined as revenue which arises
      from more than one primary source. The Company's El Cubo and Ocampo mines,
      which were disposed of in 2012, recognized co-product revenue from the
      sale of gold and silver, which was included in Revenue from mining
      operations in the Company's financial statements. The total co-product
      silver revenue adjustments for the three months and year ended December
      31, 2012 were as follows:


Ocampo
    $
    -
    
    $
    (10,282
    )
    $
    -
    
    $
    (72,308
    )El Cubo
    $
    -
    
    $
    -
    
    $
    -
    
    $
    (15,187
    )$
    -
    
    $
    (10,282
    )
    $
    -
    
    $
    (87,495
    )


ALL-INSUSTAININGCOST PEROUNCECALCULATION

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.

| | 25
| | --

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|2013ANNUAL 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)                    |  
|------------------------------------------------------------------------------------------------ | -
|                                                                                                 |  
|                                                                                                 |  
|                                                                                                 |  
|Continuing operations -
      Young-Davidson mine, El Chanate mine, and Corporate and other      |  
|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(2)                  | $
|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,
      2013 and 2012 is calculated as follows:


Capital expenditures per cash flow statement
    $
    63,572
    
    $
    58,527
    
    $
    249,422
    
    $
    361,500Less: Young-Davidson non-sustaining capital
    $
    (38,195
    )
    $
    (32,559
    )
    $
    (151,917
    )
    $
    (294,445
    )Less: El Chanate non-sustaining capital
    $
    (9,025
    )
    $
    (7,693
    )
    $
    (34,707
    )
    $
    (29,334
    )Less: Kemess non-sustaining capital
    $
    (4,553
    )
    $
    (1,386
    )
    $
    (10,101
    )
    $
    (7,587
    )$
    11,799
    
    $
    16,889
    
    $
    52,697
    
    $
    30,134


(2)
    The non-GAAP measure all-in sustaining cash cost per
      gold ounce is calculated for continuing operations only. Discontinued
      operations are excluded for the three months and year ended December 31,
      2012.


Non-sustaining capital expenditures include underground shaft
and mine development, the paste backfill plant and exploration expenditures at
Young-Davidson, and the south-east open pit expansion and exploration
expenditures at El Chanate.

| | 26
| | --

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

NETFREECASHFLOW

Net free cash flow represents an indication of the Companys
continuing capacity to generate discretionary cash flow from operations,
comprising cash flows from operating activities net of total capital
expenditures. It does not necessarily represent the cash flow in the period
available for management to use at its discretion, which may be affected by
other sources and non-discretionary uses of cash.

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

|(in thousands)                                                  |   |               |   |   |               |   |   |             |   |   |             |  
|--------------------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | ----------- | - | - | ----------- | -
|                                                                |   | Quarter Ended |   |   | Quarter Ended |   |   | Year Ended  |   |   | Year Ended  |  
|                                                                |   | December 31   |   |   | December 31   |   |   | December 31 |   |   | December 31 |  
|                                                                |   | 2013          |   |   | 2012          |   |   | 2013        |   |   | 2012        |  
|Operating cash flow from continuing
      operations(1)(2)      | $ | 11,954        |   | $ | (7,813        | ) | $ | 63,266      |   | $ | (7,231      | )
|Less: Capital expenditures of continuing
      operations(1)(2) | $ | (63,572       | ) | $ | (58,527       | ) | $ | (249,422    | ) | $ | (361,500    | )
|Net free cash flow from continuing operations                   | $ | (51,618       | ) | $ | (66,340       | ) | $ | (186,156    | ) | $ | (368,731    | )
|Operating cash flow from discontinued
      operations          | $ | -             |   | $ | (528          | ) | $ | -           |   | $ | 79,071      |  
|Less: Capital expenditures of discontinued operations           | $ | -             |   | $ | (23,256       | ) | $ | -           |   | $ | (143,520    | )
|Net free cash flow from discontinued operations                 | $ | -             |   | $ | (23,784       | ) | $ | -           |   | $ | (64,449     | )
|Operating cash flow(2)                                          | $ | 11,954        |   | $ | (8,341        | ) | $ | 63,266      |   | $ | 71,840      |  
|Less: Capital expenditures(2)                                   | $ | (63,572       | ) | $ | (81,783       | ) | $ | (249,422    | ) | $ | (505,020    | )
|Net free cash flow                                              | $ | (51,618       | ) | $ | (90,124       | ) | $ | (186,156    | ) | $ | (433,180    | )

(1)
    Operating cash flow and capital expenditures of
      continuing operations are exclusive of discontinued operations as cash
      flows from discontinued operations are presented separately on the
      Companys Consolidated Statements of Cash Flows for the 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 the Critical Accounting Estimates, Policies and Changes section
      on page 30 or note 3(a) to the consolidated financial statements for the
      year ended December 31, 2013.


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

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

NATURE OFMINERALEXPLORATION ANDMINING

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

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

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

| | 27
| | --

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

RESERVEESTIMATES

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

FOREIGNOPERATIONS

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

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

RISKS ANDUNCERTAINTIESASSOCIATED WITHDIVESTITURES

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

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

ENVIRONMENTALLAWS ANDREGULATIONS

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

| | 28
| | --

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
|-----------------------------------------------------

PROPERTYRIGHTS,PERMITS ANDLICENSING

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

UNCERTAINTIES OFTITLE

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

COMMODITYPRICERISK

The profitability of the Companys gold mining operations will
be significantly affected by changes in the market prices for gold. 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.

INTERESTRATERISK

The Company is exposed to interest rate risk on its variable
rate debt. At December 31, 2013, the Company had drawn $75.0 million on its
credit facility at an interest rate of 2.67% . 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 its exposure to interest rate risk in the future.

FOREIGNCURRENCYEXCHANGERATERISK

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

CREDITRISK

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

DERIVATIVEFINANCIALINSTRUMENTS

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

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

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
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|CRITICALACCOUNTINGESTIMATES, POLICIES
      ANDCHANGES
|------------------------------------------------------

ACCOUNTINGESTIMATES

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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|2013ANNUAL MANAGEMENTS DISCUSSION AND
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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 and
discount rates.

|(iv) | 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.

|(v) | Reclamation provisions
|--- | ----------------------

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

The principal factors that can cause the expected value of
future cash flows to change are: the construction of new processing facilities;
changes in the quantities of material in reserves and a corresponding change in
the life of mine plan; changing ore characteristics that ultimately impact the
environment; changes in water quality that impact the extent of water treatment
required; and changes in laws and regulations governing the protection of the
environment. In general, as the end of the mine life nears, the reliability of
estimates of expected cash flows increases, but earlier in the mine life, the
estimation of a reclamation provision is inherently more subjective. Significant
estimates are made in calculating the fair value of reclamation provisions.
Expected cash flows relating to reclamation provisions could occur over periods
up to twenty years and the assessment of the extent of any necessary
environmental remediation work is highly subjective. Considering all of these
factors that go into the determination of a reclamation provision, the fair
value of reclamation provisions can materially change over time.

|(vi) | Contingent consideration
  receivable
|---- | -------------------------------------

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.

ACCOUNTINGPOLICIES ANDCHANGES

The accounting policies applied in the consolidated financial
statements for the year ended December 31, 2013 are consistent with those used
in the Companys Consolidated Financial Statements for the year ended December
31, 2012, with the exception of the following accounting policies adopted on
January 1, 2013:

IFRIC 20, Stripping Costs in the Production Phase of a
Surface Mine, provides guidance on the recognition and measurement of
stripping costs associated with surface mining operations. IFRIC 20
differentiates between two benefits that could accrue to an entity from
stripping activities: (1) usable ore that can be used to produce inventory, and
(2) improved access to further quantities of material that will be mined in
future periods. IFRIC 20 provides guidance on when and how to account separately for these two benefits, as well as how to initially and
subsequently measure them. If the costs of the stripping activity asset versus
inventory produced are not separately identifiable, an entity is required to
allocate production stripping costs between the two based on a relevant
production measure. IFRIC 20 has been applied prospectively to the Companys
production stripping costs incurred on or after January 1, 2012, as all
historical stripping costs were associated with an identifiable component of the
ore body.

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
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The adoption of this interpretation resulted in an increase of
$3.3 million in inventory, an increase of $3.3 million in long-term inventory, a
decline of $8.6 million in property, plant and equipment & mining interests,
and an increase of $2.0 million in deficit in the Consolidated Balance Sheets as
at December 31, 2012. The adoption of this interpretation also resulted in an
increase of $2.0 million in production costs in the Consolidated Statements of
Operations for the year ended December 31, 2012, which decreased both the
Companys basic and diluted earnings per share by $0.01. For the year ended
December 31, 2012, the adoption of this interpretation decreased expenditures on
property, plant and equipment, mining interests and intangible assets by $8.6
million, and decreased the cash outflow from non-cash operating working capital
by $6.6 million, in the Consolidated Statements of Cash Flows.

IFRS 10,Consolidated Financial Statements,replaces the
consolidated financial statements section of IAS 27, Consolidated and Separate
Financial Statements, and SIC-12, Consolidation  Special Purposes Entities, in
its entirety. IFRS 10 establishes the principles for the presentation and
preparation of consolidated financial statements when an entity controls one or
more other entities, regardless of the nature of relationship. The new standard
introduces a revised definition of control, and provides additional guidance on
how to apply the control principle in a number of situations. There was no
impact on the Companys consolidated financial statements upon the adoption of
this standard.

IFRS 11,Joint Arrangements,replaces IAS 31,Interests in Joint Ventures,and requires the Company to classify its
interest in a joint arrangement as either a joint operation or a joint venture.
For a joint venture, the Company will account for its interest in the net assets
of the joint venture using the equity method of accounting. The Company will no
longer have the option to proportionately consolidate its share of the net
assets, revenues and expenses of joint ventures. There was no impact on the
Companys consolidated financial statements upon the adoption of this standard,
as the Company previously accounted for its interest in a joint venture using
the equity method of accounting.

IFRS 12,Disclosure of Interests in Other Entities,outlines the disclosures required surrounding an entitys interests in
subsidiaries, associates, joint arrangements and unconsolidated structured
entities, to enable users of financial statements to evaluate the nature of, and
risks associated with, its interests in other entities, and the effects of those
interests on its financial position, financial performance and cash flows. The
requirements of IFRS 12 relate to disclosures only and are applicable for the
first annual period after adoption. These disclosure requirements have been
incorporated into the Companys consolidated financial statements.

IFRS 13,Fair Value Measurement,is a single source of
fair value measurement guidance under IFRS. IFRS 13 clarifies the definition of
fair value, provides a clear framework for measuring fair value, and enhances
the disclosures about fair value measurements. IFRS 13 is not only limited to
financial instruments, but also applies to fair value measurement in other IFRS,
such as impairment and employee future benefits. These disclosure requirements
have been incorporated into the Companys consolidated financial statements.

IFRS 7,Financial Instruments: Disclosures,and IAS
32, Financial Instruments: Presentation,were amended to address
offsetting financial assets and financial liabilities in the financial
statements. The amendments to IFRS 7 contain new disclosure requirements for
financial assets and liabilities that are offset in the balance sheet or that
are subject to master netting arrangements or similar arrangements. There was no
impact on the Companys consolidated financial statements upon the adoption of
this amendment.

IAS 1, Presentation of Financial Statements,was amended
to revise the presentation of other comprehensive income, requiring entities to
group items presented in other comprehensive income based on whether they are
potentially reclassifiable to profit or loss subsequently, with subtotals for
each group. There was no impact on the Companys consolidated financial
statements upon the adoption of this amendment as all items are reclassifiable
subsequently to net earnings.

The Company also adopted the amendments to IAS 19, Employee
Benefits,IAS 27,Separate Financial Statements, and IAS 28,Investments in Associates and Joint Ventures, which did not have an impact
on the Companys consolidated financial statements.

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
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RECENTACCOUNTINGPRONOUNCEMENTS

For the purposes of preparing and presenting the Companys
consolidated financial statements, the Company has adopted all standards and
interpretations issued other than those discussed below. These standards have
not been adopted because they are not effective for the Company until subsequent
to December 31, 2013. Standards and interpretations issued, but not yet adopted,
include:

|                                                                | Effective for the Company
|--------------------------------------------------------------- | -------------------------
|IFRS 9, Financial Instruments                                   | To be
      determined   
|IFRIC 21, Levies                                                | January 1,
      2014    
|Amendments to IAS 32, Financial Instruments:
      Presentation | January 1,
      2014    

IFRS 9, Financial Instruments, proposes to replace IAS
39 Financial Instruments: Recognition and Measurement. The replacement
standard has three main phases, the first of which provides new guidance for the
classification and measurement of financial assets and liabilities, including
elimination of the existing IAS 39 categories of held-to-maturity,
available-for-sale and loans and receivables, in exchange for the classification
of financial assets and liabilities into the categories of either financial
assets measured at amortized cost or financial assets measured at fair value.
The second part, which is currently an exposure draft, provides guidance for
amortized cost and impairment methodology for financial assets. The third part,
which is also currently an exposure draft, proposes a revised general hedge
accounting model. The IASB recently suspended the originally planned effective
date of January 1, 2015 and at present the effective date has not been
determined. The Company will evaluate the impact of the change to its
consolidated financial statements based on the characteristics of financial
instruments outstanding at the time of adoption.

IFRIC 21, Levies, sets out criteria for the recognition
of liabilities for levies imposed by governments. The IFRIC 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.
The Company is currently evaluating the impact of this interpretation on its
consolidated financial statements.

The proposed 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. The Company
is currently evaluating the impact of these amendments on its consolidated
financial statements.

|CONTROLS
      ANDPROCEDURES
|----------------------------

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

The Company maintains disclosure controls and procedures
designed to ensure that information required to be disclosed in annual filings,
interim filings or other reports filed or submitted under provincial and
territorial securities legislation or reports filed or submitted under the U.S.
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the applicable time periods, and that such information is accumulated and
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosures. As of December 31, 2013, 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, 2013, the Companys disclosure controls and procedures were
effective in providing reasonable assurance that the information required to be
disclosed in reports filed or submitted by the Company under United States and
Canadian securities legislation was recorded, processed, summarized and reported
within the time periods specified by the legislation.

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

Management, including the Chief Executive Officer and Chief
Financial Officer, is responsible for establishing and maintaining adequate
internal control over financial reporting, and used the 1992 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, 2013. Based on this evaluation, management
concluded that the Companys internal control over financial reporting was
effective as at December 31, 2013, 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.

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|2013ANNUAL MANAGEMENTS DISCUSSION AND
      ANALYSIS
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|CAUTIONARYNOTE TOU.S.
      INVESTORS
|-------------------------------------

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

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, 2013). These accounting principles differ in certain
material respects from accounting principles generally accepted in the United
States of America. The Companys reporting currency is the United States dollar
unless otherwise noted.

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

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,
projected cash flows or capital expenditures, cost estimates, projected
exploration results, reserve and resource estimates 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, are
inherently subject to significant uncertainties and contingencies. Known and
unknown factors could cause actual results to differ materially from those
projected in the forward-looking statements, including: uncertainty of
production and cost estimates; fluctuations in the price of gold and foreign
exchange rates; the uncertainty of replacing depleted reserves; the risk that
the Young-Davidson shaft will not perform as planned; the risk that mining
operations do not meet expectations; the risk that projects will not be
developed accordingly to budgets or timelines, changes in laws in Canada, Mexico
and other jurisdictions in which the Company may carry on business; risks of
obtaining necessary licenses, permits or approvals for operations or projects
such as Kemess; disputes over title to properties; the speculative nature of
mineral exploration and development; risks related to aboriginal title claims;
compliance risks with respect to current and future environmental regulations;
disruptions affecting operations; opportunities that may be pursued by the
Company; employee relations; availability and costs of mining inputs and labor;
the ability to secure capital to execute business plans; volatility of the
Companys share price; continuation of the dividend and dividend reinvestment
plan; the effect of future financings; litigation; risk of loss due to sabotage
and civil disturbances; the values of assets and liabilities based on projected
future cash flows; risks arising from derivative instruments or the absence of
hedging; adequacy of internal control over financial reporting; changes in
credit rating; and the impact of inflation.

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

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