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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549

FORM 20-F

(Mark One)

[   ]  REGISTRATION STATEMENT PURSUANT TO SECTION
12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year endedDecember 31, 2011

OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[   ]  SHELL COMPANY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
Date of event requiring shell company report

For the transition period from to _______________________

Commission file number 0-26424

SILVER STANDARD RESOURCES
INC.(Exact name of Registrant as specified in its
charter)

______________________________________________ (Translation
of Registrants name into English)

British Columbia, Canada(Jurisdiction
of incorporation or organization)

Suite 1400  999 West Hastings Street, Vancouver, British
Columbia V6C 2W2(Address of principal executive offices)

Kristen Riddell, 604-689-3846, kriddell@silverstandard.com604-689-3847, 1400  999 West Hastings Street, Vancouver, BC V6C
2W2 Canada(Name, Telephone, E-mail and/or Facsimile number
and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section
12(b) of the Act.

|Title of each class             | Name of each exchange on which registered
|------------------------------- | -----------------------------------------
|Common Shares without par value | Nasdaq Global Market                     

Securities registered or to be registered pursuant to Section
12(g) of the Act.

None(Title of Class)

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.

None(Title of Class)

---

Indicate the number of outstanding shares of each of the
issuers classes of capital or common shares as of the close of the period
covered by the annual report.

80,693,432

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.

[X]    Yes [   ] No

If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934.

[   ]
  Yes     [X] No

Note  Checking the box above will not relieve any registrant
required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

[X]    Yes
  [   ] No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post
such files).

[   ] Yes     [   ]
  No

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check one):

|Large accelerated filer   [X] | Accelerated filer   [  
    ] | Non-accelerated filer  
      [   ]
|----------------------------- | ----------------------------- | -----------------------------------

Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:

|U.S. GAAP   [   ] | International Financial
      Reporting Standards as issued by | Other   [   ]
|----------------- | -------------------------------------------------------------- | -------------
|                  | the International Accounting
      Standards Board   [X]       |              

If Other has been checked in response to the previous
question, indicate by check mark which financial statement item the Registrant
has elected to follow.

[   ] Item 17    
  [   ] Item 18

If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[   ] Yes     [X] No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)

Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.

[   ]
  Yes     [   ] No

- ii -

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TABLE OF CONTENTS

|NOTE REGARDING FORWARD-LOOKING STATEMENTS | V                                                      
|----------------------------------------- | -------------------------------------------------------
|                                          |                                                        
|GLOSSARY OF GEOLOGICAL TERMS              | IX                                                     
|                                          |                                                        
|ITEM 1                                    | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS  
|                                          |                                                        
|A.                                        | DIRECTORS AND SENIOR MANAGEMENT                        
|B.                                        | ADVISERS                                               
|C.                                        | AUDITORS                                               
|                                          |                                                        
|ITEM 2                                    | OFFER STATISTICS AND EXPECTED TIMETABLE                
|                                          |                                                        
|ITEM 3                                    | KEY INFORMATION                                        
|                                          |                                                        
|A.                                        | SELECTED FINANCIAL DATA                                
|B.                                        | CAPITALIZATION AND INDEBTEDNESS                        
|C.                                        | REASONS FOR THE OFFER AND USE OF PROCEEDS              
|D.                                        | RISK FACTORS                                           
|                                          |                                                        
|ITEM 4                                    | INFORMATION ON THE COMPANY                             
|                                          |                                                        
|A.                                        | HISTORY AND DEVELOPMENT OF THE COMPANY                 
|B.                                        | BUSINESS OVERVIEW                                      
|C.                                        | ORGANIZATIONAL STRUCTURE                               
|D.                                        | PROPERTY, PLANT AND EQUIPMENT                          
|                                          |                                                        
|ITEM 4A                                   | UNRESOLVED STAFF COMMENTS                              
|                                          |                                                        
|ITEM 5                                    | OPERATING AND FINANCIAL REVIEW AND PROSPECTS           
|                                          |                                                        
|A.                                        | OPERATING RESULTS                                      
|B.                                        | LIQUIDITY AND CAPITAL RESOURCES                        
|C.                                        | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC    
|D.                                        | TREND INFORMATION                                      
|E.                                        | OFF-BALANCE SHEET ARRANGEMENTS                         
|F.                                        | TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS          
|G.                                        | SAFE HARBOR                                            
|                                          |                                                        
|ITEM 6                                    | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES             
|                                          |                                                        
|A.                                        | DIRECTORS AND SENIOR MANAGEMENT                        
|B.                                        | COMPENSATION                                           
|C.                                        | BOARD PRACTICES                                        
|D.                                        | EMPLOYEES                                              
|E.                                        | SHARE OWNERSHIP                                        
|                                          |                                                        
|ITEM 7                                    | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS      
|                                          |                                                        
|A.                                        | MAJOR SHAREHOLDERS                                     
|B.                                        | RELATED PARTY TRANSACTIONS                             
|C.                                        | INTERESTS OF EXPERTS AND COUNSEL                       
|                                          |                                                        
|ITEM 8                                    | FINANCIAL INFORMATION                                  
|                                          |                                                        
|A.                                        | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|B.                                        | SIGNIFICANT CHANGES                                    
|                                          |                                                        
|ITEM 9                                    | THE OFFER AND LISTING                                  
|                                          |                                                        
|A.                                        | OFFER AND LISTING DETAILS                              
|B.                                        | PLAN OF DISTRIBUTION                                   
|C.                                        | MARKETS                                                
|D.                                        | SELLING SHAREHOLDERS                                   
|E.                                        | DILUTION                                               
|F.                                        | EXPENSES OF THE ISSUE                                  

- iii -

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|ITEM 10       | ADDITIONAL INFORMATION                                                             | 122
|------------- | ---------------------------------------------------------------------------------- | ---
|              |                                                                                    |    
|A.            | SHARE CAPITAL                                                                      | 122
|B.            | MEMORANDUM AND ARTICLES OF ASSOCIATION                                             | 122
|C.            | MATERIAL CONTRACTS                                                                 | 124
|D.            | EXCHANGE CONTROLS AND INVESTMENT CANADA ACT                                        | 126
|E.            | TAXATION                                                                           | 128
|F.            | DIVIDENDS AND PAYING AGENTS                                                        | 134
|G.            | STATEMENT BY EXPERTS                                                               | 134
|H.            | DOCUMENTS ON DISPLAY                                                               | 134
|I.            | SUBSIDIARY INFORMATION                                                             | 134
|              |                                                                                    |    
|ITEM 11       | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK                   | 134
|              |                                                                                    |    
|ITEM 12       | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                             | 136
|              |                                                                                    |    
|ITEM 13       | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                                    | 137
|              |                                                                                    |    
|ITEM 14       | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
      AND USE OF PROCEEDS | 137
|              |                                                                                    |    
|ITEM 15       | CONTROLS AND PROCEDURES                                                            | 137
|              |                                                                                    |    
|ITEM 16       | RESERVED                                                                           | 138
|              |                                                                                    |    
|A.            | AUDIT COMMITTEE FINANCIAL EXPERT                                                   | 138
|B.            | CODE OF ETHICS                                                                     | 138
|C.            | PRINCIPAL ACCOUNTANT FEES AND SERVICES.                                            | 138
|D.            | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                         | 139
|E.            | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
      PURCHASERS       | 139
|F.            | CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT                                       | 139
|G.            | CORPORATE GOVERNANCE.                                                              | 139
|H.            | MINE SAFETY DISCLOSURE                                                             | 139
|              |                                                                                    |    
|ITEM 17       | FINANCIAL STATEMENTS                                                               | 140
|              |                                                                                    |    
|ITEM 18       | FINANCIAL STATEMENTS                                                               | 140
|              |                                                                                    |    
|ITEM 19       | EXHIBITS                                                                           | 140
|              |                                                                                    |    
|A.            | FINANCIAL STATEMENTS                                                               | 140
|B.            | EXHIBITS                                                                           | 141
|EXHIBIT INDEX | 144                                                                               

- iv -

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements and
information within the meaning of the United States Private Securities
Litigation Reform Actof 1995 and forward-looking information under the
provisions of Canadian securities laws (collectively, forward-looking
statements) concerning the anticipated production and developments in our
operations in future periods, our planned exploration, development and mining
activities, the adequacy of our financial resources and other events or
conditions that may occur in the future. These statements relate to analyses and
other information that are based on forecasts of future results, estimates of
amounts not yet determinable and assumptions of management.

Statements concerning mineral reserve and resource estimates
may also be deemed to constitute forward-looking statements to the extent that
they involve estimates of the mineralization that will be encountered if and
when the property is developed. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs, plans,
projections, objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as expects, anticipates, plans,
projects, estimates, assumes, intends, strategy, goals,
objectives, potential or variations thereof, or stating that certain
actions, events or results may, could, would, might or will be taken,
occur or be achieved, or the negative of any of these terms and similar
expressions) are not statements of historical fact and may be forward-looking
statements. Forward-looking statements are subject to a variety of known and
unknown risks, uncertainties and other factors that could cause actual events or
results to differ from those expressed or implied by the forward-looking
statements, including, without limitation:

- uncertainty of production and cost estimates for the Pirquitas Mine;
- uncertainty of future production at our mineral exploration and development
  properties including without limitation, Pitarrilla and San Luis;
- risks and uncertainties associated with new mining operations, including
  start-up delays and operational issues;
- risks related to our ability to obtain adequate financing for our planned
  development activities and to complete further exploration programs;
- risks related to operating in foreign jurisdictions, including government
  policy and legislation changes affecting our operations, and mining generally
  in such jurisdictions;
- commodity price fluctuations;
- the ability to monetize the full value of our interest in Pretium Resources
  Inc. (Pretium), including the performance of Pretiums share price;
- our history of losses;
- recent market events and conditions;
- risks related to general economic conditions;
- risks related to our covenants given with respect to, and the other terms
  of, our 4.5% convertible senior notes due 2028;
- differences in U.S. and Canadian practices for reporting mineral resources
  and reserves;

- v -

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- risks and uncertainties relating to the interpretation of, and statistical
  inferences drawn from drill results and sampling, and the geology, grade and
  continuity of our mineral deposits;
- unpredictable risks and hazards related to the development and operation of
  a mine or mine property that are beyond our control;
- risks related to governmental regulations, including environmental
  regulations;
- risks related to the delay in obtaining or failure to obtain or
  economically obtain required land access agreements and permits, or
  non-compliance with land access agreements and permits we have obtained;
- risks related to operating in remote regions, including issues with our
  relationships with local communities;
- increased costs and restrictions on operations due to compliance with
  environmental laws and regulations;
- regulations and pending legislation governing issues involving climate
  change, as well as the physical impacts of climate change, could result in
  increased operating costs;
- risks related to reclamation activities on our properties;
- uncertainties related to title to our mineral properties and the ability to
  obtain surface rights;
- risks related to political instability and unexpected regulatory change;
- our ability to successfully acquire additional commercially mineable
  mineral rights;
- currency fluctuations;
- increased costs affecting the mining industry, including risks associated
  with inflationary pressures in countries where we explore properties, develop
  projects or operate mines;
- increased competition in the mining industry for properties, qualified
  personnel and management;
- risks related to some of our directors and officers involvement with
  other natural resource companies;
- our ability to attract and retain qualified management to grow our
  business;
- risks related to estimates of future income tax assets and liabilities;
- risks related to claims and legal proceedings;
- our ability to maintain adequate internal control over financial reporting;
  and
- our potential classification as a passive foreign investment company
  under the U.S. Internal Revenue Code.

This list is not exhaustive of the factors that may affect any
of our forward-looking statements. Forward-looking statements are statements
about the future and are inherently uncertain, and our actual achievements or
other future events or conditions may differ materially from those reflected in
the forward-looking statements due to a variety of risks,
uncertainties and other factors, including, without limitation, those referred
to in this Annual Report under the heading Risk Factors and elsewhere in this
Annual Report and in the documents incorporated by reference herein. Our
forward-looking statements are based on the beliefs, expectations and opinions
of management on the date the statements are made, and we do not assume any
obligation to update forward-looking statements if circumstances or managements
beliefs, expectations or opinions should change, other than as required by
applicable law. For the reasons set forth above, you should not place undue
reliance on forward-looking statements.

- vi -

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In this Annual Report, we, us, our, Silver Standard and
the Company refer to Silver Standard Resources Inc., a company incorporated
under the Business Corporations Act(British Columbia), and its
subsidiaries.

Cautionary Note to U.S. Investors

All disclosure about our exploration properties in this Annual
Report conforms to the standards of United States Securities and Exchange
Commission (the SEC) Industry Guide 7, Description of Property by Issuers
Engaged or to be Engaged in Significant Mining Operations, other than
disclosure of Mineral Resources, Measured Mineral Resources, Indicated
Mineral Resources and Inferred Mineral Resources, which are Canadian
geological and mining terms as defined in accordance with Canadian National
Instrument 43-101 under the guidelines set out in the CIM Standards.

In this Annual Report references to Canadian
National Instrument 43-101 or NI 43-101 are references to
National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the
Canadian Securities Administrators and references to CIM Standards are
references to Canadian Institute of Mining, Metallurgy and Petroleum (the CIM)
Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council
on December 11, 2005 as may be amended from time to time by the CIM.

> Cautionary Note to U.S. Investors concerning estimates
>     of Measured Mineral Resources and Indicated Mineral Resources.
>   This Annual Report uses the terms Measured Mineral
>     Resource and Indicated Mineral Resource. We advise U.S.
>     investors that while such terms are recognized and required under Canadian
>     regulations, the SEC does not recognize them. U.S. investors are cautioned
>     not to assume that any part or all of the Mineral Resources in these categories
>     will ever be converted into Mineral Reserves.
>   Cautionary Note to U.S. Investors concerning estimates
>     of Inferred Mineral Resources.
>   This Annual Report uses the term Inferred Mineral Resources.
>     We advise U.S. investors that while such term is recognized and required under
>     Canadian regulations, the SEC does not recognize it. Inferred Mineral
>     Resources have a great amount of uncertainty as to their existence,
>     and great uncertainty as to their economic and legal feasibility. It cannot
>     be assumed that all or any part of an Inferred Mineral Resource will ever
>     be upgraded to a higher category. Under Canadian rules, estimates of Inferred
>     Mineral Resources may not generally form the basis of feasibility or other
>     economic studies. U.S. investors are cautioned not to assume that any part
>     or all of an Inferred Mineral Resource exists, or is economically or legally
>     mineable.

Non-GAAP Financial Performance Measures

The non-GAAP financial performance measures presented do not
have any standardized meaning prescribed by International Financial Reporting
Standards IFRS as issued by the International Accounting Standards Board
(IASB) and are therefore unlikely to be directly comparable to similar
measures presented by other issuers.

- vii -

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Non-GAAP financial performance measures Cash costs per
ounce of silver

The Company uses the non-GAAP measures of direct mining cost,
total cash cost and total production cost per ounce of silver to manage and
evaluate operating performance. The Company believes that, in addition to
conventional measures prepared in accordance with GAAP, certain investors use
this information to evaluate the Companys performance and ability to generate
cash flows. Accordingly, it is intended to provide additional information and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP.

This classification is based upon The Silver Institutes
production cost standard as endorsed on June 16, 2011. Previous to this date
there was no standardized presentation guidance and the Company reported cash
production cost, cash operating cost and total production cost. The Company
moved to The Silver Institutes production cost standard in its disclosures in
2011 in order to facilitate more uniform disclosures within the industry. All
comparatives have been updated to reflect the current presentation standard.

For additional information related to these non-GAAP
performance measures, please refer to Item 5.A. Operating Results  Non-GAAP
Financial Performance Measures.

- viii -

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GLOSSARY OF GEOLOGICAL TERMSDEFINITIONS AND ABBREVIATIONS

alteration - usually referring to chemical
reactions in a rock mass resulting from the passage of hydrothermal fluids.

Ag silver.

Au gold.

breccia - rock consisting of more or less angular
fragments in a matrix of finer-grained material or cementing material.

claim or concession - that portion
of public mineral lands, which a party has staked or marked out in accordance
with federal, provincial or state mining laws, to acquire the right to explore
for the minerals under the surface.

Cu  copper.

cut-off grade - the minimum grade of
mineralization that delimits mineralization that has a reasonable prospect of
economic extraction from mineralization that does not have a reasonable prospect
of economic extraction.

deposit - a natural occurrence of a useful
mineral of sufficient extent and degree to warrant exploitation.

diamond drilling - diamond drilling utilizes a
  type of rotary drill in which the cutting is done by abrasion using diamonds
  embedded in the drill-bit, with the drill cutting and then recovering cylindrical
  pieces of bedrock as the drill-bit is forced to depth. Diamond drilling provides
  a greater degree of information than reverse circulation drilling about the
  geology of a potential mineral deposit.

dilution - results from the mixing in of unwanted
gangue or waste rock with the ore during mining.

dyke - a tabular body of igneous rock that cuts
across the structure of adjacent rocks or cuts massive rocks.

fault - a fracture in a rock where there has been
displacement of the two sides.

Feasibility Study-is a
comprehensive technical and economic study of the selected development option
for a mineral project that includes appropriately detailed assessments of
realistically assumed mining, processing, metallurgical, economic, marketing,
legal, environmental, social and governmental considerations together with any
other relevant operational factors and detailed financial analysis, that are
necessary to demonstrate at the time of reporting that extraction is reasonably
justified (economically mineable). The results of the study may reasonably serve
as the basis for a final decision by a proponent or financial institution to
proceed with, or finance, the development of the project. The confidence level
of the study will be higher than that of a Preliminary Feasibility Study. This
definition is from the Canadian Institute of Mining, Metallurgy and Petroleum
Standards on Mineral Resources and Mineral Reserves adopted on November 27,
2010.

g/t - grams per tonne.

gangue - term used to describe worthless minerals
or rock waste mixed in with the valuable minerals.

geophysics - the study of the physical properties
of rocks, minerals, and mineral deposits.

- ix -

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grade - the concentration of each ore metal in a
rock sample, usually given as weight percent. Where extremely low concentrations
are involved, the concentration may be given in grams per tonne (g/t) or ounces
per ton (oz/ton). The grade of an ore deposit is calculated, often using
sophisticated statistical procedures, as an average of the grades of a very
large number of samples collected from throughout the deposit.

ha/hectare - a square of 100 meters on each side.

host rock - the rock within which the ore deposit
occurs.

igneous - means a rock formed by the cooling of
molten material.

Indicated Mineral Resource - is that part of a
Mineral Resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of confidence sufficient
to allow the appropriate application of technical and economic parameters, to
support mine planning and evaluation of the economic viability of the deposit.
The estimate is based on detailed and reliable exploration and testing
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely
enough for geological and grade continuity to be reasonably assumed. This
definition is from the Canadian Institute of Mining, Metallurgy and Petroleum
Standards on Mineral Resources and Mineral Reserves adopted on November 27,
2010.

induced polarization method - the method used to
measure various electrical responses to the passage of alternating currents of
different frequencies through near-surface rocks or to the passage of pulses of
electricity.

Inferred Mineral Resource - is that part of a
Mineral Resource for which quantity and grade or quality can be estimated on the
basis of geological evidence and limited sampling and reasonably assumed, but
not verified, geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes. This definition is
from the Canadian Institute of Mining, Metallurgy and Petroleum Standards on
Mineral Resources and Mineral Reserves adopted on November 27, 2010.

intrusion - general term for a body of igneous
rock formed below the surface.

limestone - sedimentary rock that is composed
mostly of carbonates, the two most common of which are calcium and magnesium
carbonates.

Measured Mineral Resource - is that part of a
Mineral Resource for which quantity, grade or quality, densities, shape, and
physical characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and
economic parameters, to support production planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm both geological and
grade continuity. This definition is from the Canadian Institute of Mining,
Metallurgy and Petroleum Standards on Mineral Resources and Mineral Reserves
adopted on November 27, 2010.

Mineral Reserve-is the economically
mineable part of a Measured or Indicated Mineral Resource demonstrated by at
least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified. A Mineral Reserve includes diluting materials and allowances for
losses that may occur when the material is mined. This definition is from the
Canadian Institute of Mining, Metallurgy and Petroleum Standards on
Mineral Resources and Mineral Reserves adopted on November 27, 2010.

- x -

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Mineral Resource -is a concentration or
occurrence of diamonds, natural solid inorganic material, or natural solid
fossilized organic material including base and precious metals, coal, and
industrial minerals in or on the Earths crust in such form and quantity and of
such a grade or quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics and
continuity of a Mineral Resource are known, estimated or interpreted from
specific geological evidence and knowledge.This definition is from the
Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral
Resources and Mineral Reserves adopted on November 27, 2010.

mineralization - usually implies minerals of
value occurring in rocks.

Mn Manganese.

net profits interest royalty- a
royalty based on the profit, allowing for costs directly related to production.
The expenses that the operator deducts from revenue are defined in the royalty
agreement. Payments generally begin after payback of capital costs. The royalty
holder is not responsible for contributing to capital expenses, covering
operating losses or environmental liabilities.

net smelter return - means the amount actually
paid to the mine or mill owner from the sale of ore, minerals and other
materials or concentrates mined and removed from mineral properties.

net smelter return royalty - a royalty paid from
cash flow that is free of any operating or capital costs and environmental
liabilities.

outcrop - means an exposure of rock at the
earths surface.

oz/ton  troy ounces per ton.

Pb  lead.

porphyry- a rock with conspicuous large
grains in a fine grained ground mass.

plunge - the vertical angle between a horizontal
plane and the line of maximum elongation of a body.

Preliminary Feasibility Study - is a
comprehensive study of a range of options for the technical and economic
viability of a mineral project that has advanced to a stage where a preferred
mining method, in the case of underground mining, or the pit configuration, in
the case of an open pit, is established and an effective method of mineral
processing is determined. It includes a financial analysis based on reasonable
assumptions of mining, processing, metallurgical, economic, marketing, legal,
environmental, social, and governmental considerations and the evaluation of
other relevant factors which are sufficient for a Qualified Person, acting
reasonably, to determine if all or part of the Mineral Resource may be
classified as a Mineral Reserve. This definition is from the Canadian Institute
of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Mineral
Reserves adopted on November 27, 2010.

Probable Mineral Reserve - is the economically
mineable part of an Indicated and, in some circumstances, a Measured Mineral
Resource demonstrated by at least a Preliminary Feasibility Study. This study
must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified. This definition is from the Canadian
Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and
Mineral Reserves adopted on November 27, 2010.

- xi -

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Proven Mineral Reserve - is the economically
mineable part of a Measured Mineral Resource demonstrated by at least a
Preliminary Feasibility Study. This study must include adequate information on
mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction is justified.
This definition is from the Canadian Institute of Mining, Metallurgy and
Petroleum Standards on Mineral Resources and Mineral Reserves adopted on
November 27, 2010.

Qualified Person- means an individual who
is an engineer or geoscientist with at least five years of experience in mineral
exploration, mine development or operation or mineral project assessment, or any
combination of these; has experience relevant to the subject matter of the
mineral project and the technical report; and is a member or licensee in good
standing of a professional association. This definition is from the Canadian
Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and
Mineral Reserves adopted on November 27, 2010.

reclamation bond - a financial instrument or cash
usually required when mechanized work is contemplated on a mineral claim. The
bond may be used to reclaim any workings or put right any damage, if the
reclamation of the mineral claim does not satisfy the requirements of the
regulations.

reverse circulation drilling -reverse
circulation drilling utilizes a rotary percussion drill in which the drilling
mud and rock cuttings return to the surface through the drill pipe.

SEDAR  the System for Electronic Document
Analysis and Retrieval which can be accessed at www.sedar.com.

sedimentary - a rock formed from cemented or
compacted sediments.

sediment - a composition of debris resulting from
the weathering and breakup of other rocks that have been deposited by or carried
to the oceans by rivers, or left over from glacial erosion or sometimes from
wind action.

sericite - a fine-grained variety of mica
occurring in small scales, especially in schists.

shear zone - where a fault affects a width of
rock rather than being a single clean break, the width of affected rock is
referred to as the shear zone. The term implies movement, i.e. shearing.

short ton two thousand pounds.

sill - tabular intrusion which is sandwiched
between layers in the host rock.

stockwork - a mineral deposit consisting of a
three-dimensional network of closely spaced planar or irregular veinlets.

sulphide- a mineral compound characterized by
the linkage of sulphur with a metal.

tailings - material rejected from a mill after
recoverable valuable minerals have been extracted.

tailings pond - a pond in which tailings are disposed.

tonne metric tonne.

tuff - a finer grained pyroclastic rock made up
mostly of ash and other fine grained volcanic material.

- xii -

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ton  A unit of measure, principally as a unit of
weight. A ton in the United Kingdom (long ton) is defined as 2,240 pounds
(1,016 kg). A ton in Canada and the USA (short ton) is defined as being 2,000
pounds (907 kg). A ton is different to a metric tonne (see glossary).

veins - the mineral deposits that are found
filling openings in rocks created by faults or replacing rocks on either side of
faults.

waste - rock which is not ore. Usually referred
to that rock which has to be removed during the normal course of mining in order
to get at the ore.

Zn  zinc.

- xiii -

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Item
1Identity of Directors, Senior Management and Advisers

A.Directors and Senior
Management

This Form 20-F is being filed as an annual report under the
Securities Exchange Act of 1934, as amended (the Exchange Act), and, as such,
there is no requirement to provide any information under this item.

B.Advisers

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

C.Auditors

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

Item 2Offer Statistics and Expected Timetable

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

Item 3Key Information

A.Selected Financial
Data

The following table summarizes certain of our selected
financial data. This information should be read in conjunction with the more
detailed financial statements included in this Annual Report.

The selected financial data for the years ended December 31,
2011 and 2010 is presented in Table No. 1 and in the financial statements in
accordance with IFRS. The Companys transition date to IFRS was January 1, 2010.
The financial data for dates and periods prior to January 1, 2010 have not been
restated and have been prepared under Canadian generally accepted accounting
principles (GAAP). Reference is made to note 26 to the Companys consolidated
financial statements for a description of the transition from Canadian GAAP to
IFRS.

-1-

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Table No. 1Selected Financial Data(expressed in thousands of U.S. dollars, except per share and number of shares
  data)

IFRS
    
    
    IFRS
    
    
    GAAP
    
    
    GAAP
    
    
    GAAPYear ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year endedDec 31, 2011
    
    
    Dec 31, 2010
    
    
    Dec 31, 2009
    
    
    Dec 31, 2008
    
    
    Dec 31, 20071.
    Revenues
    $
    147,845
    
    $
    112,256
    
    $
    5,442
    
    
    Nil
    
    
    Nil2.
    Earnings (Loss)
      for year(1 )
    $
    80,128
    
    $
    338,455
    
    
    ($13,193
    )
    
    ($5,946
    )
    
    ($33,965
    )3.
    Earnings (Loss)
      per common share(1 )
    
    Basic: $1.00
    
    $
    4.34
    
    
    ($0.19
    )
    
    ($0.09
    )
    
    ($0.55
    )Diluted: $0.99
    
    $
    4.32
    
    
    ($0.19
    )
    
    ($0.09
    )
    
    ($0.55
    )4.
    Total assets
    $
    1,276,102
    
    $
    1,147,990
    
    $
    749,925
    
    $
    567,905
    
    $
    504,8515.
    Net Assets
    $
    983,975
    
    $
    931,860
    
    $
    537,186
    
    $
    389,597
    
    $
    460,5316.
    Long term
      obligations and redeemable preferred shares(2
      )(3)
    $
    125,313
    
    $
    116,125
    
    $
    110,739
    
    $
    104,046
    
    
    Nil7.
    Share capital
    $
    705,876
    
    $
    676,651
    
    $
    538,700
    
    $
    389,655
    
    $
    386,5978.
    Cash dividends
      per common shares
    
    Nil
    
    
    Nil
    
    
    Nil
    
    
    Nil
    
    
    Nil9.
    Number of shares
    
    80,693,432
    
    
    79,665,041
    
    
    71,964,708
    
    
    62,755,547
    
    
    62,569,447


|(1) | All of our operations are continuing.                                            
|--- | ---------------------------------------------------------------------------------
|(2) | No preferred shares have been issued.                                            
|(3) | Excludes close down and restoration provisions (or asset retirement obligations).

*U.S./Canadian Dollar Exchange Rates*

In this Annual Report, unless otherwise specified, all dollar
amounts are expressed in United States Dollars ($). In this Annual Report, all
references to $ refer to U.S. Dollars, all references to C$ refer to
Canadian Dollars and all references to A$ refer to Australian Dollars.

Table No. 2 below sets out the rate of exchange for the
Canadian dollar at December 31, 2011, December 31, 2010, December 31, 2009,
December 31, 2008 and December 31, 2007, the average rates for each period, and
the range of high and low rates for each period. Table No. 3 sets out the high
and low rates of exchange for the Canadian dollar for each month during the
previous six months.

For purposes of these tables, the rate of exchange means the
Bank of Canadas nominal noon exchange rate. The tables set out the number of
Canadian dollars required under that formula to buy one U.S. dollar. The average
rate in Table No. 2 means the average of the exchange rates on the last day of
each month during the period.

- 2 -

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Table No. 2U.S. Dollar/Canadian Dollar Exchange Rates for Five Most Recent Financial
  YearsAverage
    High
    Low
    CloseFiscal Year Ended December 31, 2011
    0.99
    1.07
    0.95
    1.02Fiscal Year Ended December 31, 2010
    1.03
    1.08
    0.99
    0.99Fiscal Year Ended December 31, 2009
    1.14
    1.31
    1.03
    1.05Fiscal Year Ended December 31, 2008
    1.07
    1.30
    0.97
    1.22Fiscal Year Ended December 31, 2007
    1.07
    1.19
    0.92
  0.99


Table No. 3U.S. Dollar/Canadian Dollar Exchange Rates for Previous Six MonthsSeptember
    October
    November
    December
    January
    FebruaryHigh
    1.05
    1.07
    1.05
    1.04
    1.03
    1.00Low
    0.98
    1.00
    1.02
    1.01
    1.00
    0.99


On March 28, 2012, the exchange rate of Canadian dollars into
United States dollars, based on the nominal noon rate for U.S. dollars reported
by the Bank of Canada, was $1.00 equals C$0.9979.

B.Capitalization and
Indebtedness

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

C.Reasons for the Offer
and Use of Proceeds

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

D.Risk Factors

The production and cost estimates for the Pirquitas Mine
may vary and/or not be achieved.

We have prepared estimates of future production, operating
costs and capital costs for the Pirquitas Mine. We cannot give any assurance
that such production or cost estimates will be achieved. Actual production and
costs may vary from the estimates depending on a variety of factors, many of
which are not within our control. These factors include, but are not limited to,
actual ore mined varying from estimates of grade, tonnage, dilution, and
metallurgical and other characteristics; short-term operating factors such as
the need for sequential development of ore bodies and the processing of new or
different ore grades from those planned; mine failures, slope failures or
equipment failures; industrial accidents; natural phenomena such as inclement
weather conditions, floods, droughts, rock slides and earthquakes; encountering
unusual or unexpected geological conditions; changes in power costs and
potential power shortages; exchange rate and commodity price fluctuations;
shortages of principal supplies needed for operations, including explosives,
fuels, chemical reagents, water, equipment parts and lubricants; labor shortages
or strikes; high rates of inflation; civil disobedience and protests; and
restrictions (including change to the taxation regime) or regulations (including import restriction
for equipment and material required for operations at the mine) imposed by
governmental or regulatory authorities or other changes in the regulatory
environments. Failure to achieve production or cost estimates or material
increases in costs could have a material adverse impact on our future cash
flows, profitability, results of operations and financial condition.

- 3 -

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The Pirquitas Mine is currently our only mineral property
in production and we may be exposed to future development risk

The Pirquitas Mine is currently our only mineral property in
production. The future development of any other properties found to be
economically feasible and approved by our Board of Directors will require the
construction and operation of mines, processing plants and related
infrastructure. As a result, we are and will continue to be subject to all of
the risks associated with establishing new mining operations including:

- the availability and cost of skilled labor and mining equipment;
- the availability and cost of appropriate smelting and refining
  arrangements;
- securing long-term access agreements required to develop and operate a
  mine;
- the need to obtain and retain necessary environmental and other
  governmental approvals and permits and the timing of the receipt of those
  approvals and permits;
- potential opposition from non-governmental organizations, environmental
  groups or local groups which may delay or prevent development activities;
- potential increases in cost structures due to changes in the cost of fuel,
  power, materials and supplies; and
- the timing and cost, which can be considerable, of the construction and
  expansion of mining and processing facilities.

The costs, timing and complexities of operating the Pirquitas
Mine and constructing and developing our other projects may be greater than we
anticipate because the majority of our property interests are not located in
developed areas, and, as a result, our property interests may not be served by
appropriate road access, water and power supply and other support
infrastructure. Cost estimates may increase as more detailed engineering work is
completed on a project. It is common in new mining operations to experience
unexpected costs, problems and delays during construction, development and mine
start-up. In addition, delays in the early stages of mineral production often
occur. Accordingly, we cannot provide assurance that our activities will result
in profitable mining operations at any of our mineral properties.

We have limited revenue from operations.

We transitioned recently from exploration and development to
production, generating initial revenue from operations in 2010. Other than the
Pirquitas Mine, which achieved commercial production on December 1, 2009, all of
our properties are in the exploration or development stage. With the exception
of our Pitarrilla and San Luis Projects we have not defined or delineated any
proven or probable reserves on any of our exploration stage properties. Mineral
exploration involves significant risk because few properties that are explored
contain bodies of ore that become commercially economic to develop into
producing mines. If our current exploration programs do not result in the
discovery of commercial ore, we may need to write-off part or all of our
investment in our existing exploration stage properties, and we may need acquire
additional properties.

The determination of whether any mineral deposits on our
properties are economically viable is affected by numerous factors beyond our
control, including:

- the metallurgy of the mineralization forming the mineral deposit;

- 4 -

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- the geological structures and formations of the deposit and host rock;
- market fluctuations for metal prices;
- the proximity and capacity of natural resource markets and processing
  equipment; and
- government regulations governing prices, taxes, royalties, land tenure,
  land use, importing and exporting of minerals and environmental protection.

We may not have sufficient funds to fully develop our
mineral properties or to complete further exploration and
development programs.

The Company has a strengthened balance sheet following the sale
of the Snowfield and Brucejack properties in 2010. However current operating
cash flows are not sufficient to finance all our exploration programs,
development of our mineral properties and corporate costs. In the future, our
ability to continue our production, development and exploration activities, if
any, will depend on our ability to generate sufficient operating cash flows from
the Pirquitas Mine and obtain additional external financing where necessary. Any
unexpected costs, problems or delays at the Pirquitas Mine could severely impact
our ability to generate sufficient cash flows and require greater reliance on
alternative sources of financing.

In addition, under the terms of the indenture governing our
4.5% Convertible Senior Notes due 2028, the holders of such notes may at their
option require us to repurchase the outstanding principal thereunder on March 1,
2013. If the noteholders make such request, our liquidity may be negatively
impacted.

The sources of external financing that we may use for these
purposes include project or bank financing, or public or private offerings of
equity and debt. In addition, we may enter into one or more strategic alliances
or joint ventures, decide to sell certain property interests, or utilize one or
a combination of all of these alternatives. The financing alternative chosen by
us may not be available to us on acceptable terms, or at all. If additional
financing is not available, we may have to postpone the development of, or sell,
one or more of our principal properties.

Changes in the market price of silver and other metals,
which in the past have fluctuated widely, will affect our
operations.

Our profitability and long-term viability depends, in large
part, on the market price of silver, gold, tin, zinc, lead and copper. The
market prices for these metals are volatile and are affected by numerous factors
beyond our control, including:

- global or regional consumption patterns;
- the supply of, and demand for, these metals;
- speculative activities;
- the availability and costs of metal substitutes;
- expectations for inflation; and
- political and economic conditions, including interest rates and currency
  values.

We cannot predict the effect of these factors on metal prices.
A decrease in the market price of silver and other metals would affect the
profitability of the Pirquitas Mine and could affect our ability to finance the
exploration and development of any of our other mineral properties. The market
price of silver and other metals may not remain at current levels. In
particular, an increase in worldwide supply, and consequent downward pressure on
prices, may result over the longer term from increased silver production from
mines developed or expanded as a result of current metal price levels.

- 5 -

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We have a history of losses.

Although we had income from mine operations of $51.9 million
  and $14.1 million for the years ended December 31, 2011 and 2010, respectively,
  we still incurred underlying net losses after adjustments for non-operating
  items. As the Pirquitas Mine has been in commercial production since December
  2009, we anticipate continuing to generate income from mine operations for the
  foreseeable future.

We expect the Pirquitas Mine to generate sufficient cash flows
to fund continuing operations, however we may continue incurring losses or
generating insufficient cash flows, such that the exploration and development of
our other mineral properties will require commitment of substantial financial
resources that may not be available.

The amount and timing of expenditures will depend on a number
of factors, including the progress of ongoing exploration and development, the
results of consultants analyses and recommendations, the rate of operating
losses, the execution of any strategic agreements with third parties and our
acquisition of additional property interests, many of which are beyond our
control. We cannot provide assurance that we will ever achieve profitability.

General economic conditions may adversely affect our
growth and profitability.

The unprecedented events in global financial markets in the
past several years have had a profound impact on the global economy. Many
industries, including the silver and gold mining industry, have been and
continue to be impacted by these market conditions. Some of the key impacts of
the current financial market turmoil include contraction in credit markets
resulting in a widening of credit risk, devaluations, high volatility in global
equity, commodity, foreign exchange and precious metal markets and a lack of
market confidence and liquidity. A continued or worsened slowdown in the
financial markets or other economic conditions, including but not limited to,
sovereign debt and government solvency conditions, consumer spending, employment
rates, business conditions, inflation, fuel and energy costs, consumer debt
levels, lack of available credit, the state of the financial markets, interest
rates and tax rates, may adversely affect our growth and profitability.
Specifically:

- the global credit/liquidity crisis could impact the cost and availability
  of financing and our overall liquidity;
- the volatility of silver and gold prices would impact our revenues,
  profits, losses and cash flow;
- continued recessionary pressures could adversely impact demand for our
  production, and conversely, inflationary pressures would impact our production
  costs;
- volatile energy, commodity and consumables prices and currency exchange
  rates would impact our production costs; and
- the devaluation and volatility of global stock markets would impact the
  valuation of our equity and other securities.

These factors could have a material adverse effect on our
financial condition and results of operations.

An event of default under our 4.5% Convertible Senior
Notes due 2028 may significantly reduce our liquidity and adversely affect our
business.

Under the indenture governing our 4.5% Convertible Senior Notes
due 2028 (the Convertible Notes), we made various covenants to the
trustees on behalf of the holders of the Convertible Notes, including to make payments of interest and principal when due and, upon
undergoing a fundamental change, to offer to purchase all of the outstanding
Convertible Notes.

- 6 -

---

If there is an event of default under the Convertible Notes,
the principal amount of such notes, plus accrued and unpaid interest, if any,
may be declared immediately due and payable. If such an event occurs, this would
place additional strain on our cash resources, which could inhibit our ability
to further our exploration and development activities.

Recoverability of the investment in Pretium

Following the sale of the Snowfield and Brucejack properties to
Pretium, we retained a significant continuing ownership interest, currently
approximately 27% as at the date of this Annual Report. We will significantly
rely on the performance of Pretium, the market performance of Pretiums common
shares and the liquidity of the market for those shares, in realizing the full
value. This may reduce our ability to execute our strategy and fund planned
exploration and development opportunities.

We follow Canadian disclosure practices concerning our
mineral reserves and mineral resources which allow for more disclosure than is
permitted for U.S. reporting companies.

Our resource estimates are not directly comparable to those
made by U.S. domestic companies subject to the SEC reporting and disclosure
requirements, as we report resources in accordance with Canadian practices.
These practices are different from the practices used to report resource
estimates in reports and other materials filed by U.S. domestic companies with
the SEC in that the Canadian practice is to report measured, indicated and
inferred resources. In the United States, mineralization may not be classified
as a reserve unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time the reserve
determination is made. U.S. investors are cautioned not to assume that all or
any part of measured or indicated resources will ever be converted into
reserves. Further, Inferred Mineral Resources have a great amount of
uncertainty as to their existence and as to whether they can be mined legally or
economically. Disclosure of contained ounces is permitted disclosure under
Canadian regulations; however, the SEC only permits issuers to report
resources as in place tonnage and grade without reference to unit measures.
Accordingly, information concerning descriptions of mineralization and resources
contained in this Annual Report, or in any document incorporated by reference
herein, may not be comparable to information made public by U.S. companies
subject to the reporting and disclosure requirements of the SEC.

Our mineral reserve and mineral resource estimates are
based on interpretation and assumptions and may yield less mineral production
under actual conditions than is currently estimated.

In making determinations about whether to advance any of our
projects to development, we must rely upon estimated calculations as to the
mineral reserves and grades of mineralization on our properties. Until ore is
actually mined and processed, mineral reserves and grades of mineralization must
be considered as estimates only. These estimates are imprecise and depend upon
geological interpretation and statistical inferences drawn from drilling and
sampling which may prove to be unreliable. We cannot provide assurance that:

- reserve, resource or other mineralization estimates will be accurate; or
- mineralization can be mined or processed profitably.

Any material changes in mineral reserve estimates and grades of
mineralization will affect the economic viability of placing a property into
production and a propertys return on capital. Our mineral reserve and mineral
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 silver, gold, tin, zinc, lead and copper
may render portions of our mineralization uneconomic and result in reduced
reported mineral reserves.

- 7 -

---

Any material reductions in estimates of mineralization, or of
our ability to extract this mineralization, could have a material adverse effect
on our results of operations or financial condition. We cannot provide assurance
that mineral recovery rates achieved in small scale tests will be duplicated in
large scale tests under on-site conditions or in production scale.

Mining is inherently risky and subject to conditions or
events beyond our control.

The development and operation of a mine or mine property is
inherently dangerous and involves many risks that even a combination of
experience, knowledge and careful evaluation may not be able to overcome,
including:

- unusual or unexpected geological formations;
- metallurgical and other processing problems;
- metal losses;
- environmental hazards;
- power outages;
- community relations problems;
- labor disruptions;
- industrial accidents;
- periodic interruptions due to inclement or hazardous weather conditions;
- flooding, explosions, fire, rockbursts, cave-ins and landslides;
- mechanical equipment and facility performance problems; and
- the availability of materials and equipment.

These risks could result in damage to, or destruction of,
mineral properties, production facilities or other properties, personal injury
or death, including to our employees, environmental damage, delays in mining,
increased production costs, asset write downs, monetary losses and possible
legal liability. We may not be able to obtain insurance to cover these risks at
economically feasible premiums, or at all. Insurance against certain
environmental risks, including potential liability for pollution and other
hazards as a result of the disposal of waste products occurring from production,
is not generally available to companies within the mining industry. We may
suffer a material adverse effect on our business if we incur losses related to
any significant events that are not covered by our insurance policies.

We are subject to significant governmental
regulations.

The operation of the Pirquitas Mine, as well as our exploration
and development activities, are subject to extensive federal, state, provincial,
territorial and local laws and regulations governing various matters, including:

- environmental protection;
- the management and use of toxic substances and explosives;

- 8 -

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- the management of natural resources;
- the exploration of mineral properties;
- exports;
- insurance restrictions;
- import restrictions;
- exchange controls;
- price controls;
- taxation and mining royalties;
- labor standards and occupational health and safety, including mine safety;
- anti-corruption and anti-bribery statutes; and
- historic and cultural preservation.

Failure to comply with applicable laws and regulations may
result in civil or criminal fines or penalties or enforcement actions, including
orders issued by regulatory or judicial authorities enjoining or curtailing
operations or requiring corrective measures, installation of additional
equipment or remedial actions, or the imposition of additional local or foreign
parties as joint venture partners, any of which could result in significant
expenditures. We may also be required to compensate private parties suffering
loss or damage by reason of a breach of such laws, regulations or permitting
requirements. It is also possible that future laws and regulations, or more
stringent enforcement of current laws and regulations by governmental
authorities, could cause us to incur additional expense or capital expenditure
restrictions or suspensions of our activities and delays in the exploration and
development of our properties.

The Company is subject to anti-corruption laws.

The Company is subject to Canadian anti-corruption laws and the
U.S. Foreign Corrupt Practices Act, which generally prohibit companies from
engaging in bribery or other prohibited payments to foreign officials for the
purpose of obtaining or retaining business. Corruption, extortion, bribery,
pay-offs, theft and other fraudulent practices may occur from time-to-time in
Argentina, Peru and Mexico, and there can be no assurance that our employees or
other agents will not engage in such prohibited conduct for which we might be
held responsible. If our employees or other agents are found to have engaged in
such practices, we could suffer severe penalties and other consequences that may
have a material adverse effect on our business, financial condition and results
of operations.

We require further permits in order to conduct our
current and anticipated future operations, and delays in obtaining
or failure to obtain such permits, or a failure to comply with the
terms of any such permits that we have obtained, would adversely affect
our business.

Our current and anticipated future operations, including
continued production at the Pirquitas Mine, and further exploration, development
and commencement of production on our other mineral properties, require permits
from various governmental authorities. Obtaining or renewing governmental
permits is a complex and time-consuming process. The duration and success of
efforts to obtain and renew permits are contingent upon many variables not
within our control.

We cannot provide assurance that all permits that we require
for our operations, including any for construction of mining facilities or
conduct of mining, will be obtainable or renewable on reasonable terms, or at
all. Delays or a failure to obtain such required permits, or the expiry,
revocation or failure by us to comply with the terms of any such permits that we have
obtained, would adversely affect our business.

- 9 -

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Our activities are subject to environmental laws and
regulations that may increase our costs and restrict our
operations.

The Companys activities are subject to extensive laws and
regulations governing environmental protection which are complex and have tended
to become more stringent over time. The Company is required to obtain
governmental permits and in some instances provide bonding requirements under
federal, state, or provincial air, water quality, and mine reclamation rules and
permits. Although the Company makes provisions for reclamation costs, it cannot
be assured that these provisions will be adequate to discharge its future
obligations for these costs. Failure to comply with applicable environmental
laws may result in injunctions, damages, suspension or revocation of permits and
imposition of penalties. While responsible environmental stewardship is one of
the Companys top priorities, there can be no assurance that the Company has
been or will be at all times in complete compliance with such laws, regulations
and permits, or that the costs of complying with current and future
environmental laws and permits will not materially and adversely affect the
Companys business, results of operations or financial condition. 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 our behalf and may cause material changes or
delays in our intended activities. Future changes in these laws or regulations
could have a significant adverse impact on some portion of our business, causing
us to re-evaluate those activities at that time.

Environmental laws in some of the countries in which we operate
require that we periodically perform environmental impact studies at our mines.
At present, environmental impact studies are being performed at the Pirquitas
Mine and the Pitarrilla and San Luis Project. We cannot guarantee that these
studies will not reveal environmental impacts that would require us to make
significant capital outlays or cause material changes or delays in our intended
activities, any of which could adversely affect our business.

Land reclamation requirements for our exploration
properties may be burdensome.

Although variable depending on location and the governing
authority, land reclamation requirements are generally imposed on mineral
exploration companies (as well as companies with mining operations) in order to
minimize long term effects of land disturbance. Reclamation may include
requirements to:

- control dispersion of potentially deleterious effluents; and
- reasonably re-establish pre-disturbance land forms and vegetation.

In order to carry out reclamation obligations imposed on us in
connection with our exploration, potential development and production
activities, we must allocate financial resources that might otherwise be spent
on further exploration and development programs. Certain of our projects have
been subject to historic mining operations and certain of the properties that
were historically mined by us are subject to remediation obligations. We have
set up a provision for our reclamation bonds but this provision may not be
adequate. If we are required to carry out unanticipated reclamation work, our
financial position could be adversely affected.

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Our properties may be subject to uncertain title.

We cannot provide assurance that title to our properties will
  not be challenged. We own, lease or have under option, unpatented and patented
  mining claims, mineral claims or concessions which constitute our property holdings.
  The ownership and validity, or title, of unpatented mining claims and concessions
  are often uncertain and may be contested. Also, we may not have, or may not
  be able to obtain or economically obtain, all necessary surface rights to develop
  a property. Title insurance is generally not available for mineral properties
  and our ability to ensure that we have obtained a secure claim to individual
  mining properties or mining concessions may be severely constrained. We have
  not conducted surveys of all of the claims in which we hold direct or indirect
  interests. A successful claim contesting our title to a property will cause
  us to lose our rights to explore and, if warranted, develop that property or
  undertake or continue production thereon. This could result in us not being
  compensated for our prior expenditures relating to the property.

In addition, certain of our properties are located in areas
that were and are inhabited by indigenous people. If historical artifacts or
archaeological sites are discovered on or near our properties, we may be
prohibited or restricted from developing or mining our mineral properties or be
required to relocate or preserve such findings.

The sale of our concentrates will be subject to
counterparty and market risks.

We have entered into supply arrangements to sell some of the
  silver and zinc concentrates being produced at the Pirquitas Mine to integrated
  mining and smelting companies. There is no assurance that in the future, where
  necessary, we will be successful in entering into such arrangements on acceptable
  terms, or at all. If we are not successful in entering into such arrangements,
  we may be forced to sell all of our concentrates, or greater volumes of them
  than we may from time to time intend, in the spot market, or we may not have
  a market for our concentrates. In addition, should any counterparty to any supply
  arrangement we may enter into not honour such arrangement, or should any of
  such counterparties become insolvent, we may incur losses for products already
  shipped and be forced to sell greater volumes of our concentrates than intended
  in the spot market or we may not have a market for our concentrates, and our
  future operating results may be materially adversely impacted as a result. Moreover,
  there can be no assurance that we will be able to renew any agreements we may
  enter into to sell concentrates when such agreements expire, or that our concentrates
  will meet the qualitative requirements under future concentrate agreements or
  the requirements of buyers.

Political or economic instability or unexpected
regulatory change in the countries where our properties are
located could adversely affect our business.

The Company currently conducts operations in Argentina, and has
exploration projects in Mexico, Peru, Argentina, Chile, Canada and the United
States, and as such the Company is exposed to various levels of economic,
political and other risks and uncertainties. These risks and uncertainties vary
from country to country and include, but are not limited to, royalties and tax
increases or claims by governmental bodies, expropriation or nationalization,
foreign exchange controls, import and export regulations, cancellation or
renegotiation of contracts, changing fiscal regimes and uncertain regulatory
environments, fluctuations in currency exchange rates, high rates of inflation,
changes in royalty and tax regimes, including the elimination of tax exemptions,
underdeveloped industrial and economic infrastructure, unenforceability of
contractual rights and judgements and environmental permitting regulations. The
occurrence of these various factors and uncertainties cannot be accurately
predicted and could have a material adverse effect on the Companys operations
or profitability.

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We cannot provide assurance that we will successfully
acquire additional commercially mineable mineral rights.

Most exploration projects do not result in the discovery of
commercially mineable ore deposits, and no assurance can be given that any
anticipated level of recovery of ore reserves will be realized or that any
identified mineral deposit will ever qualify as a commercially mineable (or
viable) ore body which can be legally and economically exploited. Estimates of
mineral reserves, mineral resources, mineral deposits and production costs can
also be affected by such factors as environmental permitting regulations and
requirements, weather, environmental factors, unforeseen technical difficulties,
unusual or unexpected geological formations and work interruptions.

Material changes in mineral reserves, grades, stripping ratios
or recovery rates may affect the economic viability of any project. Our future
growth and productivity will depend, in part, on our ability to identify and
acquire additional commercially mineable mineral rights, and on the costs and
results of continued exploration and potential development programs. Mineral
exploration is highly speculative in nature and is frequently non-productive.
Substantial expenditures are required to:

- establish mineral reserves through drilling and metallurgical and other
  testing techniques;
- determine metal content and metallurgical recovery processes to extract
  metal from the ore; and
- construct, renovate or expand mining and processing facilities.

In addition, if we discover ore, it would take several years
from the initial phases of exploration until production is possible. During this
time, the economic feasibility of production may change. As a result of these
uncertainties, there can be no assurance that we will successfully acquire
additional commercially mineable (or viable) mineral rights.

We may be adversely affected by future fluctuations in
foreign exchange rates.

We maintain our bank accounts primarily in U.S. dollars,
Canadian dollars and Argentine Pesos. Our revenues are all in U.S. dollars,
while certain of our costs will be incurred in other currencies. In particular,
any appreciation in the currencies of Argentina, Canada, Chile, Mexico or other
countries where we carry out exploration or development activities against the
U.S. dollar will increase our costs of carrying on operations in such countries.
With the operation of the Pirquitas Mine, our costs denominated in Argentine
Pesos have increased over past levels, and we therefore have greater exposure to
Argentine currency fluctuations. In addition, any decrease in the Canadian
dollar against the U.S. dollar will result in a loss on our books to the extent
we hold funds in Canadian dollars. As a result, our financial performance and
forecasts can be significantly impacted by changes in foreign exchange rates.

High metal prices in recent years have encouraged
increased mining exploration, development and construction
activity, which has increased demand for, and cost of,
exploration, development and construction services and equipment.

The relative strength of metal prices over the past five years
has encouraged increases in mining exploration, development and construction
activities around the world, which has resulted in increased demand for, and
cost of, exploration, development and construction services and equipment. While
recent market conditions have had a moderating effect on the costs of such
services and equipment, increases in such costs may continue with the resumption
of an upward trend in metal prices. Increased demand for services and equipment
could result in delays if services or equipment cannot be obtained in a timely
manner due to inadequate availability, and may cause scheduling difficulties due
to the need to coordinate the availability of services or equipment, any of
which could materially increase project exploration, development and/or
construction costs.

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We face industry competition in the acquisition of
exploration properties and the recruitment and retention of
qualified personnel.

We compete with other exploration and producing companies, many
of which are better capitalized, have greater financial resources, operational
experience and technical capabilities than us or are further advanced in their
development or are significantly larger and have access to greater mineral
reserves, for the acquisition of mineral claims, leases and other mineral
interests as well as for the recruitment and retention of qualified employees
and other personnel. In particular, we face competition for qualified personnel
for the Pirquitas Mine, which may increase our costs of operating the mine or
result in delays. Expatriate employees are currently required in the early
stages of the Pitarrilla Project. If we require and are unsuccessful in
acquiring additional mineral properties or qualified personnel, we will not be
able to grow at the rate we desire, or at all.

Some of our directors and officers have conflicts of
interest as a result of their involvement with other natural
resource companies.

Some of our directors and officers are directors or officers of
other natural resource or mining-related companies. Currently, John Smith, our
Chief Executive Officer serves as a director of Pretium, and, as of the date of
this Annual Report, we own approximately 27% of Pretiums outstanding common
shares. These associations may give rise to conflicts of interest from time to
time. As a result of these conflicts of interest, we may miss the opportunity to
participate in certain transactions, which may have a material adverse effect on
our financial position.

We are subject to claims and legal proceedings.

We are subject to various claims and legal proceedings covering
a wide range of matters that arise in the ordinary course of business
activities. Each of these matters is subject to various uncertainties and it is
possible that some of these matters may be resolved unfavorably to us. We carry
liability insurance coverage and establish reserves for matters that are
probable and can be reasonably estimated. In addition, we may be involved in
disputes with other parties in the future that may result in litigation, which
may have a material adverse impact on our future cash flows, profitability,
results of operations and financial condition.

We may experience difficulty attracting and retaining
qualified management to grow our business.

We are dependent on the services of key executives and other
highly skilled and experienced executives and personnel focused on advancing our
corporate objectives as well as the identification of new opportunities for
growth and funding. Due to our relatively small size, the loss of any of these
persons or our inability to attract and retain suitable replacements for them or
additional highly skilled employees required for the operation of the Pirquitas
Mine and our other activities may have a material adverse effect on our business
and financial condition.

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We may fail to maintain adequate internal control over
financial reporting pursuant to the requirements of the
Sarbanes-Oxley Act.

During our six most recent fiscal years, we documented and
tested our internal control procedures in order to satisfy the requirements of
Section 404 of the Sarbanes-Oxley Act (SOX). SOX requires an annual
assessment by management of the effectiveness of our internal control over
financial reporting and, for fiscal years commencing with our fiscal year ended
December 31, 2006, an attestation report by our independent auditors addressing
the effectiveness of internal control over financial reporting. We may fail to
maintain the adequacy of our internal control over financial reporting as such
standards are modified, supplemented or amended from time to time, and we may
not be able to ensure that we can conclude, on an ongoing basis, that we have
effective internal control over financial reporting in accordance with Section
404 of SOX. Our failure to satisfy the requirements of Section 404 of SOX on an
ongoing, timely basis could result in the loss of investor confidence in the
reliability of our financial statements, which in turn could harm our business
and negatively impact the trading price or the market value of our securities.
In addition, any failure to implement required new or improved controls, or
difficulties encountered in their implementation, could harm our operating
results or cause us to fail to meet our reporting obligations. Future
acquisitions of companies, if any, may provide us with challenges in
implementing the required processes, procedures and controls in our acquired
operations. No evaluation can provide complete assurance that our internal
control over financial reporting will detect or uncover all failures of persons
within our Company to disclose material information otherwise required to be
reported. The effectiveness of our processes, procedures and controls could also
be limited by simple errors or faulty judgments. In addition, as we continue to
expand, the challenges involved in implementing appropriate internal control
over financial reporting will increase and will require that we continue to
monitor our internal control over financial reporting. Although we intend to
expend substantial time and incur substantial costs, as necessary, to ensure
ongoing compliance, we cannot be certain that we will be successful in complying
with Section 404 of SOX.

Risks Related to our Common Shares

Future sales or issuances of equity securities could
decrease the value of any existing common shares, dilute
investors voting power and reduce our earnings per share.

We may sell additional equity securities (including through the
sale of securities convertible into common shares) and may issue additional
equity securities to finance our operations, development, exploration,
acquisitions or other projects. We cannot predict the size of future sales and
issuances of equity securities or the effect, if any, that future sales and
issuances of equity securities will have on the market price of our common
shares. Sales or issuances of a substantial number of equity securities, or the
perception that such sales could occur, may adversely affect prevailing market
prices for our common shares. With any additional sale or issuance of equity
securities, investors will suffer dilution of their voting power and may
experience dilution in our earnings per share.

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Our common shares are publicly traded and are subject to
various factors that have historically made our common share price
volatile.

The market price of our common shares has been, and may
continue to be, subject to large fluctuations, which may result in losses to
investors. The market price of our common shares may increase or decrease in
response to a number of events and factors, including: our operating performance
and the performance of competitors and other similar companies; volatility in
metal prices; the publics reaction to our press releases, material change
reports, other public announcements and our filings with the various securities
regulatory authorities; changes in earnings estimates or recommendations by
research analysts who track our common shares or the shares of other companies
in the resource sector; changes in general economic and/or political conditions;
the number of common shares to be publicly traded after an offering of our
common shares; the arrival or departure of key personnel; acquisitions,
strategic alliances or joint ventures involving us or our competitors; and the
factors listed under the heading Cautionary Note Regarding Forward-Looking
Statements.

The market price of our common shares is affected by many other
variables which are not directly related to our success and are, therefore, not
within our control, including other developments that affect the market for all
resource sector securities, the breadth of the public market for our common
shares and the attractiveness of alternative investments. The effect of these
and other factors on the market price of our common shares on the exchanges on
which they trade has historically made our common share price volatile and
suggests that our common share price will continue to be volatile in the future.

We do not intend to pay any cash dividends in the
foreseeable future.

We have not declared or paid any dividends on our common shares
since 1955. We intend to retain earnings, if any, to finance the growth and
development of our business and do not intend to pay cash dividends on our
common shares in the foreseeable future. Any return on an investment in our
common shares will come from the appreciation, if any, in the value of our
common shares. The payment of future cash dividends, if any, will be reviewed
periodically by our Board of Directors and will depend upon, among other things,
conditions then existing including earnings, financial condition and capital
requirements, restrictions in financing agreements, business opportunities and
conditions and other factors.

Item
4Information on the Company

All disclosure about our exploration properties in this Annual
Report conforms to the standards of the SECs Industry Guide 7, Description of
Property by Issuers Engaged or to be Engaged in Significant Mining Operations,
other than disclosure of Mineral Resources, Measured Mineral Resources,
Indicated Mineral Resources and Inferred Mineral Resources, which are
geological and mining terms as defined in accordance with Canadian National
Instrument 43-101 under the guidelines set out in the CIM Standards. U.S.
investors in particular are advised to read carefully the definitions of these
terms as well as the explanatory and cautionary notes in the Glossary, and the
cautionary notes below, regarding use of these terms.

A.History and
Development of the Company

General Background

We were incorporated as a company in British Columbia, Canada,
on December 11, 1946 under the name Silver Standard Mines, Limited (NPL) and
changed our name to Silver Standard Mines Limited on July 18, 1979. We changed
our name to Consolidated Silver Standard Mines Limited and consolidated our common shares on a 1-for-5 basis on August 9, 1984. All
references to the number of shares or per share data in this Annual Report refer
to consolidated shares/data, unless otherwise indicated. We changed our name to
Silver Standard Resources Inc. on April 9, 1990. On May 12, 2005, our
shareholders adopted new articles as required by the new British Columbia Business Corporations Actand authorized an increase in our authorized
capital from 100,000,000 common shares without par value to an unlimited number
of common shares without par value.

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Our head office and registered and records office is located
at: Suite 1400 - 999 West Hastings Street, Vancouver, British Columbia, Canada
V6C 2W2. The contact person is Kristen Riddell, Vice President, Corporate
Secretary and General Counsel. The telephone number is (604) 689-3846; the
facsimile number is (604) 689-3847.

In December 2010, we completed the sale of our 100% interest in
the Snowfield and Brucejack Projects to Pretium. See Item 4.B  Business
Overview  Mineral Projects  Snowfield and Brucejack Projects.

On June 30, 2011, we entered into a share and asset purchase
agreement with Esperanza Resources Corp. (Esperanza) pursuant to which we
purchased all of Esperanzas remaining interest in the San Luis Project. We now
own 100% of the San Luis Project, subject to a 1% net smelter returns royalty
payable to Esperanza. See Item 4.B  Business Overview  Mineral Projects  San
Luis Project.

On April 8, 2011, the Company completed a secondary offering of
11.5 million units at a price of C$10.00 per unit for gross proceeds of C$115
million of Pretium. Each unit consisted of one common share of Pretium owned by
Silver Standard and one-half of one common share purchase warrant of Pretium,
with each whole warrant exercisable to purchase one common share of Pretium
owned by the Company at a price of C$12.50 per share for a period of 12 months
following the closing.

On August 1, 2011 we entered into a share purchase agreement
with Kingsgate Consolidated Limited (Kingsgate) and Silver Standard Australia
(BVI) Inc., pursuant to which we sold to Kingsgate all of our interest in the
Bowdens Property, located in Australia, in consideration of Kingsgate paying to
us A$35,000,000 in cash, issuing to us 3,440,367 common shares of Kingsgate with
an aggregate value of A$30,000,000, and making two deferred cash payments of
A$5,000,000 each, the first due on December 31, 2011 (received) and the second
due on June 30, 2012. See Item 4.B. Business Overview - Mineral Properties 
Bowdens Project.

On November 9, 2011 the Company announced a lowered mineral
reserve and resources estimate for its Pirquitas Mine. See Item 4.D  Property,
Plant and Equipment  Operating Mine  Pirquitas Project

The information contained in this Annual Report is current as
at December 31, 2011, other than where a different date is specified.

B.Business Overview

We are a silver resource and producing company that has one
producing mine and a portfolio of silver dominant projects. Certain of our
projects also contain significant gold resources. Our properties are located in
Argentina, Canada, Chile, Mexico, Peru and the United States. We continue to
explore for, and acquire, if warranted, silver properties throughout the world.
We are also focused on operating and producing silver from our Pirquitas Mine,
and on advancing our other mineral projects and project pipeline. A commercially
viable mineral deposit may not exist on any of our exploration stage properties,
and further exploration work may be required before a final evaluation as to the
economic and legal feasibility of any property is determined. See Item 3.D 
Risk Factors.

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In addition to the Pirquitas Mine located in the Province of
Jujuy, Argentina, we have 100% interests in several mineral projects, including
the more advanced San Luis Project in Ancash Department, Peru; the Pitarrilla
and San Agustin Projects in Durango State, Mexico; and the Diablillos Project in
Salta Province, Argentina. We also control a large portfolio of mineral
properties, with a number of these properties having silver mineral resources
identified on them, including the Berenguela Project in Peru; the Nazas Project
in Durango State, Mexico; the Challacollo Project in Chile; the San Agustin and
Veta Colorada Projects in Mexico; the Candelaria and Maverick Springs Projects
in Nevada, U.S.A.; and the Sunrise Lake Project in the Northwest Territories of
Canada. Another one of our mineral properties, the San Marcial Property in
Mexico, is currently optioned to a third party (as set out in this Item 4.B -
Business Overview - Mineral Properties). Besides the projects and properties
noted above, we have a number of other mineral property holdings at various
stages of exploration in Argentina, Canada, Chile, Mexico and the United States.
In categorizing our projects, we consider, among other things, the priority of
the project for the ensuing year, proposed expenditures in respect of the
project for the ensuing year and the stage of exploration of the project.

In December, 2010, we sold all of our interest in the Snowfield
Project and the adjoining Brucejack Project located in northern British
Columbia, Canada to Pretium. In addition to receiving C$228 million in gross
cash proceeds, we retained a 42.3% equity interest in Pretium. On April 8, 2011
we sold 11.5 million units of Pretium for gross cash proceeds of C$115 million,
thus reducing our equity interest in Pretium to approximately 27% of the company
as at the date of this Annual Report. See Item 4.B Business Overview  Mineral
Projects  Snowfield and Brucejack Projects.

On June 30, 2011, we entered into a Share and Asset Purchase
Agreement with Esperanza, Esperanza Silver Peru S.A.C. and Reliant Ventures
S.A.C. (Reliant Ventures), as amended July 28, 2011, pursuant to which we
purchased all of Esperanzas interest in the San Luis Project for the following
consideration:

- C$17 million cash;
- transferring to Esperanza the 6,459,600 common shares in Esperanza that we
  owned; and
- a royalty equal to 1% of net smelter returns on future production from the
  project.

The transaction closed on July 28, 2011, and accordingly, we
now own 100% of the San Luis Project subject to the 1% net smelter returns
royalty granted to Esperanza on the project. See Item 4.B Business Overview 
Mineral Projects  San Luis Project.

On August 1, 2011, we entered into a Share Purchase Agreement
with Kingsgate Consolidated Limited (Kingsgate) and Silver Standard Australia
(BVI) Inc., our wholly owned subsidiary, pursuant to which we agreed to sell to
Kingsgate all of the shares of Silver Standard Australia Pty Limited (which
holds the Bowdens Project) in consideration of the following:

- A$35,000,000 in cash;
- 3,440,367 of Kingsgates common shares, with an aggregate value of
  A$30,000,000 as of the closing date; and
- two deferred cash payments of A$5,000,000 each, the first due on December
  31, 2011 and the second due on June 30, 2012.

The transaction closed on September 23, 2011, and accordingly,
we no longer hold any interest in the Bowdens Project. See Item 4.B  Business
Overview  Mineral Properties  Bowdens Project.

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Marketing

From initial production until the middle of 2011, the Company
sold its silver and zinc concentrates to a single trading counterparty. Sales of
concentrate to this company amounted to 100% of total metal sales in 2011.
Generally, the loss of a single trading counterparty would not adversely affect
the Company due to the liquidity of the markets and the availability of
alternative trading counterparties.

In the second half of 2011, the Company commenced marketing discussions
  with several third party smelters, refiners, and traders for the sale of its
  silver and zinc concentrates. The Company has completed various sales contracts
  in 2012 with various counterparties to diversify its revenue base. In the future,
  the loss of any one smelting and refining client may have a material adverse
  effect on the Company if alternate smelters and refiners are not available.
  The Company believes there is sufficient global capacity available to address
  the loss of any one smelter.

Silver Prices

The Companys operating results are substantially dependent
upon the world market price of silver. The Company has no control over the
silver price, which can fluctuate widely. Silver traded between US$48.68 and
US$26.19 per ounce during 2011 as reported on the London Metal Bulletin.

Operating Mine

Pirquitas Mine

Under an agreement dated June 21, 2002, we acquired from
Stonehill Institutional Partners, L.P., Stonehill Offshore Partners Limited and
Stonehill Capital Management, LLC a 43.4% interest in Sunshine Argentina, Inc.,
a Delaware corporation, and the holder of the rights to the Pirquitas Mine
located in the Province of Jujuy, Argentina. The total purchase price for the
43.4% interest was:

- the payment at closing of $3,000,000 in cash; and
- the issuance of a $1,340,000 convertible debenture, with a term of one
  year, an exercise price of C$5.80 per share and an interest rate of 10% per
  annum.

The debenture was fully converted by the holder by December 31,
2002 into 360,636 common shares in our capital. At the time of the acquisition
of 43.4% interest in Sunshine Argentina, Inc., we became the operator of the
Pirquitas Mine.

Under an agreement dated October 20, 2004, we acquired from
Elliott International L.P., The Liverpool Limited Partnership and Highwood
Partners, L.P. the remaining 56.6% interest in Sunshine Argentina, Inc. on the
issuance of 2.663 million common shares in our capital.

We currently own 100% of the issued and outstanding shares in
the capital of Sunshine Argentina, Inc. (now known as Mina Pirquitas, Inc.) for
a 100% interest in the Pirquitas Mine.

In December 2009, the Pirquitas Mine achieved production status
and in 2010, produced 6.3 million ounces of silver, and in 2011 produced 7.1
million ounces of silver.

Fiscal stability agreement and regulatory environment

The Pirquitas Mine has a fiscal stability agreement with the
government of Argentina dating from 1998. In 2002, the government of Argentina
implemented an export duty on concentrates that did not apply to companies with
pre-existing fiscal stability agreements. In December 2007 the National
Customs Authority of Argentina levied an export duty of approximately
10% from concentrates for projects with fiscal stability agreements pre-dating
2002. The Company has been advised that the Pirquitas Mine is subject to this
export duty despite contrary rights detailed under the 1998 fiscal stability
agreement. The legality of the export duty applied to silver concentrates has
been challenged and is currently under review by the court in Argentina. In July
2010, the Company filed a claim in the provincial court for repayment of export
duties paid on silver concentrates, and for an order to cease payment of the
export duty until the matter has been decided by the court. An order was granted
effective September 29, 2010 to cease payment of the export duty on silver
concentrates pending the decision of the courts, and in April 2011 a government
appeal against this order was denied.

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As of December 31, 2011 the Pirquitas Mine has paid $6.6
million in export duties against which it has filed for recovery. In accordance
with the order to cease payment the Company has not been paying export duties on
silver concentrate but continues to accrue duties in full until the outcome of
the claim is known with certainty. At December 31, 2011, the Company had accrued
a liability totaling $13.1 million, with a corresponding impact on cost of sales
in the relevant period. If this export duty is successfully overturned the full
amount of paid and unpaid duty will be recognized in the Consolidated Statement
of Income in the period recovery becomes virtually certain.

Mineral Projects

San Luis Project

On March 22, 2005, we entered into an agreement with Esperanza
Silver Corp. (Esperanza) for the evaluation of mineral prospects in central
Peru. Under the evaluation agreement,

- we agreed to contribute $300,000; and
- Esperanza agreed to contribute $200,000 and certain know-how;

to carry out agreed upon evaluation programs for mineral
prospects, with Esperanza acting as operator. In the event Esperanza acquired or
proposed to acquire any mineral property as a result of an evaluation program,
we could elect to enter into a joint venture with Esperanza for the exploration
of the mineral property on the following terms:

- we would initially hold a 50% interest in the joint venture and Esperanza
  would initially hold a 50% interest in the joint venture;
- we could elect on the formation of the joint venture to increase our
  interest in the joint venture to 55% by funding the first $500,000 in
  exploration expenditures;
- once we incurred the first $500,000 in exploration expenditures or, if we
  did not elect to increase our interest to 55%, following the formation of the
  joint venture, we would incur with Esperanza $1.5 million in exploration
  expenditures in proportion to our respective interests in the joint venture;
- once we incurred with Esperanza $1.5 million in exploration expenditures,
  we could elect to increase our interest in the joint venture to 70% by paying
  all costs required to be incurred to complete a feasibility study for the
  project; and
- if we elected to increase our interest to 70% by completing a feasibility
  study, on completion of the feasibility study we could elect to increase our
  interest in the joint venture to 80% by paying all costs required to be
  incurred to place the property into commercial production.

In August 2005, Esperanza advised us of the acquisition of
certain mineral concessions, known as the San Luis Project, as the result of an
evaluation program carried out under the evaluation agreement. On September 6,
2005, we entered into a joint venture agreement with Esperanza for the
exploration of the San Luis Project (the San Luis Joint Venture) on the terms
set out above and elected to increase our interest in the joint venture to 55%
by funding the first $500,000 in exploration expenditures. During 2006, we earned a 55% interest in the joint venture and
commenced incurring $1.5 million in exploration expenditures with Esperanza in
proportion to our respective interests in the joint venture. In March 2006, we
received notice from Esperanza that the joint venture had incurred $1.5 million
in exploration expenditures on the San Luis Project. Following receipt of the
notice, we elected to increase our interest in the San Luis Joint Venture to 70%
by paying all costs required to be incurred to complete a feasibility study. In
June 2010, we completed a feasibility study, and accordingly our interest
automatically increased to 70%.

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On June 30, 2011, we entered into a Share and Asset Purchase
Agreement with Esperanza, Esperanza Silver Peru S.A.C. and Reliant Ventures
S.A.C. (Reliant Ventures), as amended July 28, 2011, pursuant to which we
purchased all of Esperanzas interest in the San Luis Project for the following
consideration:

- C$17 million cash;
- transferring to Esperanza the 6,459,600 common shares in Esperanza that we
  owned; and
- a royalty equal to 1% of net smelter returns on future production from the
  project.

The transaction closed on July 28, 2011, and accordingly, we
now own 100% of the San Luis Project subject to the 1% net smelter returns
royalty granted to Esperanza on the project.

Pitarrilla Project

We acquired by staking the original mineral claim covering the
Pitarrilla Project in November 2002, acquired two contiguous claims by staking
in 2003 and 2004 and acquired a fourth contiguous claim by staking in 2005. In
addition, in 2004 and 2005 we acquired two adjoining claims, the Pena and Pena 1
claims, on payment of $300,000 along with a third adjoining claim, the America
claim, on payment of $250,000. Since then, we have acquired two additional
claims by staking. We agreed to pay the following finders fee to La Cuesta
International, Inc. in respect of our acquisition of the Pitarrilla Project:

- $5,000 in cash following the staking of the property;
- the greater of (i) $5,000 and (ii) 2% of our direct exploration
  expenditures on the property, payable every six months; and
- a 0.25% net smelter returns royalty applicable to all gold and silver
  produced from the property;

provided that the maximum amount payable in respect of the
finders fee was an aggregate of $500,000.

In 2007, we paid La Cuesta the remainder of the $500,000
finders fee. Accordingly, we currently own a 100% interest in the Pitarrilla
Project.

Diablillos Project

As of November 1, 2001, we entered into a purchase agreement
with Silver Standard (BVI) Inc. (our wholly-owned subsidiary), Pacific Rim
Mining Corp. (Pacific Rim) and Pac Rim Cayman and Pac Rim Caribe (III)
(wholly-owned subsidiaries of Pacific Rim). Under the agreement, we agreed to
acquire all of Pacific Rims interest in the Diablillos Project located in Salta
Province, Argentina through the acquisition of all of the shares of two indirect
wholly-owned subsidiaries of Pacific Rim: Salta Gold Ltd. and Pacific Rim Mining
Corporation Argentina S.A. Under the terms of the agreement, we agreed to pay
Pacific Rim $3,400,000 in staged payments of:

- $1,000,000 payable in cash on closing;
- $500,000 payable in cash on December 31, 2001;

- 20 -

---

- $500,000 payable in cash or our shares, at our election, on or before June
  30, 2002;
- $500,000 payable in cash or our shares, at our election, on or before
  December 31, 2002;
- $500,000 payable in cash or our shares, at our election, on or before June
  30, 2003; and
- $400,000 payable in cash or our shares, at our election, on or before
  December 31, 2003.

On December 14, 2001, we completed the acquisition of the
Diablillos Project and made the $1,000,000 cash payment due on closing. On
December 31, 2001, we paid the $500,000 payment then due, and on January 18,
2002 issued 383,025 common shares in our capital in satisfaction of the payments
due on June 30, 2002 and December 31, 2002. On June 28, 2002, we issued 142,970
common shares in our capital in satisfaction of the payments due on June 30,
2003 and December 31, 2003. The total purchase price was C$5,433,000, with
C$5,430,000 allocated for the property and C$3,000 allocated for a provision for
reclamation.

We currently own a 100% interest in the Diablillos Project.

San Agustin Project

We acquired by staking the mineral claims covering the San
Agustin Project located in Durango State, Mexico in April 2003. We have agreed
to pay the following finders fee to La Cuesta International, Inc. in respect of
our acquisition of the San Agustin Project:

- $5,000 in cash following the staking of the property (paid);
- the greater of (i) $5,000 and (ii) 2% of our direct exploration
  expenditures on the property, payable every six months; and
- a 0.25% net smelter returns royalty applicable to all gold and silver
  produced from the property;

provided that the maximum amount payable in respect of the
finders fee is an aggregate of $500,000.

In August 2006, we granted an option to acquire a 100% interest
in the San Agustin Project to Geologix Explorations Inc. (Geologix) under an
agreement dated August 25, 2006 with Silver Standard Mexico S.A. de C.V.,
Geologixand Geologix Explorations Mexico, S.A. de C.V. (Silver Standard
Mexico S.A. de C.V. and Geologix Explorations Mexico, S.A. de C.V. are
wholly-owned subsidiaries of Silver Standard and Geologix, respectively). In
order to maintain the option in good standing under the terms of the option
agreement, Geologix was required to:

| | issue to us:                                                                                                                                                                
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                             
| | o                                                                                                                                                                           
| |                                                                                                                                                                             
| | o                                                                                                                                                                           
| |                                                                                                                                                                             
| | incur exploration expenditures of not less than $2
      million on or before the second anniversary of the date of the agreement,
      which expenditures were to include:
| |                                                                                                                                                                             
| | o                                                                                                                                                                           
| |                                                                                                                                                                             
| | o                                                                                                                                                                           

- 21 -

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| | cause an estimate of the silver resource and gold resource for the
  property to be prepared in accordance with Canadian National Instrument 43-101
  within 27 months after the date of the agreement. :
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In order to exercise the option under the terms of the option
agreement, Geologix was required to:

| | pay us in respect of the silver resource:                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                          
| | o                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                          
| | o                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                          
| | o                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                          
| | pay us in respect of the gold resource:                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                          
| | o                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                          
| | o                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                          
| | less:                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                          
| | o                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                          
| | o                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                          
| | grant us a royalty of 2.5% of net smelter returns
      applicable to all minerals produced from the San Agustin Project, that
      were not within the estimate of the silver resource and gold resource, up
      to a maximum of 2 million ounces of gold
equivalent.

If the estimate of the silver resource was equal to or greater
than 50 million ounces of silver and Geologix exercised the option, we had the
right to elect to acquire a 50% interest in the San Agustin Project by incurring
expenditures over two years equal to three times the exploration expenditures
incurred by Geologix, provided that Geologix could have elected that we pay to
Geologix up to 1.5 times their exploration expenditures in cash and incur the
remaining 1.5 times their exploration expenditures on exploration.

In September 2007, we agreed with Geologix to amend the option
agreement to provide for, among other things, Geologix to drill the required
meterage in accordance with a revised drill program, an extension of one month
to the time required to deliver the resource estimate (from 27 months to 28
months after the date of the option agreement) and the release of our rights to
back-in for a 50% interest in the property.

On August 12, 2008, Geologix delivered to us notice that it had
incurred the required expenditures under the option agreement. Under the terms
of the option agreement, Geologix had four months following delivery of notice
that it had incurred the required exploration expenditures to deliver to us the
resource estimate. On December 12, 2008, Geologix delivered to us the resource
estimate. Under the terms of the option agreement, Geologix had 60 days
following delivery of the resource estimate (February 10, 2009) to pay us the
option exercise payment, which based on then silver and gold prices was
approximately $34 million. Geologix did not pay us the required amount to
exercise the option on February 10, 2009 and the option and option agreement
terminated.

- 22 -

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We currently own a 100% interest in the San Agustin Project,
subject to the above described finders fee capped at $500,000.

Snowfield and Brucejack Projects

On December 21, 2010, we completed the sale of our 100%
interest in the Snowfield and Brucejack Projects located in northern British
Columbia, Canada to Pretium, a newly formed company which completed its initial
public offering (IPO) concurrently with the closing of the sale, for the
following consideration:

- $211.3 million in gross cash proceeds;
- 32,537,833 common shares in Pretium, representing a 41.3% interest of the
  outstanding shares as of the closing of the transaction; and
- a non-interest bearing promissory note issued by Pretium in the principal
  amount of $39.1 million, automatically convertible into common shares of
  Pretium at a conversion rate of C$6 per share 40 days after closing, to the
  extent not repaid by Pretium.

On January 6, 2011, the underwriters in connection with the IPO
of Pretium exercised in part the over-allotment option granted to them in
connection with the IPO. Pursuant to the terms of the promissory note, we
received an additional $16.7 million. On January 31, 2011, the balance of the
promissory note was automatically converted into an additional 3,625,500 common
shares of Pretium in accordance with its terms. Following this conversion, our
ownership interest in Pretium increased to 42.31% .

On April 8, 2011, the Company completed a secondary offering of
11.5 million units at a price of C$10.00 per unit for gross proceeds of C$115
million of Pretium. Each unit consisted of one common share of Pretium owned by
Silver Standard and one-half of one common share purchase warrant of Pretium,
with each whole warrant exerciseable to purchase one common share of Pretium
owned by the Company at a price of C$12.50 per share for a period of 12 months
following the closing. As of the date of this Annual Report we now own
approximately 27% of Pretiums issued and outstanding shares.

Mineral Properties

Berenguela Project

On March 31, 2004, we and our wholly-owned subsidiary, Silver
Standard Peru S.A., entered into an option agreement with Sociedad Minera
Berenguela S.A. (SOMINBESA), a Peruvian corporation and the holder of the
rights to the Berenguela Project located in Peru, and Fossores Ltd. (Fossores)
under which we acquired an option to acquire all of the in-ground silver
resources contained in the Berenguela Project. In order to maintain the option
in good standing, we were required to:

- issue 17,500 of our common shares to SOMINBESA (issued);
- substantially complete an exploration program on the Berenguela Project
  (completed); and
- cause a silver resource estimate (the Berenguela Resource Estimate) for
  the Berenguela Project to be prepared using all existing data, including data
  generated in the exploration program (prepared).

In order to exercise the option, we were required to issue to
SOMINBESA, on or before the expiry of a period of 60 days following the filing
of the Berenguela Resource Estimate with the Canadian Securities Administrators,
common shares in our capital that were equal to the value (at the time of
exercise) of the measured, indicated and inferred silver resources in the
Berenguela Resource Estimate. The silver resources were to be valued at:

- 23 -

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- $0.02 per ounce if the price of silver was less than or equal to $5.50 per
  ounce;
- $0.025 per ounce if the price of silver was greater than $5.50 per ounce
  but less than or equal to $6.50 per ounce for each ounce of silver; or
- $0.03 per ounce if the price of silver was greater than $6.50 per ounce.

Under the terms of the option agreement, we had the right on
exercise of the option, among other things, to acquire and mine all silver
resources in excess of those contained in the Berenguela Resource Estimate on
payment of $0.10 per ounce and independently exploit the silver resources on the
property if SOMINBESA had not completed a feasibility study and commenced the
development of the property at the time the price of silver had exceeded $7.00
per ounce, averaged over a consecutive 130 day period.

On March 31, 2004, we also entered into a funding agreement
with Fossores, under which Fossores agreed to provide us with:

- all the data in Fossores files concerning the Berenguela Project;
- a computerized index of the data;
- the metallurgical processes that can be used to recover the silver
  resources from the Berenguela Project; and
- a pre-feasibility study that presents an economically viable plan for the
  development of the Berenguela Project, including silver recovery.

Under the funding agreement, we agreed to pay Fossores:

| | $20,000 on execution of the Berenguela option agreement
      (paid);                                                      
| | ---------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                            
| | $180,000 following acceptance for filing of the
      Berenguela option agreement by the TSX Venture Exchange (paid);
  and
| |                                                                                                                            
| | on exercise of the Berenguela option agreement:                                                                            
| |                                                                                                                            
| | o                                                                                                                          
| |                                                                                                                            
| | o                                                                                                                          
| |                                                                                                                            
| | o                                                                                                                          

The option was not exercised as we acquired all of the shares
of SOMINBESA (the holder of the Berenguela Project) under a separate agreement
in January 2006.

On December 30, 2005, we entered into an agreement for the
acquisition of all of the shares of SOMINBESA. Under the purchase agreement, we
agreed to pay to the vendors, Daniel Kappes, Michael Cassiday and Victor Raul
Eyzaguirre, an aggregate payment of $2.0 million in cash, issue to the vendors
common shares in our capital having a value of $8.0 million and grant to the
vendors a 2% net smelter returns royalty on copper produced from the project
capped at $3.0 million. On January 12, 2006, we completed the acquisition of the shares of SOMINBESA, and the
Berenguela Project, and issued 530,504 shares in our capital to satisfy the
obligation to issue shares in our capital having a value of $8.0 million.

- 24 -

---

We currently have a 100% interest in the Berenguela Project,
subject to a royalty of 2% of net smelter returns on copper produced from the
project capped at $3.0 million.

Nazas Project

The Nazas Project comprises three contiguous properties located
in the Mexican state of Durango, being the Yerbabuena claim group, the San
Rafael claim group and the Navidad property.

Under the terms of a purchase agreement with Camino Minerals
Corporation (Camino) dated March 18, 2010, we acquired from Camino the
Yerbabuena claim group, which consists of four (4) mineral concessions. Two of
the concessions (Ampliacion Nazas and Nazas 5) were held
100% by Camino, while the other two concessions (Nazasand Nazas
3) were held by Camino subject to an agreement dated July 11, 2003 (the LCI
Agreement) with La Cuesta International, S.A. de C.V. (LCI Mexico), the
wholly owned Mexican subsidiary of La Cuesta International, Inc. (LCI).

Pursuant to the purchase agreement, we were required to make
the following payments to Camino:

- $250,000 payable on signing of the agreement (paid); and
- $250,000 payable on the one-year anniversary of the signing of the
  agreement (paid).

Having made the payments under the purchase agreement with
Camino and therefore acquiring the Yerbabuena property, we are now required to
make payments to LCI Mexico pursuant to the terms of the LCI agreement.
According to this agreement, we are required to pay LCI Mexico $15,000 twice per
year for as long as we maintain the Nazas and Nazas 3 claims in
good standing. If we fail to maintain the Nazas and Nazas3 claims
in good standing, the ownership of such claims will revert back to LCI Mexico.
In addition, if metal production is realized from either or both of the NazasandNazas 3concessions, we would be required to pay to LCI Mexico a
production royalty equal to 2% of net smelter returns, or $25,000 per calendar
year, whichever is greater. Pursuant to the LCI Agreement, we may purchase the
pre-production payment and the 2% net smelter returns royalty from LCI Mexico
for $2,000,000.

We own 100% of the two concessions (the San Rafael and
San Rafael 2 claims) comprising the San Rafael property, subject to the
terms of a Consulting and Finders Fee Agreement between us and LCI dated May 1,
2002, as amended. Pursuant to this agreement, we are required to pay LCI, on a
semi-annual basis, a payment equal to 2% of direct exploration expenditures
incurred by us, or $5,000, whichever is greater for as long as we maintain the
property in good standing. We are also required to pay to LCI a 0.25% net
smelter returns royalty on all gold, silver and all other valuable metals
produced from these concessions. We may purchase from LCI the pre-production
payments and production royalty for $2,000,000.

On April 26, 2010, we entered into an option to purchase
agreement with Minerales y Productos Metalurgicos S.A. de C.V (MPM) in respect
of the 25 mineral concessions comprising the Navidad property. Pursuant to this
agreement, we held the right to exercise the option to acquire the property by
making staged cash payments to MPM totalling $5,000,000 over a period of 36
months from the date of the agreement. Included in these staged payments were
all payments to various governmental agencies in Mexico for maintenance of the
concession licenses. In addition, MPM retained the right to mine any and all
mineral bodies in which the industrial mineral fluorite constitutes greater than
90% of the potential ore. We reserved the option to purchase MPMs right to mine
fluorite from the Navidad property for $1,000,000.

- 25 -

---

Immediately upon the completion of a 20 borehole diamond
drilling program on the Navidad Property in October 2011, we decided to
terminate the option to purchase agreement with MPM. In terminating the option
to purchase the property, we considered the results of the exploration work that
we completed on the property as well as the costs of maintaining the option into
2012. Cash payments that were made to MPM during the time the option agreement
was in effect amounted to approximately $450,000.

Currently, our Nazas Project comprises the Yerbabuena and San
Rafael properties, which we control 100%, subject to the following:

- The pre-production payments and 2% net smelter returns royalty on the
  Nazasand Nazas 3 concessions payable to LCI Mexico, which we
  may purchase at any time for $2,000,000; and
- The pre-production payments and 0.25% net smelter returns royalty on the
  San Rafaeland San Rafael 2claims payable to LCI, which
  we may purchase at any time for $2,000,000.

Challacollo Project

Under the terms of an option agreement dated November 16, 2001,
we acquired from Sociedad Contractual Minera Septentrion (Minera Septentrion)
an option to acquire a 100% interest in the Challacollo Project located in
northern Chile. Under the terms of the option agreement, we made cash option
payments (including a 5% finders fee) totaling $1,500,000 over two years.

On August 1, 2003, we exercised the option and acquired a 100%
interest in the Challacollo Project.

The project is subject to an existing 2% production royalty
capped at $850,000 and a 2% production royalty to Minera Septentrion which
increases to 3% once the existing two percent royalty is fully paid. The Minera
Septentrion royalty may be purchased for $1,500,000 at any time.

In 2005, we agreed to acquire certain mineral claims adjacent
to the Challacollo Project. In 2007, we completed the acquisition of these
mineral claims on issuance of 9,285 of our common shares.

At the date of this Annual Report, we have a 100% interest in
the Challacollo Project, subject to:

- a 2% production royalty capped at $850,000; and
- a 2% production royalty increasing to 3% once the $850,000 cap on the above
  royalty is fully paid, and which may be purchased for $1,500,000 at any time.

Candelaria Mine Project

On November 1, 1999, we entered into an option agreement with
Kinross Candelaria Mining Company, a Delaware corporation and an indirect
wholly-owned subsidiary of Kinross Gold Corporation, a Toronto Stock Exchange
listed company (together Kinross), under which we acquired an option to
acquire a 100% interest in the Candelaria Mine Project, located in Mineral and
Esmeralda counties of the State of Nevada. Under the option agreement, we issued
to Kinross of 50,000 our common shares so that we could carry out a six month
due diligence review of the Candelaria Mine Project (the option period).

In order to exercise the option at the end of the six-month
option period, we were required to:

- make staged cash payments to Kinross totalling C$300,000 over a period of
  12 months;

- 26 -

---

- issue 600,000 units to Kinross (each unit to consist of one common share
  and one common share purchase warrant, with each warrant entitling Kinross to
  acquire one additional common share for a period of one year at a price of
  C$3.50); and
- pay $1,000,000 to Kinross on commencement of commercial production.

In addition to the payments and share issuances, on exercise of
the option:

- Kinross could have elected to require us to purchase the processing
  facility located on the mine site for C$300,000; and
- we were to assume all liabilities relating to the mine.

On March 28, 2000, we entered into an amending agreement with
Kinross, under which Kinross agreed to extend the term of the option period by
three months (to a nine-month term) on our payment to Kinross of C$50,000 and
issuance to Kinross of 27,500 of our common shares. Under further amending
agreements dated July 12, 2000, October 27, 2000 and November 29, 2000, the term
of the option period was further extended, without payment of any further
consideration, to March 31, 2001. On March 30, 2001, we delivered the notice of
exercise of the option to Kinross. On October 1, 2001, we acquired from Kinross
Gold U.S.A., Inc. (Kinross Gold) all of the shares of Kinross Candelaria
Mining Company, the owner of the Candelaria mine and related assets, on:

- payment to Kinross Gold of $65,834;
- issuance to Kinross Gold of 600,000 common shares in our capital and
  600,000 common share purchase warrants, with each warrant entitling Kinross
  Gold to acquire one additional common share until October 1, 2002 at a price
  of C$3.50 per share;
- delivery to Kinross Gold of a promissory note in the amount of C$300,000
  payable on or before April 1, 2002 in cash or our shares, at our election, at
  a price equal to the 20-day average closing price of our shares on the
  Canadian Venture Exchange (we paid the full amount of the promissory note on
  March 26, 2002 by the issuance to Kinross Gold of 70,922 of our common
  shares);
- reimbursement of Kinross Gold of $209,607 for expenses incurred by Kinross
  Gold in respect of the Candelaria mine from April 1, 2001 to September 30,
  2001; and
- the assumption of all liabilities associated with the Candelaria mine.

Under the purchase agreement, Kinross Gold agreed to maintain
the reclamation bonding for the Candelaria Mine in place until April 1, 2003,
extendable to April 1, 2004 on our payment to Kinross Gold of $50,000.
Reclamation bonding for the property was $1,679,435, and we pledged the shares
of Kinross Candelaria Mining Company to Kinross Gold as collateral pending our
arrangement of reclamation bonding. In March 2003, we paid the $50,000 for
Kinross Gold to maintain the reclamation bonding in place until April 1, 2004.
In March 2004, we filed a substitute reclamation bond and related documents with
the Bureau of Land Management to assume the reclamation bonding for the
Candelaria Mine. On July 30, 2004, the Bureau of Land Management processed our
filing and, effective March 8, 2004, accepted our substitute reclamation bond
and terminated the period of liability of the Kinross Gold reclamation bond. As
a result, the shares of Kinross Candelaria Mining Company (now known as
Candelaria Mining Company) are no longer pledged to Kinross Gold.

Under the terms of the purchase agreement, Kinross Gold was
responsible for completing the reclamation of the mine (including the seeding of
certain parts of the property), and we agreed, among other things, to assume all
liabilities, including environmental monitoring, relating to the mine following
the completion of reclamation by Kinross Gold. Kinross Gold completed the
reclamation of the Candelaria Mine in 2003. With the completion of the
reclamation of the mine by Kinross Gold, we are responsible for the establishment of plant growth on the property. In the event the
seeding by Kinross Gold on the property does not result in sufficient plant
growth, we will be required to reseed the property at an estimated cost of $0.3
million; and, if reseeding does not establish sufficient plant growth, we will
be required to place a soil cap on the heap leach pads at an estimated cost of
$0.75 million. In addition, on reclamation of the mine, we were required to
monitor the water quality of leach pad drainage at a total estimated cost of
$25,500 over a five year period (completed).

- 27 -

---

We acquired the Candelaria Mine for the large silver resource
that remained on the property at the time of closure of the mine by Kinross
Gold. Our due diligence review of the property included re-drilling nine holes
in the Deep Diablo area, limited metallurgical studies, engineering scoping
studies and a complete environmental audit. Our drilling confirmed the original
resource estimate. Metallurgical and engineering studies demonstrated that
conventional milling of the ore was feasible at higher silver prices. The
environmental review did not identify any significant environmental issues and
confirmed that the substantial amount of reclamation work completed to date
satisfied state and federal guidelines.

At the date of this Annual Report, we own all of the shares of
Candelaria Mining Company, which owns a 100% interest in the Candelaria Mine.

Maverick Springs Project

Pursuant to a letter agreement dated November 7, 2002 among
Vista Gold Corporation (Vista), Vista Nevada Corp. (VNC), a wholly-owned
subsidiary of Vista, and us, on June 9, 2003, our wholly-owned subsidiary,
Maverick Silver Inc., entered into an exploration and development agreement with
Vista and VNC, pursuant to which we acquired an option to acquire a 55% interest
in the Maverick Springs Project located in northern Nevada, representing all of
the silver resources hosted in the project, subject to underlying agreements and
royalties described below. This option was exercisable on:

- payment of $300,000 on execution of the exploration and development
  agreement (paid); and
- incurring $1,200,000 over four years to fund required exploration
  expenditures, and payments and option payments (all of which was incurred
  before December 31, 2005).

Under an option agreement dated October 7, 2002 among Newmont
Mining Corporation and Newmont Capital Limited (together, Newmont), Vista and
VNC, Newmont granted Vista and VNC an option to acquire a 100% interest in the
Maverick Springs Project. In order to maintain the option in good standing,
Vista and VNC assumed responsibility for the following payments and expenditures
that Newmont was required to make under its mining lease with the owner of the
property:

- payment of $15,000 on October 1, 2002 (paid);
- payment of $50,000 on October 1, 2003 (paid);
- payment of $100,000 on each October 1stthereafter (paid
  up-to-date);
- a net smelter returns royalty ranging from 1.9% for gold and silver prices
  that are less than $250 and $4.50 per ounce, respectively, to 5.9% for gold
  and silver prices that are greater than $550 and $8.50 per ounce,
  respectively;
- a net smelter returns royalty of 2.9% for all metals other than gold and
  silver; and
- completion of a minimum of 6,400 feet of exploration drilling in each of
  the first three years of the agreement (completed).

In order for Vista and VNC to exercise their option from
Newmont, they were required to:

- 28 -

---

- pay Newmont $250,000 in cash (paid);
- reimburse Newmont for 2003 federal maintenance fees of $37,300 (paid);
- issue to Newmont 141,243 shares of Vista (issued) and 141,243 warrants of
  Vista (issued) (with each warrant exercisable for one share of Vista for a
  period of two years at $4.43 per share);
- issue to Newmont, on the first anniversary of the option agreement, the
  number of shares of Vista determined by dividing $500,000 by the weighted
  average closing price of the shares of Vista on the American Stock Exchange
  averaged over the 10-day trading period ending on the day before the first
  anniversary of the agreement (the Weighted Average Price) and an equal
  number of share purchase warrants (with each warrant exercisable for a period
  of two years from the closing at a price equal to 125% of the Weighted Average
  Price) (on October 7, 2003, Vista issued 122,923 common shares and warrants to
  Newmont); and
- grant to Newmont a 1.5% net smelter returns royalty on production from the
  Maverick Springs Project.

In addition, following the fourth anniversary of the option
agreement with Newmont, Newmont had the right, on payment of 200% of Vistas
expenditures on the Maverick Springs Project, to acquire a 51% interest in the
project. If Newmont had elected to acquire a 51% interest in the Maverick
Springs Project, expenditures by Vista, following the acquisition of 51% of the
project by Newmont, would have been capped at $2,000,000 until a feasibility
study was completed for the project.

In October 2005, we incurred the last of the $1.2 million in
required expenditures and vested our interest in the Maverick Springs Project.

In January 2007, Newmont elected not to acquire a 51% interest
in the Maverick Springs Project.

In May 2007, Vista assigned all of its rights and obligations
in respect of the Maverick Springs Project to Allied Nevada Gold Corp.

We currently have a 55% interest in the Maverick Springs
Project, representing all of the silver resources hosted in the project, subject
to the net smelter returns royalties payable to the property owner and Newmont
as described above.

Bowdens Project

We entered into an agreement on December 23, 1996 with Golden
Shamrock Mines Limited, as amended by an amending agreement dated August 4,
1997, to acquire all of the issued shares of GSM Exploration Pty Limited (GSM
Exploration) (which later became Silver Standard Australia Pty Limited) at a
cost of $6,712,845. The acquisition of the shares of GSM Exploration was
completed on August 22, 1997. At the time, the only asset of GSM Exploration was
the Bowdens Project located in New South Wales, Australia, which it acquired
from CRA Exploration Pty Limited (CRA Exploration) (now known as Rio Tinto
Exploration Pty Limited) pursuant to the terms of a tenement sale agreement
dated August 11, 1994. Under the terms of the tenement sale agreement, CRA
Exploration had the right, among other things, to:

- receive a payment of A$1,429,397 on GSM Exploration making a decision to
  mine in respect of the Bowdens Project;
- reacquire up to a 51% interest in the Bowdens Project in the event gold and
  silver resources were delineated on the Bowdens Project in excess of
  A$800,000,000 or base metal resources were delineated on the Bowdens Project in
  excess of A$3,000,000,000 within the six month period following the decision
  to mine; and

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---

- reacquire a 100% interest in the Bowdens Project at no cost in the event
  GSM Exploration did not make a decision to mine in respect of the Bowdens
  Project by August 11, 1999.

On July 31, 1997, prior to completing the acquisition of the
shares of GSM Exploration, we entered into an agreement with CRA Exploration
under which CRA Exploration agreed to release all of its rights to reacquire an
interest in the Bowdens Project in return for:

- the issuance of 160,000 of our common shares (which have since been
  issued);
- the payment of A$1,500,000 on the commencement of commercial production on
  the Bowdens Project; and
- the granting of a royalty of 2% of net smelter returns reducing to 1% of
  net smelter returns after the payment of A$5,000,000 in royalties.

On August 1, 2011, we entered into a Share Purchase Agreement
with Kingsgate Consolidated Limited (Kingsgate) and Silver Standard Australia
(BVI) Inc., our wholly owned subsidiary, pursuant to which we agreed to sell to
Kingsgate all of the shares of Silver Standard Australia Pty Limited (formerly
GSM Exploration) in consideration of the following:

- A$35,000,000 in cash (received);
- 3,440,367 of Kingsgates common shares, with an aggregate value of
  A$30,000,000 as of the closing date (received); and
- two deferred cash payments of A$5,000,000 each, the first due on December
  31, 2011 (received) and the second due on June 30, 2012.

The transaction closed on September 23, 2011, and accordingly,
we no longer hold any interest in the Bowdens Project.

Sunrise Lake Project

Under an agreement dated June 9, 2003 with Northern Hemisphere
Development Corp. (Northern) and Aber Diamond Corporation (Aber), we
acquired a 100% interest in the Sunrise Lake Project located in the South
MacKenzie District, Northwest Territories, Canada. Under the agreement:

- we paid Northern $252,442 in cash and issued to Northern 42,938 of our
  common shares;
- we paid Aber $235,558 in cash and issued to Aber 40,066 of our common
  shares; and
- we assumed the remaining reclamation obligations associated with the
  property.

The mineral claims that constitute the Sunrise Lake Project are
subject to a 5% net profits interest royalty.

We currently own a 100% interest in the Sunrise Lake Project,
subject to a 5% net profits interest royalty on claims comprised in the Sunrise
Lake Project.

Veta Colorada Project

On July 27, 2005, we entered into agreements with Mexicana del
Arco, S.A. de C.V. (Arco) and Industrial Minera Mexico, S.A. de C.V. (IMMSA)
to acquire a 100% interest in the Veta Colorada Project located in the Parral
mining district of Chihuahua State, Mexico. Under the purchase agreements, we
agreed to pay $50,000 on signing the agreements (paid) and a further $3.45
million on satisfactory completion of due diligence within 120 days of signing the
agreements. We also agreed to grant a royalty of 1% of net smelter returns to
the vendors. In December 2005, the vendors agreed to extend the due diligence
period to March 31, 2006 in consideration of an advance payment of $120,000
(paid) with the remaining $3.33 million due by March 31, 2006.

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---

In March 2006, we advised Arco and IMMSA that we had completed
our due diligence of the Veta Colorada Project and were ready to complete the
acquisition of the project. In June of 2006, we completed the acquisition of the
Veta Colorada Project by paying $3.33 million.

We currently own a 100% interest in the Veta Colorada Project,
subject to a 1% net smelter returns royalty payable to the vendors.

San Marcial Project

In January 2002, we acquired from Gold-Ore Resources Ltd.
(Gold-Ore) an option to acquire up to a 100% interest in Gold-Ores option to
acquire the San Marcial Project located in Sinaloa State, Mexico. Under the
terms of the option:

| | we could earn a 50% interest by:                                                                
| | ------------------------------------------------------------------------------------------------
| |                                                                                                 
| | o                                                                                               
| |                                                                                                 
| | o                                                                                               
| |                                                                                                 
| | We could then earn up to a 100% interest in Gold-Ores
      option by, at our election, either:
| |                                                                                                 
| | o                                                                                               
| |                                                                                                 
| | o                                                                                               

In addition, if, following the exercise of the option, within
three years of the date of the option agreement:

- we outlined in excess of 50 million ounces of measured and indicated silver
  resources on the property, in accordance with Canadian National Instrument
  43-101 using a 50 g/t silver cut- off grade, we were to pay to Gold-Ore, in
  cash or our common shares, at our election, $0.005 per ounce for each ounce of
  silver outlined in excess of 50 million ounces; and
- the afternoon fix of the price of silver on the London Mercantile Exchange
  was greater than or equal to $6.50 per ounce for a minimum of 60 consecutive
  days, we were to pay to Gold- Ore, in cash or our common shares, at our
  election, $0.005 per ounce for each ounce of measured and indicated silver
  resources outlined on the property, in accordance with Canadian National
  Instrument 43-101, using a 50 g/t silver cut-off grade.

To exercise Gold-Ores option and earn a 100% interest in the
San Marcial Project pursuant to the underlying option agreement, we were
required to:

- make scheduled cash payments to the project vendor, Met-Sin Industriales,
  S.A. de C.V., totaling $462,500;
- incur $400,000 in further exploration expenditures on the project by
  February 4, 2004 ($200,000 of which was required to be incurred by February 4,
  2003);
- pay $100,000 on commencement of commercial production to International
  American Resources Inc.; and

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- grant a 3% net smelter returns royalty to the project vendor, provided
  that each 1% of the royalty could be acquired for $600,000.

In August 2002, we exercised our option with Gold-Ore to
acquire an option to acquire a 100% interest in the San Marcial Project by:

- paying to Gold-Ore $150,000 in cash;
- issuing to Gold-Ore 45,706 common shares in our capital; and
- entering into an option agreement with the owner of the San Marcial Project
  to acquire a 100% interest in the San Marcial Project on the terms contained
  in the original option agreement between Gold-Ore and the owner of the project
  as described above.

In February 2004, we exercised our option to acquire a 100%
interest in the San Marcial Project by making the final payment due under the
option agreement of $387,500, for total payments of $462,500.

In March 2009, we entered into an option agreement with
Silvermex Resources Ltd. (Silvermex), under which we granted to Silvermex an
option to acquire a 100% interest in the San Marcial Project. Under the terms of
the agreement, to maintain the option in good standing, Silvermex is required
to:

| | issue to us:                                                                                           
| | -------------------------------------------------------------------------------------------------------
| |                                                                                                        
| | o                                                                                                      
| |                                                                                                        
| | o                                                                                                      
| |                                                                                                        
| | o                                                                                                      
| |                                                                                                        
| | pay us $100,000 per month commencing 30 days after the
      commencement of commercial production; and
| |                                                                                                        
| | incur expenditures of $1,000,000 on the project on or
      before February 1, 2011.                   

On August 4, 2010, and October 1, 2010, we entered into
amending agreements with Silvermex to amend the terms of the option agreement.
Under the terms of the amended option agreement, Silvermex is required to:

- issue to us the remaining 1,000,000 shares of Silvermex that are issuable
  under the original option agreement on or before February 1, 2011 (not
  issued);
- pay to us $6 million in cash or in Silvermex shares, at our election (not
  received); and
- grant to us at the time the balance of the purchase price is payable a
  royalty equal to 1% of net smelter returns from the San Marcial property up to
  a maximum of $9 million less the value of the 3,000,000 Silvermex shares (not
  granted).

In January, 2011, Silvermex requested an extension to the
payment of the 1,000,000 shares of Silvermex due on February 1, 2011, which were
not issued to us. As of the date of this Annual Report, we are in discussions
with Silvermex to renegotiate the terms of the option agreement.

At the date of this Annual Report, we have a 100% interest in
the San Marcial Project, subject to:

- paying $100,000 on commencement of commercial production to International
  American Resources Inc.;
- a 3% net smelter returns royalty payable to Met-Sin Industriales, S.A. de
  C.V., provided that each 1% of the royalty could be acquired for $600,000; and

- 32 -

---

- the option granted to Silvermex to acquire the property described above.

Silvertip Project

In February 2010, we sold our 100% interest in the Silvertip
Project, subject to a 5% net profits interest royalty on certain of the non-core
claims that constitute the project, to Silvercorp Metals Inc. Under the
Agreement:

- we received a cash payment from Silvercorp of C$7.5 million; and
- we were issued 1.2 million common shares of Silvercorp.

We no longer hold any interest in the Silvertip Project.

Other Properties

Duthie Property

We acquired the Duthie Property in November 1978 for its then
known silver reserve, based on the then prevailing price of silver, along with a
functioning mill. The Duthie Property is located 12 kilometers west of Smithers,
British Columbia and approximately 1.2 kilometers north of Aldrich Lake. It
operated intermittently from 1923 until the mid-1980s. Over much of this period,
some hand-picked direct-shipping ore was mined, especially in the early years.
Of an estimated 80,000 tons mined, about 59,400 tons were milled. Concentrate
shipments totalled 7,144 tons.

At the time of acquisition of the Duthie Property, we were not
responsible for, and had no obligation in respect of, the reclamation of
historical tailings. In the early 1990s, British Columbia adopted legislation
which resulted in us becoming responsible for the reclamation of historical
tailings on the Duthie Property. As a result, we submitted a reclamation
proposal for the tailings impoundment area that contained three reclamation
options to the Province of British Columbia in March 1994. The completed study,
which defines the most appropriate reclamation option, was submitted to the
Province of British Columbia in March, 1998. A reclamation option was accepted
by the Province of British Columbia in June 1999, subject to possible
refinements. During 2007, 2008, 2009 and 2010, we carried out reclamation work
of $526,700, $634,200, $22,500 and $64,300, respectively. In 2011, our
reclamation work program was completed at a cost of $15,800. Remaining
reclamation obligations beyond 2011 include constructing a wetland and
monitoring the results in subsequent years. Estimated costs for the remaining
reclamation beyond 2011 are $935,500 which includes $25,000 per year for 10
years of ongoing environmental monitoring.

Silver Standard Mine Property

We acquired the Silver Standard Mine Property in 1947, placed a
silver mine in production in 1948 and operated the mine until 1958. As the
former mine operator, we are responsible for the reclamation of the
property.

Our environmental consultants have studied the property and
prepared a conceptual reclamation plan with possible alternatives for the
property. In 2006, we submitted the conceptual reclamation plan to the
appropriate government agencies for comment. With the finalization of the
conceptual reclamation plan, we have estimated the fair value of the liability
associated with the reclamation of the property to be $2.7 million. A
reclamation permit was issued by the Province of British Columbia in July of
2010. In 2011, approximately $529,300 in expenditures for reclamation work were
incurred.

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During the years 2006 to 2011, we spent $698,400 completing
required reclamation work on the property, which involved the closure of mine
workings and preparations for reclamation.

Others

We have a number of other property holdings in Argentina,
Canada, Chile, Mexico and the United States, which are not considered our
principal, secondary, tertiary or long-term properties. These property interests
are being held for possible future exploration and development, reclamation
work, sale, or joint venture. Interests in all of our properties are currently
held through claims, leases and options and through working interests. We review
such holdings on a regular basis to determine if they should be retained.

C.Organizational Structure

We have four significant subsidiaries. The following table sets
out the name, jurisdiction of incorporation and incorporation date, date of our
acquisition and our interest in each of our significant subsidiaries:

Table No. 4Significant Subsidiaries

|                                                    | Jurisdiction of Incorporation          |                     |                   
|--------------------------------------------------- | -------------------------------------- | ------------------- | ------------------
|Name of Subsidiary                                  | and
      Incorporation Date           | Date
      Acquired | Our
      Interest
|                                                    |                                        |                     |                   
|Reliant Ventures S.A.C.                             | Peru; October 24, 2002                 | November 2007       | 100%(1)           
|                                                    |                                        |                     |                   
|Mina Pirquitas, Inc.                                | Delaware, USA; September 8,
      1994 | October 22, 2004    | 100%(2)           
|                                                    |                                        |                     |                   
|Pacific Rim Mining Corporation Argentina
      S.A. | Argentina; October 1, 1993             | December 14, 2001   | 100%              
|                                                    |                                        |                     |                   
|Silver Standard Durango S.A. de C.V.                | Mexico; January 21, 2004               | January 21, 2004    | 100%              

|(1) | On July 28, 2011 we completed the transaction to acquire
      100% of the shares of Reliant Ventures S.A.C. (see Item 4.B Business
      Overview  Mineral Projects  San Luis Project).                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                   
|(2) | Formerly known as Sunshine Argentina, Inc. We acquired a
      43.4% interest on June 27, 2001 and acquired the remaining 56.6% interest
      on October 22, 2004. (see Item 4.B Business Overview  Operating Mine 
      Pirquitas Project).

D.Property, Plant and
Equipment

Operating Mine

The Companys property, plant and equipment primarily comprises
capitalized exploration and development expenses at its various mineral
projects, and the assets at its Pirquitas operating mine.

Pirquitas Project

Location, Access and Infrastructure

Our 100% owned Pirquitas Project consists of an open-pit mine
and processing plant that is exploiting a primary silver deposit situated in the
Puna de Atacama in the Province of Jujuy of northwestern Argentina. The project
is held by our wholly-owned subsidiary, Mina Pirquitas, Inc. (formerly known
as Sunshine Argentina, Inc.), and is located approximately 355
kilometers northwest of the city of San Salvador de Jujuy. Access to the site is
by public paved and gravel roads. The terrain surrounding the mine is
mountainous, with elevations ranging from 4,100 to 4,400 meters above sea level.
There are no nearby electrical power or telecommunication lines; however, the
Trans Andean natural gas pipeline is located approximately 36 kilometers to the
south of the project and a spur gas line was constructed to the site. A power
plant was constructed at the site that provides all power required for the mine
and processing plant. See the following Pirquitas Project, Location Map.

- 34 -

---

A water diversion was constructed at the San Marcos River,
about 7 km from the plant and the site has water rights to 31 liters per second.
A camp site was constructed and is fully operational. Communications systems
were constructed and the mine is equipped with phone and internet service.

*Land Tenure*

The Pirquitas Project consists of 50 semi-contiguous mineral
exploration concessions covering a total area of 3,621 hectares. In order to
maintain our rights to these concessions, we are required to make canon
payments to the Argentine government.

The Pirquitas Project also includes surface rights covering an
area of approximately 7,502 hectares, which can be used for purposes such as
housing, infrastructure facilities, processing plants, waste and tailing
disposal sites, and other facilities to support mining operations.

History

Pirquitas is the largest historical producer of tin and silver
in Argentina. The following is a chronological description of mining that has
occurred at Pirquitas:

1932-1935 ****Tin placer deposits were first discovered in the area in 1932. Dredging
of the tin placers commenced in 1933.

1935-1990 ****The bedrock source of the tin placers was discovered in 1935 and mining
of the tin and silver lodes started soon thereafter. Twelve mines operated in
the area. Often, mineralization found in one mine would extend into the workings
of the adjacent mine, and as a consequence several of the mines eventually
became interconnected. The largest operations were the San Miguel, Chocaya,
Llallagua, and Potosi mines. Reported total metal production during this time is
estimated to be 777,600 kg of silver, 9,100 tonnes of tin from placer deposits,
and 18,200 tonnes of tin mined from the vein systems. 1995-2003 Sunshine
Argentina, Inc. (Sunshine Argentina) acquired the Pirquitas property in a
bankruptcy auction in November 1995. Sunshine Argentinas exploration program
included survey control, geophysical surveys, geological mapping, sampling, and
drilling. All accessible underground workings were sampled and mapped. Sunshine
Argentina also conducted extensive diamond and reverse circulation drilling from
surface as well as diamond core drilling from rehabilitated underground
workings. A feasibility study was completed for the project by Sunshine
Argentina in 2000.

2004-2005 ****With the acquisition of a 100% interest in the Pirquitas Project, we
commenced updating the feasibility study that was completed in 2000 to take into
account current economic conditions. We also commenced an underground ramp to
(a) provide a platform area to allow underground drilling, to better define the
base of the open pit as proposed in the 2000 feasibility study and (b) access
the Oploca vein mineralization, which is located outside the open pit.

2006 **** ****In 2006, we announced the completion of the update to the previous
feasibility study along with proven and probable reserves for the Pirquitas
Project. We also announced our decision to proceed with the development of the
Pirquitas mine. As part of our exploration efforts, we continued with the
underground ramp that accessed the Oploca vein mineralization.

- 35 -

---

2007-2008 ****We completed the majority of detailed engineering
required to construct the Pirquitas mine, and during 2008, we constructed a
substantial portion of the Pirquitas mine. The underground ramp to the Oploca
vein was placed on care and maintenance prior to commencing construction of the
Pirquitas mine.

2008-2011 ****During this period we completed the construction of
the Pirquitas mine. The Pirquitas mine achieved production status in December
2009, and produced 6.3 million ounces of silver in 2010. The Pirquitas Mine
began zinc shipments in 2011 and produced 10.1 million pounds of zinc and 7.1
million ounces of silver during the year. On November 9, 2011 the Company
announced a reduction to the estimated mineral reserve at Pirquitas incorporated
into the mine plan, and filed on SEDAR a NI 43-101 Technical Report dated
December 23, 2011 titled NI 43-101 Technical Report on the Pirquitas Mine,
Jujuy Province, Argentina.



- 36 -

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Geology and Mineralization

Northwestern Argentina can be subdivided into three main
geological terranes or belts which are oriented with north-northeasterly trends.
From east to west, these terranes are referred to as the Sub-Andean Belt, the
Eastern Cordillera, and the Puna, where the Pirquitas Project is located. These
terranes are distinguished on the basis of their basement lithology, complexes,
tectonic histories, magmatism, metallogeny and geomorphologies.

The puna terrane underlies most of the western half of
Jujuy Province and is marked by a high-Andean geomorphology consisting of
northerly trending mountain ranges separated by broad valleys and salars or salt
pans. Elevations range from 3,900 to as high as 6,700 meters above sea level.
Paleozoic marine sedimentary formations are the main basement rocks in the puna,
with thick deposits of continental clastics existing where sedimentary basins
had developed during Mesozoic time subsequent to a major compressional tectonic
event that had caused crustal uplift and intense folding during the Early
Devonian. By Middle Tertiary time, the tectonic regime of the puna had changed
to one of extension, resulting in a basin and range geomorphology being
developed. As well, the extensional tectonism resulted in the upwelling of magma
and the development of andesitic to dacitic stratovolcanoes and subsequently a
number of very large caldera structures from which regionally extensive
ignimbrite sheets were erupted. These volcanic edifices and deposits are readily
seen in the present landscape surrounding the Pirquitas Project.

In terms of mineral deposit endowment, the puna is by far the
most important of the three regional terranes in Jujuy Province. There are four
main types of mineral deposits in the puna: mesothermal quartz veins containing
gold and minor amounts of base metals; polymetallic quartz veins genetically
related to Tertiary volcanic centers; Bolivian-type silver-tin sulphide veins
of which Pirquitas is the best example; and Quaternary placer deposits of gold
and tin.

At Pirquitas, the silver-zinc-tin mineralization is hosted by a
folded and fractured succession of interbedded units of marine sandstone,
siltstone and minor shale of Ordovician age. The metals of interest occur in a
variety of sulphide minerals that were deposited in large fractures to form a
number of east-west trending veins that are a few hundreds of meters in length
and generally 50 to 200 centimeters wide. Between the larger veins there are
irregular networks of sulphide veinlets as well as disseminated sulphide grains
in some of the more porous lithologies. The San Miguel open-pit is mainly
exploiting a broad zone of sulphide veinlets and disseminations that was defined
by drilling immediately south of the historically most productive vein
structure, the Potosí Vein. Silver, zinc and tin commonly occur together in
mineralized samples, however, their concentrations in the deposit as a whole are
not directly co-relatable. Silver in the deposit takes the form of silver
sulphide, acanthite, and as a number of silver sulphosalt minerals. Zinc occurs
in the sulphides of sphalerite and wurzite, while tin is found mainly in
stannite along with a number of other rare sulphide and sulphosalt minerals.

Permitting

All material permits required to construct and operate the mine
are in place.

Production Status

Construction of the mine and all associated infrastructure was
completed at the end of 2009. The mine reached production status in December
2009, and produced 1.1 million ounces of silver during that year. In 2010, the
mine produced 6.3 million ounces of silver of which 5.9 million ounces were
shipped that year. In 2011, we produced 7.1 million ounces of silver and 10.1
million pounds of zinc. Due to lengthy production stoppages caused by mechanical
problems that first affected our crushing capacity and then our milling, the total amount of silver produced in 2011 was
less than what had been anticipated at the beginning of the year.

- 37 -

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After the repairs to the ball-mill gearbox were completed and
full milling capacity was restored in the middle of November, 2011, our silver
production has returned to design levels. For 2012, we anticipate that Pirquitas
will produce between 8.2 and 8.5 million ounces of silver.

The Pirquitas Mine has total property, plant and equipment with
a net book value of $342.8 million, of which $102.2 million, relates to mineral
properties i.e. acquisition and capitalized pre-operating costs and plant and
equipment of $240.6 million. The plant and equipment comprises the cost for
plant construction, mobile equipment and ongoing sustaining capital. See Item
5.A Operating Results  Pirquitas Mine, Argentina for a discussion of capital
expenditures and additional information on the Pirquitas Mine. Please also refer
to the Companys financial statements for the year ended December 31, 2011.

Reserve Estimates

The following mineral reserve estimates for the Pirquitas
Project were prepared by Andrew Sharp, Vice President Technical Services under
the supervision of qualified person, Bruce Kennedy, P.Eng., General Manager of
the Pirquitas Mine, in accordance with the standards of Canadian National
Instrument 43-101 and the definitions of the CIM Standards. Disclosure of
contained ounces is permitted disclosure under Canadian regulations; however,
the SEC only permits issuers to report resources as in place tonnage and grade
without reference to unit measures. Accordingly, information concerning
descriptions of mineralization and resources noted below may not be comparable
to information made public by U.S. companies subject to the reporting and
disclosure requirements of the SEC.

Table No. 5Silver Standard Resources Inc.Pirquitas ProjectProven and Probable Reserves as at December 31, 2011(1) (2)

Ore 
      (Million tonnes)
    Silver Grade 
      (g/t)
    Tin Grade 
      (%)
    Zinc Grade 
      (%)
    Silver 
      (Oz. in millions)Proven
    9.8
    180.8
    0.26
    0.51
    57.2Probable
    5.0
    168.4
    0.19
    1.04
    26.9Stockpiles(3)(Probable)
    1.5
    129.5
    0.15
    1.04
    6.2Total Project Reserves
    16.3
    172.3
    0.23
    0.72
  90.3


|(1) | Reserve estimates are based on metal prices of $25.00 per
      ounce of silver and $1.09 per pound of zinc and operating costs of $35.52
      per tonne net smelter returns. Tin was given no economic value. These
      values remain unchanged to the values that are reported in the Companys
      Technical Report dated effective December 23, 2011, titled NI 43-101
      Technical Report on the Pirquitas Mine, Jujuy Province, Argentina (the
      Pirquitas Technical Report), which is filed on SEDAR and is available on
      the Companys website. Mineral Reserve estimates have been adjusted for
      mine depletion since the Technical Report was prepared.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The In-situ Proven and Probable Reserve were under the
      end of December 2011 surveyed mine surface and within the current mine
      design used in the Pirquitas Mine Technical Report. For a complete
      description of estimated metallurgical recoveries and head grade, please
      refer to the Pirquitas Technical Report.                                                                                                                                                                                                                                                                                                                                                 
|(3) | The stockpiles include remaining jig tails that are the
      product of previous mining operations at the Pirquitas Mine and ores
      stockpiled up to the end of December 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

- 38 -

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> Cautionary Note to U.S. Investors concerning estimates
>       of Measured Mineral Resources.
>     Table No. 6 below uses the term Measured Mineral
>       Resource. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.
>     Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 6 below uses the term Indicated Mineral
>       Resource. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.
>     Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No.6 below uses the term Inferred Mineral Resources.
>       We advise U.S. investors that while such term is recognized and required
>       under Canadian regulations, the SEC does not recognize it. Inferred
>       Mineral Resources have a great amount of uncertainty as to their existence,
>       and great uncertainty as to their economic and legal feasibility. It cannot
>       be assumed that all or any part of an Inferred Mineral Resource will ever
>       be upgraded to a higher category. Under Canadian rules, estimates of Inferred
>       Mineral Resources may not form the basis of feasibility or other economic
>       studies. U.S. investors are cautioned not to assume that any part or
>       all of an Inferred Mineral Resource exists, or is economically or legally
>       mineable.

Table No. 6Silver Standard Resources Inc.Pirquitas ProjectMineral Resource Estimate as at December
31, 2011(Cutoff Grade = 50 g/t Ag(1))

Resource Category
    Tonnes(Mt)
    Ag(g/t)
    Zn(%)
    Sn(%)
    Contained
      Ag(Moz)
    Contained
      Zn(Mlbs)Measured
    12.9
    155.3
    0.48
    0.24
    64.6
    135.7Indicated
    16.2
    142.0
    0.91
    0.20
    73.8
    325.1Stockpile Indicated(2)
    1.5
    129.5
    1.04
    0.15
    6.2
    34.3Mineralized WasteIndicated(2)
    2.0
    44.0
    1.79
    0.08
    2.9
    79.9Inferred
    7.0
    99.7
    2.32
    0.04
    22.6
    360.5


(1)
    The Mineral Resource estimates are reported using a
      cut-off grade of 50.0 grams per tonne silver. The Qualified Person for the
      Pirquitas Mineral Resource estimates is Dr. Warwick Board, P. Geo. Please
      refer to the Pirquitas Technical Report which is available on SEDAR and
      the Companys website.(2)
    Stockpile and mineralized waste data based on inclusion
      of mined material in Silver Standards ore stockpile (HG-Ag, MG-Ag, and
      LG-Ag), and marginal grade stockpiles (Marg-Zn-Bx-Pit, Marg-Zn-Bx_Ve-Pla,
      Marg-Zn-Bx_Ve-Com, Marg-Zn-Bx_Ve- Can, Marg-Zn-Bx_Ve-Tri,
      Marg-Sn-Bx_Ve-Com, and Marg-Sn-Ox).


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Principal Projects

San Luis Project

Location, Access and Infrastructure

The San Luis Project is targeting a newly discovered high-grade
gold-silver vein deposit located in the Ancash Department of north-central Peru,
approximately 25 kilometers northwest of Barrick Gold Corporations Pierina gold
mine (see San Luis Project Location Map shown below). Having completed the
purchase of Esperanzas remaining 30% interest in the project in 2011, we now
hold a 100% interest in the project. The property lies within the Cordillera
Negra mountain range at elevations that range from 3,800 to 4,700 meters above
sea level. The project can be accessed by two all-weather roads from the town of
Casma on the Pacific Coast and from the town of Huaraz which lies in the valley
of Santa River that flows east of the property. Electrical power for our
exploration camp is currently generated on-site using diesel generators.

Land Tenure

The San Luis Project consists of 43 mineral concessions
covering an area of approximately 35,538 hectares. In order to maintain our
rights to these concessions, we are required to pay an annual mining good
standing fee in the aggregate of approximately $98,000 in respect of the
concessions to the government of Peru.



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History

The veins that are the focus of interest at the San Luis
Project were discovered in mid-2005 by an Esperanza field crew carrying out a
prospecting program under the evaluation joint venture that existed at the time
between Esperanza and Silver Standard. Following the discovery in July 2005,
Esperanza, as the operator of the San Luis joint venture completed channel
sampling of the Ayelén Vein, one of five veins that were identified in the field
at that time. Channel samples were spaced approximately every 25 meters (82
feet) along the strike length of the Ayelén Vein. Based on the results of the
channel sampling, a diamond drill program was commenced by Esperanza in late
2006.

On April 1, 2007, we assumed the role of operator for the San
Luis Joint Venture and continued with the diamond drill program. From 2006 to
2008, the joint venture completed 33,600 meters of diamond drilling in 154
holes. In 2010, we completed a feasibility study for the development of the San
Luis Project. In 2011 we signed a land access agreement with the Cochabamba
community.

Geology and Mineralization

At the San Luis Project, gold and silver-bearing quartz veins
are hosted within Tertiary-age volcanic rocks. Five separate,
north-northwesterly trending veins have been identified so far with a cumulative
strike length of over 5,000 meters; however, at this time only one of the veins,
the Ayelén Vein, hosts an economic deposit of precious metal mineralization.
Individual veins range from several hundreds of meters to over 2,000 meters in
strike length and are up to 10 meters wide though widths of one to three meters
are more common.

The well mineralized Ayelén Vein is typical of quartz-adularia
or low-sulfidation epithermal precious metal vein systems. Vein textures such as
well-developed banding and multiple brecciation indicate that repeated episodes
of quartz deposition occurred, with gold and silver likely being precipitated
from the fluids as they ascended towards the paleo-surface and boiled. Modeling
of the concentration of precious metals within and along the Ayelén Vein
indicates that high-grade mineralization forms subvertically elongated zones
commonly referred to as ore shoots.

Status

In June 2010, we completed a feasibility study for the
development of the project, and in the fall of 2010, we submitted our
environmental impact assessment study to the Peruvian Ministry of Mines and
Energy. In December 2011, we executed a long-term, land-use agreement with the
Cochabamba community, one of the two local communities. We are in negotiations
with the other local community to secure the other required long-term, land-use
agreement. We will make a construction decision once we have received approval
of the environmental impact assessment and entered into the remaining required
land-use agreements.

On February 28, 2011, we entered into a share purchase
agreement with Esperanza, our then joint venture partner in the San Luis
Project, to purchase all of Esperanzas remaining interest in the project which
closed on July 28, 2011. See Item 4.B  Business Overview  Mineral Projects 
San Luis Project.

Reserve Estimates

The following mineral reserve estimates for the San Luis
Project were prepared by Steve L. Milne, P.E. of Tucson, AZ, and presented in a
technical report dated June 4, 2010, in accordance with the standards of
Canadian National Instrument 43-101 and the definitions of the CIM Standards.
Disclosure of contained ounces is permitted disclosure under Canadian
regulations; however, the SEC only permits issuers to report resources as in
place tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization and
resources noted below may not be comparable to information made public by U.S.
companies subject to the reporting and disclosure requirements of the SEC.

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Table No. 7Silver Standard Resources Inc.San Luis ProjectProven and Probable Reserves(1)

Reserves
    Ore 
      (Tonnes)
    Gold Grade (g/t)
    Silver Grade (g/t)
    Contained Gold (ounces)
    Contained Silver (ounces)Proven
    56,000
    28.3
    604.5
    51,000
    1,088,000Probable
    447,000
    16.7
    426.2
    240,000
    6,125,000Total Project Reserves
    503,000
    18.0
    446.14
    291,000
  7,213,000


(1)
    Reserve estimates are reported at a cut-off grade of 6.0
      grams per tonne gold equivalent, based on metal prices of $800 per troy
      ounce of gold and $12.50 per troy ounce of silver and recoveries of 94%
      gold and 90% silver as presented in the Companys technical report dated
      effective June 4, 2010 titled Technical Report for the San Luis
      Feasibility Study, Ancash Department Peru (the San Luis Technical
      Report) filed on SEDAR.


Pitarrilla Project

Location, Access and Infrastructure

Our wholly-owned Pitarrilla Project is located in the
north-central part of the State of Durango, Mexico. The Pitarrilla property is
easily accessible year-round and can be reached by traveling along all-weather
roads either from the small town of San Francisco de Asis or the village of
Casas Blancas via the town of El Palmito. The required driving time from the
city of Durango is about 4 hours (approximately 260 km by road). See the
Pitarrilla Project Location Map shown below.

Being situated in a high-desert environment, the climate at
Pitarrilla is generally an arid one. The hottest and driest months are from May
through July, with day-time temperatures generally greater than 45°C. During the
winter months, December through February, day-time temperatures range from 15°C
to 25°C, while night-time temperatures are generally in the -5°C to 10°C range.
The wettest months are August through October, with most of the annual rainfall
of about 500 mm coming during this period.

Supplies and resources, including fuel and groceries, are
available in the town of Rodeo which is a two hour drive to the southeast.
Limited supplies are available in San Francisco de Asis and no services are
available in Casas Blancas. The company has accommodations, a mess hall and a
warehouse in Casas Blancas. Most large items, supplies, assay laboratories and
air transportation are available in the cities of Durango and Gomez
Palacio-Torreon. Electrical power for the camp facilities is obtained from the
existing power grid. Power alternatives for the Pitarrilla Project in connection
with the preparation of a Feasibility Study are being evaluated.

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Land Tenure

The Pitarrilla Project is comprised of 12 mineral claims
covering an area of approximately 136,192 hectares. In order to maintain our
rights to these concessions, we are required to pay surface mining taxes to the
Mexican government and submit summaries of work programs.

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History

Consulting geologists P. Durning and F. Hillemeyer of La Cuesta
International Inc. (LCI) first recognized the mineral potential at Pitarrilla in
1995 as part of a generative gold exploration program for Monarch Resources Ltd.
In 2002, we entered into an agreement with LCI to claim what is now the core
area of the current property. Following programs of geological mapping, rock
sampling and reverse circulation drilling, the Company reported in October, 2003
the discovery of the Cordon Colorado, Peña Dyke and Javelina Creek mineralized
zones. Subsequent diamond drilling campaigns resulted in the discovery of two
additional zones of silver mineralization, the South Ridge and Breccia Ridge
zones. In the six years following the discovery at Cordon Colorado, the Company
drilled 186 reverse circulation boreholes with a combined length of
approximately 20,600 meters as well as 365 diamond drill-holes with a total
length of approximately 180,200 meters. In addition, a decline ramp was
developed underground during 2007 and 2008 in an effort to gain access to the
sulphide-associated Ag-Pb-Zn mineralization of the Breccia Ridge Zone.
Approximately 1,350 meters of decline were excavated; however the underground
development was halted at the end of 2008 due to the global economic crisis,
with the ramp ending short of its target depth. A further 83 diamond drill-holes
with a total length of approximately 13,900 meters were drilled in 2011.

Geology and Mineralization

The Pitarrilla silver-zinc-lead deposit is characterized by
iron oxide- and sulphide-associated mineralization, which together defines a
vertically stacked mineralized system centred on an intrusive complex of
rhyolitic dikes and sills that constitute the feeder system for a rhyolitic
flow-dome. These subvolcanic rocks are estimated to have formed roughly 30
million years ago (during the Oligocene) and were emplaced into a sequence of
somewhat older Eocene volcaniclastic rocks. More than 450 meters below surface,
the Eocene volcaniclastic rocks are underlain by folded marine sedimentary
strata, mainly siltstones and sandstones, that are believed to be older than 60
million years. A conglomerate formation separates the sedimentary succession
from the overlying younger volcanic and volcaniclastic rocks. The
sulphide-associated silver mineralization is rooted in the basement sedimentary
strata and comprises a vertically extensive zone of disseminated and
veinlet-forming Ag-Zn-Pb(-Cu-As-Sb) sulphide mineralization. In addition,
replacement-style sulphide mineralization exists stratabound within the
conglomerate formation. The sulphide mineralization that forms the central
Breccia Ridge Ag-Zn-Pb zone extends upwards into the overlying Eocene
volcaniclastic strata and into Oligocene rhyolitic sills where it abruptly
grades into a laterally more extensive zone of disseminated iron
oxide-associated silver mineralization. The Cordon Colorado, Peña Dyke, Javelina
Creek and South Ridge silver zones are marked by ubiquitous but minor amounts of
iron and manganese oxides that are believed to have formed through the oxidation
of disseminated sulphides. The main Ag-Zn-Pb mineralization event is interpreted
to have occurred during or relatively soon after emplacement of the Oligocene
rhyolitic dome.

Status

A NI 43-101 Technical Report  Pitarrilla Property
Pre-Feasibility study on the economic viability of an underground mining
operation on the Pitarrilla Property was prepared by mining consultants Wardrop,
A Tetra Tech Company (Wardrop) in September of 2009 (the Preliminary
Feasibility Study). As presented in Wardrops Preliminary Feasibility Study,
the underground project was to have a 12-year mine life, would mine 4,000 tonnes
per day and produce approximately seven million ounces of silver per year.
Capital costs were projected at $277 million with average operating costs of
$33.81/tonne. Metal recoveries vary by rock type with expected weighted average
recoveries of 88.4% for silver, 93.2% for zinc and 89.6% for lead.

Ore processing would produce two concentrates, a lead
concentrate which would contain the bulk of recovered silver and a zinc
concentrate. The lead concentrate was expected to average 60.7% lead and contain approximately 8,000 g/t silver. The zinc concentrate
was expected to average 48.5% zinc and contain approximately 400 g/t silver.

- 44 -

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In the Preliminary Feasibility Study completed by Wardrop, the
capital cost estimate (CAPEX) was determined with an accuracy of ±25% and is
suitable for project evaluation and client budgeting. The Pitarrilla Projects
CAPEX consists of four main parts: direct costs, indirect costs, contingency,
and owners costs. As of April 2009, the CAPEX for the Project was estimated at
$277 million. The estimate is subject to qualifications, assumptions, and
exclusions, as detailed in the Preliminary Feasibility Study. The economic
evaluation of the Pitarrilla Project was prepared by Wardrop based on a pre-tax
financial model. For the 12-year mine life and 16.7 Mt reserve, the following
pre-tax financial parameters were calculated: 10.9% internal rate of return
(IRR); 6.2 years payback on $277 million capital; $107.4 million net present
value (NPV) at a 5% discount rate. The base case prices supplied by the Company
were as follows: silver  $11.00/oz, zinc  $0.70/lb, lead  $0.50/oz.
Sensitivity analyses were carried out to evaluate the project economics for
2-year, 5-year, and current metal prices. The financial outcomes for four metal
price scenarios were tabulated for NPV, IRR and payback of capital. Discount
rates of 10%, 8%, and 5% were applied to all cases identified by the following
metal price scenarios: base case, 2-year average, 5-year average, and current
prices. The five year average prices for silver, zinc, and lead were $11.16/oz,
$0.99/lb and $0.72/lb, respectively. The two year average prices for silver,
zinc, and lead were $14.06/oz, $1.01/lb and $1.02/lb, respectively, and the spot
prices at the time of the study for silver, zinc, and lead were $14.02/oz,
$0.71/lb and $0.77/lb, respectively. The results are presented below:

Table No. 8Summary of Pre-tax NPV, IRR and Payback
by Metal Price ScenarioFrom September 2009 Pre-Feasibility Study

NPV
        at Selected Discount Rates(Million C$)IRR
      PaybackScenario
      10%
      8%
      5%
      (%)
      (Years)5-year Average
      163.6
      214.7
      310.5
      20.3
      3.8Silver Standard (Base Case)
      12.8
      45.5
      107.4
      10.9
      6.22-year Average
      317.9
      388.6
      521.1
      28.9
      2.8Spot
      168.7
      221.3
      320.1
      20.4
      3.9


Wardrop adopted metal prices supplied by Silver Standard for
the base case. The 3-year average approach was not used as the Company felt its
Base Case was an appropriate measure. The prices provided are lower than the
historical 3-year average metal prices.

Sensitivity analyses were carried out on the following
parameters: silver prices, lead prices, zinc prices, initial capital
expenditure, mine site operating costs. The project NPV (5% discount) is most
sensitive to the silver price followed by, in decreasing order: zinc prices,
capital costs, operating costs, and lead price.

Reserve and Resource Estimates  Breccia Ridge
Underground

Wardrop of Vancouver, British Columbia completed the following
mineral reserve estimate for the Pitarrilla Project Breccia Ridge Underground
Zone in accordance with the standards of Canadian National Instrument 43-101 and
the definitions of the CIM Standards dated September 21, 2009. The entire
reserve is categorized as Probable.

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Table No. 9Silver Standard Resources Inc.Pitarrilla ProjectBreccia Ridge UndergroundProbable Mineral Reserve Estimate(Cutoff Grade(1))

Classification
    Tonnes (in millions)
    Ag (g/t)
    Zn (%)
    Pb (%)
    Silver (million oz)Probable
    16.7
    171
    2.57
    1.12
    91.7


(1)
    A Net Smelter Return (NSR) cutoff grade of $50/tonne was
      used to estimate the mineral reserve. The project was evaluated using
      metal prices of $11/oz silver, $0.70/lb Zn, and $0.50/lb Pb with
      recoveries varying by rock type. Please refer to the Preliminary
      Feasibility Study dated September, 2009 prepared by Wardrop and filed on
      SEDAR.


In 2011 the Company reviewed alternatives for the Pitarrilla
Project and retained M3 Engineering & Technology Corporation (M3) to
prepare a feasibility study on Pitarrilla. The Companys development team and M3
will build on previous resource engineering and design work and will focus on
mining oxide and sulphide ores from one large open-pit operation. Plant
facilities are expected to target 16,000 tonnes per day and include a milling
circuit, an agitated leach circuit and a flotation circuit. These facilities are
expected to produce silver doré, and separate zinc and lead concentrates
containing payable silver. Completion of the Pitarrilla feasibility study is
scheduled for mid-year 2012.

A diamond drill program of approximately 8,300 meters is
scheduled for 2012, with the objective of expanding the near-surface oxide
mineralization at the Breccia Ridge and South Ridge zones. In addition,
metallurgical testing is underway to optimize metal recoveries from oxide and
sulphide mineralization. Where possible, results of this years drilling and
metallurgical studies will be included in the Pitarrilla feasibility study.

In January 31, 2012, an updated Pitarrilla mineral resources
estimate was prepared, verified and approved by the Companys qualified person
Dr. Warwick Board, Ph.D., Senior Geologist with Silver Standard. The estimate is
presented at a 30 g/t silver cut-off grade. These mineral resources estimates
are not materially different from those previously reported by the Company. A
new mineral reserve estimate will be prepared as part of the Pitarrilla
feasibility study. This new mineral reserve estimate will utilize the open-pit
mine concept whereas the current mineral reserve estimate reported above in this
Annual Report utilizes an underground mine concept.

The following resource estimates for the Pitarrilla Project
were prepared in accordance with the standards of Canadian National Instrument
43-101 and the definitions of the CIM Standards. Disclosure of contained
ounces is permitted disclosure under Canadian regulations; however, the SEC
only permits issuers to report resources as in place tonnage and grade without
reference to unit measures. Accordingly, information concerning descriptions of
mineralization and resources noted below may not be comparable to information
made public by U.S. companies subject to the reporting and disclosure
requirements of the SEC.

> Cautionary Note to U.S. Investors concerning estimates
>       of Measured Mineral Resources.
>     Table No. 10 below uses the term Measured Mineral
>       Resource. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.

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> Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 10 below uses the term Indicated Mineral
>       Resource. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.
>     Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No.10 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and legal
>       feasibility. It cannot be assumed that all or any part of an Inferred Mineral
>       Resource will ever be upgraded to a higher category. Under Canadian rules,
>       estimates of Inferred Mineral Resources may not form the basis of feasibility
>       or other economic studies. U.S. investors are cautioned not to assume
>       that any part or all of an Inferred Mineral Resource exists, or is economically
>       or legally mineable.

Table No. 10Silver Standard Resources Inc.Pitarrilla ProjectMineral Resource Estimate(1)

Classification
    Silver Cut-off
      Grade (g/t)
    Tonnage (Mt)
    Silver Grade
      (g/t)
    Lead Grade
      (%)
    Zinc Grade
      (%)
    Contained Silver
      (Moz)
    Contained Lead
      (Mlbs)
    Contained Zinc
      (Mlbs)Measured
    30
    23.0
    86.7
    0.67
    1.14
    64.2
    340
    580Indicated
    30
    222.0
    82.9
    0.31
    0.73
    591.5
    1,525
    3,581Inferred
    30
    31.3
    64.7
    0.18
    0.44
    65.0
    124
  301


Notes to Table No. 10:

|1. | Dr. Warwick Board, Ph.D. (Geology), P.Geo., is the
      Qualified Person for the reported mineral resources estimate.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | All mineral resources have been classified in accordance
      with current CIM definition standards.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3. | The Ordinary Kriging with appropriate top-cuts modeling
      methodology was employed for the mineral resources estimates presented in
      the above table.                                                                                                                                                                                                                                                                                                                                                                                                                     
|4. | Although a silver cut-off grade of 30 g/t is considered
      at this time to be the most likely economic cut-off grade for large-scale
      open-pit mining of the Pitarrilla deposit, it has not yet been confirmed
      by the appropriate mining studies. A detailed economic cut-off grade
      analysis will be conducted as part of the Pitarrilla feasibility
    study.                                                                                                                                                                                                
|5. | Silver capping grades used in the estimation range
      between 415 g/t and 1,825 g/t for the various oxide domains, and between
      uncapped to 1,370 g/t for the various sulphide domains. Zinc capping
      grades used in the estimation range between 0.55% and 4.63% for the
      various oxide domains, and between uncapped and 10.00% for the various
      sulphide domains. Lead capping grades used in the estimation range between
      uncapped and 4.02% for the various oxide domains, and between uncapped and
      6.04% for the various sulphide domains.
|6. | Detailed bulk density modeling was conducted taking into
      account lithological variability (including an analysis of voids),
      mineralization, and degree of oxidation.                                                                                                                                                                                                                                                                                                                                                                                                   
|7. | The drillhole database including collar, survey, assay,
      lithology, and mineralization, used in the preparation of the mineral
      resources estimate in Table 10 was validated through conducting detailed
      verification checks, including QA/QC of location and assay data.                                                                                                                                                                                                                                                                                          
|8. | Sums may not equal reported totals due to
  rounding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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Diablillos Project

Location, Access and Infrastructure

Our wholly-owned Diablillos Project covers an area of 4,500 ha
and is located in the altiplanoorpunaregion of northern
Argentina about 160 kilometers southwest of the city of Salta, in the Province
of Salta. The property is road accessible from Salta, with the drive requiring
about six hours, the first half of which is along paved road. The geographic
coordinates of the centre of the property are 25°18' South latitude by 66°50'
West longitude.

Land Tenure

The project consists of eight mining leases or minas totaling
4,500 hectares, and 2 cateos (or exploration licences) of 5,567 hectares.
In order to maintain our rights to these concessions, we are required to make
canon payments to the Argentine government.

History

Discovered in the 1970s, the property was primarily explored
from 1988 to 2001. A mineral deposit know as the Oculto deposit was initially
defined by 17 diamond drill-holes totaling 3,010 meters and 79 reverse
circulation holes totaling 19,114 meters, with this drilling being done by
previous property holders BHP-Utah and Pacific Rim Mining. Barrick, under an
option to purchase agreement with Pacific Rim Mining drilled an additional 24
diamond drill holes and 150 reverse circulation holes during the period of
1997-1999. Following our deposition of the project in 2003, we drilled 20
drill-holes totaling 3,046 meters, mainly to test geophysical anomalies outside
of the Oculto deposit and to test for continuity of several high-grade zones
within the known deposit. The peripheral drilling intersected several areas with
minor gold and silver mineralization. The drilling within the Oculto deposit
zone confirmed continuity of the mineralization forming the deposit. During
2006, a geological review of the project, done as part of an update of the
Barrick pre-feasibility study determined that the previous reverse circulation
drilling may have understated the gold and silver values. As a result, a diamond
drilling program of approximately 17,600 meters in 107 drill holes was completed
by us in 2007 and 2008. This drilling program was designed to investigate
whether previously obtained drilling results understated gold concentrates and
also to test a number of gold targets separate from the Oculto Zone where a
reinterpretation of the geology indicates potential for the discovery of new
gold zones.

Geology and Mineralization

The gold and silver deposit at the Diablillos Project is
interpreted to be an example of the high-sulphidation subgroup of the epithermal
class of precious metal deposits. The mineralization is predominantly hosted by
volcanic tuffs, breccias and minor flows that have been intensely leached by
acidic fluids which rendered these rocks to be highly porous. The acidic fluids
that strongly altered the mineralized rocks are believed to have formed by two
processes, in part by magmatic vapors reacting with ground waters during the
primary mineralizing event, and then later by the near-surface oxidation of
sulphide mineral grains which had been deposited from the deposit-forming
hydrothermal fluids. Lying directly below the sequence of Tertiary volcanic
rocks is a basal conglomerate formation that contains pebbles and cobbles of
older, underlying rocks, including Paleozoic granite and metamorphosed
sedimentary rocks. The conglomerate is a particularly important host to the
precious metal mineralization, especially zones with higher concentrations of
gold. Two main sets of faults have affected the rocks at Diablillos; ENE-WSW
trending structures appear to have been important conduits that channeled the
hydrothermal fluids which deposited gold and silver in the conglomerate
formation and overlying volcanic rocks, whereas N-S fault structures are
interpreted to be younger than the ENE-WSW faults and define the margins of a
downward-displaced structural block that includes the Oculto deposit.

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The bulk of the Oculto gold-silver deposit is hosted by
oxidized and porous volcanic and sedimentary rocks containing abundant hematite,
limonite and jarosite. Gold generally occurs as fine grains of native gold and
electrum, while silver is found as fine grains of acanthite (silver sulphide),
chlorargyrite (silver halide), matildite (silver bismuth sulphide) as well as
with gold in electrum. Owing to the relatively high grades of gold and silver in
the Oculto mineralization and the less anticipated recoveries of these metals by
heap-leach processing methods, the Oculto deposit is being considered for a
conventional milling operation.



Status

We initiated a Preliminary Economic Assessment for the
Diablillos Project in 2010 to evaluate the potential for placing the project in
production. Additional exploration work and engineering studies are currently
being completed on the project. In 2011, surface rock sampling was conducted on
the property by our geologists, and we anticipate carrying out additional
exploration drilling in 2012 on targets that are peripheral to the Oculto
deposit.

Resource Estimate

As of the date of this report, the Diablillos Project is
without known Mineral Reserves, and any activity carried out on the property is
exploratory in nature.

Wardrop Engineering Inc. of Vancouver, British Columbia
completed the following resource estimate for the Oculto deposit within the
Diablillos Project in accordance with the standards of Canadian National
Instrument 43-101 and the definitions of the CIM Standards, in a report dated
July 27, 2009. The resource was evaluated using a Recovered Metal Value (RMV)
cutoff grade of $10/tonne. The RMV was based on metal values of $11/oz silver
and $700/oz gold, and applied recoveries of 65% for gold and 40% for silver.
Disclosure of contained ounces is permitted disclosure under Canadian
regulations; however, the SEC only permits issuers to report resources as in
place tonnage and grade without reference to unit measures. Accordingly,
information concerning descriptions of mineralization and resources noted below
may not be comparable to information made public by U.S. companies subject to
the reporting and disclosure requirements of the SEC.

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> Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 11 below uses the term Indicated Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.

Table No. 11Silver Standard Resources Inc.Diablillos ProjectIndicated Mineral Resource
Estimate(Cut-off Grade(1))

Category
    Tonnes (millions)
    Gold (g/t)
    Silver (g/t)
    Gold (oz)
    Silver (oz in
      millions)Indicated
    21.6
    0.92
    111
    640,000
    77.1


(1)
    The cut-off grade is based on $10.00 recovered metal
      values (RMV) and the following metal prices and recoveries: gold ($700/oz,
      65%); and silver ($11.00/oz., 40%). Please refer to the NI 43-101
      Technical Report dated effective July 27, 2009 titled Technical Report on
      the Diablillos Property  Salta and Catamarca Provinces, Argentina
      prepared by Wardrop and filed on filed on SEDAR (the Diablillos Technical
      Report).


> Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No. 12 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and legal
>       feasibility. It cannot be assumed that all or any part of an Inferred Mineral
>       Resource will ever be upgraded to a higher category. Under Canadian rules,
>       estimates of Inferred Mineral Resources may not form the basis of feasibility
>       or other economic studies. U.S. investors are cautioned not to assume
>       that any part or all of an Inferred Mineral Resource exists, or is economically
>       or legally mineable.

Table No. 12Silver Standard Resources Inc.Diablillos ProjectInferred Mineral Resource
Estimate(Cutoff Grade(1))

Category
    Tonnes (millions)
    Gold (g/t)
    Silver (g/t)
    Gold (oz)
    Silver (oz in
      millions)Inferred
    7.2
    0.81
    27
    187,000
    6.3


(1)
    The cut-off grade is based on $10.00 recovered metal
      values (RMV) and the following metal prices and recoveries: gold ($700/oz,
      65%); and silver ($11.00/oz., 40%). Please refer to the Diablillos
      Technical Report filed on SEDAR.


- 50 -

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San Agustin Project

Land Tenure, Location, Access and Infrastructure

The San Agustin Project comprises two mineral claims covering
an area of approximately 575 hectares and is located approximately 4 kilometers
north of the village of San Agustin de Ocampo and approximately 100 kilometers
north of the city of Durango in the State of Durango, Mexico. The Company does
not hold the surface rights to the property. Infrastructure is located nearby
and paved Highway 45 passes 10 kilometers southeast of the property (refer to
the San Agustin Location Map, shown below) and the center of the property can be
reached by following a gravel road that turns off this highway and passes
through the village of San Agustin. In order to maintain our rights to these
concessions, we are required to pay mineral license taxes to the Mexican
government.



Geology and Mineralization

The local geology at San Agustin is dominated by a subvolcanic
intrusive complex that was emplaced into a folded and faulted sequence of thinly
bedded, fine-grained marine clastic sedimentary rocks that are believed to be
more than 30 million years older than the intrusive rocks. The emplacement of
the dacite porphyry intrusive rocks apparently resulted in the dense fracturing
and local brecciation of the sedimentary rocks over a broad area, which
facilitated the migration of metal-bearing hydrothermal fluids outwards from the
intrusive stock into the enclosing sedimentary rocks. These fluids deposited
pyrite and lesser amounts of sphalerite as disseminated grains and stringer
veinlets in both the feldspar-porphyritic intrusive rocks and the fine-grained
interbedded sandstone and siltone units. At depths of 30 meters and more below
the surface, in unoxidized rocks, the precious metal mineralization generally
consists of disseminated grains and stringer veinlets of pyrite that contain
minute inclusions of gold, while silver is more commonly associated with zinc
and lead sulphides in veinlets. Within 30 meters of surface, most of the rocks
have been oxidized, with sulphide minerals being converted to iron oxide
minerals, namely hematite, goethite and limonite. In terms of gold recovery, the
oxidized mineralization is more favourable than the sulphide-associated
mineralization, especially considering the low-grade nature of the pyritic
mineralization.

Prior to us acquiring the property, exploration activities that
were done on the property in the 1990s consisted of geological mapping, soil
sampling and the drilling of 69 reverse circulation boreholes totaling 10,400
meters which outlined the first gold-silver resource to be identified at San
Agustin. In early 2004, we completed a reverse circulation drilling program,
which totaled 3,890 meters in 24 holes.

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The assay results of this program, together with assays from
the earlier drill holes, were used to calculate a preliminary gold resource.

In 2006, Geologix Exploration (Geologix) entered into an
option to purchase agreement with Silver Standard for the San Agustin property.
In the following two years, Geologix completed a 175-hole, 40,700 meter diamond
drilling program in accordance with the terms of the option agreement (see Item
4.B - Business Overview  Mineral Properties  San Agustin Project). At the
end of 2008, a mineral resource estimate was completed for Geologix by mining
consultants Wardrop, a Tetra Tech Company. Two months later, in early 2009,
Geologix was unable to meet its option payment obligations as defined by the
agreement due to the global financial crisis that was taking place at that time,
and as a consequence, the purchase option was terminated. In 2010, we decided to
resume our own exploration of the property, completing a program of multi-method
geophysical surveying together with some re-logging of drill cores for a
re-interpretation of the geological controls on the mineralization that
constitutes the gold-silver(zinc) deposit. Plans are to resume exploration work
at San Agustin in 2012 by completing another drilling campaign to expand the
known resources and to test some of the geophysical anomalies that were outlined
in 2010.

As of the date of this report, the San Agustin Project is
without known Mineral Reserves, and any activity carried out on the property is
exploratory in nature.

Wardrop, A Tetra Tech Company of Vancouver, British Columbia
prepared a mineral resource estimate for the San Agustin Project, in accordance
with the standards of Canadian National Instrument 43-101 and the definitions of
the CIM Standards, and presented this resource estimate in a technical report
dated March, 2009 and filed on SEDAR.

> Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 13 below uses the term Indicated Mineral
>       Resource. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.

Table No. 13Silver Standard Resources Inc.San Agustin ProjectIndicated Mineral Resource
Estimate(Cut-off grade)(1)

Category
    Tonnes (millions)
    Gold Grade (g/t)
    Silver Grade (g/t)
    Zinc (%)
    Lead (%)Indicated
    121.0
    0.41
    12.3
    0.49
    0.06


(1)
    The cut-off grade is based on $3.40 recovered metal
      values (RMV) in oxide material and $6.25 (RMV) in sulphide material and
      the following metal prices and recoveries: gold ($631.97/oz, 72%); silver
      ($11.63, 74%); zinc ($1.11/lb., 62%); and lead $0.78/lb.;
  50%).


> Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No. 14 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and
>   legal feasibility. It cannot be assumed that all or any part of an Inferred
>   Mineral Resource will ever be upgraded to a higher category. Under Canadian
>   rules, estimates of Inferred Mineral Resources may not form the basis of
>   feasibility or other economic studies. U.S. investors are cautioned not
>     to assume that any part or all of an Inferred Mineral Resource exists, or
>     is economically or legally mineable.

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Table No. 14Silver Standard Resources Inc.San Agustin ProjectInferred Mineral Resource
Estimate(Cut-off grade)(1)

Category
    Tonnes (millions)
    Gold Grade (g/t)
    Silver Grade (g/t)
    Zinc (%)
    Lead (%)Inferred
    91.2
    0.36
    12.6
    0.48
  0.07


|(1) | The cut-off grade is based on $3.40 recovered metal
      values (RMV) in oxide material and $6.25 (RMV) in sulphide material and
      the following metal prices and recoveries: gold ($631.97/oz, 72%); silver
      ($11.63, 74%); zinc ($1.11/lb., 62%); and lead $0.78/lb.;
  50%).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Mineral Properties

Berenguela Project

Location, Access and Infrastructure

The Berenguela silver-copper-manganese project is located in
the high Andean altiplanoof southern Peru about 5 kilometers northeast
of the town of Santa Lucia in the Province of Puno (refer to the Berenguela
Project Location Map, shown below).

The property comprises 14 mineral concessions covering an area
of approximately 6,668 hectares. The project can be accessed from the small city
of Juliaca by following a paved highway for about 65 kilometers to the village
of Santa Lucía from where a gravel road leads to the central part of the
property. Electrical power is readily available and a main-line railway passes
within five kilometers of the project.



- 53 -

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Geology and Mineralization

The silver-copper-manganese deposit at the center of the
Berenguela Project is hosted by a strongly folded sequence of marine sedimentary
rocks consisting of interbedded units of limestone, dolomite, marl (impure
carbonate), sandstone and minor shale. A formation rich in gypsum, probably an
evaporite, occurs in the lower part of the succession which is believed to have
been deposited roughly 100 million years ago. Mineralization consists of massive
replacement of limestone, dolomite and to a lesser extent marl beds by manganese
oxide minerals which contain variable amounts of silver and copper. How silver
and copper actually occur in the mineralization is not well understood, but
mineral phases of silver and copper are rarely observed with the naked eye.
Overall, the deposit consists of a few lenticular bodies of replacement
mineralization that are grossly conformable with, and occur within 100 meters of
the surface which occurs at an elevation of about 4,200 meters above sea
level.

History

The deposit was mined intermittently between 1905 and 1965 by
the Lampa Mining Company, principally for silver. In the 1960s, Charter
Consolidated Mining Co. and then Asarco Inc. assessed the mining potential of
the Berenguela deposit. The two companies completed a total of 6,600 meters of
diamond drilling and channel-sampled underground workings at 1.5 -meter
intervals for a total of 5,108 meters. In 1968, Charter Consolidated developed
an open-pit plan, and calculated a mineable ore reserve for the project. Since
the closure of the mine in 1965, no significant quantity of ore has been
recovered from the project. The ore reserve estimated by Charter Consolidated
does not comply with Canadian National Instrument 43-101 and CIM Standards;
under these mining industry guidelines, Charter Consolidateds mineable
reserve would be classified as a mineral resource only.

In the late 1960s, the Peruvian Government nationalized the
Berenguela Project. SOMINBESA acquired the project from Minero Peru (a state
owned mining company) in 1995 and completed engineering studies for the
development of the project. Under our option agreement, we agreed to undertake
additional drilling and prepare a resource estimate for the project in
accordance with Canadian National Instrument 43-101 and the CIM Standards.

From late 2004 through mid-2005, we completed a reverse circulation
  drill program that totaled 19,029 meters in 222 holes. The program objectives
  were: (1) to twin historic, relatively wide-spaced drill-holes to verify the
  grade of mineralization, and (2) to complete sufficient in-fill drilling in
  two areas of deposit to determine the scope of future drilling requirements
  for a measured, indicated and inferred resource. In 2010, we undertook a broader
  assessment of the mineral potential of the property by completing a comprehensive
  program of geophysical surveying, a soil geochemistry survey and campaign of
  diamond drilling. The drilling program consisted of 16 boreholes, with a total
  of 5,546 meters being drilled. Only three of 2010 drill-holes tested the area
  of the known Ag-Cu-Mn deposit, with the remaining holes probing geophysical
  anomalies that were outlined to the east, west and south of the deposit. A preliminary
  economic assessment study was initiated in the fourth quarter of 2010 and continued
  until March, 2011 when it was terminated before its completion. The early-stage
  metallurgical and engineering studies that were done for the preliminary economic
  assessment were performed by mining consultants Kappes, Casssidy & Associates.
  No exploration or other types of work programs were carried out on the property
  in 2011.

Resource Estimates

As of the date of this report, the Berenguela Project is
without known Mineral Reserves, and any activity carried out on the property is
exploratory in nature.

- 54 -

---

James A. McCrea, P. Geo., of Surrey, British Columbia completed
the following resource estimate for the Berenguela Project, in accordance with
the standards of Canadian National Instrument 43-101 and the definitions of the
CIM Standards,in a report dated October 26, 2005 titled Technical
Report on the Berenguela Property, Peru (the Berenguela Technical Report).

> Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 15 below uses the term Indicated Mineral
>       Resource. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.

Table No. 15Silver Standard Resources Inc.Berenguela ProjectIndicated Mineral Resource
Estimate(50 g/t silver Cut-off grade  capped)

Classification
    Tonnes (millions)
    Silver Grade (g/t)
    Copper (%)Indicated
    15.6
    132.0
    0.9


> Please refer to the Berenguela Technical Report available
>         on the Companys website.
>     Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No. 16 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and legal
>       feasibility. It cannot be assumed that all or any part of an Inferred Mineral
>       Resource will ever be upgraded to a higher category. Under Canadian rules,
>       estimates of Inferred Mineral Resources may not form the basis of feasibility
>       or other economic studies. U.S. investors are cautioned not to assume
>       that any part or all of an Inferred Mineral Resource exists, or is economically
>       or legally mineable.

Table No. 16Silver Standard Resources Inc.Berenguela ProjectInferred Mineral Resource Estimate(50 g/t Silver Cut-off Grade  capped)

Classification
    Tonnes (millions)
    Silver Grade (g/t)
    Copper (%)Inferred
    6.0
    111.7
    0.7


> Please refer to the Berenguela Technical Report available
>         on the Companys website.

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Nazas Project

Until October, 2011, the property that constitutes the Nazas
Project was a collection of 31 contiguous mineral concessions located in
north-central Durango State, Mexico, that lies about 17 kilometers east of our
Pitarrilla project (refer to the Nazas Project Location Map, shown below).
Covering a total of 23,591 hectares, the property is a collection of four claims
purchased from Camino Minerals Corp., two claims that were acquired through a
prospecting agreement with La Cuesta International, Inc., and 25 small claims
under an option to purchase agreement with Minerales y Productos Metalurgicos
S.A. de C.V., a private Mexican mining company. The project can be accessed from
the city of Torreon or the city of Durango by travelling paved highways to a
point a few kilometers north of the town of Rodeo where a dirt road turns off to
the northwest, eventually reaching the property as it passes along the Nazas
River. The trip to the property from Torreon takes about 4 hours, and is about 5
hours from Durango.



Our exploration efforts at the Nazas Project are directed at
discovering deposits of epithermal gold and silver mineralization. In 2011, we
completed a systematic and comprehensive exploration program that consisted of
multiple methods of geophysical surveying (ground magnetics, induced
polarization chargeability and resistivity, gravimetrics and magneto-tellurics
resistivity), geological mapping and rock sampling and the diamond drilling of
20 boreholes for a combined length of 11,641 meters. Several of the drillholes
targeted large epithermal quartz veins that contain weak but significant gold
mineralization at surface. Other drillholes were designed to test at depths of
more than 300 meters below surface the intersection between subvertical faults
and a subhorizontal contact between an upper package of Tertiary volcanic rocks
and significantly older sedimentary rocks. Such a geological setting is found at
our Pitarrilla Project where it is proven to be highly prospective for
silver-rich F-Zn-Pb mineralization. While a number of the 2011 drillholes
intersected mineralized zones containing anomalous concentrations of gold,
silver, zinc and lead, a mineral resource was not delineated by our drilling. As
a consequence, the decision was made in October, 2011 to terminate the option to
purchase agreement with Minerales y Productos Metalurgicos S.A. de C.V. for the
25 small claims included in the Nazas Projects. However, the remaining six
claims at Nazas which we control 100% subject to royalty interests held by La
Cuesta International, Inc. will continue to be explored in the future.

- 56 -

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Challacollo Project

Location, Access and Infrastructure

Our wholly-owned Challacollo Project is located in Region One
in northern Chile about 130 kilometers southeast of the port of Iquique and 15
kilometers east of the Pan American Highway at an elevation of 1,500 meters
above sea level (refer to the Challacollo Location Map, shown below). The
property comprises approximately 37.5 square kilometers and essentially covers a
range of high, rocky hills that is surrounded by sandy plains of the Atacama
Desert. The project can be readily accessed by following a good dirt road that
connects the site of the former Challacollo silver mine to the Pan American
Highway. In order to maintain our rights to the concessions that comprise the
project, we are required to pay annual patentes (taxes) to the Chilean
government.



Geology and Mineralization

The Challacollo Project is focused on four main north-south
trending epithermal quartz veins and silicified breccia structures that are
hosted by volcanic tuffs and flows that were deposited on considerably older
marine sedimentary rocks. The Lolón Vein is the largest and most productive
vein; it is more than 3,500 meters in length, locally up to 13 meters wide, and
was historically mined for silver along a 700 m-long section of the structure
where multiple episodes of quartz deposition and brecciation can be observed.
Below the zone of surficial oxidation, silver is associated with lead and zinc
sulphides, but in the former underground mine the vein rock is oxidized, where
primary sulphide minerals have been replaced by iron oxides, with silver
occurring in supergene mineral phases.

History

During the two decades between the closure of the underground
mine and us acquiring the Challacollo Project in 2001, a number of mining
companies held exploration options to explore the property. These companies
completed underground sampling and drilled a total of 22 boreholes that tested a
number of veins. Following our acquisition of the property, we completed an
extensive sampling program of the underground workings at 25 meter intervals,
collecting and analyzing more than 1,000 chip-channel samples. In addition, a
seven-hole, 746-meter drill program was carried out and tested approximately
600 meters of strike length of the Lolón Vein. In 2003, a follow-up
drilling program of 5,685 meters was completed for in-fill and step-out
purposes. Combining the assay results obtained by the 2002 and 2003 drilling
campaigns with assays obtained from underground channel samples, we were able to
prepare a resource estimate for the project in accordance with Canadian National
Instrument 43-101 and the CIM Standards. More recently, in 2007, we completed a
37-hole, 7,986-meter reverse circulation drill program with the objective of
expanding resources along the known veins and to test for porphyry-related
copper mineralization. In 2010, we contracted to have multiple geophysical
surveys performed over the property, including airborne magnetics and
radiometrics surveys. We also completed a grid-controlled rock-sampling survey,
where samples were collected for geochemical analysis as well as mineralogical
spectral analysis. The new geophysical and geochemical data have been used to
identify several drill targets that will be tested in the future.

- 57 -

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Resource Estimate

As of the date of this report, the Challacollo Project is
without known Mineral Reserves, and any activity carried out on the property is
exploratory in nature.

We completed an updated polygonal estimate of the resources for
the Challacollo Project in July 2003, which included the results of the 2001 and
2002 underground sampling and drill programs and the 2003 drill program. The
resource estimate is based on a cut-off of 50 g/t of silver and was prepared in
accordance with Canadian National Instrument 43-101 and the CIM Standards.
Sundance Ventures reviewed and confirmed our classification of Indicated and
Inferred Mineral Resources for the Challacollo Project, in a report dated
September 17, 2003.

> Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 17 below uses the term Indicated Mineral
>       Resource. We advise U.S. investors that while such terms are recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.

Table No. 17Silver Standard Resources Inc.Challacollo ProjectSilver Standard Indicated Mineral
Resource Estimate(50 g/t Silver Cut-off Grade)

Classification
    Tonnes
    Silver Grade (g/t)Indicated
    3,390,000
    170.6


> Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No. 18 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and legal
>       feasibility. It cannot be assumed that all or any part of an Inferred Mineral
>       Resource will ever be upgraded to a higher category. Under Canadian rules,
>       estimates of Inferred Mineral Resources may not form the basis of feasibility
>       or other economic studies. U.S. investors are cautioned not to     assume that any part or all of
>   an Inferred Mineral Resource exists, or is economically or legally mineable.

- 58 -

---



Table No. 18Silver Standard Resources Inc.Challacollo ProjectSilver Standard Inferred Mineral
Resource Estimate with Sundance Review(50 g/t Silver Cut-off Grade)

Classification
    Tonnes
    Silver Grade (g/t)Inferred
    4,569,000
    160.7


Candelaria Mine Project

Our wholly-owned Candelaria Mine Project is located in the
Candelaria Hills in west central Nevada approximately 55 miles south of
Hawthorne, Nevada and approximately five miles west of Highway 95, which
connects Reno, Nevada to Las Vegas, Nevada. Access to the property is by paved
road from Highway 95. The mine site is connected to the local power grid and has
water wells and pumping equipment in place. See the following Candelaria Mine
Project Location Map.



The Candelaria District developed into the richest silver
district in the State of Nevada, following discovery of high-grade mineralized
quartz veins in 1864. From then until 1954, the property produced 22 million
ounces of silver. The property was acquired by Occidental Minerals and later
Nerco Minerals, who built a processing facility and operated the mine from 1980
until 1989. During that time they produced over 33 million ounces of silver.
Kinross Candelaria Mining Company, an indirect wholly-owned subsidiary of
Kinross Gold, purchased the Candelaria mine in 1994 and operated the mine until
January 1999. Kinross produced over 13 million ounces of silver, bringing the
total historical production for the property to over 68 million ounces of
silver.

Mineralization within the district is confined to the
Candelaria Shear, a linear zone of brittle-ductile deformation related to
faulting. High-grade veins form along contacts of felsic rock dikes that
were intruded into the shear zone that is developed in a sequence of
Tertiary volcanic rocks. Lower grade, bulk tonnage mineralization extends as a
halo from the veins into the surrounding shear zone. The main ore bodies vary in
width from 80 to 120 feet and average 3.5 to 4.1 ounces of silver per ton in
silver concentration.

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Reclamation of the Candelaria mine has been on-going for the
past several years. The mine dumps have been re-contoured and re-vegetated,
while both of the heap leach piles have been rinsed with fresh water and
re-seeded. Kinross completed re-contouring and re-seeding of the leach ponds in
the first quarter of 2002. We have completed an environmental audit of the mine.
This audit did not identify any significant environmental issues and confirmed
that the substantial amount of reclamation work completed to date met all state
and federal guidelines. See Item 4.B - Business Overview  Mineral Properties
Candelaria Mine Project.

Mark G. Stevens, P.G. prepared the following resource estimate
  for the Candelaria project in accordance with the standards of Canadian
  National Instrument 43-101 and the definitions of the CIM Standards on May
  24, 2001.

> Cautionary Note to U.S. Investors concerning estimates
>       of Measured Mineral Resources.
>     Table No. 19 below uses the term Measured Mineral
>       Resource. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.
>     Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 19 below uses the term Indicated Mineral
>       Resource. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.
>     Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No.19 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and legal
>       feasibility. It cannot be assumed that all or any part of an Inferred Mineral
>       Resource will ever be upgraded to a higher category. Under Canadian rules,
>       estimates of Inferred Mineral Resources may not form the basis of feasibility
>       or other economic studies. U.S. investors are cautioned not to assume
>       that any part or all of an Inferred Mineral Resource exists, or is economically
>       or legally mineable.

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Table No. 19Silver Standard Resources Inc.Candelaria ProjectSilver Standard Mineral Resource
Estimate(0.5 troy oz/ton soluble Ag)

Classification
    Tonnes (millions)
    Silver Grade (oz/ton)
    Gold Grade (oz/ton)Measured
    3.4
    4.44
    0.004Indicated
    10.2
    2.84
    0.003Inferred
    55.7
    1.49
    0.002


Maverick Springs Project

Location, Access and Infrastructure

The Maverick Springs Project is located approximately half-way
between Elko and Ely, Nevada and covers approximately 3,970 acres within the
prospective belt or trend of gold/silver mineralization known as the Carlin
Trend. We hold a 55% interest in the Maverick Springs Project, representing all
of the silver mineral resources hosted in the project. The project can be
accessed year-round by fifteen miles of gravel road from the Ruby Lakes National
Wildlife Refuge, located west of the Maverick Springs Project. See the following
Maverick Springs Project Location Map.



Geology and Mineralization

The Carlin Trend is thought to mark a deep penetrating fault
that separates relatively thick and stable continental crust to the east from a
zone of thinned transitional crust to the west. The Maverick Springs Project is
underlain primarily by Paleozoic marinesedimentary rocks that are
unconformably overlain by basin-fill clastic sediments and Middle Tertiary
volcanic tuffs. Gently folded and normal-faulted limestone and calcareous siltstone formations are the main host
rocks to the silver-gold mineralization at the Maverick Springs Project. The
disseminated mineralization does not outcrop; it occurs at depths of 500 feet to
600 feet below surface and has been delineated by programs of reverse
circulation and diamond core drilling. The mineralization trends north-northeast
and occurs as a gently convex-shaped tabular body with length-width dimensions
of approximately 8,000 feet and 2,500 feet, respectfully. In the vertical
dimension the mineralized body attains a maximum thickness of about 200 feet.

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History

Newmont was the first company to test the mineral potential of
the Maverick Springs Property in the late 1990s, completing geological mapping,
soil and stream sediment geochemical surveys as well as a substantial amount of
drilling. A total of 130 drillholes were completed by Newmont, of which 37 were
shallow conventional rotary or percussion holes, 39 were reverse circulation
holes, and 54 were diamond core holes. Vista Gold and its Nevada based
affiliate, VNC, then took over Newmonts purchase option agreement for the
mineral rights to the property and conducted a wide-spaced seven-hole reverse
circulation drilling program to test for continuation of the previously
identified mineralized zone. In 2003 and 2004 respectively, Vista completed an
additional 16 and 13 reverse circulation holes to further test the continuation
of mineralization. In 2006, an 18-hole, 16,035 foot reverse circulation drill
program encountered additional silver mineralization at the north end of the
mineralized zone. In 2008, we assumed the role of operator under a joint venture
with Vista Gold, whose 45% interest in the project is now controlled by Allied
Nevada, and completed a 5 hole, 5,330 foot reverse circulation drilling program.
Since the 2008 work program, we have not carried out any exploration activities
on the property.

Resource Estimate

As of the date of this report, the Maverick Springs Project
is without known Mineral Reserves, and any activity carried out on the property
is exploratory in nature.

Snowden Mining Industry Consultants of Vancouver, British
Columbia completed the following resource estimate for the Maverick Springs
Project in accordance with the standards of Canadian National Instrument 43-101
and the definitions of the CIM Standards, in a report dated April 13, 2004
available on the Companys website (the Maverick Springs Technical Report). We
hold a 55% interest in the Maverick Springs Project, representing all of the
silver mineral resources hosted in the project.

> Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 20 below uses the term Indicated Mineral
>       Resource. We advise U.S. investors that while such terms are recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.

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Table No. 20Silver Standard Resources Inc.Maverick Springs ProjectIndicated Mineral Resource
Estimate(1 oz/ton Silver-Equivalent Cutoff Grade)

Classification
    Tons (millions)
    Silver Grade (oz/ton)
    Gold Grade (oz/ton)Indicated
    69.63
    1.0
    0.010


Please refer to the Maverick Springs
Technical Report dated April 13, 2004.

> Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No. 21 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and legal
>       feasibility. It cannot be assumed that all or any part of an Inferred Mineral
>       Resource will ever be upgraded to a higher category. Under Canadian rules,
>       estimates of Inferred Mineral Resources may not form the basis of feasibility
>       or other economic studies. U.S. investors are cautioned not to assume
>       that any part or all of an Inferred Mineral Resource exists, or is economically
>       or legally mineable.

Table No. 21Silver Standard Resources Inc.Maverick Springs ProjectInferred Mineral Resource
Estimate(1 oz/ton Silver-Equivalent Cutoff Grade)

Classification
    Tons (millions)
    Silver Grade (oz/ton)
    Gold Grade (oz/ton)Inferred
    85.55
    1.0
    0.008


Please refer to the Maverick Springs
Technical Report dated April 13, 2004.

Sunrise Lake Project

The Sunrise Lake Project is located about 130 kilometers by air
east-northeast of Yellowknife, Northwest Territories, Canada. Access to the
property is typically by ski or float-equipped aircraft. The Sunrise Lake
Project consists of six mining leases, which form a contiguous block with an
aggregate area of 1,618 hectares.



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The Sunrise Lake Project consists of a lens of polymetallic
massive sulphides overlying stringer zones of low-grade mineralization. The
massive sulphide lens is three to four meters thick and has a strike length of
about 120 meters at the surface. At depth it is up to 190 meters long. The
deposit remains open down plunge.

Hemisphere and Aber discovered the Sunrise Lake Project in
October 1987. During 1987 and 1988, they drilled a total 18,951 meters in 65
diamond drillholes on the Sunrise Lake Project and 1,280 meters in 12 holes on
peripheral targets. In 1998, they completed an additional seven diamond
drillholes aggregating 1,543 meters. We have not carried out any exploration
activities on the property since acquisition.

As of the date of this report, the Sunrise Lake Project is
without known Mineral Reserves, and any activity carried out on the property is
exploratory in nature.

We completed an updated polygonal estimate of the resources for
the Sunrise Lake Project in August 2003. The resource estimate is based on a
cut-off of 30 g/t of silver and was prepared in accordance with Canadian
National Instrument 43-101 and the CIM Standards. Roscoe Postle Associates Inc.
(now known as Scott Wilson Roscoe Postle Associates Inc.) reviewed and confirmed
our classification of Indicated and Inferred Mineral Resources for the Sunrise
Lake Deposit in a report dated September 3, 2003 and available on the Companys
website (the Sunrise Lake Technical Report).

> Cautionary Note to U.S. Investors concerning estimates
>       of Indicated Mineral Resources.
>     Table No. 22 below uses the term Indicated Mineral
>       Resource. We advise U.S. investors that while such terms are recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       U.S. investors are cautioned not to assume that any part or all of the
>       mineral deposits in this category will ever be converted into reserves.

Table No. 22Silver Standard Resources Inc.Sunrise Lake ProjectSilver Standard Indicated Mineral
Resource Estimate with Roscoe Postle Review(30 g/t Silver Cut-off Grade- Uncut)

Classification
    Tonnes
    Silver Grade (g/t)
    Lead (%)
    Zinc (%)
    Copper (%)
    Gold Grade (g/t)Indicated
    1,522,000
    262.0
    2.39
    5.99
    0.08
    0.67


Please refer to the Sunrise Lake Technical Report.

> Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No. 23 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and legal
>       feasibility. It cannot be assumed that all or any part of an Inferred Mineral
>       Resource will ever be upgraded to a higher category. Under Canadian rules,
>       estimates of Inferred Mineral Resources may not form the basis of feasibility
>       or other economic studies. U.S. investors are cautioned not to assume
>       that any part or all of an Inferred Mineral Resource exists, or is economically
>       or legally mineable.

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Table No. 23Silver Standard Resources Inc.Sunrise Lake ProjectSilver Standard Inferred Mineral
Resource Estimate with Roscoe Postle Review(30 g/t Silver Cut-off Grade- Uncut)

Classification
    Tonnes
    Silver Grade (g/t)
    Lead (%)
    Zinc (%)
    Copper (%)
    Gold Grade (g/t)Inferred
    2,555,000
    169.0
    1.92
    4.42
    0.07
    0.51


Please refer to the Sunrise Lake Technical Report.

*Veta Colorada Project*

The Veta Colorada Project is located a few kilometers northwest
of the city of Parral in Chihuahua State, Mexico, approximately 210 kilometers
south of Chihuahua City. Mining in the Parral mineral district commenced in the
late 1500s when high-grade silver-gold mineralization was discovered in the
Colorada vein, the principal mineralized structure in the district. For nearly
four centuries, dozens of small mines intermittently exploited the Veta
Colorada. The property of the Veta Colorada Project consists of nine mining
concessions covering an area of approximately 4,244 hectares. The project can be
accessed from paved Highway 24 that connects the Mexican cities of Hidalgo del
Parraland Durango. In order to maintain our rights to these concessions we are
required to pay surface mining taxes to the Mexican government.

The Veta Colorada vein structure is traceable for over
10 kilometers, striking north-south and dipping moderately to the east. The base
of this mineralized structure is represented by a planar fault that cuts through
a sequence of Tertiary volcanic rocks a few hundred meters thick as well as
significantly older marine sedimentary rocks that form the basement to the
volcanics. Quartz veining, with textures that are typical of epithermal precious
metal deposits, was deposited along sections of this major fault. The commonly
banded and locally brecciated quartz veins attain thicknesses of one to four
meters thick. The volcanic rocks in the immediate hanging wall of the veins are
strongly fractured and locally brecciated, with quartz stocks and
quartz-cemented breccias bodies extending up to 30 meters from the larger veins.
Silver mineralization in the breccias bodies tends to be less concentrated than
the vein-hosted mineralization and was generally left in place by previous
miners.

Since acquiring the project, we have performed a limited amount
of exploration work, including geological mapping, surface rock sampling, a
limited amount of underground rock sampling and the diamond drilling of three
boreholes for a combined length of 1,001 meters. This work was mainly done in
2006; no exploration was done on the property in 2011.

As of the date of this report, the Veta Colorada Project is
without known Mineral Reserves, and any activity carried out on the property is
exploratory in nature.

San Marcial Project

The San Marcial Project is located in Sinaloa State, Mexico 90
kilometers due east of Mazatlan in the Sierra Madre Mountains in west-central
Mexico and comprises two claims covering an area of 1,250 hectares. The
concession is generally road accessible year round except during the rainy
season when 4-wheel drive vehicles are required. See the following San Marcial
Project Location Map. In order to maintain our rights to these concessions, we
are required to pay surface mining taxes to the Mexican government.

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The geology at the San Marcial Project can be sub-divided into
two distinct underlying rock types, an upper volcanic group of rocks occurring
in the higher and more mountainous portions of the project in the northeast, and
the underlying lower volcanic group of rocks that occur at lower elevations. The
known silver prospects at the San Marcial Project are hosted along what appears
to be a narrow set of northwest trending fault structures in two known vein
systems, both of which outcrop and can be identified by small historical
diggings over a strike length of approximately 300 meters. Prior to our
acquisition of the project Gold-Ore carried out regional stream sediment
sampling, geological mapping, rock sampling and trenching and completed the
drilling of six holes totaling 601.7 meters. Following acquisition, we completed
two drill programs totalling 2,526.8 meters in 14 holes.

As of the date of this report, the San Marcial Project is
without known Mineral Reserves, and any activity carried out on the property is
exploratory in nature.

We completed an estimate of the resources for the San Marcial
Project in August 2002. The resource estimate is based on a cut-off of 30 g/t of
silver and was prepared in accordance with Canadian National Instrument 43-101
and the CIM Standards. Sundance Ventures reviewed and confirmed our
classification of Indicated and Inferred Mineral Resources for the San Marcial
Project in a report dated October 15, 2002.

> Cautionary Note to U.S. Investors concerning estimates
>       of Inferred Mineral Resources.
>     Table No. 24 below uses the term Inferred Mineral
>       Resources. We advise U.S. investors that while such term is recognized
>       and required under Canadian regulations, the SEC does not recognize it.
>       Inferred Mineral Resources have a great amount of uncertainty
>       as to their existence, and great uncertainty as to their economic and legal
>       feasibility. It cannot be assumed that all or any part of an Inferred Mineral
>       Resource will ever be upgraded to a higher category. Under Canadian rules,
>       estimates of Inferred Mineral Resources may not form the basis of feasibility
>       or other economic studies. U.S. investors are cautioned not to assume
>       that any part or all of an Inferred Mineral Resource exists, or is economically
>       or legally mineable.

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Table No. 24Silver Standard Resources Inc.San Marcial ProjectSilver Standard Inferred Mineral
Resource Estimate with Sundance Review(30 g/t Silver Cut-off Grade)

Classification
    Tonnes (millions)
    Silver Grade (g/t)
    Lead (%)
    Zinc (%)Inferred
    2.31
    191.79
    0.32
    0.66


Office Space

In April 2009, we agreed to sublease approximately 10,745
square feet at 1400, 999 West Hastings Street, Vancouver, BC for a 45 month
period commencing July 1, 2009 and expiring on March 30, 2013. Under the terms
of the sublease, we agreed to pay $19.50 per square foot per annum and a
proportionate share of operating costs and operating taxes over the term of the
sublease. Effective July 27, 2009, we moved our head office to 1400, 999 West
Hastings Street, Vancouver, BC.

We continue to lease our former head office at 1180, 999 West
Hastings Street, Vancouver, BC, under a lease dated March 13, 2008, as amended
June 19, 2008, that expire on March 31, 2013. Under the terms of the lease, we
lease 8,361 square feet of office space for a five year period at rates
increasing from $284,279 in the first year to $334,440 per year in the fifth
year; and under the terms of the amendment to the lease, we lease 1,319 square
feet of office space for a four year and five month period at rates increasing
from $44,846 per year, pro rated for the first five months to $52,760 in the
fifth year. We are also required to pay our proportionate share of operating
costs and property taxes over the term of these leases.

Under a sublease dated June 16, 2009, we agreed to sublease
approximately 6,000 square feet of the office space at 1180, 999 West Hastings
Street, Vancouver, BC until March 30, 2013 for $22 per square foot per annum and
a proportionate share of operating costs and property taxes. Under a sublease
dated November 1, 2008, we subleased 1,319 square feet of the office space at
1180, 999 West Hastings Street, Vancouver, BC until October 30, 2011 at the same
rate per square foot as set out in the amendment to the lease. The sublease
terminated early on August 2, 2011.

Item
4AUnresolved Staff Comments

There are no unresolved SEC comments at this time.

Item
5Operating and Financial Review and Prospects

A.Operating Results

This Managements Discussion and Analysis (MD&A) is
intended to supplement the audited consolidated financial statements of Silver
Standard Resources Inc. (Silver Standard or the Company) for the year ended
December 31, 2011, and the related notes thereto, which have been prepared in
accordance with International Financial Reporting Standards (IFRS). The
Company adopted IFRS on January 1, 2011 with a transition date of January 1,
2010. Full disclosure of the Companys IFRS accounting policies and a
reconciliation of the previously disclosed opening balance sheet prepared in accordance with Canadian generally accepted accounting
principles (Canadian GAAP) to IFRS is set out in notes 2 and 26 to the audited
consolidated financial statements.

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The Companys 2010 comparative financial information in this
MD&A have been restated and are presented in accordance with IFRS, but 2009
comparative financial information has not been restated. All figures are
expressed in U.S. dollars except where otherwise indicated. This MD&A has
been prepared as of March 11, 2012, and should be read in conjunction with the
audited consolidated financial statements for the year ended December 31, 2011.
Unless otherwise stated all currency amounts are presented in U.S. dollars.

This Annual Report contains forward-looking statements that
are subject to risk factors set out under the heading 2.D.  Risk Factors. The
Company uses certain non-GAAP financial measures in this Annual Report. For a
description of each of the non-GAAP financial measures used in this Annual
Report please see the discussion under Non-GAAP Financial Measures. The
Company changed its presentation of costs per ounce during 2011 in line with the
newly-endorsed production cost guidance provided by The Silver Institute.

Financial and Operational Summary 2011

- Silver production of 7.1 million ounces in 2011 compared to 6.3 million
  ounces in 2010, an increase of 12%.
- Net income of $80.1 million or $1.00 per share.
- Operational improvements at the Pirquitas silver mine in Argentina to
  position the mine for consistent period-on-period production performance.
- Monetized approximately one-third of the Companys shareholding in Pretium
  for $130 million, while retaining an interest with a market value at February
  29, 2012 in excess of $400 million.
- Consolidated the Companys ownership interest in the high-grade gold and
  silver San Luis project in Peru.
- Completed the sale of the Bowdens project in Australia for $70 million.
- Accelerated the feasibility study on the Pitarrilla project in Mexico
  towards completion in mid- 2012.
- Strengthened and enhanced the senior management team and technical
  capability with several appointments.
- In the Cortaderas area at the Pirquitas mine, intersected high-grade
  silver and zinc mineralization, including 218 meters of 477.3 g/t silver and
  7.97% Zn (DDH-214), in and around a breccia body to the north of the current
  open-pit, resulting in the establishment of a new Inferred mineral resource
  estimate of 22.5 million ounces of contained silver.

Silver Standard is engaged in the exploration, development and
production of silver-dominant mineral properties located in the Americas.

The Companys strategic focus is to optimize production of
silver from the Pirquitas mine and to advance other principal development and
exploration projects, including Pitarrilla, San Luis, Diablillos and San
Agustin. The Company has a large in-ground silver position and looks to exploit
this for the benefit of the Companys shareholders. Certain projects also
contain significant gold and base metals. The Companys future growth will be
primarily driven through the development of core projects, while monetizing
other non-core projects to support funding requirements.

2011 was a volatile year for equity and financial markets
globally. Significant sell-offs were evidenced in July and August as the U.S.
sovereign debt downgrade was pending and the European sovereign debt situation
worsened. Equity markets did recover somewhat and were led by the U.S. Dow Jones
Index.

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Central banks around the world, including China and many
European banks, acted in concert with the Americans to lower interest rates as
the year progressed.

This volatile economic environment has been supportive for the
silver price and helped drive silver to a record high of $48.70 per ounce at the
end of April before a sharp price reduction. Price increases through the summer
saw the silver price back in the $40 per ounce range, but concerns over the
world economic outlook in September resulted in prices declining to the low $30
per ounce range. The silver price has been more stable since then and closed the
year at $28.18 per ounce. Silver has maintained its status as a safe haven
asset and a component of asset portfolios around the world.

The Company realized an average silver price of $33.58 per
ounce on deliveries during 2011, compared to $20.92 per ounce in 2010.

The stronger price environment enabled the Company to increase
revenues by 32% compared to 2010 despite sales volumes being lower, as a result
of the Company terminating its long-term sales contract in the third quarter of
2011.

Two significant events impacted Pirquitas during 2011. Firstly,
the replacement time for delivery of the ball mill gearbox significantly
impacted operations. The Company believes, however, that during the year
significant progress was made improving the infrastructure, systems and
processes for future operations at Pirquitas. The primary crushing capacity was
increased and the ball mill refurbished. Cost initiatives have also been
implemented to lower costs where possible and offset the risk of inflationary
pressures. Despite the ball mill not being operational for over two months of
the year, production of 7.1 million ounces of silver exceeded 2010 by 12%.

Secondly, a reduction to the estimated mineral reserves at
Pirquitas has now been incorporated into the mine plan and shortened the mine
life. However, this had no significant impact on the Companys financial results
for 2011. In addition, the Company believes the exploration potential at
Pirquitas is significant and has planned an extensive drilling program for 2012.

The Company concluded 2,000 tonnes of spot sales of silver
concentrate during the fourth quarter of 2011 (of which 1,000 tonnes was
delivered before the year-end), and announced on February 14, 2012 that it had
committed an additional 6,000 tonnes of silver concentrate to various customers
for delivery in the first half of 2012. In addition to the spot sales, trial
shipments totaling 500 tonnes of silver concentrate are at various stages of
evaluation with potential customers, and these trials are part of longer term
contract negotiations. This committed tonnage goes a long way toward reducing
the inventory which had accumulated during the year, and current deliveries are
expected to be in a strong price environment.

The Company also completed significant transactions in the
year; acquiring the remaining 30% interest in the San Luis project, monetizing
the non-core Bowdens project for $70 million, and monetizing a significant
amount of value from the investment in Pretium by selling approximately
one-third for $130 million. The market value of the Companys investment in
Pretium at the year-end was in excess of $300 million.

Exploration remains important for the Company and during 2011
$36 million was spent, primarily at the development projects of Pitarrilla in
Mexico and San Luis in Peru.

Through 2011 the Company accelerated the Pitarrilla project in
Mexico. In the third quarter the Board of Directors committed significant funds
for completion of a feasibility study by the middle of 2012, and for
commencement of infrastructure construction, such as the operations camp, access
roads and water wells. The Company has also been building the management team to
advance this project.

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SUMMARIZED ANNUAL FINANCIAL AND OPERATIONAL RESULTS(thousands of dollars, except production data and per share amounts)

The following table sets forth selected financial data from our
audited consolidated financial statements and should be read in conjunction with
those statements:

|                                 |  | IFRS      |  |  | IFRS      |  |  | GAAP        |  |  | GAAP | 
|-------------------------------- |  | --------- |  |  | --------- |  |  | ----------- |  |  | ---- | 
|                                 |  | 2011      |  |  | 2010      |  |  | **2009(1)** |  |  | 2008 | 
|                                 |  |           |  |  |           |  |  |             |  |  |      | 
|Production Data                  |  |           |  |  |           |  |  |             |  |  |      | 
|                                 |  |           |  |  |           |  |  |             |  |  |      | 
|Tonnes milled (kt)               |  | 1,089     |  |  | 1,255     |  |  | 410         |  |  | N/A  | 
|Silver head grades (grams/tonne) |  | 253       |  |  | 233       |  |  | 185         |  |  | N/A  | 
|Silver recoveries                |  | 79.5%     |  |  | 65.2%     |  |  | 45.0%       |  |  | N/A  | 
|Silver produced (ounces)         |  | 7,055,589 |  |  | 6,302,140 |  |  | 1,114,300   |  |  | N/A  | 
|Silver sold (ounces)             |  | 4,845,597 |  |  | 5,936,657 |  |  | 602,400     |  |  | N/A  | 

|(1) | We entered production at our Pirquitas mine in Argentina
      on December 1, 2009. As a result, 2009 is our first year of reported
      revenues and production data. Production during 2009 included processing
      historical jig tailings to prove the mechanical operation of the plant;
      since December 1, 2009, the tonnes milled were primarily oxide
  ore
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             |   | IFRS      |  |   | IFRS      |  |   | GAAP    |   |   | GAAP    |  
|-------------------------------------------- | - | --------- |  | - | --------- |  | - | ------- | - | - | ------- | -
|                                             |   | 2011      |  |   | 2010      |  |   | 2009(3) |   |   | 2008(3) |  
|Cash cost per ounce of silver(1)             |   |           |  |   |           |  |   |         |   |   |         |  
|Cash production
      cost                   | $ | 13.65     |  | $ | 12.19     |  | $ | 8.98    |   |   | N/A     |  
|Cash operation cost                          | $ | 20.93     |  | $ | 18.03     |  | $ | 16.57   |   |   | N/A     |  
|Total cost                                   | $ | 25.37     |  | $ | 22.14     |  | $ | 20.30   |   |   | N/A     |  
|Revenues (2)                                 | $ | 147,845   |  | $ | 112,256   |  | $ | 5,442   |   | $ | -       |  
|Average realized silver price (per ounce)    | $ | 33.58     |  | $ | 20.92     |  | $ | 17.49   |   |   | N/A     |  
|Average London spot silver price (per ounce) | $ | 35.11     |  | $ | 20.16     |  | $ | 17.67   |   |   | N/A     |  
|Other financial information                  |   |           |  |   |           |  |   |         |   |   |         |  
|Net earnings (loss)                          | $ | 80,128    |  | $ | 338,455   |  | $ | (13,193 | ) | $ | (5,946  | )
|Basic earnings (loss) per share              | $ | 1.00      |  | $ | 4.34      |  | $ | (0.19   | ) | $ | (0.09   | )
|Diluted earnings (loss) per share            | $ | 0.99      |  | $ | 4.32      |  |   | ($0.19  | ) | $ | (0.09   | )
|Cash and cash equivalents                    | $ | 329,055   |  | $ | 232,311   |  | $ | 26,659  |   | $ | 72,013  |  
|Total assets                                 | $ | 1,276,102 |  | $ | 1,147,990 |  | $ | 749,925 |   | $ | 567,905 |  
|Working capital                              | $ | 399,088   |  | $ | 306,391   |  | $ | 24,515  |   | $ | 41,486  |  
|Non current financial liabilities            | $ | 126,555   |  | $ | 137,860   |  | $ | 162,057 |   | $ | 132,980 |  
|Cash dividends declared                      | $ | -         |  | $ | -         |  | $ | -       |   | $ | -       |  

|(1) | The Company reports non-GAAP cost per ounce of silver
      produced to manage and evaluate operating performance at the Pirquitas
      mine. For a better understanding and a reconciliation of these measures to
      cost of sales, as shown in the Companys Consolidated Statement of Income
      please refer to Non-GAAP Financial Measures.                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Revenues are reported net of deductions, treatment and
      refining charges.                                                                                                                                                                                                                                                                                                                            
|(3) | The Companys annual financial results as at and for the
      years ended December 31, 2011 and 2010 have been prepared in accordance
      with IFRS. As the Companys transition date to IFRS was January 1, 2010,
      the summarized annual financial results as at and for the year ended
      December 31, 2009 and 2008 have not been restated and have been prepared
      under Canadian GAAP.

Review of the Annual Financial Results

Net income for the year ended December 31, 2011 was $80.1
million ($1.00 per share) compared to $338.5 million ($4.34 per share) in 2010
and a net loss of $13.2 million ($0.19 per share) in 2009. The following is a
summary and discussion on significant components of income and expenses recorded
during 2011 compared to the prior two years.

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In 2011, the Company recorded total revenues from the Pirquitas
Mine of $147.8 million from the sale of 4.8 million ounces of silver and 12.4
million pounds of zinc. Shipments made in the period realized an average silver
price of $33.58 per ounce, excluding the impact of period-end price adjustments,
and zinc realized an average price of $1.02 per pound. This is compared with
2010 which recorded revenues of $112.3 million from the sale of 5.9 million
ounces of silver at an average realized price of $20.92, and 2009 which only
recognised $5.4 million in revenue because commercial production only started in
December of that year. There were no zinc sales in either 2010 or 2009. The
increase in sales recognised compared to 2010 is reflective of the significant
increase in the price of silver, partially offset by the lower volume sold in
2011. Zinc sold in 2011 contributed $9.3 million to total revenues.

Since the mines start-up, silver concentrates were sold
pursuant to a sales contract to a single customer. The contract was terminated
during the third quarter of 2011 which resulted in sales volumes of silver
concentrate being lower than the prior year. Zinc concentrate sales were
unaffected. A total of 1,000 tonnes of spot sales of silver concentrate were
completed in the fourth quarter the Company has committed an additional 7,000
tonnes for delivery in the first half of 2012. The Company is continuing
negotiations to establish long-term contracts with various counterparties.

Cost of sales for 2011 was $95.9 million compared to $98.1
million in 2010, and $7.9 million in 2009. This resulted in income from mine
operations of $51.9 million in 2011, $14.1 million in 2010 and a loss of $2.5
million in 2009. The net result was an improvement in margins from 2010 to 2011
from 14.4% to 54.1% . Higher silver prices realized in 2011, and the
commencement of zinc sales, fully offset the increase in unit costs that the
mine experienced in the same period.

General and administrative expenses for the year ended December
31, 2011 were $23.7 million compared to $28.9 million in 2010 and $20.9 million
in 2009. The main reason for the reduction between 2011 and 2010 was share-based
payments that are revalued based on the Companys share price were significantly
lower as the share price declined towards the end of 2011. Salaries and benefits
were slightly higher in 2011 due to the increase in headcount as the Company
expands its business. The increase in 2010 compared with 2009 was primarily due
to growth in headcount and was mainly salary, employee benefit and bonus
related, and the increase in stock price through 2010 also resulted in a
significant increase in certain forms of share-based payments.

Expensed exploration costs of $5.7 million for 2011 and $2.4
million in 2010, and $0.5 million in 2009 relate primarily to the drilling
programs at the Pirquitas mine. Such costs at an operating property are expensed
in line with the Companys accounting policy.

In 2011 the Company recorded a gain on sale of mineral
properties of $51.4 million from the sale of the Bowdens project in Australia,
offset by $1.5 million of transaction costs related to the Snowfield and
Brucejack disposition in 2010, for a net gain of $49.9 million. In 2010 the
Company recognised a total gain of $402.0 million from the disposal of Snowfield
and Brucejack, and the smaller Silvertip property.

In September 2011, the Company sold the Bowdens project in
Australia to Kingsgate for $35.0 million in cash, 3.4 million shares of
Kingsgate (with an approximate value of $25.6 million), and two deferred cash
payments of A$5 million each. The first deferred payment was received on
December 31, 2011 and the second is due on June 30, 2012. Total consideration
was approximately $70.7 million, resulting in a gain on sale of $51.4 million
(after tax gain of $35.3 million).

On December 21, 2010 the Company sold its 100% interest in the
Snowfield and Brucejack properties located in British Columbia, Canada to
Pretium for total consideration of $442.3 million. Under the terms of the
transaction the Company received a total of 32.5 million common shares of
Pretium with a fair value of $191.9 million, cash proceeds of $211.3 million
(before costs of $12.4 million) and a non-interest bearing convertible promissory note in the principal
amount of $39.1 million. This resulted in a gain of $388.8 million (after tax
gain of $360.6 million).

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During February 2010, the Company sold its 100% interest in the
Silvertip property located in British Columbia, Canada to Silvercorp Metals Inc.
(Silvercorp). Under the terms of the agreement, Silvercorp paid consideration
of $15.0 million, comprising cash of $7.1 million and 1.2 million common shares
of Silvercorp with a fair value of $7.8 million, for an after-tax gain of $13.1
million.

On April 8, 2011 the Company sold 11.5 million units of Pretium
for $120.1 million, before transaction costs. Each unit is comprised of one
common share of Pretium and half of a warrant to purchase an additional common
share of Pretium for C$12.50. This constituted a partial disposal of the
investment in the equity accounted associate, and resulted in a gain of $38.8
million. As at December 31, 2011 the Company retained an ownership interest of
28.39% in Pretium, which had a book value of $136.3 million and a market value
in excess of $300 million.

Other income (expenses) comprised the following for the year
ended December 31:

|                                                                        |  | 2011   |   |  | 2010   |   |  | 2009   |  
|----------------------------------------------------------------------- |  | ------ | - |  | ------ | - |  | ------ | -
|                                                                        |  | $000s  |   |  | $000s  |   |  | $000s  |  
|(Impairment) reversal of impairment of
      convertible debenture      |  | 2,400  |   |  | -      |   |  | (2,002 | )
|Unrealized gain (loss) on financial instruments at FVTPL                |  | 20,182 |   |  | (1,109 | ) |  | 412    |  
|Gain (loss) on sale of marketable
      securities                      |  | 5,453  |   |  | 3,114  |   |  | (1,279 | )
|Write-off of mineral property costs                                     |  | (4,624 | ) |  | (238   | ) |  | (377   | )
|Write down of marketable securities and
      other investments, net of |  |        |   |  |        |   |  |        |  
|interest received                                                       |  | -      |   |  | -      |   |  | 534    |  
|Gain on dilution of associate                                           |  | 1,803  |   |  | -      |   |  | -      |  
|Share of loss of associate                                              |  | (6,078 | ) |  | (77    | ) |  | -      |  
|Miscellaneous income (expense)                                          |  | (1,056 | ) |  | 16     |   |  | -      |  
|                                                                        |  | 18,080 |   |  | 1,706  |   |  | (2,712 | )

The unrealized gain on financial instruments at fair value
through profit and loss (FVTPL) is primarily from the convertible notes, for
which a gain of $20.2 million was recorded in 2011 compared to a loss of $1.1
million in 2010. This item was not recorded in 2009 as this instrument did not
meet the definition of a derivative liability under Canadian GAAP. Since the
acquisition of the Companys interest in Pretium in December 2010 the Company is
required to record its share of Pretiums losses, which were $6.1 million in
2011 and $0.1 million in 2010. The Company wrote off exploration costs of $4.5
million following its decision to let its option of the Navidad claim group at
the Nazas property expire. There were no significant cost write-offs in either
2010 or 2009. The gain on marketable securities recognised in the income
statement is the cumulative gain from the sale of marketable securities which
has been recycled from other comprehensive income.

The Company recorded a foreign exchange loss for the year ended
December 31, 2011 of $2.7 million compared to a loss of $0.9 million in 2010 and
a gain of $1.2 million in 2009. The Companys main exposure to foreign exchange
risk is related to net monetary assets denominated in Canadian dollars and
Argentine pesos. During 2011 the Canadian dollar was strong against the U.S.
dollar during the first half of the year and weakened subsequently, while the
Argentine peso steadily weakened against the U.S. dollar.

In the year ended December 31, 2011 the Company recorded an
income tax expense of $31.4 million compared to $32.2 million in 2010 and a
recovery of $4.3 million in 2009. Of the total tax expense in 2011, $21.1 million reflects the current and deferred tax
expense at Pirquitas, $5.2 million from the capital gain on the sale of the
Pretium shares, $16.1 million from the gain on the sale of the Bowdens project;
these expenses are partially offset by realized losses and the balance relates
to changes in deferred tax liabilities. In 2010 the tax expense at Pirquitas was
$5.5 million and there was an expense of $27.1 million in Canada primarily due
to the sale of the Snowfield and Brucejack properties. The income tax recovery
in 2009 was the result of unrealized losses on marketable securities and the
operating loss at Pirquitas in that year.

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Quarterly Financial Review

The following table sets out selected results from the eight
most recent quarters all of which have been prepared in accordance with IFRS;

2011
    
    
    
    
    
    
    
    
    201031-Dec
    
    
    30-Sep
    
    
    30-Jun
    
    
    31-Mar
    
    
    31-Dec
    
    
    30-Sep
    
    
    30-Jun
    
    
    31-Mar$000s
    
    
    $000s
    
    
    $000s
    
    
    $000s
    
    
    $000s
    
    
    $000s
    
    
    $000s
    
    
    $000sRevenue
    
    14,369
    
    
    26,152
    
    
    47,271
    
    
    60,053
    
    
    45,077
    
    
    41,557
    
    
    14,091
    
    
    11,531Income (loss) from mine operations
    
    (3,270
    )
    
    11,492
    
    
    15,838
    
    
    27,859
    
    
    24,975
    
    
    7,426
    
    
    (1,673
    )
    
    (16,594
    )Net income (loss)
    
    2,584
    
    
    21,836
    
    
    45,765
    
    
    9,943
    
    
    361,623
    
    
    (10,407
    )
    
    (9,385
    )
    
    (3,376
    )Basic earnings (loss) per share
    
    0.03
    
    
    0.27
    
    
    0.57
    
    
    0.12
    
    
    4.64
    
    
    (0.13
    )
    
    (0.12
    )
    
    (0.04
    )Diluted earnings (loss) per share
    
    0.03
    
    
    0.27
    
    
    0.57
    
    
    0.12
    
    
    4.62
    
    
    (0.13
    )
    
    (0.12
    )
    
    (0.04
    )Cash and cash equivalents
    
    329,055
    
    
    355,903
    
    
    368,759
    
    
    260,733
    
    
    232,311
    
    
    35,839
    
    
    57,719
    
    
    102,995Total assets
    
    1,276,102
    
    
    1,249,570
    
    
    1,252,360
    
    
    1,178,644
    
    
    1,147,990
    
    
    717,749
    
    
    701,356
    
    
    721,795Working capital
    
    399,088
    
    
    428,627
    
    
    418,812
    
    
    335,764
    
    
    306,891
    
    
    65,201
    
    
    89,429
    
    
    117,441Non current financial liabilities
    
    126,555
    
    
    182,018
    
    
    171,203
    
    
    174,497
    
    
    137,860
    
    
    144,827
    
    
    137,547
    
    
    135,792


The Pirquitas mine commenced production at the end of 2009 and
gradually increased production, and correspondingly, revenue through 2010 and
into the first half of 2011. Silver prices also increased from the second half
of 2010 through 2011. Lower revenues in the second half of 2011 were due to the
termination of the sales contract while long-term contract negotiations were
undertaken. Production continued through this period which resulted in a
significant increase in finished goods inventory.

Income from mine operations follows the trend of revenues as a
significant portion of operating costs are fixed and, although they increased on
a unit basis through 2011, were broadly consistent. Net income of the Company
has been impacted by non-routine transactions such as the sale of mineral
properties in the fourth quarter of 2010 and third quarter of 2011, and the
partial sale of the Companys investment in Pretium in the second quarter of
2011. In 2011 changes in fair value of the derivative liability has had an
increasingly significant impact on net income with a gain in excess of $20.0
million.

Review of Quarterly Financial Results  three months
ended December 31, 2011 compared to the three months ended September 30, 2011

The Company recorded net income attributable to shareholders in
the fourth quarter of 2011 of $2.6 million, compared to $21.8 million in the
third quarter. Compared to the prior quarter net income was impacted
significantly by the following factors.

In the fourth quarter of 2011 the Company recognised revenues
of $14.4 million from the sale of 0.5 million ounces of silver and 1.9 million
pounds of zinc, with realized silver prices of $33.42 per ounce, and $0.87 per
pound of zinc. This compares to revenues of $26.2 million in the third quarter
of 2011 from the sale of 0.7 million ounces of silver, and 3.9 million pounds of
zinc, with realized silver price of $39.88 per ounce, and $1.01 per pound of zinc. In addition,
negative final settlement prices and mark to market (MTM) adjustments reduced
revenue compared to units delivered.

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Cost of sales was higher in the fourth quarter because a higher
proportion of operating costs were expensed during the period of plant downtime
while not producing inventory, an increase in depreciation charges following the
revised mineral reserve and mineral resource estimates, and a write down of low
grade stockpiles that are planned to be processed towards the end of the mine
life. The increased costs generated a loss from mining operations in the fourth
quarter.

General and administrative costs in the fourth quarter were
$3.3 million compared to $6.7 million in the third quarter. The reduction in the
fourth quarter was due to lower expenses on share-based payments that are linked
to the Companys share price which fell significantly in the fourth quarter.
Severance expenses were also incurred in the third quarter.

The recognition of a gain of $51.4 million from the disposal of
the Bowdens project in the third quarter materially increased net income and
there were no significant dispositions or similar transactions in the fourth
quarter.

Unrealised gains on financial instruments at FVTPL were $6.7
million in the fourth quarter compared to $5.4 million in the third quarter due
to the continued reduction in fair value of the conversion option of the
convertible notes.

An income tax recovery of $10.4 million was recorded in the
fourth quarter compared to an expense of $30.9 million in the third quarter. The
recovery in the fourth quarter was a result of the operating loss recorded at
Pirquitas for the quarter as discussed above, the Company also realized a
capital loss in Canada which sheltered gains from earlier in the year, and a
reversal of deferred tax liabilities in Argentina. The significant tax expense
in the third quarter was primarily driven by the taxable gain from the sale of
the Bowdens project, operating income at Pirquitas and an increase in deferred
tax liabilities.

Pirquitas Mine, Argentina

Mine production

The Pirquitas mine produced 7.1 million ounces of silver during
2011 compared with 6.3 million ounces in 2010. Although production was 12%
higher than in 2010, 2011 production was negatively impacted by over two months
of production downtime due to installing additional crushing capacity, and
operating for most of the year with a damaged ball mill gearbox. The gearbox has
now been completely rebuilt to nearly-new condition, and the mill recommenced
operating in early November 2011. A spare gearbox from Europe is due to arrive
in March 2012 and the Company has purchased a spare ball mill ring gear with
expected delivery towards the end of 2012. Since the mill has been back in
operation, it has exceeded design rates and production volumes have been strong.

Operations were also impacted by import restrictions imposed by
the Argentine government on all industries, including mining. The restrictions
make the timely sourcing of spare and replacement parts challenging as many
necessary mining-related parts are not readily available at the required quality
or specifications in Argentina. Import restrictions therefore result in lower
equipment availability and additional maintenance costs. Most significantly
impacted was the operation of the jig circuit. Loading, drilling and haulage
equipment availabilities were also impacted.

During the year, 1.1 million tonnes of ore were processed at an
average milling rate of 2,983 tonnes per day, compared to 1.3 million tonnes at
an average of 3,439 tonnes per day in 2010. The reduced tonnage processed during 2011 was due to the aforementioned ball mill
shutdowns, however, the average milling rate during 2011 per operating day was
in excess of 3,600 tonnes per day.

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Ore milled during 2011 contained an average silver grade of 253
g/t and an average silver recovery of 79.5% was achieved. This was a significant
improvement compared to a silver grade of 233 g/t and recovery of 65.2% in 2010.
The better silver recovery achieved during 2011 was due principally to
improvements in the consistency of feed and continuous improvements to the
crushing and flotation circuits.

The mine produced a total of 10.1 million pounds of zinc in
2011 which met guidance and resulted from milling higher grades and achieving
better recovery than planned. There was no zinc production in 2010 as the zinc
circuit was not commissioned until the start of 2011.

Mine operating costs

Direct mining cost per ounce, total cash cost per ounce and
total production cost per ounce are non-GAAP financial measures. Please see the
discussion under Non-GAAP Financial Measures below.

During 2011 the Company adopted The Silver Institutes
presentation guidance for production costs. This disclosure guidance differed
from the Companys previous methodology; previous disclosures have therefore
been restated to conform to the amended presentation.

Direct mining costs in 2011 were $13.65 per ounce of silver
compared to $12.19 per ounce in 2010. The increase in unit cost in 2011 versus
2010 was primarily driven by inflationary pressures on local labour costs and
catering, repairs and maintenance costs related to the primary crusher and the
refurbishment of the ball mill gearbox, additional maintenance costs and
external costs associated with the import restrictions, and expenditures
incurred to improve the long-term production efficiency of the facility.

Total cash cost in 2011, which includes by-product credits,
treatment and refining costs, royalties and production taxes, was $20.93 per
ounce of silver compared to $18.03 per ounce of silver in 2010. Treatment and
refining costs, as well as royalties and production taxes all vary as a function
of sales prices and are recorded for the actual ounces of silver sold.
Consequently, on a per ounce basis, the variability in total cash cost from
period to period is partially due to sales prices and the difference between
production and sales volumes. The higher incremental per ounce impact of these
costs in 2011 compared with 2010 is due primarily to higher prices achieved for
sales in the current year.

Total production cost, which includes depreciation and
amortization, was $25.37 per ounce in 2011 compared to $22.14 in 2010. The
depreciation and amortization costs are largely similar on a per ounce basis,
although these costs were impacted in the fourth quarter of 2011 following the
reduction of mineral reserves at Pirquitas which increased the depreciation
charges on certain assets.

Pirquitas Mineral Resources and Reserve

As part of the Companys ongoing production to mineral reserve
reconciliation and mine planning, and to delineate the deposit in greater detail
for the mines Mineral Resources and Mineral Reserve estimates, the Company
undertook a comprehensive drilling campaign between the fourth quarter of 2010
and September 2011. Assay results from these drill-holes were utilized by the
Companys Qualified Persons (QPs) to complete advanced modeling of the
deposits Mineral Resource and Mineral Reserve estimates. The results of this
work were included in the National Instrument 43-101 (NI 43-101) technical
report that was filed on SEDAR on December 23, 2011. As of December 31, 2011 the
mineral reserves of 16.3 million tonnes averaged 172.3 g/t of silver and 0.72%
zinc, for approximately 90.3 million ounces of contained silver and 259 million
pounds of contained zinc.

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Exploration drilling program

In addition to the comprehensive in-fill drilling program that
was completed in 2011 in the area of the San Miguel open-pit, the Company
diamond drilled 1,837 meters at an exploration target located just 200 meters
north of the pit in the Cortaderas Valley. The main target at Cortaderas
consists of a steeply-plunging breccia body where the breccia matrix is composed
of silver-bearing iron and zinc sulphide mineralization and sulfide-rich,
vein-hosted mineralization was intersected by drill-holes in the vicinity of the
above-mentioned breccia body. To date, nine relatively closely-spaced
drill-holes have intersected the mineralized breccia body. The results from this
drilling were encouraging and based on the drilling completed, the Company
estimated an Inferred Mineral Resource for the breccia of 7.0 million tonnes
averaging 98.4 g/t silver and 2.3% zinc, for approximately 22.5 million ounces
of contained silver and 360.1 million pounds of contained zinc, at a 50 g/t
silver cut-off grade. Additional drilling is planned in the first half of 2012
to further define and delineate this resource.

Fiscal stability agreement and regulatory environment

The Pirquitas mine has a fiscal stability agreement with the
government of Argentina dating from 1998. In 2002, the government of Argentina
implemented an export duty on concentrates that did not apply to companies with
pre-existing fiscal stability agreements. In December 2007 the National Customs
Authority of Argentina levied an export duty of approximately 10% from
concentrates for projects with fiscal stability agreements pre-dating 2002. The
Company has been advised that Pirquitas is subject to this export duty despite
contrary rights detailed under the 1998 fiscal stability agreement. The legality
of the export duty applied to silver concentrates has been challenged and is
currently under review by the court in Argentina. In July 2010, the Company
filed a claim in the provincial court for repayment of export duties paid on
silver concentrates, and for an order to cease payment of the export duty until
the matter has been decided by the court. An order was granted effective
September 29, 2010 to cease payment of the export duty on silver concentrates
pending the decision of the courts, and in April 2011 a government appeal
against this order was denied.

As of December 31, 2011 the Pirquitas mine has paid $6.6
million in export duties against which it has filed for recovery. In accordance
with the order to cease payment the Company has not been paying export duties on
silver concentrate but continues to accrue duties in full until the outcome of
the claim is known with certainty. At December 31, 2011, the Company had accrued
a liability totaling $13.1 million, with a corresponding impact on cost of sales
in the relevant period. If this export duty is successfully overturned the
benefit will be recognized in the Consolidated Statement of Income for the full
amount of paid and unpaid duty in the period recovery becomes virtually certain.

On October 26, 2011 the Argentina government announced a decree
that requires all funds from mining export sales to be repatriated to Argentina
and converted into Argentina Pesos within the Sole Foreign Exchange Market in
Argentina, and each transfer is subject to a 0.6% transfer tax. The mining
industry had previously been exempted from this tax. Although the aforementioned
fiscal stability agreement also includes stability over foreign exchange
controls, the government removed such benefits with this decree. The Company
will comply with all laws and regulations, and is monitoring the situation
closely. The impact of the transfer tax should not have a material impact on the
Company.

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Exploration

Pitarrilla, Mexico

A total of $18.2 million was spent during 2011 at the
wholly-owned Pitarrilla project located in the state of Durango, Mexico compared
to $17.7 million in 2010.

During the year a campaign of diamond drilling was conducted,
with 83 boreholes and a total of 13,867 meters being drilled. This drilling
program was designed to provide in-fill assay data for an enhanced estimate of
the projects oxide silver Mineral Resource as well as geotechnical and
metallurgical information that will be used for mine design and optimization.
This drilling work is the basis for a feasibility study which is scheduled to be
completed in the middle of 2012.

A scoping level evaluation indicates the optimum project will
be a large open pit mine. Plant facilities are expected to target 16,000 tonnes
per day and include a milling circuit, an agitated leach circuit and a flotation
circuit. These facilities are expected to produce silver doré and separate lead
and zinc concentrates containing payable silver.

The design of the open pit is expected to start in the upper
and mid-level oxide and transitional ores and then extend into the higher grade
sulfide ores in the heart of the deposit in the basal conglomerate zone and
finally bottom out in the upper levels of sulfide mineralization in sedimentary
structures below the conglomerate. This mining operation will leave intact, the
middle and lower zones of the sedimentary structures for subsequent potential
underground mining.

The Environmental Impact Assessment (EIA) process is
currently scheduled to be completed with a construction permit application in
the third quarter of 2012. Land access rights are being secured and construction
has commenced for the operations camp, water wells and access roads.

In March 2012 the Company plans to commence the latest phase of
in-fill and brownfields drilling. This diamond drill program of approximately
8,300 meters has the objective of expanding the near-surface oxide
mineralization at the Breccia Ridge and South Ridge zones. In addition,
metallurgical testing is underway to optimize metal recoveries from oxide and
sulfide mineralization. Where possible, results of the drilling and
metallurgical studies will be included in the Pitarrilla feasibility study.

The Company also continues to build management and technical
capability, notably with the recruitment of a new country manager and a project
manager.

The Company updated the Mineral Resources at Pitarrilla as of
January 31, 2012, as announced in the Companys news release on February 27,
2012 and the project currently comprises Measured and Indicated Mineral
Resources of 245.0 million tonnes containing 655.7 million ounces of silver
averaging 83.3 g/t and Inferred Mineral Resources of 31.3 million tonnes
containing 65.0 million ounces of silver averaging 64.7 g/t, at a 30 g/t silver
cut-off grade. The project also contains Measured and Indicated Mineral
Resources of 4 billion pounds of zinc and 2 billion pounds of lead.

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San Luis, Peru

A total of $5.6 million was spent during 2011 at the now
wholly-owned San Luis project in Peru compared to $6.4 million in 2010. On July
28, 2011, the Company acquired the remaining 30% interest in the San Luis
project from the Companys former joint venture partner, Esperanza Resources
Corp. (Esperanza). Under the terms of the agreement, the Company paid $17.9
million in cash, transferred to Esperanza the 6.5 million shares of Esperanza
that the Company owned, and granted to Esperanza a 1% net smelter return royalty
on future revenues earned from the project.

Long-term land access negotiations continued with two local
communities, one agreement being completed and one ongoing, and work also
continued on completing the required Environmental Impact Study (EIS). The
completion of the land access agreements and approval of the EIS will enable a
construction decision to be made.

During the year, mineral prospecting on the property resulted
in the discovery of a set of northwesterly trending quartz veins which were
tested for their precious metal content with the collection of 265 rock-chip
samples. Assay results for these samples indicate sections of these veins are
significantly mineralized with gold and require further assessment by diamond
drilling. In addition, the Company contracted an external consultant to examine
and assess the potential of the BP Zone. This zone of widespread hydrothermal
alteration and base metal mineralization is centered about 4 kilometers
southwest of the Ayelen vein-hosted gold-silver deposit. It was concluded that
the alteration and mineralization found at the BP Zone is most likely related to
a porphyry intrusion and warrants additional drill-testing. Exploration programs
to further evaluate the epithermal gold and porphyry copper targets are
planned.

The San Luis project comprises Proven and Probable Mineral
Reserves of 0.5 million tonnes containing 7.2 million ounces of silver averaging
446 g/t and 0.29 million ounces of gold averaging 18 g/t. These Mineral Reserves
are 100% attributable to the Company as of July 28, 2011, following its
consolidation of ownership.

Diablillos, Argentina

A total of $2.6 million was spent during 2011 at the Companys
wholly-owned Diablillos project (which is located 275 kilometers south of the
Pirquitas Mine in northwestern Argentina) compared to $2.2 million in 2010.

Expenditures primarily included administrative, property taxes
and camp maintenance costs. Fieldwork mainly comprised rock sampling to identify
satellite zones of near-surface oxidized gold mineralization that would
complement the resources defined in the main Oculto silver-gold deposit. A
number of prospects were identified for follow-up mechanized trenching and
additional sampling and several of these targets will be drilled in 2012 with
shallow boreholes.

The Oculto deposit at the Diablillos project has an Indicated
Mineral Resource of 21.6 tonnes containing 77.1 million ounces of silver
averaging 111 g/t and 0.64 million ounces of gold averaging 0.9 g/t, with
additional Inferred Mineral Resources of 7.2 million tonnes containing 6.3
million ounces of silver averaging 27 g/t and 0.19 million ounces of gold
averaging 0.8 g/t.

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San Agustin, Mexico

A total of $0.6 million was spent during 2011 at the Companys
wholly-owned San Agustin project located in Durango State, Mexico compared to
$1.1 million spent in the prior year. Most of the expenditure was incurred as
property holding costs and other administrative expenses.

Advanced negotiations were conducted during the year with three
parties that control the property surface rights. Once land access agreements
are in place, a 5,000 meter diamond drilling program will be initiated. The
objective of the drilling program will be to expand the near-surface oxidized
gold resource. In addition to the proposed program of in-fill drilling, detailed
metallurgical studies will also be undertaken and will focus on gold recovery
characteristics of the oxide gold mineralization.

The San Agustin project currently comprises an Indicated
Mineral Resource of 121 million tonnes containing 47.8 million ounces of silver
averaging 12.3 g/t and 1.59 million ounces of gold averaging 0.41 g/t, along
with an Inferred Mineral Resource of 91.2 million tonnes containing 36.9 million
ounces of silver averaging 12.6 g/t and 1.06 million ounces of gold averaging
0.36 g/t.

Nazas, Mexico

A total of $4.4 million was spent during 2011 at the Companys
wholly-owned Nazas project located in Durango State, Mexico compared to $1.3
million during 2010.

Nazas, which until recently comprised three contiguous mineral
properties covering approximately 236 square kilometers, is centered about 16
kilometers east of the Pitarrilla project and covers an extensive system of
gold- and silver-bearing quartz veins and related hydrothermal alteration.
Several of these vein targets have now been tested, with approximately 12,587
meters being drilled from 22 boreholes during 2011. Early in the campaign,
drill-holes intersected gold mineralization in epithermal quartz veining that
prompted the addition of seven holes to the original program.

During the fourth quarter of 2011 however, the Company elected
not to continue its option to purchase the Navidad claim group at the center of
the Nazas project area and expensed previously capitalized exploration costs of
$4.5 million. Although mineralization was encountered, assay results were
inadequate to justify the high costs to maintain the option. Notwithstanding the
decision on the Navidad claim group, the geological information provided by this
years drilling campaign will be utilized in the planning of future drilling on
the other two Nazas properties. The goal at Nazas continues to be the discovery
of precious metal-rich polymetallic mineralization.

Critical Accounting Policies and Estimates

Basis of preparation and accounting policies

The Company has prepared its consolidated financial statements
in accordance with IFRS as issued by the International Accounting Standards
Board (IASB). IFRS represents standards and interpretations approved by the
IASB and are comprised of IFRS, International Accounting Standards (IASs),
and interpretations issued by the IFRS Interpretations Committee (IFRICs) and
the former Standing Interpretations Committee (SICs). The Company adopted
IFRS in accordance with IFRS 1  First-time Adoption of International Financial
Reporting Standards (IFRS 1) with a transition date of January 1, 2010. The
consolidated financial statements have been prepared in accordance with IFRS
standards and interpretations effective as of December 31, 2011. Note 2 to the
consolidated financial statements for the year ended December 31, 2011 provides
details of significant accounting policies and accounting policy decisions as a
result of IFRS 1 optional exemptions, for significant or potentially significant
areas that have had an impact on the Companys financial statements on
transition to IFRS or may have an impact in future periods.

- 79 -

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There were no changes to the accounting policies applied by the
Company to each of the 2011 quarterly unaudited interim consolidated financial
statements, to those applied to the consolidated financial statements for the
year ended December 31, 2011.

Critical Accounting Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to use estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as revenues and expenses.

Review of asset carrying values and impairment
assessment In accordance with the Companys accounting policy each asset
or cash generating unit is evaluated every reporting period to determine whether
there are any indications of impairment. If any such indication exists, a formal
estimate of recoverable amount is performed and an impairment loss is recognized
to the extent that the carrying amount exceeds the recoverable amount. The
recoverable amount of an asset or cash generating group of assets is measured at
the higher of fair value less costs to sell and value in use.

The determination of fair value and value in use requires management to make estimates and assumptions about expected production, sales volumes, commodity prices, reserves, operating costs, closure and rehabilitation costs and future capital expenditures. The estimates and assumptions are subject to risk and uncertainty, hence there is the possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances some or all of the carrying value of the assets may be further impaired or the impairment charge reduced with the impact recorded in the income statement.

Determination of mineral reserve and mineral resource
estimates The Company estimates its mineral reserves and mineral
resources based on information compiled by qualified persons as defined by NI
43-101. Reserves determined in this way are used in the calculation of
depreciation, amortization and impairment charges, and for forecasting the
timing of the payment of close down and restoration costs. In assessing the life
of a mine for accounting purposes, mineral resources are only taken into account
where there is a high degree of confidence of economic extraction. There are
numerous uncertainties inherent in estimating mineral reserves, and assumptions
that are valid at the time of estimation may change significantly when new
information becomes available. Changes in the forecast prices of commodities,
exchange rates, production costs or recovery rates may change the economic
status of reserves and may, ultimately, result in reserve estimates being
revised. Such changes in reserves could impact on depreciation and amortization
rates, asset carrying values and provisions for close down and restoration
costs.

During the year ended December 31, 2011 the Company presented
an updated mineral reserve and mineral resource at its Pirquitas mine in
Argentina, this will increase depletion and depreciation charges in future
periods by reducing the life of mine and expected tonnes of production.

Determination of useful lives of property, plant and
equipment The Company uses the units of production method to depreciate
mineral property expenditure, whereby depreciation is calculated using the
tonnage of ore extracted from the mine in the period as a percentage of the
total tonnage of ore expected to be extracted in current and future periods
based on proven and probable reserves. As noted above there are numerous
uncertainties inherent in estimating ore reserves which are fundamental to this
calculation.

- 80 -

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Valuation of inventory Stockpiled ore, work in
process and finished goods are valued at the lower of cost and net realizable
value (NRV). NRV is calculated as the estimated price at the time of sale
based on prevailing and future metal prices less estimated future production
costs to convert the inventory into saleable form and all associated selling
costs. The determination of both estimated future sales price and production
costs requires significant assumptions that may significantly impact the stated
value of the Companys inventory.

Close down and restoration provisions Close down
and restoration costs are a normal consequence of mining, and the majority of
close down and restoration expenditures are incurred near the end of the life of
the mine. The Companys accounting policy requires the recognition of such
provisions when the obligation occurs. The initial provisions are periodically
reviewed during the life of the operation to reflect known developments, e.g.
updated cost estimates and revisions to the estimated lives of operations.
Although the ultimate cost to be incurred is uncertain, the Company estimates
its costs based on studies using current restoration standards and techniques.
The initial closure provisions together with changes, other than those arising
from the unwind of the discount applied in establishing the net present value of
the provision, are capitalized within property plant and equipment and
depreciated over the lives of the assets to which they relate.

The ultimate magnitude of these costs is uncertain, and cost
estimates can vary in response to many factors including changes to the relevant
legal requirements, the emergence of new restoration techniques or experience on
other mine sites. The expected timing of expenditure can also change, for
example in response to changes in ore reserves or production rates or economic
conditions. As a result there could be significant adjustments to the provision
for close down and restoration, which would affect future financial results.

During the fourth quarter of the year ended December 31, 2011,
the Company recorded a change in its estimate for close down and restoration
from the preliminary findings of a mine closure plan for its Pirquitas mine in
Argentina, that is scheduled for completion in 2012. The estimate increased by
$33.8 million, and this was a prospective change that no impact on the
Consolidated Statement of Income for the year ended December 31, 2011. There is
considerable measurement uncertainty with a provision of this nature from the
timing of cash flows, inflationary environment and impact of exchange rates. The
final obligation could vary materially from that presented which would impact
future results.

Determination of the fair value of share-based
compensation The fair value of stock options and other forms of
share-based compensation granted is computed to determine the relevant charge to
the income statement, and liability if applicable. In order to compute this fair
value the Company uses different option pricing models that inherently require
management to make various estimates and assumptions in relation to the expected
life of the award, expected volatility, risk-free rate and forfeiture rates.

Deferred tax assets and liabilities The
determination of the Companys tax expense for the period and deferred tax
assets and liabilities involves significant estimation and judgment by
management. In determining these amounts, management interprets tax legislation
in a variety of jurisdictions and makes estimates of the expected timing of the
reversal of deferred tax assets and liabilities. Management also makes estimates
of future earnings which affect the extent to which potential future tax
benefits may be used. The Company is subject to assessments by various taxation
authorities, which may interpret legislation differently. These differences may
affect the final amount or the timing of the payment of taxes. The Company
provides for such differences, where known, based on managements best estimate
of the probable outcome of these matters.

The Company has an unrecognised deferred tax asset in respect of potential foreign tax credits that may be used to offset taxes paid in Argentina.  These have not been recognised due to measurement uncertainty over the extent and timing of any potential benefit. If recognized this will create a recovery of income tax expense in that period.

- 81 -

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Transition to International Financial Reporting Standards

On January 1, 2011 the Canadian Accounting Standards Board
replaced Canadian GAAP with IFRS for publically accountable enterprises, with a
transition date of January 1, 2010, due to requirement to present comparative
financial information. IFRS represents standards and interpretations approved by
the IASB and are comprised of IFRSs, IASs, IFRICs and the former SICs.

Notes 2 and 26 to the consolidated financial statements for the
year ended December 31, 2011 provide details of key Canadian GAAP to IFRS
differences, accounting policy decisions and IFRS 1, optional exemptions for
significant or potentially significant areas that have had an impact on the
Companys financial statements on transition to IFRS or may have an impact in
future periods.

The Company completed its conversion from Canadian GAAP to IFRS
through a transition plan that involved scoping and planning, an assessment of
differences, implementation and post-implementation. The post-implementation
phase involves the maintenance of IFRS-compliant financial data and processes
for 2011 and the future.

The conversion from Canadian GAAP to IFRS has resulted in
changes to the Companys accounting policies, financial reporting processes,
incremental controls relating to the conversion process and additional training
requirements. The conversion did not have any impact on the Companys key
internal performance ratios or compensation plans.

The following outlines the impact of transition to IFRS on
shareholders equity and total comprehensive income.

Shareholders Equity Impact

As a result of accounting policy choices selected and changes
that were required to be made under IFRS, the Company recorded a reduction in
shareholders equity of $98.0 million as at January 1, 2010. A full
reconciliation of this adjustment is included in the consolidated financial
statements for the year ended December 31, 2011. In accordance with IFRS 1, the
Company was required to maintain all previous estimates and assumptions in
existence including but not limited to metal prices, discount rates, capital and
operating costs, reserves and resources.

The following is a summary of the adjustments to shareholders
equity as at December 31, 2010 and January 1, 2010 under IFRS (all of which are
outlined in the notes to the consolidated financial statements):

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December 31,
    
    
    January 1,2010
    
    
    2010$000s
    
      
    $000sTotal equity reported under
      Canadian GAAP
    
    1,031,772
    
    
    537,186Increase (decrease) net of
      tax in respect of:Valuation of Pirquitas mine
    
    (79,842
    )
    
    (84,018
    )Close down and restoration provision
    
    (76
    )
    
    -Share-based compensation
    
    (52
    )
    
    -Functional currency
    
    4,654
    
    
    5,030Convertible notes
    
    (18,859
    )
    
    (17,086
    )Deferred tax liabilities
    
    (5,737
    )
    
    (1,949
    )Total equity reported under IFRS
    
    931,860
    
    
    439,163


Comprehensive Income Impact

As a result of accounting policy choices selected and changes
that were required to be made under IFRS, the Company has recorded a decrease in
total comprehensive income of $6.0 million for the year ended December 31,
2010.

The following is a summary of the adjustments to comprehensive
income for the year ended December 31, 2010 under IFRS (all of which are
outlined in the notes to the consolidated financial statements), expressed in
thousands of USD:

2010$000sTotal comprehensive income as reported
      under Canadian GAAP
    
    359,501Increase (decrease) net of tax in respect
      of:Valuation of Pirquitas mine
    
    4,176Close down and restoration provision
    
    (76
    )Share-based compensation
    
    991Functional currency
    
    (373
    )Convertible notes
    
    (1,773
    )Deferred tax liabilities
    
    (8,897
    )Total comprehensive income as reported under IFRS
    
    353,549


The Company revised its previously published transition
adjustment for deferred tax liabilities in relation to the tax basis of certain
Argentine assets relating to foreign exchange and other adjustments. The impact
was an increase in deferred tax liabilities of $0.7 million as at January 1,
2010 and a further increase of $5.5 million as at December 31, 2010 with a
corresponding increase in the tax expense for the year. These adjustments are
not material to the previously presented financial information.

- 83 -

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Cash Flow Impact

The transition from Canadian GAAP to IFRS had no significant
impact on cash flows generated by the Company.

Control Activities

For all changes to policies and procedures that have been
identified, the effectiveness of internal controls over financial reporting and
disclosure controls and procedures have been assessed and any changes have been
implemented. In addition, controls over the IFRS changeover process have been
implemented, as necessary. The Company has identified and implemented the
required accounting process changes that resulted from the application of IFRS
accounting policies and these changes were not significant. The Company has
updated the design, implementation and documentation of the internal controls
over accounting process resulting from the application of IFRS accounting
policies. The existing control framework has been applied to the IFRS changeover
process. All accounting policy changes, transitional exemption elections and
transitional financial position impacts were subject to review by senior
management and the Audit Committee of the Board of Directors.

Business Activities and Key Performance Measures

The Company has reviewed the impacts of the IFRS transition
project on its key performance measures and compensation arrangements, in
particular those that are calculated based on indicators in the financial
statements, and determined that there was no significant impact.

Information Technology and Systems

The IFRS transition project did not have a significant impact
on information systems for the convergence periods, nor is it expected that
significant changes are required in the post-convergence periods.

Post-Implementation

The post-implementation phase will involve continuous
monitoring of changes in IFRS in future periods. It has been noted that the
standard-setting bodies that determine IFRS have significant ongoing projects
that could impact the IFRS accounting policies that the Company has selected. In
particular, there may be additional new or revised IFRSs or IFRICs in relation
to consolidation, financial instruments, leases, revenue recognition and
stripping costs in the production phase of a surface mine. The IASB is also
currently working on an extractive industries project, which could significantly
impact the financial statements of the Company primarily in the areas of
capitalization of exploration costs and disclosures. Processes are in place to
ensure that potential changes are monitored and evaluated. The impact of any new
IFRSs and IFRIC Interpretations will be evaluated as they are drafted and
published.

Future Accounting Changes

IFRS 9, Financial Instruments (IFRS 9) was issued in
November 2009 and contained requirements for financial assets. This standard
addresses classification and measurement of financial assets and replaces
mulitiple category and measurement models in IAS 39 for debt instruments with a
new mixed measurement model having only two categories: amortized cost and
FVTPL. IFRS 9 also replaces the models for measuring equity instruments, and
such investments are either recognised at FVTPL or at fair value through other
comprehensive income. Where such equity instruments are measured at fair value
through other comprehensive income, dividends are recognised in profit or loss
to the extent not clearly representing a return of investment; however, other
gains and losses (including impairments) associated with such instruments remain
in accumulated comprehensive income indefinitely.

- 84 -

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Requirements for financial liabilities were added in October
2010 and they largely carried forward existing requirements in IAS 39, Financial
Instruments  Recognition and Measurement, except that fair value changes due to
credit risk for liabilities designated at fair value through profit and loss
would generally be recorded in other comprehensive income.

This standard is required to be applied for accounting periods
beginning on or after January 1, 2013, with earlier adoption permitted. The
Company has not yet assessed the impact of the standard or determined whether it
will adopt the standard early.

On May 12, 2011 the IASB issued the following statements:

| | i.   | IFRS 10, Consolidation(IFRS 10) (see further
      details below)                                                                                                                            
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii.  | IFRS 11, Joint Arrangements(IFRS 11) ( see
      further details below)                                                                                                                      
| | iii. | IFRS 12, Disclosures of Interests with Other Entities(IFRS 12) (see further details below)                                                                                                   
| | iv.  | IAS 27, Separate Financial Statements(revised
      2011) (IAS 27), has been amended for issuance of IFRS 10 while
      maintaining the current guidance for separate financial
  statements
| | v.   | IAS 28, Investments in Associates and Joint Ventures (revised 2011) (“IAS 28”), has been amended for conforming changes based on the issuance of IFRS 10 and IFRS 11.                          

Each of these standards has an effective date for annual
periods beginning on or after January 1, 2013, early adoption of any of these
standards is permitted only if the other standards are also adopted early.

| | i.   | IFRS 10 establishes control as the single basis for
      consolidation of entities, regardless of the nature of the investee. An
      entity has control over an investee when it has power over it; it is
      exposed, or has the rights, to variable returns from its involvement with
      the investee; and has the ability to use its power over the investee to
      affect those returns. IFRS 10 replaces IAS 27s guidance that addresses
      when and how an investor should prepare consolidated financial statements
      and replaces all of SIC-12. The Company has not yet assessed the impact of
      the standard or determined whether it will adopt the standard
  early.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ii.  | IFRS 11 requires a venturer to classify its interest in a
      joint arrangement as a joint venture or joint operation. A joint operation
      is a joint arrangement whereby the parties that have joint control have
      rights to the assets and the obligations for the liabilities. A joint
      venture is a joint arrangement whereby the parties that have joint control
      of the arrangement have rights to the net assets of the arrangement. The
      determination whether a joint arrangement constitutes a joint operation or
      a joint venture is based on the parties rights and responsibilities under
      the arrangement and thus the existence of a separate legal vehicle is no
      longer the main factor in making such determination. Joint ventures will
      be accounted for using the equity method of accounting thereby eliminating
      the option available under existing IFRS to use either the proportionate
      consolidation method or the equity method. Joint operations are accounted
      for by a venturer by recognizing its share of the assets, liabilities,
      revenues and expenses of the joint operation. The Company has not yet
      assessed the impact of the standard or determined whether it will adopt
      the standard early.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | iii. | IFRS 12 sets out the required disclosures relating to an
      entitys interest in subsidiaries, joint arrangements, associates and
      unconsolidated structured entities. An entity is required to disclose
      information that enable users of its financial statements to assess the
      nature of, and risks associated with, its interests in other entities and
      the effects of those interests on its financial statements. The Company
      has not yet assessed the impact of the standard or determined whether it
      will adopt the standard early.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

- 85 -

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IFRS 13 Fair Value Measurement(IFRS 13) was issued on
May 12, 2011 and establishes a single framework for measuring fair value where
it is required by other standards. IFRS 13 applies to all transactions (whether
financial or non-financial) for which IFRS requires or permits fair value
measurements, with the exception of share-based payment transactions accounted
for under IFRS 2 Share-based Payment and leasing transactions within the
scope of IAS 12 Leases, and measurements that have some similarities to
fair value but are not fair value such as net realisable value under IAS 2
Inventories or value in use under IAS 36 Impairment of assets.
Fair value is defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date (i.e. an exit price).

This standard is required to be applied for accounting periods
beginning on or after January 1, 2013, with earlier adoption permitted. The
Company has not yet assessed the impact of the standard or determined whether it
will adopt the standard early.

On June 16, 2011 the IASB issued Presentation of Items of
Other Comprehensive Income (amendments to IAS 1, Presentation of Financial
statements). The amendments require the grouping of items presented in other
comprehensive income into items that might be reclassified to profit or loss in
subsequent periods and items that will not be reclassified to profit or loss in
subsequent periods. The amendments are effective for annual periods beginning on
or after July 1, 2012, with full retrospective application. The Company has not
yet assessed the impact of the standard or determined whether it will adopt the
standard early.

In October 2011 the IASB issued IFRIC 20 Stripping Costs in
the Production Phase of a Surface Mine (IFRIC 20). This interpretation provides guidance on the
accounting for the costs of stripping activity in the production phase when two
benefits accrue to the entity: usable ore that can be used to produce inventory
and improved access to further quantities of material that will be mined in
future periods. IFRIC 20 is applicable for annual periods beginning on or after
January 1, 2013 with early adoption permitted. The Company has not yet assessed
the impact of the standard or determined whether it will adopt the standard
early.

Non-GAAP Financial Performance Measures

The non-GAAP financial measures presented do not have any
standardized meaning prescribed by IFRS and are therefore unlikely to be
directly comparable to similar measures presented by other issuers.

Non-GAAP financial measures  Cash cost per ounce
  of silver

The Company uses the non-GAAP measures of direct mining cost,
total cash cost and total production cost per ounce of silver to manage and
evaluate operating performance. The Company believes that, in addition to
conventional measures prepared in accordance with GAAP, certain investors use
this information to evaluate the Companys performance and ability to generate
cash flows. Accordingly, it is intended to provide additional information and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP.

This classification is based upon The Silver Institutes
production cost standard as endorsed on June 16, 2011. Previous to this date
there was no standardized presentation guidance and the Company reported cash
production cost, cash operating cost and total production cost, and moved to The
Silver Institutes production cost standard in its disclosures in 2011 in order
to facilitate more uniform disclosures within the industry. All comparatives
have been updated to reflect the current presentation standard.

The following table provides a reconciliation of direct mining
costs, total cash costs and total production costs to cost of sales, as reported
in the Companys Consolidated Statement of Income:

- 86 -

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Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
      
      **TOTAL**
      
    
    TOTAL2011
    
    
    2011
    
    
    2011
    
    
    2011
    
      
      2011
      
    
    2010$000s
    
    
    $000s
    
    
    $000s
    
    
    $000s
    
      
      $000s
      
    
    $000sCost of inventory per income statement
    
    22,547
    
    
    20,602
    
    
    11,532
    
    
    12,013
    
      
      66,694
      
    
    67,231Movement in inventory
    
    (1,745
    )
    
    2,399
    
    
    14,892
    
    
    14,357
    
      
      29,903
      
    
    9,619Other adjustments
    
    -
    
    
    (152
    )
    
    
    
    
    (156
    )
      
      (308
      )
    
    -Direct mining expenses
    
    20,802
    
    
    22,849
    
    
    26,424
    
    
    26,215
    
      
      96,290
      
    
    76,850Third party smelting, refining andtransportation costs
    
    15,568
    
    
    13,964
    
    
    8,620
    
    
    4,614
    
      
      42,766
      
    
    26,792By-product credits
    
    (2,250
    )
    
    (733
    )
    
    (1,645
    )
    
    (992
    )
      
      (5,620
      )
    
    (204
    )Royalties & production taxes
    
    5,306
    
    
    7,507
    
    
    204
    
    
    1,193
    
      
      14,210
      
    
    10,192Total cash costs
    
    39,426
    
    
    43,587
    
    
    33,603
    
    
    31,029
    
      
      147,645
      
    
    113,630Depletion, depreciation and amortization perincome statement
    
    5,794
    
    
    5,235
    
    
    2,410
    
    
    3,107
    
      
      16,546
      
    
    22,151Movement in inventory
    
    591
    
    
    1,090
    
    
    4,031
    
    
    9,081
    
      
      14,793
      
    
    3,745Total production costs
    
    45,811
    
    
    49,912
    
    
    40,044
    
    
    43,217
    
      
      178,984
      
    
    139,526Production (ounces)
    
    1,697,294
    
    
    1,975,616
    
    
    1,631,281
    
    
    1,751,398
    
      
      7,055,589
      
    
    6,302,140Direct mining expenses ($ per ounce)
    
    12.26
    
    
    11.57
    
    
    16.20
    
    
    14.97
    
      
      13.65
      
    
    12.19Total cash cost ($ per ounce)
    
    23.23
    
    
    22.06
    
    
    20.60
    
    
    17.72
    
      
      20.93
      
    
    18.03Total production cost ($ per ounce)
    
    26.99
    
    
    25.26
    
    
    24.55
    
    
    24.68
    
      
      25.37
      
    
    22.14


Non-GAAP financial measures  adjusted income (loss)

The Company has included the non-GAAP financial performance
measure of adjusted net income (loss) and adjusted basic earnings (loss) per
share. The Company believes that, in addition to conventional measures prepared
in accordance with GAAP, certain investors may want to use this information to
evaluate the Companys performance and ability to generate cash flow.
Accordingly, it is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with GAAP.

The following table provides a reconciliation of adjusted net
loss to the consolidated financial statements:

2011
    
    
    2010$000's
    
    
    $000'sNet income attributable to
      shareholders
    
    80,128
    
    
    338,455Adjusted for:Gain on sale and write off of mineral
      properties
    
    (54,480
    )
    
    (402,247
    )Gain on partial
      disposal of associate
    
    (38,776
    )
    
    -Unrealised (gain) loss on financial
      instruments at FVTPL
    
    (20,182
    )
    
    1,109Gain on dilution of
      associate
    
    (1,803
    )
    
    -Share of loss of associate
    
    6,078
    
    
    77Adjusted net loss
    
    (29,034
    )
    
    (62,606
    )Weighted average shares outstanding (000's)
    
    80,324
    
    
    77,972Adjusted basic loss per share ($)
    
    (0.36
    )
    
    (0.80
    )


- 87 -

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Financial Instruments and Related Risks

The Company is exposed to a variety of financial risks as a
result of its operations, including market risk (which includes price risk,
currency risk and interest rate risk), credit risk and liquidity risk. The
Companys overall risk management strategy seeks to reduce potential adverse
effects on the Companys financial performance. Risk management is carried out
under policies approved by the Board of Directors.

The Company may, from time to time, use foreign exchange
contracts, commodity price contracts and interest rate swaps to manage its
exposure to fluctuations in foreign exchange, metal prices and interest rates.
The Company does not have a practice of trading derivatives. In the past, the
Companys use of derivatives was limited to specific programs to manage
fluctuations in foreign exchange risk, which are subject to the oversight of the
Board of Directors.

The risks associated with the Companys financial instruments,
and the policies on how the Company mitigates those risks are set out below.
This does not constitute a fulsome discussion of all risks facing the
Company.

See Item 11 Quantitative and Qualitative Disclosures About
Market Risk for a discussion about market risk.

Credit Risk

Credit risk is the risk that a third party might fail to
discharge its obligations under the terms of a financial contract. The Companys
credit risk is limited to the collectability of trade receivables in the
ordinary course of business and the quality of its financial investments.

Credit risk related to financial institutions and cash
deposits The Companys policy is only to utilize highly-rated financial
institutions and only to invest in government securities. The Company considers
the risk of loss associated with cash deposits to be low.

Credit risk related to trade receivables The
Company is subject to significant concentrations of credit risk related to trade
receivables because almost all of its sales through 2011 were to a single
customer. The Company has not, however, recorded an allowance against trade
receivables because it is confident of the collectability based on the nature of
its customer and all balances owed have been settled in full when due. In order
to mitigate this risk, the Company ensures a minimum creditworthiness of
customers, and has entered into spot sales agreements with additional customers
in 2012.

Credit risk related to other financial assets All
other receivable balances are expected to be collectible in full due to the
nature of the counterparties and/or a previous history of collectability.

The Company also has credit risk through its significant value
added tax balance that is collectible from the government of Argentina. Due to
the legislative rules and complex collection process the asset has been
classified as non-current. The Company believes that this balance is collectible
in full.

- 88 -

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The Companys maximum exposure to credit risk at December 31was
as follows:

2011
    
    
    2010$000s
    
    
    $000sCash and cash equivalents
    
    329,055
    
    
    232,311Value added tax receivable
    
    90,642
    
    
    71,683Trade and other receivables
    
    5,045
    
    
    35,916Other financial assets
    
    1,768
    
    
    9,051426,510
    
    
    348,961


At December 31, 2011 no amounts were held as collateral.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to
meet its obligations over financial instruments as they fall due. The Company
manages its liquidity risk through a rigorous planning and budgeting process,
which is reviewed and updated on a regular basis, to help determine the funding
requirements to support the Companys current operations, expansion and
development plans, and by managing its capital structure. The Companys
objective is to ensure that there are sufficient committed financial resources
to meet its business requirements for a minimum of twelve months.

In the opinion of management, working capital at December 31,
2011 together with future cash flows from operations is sufficient to support
the Companys commitments through 2012. For periods beyond 2012 the current
working capital and cash flows from operations are expected to support further
development, exploration and growth.

B.Liquidity and Capital Resources

At December 31, 2011, the Company had approximately $329.1
million of cash and cash equivalents, an increase of $96.7 million from December
31, 2010. This cash is considered sufficient to meet the Companys working
capital requirements and debt obligations.

In addition to the cash and cash equivalents, at December 31,
2011 the Company had positive working capital of $70.0 million, comprised of
$33.5 million in marketable securities and inventory of $94.7 million, offset by
current liabilities of $77.6 million. The high finished goods inventory balance
of $44.5 million at year end was due to the lower level of sales in the second
half of 2011 while new long-term sales contracts were being negotiated; this is
expected to be sold in the first half of 2012. Current liabilities constitute
taxes payable of $22.5 million, and other payables and accrued liabilities in
the normal course of business.

At December 31, 2011 the Company also owned 24.7 million shares
of Pretium which are held at cost on the Statement of Financial Position, but
had a market value in excess of $300 million, and subsequent to the year-end by
February 29, 2012 the market value of the Pretium holding has risen further, to
in excess of $400 million.

The Companys liquidity position improved compared to the prior
year end due to net cash inflows of $96.7 million, for total cash and cash
equivalents at December 31, 2011 of $329.1 million. Of this $322.7 million is
held in Canada and the United States.

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The cash inflows during the year were largely the result of the
sale of Pretium shares in April for cash proceeds of $112.4 million, the sale of
the Bowdens project generating $39.4 million, and $20.1 million from 1.0 million
stock options exercised. Operating cash flows from the Pirquitas mine largely
offset corporate costs and interest payments, while exploration and capital
costs totalled $65.3 million.

The following table summarizes the Companys financial
liabilities, operating and capital commitments at December 31, 2011:

We enter into contracts that give rise to commitments for
future minimum payments in the normal course of business. The following table
summarizes the remaining undisclosed contractual maturities of our financial
liabilities and operating and capital commitments, at December 31:

Payments due by period ($000s)Contractual obligations
      
      Total
      
      
      Less than one year
      
      
      1
        - 3 years
      
      
      4-5 years
      
      
      After 5 yearsTrade and other payables
      
      46,898
      
      
      46,898
      
      
      -
      
      
      -
      
      
      -Convertible notes (i)
      
      138,000
      
      
      -
      
      
      138,000
      
      
      -
      
      
      -Interest on convertible notes (i)
      
      1,004
      
      
      -
      
      
      1,004
      
      
      -
      
      
      -Capital expenditure commitments
      
      9,635
      
      
      7,573
      
      
      2,062
      
      
      -
      
      
      -Minimum lease rental and lease payments
      
      505
      
      
      453
      
      
      52
      
      
      -
      
      
      -Total contractual obligations
      
      196,042
      
      
      54,924
      
      
      141,118
      
      
      -
      
      
      -


(i)Convertible notes mature in 2028 but are
redeemable in part or in full at the option of the holder on March 1 of each of
2013, 2018 and 2023, or upon certain fundamental corporate changes. They are
also redeemable by the Company in part or in full on and after March 5, 2013.
The notes bear interest at 4.5% per annum and are convertible into common shares
upon specified events at a fixed conversion price of approximately $43.33 per
common share.

The Companys financial position at December 31, 2011, and the
operating cash flows that are expected over the next twelve months are believed,
in the Companys opinion to be sufficient to fund currently-planned capital and
exploration expenditures in 2012 and to discharge liabilities as they come
due.

Capital Resources

The capital of the Company consists of items included in
shareholders equity and debt, net of cash and cash equivalents as follows:

December 31
    
    
    December 31
    
    
    January 12011
    
    
    2010
    
    
    2010$000s
    
    
    $000s
    
    
    $000sShareholders' equity
    
    705,876
    
    
    676,651
    
    
    538,700Convertible notes
    
    125,313
    
    
    116,125
    
    
    107,895831,189
    
    
    792,776
    
    
    646,595Less: cash and cash equivalents
    
    (329,055
    )
    
    (232,311
    )
    
    (26,659
    )502,134
    
    
    560,465
    
    
    619,936


At December 31, 2011 there was no externally-imposed capital
requirement to which the Company is subject and with which the Company has not
complied.

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The Company is advancing its Pitarrilla project in Mexico with
the objective of completing a feasibility study by mid-2012. If the feasibility
study results in a positive construction decision the Companys capital
expenditure requirements are expected to increase materially in late 2012 and
for the next few years.

As at December 31, 2011 the Company had approximately 80.7
million common shares outstanding and 1.9 million stock options outstanding
which are exercisable into common shares at exercise prices ranging between
C$11.50 and C$40.62.

Outstanding share data

The authorized capital consists of an unlimited number of
common shares without par value. As at March 8, 2012, the following common
shares and options were outstanding:

Number of shares
    Exercise price
    Remaining lifeC$
    (years)Capital stock
    80,745,100Stock options
    2,065,829
    11.50 - 40.62
    0.3 - 8.7Fully diluted
    82,810,929


The Companys Board of Directors adopted a Shareholder Rights
Plan on March 9, 2012 as more fully described in the Companys news release
dated March 12, 2012. See Item 9.A. Offer and Listing Details.

C.Research and Development, Patents and Licenses, etc.

We are a mineral exploration and development company with only
one producing property, which achieved production status on December 1, 2009
and, as such, the information required by this item is inapplicable.

D.Trend Information

The key trend impacting the Companys results are the Companys
operations at the Pirquitas Mine. The mine achieved commercial production on
December 1, 2009, with 2010 and 2011 being the first full years of silver
production resulting in the generation of revenue and cash flows. See Item 5.A.
 Operating Results.

The Companys results have also been significantly impacted by
mineral property sales such as Silvertip and Snowfield/Bruckjack in 2010 and
Bowdens in 2011 as described in this Annual Report.

E.Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to investors.

**F.       
Tabular Disclosure of Contractual Obligations**

See Item 5.B. Liquidity and Capital Resources  Contractual
Obligations.

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G.Safe Harbor

See Note Regarding Forward-Looking Statements.

Item
6Directors, Senior Management and Employees

A.Directors and Senior Management

The following table lists, as of March 30, 2012, the names of
our directors and senior management. Each of the directors and senior officers
has served in his or her respective capacity since his or her election and/or
appointment and each director will serve until the next annual general meeting
of shareholders or until a successor is duly elected, unless the office is
vacated in accordance with our Articles.

Table No. 25Our Directors and Senior Management

|                                      | Position with Silver                                    | Date
      of First |    
|------------------------------------- | ------------------------------------------------------- | ------------------- | ---
|Name                                  | Standard                                                | Appointment         | Age
|                                      |                                                         |                     |    
|A.E. Michael Anglin(2)(4)(5)          | Director                                                | August 2008         | 56 
|                                      |                                                         |                     |    
|John R. Brodie, FCA(1)(2)(3)          | Director                                                | January 2006        | 67 
|                                      |                                                         |                     |    
|Richard C. Campbell, MBE (1)(3)(4)(5) | Director                                                | August 2008         | 65 
|                                      |                                                         |                     |    
|Richard D. Paterson (2)(3)(5)         | Director                                                | August 2008         | 69 
|                                      |                                                         |                     |    
|Peter W. Tomsett (1)(4)               | Director and Chairman                                   | November 2006       | 54 
|                                      |                                                         |                     |    
|John Smith (1)                        | Director, President and Chief
      Executive Officer   | August 2010         | 55 
|                                      |                                                         |                     |    
|Joe Phillips  (1)                     | Senior Vice President,
      Operations and Development | March 2011          | 60 
|                                      |                                                         |                     |    
|Gregory J. Martin (1)                 | Senior Vice President and CFO                           | January 2012        | 44 
|                                      |                                                         |                     |    
|W. John DeCooman (1)                  | Vice President, Business
      Development and Strategy | June 2009           | 42 
|                                      |                                                         |                     |    
|Andrew Sharp (1)                      | Vice President, Technical
      Services                | September 2011      | 47 
|                                      |                                                         |                     |    
|Ron Burk (1)                          | Vice President, Exploration                             | October 2004        | 53 
|                                      |                                                         |                     |    
|David L. Smith (1)                    | Vice President, Human Resources                         | December 2009       | 47 
|                                      |                                                         |                     |    
|Kristen G. Riddell (1)                | Vice President, Corporate Secretary and General Counsel | October 2009        | 40 

|(1) | Resident of Canada                                               
|--- | -----------------------------------------------------------------
|(2) | Member of the Audit Committee                                    
|(3) | Member of the Compensation Committee                             
|(4) | Member of the Corporate Governance and Nominating
      Committee
|(5) | Member of the Safety and Sustainability
  Committee              

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Our Board of Directors and Senior Management

The following is a brief description of the business experience
and principal business activities ofour directors and senior management:

A.E. Michael Anglin

Mr. Anglin is the Chair of our Corporate Governance and
Nominating Committee. Mr. Anglin graduated with a Bachelor of Science (Honours)
degree in Mining Engineering from the Royal School of Mines, Imperial College,
London in 1977 and later attained a Master of Science degree from the Imperial
College in London in 1985. Mr. Anglin spent 22 years with BHP, most recently
serving as Vice President Operations and Chief Operating Officer of the Base
Metals Group based in Santiago, Chile, before retiring in 2008. Mr. Anglin is
also a director of Emberclear Corp.

John R. Brodie, FCA

Mr. Brodie is our audit committee financial expert and the
Chair of our Audit Committee. Mr. Brodie has been the President of John R.
Brodie Capital Inc., a private consulting firm, since 2003. From 1975 to 2003,
Mr. Brodie was a partner at KPMG LLP and from 1987 to 1995 served as a director
of KPMG LLP. Mr. Brodie graduated from the University of Manitoba with a
Bachelor of Science degree in 1967 and attended the Stanford Executive Program
at Stanford University in 1982. He is a member of the Canadian Institute of
Chartered Accountants, British Columbia Institute of Chartered Accountants and a
lifetime member of Certified Fraud Examiners. Mr. Brodie was elected a Fellow
and awarded the FCA designation by the Institute of Chartered Accountants of
British Columbia in 2003 for distinguished service to the accounting profession.
Mr. Brodie is also a director of Ag Growth International Inc., Augusta Resource
Corporation and Wildcat Silver Corporation.

Richard C. Campbell, MBE

Mr. Campbell is the Chair of our Safety and Sustainability
Committee. Mr. Campbell graduated with a Bachelor of Science (Honours) degree in
Geology from Glasgow University in 1969. He spent the following 32 years with
British Petroleum (BP), most recently serving as President of BP Alaska before
retiring in 2001. Mr. Campbell was awarded membership of the Order of British
Empire (MBE) by Queen Elizabeth II in 1994 for his contribution to British
commercial interests in Colombia while serving as President of BP in Colombia.

Richard D. Paterson

Mr. Paterson is the Chair of our Compensation Committee. Mr.
Paterson graduated from Concordia University, Montreal with a Bachelor of
Commerce degree in 1964. Mr. Paterson has been a Managing Director of Genstar
Capital, a private equity firm specializing in leveraged buyouts, since 1988.
Before founding Genstar Capital, Mr. Paterson served as Senior Vice President
and Chief Financial Officer of Genstar Corporation, a NYSE-listed company, where
he was responsible for finance, tax, information systems and public reporting.

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Peter W. Tomsett

Mr. Tomsett is the Chair of our Board. Mr. Tomsett graduated
with a Bachelor of Engineering (Honours) degree in Mining Engineering from the
University of New South Wales, later attaining a Master of Science (Distinction)
degree in Mineral Production Management from the Imperial College in London. Mr.
Tomsett spent 20 years at Placer Dome Inc., most recently serving as President
and Chief Executive Officer until its acquisition by Barrick Gold Corporation.
Mr. Tomsett is also a director of North American Energy Partners Inc. and
Talisman Energy Inc.

John Smith

Mr. Smith has over 30 years of varied
experience in the resources industry. He started his career in the North Sea oil
industry and has spent the last 18 years with BHP Billiton, most recently as
Vice President, Resourcing and Development, based in Melbourne, Australia. He
has worked in various operational, strategic, M&A, and commercial roles
within BHP Billiton, including over three years as CEO of the BHP Billiton
Mitsubishi Alliance, which operates one of the worlds largest coal operations
in the Bowen Basin of Queensland, consisting of nine mines, a port, and 4,000
employees. Under his leadership, four of the mines completed significant
expansion projects, one new mine was brought into operation, and a tenth mine
was developed to within a year of production. He has a BA, Commerce degree from
Robert Gordon University in Aberdeen, Scotland, and an MBA with Distinction from
Aberdeen University. Mr. Smith is also a director of Pretium Resources Inc.

Joe Phillips

Mr. Phillips is an international mining executive with over 38
years of experience in development and operation of mining projects. He has
lived and worked in 12 countries on four continents and has worked in the large
scale development and production of gold, silver, phosphate, coal and
aggregates. Most recently, as the Senior Vice President of Project Development
for Pan American Silver, Mr. Phillips directed the construction, startup and
operation of three mines and expansion of a fourth. Mr. Phillips graduated from
the Colorado School of Mines in Geological Engineering and did graduate studies
in Business Administration at the University of South Florida. He is a
registered Professional Engineer and a former director of the Chamber of Mines
of both Mexico and Chile.

Gregory J. Martin

Mr. Martin joined Silver Standard on January 31, 2012 as our
Senior Vice President and Chief Financial Officer. Mr. Martin is a finance
executive with over 15 years in the mining sector. Prior to joining Silver
Standard, he held senior finance and corporate development roles with NovaGold
Resources, Finning International, Zincore Metals and Placer Dome gaining
significant international and South American experience. Mr. Martin holds an MBA
from the University of Western Ontario and a Bachelor of Applied Sciences in
Civil Engineering from the University of British Columbia.

W. John DeCooman

Mr. DeCoomans experience prior to joining Silver Standard in
2009 includes over 15 years of mining project finance and advisory
responsibilities at Deutsche Banc, Alex Brown and Standard Bank, as well as
corporate positions in finance, business development and exploration. Mr.
DeCooman holds a Bachelor of Science degree from The Pennsylvania State
University and a Master of Science degree from the Colorado School of Mines.

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Andrew Sharp

Mr. Sharp joined Silver Standard in October, 2011 as our Vice
President, Technical Services. Mr. Sharp has over 25 years of experience in the
mining industry covering 8 countries and 5 continents. Prior to joining Silver
Standard, he held positions with Great Panther, Pan American Silver, Ok Tedi
Mining and Worsley Alumina among others. Over the last 15 years he has held
management roles in the areas of mine engineering, grass roots and brown fields
exploration, metallurgical studies and plant design, UG mining, open cut mining,
and site general management. His later experience has centered on site
management roles and project evaluation. Mr. Sharp graduated with honors from
the Kalgoorlie School of Mines with a degree in mine engineering.

Ron Burk

Mr. Burk has over 20 years of experience as
a professional geologist, and has designed and supervised exploration programs
in Canada, Mexico, Peru, Argentina and Brazil. Prior to joining Silver Standard
as Chief Geoscientist in 2004, he spent 15 years working for Teck Resources as a
geologist in various international projects. Mr. Burk holds a Bachelor of
Geological Engineering from the University of Toronto and a Master of Science in
Engineering from Queen's University.

David L. Smith

Mr. Smith has served as our Vice President, Human Resources
since December 2009. Prior to joining Silver Standard, Mr. Smith held the
position of Director of Human Resources  Russia for Kinross Gold Corporation.
Mr. Smith has also held management positions with Barrick Gold Corporation and
Motorola Inc. Mr. Smith holds a Bachelor of Arts degree from Brock University.

Kristen G. Riddell

Ms. Riddell has served as our Vice President, Corporate
Secretary and General Counsel since October, 2009. Prior to joining Silver
Standard, Ms. Riddell held the positions of Corporate Secretary with Skye
Resources Inc. and Legal Counsel and Corporate Secretary with Pan American
Silver Corp. She has served as legal counsel for other public companies,
including Placer Dome Inc., and Westport Innovations Inc. Ms. Riddell holds a
Bachelor of Arts and Bachelor of Laws degree from the University of Manitoba,
and is a member of the Society of Corporate Secretaries and Governance
Professionals.

B.Compensation

Named Executive Officers

Set out below are particulars of compensation paid to the
following persons (the Named Executive Officers):

|(a) | the Companys chief executive officer (CEO);                                                                                                                                                                                                                                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                      
|(b) | the Companys chief financial officer (CFO);                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                      
|(c) | each of the three most highly compensated executive
      officers, or the three most highly compensated individuals acting in a
      similar capacity, other than the CEO and CFO, at the end of the most
      recently completed financial year whose total compensation was,
      individually, more than $150,000 for that financial year; and
|    |                                                                                                                                                                                                                                                                                                                                                      
|(d) | each individual who would be a Named Executive Officer
      under paragraph (c) but for the fact that the individual was neither one of
  our executive officers nor acting in a similar capacity at the end of that
  financial year.                                                                                                              

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As at December 31, 2011, the end of the Companys most recently
completed financial year, we had six Named Executive Officers, whose names and
positions held with the Company are set out under the heading Summary
Compensation Table below. Included in our Named Executive Officers are Tom
S.Q. Yip who served as our Vice President, Finance and Chief Financial Officer
until August 31, 2011 and Matthew Freeman, who served as our interim Chief
Financial Officer from August 31, 2011 until January 31, 2012.

Compensation Discussion & Analysis

Compensation Philosophy and Principles

The Company recognizes that people are our primary asset and
our principal source of competitive advantage. The success of the Companydepends upon a group of highly qualified and motivated executives dedicated
to the consistent operation and strong long-term performance of the Company.
Highly skilled and motivated executives greatly enhance the Companys ability to
produce superior results for its shareholders and to be a leader in its
industry. In 2010, the Company adopted an Executive Compensation Philosophy, the
purpose of which is to detail the Companys goals, principles and limitations in
regard to executive compensation. This philosophy is intended to guide the
Company in establishing a foundation for executive compensation decisions.
Executive compensation at the Company is performance-based, driven by the
achievements of the individual and the Company.

The goal for the Companys executive compensation program is to
provide a total compensation package that is competitive in the industry,
flexible, and attracts, motivates and retains experienced and qualified
executive leadership. The mining industry is experiencing a very competitive
labour market and this situation is expected to continue for the foreseeable
future as the talent pool ages and the supply of experienced talent continues to
decline. As the Company expands the number of operating mines in its portfolio,
the necessary experienced talent will be drawn primarily from mid-tier and
senior producer companies within the mining industry.

In order to accomplish its goals and to ensure that the
Companys executive compensation program is consistent with its stated mission
and strategy, the Board of Directors has approved the following philosophy
statements: (1) The Company will provide a competitive and flexible compensation
program for its senior executives that will attract, motivate and retain the
highly qualified individuals necessary to grow our business. Our desire is to
motivate employees to achieve higher levels of performance and to appropriately
reward those employees for their efforts; and (2) Compensation programs will
emphasize a pay-for-performance system, in which an individuals long-term
compensation and career advancement are dependent upon both individual and
Company performance, with an objective of increasing long-term shareholder
value. If the individual or the Company does not meet its objectives, awards
will be adjusted in accordance with pre-established metrics and formulae.

There are four components to the Companys
pay-for-performance system: base salary; short-term incentive compensation;
long-term incentive compensation; and non-cash compensation.

Base Salary. Annual base salary must be considered in
the context of the total compensation package. Generally, we will target to be
competitive within our defined peer group (discussed below) and market place
where we compete for talent. Salaries are reviewed annually and base salaries
may be adjusted based on changes within the competitive market of our peer
group, an individuals evaluated performance and his or her direct managers
assessment.

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Short-term Incentive. The objective of the short-term
incentive program at the Company is to put variable pay at risk, motivate the
executive to achieve pre-determined objectives and provide a means to reward
achievement of the annual business plan. The short-term incentive plan is based
on the achievement of both corporate and individual goals. Corporate goals are
derived from the Companys annual business plan and are typically 5  7 in
number. Bonuses are scaled depending on actual performance compared to the
expected performance set out in the Companys business plan. The CEO develops
individual goals for each member of the senior management team. Individual goals
for the CEO are developed by the Board of Directors. We continue to strive to
provide superior compensation for employees who deliver superior results. The
CEO and the Compensation Committee also retain the right to exercise discretion
when making incentive compensation recommendations to the Board to reflect
extraordinary events and or market conditions.

Long-Term Incentive (LTI).The objective of the LTI
program is to ensure the appropriate level of long-term reward/risk to motivate
executive performance and provide retention of senior management. Prior to 2010,
our LTI program consisted of only Company stock options. In 2010, our Board of
Directors approved a new LTI program, which was introduced in January 2011. The
new LTI program for our executive participants includes Performance Share Units
(PSUs) in addition to stock options. The PSUs are intended to bring better
alignment of executive risk/rewards measured by total returns to the Companys
shareholders relative to our defined peer group. Under the LTI plan, executive
participants will be eligible for PSU grants on an annual basis, subject to
Board approval. The PSUs will have a three year cliff-vesting period, and the
potential payout at the end of the period will range from 0 to 200% of the
initial grant, depending on results. The payout will be based on a Total
Shareholder Return (TSR) calculation at the end of the three year vesting
period, in comparison to the TSR of our defined peer group. The peer group has
been established by the Board of Directors and will be reviewed annually for
continued appropriateness. Our goal continues to be motivation of our executives
for the long-term by balancing appropriate reward / risk for both the individual
and the Company.

The criteria for choosing the comparator group is as follows:
(a) companies in the precious metals segment, with similar revenue, market
capitalization, operations and projects (b) companies that reflect our
competition for investment dollars.

In 2011 our TSR Comparator group included Alamos Gold Inc.;
Allied Nevada Gold Corp.; AuRico Gold Inc.; Compania de Minas Buenaventura;
Centamin Egypt Ltd.; Coeur dAlene Mines Corporation; European Goldfields;
Fresnillo plc; Golden Star Resources Inc.; Hecla Mining Company; Hochschild
Mining; Iamgold Corporation; Ivanhoe Mines Ltd.; New Gold Inc.; Northgate
Minerals; Novagold Resources Inc.; Minefinders; Pan American Silver Corp.; the
Silver Price; Silver Wheaton Corp. and Silvercorp Metals Inc.

The Board reviews the TSR Comparator Group on an annual basis
and adjusts the group based on continued applicability and mergers and
acquisitions in the market place.

In 2012, we have adjusted our TSR Comparator Group to include:
Alexco Resource Corp.; Endeavour Silver Corp.; First Majestic Silver Corp.;
Fortuna Silver Mines Inc.; and International Minerals Corp.; based on the
criteria listed above, and our desire to increase the size of our comparator
group. We have removed from the TSR Comparator Group European Goldfields and
Northgate Minerals (due to acquisitions) and Ivanhoe Mines Ltd. This adjusted
TSR Comparator Group will be used to calculate the value of PSUs which were
granted January, 2012.

Under the Companys Stock Option Plan, grants are made annually
at the market price of the underlying stock and the options vest one-third
annually on the first, second and third anniversaries of grant. The Board
currently grants stock options with a term of seven years.

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Under the Companys LTI plan, PSU and stock option grants have
equal dollar value and the total value of grants is based on the individuals
base salary and position in the Company.

Non-cash Compensation.In addition to the programs
outlined above, executives at the Company will be eligible to participate in
company provided Health and Welfare benefits, annual medical screenings,
Retirement Savings Programs (Defined Contribution), paid time off and other
perquisites. The Company reviews these benefits on a periodic basis to ensure
market competitiveness.

There were no identified risks arising from the Company's
compensation policies and practices that are reasonably likely to have a
material adverse effect on the Company.

Named Executive Officer Compensation

Compensation for each of our Named Executive Officers is
comprised of a base salary, a short term incentive award, a long-term incentive
award and non-cash compensation. In general terms, our compensation program is
intended to operate in an integrated manner to meet company objectives.

Base Salary

The base salary of our Named Executive Officers is designed to
attract and retain individuals who can contribute to our growth as an operating
mining company. During the last several years, competition among resource
companies for skilled executives has been intense and the base salaries of
recently hired Named Executive Officers have been established through
negotiation in the market place. Base salaries are reviewed annually to reflect
performance and market conditions if appropriate. For 2012, base salaries for
each Named Executive Officer were reviewed by our Compensation Committee and
changes were approved by the independent members of the Board, in consultation
with our CEO and based on discussion, analysis and review of compensation data
provided by the Hay Group on our peer group of companies and the PwC Canadian
mining survey of base salaries. In 2010, our Compensation Committee established
and reviewed our peer group of companies, against which to benchmark the base
salaries of our Named Executive Officers. The selection of our peer group was
based on two principal criteria; (1) Companies that are similar to Silver
Standard in terms of roles, operations, locations, staff levels, projects etc.;
and (2) Companies which are a potential source of executive talent. The peer
group for 2012 includes Agnico-Eagle Mines Ltd., Aurico, First Majestic Silver
Corp., GoldCorp., NovaGold, Teck Resources, Yamana Gold, IAMGOLD Corp.,
Fresnillo Mining, QuadraFNX Mining Ltd., Centerra Gold Inc., Eldorado Gold
Corp., HudBay Minerals Inc., Pan American Silver Corp., Thompson Creek Metals
Co. Inc., Stillwater Mining Co., New Gold Inc., Coeur d Alene Mines Corp.,
Golden Star Resources Ltd., Hecla Mining Co., Eastern Platinum Ltd., European
Goldfields Ltd., Ivanhoe Mining Ltd., and Lundin Mining. The Company will
continue to monitor relevant market data and our peer group, to ensure
competitiveness of our base salaries for Named Executive Officers in the
marketplace.

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Short Term Incentive Award

Short-term incentive awards are used to reward Named Executive
Officers for their performance during the year and to incentivize such
individuals for the following year. The awards are comprised of cash bonuses in
amounts determined by the Compensation Committee, in consultation with our CEO,
and approved by the Board. The target annual short term incentive award ranges
from 50% to 100% of base salary (actual payouts can range from 0 to 200% of
target) for each Named Executive Officer. Cash bonuses were awarded to our Named
Executive Officers, based on the Companys achievement of corporate objectives
as well as achievement of their own personal objectives that were established at
the start of the year, as determined by our CEO and the Compensation Committee
and approved by the board. For the Named Executive Officers, the short term
incentive awards are weighted 70% for corporate objectives and 30% for personal
objectives.

The Companys corporate targets for 2011 were measured and
based on the following factors: production of ounces of silver at the Pirquitas
Mine; operating costs; operating cash flow; completion of feasibility studies
for some of our mineral projects; exploration reserves increase; reduction of
High Potential Incidents (HPI) across the Company; and a reduction in
environmental and community relations incidents. In 2011, it was determined that
the Company achieved 45% of its corporate objectives. The Company overachieved
on its HPI objective, achieved its exploration and community relations targets,
but did not achieve expectations on production, operating cost, feasibility
studies and environmental objectives.

Individual Performance for Named Executive Officers

For the Named Executive Officers, the individual performance
component is weighted at 30% of the bonus potential, except for Matthew Freeman
whose performance component is weighted at 50%, with the ability to over achieve
based on accomplishments of the individual (described below). For 2011 the
Compensation Committee recommended to the Board that discretion be applied to
awards for the individual performance component of our plan to reflect the
significant effort of our Named Executive Officers in addressing unique
operating circumstances and to build the Company foundation for future growth,
irrespective of the short-term impact on financial results. The Compensation
Committee did not alter our plan with respect to the corporate performance
component.

John Smith  President and Chief Executive Officer is evaluated
on the basis of the Companys overall long and short term performance.
Significant progress was made in recruiting executives and technical teams as
well as making changes at the Pirquitas Mine that positions the mine for the
future. He also pursued alternative strategic options for several projects in
our development pipeline.

Joe Phillips, Senior Vice President exceeded target on his personal objectives in 2011 by implementing substantial improvements at our operations, expanding our development options with respect to both our Pitarrilla and San Luis projects and upgrading and increasing our talent within the operations / development group.

John W. DeCooman, Vice President exceeded target on his personal objectives in 2011 by selling our non-core Bowdens asset for a substantial gain, setting the stage for entering into both short and long term contracts to sell concentrate on terms more favorable than those achieved in the past, and upgrading our Investor Relations function and our mergers and acquisition capability.

Tom Yip, Vice-President and Chief Financial Officer and Silver
Standard entered into a Transition Agreement under which Mr. Yip did not receive
a 2011 bonus.

- 99 -

---

Matthew Freeman, Interim Chief Financial Officer, exceeded
target on his personal objectives for 2011. As noted, Mr. Freeman was our
interim CFO for part of the 2011 year and contributed significantly to Silver
Standard directing the preparation of monthly, quarterly and year-end financial
reports as well as leading our annual budgeting process. It should be noted that
Mr. Freeman participates in a non-executive short-term incentive plan and his
personal weighting is 50%.

David Smith, Vice President exceeded target on his personal objectives for 2011 by leading the recruitment of several new senior executives for Silver Standard, implementing executive leadership development and communication programs and establishing the framework for labour relations at our mine in Mexico.

For 2011, the Compensation Committee monitored and made
improvements to the short-term incentive award program that sets objective and
subjective corporate performance goals and personal performance goals for all
Named Executive Officers. These improvements focused on timing of the objective
setting process. Annual performance objectives are established through
consultation amongst the CEO, Named Executive Officers and the Compensation
Committee, for final approval by the Board. The Compensation Committee will also
review personal objectives for the CEO and recommend them to the Board of
Directors for approval.

Long Term Incentive Awards

Our Long-Term Incentive program utilizes both Stock Options and
PSUs. Stock Options are used to retain our Named Executive Officers while
aligning their interest with those of our shareholders by providing incentive to
grow the Company and increase the wealth of our shareholders, through an
increase in our share price. The vesting schedule for our stock options is
currently as follows: 1/3 of options granted vest one year after the date of
grant; 1/3 of options vest two years after the date of grant; and the final 1/3
of options vest three years after the date of grant. The term for exercising
stock options is seven years.

In January 2011, stock options and PSUs were granted to our
Named Executive Officers with the exception of Mr. Freeman. The number of
options granted to each Named Executive Officer was reviewed by the Compensation
Committee and approved by the Board, in consultation with our CEO. The
Compensation Committee recommended the grant of options after discussion taking
into account individual performance, targets under our approach to LTI,
participants ability to contribute to our long term growth and the need to
retain our Named Executive Officers. Based on this discussion and our plan
design, Named Executive Officer participants were granted options valued from
50% to 100% of their base salaries.

The Target Milestone for the PSUs granted is based on the TSR
of Silver Standard over the Performance Period compared with the TSR of our
comparator group of companies set forth above (the Comparator Companies) over
the same time period. The Compensation Committee may revise the Comparator
Companies, as appropriate from time to time and did so in 2012 for the reasons
discussed above.

As soon as reasonably practicable following the end of the
Performance Period (and in any event not later than 30 days following the end of
the Performance Period), the Committee will determine the Companys TSR
performance and assign a percentage from 0  200% reflecting such performance as
follows (the Performance Percentage):

| | a) | if the Companys TSR is equal to the 100thpercentile as compared to the TSR of the Comparator Companies,
      200%;
| | -- | --------------------------------------------------------------------------------------------------------------------

- 100 -

---

| | b) | if the Companys TSR is equal to or greater than the
      75thpercentile, but less than the 100thpercentile,
      as compared to the TSR of the Comparator Companies, 150%; 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                               
| | c) | if the Companys TSR is equal to or greater than the
      50thpercentile, but less than the 75thpercentile,
      as compared to the TSR of the Comparator Companies, 100%;  
| |    |                                                                                                                                                                               
| | d) | if the Companys TSR is equal to or greater than the
      25thpercentile, but less than the 50thpercentile,
      as compared to the TSR of the Comparator Companies, 50%; or
| |    |                                                                                                                                                                               
| | e) | if the Companys TSR is less than the 25thpercentile as compared to the TSR of the Comparator Companies,
      0%;                                                            

Subject to the PSU Plan, the number of PSUs granted vest in
favour of each Designated Participant on the Vesting Date equal to the number of
PSUs granted to such Designated Participant multiplied by the Performance
Percentage. The formula for granting PSUs to the Named Executive Officers is a
target award of from 50% to 100% of base salary (50% for Vice Presidents, 75%
for Senior Vice Presidents and 100% for the CEO) divided by the 5 day Volume
Weighted Average Price (VWAP) prior to the date of the award.

The PSUs will also vest in the event of a termination upon a
change of control. If the termination date is on or after the date which is one
half way through the applicable performance period, all unvested PSUs are deemed
to be vested PSUs based on an assumed performance percentage of 100% and shall
be redeemed at a cash amount equal to the market value of the shares at the
termination date. If the termination date is before the date which is one-half
way through the Performance Period applicable to the PSUs held, all unvested
PSUs shall immediately be deemed to be Vested PSUs as of the termination date
based on an assumed Performance Percentage of 100 per cent and the Company shall
redeem such vested PSUs by paying, as of the redemption date, a cash amount
calculated by multiplying the Market Value of such vested PSUs as of the
termination date by the proportion of the Performance Period which has elapsed
as of the termination date. In the event of a Change of Control where an
acquiror of the Company does not agree to assume all of the obligations of the
Company under the PSU Plan, or the Committee determines that such assumption is
not consistent with the objectives of the PSU Plan, all unvested PSUs held shall
immediately be deemed to be vested PSUs as of the effective date of the Change
of Control based on an assumed Performance Percentage of (a) 100 per cent or (b)
any percentage specifically determined by the Committee for this purpose and the
Company shall redeem such vested PSUs by paying to each Designated Participant,
as of the Redemption Date, a cash amount equal to such vested PSUs calculated by
multiplying (a) the Market Value of such vested PSUs as of the effective date of
the Change of Control by (b) the proportion of the Performance Period that has
elapsed as of the effective date of the Change of Control.

No Named Executive Officer or director has purchased any
financial instruments (such as prepaid variable forward contracts, equity swaps,
collars, or units of exchange funds) designed to hedge or offset a decrease in
the market value of the equity-based securities granted as compensation or held,
directly or indirectly, by the Named Executive Officer or director.

- 101 -

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Performance Graph

The following chart compares the total cumulative shareholder
return for C$100 invested in the Companys common shares since December 31, 2006,
with the cumulative total return of the S&P/TSX Composite Index for the five
most recently completed fiscal years of the Company.

Silver Standard Resources Inc.Comparison of Five
Year Total Common Shareholders Return 
  (as at December 31 of each year)



2006
      
      
      2007
      
      
      2008
      
      
      2009
      
      
      2010
      
      
      2011ForthefinancialyearsendedCommon Shares of Silver Standard Resources Inc.
      
      
      C$100.00
      
      
      C$100.70
      
      
      C$54.33
      
      
      C$64.25
      
      
      C$77.68
      
      
      C$39.39S&P / TSX Composite Total Returns Index
      
      
      C$100.00
      
      
      C$109.83
      
      
      C$73.58
      
      
      C$99.38
      
      
      C$116.87
      
      
      C$106.69


Under our compensation program, base salary and short-term
incentive awards for each year are determined in March in conjunction with the
assessment of our previous year-end results. Long-term incentive awards for each
year are determined in January for all executive participants, to align with the
start of the measurement period for PSUs and adhere to appropriate taxation
regulations. While the Companys share price has decreased over the 5 year
period, compensation to Named Executive Officers has increased. In 2011, the
salaries of Named Executive Officers were increased to address inflation and the
increasingly competitive market for executive talent in the mining industry.

Option-Based Awards

The Compensation Committee, in consultation with our CEO,
periodically assesses our stock option plan and recommends any proposed
amendments to our Board of Directors for approval. In accordance with the
Toronto Stock Exchange requirements, our shareholders are required to reapprove
the stock option plan every three years.

- 102 -

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Compensation Governance

The Company has established a Compensation Committee comprised
of three independent directors, Messrs. Paterson, Campbell and Brodie. Messrs.
Paterson, Campbell and Brodie have human resource and compensation experience
relevant to oversee and advise on the Companys executive compensation
practices. Please refer to each of their biographies under the heading Our
Board of Directors and Senior Management and under the heading Election of
Directors as contained in the Companys Information Circular. The Committee
members have the necessary experience to enable them to make decisions on the
suitability of the Companys compensation policies or practices. The
Compensation Committees responsibilities, powers and operation are described
under the heading Compensation Committee.

Fees Paid to Compensation Consultants

Fiscal Year
      2011(1)
      2010(2)Hay Group Limited(3)
      Towers- Watson
        Canada Inc. 
      (4)
      Semler Brossy Consulting
        Group, LLC 
      (5)
      Hay Group Limited(3)
      Towers- Watson
        Canada Inc. 
      (4)
      Semler Brossy Consulting
      Group, LLC(5)Executive compensation related fees
      $77,229
      $6,964
      $35,031
      $54,988
      $35,766
      $8,447All other fees
      Nil
      Nil
      Nil
      Nil
      Nil
      NilTotal Fees
      $119,224
      $99,201


|(1) | Invoices were received in Canadian dollars, amounts above
      have been converted using the US dollar/Canadian dollar average exchange
      rate of 0.9891 for 2011.                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Invoices were received in Canadian dollars, amounts above
      have been converted using the US dollar/Canadian dollar average exchange
      rate of 1.0299 for 2010.                                                                                                                                                                                                                                         
|(3) | Hay Group Limited fees are related to services regarding
      comparative salary information.                                                                                                                                                                                                                                                                                                                  
|(4) | Towers-Watson Canada Inc. fees are related to services
      regarding advice and counsel on matters relating to: executive
      compensation principles; review and design of all major compensation
      programs; review of compensation philosophy; advising on governance trends
      as they apply to compensation practices; providing market data relating to
      competitive practices and trends.
|(5) | Semler Brossy Consulting Group, LLC fees are related to
      services regarding specific consultative projects, including an
      independent review of our new compensation program, director compensation
      and research on executive ownership programs.                                                                                                                                               

- 103 -

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Summary Compensation Table

The following table is a summary of compensation paid in the
Companys previous three financial years to our Named Executive Officers for our
most recently completed fiscal year. The salaries for the Named Executive
Officers are stated in US dollars, but are paid in Canadian dollars.

Name andprincipal
      position
      Year
      Salary**($)**(1)
      Share Basedawards($)
      Option-basedawards($)
      Non-equity incentive plancompensation**($)**
      All othercompensation(6)($)
      Totalcompensation($)Annualincentive**plans**(5)
      Long-termincentiveplansJohn Smith 
      President and CEO
      2011 
        2010 
        2009
      631,888 
        252,856 
        N/A
      1,233,223(7)(8)
        N/A 
      N/A
      581,058 (3)
        4,271,888(3)
        N/A
      Nil(10)
        291,290 
        N/A
      Nil 
        Nil 
        Nil
      33,169 
        48,548 
        N/A
      2,479,338 
        4,864,582 
        N/ATom S.Q. Yip 
        Vice President, 
      Finance and CFO
      2011 
        2010 
        2009
      244,330 
        268,958 
        227,671
      409,558(7)(8)
        N/A 
      N/A
      129,005(3)
        Nil 
        452,280(3)
      Nil 
        172,754 
        60,967
      Nil 
        Nil 
        Nil
      659,374(4)
        59,229 
        10,552
      1,442,267 
        500,941 
        751,470Matthew Freeman(2)
        Interim Chief 
      Financial Officer
      2011 
        2010 
        2009
      148,620 
        56,266 
        N/A
      86,340(9)
        N/A 
      N/A
      67,482(3)
        85,438(3)
        N/A
      60,661 
        16,992 
        N/A
      Nil 
        Nil 
        Nil
      5,945 
        15,244 
        N/A
      369,048 
        173,940 
        N/AJoe Phillips 
        Senior Vice 
        President 
        Operations and 
      Development
      2011 
        2010 
        2009
      328,582 
        N/A 
        N/A
      N/A 
        N/A 
      N/A
      1,999,894 (3)
        N/A 
        N/A
      303,306 
        N/A 
        N/A
      Nil 
        Nil 
        Nil
      10,515 
        N/A 
        N/A
      2,642,297 
        N/A 
        N/AW. John 
        DeCooman 
        Vice President, 
        Business 
        Development and 
      Strategy
      2011 
        2010 
        2009
      288,141 
        218,468 
        100,313
      334,472(7)(8)
        N/A 
      N/A
      105,550 (3)
        Nil 
        552,801(3)
      146,598 
        192,779 
        32,180
      Nil 
        Nil 
        Nil
      7,861 
        48,548 
        Nil
      882,622 
        459,795 
        685,294David Smith 
        Vice President, 
      Human Resources
      2011 
        2010 
        2009
      254,777 
        213,613 
        15,689
      334,472(7)(8)
        N/A 
      N/A
      105,549(3)
        Nil 
        966,316 (3)
      121,322 
        137,269 
        Nil
      Nil 
        Nil 
        Nil
      10,191 
        54,309 
        Nil
      826,311 
        405,191 
        982,005


|(1) | Named Executive Officers are remunerated in Canadian
      dollars and amounts contained in this table are converted to US dollars
      using the average US dollar/Canadian dollar exchange rate of 0.9891 for
      2011, 1.0299 for 2010, and 1.142 for 2009. Base salaries were: Mr. J.
      Smith C$625,000 (2010 was pro-rated and 2009  nil); Mr. Yip 2011 
      C$325,000 (2010 - C$277,000 and 2009  C$260,000); Mr. Freeman C$147,000
      (2010  C$120,000 was pro-rated from July thru to December); Mr. Phillips
      C$390,000; Mr. DeCooman C$285,000 (2010  C$225,000 and 2009 - C$210,000);
      and Mr. D. Smith C$252,000 (2010  C$225,000 and 2009  C$215,000), Base
      salaries in this table for Messrs. Freeman and Phillips represent amounts
      paid for their period of service during the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Mr. Freeman served as the interim CFO from August 31,
      2011 to January 31, 2012 and Mr. Phillips commenced employment in March,
      2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(3) | Amounts shown represent Options granted as part of the
      annual compensation package of each Named Executive Officer (and on hire,
      in the case of Mr. DeCooman and Mr. D. Smith in May and December 2009,
      respectively, Mr. Freeman and Mr. J. Smith in August, 2010, and Mr.
      Phillips in March, 2011). The Black-Scholes model was used to calculate
      and assign a prospective value per Option granted to the Named Executive
      Officers, based on the date of grant. Options granted as part of the
      annual compensation package granted December 16, 2009 had a Black-Scholes
      value of C$12.91, Options granted January 27, 2011 had a Black-Scholes
      value of C$10.55, Options granted March 9, 2011 (in the case of Mr.
      Freeman only) had a Black-Scholes value of C$13.35. Options granted to new
      hires as described above had the following Black- Sholes values: May 15,
      2009 had a Black-Scholes value of C$12.55, December 14, 2009 had a
      Black-Scholes value of C$12.98, August 13, 2010 had a Black-Scholes value
      of C$8.80, March 28, 2011 had a Black-Scholes value of C$13.19. The grant
      date fair value in the table is the same as the accounting fair value
      recorded by the Company at the time of grant. Upon vesting, and until
      their expiry, the Options may or may not be in the money depending on
      the Common Share price during that period at times when the executive is
      not restricted from trading under the Companys insider trading
    policy.
|(4) | Includes transition agreement payment per agreement,
      vacation pay-out, and group registered savings plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(5) | Annual Incentive bonus awards for the 2011 fiscal year
      were determined and paid to the Named Executive Officers in
2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(6) | All Other Compensation for Named Executive Officers is
      comprised of payments for term life insurance, disability insurance and
      group registered retirement savings plan (RRSP) payments made by us on
      their behalf, as applicable. In 2010, this includes payments with
      respect to participation in the Pretium Resources Inc (Pretium)
      Initial Public Offering whereby the company matched the executives
      purchase of Pretium common shares at a rate of 1 for 2 shares purchased up
      to a limit of C$50,000 for Messrs. Smith, Yip, DeCooman, and D. Smith, and
    up to C$15,000 for Mr. Freeman.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

- 104 -

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|(7)  | A PSU transition grant was granted to the Named Executive
      Officers on January 27, 2011. The PSU transition grant value was
      determined by using 100% of the Named Executive Officers salary, divided
      by the greater of the closing price preceding the award date and the 5 day
      VWAP share price prior to the award date (C$23.14) to establish the number
      of PSUs to be granted (rounded to the nearest hundred). The performance
      period for transition PSU grant is January 4, 2011 to December 31, 2012,
      please refer to Long Term Incentive Awards for details of the PSU Plan
      and Target Shareholder Return milestones. For accounting purposes, we
      selected the Monte Carlo model for valuation for disclosure of the fair
      value. As at the start of the performance period, January 4, 2011 the
      Monte Carlo valuation for the PSU was $31.00 per PSU. As at December 31,
      2011, the Monte Carlo valuation for the PSU was $6.95 for the two year
      performance period. Mr. J. Smith received 27,100 Transition PSUs, Mr. Yip
      received 12,000 Transition PSUs, Mr. DeCooman received 9,800 Transition
      PSU and Mr. D. Smith received 9,800 Transition PSUs. Mr. Phillips was not
      employed in the capacity of Senior Vice President Operations and
      Development at the date of the PSU Transition grant and therefore, did not
      receive a grant. 
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8)  | A PSU LTI grant was granted to the Named Executive
      Officers on January 27, 2011. The PSU LTI grant value was determined by
      using 50% of the Vice-President Named Executive Officers salary, 75% of
      the Senior Vice-President salary and in the case of the CEO 100% of his
      salary, divided by the greater of the closing price preceding the award
      date and the 5day VWAP share price prior to the award date (C$23.14) to
      establish the number of PSUs to be granted. The performance period for the
      PSU LTI grant is January 4, 2011 to December 31, 2013, please refer to
      Long Term Incentive Awards for details of the PSU Plan and Target
      Shareholder Return milestones. For accounting purposes, we selected the
      Monte Carlo model for valuation of the fair value. As at the start of the
      performance period, January 4, 2011 the Monte Carlo valuation for the PSU
      was $31.00 per PSU. As at December 31, 2011, the Monte Carlo valuation for
      the PSU was $8.51 for the three year performance period. Mr. J. Smith
      received 27,100 LTI PSUs, Mr. Yip received 6,000 LTI PSUs, Mr. DeCooman
      received 4,900 LTI PSU and Mr. D. Smith received 4,900 LTI PSUs. Mr.
      Phillips was not employed in the capacity of Senior Vice President
      Operations and Development at the date of the PSU LTI grant and therefore,
      did not receive a grant.
|(9)  | Restricted Share Units (RSUs) were granted on March 9,
      2011, and vest in three equal installments over three years on each
      anniversary date of grant. The fair value at the date of grant was $28.78.
      The vested RSUs are automatically redeemed on the anniversary date of the
      grant and the redemption value is calculated by multiplying the number of
      vested RSUs by the Companys 5 day VWAP share price on the date preceding
      the RSU vesting. The redemption amount less statutory withholdings is then
      paid to the RSU participant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(10) | Mr. Smith was eligible to receive a bonus of $281,250 in
      accordance with the terms of our Short Term Incentive Plan but he
      recommended that he not receive his annual incentive award for the year
      ended December 31, 2011 and the Compensation Committee and Board concurred
      with his recommendation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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Incentive Plan Awards

Outstanding Share-Based Awards and Option Based Awards

The following table sets out all option-based awards
outstanding for each Named Executive Officer at December 31, 2011.

Option-based Awards
      Share-based AwardsName
      Number of securities
        underlying unexercised options (#)
      Option exercise
        price (C$)
      Option expiration
        date
      Value of unexercised
        in-the- money options ($)
      Number of shares
        or units of shares that have not vested (#)
      Market or payout
        value of share- based awards
        that have not vested ($)
      Market or payout
        value of vested share-based awards
        not paid out or distributed ($)John Smith 
        President and CEO
      54,500(3)
      500,000(2)
      23.14 
        17.38
      Jan 27, 2018 
      Aug 13, 2020
      Nil 
        Nil
      54,200(4)
      Nil(4)
      NilMatthew Freeman 
        Interim Chief 
        Financial Officer
      5,000(3)
      10,000(2)
      28.78 
        17.38
      Mar. 9, 2018 
      Aug. 13, 2020
      Nil 
        Nil
      3,000(5)
      41,593
      NilJoe Phillips 
        Senior Vice President Operations and Development
      150,000(3)
      28.98
      Mar. 28, 2018
      Nil
      N/A
      Nil(4)
      NilW. John 
        DeCooman 
        Vice President, 
        Business Development 
        and Strategy
      9,900(3)
        10,000(1)
      26,667(1)
      23.14 
        24.41 
        23.57
      Jan. 27, 2018 
        Dec. 16, 2019 
      May 15, 2019
      Nil 
        Nil 
        Nil
      14,700(4)
      Nil(4)
      NilDavid Smith 
        Vice President, 
        Human Resources
      9,900(3)
      85,000(1)
      23.14 
        24.61
      Jan. 27, 2018 
      Dec. 14, 2019
      Nil 
        Nil
      14,700(4)
      Nil(4)
      Nil


|(1) | Options awarded during the year ended December 31, 2009
      vest one-third per year commencing on May 16, 2010, December 14, 2010 and
      December 16, 2010 and each have a ten year term.                                                                                                                                                                                                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Options awarded during the year ended December 31, 2010
      vest one-third per year commencing on August 13, 2011 and have a ten year
      term.                                                                                                                                                                                                                                                                                                                                      
|(3) | Options awarded during the year ended December 31, 2011
      vest one-third per year commencing on January 27, 2012, March 9, 2012 and
      March 28, 2012 and have a seven year term.                                                                                                                                                                                                                                                                                                 
|(4) | PSUs granted in 2011 have a performance period of
      December 31, 2012 and December 31, 2013, respectively. PSUs are paid
      dependent on the achievement of Target Milestones. See Named Executive
      Compensation  Long Term Incentive Awards. If the Companys TSR is less
      than the 25thpercentile compared to the TSR of the comparator
      group at the time of grant, the PSUs will have a performance percentage of
      0% and the award will have no value.
|(5) | The RSUs were granted on March 9, 2011, and the initial
      one third of this grant vested on March 9, 2012. Calculated using the
      market price of our shares on the TSX on December 31, 2011 (C$14.10).
      Converted to US dollars using the US dollar/Canadian dollar exchange rate
      of 1.017 at December 31, 2011.                                                                                                                                                     

- 106 -

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Incentive Plan Awards  Value Vested or Earned During the
Year

The following table sets out the value of incentive plan awards
vested or earned during the year ended December 31, 2011.

Name
    Option-based awards  Value
      vested during the year ($)
    Share-based awards  Value
      vested during the year ($)
    Non-equity incentive plan
      compensation  Value earned during the year
      ($)John Smith
    1,624,309(2)
    N/A
    NilTom S.Q. Yip
    35,218(3)
    N/A
    NilMatthew Freeman
    32,483(2)
    N/A
    NilJoe Phillips
    N/A
    N/A
    NilW. John DeCooman
    47,491(1)
    N/A
    NilDavid Smith
    N/A
    N/A
    Nil


|(1) | On May 15, 2011, Mr. DeCooman had 13,333 stock options
      vest. Calculated based on the difference between the market price of the
      shares on the TSX on May 16, 2011 (C$27.04) and the exercise price of the
      stock options being C$23.57, converted to US dollars at the US
      dollar/Canadian dollar exchange rate of 0.9742 at May 16, 2011.                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | On August 13, 2011, Mr. J. Smith had 166,666 stock
      options vest and Mr. Freeman had 3,333 stock options vest. Calculated
      based on the difference between the market price of the shares on the TSX
      on August 15, 2011 (C$26.93) and the exercise price of the stock options
      being C$17.38, converted to US dollars at the US dollar/Canadian dollar
      exchange rate of 0.9799 at August 15, 2011.
|(3) | On December 11, 2011, Mr. Yip had 10,000 stock options
      vest. Calculated based on the difference between the market price of our
      shares on the TSX on December 12, 2011 (C$14.95) and the exercise price of
      the option (C$11.50). Converted to US dollars using the US dollar/Canadian
      dollar exchange rate of 0.9796 at December 12,
2011.                                                           

Termination and Change of Control Benefits

Transition Agreement with Tom S.Q. Yip, Former Vice
President, Finance and Chief Financial Officer

On August 15, 2011, the Company and Tom Yip entered into a
transition agreement in conjunction with Mr. Yips resignation as the Companys
Vice President, Finance and Chief Financial Officer, effective August 31, 2011.
Pursuant to the terms of the transition agreement, Mr. Yip was paid C$487,500
representing 18 months of his annual base salary and C$132,520 for payment in
lieu of bonus, based on the average annual bonus earned in the three immediately
preceding years. Under the terms of the transition agreement, Mr. Yips existing
stock options continued to vest and be exercisable until the end of the
transition period, which concluded on December 31, 2011, after which all of Mr.
Yips stock options expire. In addition Mr. Yip was also provided with a
one-time relocation assistance payment of C$35,000 (less applicable taxes),
continuation of his employer provided benefits (medical, dental and life
insurance) and the use of his Company provided cellular phone (up to C$500 per
month) for the duration of the agreement. All of these benefits ceased upon Mr.
Yip commencing new employment.

Named Executive Officer Termination and Change of Control
Benefits

The following discussion applies to our Named Executive
Officers except Matthew Freeman, our interim Chief Financial Officer, who does
not have an executive employment agreement with the Company.

We have entered into employment agreements with each of our
Named Executive Officers, except for Mr. Freeman who was appointed interim Chief
Financial Officer in 2011. Under the terms of the employment agreements, these
Named Executive Officers are entitled to compensation, based on their
remuneration at the time, in the event of termination without cause and on a
termination without cause or for good reason, within 12 months of a change of
control of the Company. No Named Executive Officer is entitled to compensation
on resignation, retirement or termination for cause. A change of control, in general, occurs when a person or group of persons acting
together through a transaction or series of transactions beneficially acquire or
exercise control or direction over 25% or more of our common shares. Any such
compensation payable to a Named Executive Officer is required to be paid to him
within 30 days of the termination of the Named Executive Officers employment.
The events selected for triggering payment in connection with termination
without cause and on a change of control were determined by the Compensation
Committee, with advice from independent consultants, based on industry standards
at the time the agreements were entered into with the Named Executive Officers.

- 107 -

---

In respect of termination without cause, each of our Named
Executive Officers is entitled to a lump sum payment equal to (i) 24 months of
base salary, and (ii) two times the average annual bonus earned by the Named
Executive Officer in the three immediately preceding years.

The table below sets out the estimated incremental payments,
payables and benefits due to each of the Named Executive Officers on termination
without cause assuming termination on December 31, 2011.

Name(3)(4)(5)
    Base
      Salary(1)(3) ($)
    Bonus(2)(3)
      ($)
    Option-Based Awards
      ($)(6)
    All Other Compensation
      ($)
    Total ($)John Smith
    1,263,775
    623,462
    Nil
    N/A
    1,887,237Joe Phillips
    788,596
    596,502
    Nil
    N/A
    1,385,098W. John DeCooman
    576,281
    256,323
    Nil
    N/A
    832,604David Smith
    509,554
    261,095
    Nil
    N/A
    770,649


|(1) | 24 months base salary for all Named Executive
      Officers.                                                                                                             
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Two times the average annual bonus earned by the Named
      Executive Officers in the three immediately preceding years using the
      target bonus for incomplete years.
|(3) | Lump sum payments are paid in Canadian dollars, amounts
      are converted using the US dollar/Canadian dollar average exchange rate of
      0.9891 for 2011.            
|(4) | Matthew Freemans employment terms do not include a
      change of control provision.                                                                                     
|(5) | As at December 31, 2011, there were no stock option
      awards that were in the money.                                                                                   

If within 12 months following a change of control, a Named
Executive Officers employment is terminated without cause, or a Named Executive
Officer terminates his employment for Good Reason (as described below), each of
our Named Executive Officers, other than John Smith, our CEO, is entitled to a
lump sum payment equal to (i) 24 months of base salary, and (ii) two times the
average annual bonus earned by the Named Executive Officer in the three
immediately preceding years. Our CEO is entitled to a lump sum payment equal to
(i) 36 months of base salary, and (ii) 3 times the average annual bonus earned
by the CEO in the three immediately preceding years. In addition, if on a change
of control, the acquiring company does not exchange options held by a Named
Executive Officer for the acquiring companys stock options without a material
financial loss to the Named Executive Officer, any outstanding unvested options
granted to the Named Executive Officer under our stock option plan shall become
100% vested and exercisable on the Named Executive Officers last day of
employment.

Good Reason will arise within 12 months following a change of
control where a Named Executive Officer is induced to resign or terminate his
employment for, amongst other reasons, an adverse change in his position,
duties, or responsibilities, or reporting relationship that is inconsistent with
his title or position, a reduction of his base salary, or aggregate level of
benefits, or relocation of his principal office outside of Vancouver, British
Columbia.

Each Named Executive Officer is required to (a) not disclose or
use for any purpose any of our confidential information following termination
and (b) sign a full release acceptable to us prior to receiving any payment as a
result of termination following a change of control.

- 108 -

---

The table below sets out the estimated incremental payments,
payables and benefits due to each of the Named Executives Officers for
termination on a change of control assuming termination on December 31,
2011.

Name(5)
    Base
      Salary(1)(4) ($)
    Bonus(2)(4)
      ($)
    Option-Based
      Awards(3)(4)(6) ($)
    Share Based Awards
      ($)(7)
    All Other Compensation
      ($)
    Total(4)
      ($)John Smith
    1,895,663
    935,194
    Nil
    513,807
    Nil
    3,344,664Joe Phillips
    788,596
    596,502
    Nil
    N/A
    Nil
    1,385,098W. John DeCooman
    576,281
    256,323
    Nil
    162,754
    Nil
    995,358David Smith
    509,554
    261,095
    Nil
    162,754
    Nil
    933,403


|(1) | 24 months base salary for Named Executive Officers other
      than John Smith the Companys Chief Executive Officer who receives 36
      months base salary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Two times the average annual bonus earned by all Named
      Executive Officers in the three immediately preceding years using the
      target bonus for incomplete years other than John Smith, our Chief
      Executive Officer, who receives three times the average annual bonus
      earned, using the target bonus for incomplete years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(3) | Assumes no exchange of options held by Named Executive
      Officers for acquiring companys stock options and the vesting of all
      outstanding options. Calculated based on the difference between the market
      price of our shares on the TSX on December 31, 2011 (C$14.10) and the
      exercise price of the option.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(4) | Lump sum payments are paid in Canadian dollars, amounts
      are converted using the US dollar/Canadian dollar average exchange rate of
      0.9891 for 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(5) | Matthew Freemans employment terms do not include a
      change of control provision.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(6) | As at December 31, 2011, there were no stock options that
      were in the money.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(7) | In the event of a change of control if the termination
      date is on or after the date which is one half way through the applicable
      performance period, all unvested PSUs held are deemed to be vested PSUs
      based on an assumed performance percentage of 100% and shall be redeemed
      at a cash amount equal to the market value of the shares at the
      termination date. If the termination date is before the date which is
      one-half way through the Performance Period applicable to the PSUs held,
      all unvested PSUs held by such Designated Participant shall immediately be
      deemed to be Vested PSUs as of the termination date based on an assumed
      Performance Percentage of 100% and the Company shall redeem such Vested
      PSUs by paying, as of the Redemption Date, a cash amount calculated by
      multiplying the Market Value of such vested PSUs as of the termination
      date by the proportion of the Performance Period which has elapsed as of
      the termination date.

Director Compensation

2011 Director Compensation Table

The following table sets out all amounts of compensation
provided to our directors, other than Mr. John Smith, our President and CEO, for
the year ended December 31, 2011.

Name
    Fees earned
      ($)(1)
    Share-based
      awards(1)(2) ($)
    Option-based awards
      ($)
    All other compensation
      ($)
    Total
      ($)(1)A.E. Michael Anglin
    -
    117,106
    Nil
    Nil
    117,106John R. Brodie, FCA
    50,761
    77,582
    Nil
    Nil
    128,343Richard C. Campbell, MBE
    65,716
    60,661
    Nil
    Nil
    126,377David L. Johnston(3)
    13,902
    44,232
    Nil
    Nil
    58,134Richard D. Paterson
    -
    124,552
    Nil
    Nil
    124,552Peter W. Tomsett
    111,212
    121,322
    Nil
    Nil
    232,534


|(1) | All amounts are paid in Canadian dollars. Directors are
      remunerated in Canadian dollars and amounts contained in this table were
      converted to US dollars using the average US dollar/Canadian dollar
      exchange rate of 0.9891 for 2011.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Our Board of Directors adopted a deferred share unit plan
      effective July 1, 2008.                                                                                                                                                                 
|(3) | Mr. Johnson retired from the Board on May 11,
  2011.                                                                                                                                                                                                   

- 109 -

---

Our Board of Directors adopted a deferred share unit (DSU)
plan effective July 1, 2008 to more closely align the interests of our directors
with the interests of our shareholders. With the adoption of the DSU plan, our
directors will no longer receive option awards. Under our DSU plan: (a)
directors are awarded annual DSU grants and directors may elect to receive all
or a portion of their annual retainer fees in DSUs, (b) the number of DSUs to be
received is calculated by dividing the dollar value of the DSUs to be received
by the market price of our common shares on the date the DSUs are credited to a
directors account, (c) DSUs are credited to a directors account pro rata on a
quarterly basis and (d) DSUs cannot be redeemed until the director ceases to be
a member of the Board of Directors. Upon redemption of DSUs, we will pay to a
director a lump sum cash amount equal to the aggregate number of DSUs that have
been credited to the account of that director multiplied by the market price of
our common shares at the time of redemption.

Directors are awarded an annual DSU amount equivalent to
C$60,000 and the Chairman C$120,000 paid quarterly. The following table provides
a breakdown of fees earned by our directors, other than Mr. John Smith our
President and CEO, who does not receive DSUs, for the year ended December 31,
2011. The directors may elect to have their fees paid in cash or DSUs. In March
2012, after a peer review of director compensation was conducted by Semler
Brossy, the Directors approved an increase in the annual DSU amount by an
equivalent of C$5,000 DSUs per quarter to each Non-Employee Director, to be
included in the quarterly awards going forward.

For 2011, each of our directors, save for Mr. Tomsett, received
an annual director retainer of C$45,000; each committee member, excluding the
committee chair, received an annual retainer of C$5,000; the Audit Committee
chair received an annual retainer of C$15,000; and the other committee chairs
received an annual retainer of C$10,000. Mr. Tomsett, as the chair of our Board
of Directors, receives an annual board chair retainer fee of C$110,000, in place
of the annual director retainer fee, annual committee member retainer fee and
annual committee chair retainer fee. These retainer fees may be awarded in
either cash or DSUs.

Silver Standard provides each Director the option of having an
annual private medical examination.

Name
    RetainerFee($)(2)
    CommitteeRetainerFee($)(2)
    CommitteeChairRetainerFee($)(2)
    Annual DSUGrant(2)($)
    TotalFeesEarned**($)**(2)
    Fees takenin DSUs($)(1)(2)
    FeesTaken inCash($)(2)A.E. Michael Anglin
    45,496
    7,021(4)
    3,928(4)
    60,661
    117,106
    117,106
    -John R. Brodie, FCA
    45,496
    7,021(4)
    15,165
    60,661
    128,343
    77,582
    50,761Richard C. Campbell, MBE
    45,496
    10,110
    10,110
    60,661
    126,377
    60,661
    65,716David L. Johnston(3)
    22,748
    5,055
    -
    30,331
    58,134
    44,232
    13,902Richard D. Paterson
    45,496
    8,285(4)
    10,110
    60,661
    124,552
    124,552
    -Peter W. Tomsett
    111,212
    -
    -
    121,322
    232,534
    121,322
  111,212


|(1) | Under our deferred share unit plan, a director may elect
      to receive all or a portion of his annual retainer fees as DSUs.                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Directors are remunerated in Canadian dollars and amounts
      contained in this table were converted to US dollars using the average US
      dollar/Canadian dollar exchange rate of 0.9891 for 2011.                                                      
|(3) | Mr. Johnson resigned as a director as of May 11, 2011 and
      redeemed his DSUs on August 15, 2011.                                                                                                                                                         
|(4) | Due to movement between Committees, Messrs. Anglin,
      Brodie and Paterson received pro rata amounts in respect of their
      membership during the year on the Safety and Sustainability, Audit and
      Corporate Governance and Nominating Committees.

- 110 -

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The Compensation Committee reviews board compensation on an
annual basis and recommends revisions to the annual retainers paid to the Board
of Directors when warranted in the circumstances. In addition, the Board of
Directors may award special remuneration to any director undertaking any special
services on our behalf other than services ordinarily required of a director.

Outstanding Option Based Awards

The following table sets out all option based awards
outstanding for each of our directors, other than Mr. John Smith, our President
and CEO (who in 2011 received no additional compensation for his service as a
director) at December 31, 2011.

Option-based AwardsName
      Number of securities underlying unexercised options (#)
      Option exercise price
      (C$)
      Option expiration date
      Value of unexercised in-the-money options(1) ($)A.E. Michael Anglin
      50,000
      29.02
      August 7, 2013
      NilJohn R. Brodie, FCA
      14,000
      36.14
      December 18, 2012
      NilRichard C. Campbell, MBE
      50,000
      29.02
      August 7, 2013
      NilRichard D. Paterson
      50,000
      29.02
      August 7, 2013
      NilPeter W. Tomsett
      14,000
      36.14
      December 18, 2012
      Nil


|(1) | Calculated based on the difference of the market price of
      our shares on the TSX on December 31, 2011 (C$14.10) and the exercise
      price of the option. Converted to US dollars using the US dollar/Canadian
      dollar exchange rate of 1.0170 at December 31,
2011.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Outstanding Share-Based Awards

The following table sets out the value of share based awards
outstanding for each of our directors, other than Mr. John Smith our current
President and CEO (who received no additional compensation for his services as a
director), as at December 31, 2011.

Name(2)
    Number of DSUs (#)
    Value of DSUs
      ($)(1)A.E. Michael Anglin
    17,665
    244,913John R. Brodie, FCA
    12,562
    174,163Richard C. Campbell, MBE
    13,342
    184,978Richard D. Paterson
    19,324
    267,914Peter W. Tomsett
    35,397
    490,755


|(1) | DSUs are only redeemable into cash upon a director
      ceasing to be a member of the board. Calculated based on the market price
      of our shares on the TSX on December 31, 2011 (C$14.10). Converted to US
      dollars using the US dollar/Canadian dollar exchange rate of 1.0170 at
      December 31, 2011.             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                     
|(2) | David L. Johnston ceased to be a Director in 2011 and
      redeemed 13,223 DSUs on August 15, 2011. The market value at the date of
      redemption was C$25.39, for total proceeds of C$335,704. Converted to US
      dollars using the average US dollar/Canadian dollar exchange rate of
      0.9891 for 2011 being $339,404.

- 111 -

---

Incentive Plan Awards - Value Vested or Earned During the
Year

The following table sets out the value of incentive plan awards
for each of our directors, other than Mr. John Smith our current President and
CEO (who received no additional compensation for his services as a director),
vested or earned during the year ended December 31, 2011.

Name
    Option-based awards  Value
      vested during the year ($)
    Share-based awards  Value
      vested during the year ($)(1)
    Non-equity incentive plan
      compensation  Value earned during the year
      ($)A.E. Michael Anglin
    N/A
    64,095
    N/AJohn R. Brodie, FCA
    N/A
    41,981
    N/ARichard C. Campbell, MBE
    N/A
    32,819
    N/ARichard D. Paterson
    N/A
    67,547
    N/APeter W. Tomsett
    N/A
    65,634
    N/A


|(1) | Deferred share units vest immediately and are credited to
      each directors account pro-rata on a quarterly basis. Calculated based on
      the market price of our shares on the TSX on December 31, 2011 (C$14.10).
      Converted to US dollars using the US dollar/Canadian dollar exchange rate
      of 1.0170 at December 31, 2011.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Options to Purchase Securities from Company or
Subsidiaries

Options Outstanding

Stock options to purchase our securities are granted to our
directors (upon their appointment) and employees on terms and conditions
acceptable to the regulatory authorities in Canada. At our annual general
meeting held on May 11, 2011, our shareholders approved a stock option plan that
reserves 8.5% of our issued and outstanding shares for issuance on exercise of
stock options, including previously granted stock options.

Under our stock option plan, (a) the maximum number of shares
reserved for issuance under the plan is 8.5% of our issued and outstanding
shares, (b) stock options in favor of any one individual may not exceed 5% of
the issued and outstanding shares of common shares, (c) no stock option is
transferable by the optionee other than by will or the laws of descent and
distribution, (d) a stock option is exercisable during the lifetime of the
optionee only by such optionee, (e) the maximum term of each stock option is ten
years, with the vesting period determined at the discretion of the board of
directors and (f) the minimum exercise price for a stock option is equal to the
greater of the (i) closing price of the Companys shares on the Toronto
Stock Exchange on the day preceding the date of grant; and (ii)the
volume weighted average trading price of the common shares of the Company on the
Toronto Stock Exchange, calculated by dividing the total value by the total
volume of common shares traded, for the five trading days immediately preceding
the granting of the option.

The number of stock options and the number of common shares
subject to such stock options granted to officers and senior management as a
group, to directors who are not officers or senior management as a group and
employees and consultants as a group are set out below as of December 31, 2011.
The exercise price of the stock options is stated in Canadian dollars.

- 112 -

---

Table No. 26Outstanding Stock Options

|                               | Number of Options |                |                  
|------------------------------ | ----------------- | -------------- | -----------------
|                               | Outstanding       | Exercise Price | Expiry Date      
|Officers and Senior Management | 12,500            | $36.14         | December 18, 2012
|                               | 20,000            | $11.50         | December 11, 2018
|                               | 26,667            | $23.57         | May 15, 2019     
|                               | 25,000            | $21.07         | November 10, 2019
|                               | 85,000            | $24.61         | December 14, 2019
|                               | 37,500            | $24.41         | December 16, 2019
|                               | 500,000           | $17.38         | August 13, 2020  
|                               | 82,000            | $23.14         | January 27, 2018 
|                               | 10,000            | $28.78         | March 9, 2018    
|                               | 150,000           | $28.98         | March 28, 2018   
|                               | 50,000            | $15.64         | November 17, 2018
|Directors who are not          |                   |                |                  
|Officers or                    | 28,000            | $36.14         | December 18, 2012
|Senior Management              | 150,000           | $29.02         | August 7, 2013   
|                               |                   |                |                  
|Employees and Consultants      | 10,000            | $21.30         | July 27, 2011(1) 
|                               | 20,000            | $40.62         | May 3, 2012      
|                               | 95,000            | $34.71         | September 7, 2012
|                               | 117,500           | $36.14         | December 18, 2012
|                               | 81,136            | $11.50         | December 11, 2018
|                               | 6,667             | $21.07         | November 10, 2019
|                               | 179,002           | $24.41         | December 16, 2019
|                               | 10,000            | $17.38         | August 13, 2020  
|                               | 10,000            | $26.55         | November 12, 2020
|                               | 9,900             | $23.14         | January 27, 2018 
|                               | 72,500            | $28.78         | March 9, 2018    
|                               | 20,000            | $26.23         | July 6, 2018     
|                               | 20,000            | $26.42         | August 18, 2018  
|                               | 50,000            | $15.64         | November 17, 2018
|Total:                         | 1,878,372         |                |                  

|(1) | As per the Companys Stock Option Plan, in the event that
      the Option Holder should die while he or she is still a Director, an
      Employee, or a Service Provider, the Expiry Date shall be the first
      anniversary of the Option Holders date of death. Therefore, the 10,000
      stock options with a strike price of $21.30 shall expire on June 28, 2012.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As at December 31, 2011, we did not have any share purchase
warrants outstanding.

C.Board Practices

Our directors are elected annually and hold office until the
next annual general meeting of our shareholders or until their successors in
office are duly elected or appointed. We do not have an executive committee. All directors are elected for a one-year
term. See Table No. 25 under Item 6.A under the heading Directors and Senior
Management for the length of time our directors have served on the board. All
officers serve at the pleasure of the board. The next annual general meeting of
our shareholders has been called for May 9, 2012.

- 113 -

---

Our Board of Directors has four committees: the Audit
Committee, the Compensation Committee, the Corporate Governance and Nominating
Committee and the Safety and Sustainability Committee. The members of these
committees do not have any fixed terms for holding their positions, are
appointed and replaced from time to time by resolution of the Board of Directors
and receive separate remuneration for acting as members of the committees (other
than our Chair of the Board of Directors).

The Audit Committee, comprised of John R. Brodie FCA, Chair,
Richard D. Paterson and A.E. Michael Anglin, has the responsibility of, among
other things, recommending the Companys independent auditor to the Board;
determining the extent of involvement of the independent auditor in reviewing
unaudited quarterly financial results; evaluating the qualifications,
performance and independence of the independent auditor; reviewing and
recommending approval to the Board of our annual and quarterly financial results
and management discussion and analysis and overseeing the establishment of
whistle-blower and related procedures. Each member of the Audit Committee has
been determined to be an independent director. The full text of the Audit
Committee Charter is available on the Companys website.

The Compensation Committee, comprised of Richard D. Paterson,
Chair, John R. Brodie FCA, and Richard C. Campbell, MBE, has the responsibility
for recommending approval of executive and management direct remuneration and
stock options to the independent members of the Board. The President and Chief
Executive Officers function in relation to the Compensation Committee is to
make specific recommendations on remuneration with supporting commentary on
individual performance and industry standards. Each member of the Compensation
Committee has been determined to be an independent director. The full text of
the Compensation Committee Charter is available on the Companys website.

The Corporate Governance and Nominating Committee, comprised of
A.E. Michael Anglin, Chair, Richard C. Campbell, MBE and Peter W. Tomsett, has
the responsibility of, among other things, recommending to the Board, on an
annual basis, nominees for election as directors for the next annual meeting of
shareholders and nominees for appointment to committees of the Board and
analyzing the needs of the Board when vacancies arise on the Board and
recommending nominees who meet such needs. Each member of the Corporate
Governance and Nominating Committee has been determined to be an independent
director.

The Safety and Sustainability Committee comprised of Richard C.
Campbell, MBE, Chair, A.E. Michael Anglin and Richard D. Paterson, has the
responsibility of, among other things monitoring our safety, health, security,
environment and community relations performance on behalf of the Board and
assessing the effectiveness of our safety, health, security, environment and
community relations policies and practices. Each member of the Safety and
Sustainability Committee has been determined to be an independent director.

Currently, we do not have service contracts with any of our
directors or those of our subsidiaries providing for benefits upon termination
of employment. (see Item 6.B  Compensation  Termination and Change of Control
Benefits).

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D.Employees

Silver Standard currently employs in excess of 750 people at
our four principal locations  Corporate Office (Vancouver, BC, Canada), Mina
Pirquitas (Jujuy, Argentina), Silver Standard Peru (Lima, Peru), Silver Standard
Mexico (Durango, Mexico). In our corporate head office, we had 37 full-time
employees as at December 31, 2011, 7 of whom carried out our management and
executive functions, 3 of whom were involved in shareholder and investor
communications, 9 of whom were responsible for project exploration and
development, 11 of whom provided financial, legal and community relations
expertise, and 7 of whom provided administrative support.

At the end of 2011, Silver Standard was engaged with only one
union, at our mine site in Jujuy, Argentina. We currently have a cordial
relationship with the union in Argentina and negotiate amendments to our
collective agreement on an annual basis, which is a standard practice in
Argentina due to inflationary factors.

For the year ending December 31, 2010, in our corporate head
office in Vancouver, we had 39 full and 1 part-time employees. For the year
ending December 31st 2009 we had 36 full and 2 part-time employees.
We had an aggregate in excess of 700 employees at our various projects in 2010,
and in excess of 600 employees in 2009.

E.Share Ownership

The following table sets out, as of March 30, 2012 the number
of our common shares beneficially owned by senior management and directors who
to our knowledge, possess sole voting and investment power with respect to the
shares shown.

Table No. 27Senior Management and Directors Share Ownership

|Name of
      Beneficial |                | Number of Securities |                 
|------------------------ | -------------- | -------------------- | ----------------
|Owner                    | Title of Class | of Class*            | Percent of Class
|John Smith               | Common         | 319,833              | **              
|Joe Phillips             | Common         | 50,000               | **              
|David L. Smith           | Common         | 72,966               | **              
|W. John DeCooman         | Common         | 36,633               | **              
|Kristen G. Riddell       | Common         | 26,065               | **              
|Andrew Sharp             | Common         | Nil                  | Nil             
|Ronald Burk              | Common         | 50,833               | **              
|A.E. Michael Anglin      | Common         | 50,000               | **              
|John R. Brodie, FCA      | Common         | 17,500               | **              
|Richard C. Campbell, MBE | Common         | 52,000               | **              
|Richard D. Paterson      | Common         | 65,000(1)            | **              
|Peter W. Tomsett         | Common         | 24,000               | **              

* includes options exercisable within 60 days. **beneficial
ownership is less than 1% of the common shares outstanding as at March 30, 2012.

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(1) 15,000 Common Shares are held through a family trust over
which Mr. Paterson has control and direction, but not sole voting and investment
power.

As at March 30, 2012, our directors and senior management held,
as a group, directly or indirectly, an aggregate of 182,000 common shares and
582,830 options exercisable within 60 days.

The total number of exercisable and unexercisable stock options
  and the number of common shares subject to such stock options granted to the
  senior management and our directors are set out below as of March 30, 2012.

Table No. 28Senior Management and Directors Stock Options

Number of OptionsName
    Outstanding
    Exercise Price
    Expiry DateJohn Smith
    500,000
    $17.38
    August 13, 201754,500
    $23.14
    January 27, 201877,065
    $15.41
    January 18, 2019David L. Smith
    85,000
    $24.61
    December 14, 20199,900
    $23.14
    January 27, 201815,536
    $15.41
    January 18, 2019W. John DeCooman
    26,667
    $23.57
    May 15, 201910,000
    $24.41
    December 16, 20199,900
    $23.14
    January 27, 201817,571
    $15.41
    January 18, 2019Joe Phillips
    150,000
    $28.98
    March 28, 201836,067
    $15.41
    January 18, 2019Andrew Sharp
    50,000
    $15.64
    November 17, 201817,571
    $15.41
    January 18, 2019Ronald Burk
    10,000
    $36.14
    December 18, 201222,500
    $11.50
    December 11, 201820,000
    $24.41
    December 16, 201912,500
    $28.78
    March 9, 201815,413
    $15.41
    January 18, 2019Kristen G. Riddell
    25,000
    $21.07
    November 10, 20195,000
    $24.41
    December 16, 20197,700
    $23.14
    January 27, 201813,564
    $15.41
    January 18, 2019Gregory J. Martin
    150,000
    $17.47
    January 31, 2019A.E. Michael Anglin
    50,000
    $29.02
    August 7, 2013John R. Brodie, FCA
    14,000
    $36.14
    December 18, 2012Richard C. Campbell, MBE
    50,000
    $29.02
    August 7, 2013


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|                    | Number of Options |                |                  
|------------------- | ----------------- | -------------- | -----------------
|Name                | Outstanding       | Exercise Price | Expiry Date      
|                    |                   |                |                  
|Richard D. Paterson | 50,000            | $29.02         | August 7, 2013   
|                    |                   |                |                  
|Peter W. Tomsett    | 14,000            | $36.14         | December 18, 2012

Item
7Major
Shareholders and Related Party Transactions

A.Major Shareholders

To the best of our knowledge at the date of this Annual Report,
no shareholder directly or indirectly owns more than 5% of our issued shares,
other than Royce & Associates, LLC, and Tradewinds Global Investors, LLC.
Royce & Associates, LLC reported owning 10,378,025 of our common shares
(12.86% of our issued and outstanding shares) as at December 31, 2011, pursuant
to the Form 13-G filed on January 20, 2012. Royce & Associates, LLC reported
owning 8,831,025 of our common shares (11.07% of our issued and outstanding
shares) as at December 31, 2010, pursuant to the Form 13-G filed on February 3,
2011 and 10,449,825 of our common shares (14.52% of our issued and outstanding
shares) as at December 31, 2009, pursuant to the Form 13-G filed on February 9,
2010. Tradewinds Global Investors, LLC, reported owning 7,317,977 of our common
shares (9.07% of our issued and outstanding shares) as at December 31, 2011,
pursuant to the Form 13-G filed on February 14, 2012. Neither Royce &
Associates, LLC nor Tradewinds Global Investors, LLC have voting rights that are
different from the voting rights of the other holders of our common shares. To
the best of our knowledge at the date of this Annual Report, we are not directly
or indirectly owned or controlled by another corporation, by any foreign
government or by any other natural or legal person severally or jointly.

Our common shares are issued in registered form and the
following information is taken from the records of Computershare Investor
Services Inc. (located in Vancouver, British Columbia, Canada), the registrar
and transfer agent for our common shares.

On December 31, 2011, the shareholders list for our common
shares showed 2,166 registered shareholders and 80,693,432 shares outstanding.
774 of these registered shareholders were US residents, owning 46,736,512 shares
representing 57.92% of our issued and outstanding shares.

B.Related Party Transactions

Since January 1, 2011, we have not entered into any
transactions that have materially affected or will materially affect us in which
any director, executive officer, or beneficial holder of more than 10% of the
outstanding common shares, or any of their respective relatives, spouses,
associates or affiliates has had or will have any direct or material indirect
interest.

C.Interests of Experts and Counsel

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

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Item
8Financial Information

A.Consolidated Statements and Other Financial Information

Our audited consolidated financial statements are stated in
United States dollars and are prepared in accordance with IFRS as issued by the
IASB.

Exhibited hereto are audited consolidated financial statements
prepared by our management, audited by an independent auditor and accompanied by
an audit report:

|(a) | Managements Responsibility for the Financial Statements
      and Independent Auditors Report, dated March 11, 2012.          
|--- | --------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                 
|(b) | Consolidated Statements of Financial Position as at
      December 31, 2011, December 31, 2010, and January 1, 2010.            
|    |                                                                                                                                 
|(c) | Consolidated Statements of Income for the years ended
      December 31, 2011 and December 31, 2010.                            
|    |                                                                                                                                 
|(d) | Consolidated Statements of Comprehensive Income for the
      years December 31, 2011 and December 31, 2010.                    
|    |                                                                                                                                 
|(e) | Consolidated Statements of Changes in Shareholders
      Equity for the years ended December 31, 2011 and December 31,
  2010. 
|    |                                                                                                                                 
|(f) | Consolidated Statements of Cash Flows for the years ended
      December 31, 2011 and December 31, 2010.                        
|    |                                                                                                                                 
|(g) | Notes to Consolidated Financial Statements for the years
      ended December 31, 2011, December 31, 2010 and January 1,
  2009.

100% of our sales are export sales, the total of which was
$147.8 million in 2011.

The Pirquitas mine has a fiscal stability agreement with the
government of Argentina dating from 1998. In 2002, the government of Argentina
implemented an export duty on concentrates that did not apply to companies with
pre-existing fiscal stability agreements. In December 2007 the National Customs
Authority of Argentina levied an export duty of approximately 10% from
concentrates for projects with fiscal stability agreements pre-dating 2002. The
Company has been advised that Pirquitas is subject to this export duty despite
contrary rights detailed under the 1998 fiscal stability agreement. The legality
of the export duty applied to silver concentrates has been challenged and is
currently under review by the court in Argentina. In July 2010, the Company
filed a claim in the provincial court for repayment of export duties paid on
silver concentrates, and for an order to cease payment of the export duty until
the matter has been decided by the court. An order was granted effective
September 29, 2010 to cease payment of the export duty on silver concentrates
pending the decision of the courts, and in April 2011 a government appeal
against this order was denied.

As of December 31, 2011 the Pirquitas mine has paid $6.6
million in export duties against which it has filed for recovery. In accordance
with the order to cease payment the Company has not been paying export duties on
silver concentrate but continues to accrue duties in full until the outcome of
the claim is known with certainty. At December 31, 2011, the Company had accrued
a liability totaling $13.1 million, with a corresponding impact on cost of sales
in the relevant period. If this export duty is successfully overturned the
benefit will be recognized in the Consolidated Statement of Income for the full
amount of paid and unpaid duty in the period recovery becomes virtually certain.

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On October 26, 2011 the Argentina government announced a decree
that requires all funds from mining export sales to be repatriated to Argentina
and converted into Argentina Pesos within the Sole Foreign Exchange Market in
Argentina, and each transfer is subject to a 0.6% transfer tax. The mining
industry had previously been exempted from this tax. Although the aforementioned
fiscal stability agreement also includes stability over foreign exchange
controls, the government removed such benefits with this decree. The Company
will comply with all laws and regulations, and is monitoring the situation
closely. The impact of the transfer tax should not have a material impact on the
Company.

We have not paid dividends in the past five years and do not
expect to pay dividends in the near future. Our present policy is to retain
future earnings for use in our operations and the expansion of our business.

B.Significant Changes

There were no significant changes that have occurred since the
date of our most recent audited consolidated financial statements.

Item 9The
  Offer and Listing

A.Offer and Listing Details

On November 4, 2004, our common shares commenced trading in
Canada on the Toronto Stock Exchange (TSE) in Toronto, Ontario, Canada, under
the trading symbol SSO and CUSIP #82823L-10-6. Prior to November 4, 2004, our
shares were listed in Canada on the TSX Venture Exchange (TSX-V) (formerly
known as the Canadian Venture Exchange Inc., the successor exchange resulting
from the merger of the Vancouver Stock Exchange and Alberta Stock Exchange
effective November 29, 1999) (together the TSE and TSX-V are referred to as the
TSX). Our common shares commenced trading on the Vancouver Stock Exchange in
1947.

On October 12, 2004, our common shares commenced trading in the
United States on the Nasdaq Global Market (NGM, formerly known as the Nasdaq
National Market) with the symbol SSRI. Prior to October 12, 2004, our shares
were traded in the United States on the Nasdaq SmallCap Market (NSM) (together
the NGM and NSM are referred to as Nasdaq). Our common shares were first
quoted on the Nasdaq SmallCap Market on August 1, 1996.

The following tables set out the reported high and low prices
on each of TSX and Nasdaq for (a) the five most recent fiscal years; (b) each
quarterly period for the past two fiscal years; and (c) each month for the past
six months.

Table No. 29High and Low Prices for the Five Most Recent Fiscal Years on the TSX (C$s)

Fiscal Year Ended
    High
    LowDecember 31, 2011
    $34.17
    $12.70December 31, 2010
    $30.07
    $16.21December 31, 2009
    $26.75
    $15.59December 31, 2008
    $40.30
    $6.87December 31, 2007
    $45.58
    $27.80


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Table No. 30High and Low Prices for the Five Most Recent Fiscal Years on Nasdaq ($s)

Fiscal Year Ended
    High
    LowDecember 31, 2011
    $35.94
    $12.39December 31, 2010
    $29.95
    $15.61December 31, 2009
    $24.67
    $12.04December 31, 2008
    $40.72
    $5.35December 31, 2007
    $48.16
    $27.52


Table No. 31High and Low Prices for each Quarterly Period for the Past Two Fiscal Years
  on the TSX C$s)

|Period Ended       | High   | Low   
|------------------ | ------ | ------
|December 31, 2011  | $21.36 | $12.70
|September 30, 2011 | $31.25 | $18.79
|June 30, 2011      | $34.17 | $23.62
|March 31, 2011     | $30.72 | $21.52
|December 31, 2010  | $29.50 | $20.73
|September 30, 2010 | $21.30 | $16.39
|June 30, 2010      | $20.87 | $18.15
|March 31, 2010     | $24.79 | $17.31

Table No. 32High and Low Prices for each Quarterly Period for the Past Two Fiscal Years
  on Nasdaq ($s)

|Period Ended       | High   | Low   
|------------------ | ------ | ------
|December 31, 2011  | $21.07 | $12.51
|September 30, 2011 | $31.75 | $18.08
|June 30, 2011      | $35.66 | $23.90
|March 31, 2011     | $31.68 | $22.02
|December 31, 2010  | $29.32 | $20.32
|September 30, 2010 | $20.59 | $15.80
|June 30, 2010      | $20.58 | $16.92
|March 31, 2010     | $24.02 | $16.54

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Table No. 33High and Low Prices for each Month for the Past Six Months on the TSX (C$s)

|Month Ended              | High   | Low   
|------------------------ | ------ | ------
|February 28, 2012        | $18.05 | $15.90
|January 31, 2012         | $17.68 | $14.83
|December 31, 2011        | $15.92 | $13.01
|November 30, 2011        | $21.36 | $13.57
|October 31, 2011         | $20.21 | $16.52
|September 30,
      2011 | $31.25 | $18.79

Table No. 34High and Low Prices for each Month for the Past Six Months on Nasdaq ($s)

|Month Ended              | High   | Low   
|------------------------ | ------ | ------
|February 28, 2012        | $18.07 | $16.01
|January 31, 2012         | $17.68 | $14.63
|December 31, 2011        | $14.98 | $12.39
|November 30, 2011        | $21.07 | $12.90
|October 31, 2011         | $20.27 | $16.17
|September 30,
      2011 | $31.75 | $18.08

Shareholder Rights Plan

The Companys Board of Directors adopted a Shareholder Rights
Plan on March 9, 2012 (the Rights Plan). The Rights Plan is similar to
existing shareholder rights plans adopted by other Canadian public companies.
The Rights Plan has not been adopted in response to, or in anticipation of, any
known take-over bid. The Rights Plan's objective is to ensure that all
shareholders of the Company are treated equally and fairly in connection with
any proposed takeover bid for the Company or other transaction that would
involve a change in control.

The Board has implemented the Rights Plan by authorizing the
issuance, of one right (a Right) in respect of each outstanding common share
of the Company (the Common Shares) at the close of business on March 9, 2012
(the Record Time). In addition, the Board authorized the issuance of one Right
in respect of each Common Share and other share of capital stock or voting
interests of the Company entitled to vote generally in the election of directors
(together with the Common Shares, the Voting Shares) issued from treasury
after the Record Time and prior to the Separation Time (as defined in the Rights
Plan). Initially, the Rights will be attached to the Companys Voting Shares and
will not be exercisable. Until such time as the Rights separate from the Voting
Shares, when they become exercisable, Rights certificates will not be
distributed to shareholders.

If a person, or a group acting jointly or in concert, acquires
(other than pursuant to an exemption available under the Rights Plan) beneficial
ownership of 20 percent or more of the Voting Shares, Rights (other than those
held by such acquiring person or group which will become void) will separate
from the Common Shares and each Right will permit the holder thereof to receive,
upon exercise, the number of Common Shares having an aggregate market price (as determined
in accordance with the Rights Plan), as of the date of consummation or
occurrence of such acquisition of Common Shares, equal to four times the
exercise price (as of the Separation Time) of the Right for an amount in cash
equal to the exercise price. The exercise price of the Rights pursuant to the
Rights Plan is four times the market price per Common Share.

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B.Plan of Distribution

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

C.Markets

See Subsection A of this Item 9.

D.Selling Shareholders

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

E.Dilution

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

F.Expenses of the Issue

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

Item
10Additional Information

A.Share Capital

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

B.Memorandum and Articles of Association

Incorporation

We were incorporated in British Columbia, Canada, under
Certificate of Incorporation number 21492 on December 11, 1946. We do not have
any stated objects or purposes as such are not required by the corporate
laws of the Province of British Columbia. Rather, we are, by such corporate
laws, entitled to carry on any activities whatsoever, which are not specifically
precluded by other statutory provisions of the Province of British Columbia.

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Powers and Functions of the Directors

The powers and functions of the directors are set out in our
Articles, which were adopted by our shareholders on May 12, 2005. They provide:

|(a) | a director is obligated to disclose his potential
      interest in a proposal, arrangement or contract being considered by us,
      and may not vote on any proposal, arrangement or contract proposed, but
      such director shall be counted in the quorum at the meeting of the
      directors at which the proposal, arrangement or contract is
    approved;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                       
|(b) | the directors may, in the absence of an independent
      quorum, vote compensation to themselves;                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                       
|(c) | there are no limitations on the exercise by the directors
      of our borrowing powers;                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                       
|(d) | there are no provisions for the retirement or
      non-retirement of directors under an age limit; and                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                       
|(e) | there is no requirement for a director to hold any of our
      shares.                                                                                                                                                                                                                                                                                               

Rights and Restrictions Attached to the Shares

As all of our authorized and issued shares are of one class
there are no special rights or restrictions of any nature or kind attached to
any of the shares. All authorized and issued shares rank equally in respect to
the declaration and receipt of dividends, the rights to share in any profits or
surplus on our liquidation, dissolution or winding. Each share has attached to
it one non-cumulative vote.

Alteration of Share Rights

To alter the rights of holders of our issued shares such
alteration must be approved by the majority vote of two-thirds of our issued
shares attending and voting at a meeting of our shareholders.

Annual General Meetings

Annual general meetings are called and scheduled upon decision
by the board of directors. The directors may convene an extraordinary general
meeting of the shareholders. The holders of not less than 5% of our issued
shares may requisition an extraordinary meeting of the shareholders. All
meetings of the shareholders may be attended by registered shareholders or
persons who hold powers of attorney or proxies given to them by registered
shareholders.

Foreign Ownership Limitations

Our Articles do not contain limitations prohibiting shares
being held by non-residents, foreigners or any other group.

Change of Control

There are no provisions in our Articles that would have an
effect of delaying, deferring or preventing a change in our control, or that
would operate with respect to any proposed merger, acquisition or corporate
restructuring.

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Share Ownership Reporting Obligations

There are no provisions in our Articles requiring share
ownership to be disclosed. The securities laws of the Province of British
Columbia require disclosure of shareholdings by:

|(a) | persons who are our directors or senior officers;
    and                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                              
|(b) | a person who has direct or indirect beneficial ownership
      of, control or direction over, or a combination of direct or indirect
      beneficial ownership of and control or direction over our securities
      carrying more than 10% of the voting rights attached to all of our
      outstanding voting securities.

Differences from U.S. Law

The threshold of share ownership percentage requiring
disclosure of ownership is higher in the home jurisdiction of British Columbia
(a 10% threshold) than the United States where U.S. securities law prescribes a
5% threshold for ownership disclosure.

C.Material Contracts

The following is a summary of each material contract, other
than contracts entered into in the ordinary course of business, to which we or
any of our subsidiaries is a party, for the two years immediately preceding
publication of the document, including dates, parties, general nature of the
contracts, terms and conditions, and amount of any consideration passing to or
from us or any other member of the group.

1. ****Convertible
Note Purchase Agreement dated February 27, 2008 with UBS Securities LLC, Bear,
Stearns & Co., Inc., Deutsche Bank Securities Inc., Blackmont Capital Inc.,
GMP Securities L.P., National Bank Financial Inc. and Salman Partners Inc., as
initial purchasers. Under the terms of the Convertible Note Purchase Agreement,
we issued $138 million of convertible notes (the Convertible Notes) due March
1, 2028 and bearing interest at a rate of 4.5% per year. The Convertible Notes
will be convertible into our common shares at a fixed conversion rate, subject
to certain anti-dilution adjustments, only in the event that (i) during
specified consecutive trading periods, the market price of our common shares
exceeds 130% of the conversion price of the Convertible Notes, (ii) the trading
price of the Convertible Notes falls to 97% or less of the amount equal to the
then prevailing price of our common shares, multiplied by the applicable
conversion rate, (iii) the Convertible Notes are called for redemption, (iv)
upon the occurrence of specified corporate transactions, or (v) during specified
periods in early 2013 and 2028. On conversion, holders of the Convertible Notes
will receive cash and, if applicable, common shares (or, at our election, in
lieu of such common shares, cash or any combination of cash and common shares).
In addition, if certain fundamental changes occur to us, holders of the
Convertible Notes may be entitled to an increased conversion rate. The
Convertible Notes will be convertible into our common shares at an initial
conversion rate of 23.0792 common shares per $1,000 principal amount of
Convertible Notes converted, representing an initial conversion price of
approximately $43.33 per common share, which is approximately 130% of the
closing price of our common shares on the Nasdaq Global Market on February 21,
2008. Holders of the Convertible Notes will have the right to require us to
repurchase all or part of their Convertible Notes on March 1 of each of 2013,
2018 and 2023, and upon certain fundamental corporate changes. The repurchase
price will be equal to 100% of the principal amount of the Convertible Notes
being converted, plus accrued and unpaid interest to, but excluding, the
repurchase date. Subject to specified conditions, we shall pay the purchase
price in cash. On and after March 5, 2013, we may redeem all or part of the
Convertible Notes for cash at a redemption price equal to 100% of the principal
amount of the Convertible Notes being redeemed, plus accrued and unpaid interest
to, but excluding, the redemption date. See Item 5.B under the heading
Liquidity and Capital Resources.

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2.****
An Underwriting Agreement dated February 24, 2009 with UBS Securities Canada
Inc., Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, Dahlman
Rose & Co., LLC, Morgan Stanley & Co. Incorporated, Scotia Capital Inc.,
Blackmont Capital Inc., GMP Securities L.P., National Bank Financial Inc. and
Salman Partners Inc., as Underwriters and Deutsche Bank Securities Limited and
Credit Suisse Securities (Canada), Inc. as Sub-Underwriters. Under the terms of
the Underwriting Agreement, we issued 5,450,000 common shares with an
over-allotment option of up to 817,500 common shares, exercisable to March 29,
2009. Pursuant to the over-allotment option, the Underwriters purchased an
additional 375,713 common shares. We received gross proceeds from the offering
of $99.0 million and paid underwriting commission to the underwriters in the
amount of $5.6 million.

3. ****An
Underwriting Agreement dated August 12, 2009 with UBS Securities Canada Inc.,
Credit Suisse Securities (USA) LLC, Dahlman Rose & Co. LLC, Deutsche Bank
Securities Inc., Morgan Stanley & Co. Incorporated, CIBC World Markets Inc.,
Scotia Capital Inc., Blackmont Capital Inc., GMP Securities L.P., National Bank
Financial Inc. and Salman Partners Inc., as Underwriters and Deutsche Bank
Securities Limited and Credit Suisse Securities (Canada), Inc. as
Sub-Underwriters. Under the terms of the Underwriting Agreement, we issued
2,725,288 common shares with an over-allotment option of up to 272,528 common
shares, exercisable to September 17, 2009. Pursuant to the over-allotment
option, the Underwriters purchased an additional 272,528 common shares. We
received gross proceeds from the offering of $51.0 million and paid underwriting
commission to the underwriters in the amount of $3.1 million.

4.****
An Underwriting Agreement dated February 12, 2010 with UBS Securities Canada
Inc., BMO Nesbitt Burns Inc., CIBC World Markets Inc., Credit Suisse Securities
(USA) LLC, Dahlman Rose & Co. LLC, Deutsche Bank Securities Inc., Morgan
Stanley & Co. Incorporated, Scotia Capital Inc., GMP Securities L.P.,
National Bank Financial Inc. and Salman Partners Inc., as Underwriters and
Deutsche Bank Securities Limited and Credit Suisse Securities (Canada), Inc. as
Sub-Underwriters. Under the terms of the Underwriting Agreement, we issued
5,882,353 common shares with an over-allotment option of up to 882,352 common
shares, exercisable to March 20, 2010. Pursuant to the over-allotment option,
the Underwriters purchased an additional 846,402 common shares. We received
gross proceeds from the offering of $114.4 million and paid underwriting
commission to the underwriters in the amount of $6.4 million.

5.****
Sale Agreement dated February 19, 2010 with Silvercorp Metals Inc. in respect of
the sale of our interest in the Silvertip Project. See Item 4.B Business
Overview under the heading Silvertip Project for a description of the Sale
Agreement.

6. ****Acquisition
Agreement dated October 28, 2010, as amended November 4, 2010, with Pretium in
respect of the sale of our interest in the Snowfield and Brucejack Projects. See
Item 4.B Business Overview under the heading Snowfield Project and Brucejack
Project.

7. ****An
Underwriting Agreement dated December 9, 2010 with Pretium, CIBC World Markets
Inc., Citigroup Global Markets Canada Inc., UBS Securities Canada Inc., BMO
Nesbitt Burns Inc., Credit Suisse Securities (Canada) Inc., Dahlman Rose &
Company, LLC, GMP Securities L.P. and Salman Partners Inc. Under the terms of
the Underwriting Agreement, Pretium issued an aggregate of 80,323,333 common
shares, including 36,163,333 common shares to us, as partial consideration for
the sale of the Snowfield and Brucejack Projects. See Item 4.B Business
Overview under the heading Snowfield Project and Brucejack Project.

8. ****An
Underwriting Agreement dated March 31, 2011 with Pretium, CIBC World Markets
Inc., Citigroup Global Markets Canada Inc., UBS Securities Canada Inc., BMO
Nesbitt Burns Inc., Dahlman Rose & Company, LLC, GMP Securities L.P., Credit
Suisse Securities (Canada) Inc. and Salman Partners Inc. Under the terms of the
Underwriting Agreement the Company and Pretium agreed to sell 10,000,000 units, with an over-allotment option of an additional 1,500,000
units each unit comprised of one common share of Pretium and one-half of one
common share purchase warrant to purchase an additional common share of Pretium
at a price of C$12.50 at any time within 12 months of the closing of the
offering. The Pretium common shares sold as part of the units and the Pretium
common shares underlying the warrants were and are owned by the Company.

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9.****
Shareholder Rights Plan Agreement dated March 9, 2012 with Computershare
Investor Services Inc. as Rights Agent, pursuant to which we declared a dividend
to shareholders of one right for each of our outstanding common shares on March
9, 2012 and each of our common shares and other shares of capital stock or
voting interests of the Company entitled to vote generally in the election of
directors issued after March 9, 2012 and prior to the Separation Time (as
defined in the Rights Plan). See Item 9.A. Offer and Listing Details under the
heading Shareholder Rights Plan.

D.Exchange Controls and Investment Canada Act

Canada has no system of exchange controls. There are no
exchange restrictions on borrowing from foreign countries or on the remittance
of dividends, interest, royalties and similar payments, management fees, loan
repayments, settlement of trade debts, or the repatriation of capital. Any such
remittances to United States residents, however, may be subject to a withholding
tax pursuant to the Canadian Income Tax Act as modified by the reciprocal tax
treaty between Canada and the United States. See Item 10.E, Taxation.

The Investment Canada Act (the Act), enacted on June 20,
1985, requires, depending on the circumstances and subject to certain
exceptions, either pre-closing review by, or post-closing notification to, the
Government of Canada on the acquisition of control of Canadian businesses by
non-Canadians, as such terms are defined in the Act. The term acquisition of
control is defined as any one or more non-Canadian persons acquiring all or
substantially all of the assets used in the Canadian business, the acquisition
of the voting shares of a Canadian corporation carrying on the Canadian business
or the acquisition of the voting interests of an entity controlling or carrying
on the Canadian business. The acquisition of the majority of the outstanding
shares is deemed to be an acquisition of control of a corporation. The
acquisition of less than a majority, but one-third or more, of the voting shares
of a corporation is presumed to be an acquisition of control of a corporation
unless it can be established that the purchaser will not control the
corporation.

Investments requiring review are all direct acquisitions of
Canadian businesses with assets of $5,000,000 or more (subject to the comments
below on WTO investors), and all indirect acquisitions of Canadian businesses
(subject to the comments below on WTO investors) with assets of more than
$50,000,000 or with assets of between $5,000,000 and $50,000,000 which represent
more than 50% of the value of the total international transaction. In addition,
specific acquisitions or new businesses in designated types of business
activities related to Canadas cultural heritage or national identity could
require review following notification if the Government of Canada considers that
it is in the public interest to do so.

Furthermore, all investments (regardless of transaction size or
whether control has been acquired) may be reviewed either prior to or after
closing of the transaction on national security grounds, despite the fact that
such investments may not otherwise be reviewable. The relevant test is whether
the investment is injurious to national security, however, the Act does not
define national security, nor does it identify the relevant factors that may
be taken into account for purposes of this review. The definition of Canadian
business that applies under national security reviews is also significantly
broader than otherwise applies under the Act, which expands the number of
transactions that may be subject to this form of review.

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The Act was amended with the implementation of the Agreement
establishing the World Trade Organization (WTO) to provide for special review
thresholds for WTO investors, as defined in the Act. WTO investor generally
means (i) an individual, other than a Canadian, who is a national or a WTO
member (such as, for example, the United States), or who has the right of
permanent residence in relation to that WTO member, (ii) governments of WTO
members, and (iii) entities that are not Canadian controlled, but which are WTO
investor controlled, as determined by rules specified in the Act. If the WTO
investor rules apply, an investment in our shares by or from a WTO investor will
be reviewable only if (i) it is direct investment to acquire control of Silver
Standard and (ii) the book value of our assets is equal to or greater than a
specified amount (the WTO Review Threshold). The WTO Review Threshold is
adjusted annually by a formula relating to increases in the nominal gross
domestic product of Canada. The 2012 WTO Review Threshold is $330,000,000.
However, both the special WTO Review Threshold and the exemption from review for
indirect investments by and from WTO investors do not apply to WTO investors,
and the general rules described in the preceding paragraph do apply, to the
acquisition of control of certain types of businesses specified in the Act,
including a business that is a cultural business. In addition, upon certain
amendments to the Act made in March 2009 taking effect, the threshold for direct
acquisitions by WTO investors will be replaced with an enterprise value
threshold initially set at $600,000,000, which will subsequently increase first
to $800,000,000 two years after the new threshold is adopted, and later to $1
billion, to be adjusted annually by a formula relating to increases in the
nominal gross domestic product of Canada.

If any non-Canadian, whether or not a WTO investor, acquires
control of Silver Standard by the acquisition of shares where the transaction is
not reviewable as described above, the non-Canadian is required to notify the
Canadian government and to provide certain basic information relating to the
investment. A non-Canadian, whether or not a WTO investor, is also required to
provide a notice to the government on the establishment of a new Canadian
business. If our business is then a prescribed type of business activity related
to Canadas cultural heritage or national identity, and if the Canadian
government considers it to be in the public interest to do so, then the Canadian
government may give notice in writing within 21 days requiring the investment to
be reviewed.

For non-Canadians (other than WTO investors), an indirect
acquisition of control, by the acquisition of voting interests of an entity that
directly or indirectly controls Silver Standard, is reviewable if the book value
of our assets is then $50,000,000 or more. If the WTO investor rules apply, then
this requirement does not apply to a WTO investor, or to a person acquiring the
entity from a WTO investor. Special rules specified in the Act would apply if
the value of our assets is more than 50% of the value of the entity so acquired.
By these special rules, if the non-Canadian (other than a WTO investor) were to
acquire indirect control of Silver Standard, and the value of our assets and all
other entities carrying on business in Canada, calculated in the manner provided
in the Act and the regulations under the Act, is more than 50% of the value,
calculated in the manner provided in the Act and the regulations under the Act,
of the assets of all entities, the control of which is acquired, directly or
indirectly, in the transaction of which the acquisition of control of Silver
Standard forms a part, then the thresholds for a direct acquisition of control
as discussed above will apply, that is, a threshold of $5,000,000 for a
non-Canadian other than a WTO investor. If the value exceeds that level, then
the transaction must be reviewed in the same manner as if the transaction were a
direct acquisition of control.

If an investment is reviewable, an application for review in
the form prescribed by the regulations is required to be filed with the Director
appointed under the Act (the Director) prior to the investment taking place
and the investment may not be consummated until the review has been completed.
There are, however, certain exceptions. Applications concerning reviewable
investments in culture-sensitive sectors are required upon receipt of a notice
for review. In addition, the Minister (a person designated as such under the
Act) may permit an investment to be consummated prior to completion of the
review if he is satisfied that delay would cause undue hardship to the acquirer
or jeopardize the operations of the Canadian business that is being acquired.
The Director will submit the application to the Minister, together with any other information or written undertakings
given by the acquirer and any representation submitted to the Director by a
province that is likely to be significantly affected by the investment.

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The Minister will then determine whether the investment is
likely to be of net benefit to Canada, taking into account the information
provided and having regard to certain factors of assessment where they are
relevant. Some of the factors to be considered are (i) the effect of the
investment on the level and nature of economic activity in Canada, including the
effect on employment, on resource processing, and on the utilization of parts,
components and services produced in Canada; (ii) the effect of the investment on
exports from Canada; (iii) the degree and significance of participation by
Canadians in the Canadian business and in any industry in Canada of which it
forms a part; (iv) the effect of the investment on productivity, industrial
efficiency, technological development, product innovation and product variety in
Canada; (v) the effect of the investment on competition within any industry or
industries in Canada; (vi) the compatibility of the investment with national
industrial, economic and cultural policies taking into consideration industrial,
economic and cultural objectives enunciated by the government or legislature of
any province likely to be significantly affected by the investment; and (vii)
the contribution of the investment to Canadas ability to compete in world
markets.

The Act sets certain time limits for the Director and the
Minister. Within 45 days after a completed application has been received, the
Minister must notify the acquirer that (a) he is satisfied that the investment
is likely to be of net benefit to Canada, or (b) he is unable to complete his
review, in which case he shall have 30 additional days to complete his review
(unless the acquirer agrees to a longer period), or (c) he is not satisfied that
the investment is likely to be of net benefit to Canada.

Where the Minister has advised the acquirer that he is not
satisfied that the investment is likely to be of net benefit to Canada, the
acquirer has the right to make representations and submit undertakings within 30
days of the date of the notice (or any further period that is agreed upon
between the acquirer and the Minister). On the expiration of the 30 day period
(or the agreed extension), the Minister must quickly notify the acquirer (i)
that he is now satisfied that the investment is likely to be of net benefit to
Canada or (ii) that he is not satisfied that the investment is likely to be of
net benefit to Canada. In the latter case, the acquirer may not proceed with the
investment or, if the investment has already been consummated, must divest
itself of control of the Canadian business.

The Act provides civil remedies for non-compliance with any
provision. There are also criminal penalties for breach of confidentiality or
providing false information.

E.Taxation

A brief description of certain provisions of the tax treaty
between Canada and the United States is included below, together with a brief
outline of certain taxes, including withholding provisions, to which United
States security holders are subject under existing laws and regulations of
Canada. The consequences, if any, of provincial, state and local taxes are not
considered.

The Company recommends security holders seek the advice of
their own tax advisors, tax counsel or accountants with respect to the
applicability or effect on their own individual circumstances of the matters
referred to herein and of any provincial, state or local taxes.

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Certain Canadian Federal Income Tax Consequences

The discussion under this heading summarizes the principal
Canadian federal income tax consequences of acquiring, holding and disposing of
common shares of the Company for a shareholder of the Company who is not a
resident of Canada but is a resident of the United States and who will acquire
and hold common shares of the Company as capital property for the purposes of
the Income Tax Act (Canada) (the Canadian Tax Act). This summary does
not apply to a shareholder who carries on business in Canada through a
permanent establishment situated in Canada or performs independent personal
services in Canada through a fixed base in Canada if the shareholders holding
in the Company is effectively connected with such permanent establishment or
fixed base. This summary is based on the provisions of the Canadian Tax Act and
the regulations thereunder and on an understanding of the administrative
practices of the Canada Revenue Agency, and takes into account all specific
proposals to amend the Canadian Tax Act or regulations made by the Minister of
Finance of Canada as of the date hereof. It has been assumed that there will be
no other relevant amendment of any governing law although no assurance can be
given in this respect. The Company recommends shareholders seek the advice of
their own Canadian and U.S. tax advisors.

The provisions of the Canadian Tax Act are subject to income
tax treaties to which Canada is a party, including the Canada-United States
Income Tax Convention (1980), as amended (the Convention).

Dividends on Common Shares and Other Income

Under the Canadian Tax Act, a non-resident of Canada is
generally subject to Canadian withholding tax at the rate of 25% on dividends
paid or deemed to have been paid to him or her by a corporation resident in
Canada. The Convention limits the rate to 15% if the shareholder is a resident
of the United States and the dividends are beneficially owned by and paid to
such shareholder, and to 5% if the shareholder is also a corporation that
beneficially owns at least 10% of the voting shares of the payor corporation.

The amount of a stock dividend (for tax purposes) would
generally be equal to the amount by which the paid up or stated capital of the
Company had increased by reason of the payment of such dividend. The Company
will furnish additional tax information to shareholders in the event of such a
dividend.

The Convention generally exempts from Canadian income tax
dividends paid to a religious, scientific, literary, educational or charitable
organization or to an organization constituted and operated exclusively to
administer a pension, retirement or employee benefit fund or plan, if the
organization is a resident of the United States and is exempt from income tax
under the laws of the United States.

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Dispositions of Common Shares

Under the Canadian Tax Act, a taxpayers capital gain or
capital loss from a disposition of a common share of the Company is the amount,
if any, by which his or her proceeds of disposition exceed (or are exceeded by,
respectively) the aggregate of his or her adjusted cost base of the share and
reasonable expenses of disposition. The capital gain or loss must be computed in
Canadian currency using a weighted average adjusted cost base for identical
properties. One-half of a capital gain (the taxable capital gain) is included
in income, and one-half of a capital loss in a year (the allowable capital
loss) is deductible from taxable capital gains realized in the same year. The
amount by which a shareholders allowable capital loss exceeds the taxable
capital gain in a year may be deducted from a taxable capital gain realized by
the shareholder in the three previous years or any subsequent year, subject to
certain restrictions in the case of a corporate shareholder and subject to
adjustment when the capital gains inclusion rate in the year of disposition
differs from the inclusion rate in the year the deduction is claimed.

If a common share of the Company is disposed of to the Company
other than in the open market in the manner in which shares would normally be
purchased by the public, the proceeds of disposition will, in general terms, be
considered as limited to the paid-up capital of the share and the balance of the
price paid will be deemed to be a dividend. In the case of a shareholder that is
a corporation, the amount of any capital loss otherwise determined may be
reduced, in certain circumstances, by the amount of dividends previously
received in respect of the shares disposed of, unless the corporation owned the
shares for at least 365 days prior to sustaining the loss and (together with
corporations, persons and other entities, with whom the corporation was not
dealing at arms length) did not own more than five percent of the shares of any
class of the corporation from which the dividend was received. These loss
limitation rules may also apply where a corporation is a member of a partnership
or a beneficiary of a trust that owned the shares disposed of.

Under the Canadian Tax Act, a non-resident of Canada is subject
to Canadian tax on taxable capital gains, and may deduct allowable capital
losses, realized on a disposition of taxable Canadian property. Common shares
of the Company will constitute taxable Canadian property of a shareholder at a
particular time if (i) the shareholder used the shares in carrying on business
in Canada, or if at any time in the five years immediately preceding the
disposition 25% or more of the issued shares of any class or series in the
capital stock of the Company belonged to one or more persons in a group
comprising the shareholder and persons with whom the shareholder did not deal at
arms length and (ii) the value of the shares is derived principally from real
property situated in Canada, Canadian resource property or timber resource
property. Non-residents disposing of taxable Canadian property must file a
Canadian tax return to report the disposition.

The Convention relieves United States residents from liability
for Canadian tax on capital gains derived on a disposition of shares unless:

|(a) | the value of the shares is derived principally from real
      property in Canada, including the right to explore for or exploit natural
      resources and rights to amounts computed by reference to
  production;                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                              
|(b) | the shareholder was resident in Canada for 120 months
      during any period of 20 consecutive years preceding, and at any time
      during the 10 years immediately preceding, the disposition and the shares
      were owned by him when he or she ceased to be resident in Canada;
  or
|    |                                                                                                                                                                                                                                                                                              
|(c) | the shares formed part of the business property of a
      permanent establishment that the holder has or had in Canada within the
      12 months preceding the disposition.                                                                                                              

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Certain U.S. Federal Income Tax Considerations

The following is a general summary of certain material
anticipated U.S. federal income tax consequences to a U.S. Holder, as defined
below, of the ownership and disposition of Common Shares in the Company. This
discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the
Code), Treasury regulations promulgated under the Code (Treasury
Regulations), administrative pronouncements or practices, judicial decisions,
and the Income Tax Convention between the U.S. and Canada (the Tax
Convention), all as of the date hereof. Future legislative, judicial, or
administrative modifications, revocations, or interpretations, which may or may
not be retroactive, may result in U.S. federal income tax consequences
significantly different from those discussed herein. This discussion is not
binding on the U.S. Internal Revenue Service (the IRS). No ruling has been or
will be sought or obtained from the IRS with respect to any of the U.S. federal
income tax consequences discussed herein. There can be no assurance that the IRS
will not challenge any of the conclusions described herein or that a U.S. court
will not sustain such a challenge.

This discussion does not address the U.S. federal income tax
consequences to U.S. Holders subject to special rules, including U.S. Holders
that (i) are banks, financial institutions, or insurance companies, (ii) are
regulated investment companies or real estate investment trusts, (iii) are
brokers, dealers, or traders in securities or currencies, (iv) are tax-exempt
organizations, (v) hold Common Shares as part of hedges, straddles, constructive
sales, conversion transactions, or other integrated investments, (vi) acquire
Common Shares as compensation for services or through the exercise or
cancellation of employee stock options or warrants, (vii) have a functional

currency other than the U.S. dollar, (viii) own or have owned directly,
indirectly, or constructively 10% or more of the voting power of the Company, or
(ix) are subject to the alternative minimum tax. In addition, this discussion
does not address any U.S. federal estate, gift, or other non-income tax, or any
state, local, or non-U.S. tax consequences of the ownership and disposition of
Common Shares.

As used herein, U.S. Holder means a beneficial owner of
Common Shares that is (i) an individual that is a citizen or resident of the
U.S. for U.S. federal income tax purposes, (ii) a corporation (or other entity
taxable as a corporation for U.S. federal income tax purposes) created or
organized in or under the laws of the U.S., any state thereof, or the District
of Columbia, (iii) an estate the income of which is subject to U.S. federal
income tax regardless of its source, or (iv) a trust that (a) is subject to the
primary jurisdiction of a court within the U.S. and for which one or more U.S.
persons have authority to control all substantial decisions or (b) has a valid
election in effect under applicable Treasury Regulations to be treated as a U.S.
person.

If a pass-through entity, including a partnership or other
entity taxable as a partnership for U.S. federal income tax purposes, holds
Common Shares, the U.S. federal income tax treatment of an owner or partner
generally will depend on the status of such owner or partner and on the
activities of the pass-through entity. A U.S. person that is an owner or partner
of a pass-through entity holding Common Shares is urged to consult its own tax
advisor.

This discussion assumes that Common Shares are held as capital
assets (generally, property held for investment), within the meaning of the
Code, in the hands of a U.S. Holder at all relevant times.

A U.S. HOLDER OF COMMON SHARES IS URGED TO CONSULT ITS OWN TAX
ADVISOR REGARDING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS TO ITS
PARTICULAR SITUATION AND ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY
STATE, LOCAL, NON-U.S., OR OTHER TAXING JURISDICTION.

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Distributions on Common Shares

Subject to the discussion below under Passive Foreign
Investment Company (PFIC) Considerations, the gross amount of any distribution
paid by the Company will generally be subject to U.S. federal income tax as
dividend income to the extent paid out of the Companys current or accumulated
earnings and profits, as determined under U.S. federal income tax principles.
Such amount will be includable in gross income by a U.S. Holder as ordinary
income on the date such U.S. Holder actually or constructively receives the
distribution. Dividends paid by the Company will not be eligible for the
dividends received deduction generally allowed to corporations.

Subject to applicable exceptions with respect to short-term and
hedged positions, certain dividends received by non-corporate U.S. Holders prior
to January 1, 2013 from a qualified foreign corporation may be eligible for
reduced rates of taxation (qualified dividends). A qualified foreign
corporation includes a foreign corporation that is eligible for the benefits of
a comprehensive income tax treaty with the United States that the U.S. Treasury
Department determines to be satisfactory for these purposes and that includes an
exchange of information provision. The U.S. Treasury has determined that the Tax
Convention meets these requirements, and the Company believes it is eligible for
the benefits of the Tax Convention. Dividends received by U.S. investors from a
foreign corporation that was a passive foreign investment company (a PFIC) in
either the taxable year of the distribution or the preceding taxable year will
not constitute qualified dividends. However, as discussed below under Passive
Foreign Investment Company (PFIC) Considerations, the Company believes that it
was not a PFIC for its 2011 taxable year and that it likely will not be a PFIC
for its 2012 taxable year (and possibly subsequent taxable years). Accordingly,
dividends paid on the Common Shares will likely constitute qualified dividends.

Dividends received by a U.S. Holder with respect to Common
Shares will constitute foreign source income, which may be relevant in
calculating the holders foreign tax credit limitation. The limitation on
foreign taxes eligible for credit is calculated separately with respect to
specific classes of income. For this purpose, dividends paid by the Company with
respect to the Common Shares will, depending on a U.S. Holders circumstances,
be passive category or general category income.

Subject to certain limitations, any Canadian tax withheld with
respect to distributions made on the Common Shares may be treated as foreign
taxes eligible for credit against a U.S. Holders U.S. federal income tax
liability. Alternatively, a U.S. Holder may, subject to applicable limitations,
elect to deduct the otherwise creditable Canadian withholding taxes for U.S.
federal income tax purposes. The rules governing the foreign tax credit are
complex and their application depends on each taxpayers particular
circumstances. Accordingly, U.S. Holders are urged to consult their own tax
advisors regarding the availability of the foreign tax credit under their
particular circumstances.

To the extent that a distribution exceeds the amount of the
Companys current or accumulated earnings and profits, as determined under U.S.
federal income tax principles, it will be treated first as a tax-free return of
capital, causing a reduction in the U.S. Holders adjusted tax basis in the
Common Shares held by such U.S. Holder (thereby increasing the amount of gain,
or decreasing the amount of loss, to be recognized by such U.S. Holder upon a
subsequent disposition of the Common Shares), with any amount that exceeds the
adjusted tax basis being taxed as a capital gain recognized on a sale or
exchange (as discussed under Sale, Exchange or Other Taxable Disposition of
Common Shares below). However, the Company does not intend to maintain
calculations of earnings and profits in a manner necessary to enable U.S.
Holders to determine the extent to which a distribution would be treated as a
dividend. Each U.S. Holder should therefore assume that any distribution by the
Company with respect to the Common Shares will constitute ordinary dividend
income.

The gross amount of distributions paid in any foreign currency
will be included by each U.S. Holder in gross income in a U.S. dollar amount
calculated by reference to the exchange rate in effect on the day the distributions are paid, regardless of whether the payment is in
fact converted into U.S. dollars. If the foreign currency is converted into U.S.
dollars on the date of the payment, the U.S. Holder should not be required to
recognize any foreign currency gain or loss with respect to the receipt of the
foreign currency distributions. If instead the foreign currency is converted at
a later date, any currency gains or losses resulting from the conversion of the
foreign currency will be treated as U.S. source ordinary income or loss.

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Sale, Exchange, or Other Taxable Disposition of Common
Shares

Subject to the discussion below under Passive Foreign
Investment Company (PFIC) Considerations, a U.S. Holder generally will
recognize gain or loss on the sale, exchange, or other taxable disposition of
Common Shares in an amount equal to the difference between the amount realized
on the disposition and the U.S. Holders adjusted tax basis in the Common
Shares. Such gain or loss generally will be long-term capital gain or loss if
the U.S. Holder held the Common Shares for more than one year at the time of the
sale, exchange, or other taxable disposition. Preferential tax rates may apply
to long-term capital gains or losses of a U.S. Holder that is an individual,
trust, or estate. The deductibility of capital losses is subject to significant
limitations.

If a U.S. Holder receives any foreign currency on the sale of
Common Shares, such U.S. Holder may recognize ordinary income or loss as a
result of currency fluctuations between the date of the sale of Common Shares
and the date the sale proceeds are converted into U.S. dollars.

Passive Foreign Investment Company (PFIC) Considerations

Special and generally unfavorable U.S. federal income tax rules
may apply to a U.S. Holder if its holding period in its Common Shares includes
any period during a taxable year of the Company in which the Company is a PFIC.
A non-U.S. corporation is a PFIC for each taxable year in which (i) 75% or more
of its gross income is passive income or (ii) 50% or more of the average value
(or, in certain circumstances, the adjusted tax basis for U.S. federal income
tax purposes) of its assets are assets that either produce or are held for the
production of passive income.

For purposes of the PFIC rules, and subject to certain
exceptions, passive income includes, in part, dividends, interest, royalties,
rents, and net gains from certain transactions in commodities. Net gains from
transactions in commodities will not be passive income for purposes of the PFIC
rules if (i) they are active business gains or losses from the sale of
commodities, and (ii) substantially all of the taxpayers commodities are (a)
shares in trade or inventory of it, (b) property used in its trade or business,
or (c) supplies regularly used or consumed by it in the ordinary course of its
trade or business.

Under these PFIC rules, the Company believes that (i) it was
not a PFIC for its 2011 taxable year, (ii) based on the Companys current and
anticipated operations, that it will not be a PFIC for its 2012 and subsequent
taxable years. There can be no assurance regarding the PFIC classification of
the Company for its 2012 and subsequent taxable years, because PFIC
classification is fundamentally factual in nature, is determined annually, and
generally cannot be determined until the close of the taxable year in question.

If the Company were classified as a PFIC for any year during
which a U.S. Holder holds Common Shares (regardless of whether the Company
continues to be a PFIC), such U.S. Holder would be subject to special adverse
rules, including taxation at maximum ordinary income rates plus an interest
charge on both gains on sale and certain dividends, unless such U.S. Holder
makes an election to be taxed under an alternative regime. The Company will
provide U.S. Holders with information concerning the potential availability of
such elections if it determines that it is or will become a PFIC.

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Additional Tax on Passive Income

For taxable years beginning after December 31, 2012, certain
U.S. Holders who are individuals, estates, or trusts and whose income exceeds
certain thresholds will be required to pay an additional 3.8 percent tax on,
among other things, dividends on, and capital gains from the sale or other

taxable disposition of, Common Shares, subject to certain limitations and
exceptions.

U.S. Information Reporting and Backup Withholding Tax

Under U.S. federal income tax law and regulations, certain
categories of U.S. Holders must file information returns with respect to their
investment in, or involvement in, a foreign corporation. Penalties for failure
to file certain of these information returns are substantial. U.S. Holders of
the Common Shares should consult with their own tax advisors regarding the
requirements of filing information returns.

Dividends and proceeds from the sale or other disposition of
Common Shares that are paid in the United States or by a U.S.-related financial
intermediary will be subject to U.S. information reporting rules, unless a U.S.
Holder is a corporation or other exempt recipient. In addition, payments that
are subject to information reporting may be subject to backup withholding
(currently at a 28% rate) if a U.S. Holder does not provide its correct taxpayer
identification number and otherwise comply with the backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld under the backup
withholding rules are available to be credited against a U.S. Holders U.S.
federal income tax liability and may be refunded to the extent they exceed such
liability, provided the required information is provided to the IRS in a timely
manner.

F.Dividends and Paying Agents

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

G.Statement by Experts

This Form 20-F is being filed as an annual report under the
Exchange Act, and, as such, there is no requirement to provide any information
under this item.

H.Documents on Display

Any of the documents referred to above can be viewed at our
registered office, which is located at Suite 1400 - 999 West Hastings Street,
Vancouver, British Columbia, Canada. All of these documents are in English.

I.Subsidiary Information

This information is not required for reports filed in the
United States.

Item 11Quantitative and Qualitative Disclosures About Market
  Risk

Our primary market risk exposures are price risk, interest rate
risk and foreign currency risk. We are exposed to interest rate risk on our cash
and cash equivalents.

Our reporting currency is the United States dollar. We are
exposed to foreign exchange risk associated with purchases of goods and
equipment denominated in U.S. dollars, cash and cash equivalents. Gains and losses resulting from the effects of changes in the U.S.
dollar to Canadian dollar exchange rate are recorded in income.

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Price

Currency Risk

Currency risk is the risk that the fair value or future cash
flows of the Companys financial instruments will fluctuate because of changes
in foreign exchange rates. The Companys financial instruments are exposed to
currency risk where those instruments are denominated in currencies that are not
the same as their functional currency; exchange gains and losses in these
situations impact earnings. The Companys sale of silver and zinc are
denominated in U.S. dollars and thus the risk is related to costs incurred and
other non-U.S. dollars financial instruments.

As at December 31, our exposure to currency risk in currencies
other than the U.S. dollar is stated in the table below. Based on the net
exposures at December 31, 2011, a 10% depreciation or appreciation of the
currencies against the U.S. dollar would result in a decrease or increase,
respectively, in our after-tax earnings by $12,129,000 and $11,135,000 as set
out in more detail in the table below.

|                           |  | December 31, 2011 | 
|-------------------------- |  | ----------------- | 
|                           |  | Canadian dollar   | 
|Cash                       |  | 80,480            | 
|Marketable securities      |  | 13,753            | 
|Value added tax receivable |  | -                 | 
|Trade and other payables   |  | (7,825)           | 
|Warrant liability          |  | (7,067)           | 
|Total                      |  | 79,341            | 

Interest Rate Risk

Interest rate risk is the risk that the fair values and future
cash flows of the Company will fluctuate because of changes in market interest
rates. Interest rate risk mainly arises from the interest rate impact on the
Companys cash and cash equivalents because they are the only financial
instrument the Company holds that earns interest based on variable market
interest rates. The long-term convertible notes have fixed interest rates and
therefore cash flows are not exposed to fluctuations in interest rates, however
a change in interest rates would impact the fair value of the instruments but
because the Company records the notes at amortized cost there would be no impact
on the financial results of the Company. The Company monitors its exposure to
interest rates closely and has not entered into any derivative contracts to
manage its risk.

At December 31, 2011, the weighted average interest rate of
cash equivalents was 0.14% (2010 - 0.89%) . With other variables unchanged, a 1%
increase in the interest rate would increase after-tax net income by $2,340,000
(2010 - $450,000).

Price Risk

This is the risk that the fair value or future cash flows of
the Companys financial instruments will fluctuate because of changes in market
prices. Income from mine operations in the next year depends on the metal prices
for silver and to a lesser extent zinc. These prices are affected by numerous
factors that are outside the control of the Company such as:

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|- | global or regional consumption patterns;                                        
|- | --------------------------------------------------------------------------------
|- | the supply of, and demand for,
      these metals;                              
|- | speculative activities;                                                         
|- | the availability and costs of
      metal substitutes;                          
|- | inflation; and                                                                  
|- | political and economic
conditions, including interest rates and currency values.

The principal financial instrument that the Company holds which
is impacted by commodity prices is the embedded derivative within trade
receivables. The majority of revenue agreements are subject to pricing terms
that settle within one to three months after delivery, and this adjustment
period represents the Companys trade receivable exposure to variations in
commodity prices.

The Company has not hedged the price of silver as part of its
overall corporate strategy.

The costs relating to the Companys production, development and
exploration activities vary depending on the market prices of certain mining
consumables including diesel fuel and natural gas. The Company has not hedged
any such costs.

A 10% change in the average commodity price for the year, with
all other variables held constant, expressed in thousands of U.S. dollars, would
result in the following impact to the Companys after-tax net income:

2011
    
    
    2010Products
    
    $000s
    
    
    $000s10% increase in silver price
    
    9,005
    
    
    7,35910% increase in zinc price
    
    605
    
    
    -10% increase in diesel and
      natural gas prices
    
    (1,192
    )
    
    (658
    )


The Company holds certain investments in available for sale
marketable securities which are measured at fair value, being the closing price
of each equity investment at the balance sheet date. The Company is exposed to
changes in share prices which would result in gains and losses being recognized
in other comprehensive income.

Limitations

The above discussion includes only those exposures that exist
as of December 31, 2011 and as a result, does not consider exposures or
positions that could arise after that date. Our ultimate realized gain or loss
with respect to price, foreign currency and interest rate fluctuations would
depend on the exposures that arise during the period and interest and foreign
exchange rates.

Reference is made to note 23 to the consolidated financial statements for a description of financial risk management.  See also Item 5.B “Liquidity and Capital Resources” for a discussion of credit risk, and liquidity risk. Also see item 3.D “Risk Factors” for a discussion of risks effecting the Company.

Item
12Description of Securities Other than Equity
Securities

This Form 20-F is being filed as an annual report under the
Exchange Act, and as such, there is no requirement to provide any information
under this item. In 2011 the Company did not have any securities represented by
American Depository Receipts.

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PART II

Item
13Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item
14Material Modifications to the Rights of Security Holders and Use of
Proceeds

Not applicable.

Item 15Controls and Procedures

Our management, with the participation of the President and
Chief Executive Officer (our principal executive officer) and Chief Financial
Officer (our principal financial officer), has evaluated the effectiveness of
our disclosure controls and procedures (as defined in the rules of the Canadian
Securities Administrators and the Rules 13a-15(e) and 15d-15(e) of the Exchange
Act) as at December 31, 2011, and has concluded that such disclosure controls
and procedures are effective.

The following report is provided by management in respect of
internal control over financial reporting and disclosure controls and procedures
(as defined in the rules of the CSA and the SEC):

|(1) | Management is responsible for establishing and
      maintaining adequate internal control over financial reporting and
      disclosure controls and procedures. All internal control systems, no
      matter how well designed, have inherent limitations and may not prevent or
      detect misstatements. Therefore, even those systems determined to be
      effective can provide only reasonable assurance with respect to financial
      statement preparation and presentation. Also, projections of any
      evaluation of effectiveness to future periods are subject to the risk that
      controls may become inadequate because of changes in conditions, or that
      the degree of compliance with the policies or procedures may
      deteriorate.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2) | Our management has used the Committee of Sponsoring
      Organizations of the Treadway Commission (COSO) framework to evaluate the
      effectiveness of our internal control over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(3) | As at December 31, 2011, management assessed the
      effectiveness of our internal control over financial reporting and
      disclosure controls and procedures and concluded that such internal
      control over financial reporting and disclosure controls and procedures
      were effective and that there were no material weaknesses in our internal
      control over financial reporting as of that date.                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(4) | PricewaterhouseCoopers LLP, who has audited our
      consolidated financial statements for the year ended December 31, 2011,
      has also issued a report on our financial statements and internal controls
      under the standards of the Public Company Accounting Oversight Board
      (United States). See Item 19.A - Financial
Statements.                                                                                                                                                                                                                                                                                                                                                                                                                   

On August 31, 2011 the former Chief Financial Officer left the
Company and appropriate actions were implemented to ensure that this would not
have a material effect on internal control over financial reporting, there were
also certain changes made following the Companys adoption of IFRS as discussed
above. There have been no other changes in our internal control over financial
reporting during the year ended December 31, 2011, that have materially
affected, or are reasonably likely to affect our internal control over financial
reporting.

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---

It should be noted that while our principal executive officer
and principal financial officer believe that our disclosure controls and
procedures and internal controls over financial reporting provide a reasonable
level of assurance that they are effective, they do not expect that our
disclosure controls and procedures or internal controls over financial reporting
will prevent all errors and fraud. A control system, no matter how well
conceived or operated, can provide only reasonable, not absolute, assurance that
the objectives of the control system are met.

Item 16Reserved

A.Audit Committee Financial Expert.

Our Board of Directors has determined that we have an audit
committee financial expert, John R. Brodie, FCA. Mr. Brodie, FCA is the Chair of
our Audit Committee and independent as that term is defined in the listing
standards of the Nasdaq Global Market. Our Audit Committee consists of the
following independent and financially literate directors; John R. Brodie, FCA,
Richard D. Paterson and A.E. Michael Anglin.

For more information regarding relevant education and
experience for Messrs. Brodie, Paterson and Anglin, see Item 6.A  Directors
and Senior Management.

The Companys Audit Committee Charter is attached as Exhibit
99.1 to this Annual Report.

B.Code of Ethics.

We have adopted a Code of Business Conduct that applies to our
principal executive officer, principal financial officer and other senior
financial officers performing similar functions. Our Code of Business Conduct is
available for viewing on our website at www.silverstandard.com.

In 2011, no waivers from the Code were granted to members of
senior management or directors of the Company.

C.Principal Accountant Fees and Services.

The following is a summary of the aggregate fees billed for
each of the last two fiscal years by our principal accountant.

|Principal
      Accountant | Fiscal year ended | Fiscal year ended | Fiscal year ended
|-------------------------- | ----------------- | ----------------- | -----------------
|Fees and Services          | December 31, 2011 | December 31, 2010 | December 31, 2009
|                           | C$                | C$                | C$               
|Audit Fees(1)              | 523,495           | 428,482           | 218,153          
|Audit-Related Fees(2)      | 105,709           | 191,530           | 212,259          
|Tax-Related Fees           | -                 | -                 | -                
|All Other Fees             | -                 | -                 | -                
|Total                      | 629,204           | 620,012           | 430,412          

(1)
    Audit fees were paid for professional services rendered
      by the auditor for the integrated audit of our annual financial
      statements, including its audit of the effectiveness of our internal
      control over financial reporting, and the financial statement audits of
      our subsidiaries.(2)
    Audit-related fees were paid for assurance and related
      services provided in connection with statutory and regulatory filings and
      engagements related to prospectuses and other offering
  documents.


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Pre-Approval Policies and Procedures

Our Audit Committee has established policies and procedures
that are intended to control the services provided by our auditors and to
monitor their continuing independence. Under these policies, no services may be
undertaken by our auditors unless the engagement is specifically approved by our
Audit Committee or the services are included within a category which has been
pre-approved by our Audit Committee. The maximum charge for services is
established by the Audit Committee when the specific engagement is approved or
the category of services pre-approved. Management is required to notify the
Audit Committee of the nature and value of pre-approved services undertaken.

Our Audit Committee will not approve engagements relating to,
or pre-approve categories of, non-audit services to be provided by our auditors
(i) if such services are of a type the performance of which would cause our
auditors to cease to be independent within the meaning of applicable SEC or
Nasdaq rules, and (ii) without consideration, among other things, of whether our
auditors are best situated to provide the required services and whether the
required services are consistent with their role as auditor.

All services provided by our principal accountant in 2011 were
pre-approved by our audit committee.

D.Exemptions from the Listing Standards for Audit Committees.

Not applicable.

E.Purchases of Equity Securities by the Issuer and Affiliated
Purchasers.

Not applicable.

F.Change in Registrants Certifying Accountant.

Not applicable.

G.Corporate Governance.

We are subject to a variety of corporate governance guidelines
and requirements enacted by Canadian securities regulators the TSX, the Nasdaq
and the SEC and those mandated by the U.S. Sarbanes Oxley Act of 2002. Today, we
are in compliance with the corporate governance legal requirements in Canada and
the United States. We are listed on the Nasdaq and, although we are not required
to comply with all of the Nasdaqs corporate governance requirements to which we
would be subject if we were a U.S. corporation, our governance practices comply
with the Nasdaqs requirements as if we were a U.S. domestic issuer, except that
A.E. Michael Anglin would not be permitted to serve on the Audit Committee under
Nasdaq listing rules due to the fact that he participated in the preparation of
financial statements by virtue of holding the position of interim President and
Chief Executive Officer of the Company from January 19, 2010 to August 6, 2010,
while the Company searched for a replacement CEO due to the resignation of
Robert A. Quartermain. The Board has determined that A.E. Michael Anglin has no
direct or indirect material relationship with the Company which could interfere
with his exercise of judgement and therefore he is an independent director. Mr.
Anglin is not prohibited under Canadian requirements from serving on the
Companys Audit Committee.

H.Mine Safety Disclosure

Pursuant to Section 1503(a) of the recently enacted Dodd−Frank
Wall Street Reform and Consumer Protection Act of 2010 (the Dodd−Frank Act),
issuers that are operators, or that have a subsidiary that is an operator, of a
coal or other mine in the United States are required to disclose in their
periodic reports filed with the SEC information regarding specified health and
safety violations, orders and citations, related assessments and legal actions,
and mining related fatalities. During the fiscal year ended December 31, 2011,
the Company had no such specified health and safety violations, orders or
citations, related assessments or legal actions, mining related fatalities, or
similar events in relation to the Companys United States operations requiring
disclosure pursuant to Section 1503(a) of the Dodd−Frank Act.

- 139 -

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PART III

Item
17Financial Statements

Not applicable.

Item 18Financial Statements

Our audited consolidated financial statements are stated in
U.S. Dollars and are prepared in accordance with IFRS as issued by the IASB.

The financial statements and notes thereto as required under
Item 18 are attached to this Annual Report, are individually listed under Item
19, and are found immediately following the text of this Annual Report. The
audit report of PricewaterhouseCoopers LLP is included in this Annual Report
immediately preceding the financial statements.

Item 19Exhibits

All financial statements and exhibits referred to in this Item
19 are incorporated by reference into this Annual Report.

A.Financial Statements

Document
    PageConsolidated Financial Statements as at
      December 31, 2011 and 2010 and January 1, 2010
    F-1Auditors Report, dated March 11, 2012
    F-3Consolidated Statements of Financial
      Position as at December 31, 2011, December 31, 2010 and January 1, 2010
    F-6Consolidated Statements of Income for
      the years ended December 31, 2011 and December 31, 2010
    F-7Consolidated Statement of Comprehensive
      Income for the years ended December 31, 2011 and December 31, 2010
    F-8Consolidated Statements of Changes in
      Shareholders Equity for the years ended December 31, 2011 and December
      31, 2010
    F-9Consolidated Statements of Cash Flows
      for the years ended December 31, 2011 and December 31, 2010
    F-10Notes to Consolidated Financial
      Statements for the years ended December 31, 2011, December 31, 2010 and
      January 1, 2010
    F-11


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B.Exhibits

Exhibit Number
      Description1.1
      Memorandum, Articles and Certificate
          of Incorporation incorporated by reference from Exhibit 1.1 to Registration
          Statement under the Securities Exchange Act of 1934 on Form 20-F, file
          no. 0-26424 filed on July 13, 1995.1.2
      Notice of Articles and Articles
          filed under the Business Corporations Act(British Columbia)
          incorporated by reference from Exhibit 1.2 to Annual Report for the
          fiscal year ended December 31, 2005 under the Securities Exchange Act
          of 1934 on Form 20- F, file no. 0-26424 filed on March 31, 2006.2.1
      Indenture, dated as of February
          27, 2008, between the Company and the Bank of New York, as trustee,
          incorporated by reference from Exhibit 2.1 to Annual Report for the
          fiscal year ended December 31, 2007 under the Securities Exchange Act
          of 1934 on Form 20-F, file no. 0-26424 filed on March 31, 2008.2.2
      Shareholder Rights Plan Agreement
          dated March 9, 2012 with Computershare Investor Services Inc. as Rights
          Agent incorporated by reference from Form 8-A, file no. 00135455 filed
          on March 12, 2012 .4.1
      Underwriting Agreement dated
          August 12, 2009 incorporated by reference from Exhibit 99.1 to Report
          of Foreign Private Issuer under the Securities Exchange Act of 1934
          on Form 6-K, file no. 0-26424 filed on August 13, 2009.4.2
      Underwriting Agreement dated
          February 12, 2010 incorporated by reference from Exhibit 99.1 to Report
          of Foreign Private Issuer under the Securities Exchange Act of 1934
          on Form 6-K, file no. 0-26424 filed on February 12, 2010.4.3
      Acquisition Agreement dated
          October 28, 2010 between the Company and Pretium Resources Inc. incorporated
          by reference from Exhibit 4.3 to the Annual Report for the fiscal year
          ended December 31, 2010 under the Securities Exchange Act of 1934 on
          Form 20-F, file no. 0-26424 filed on March 31, 2011.4.4
      Underwriting Agreement dated
          December 9, 2010 incorporated by reference from Exhibit 4.4 to Annual
          Report for the fiscal year ended December 31, 2010 under the Securities
          Exchange Act of 1934 on Form 20-F, file no. 0-26424 filed on March 31,
          2011.4.5
      Underwriting
          Agreement dated March 31, 2011.8.1
      List
          of Significant Subsidiaries (as defined in Rule 1-02(w) of Regulation
      S-X) included under Item 4.C, Organizational Structure.12.1
      Certification
          of President and Chief Executive Officer Pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002


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---

Exhibit Number
      Description12.2
      Certification
          of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
          Act of 2002.13.1
      Certification
          of President and Chief Executive Officer Pursuant to 18 U.S.C. Section
          1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
          2002.13.2
      Certification
          of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted
          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1
      Audit
          Committee Charter


- 142 -

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SIGNATURES

The registrant hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.

| |           | Silver Standard Resources Inc.           
| | --------- | -----------------------------------------
| | (Company)
| |           |                                          
| |           |                                          
| | By:       | /s/ John Smith                           
| |           | John Smith, President and Chief Executive
| |           | Officer and Director                     

Date: March 30, 2012

- 143 -

---

Exhibit Index

Exhibit Number
      Description1.1
      Memorandum, Articles and Certificate
        of Incorporation incorporated by reference from Exhibit 1.1 to Registration
        Statement under the Securities Exchange Act of 1934 on Form 20-F, file
        no. 0-26424 filed on July 13, 1995.1.2
      Notice of Articles and Articles
        filed under the Business Corporations Act(British Columbia)
        incorporated by reference from Exhibit 1.2 to Annual Report for the
        fiscal year ended December 31, 2005 under the Securities Exchange Act
        of 1934 on Form 20- F, file no. 0-26424 filed on March 31, 2006.2.1
      Indenture, dated as of February
        27, 2008, between the Company and the Bank of New York, as trustee,
        incorporated by reference from Exhibit 2.1 to Annual Report for the
        fiscal year ended December 31, 2007 under the Securities Exchange Act
        of 1934 on Form 20-F, file no. 0-26424 filed on March 31, 2008.2.2
      Shareholder Rights Plan Agreement
        dated March 9, 2012 with Computershare Investor Services Inc. as Rights
        Agent incorporated by reference from Form 8-A, file no. 00135455 filed
        on March 12, 2012 .4.1
      Underwriting Agreement dated
        August 12, 2009 incorporated by reference from Exhibit 99.1 to Report
        of Foreign Private Issuer under the Securities Exchange Act of 1934
        on Form 6-K, file no. 0-26424 filed on August 13, 2009.4.2
      Underwriting Agreement dated
        February 12, 2010 incorporated by reference from Exhibit 99.1 to Report
        of Foreign Private Issuer under the Securities Exchange Act of 1934
        on Form 6-K, file no. 0-26424 filed on February 12, 2010.4.3
      Acquisition Agreement dated
        October 28, 2010 between the Company and Pretium Resources Inc. incorporated
        by reference from Exhibit 4.3 to the Annual Report for the fiscal year
        ended December 31, 2010 under the Securities Exchange Act of 1934 on
        Form 20-F, file no. 0-26424 filed on March 31, 2011.4.4
      Underwriting Agreement dated
        December 9, 2010 incorporated by reference from Exhibit 4.4 to Annual
        Report for the fiscal year ended December 31, 2010 under the Securities
        Exchange Act of 1934 on Form 20-F, file no. 0-26424 filed on March 31,
        2011.4.5
      Underwriting
        Agreement dated March 31, 2011.8.1
      List
        of Significant Subsidiaries (as defined in Rule 1-02(w) of Regulation
      S-X) included under Item 4.C, Organizational Structure.12.1
      Certification
        of President and Chief Executive Officer Pursuant to Section 302 of
        the Sarbanes-Oxley Act of 2002


- 144 -

---

Exhibit Number
      Description12.2
      Certification
          of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
          Act of 2002.13.1
      Certification
          of President and Chief Executive Officer Pursuant to 18 U.S.C. Section
          1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
          2002.13.2
      Certification
          of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted
          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1
      Audit
          Committee Charter


- 145 -

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Silver Standard Resources Inc.

Consolidated Financial StatementsDecember 31, 2011 and 2010 and January 1, 2010







---

Managements Responsibility for the Financial
Statements

The preparation and presentation of the accompanying
consolidated financial statements and Managements Discussion and Analysis
(MD&A) are the responsibility of management and have been approved by the
Board of Directors.

The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board. Financial statements, by nature, are
not precise since they include certain amounts based upon estimates and
judgements. When alternative methods exist, management has chosen those it deems
to be the most appropriate in the circumstances.

Management, under the supervision of and the participation of
the President and Chief Executive Officer and the Chief Financial Officer, has a
process in place to evaluate disclosure controls and procedures and internal
control over financial reporting as required by Canadian and U.S. securities
regulations. We, as President and Chief Executive Officer and as Chief Financial
Officer, will certify our annual filings with the CSA and SEC as required in
Canada by National Instrument 52-109 and in the United States as required by the
Sarbanes-Oxley Act of 2002.

The Board of Directors is responsible for ensuring that
management fulfills its responsibilities for financial reporting and is
ultimately responsible for reviewing and approving the consolidated financial
statements. The Board carries out this responsibility principally through its
Audit Committee which is independent from management.

The Audit Committee is appointed by the Board of Directors and
reviews the consolidated financial statements and MD&A; considers the report
of the external auditors; assesses the adequacy of our internal controls,
including managements assessment described below; examines the fees and
expenses for audit services; and recommends to the Board the independent
auditors for appointment by the shareholders. The independent auditors have full
and free access to the Audit Committee and meet with it to discuss their audit
work, our internal control over financial reporting and financial reporting
matters. The Audit Committee reports its findings to the Board for consideration
when approving the consolidated financial statements for issuance to the
shareholders and managements assessment of the internal control over financial
reporting.

Managements Report on Internal Control over Financial
Reporting

Management is responsible for establishing and maintaining
adequate internal control over financial reporting. Management has assessed the
effectiveness of our internal control over financial reporting as of December
31, 2011 using criteria established in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded that our
internal control over financial reporting was effective as of December 31,
2011.

PricewaterhouseCoopers LLP, our auditor, has audited the
effectiveness of our internal control over financial reporting as of December
31, 2011, as stated in their report which appears herein.

|John Smith                          | Gregory Martin       
|------------------------------------- | -----------------------
|John Smith                            | Gregory Martin         
|President and Chief Executive Officer | Chief Financial Officer
|                                      |                        
|March 11, 2012                        |                        

|F-2 | P a g e
|-------------

---

March 11, 2012

Independent Auditors Report

To the Shareholders of Silver Standard Resources Inc.

We have completed an integrated audit of Silver Standard
Resources Inc.s and its subsidiaries (the Company) December 31, 2011
consolidated financial statements and their internal control over financial
reporting as at December 31, 2011 and an audit of their December 31, 2010
consolidated financial statements. Our opinions, based on our audits, are
presented below.

Report on the consolidated financial statementsWe
have audited the accompanying consolidated financial statements of Silver
Standard Resources Inc. and its subsidiaries, which comprise the consolidated
statement of financial position as at December 31, 2011, 2010 and January 1,
2010 and the consolidated statements of income, comprehensive income, changes in
shareholders equity and cash flows and for the years ended December 31, 2011
and 2010, and the related notes, which comprise a summary of significant
accounting policies and other explanatory information.

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

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

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

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

OpinionIn our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of
Silver Standard Resources Inc. and its subsidiaries as at December 31, 2011,
2010 and January 1, 2010 and their financial performance and their cash flows
for the years ended December 31, 2011 and 2010 in accordance with International
Financial Reporting Standards as issued by the International Accounting
Standards Board.

Report on internal control over financial reportingWe have also audited Silver Standard Resources Inc.s and its subsidiaries
  internal control over financial reporting as at December 31, 2011, based on
  criteria established in Internal Control - Integrated Framework, issued by the
  Committee of Sponsoring Organizations of the Treadway Commission (COSO).

|F-3 | P a g e
|-------------

---

Managements responsibility for internal control over
financial reportingManagement is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in
Managements Report on Internal Control over Financial Reporting.

Auditors responsibilityOur responsibility is to
express an opinion on the Companys internal control over financial reporting
based on our audit. We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects.

An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control, based on the assessed
risk, and performing such other procedures as we consider necessary in the
circumstances.

We believe that our audit provides a reasonable basis for our
audit opinion on the Companys internal control over financial reporting.

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

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

OpinionIn our opinion, Silver Standard Resources
Inc. and its subsidiaries maintained, in all material respects, effective
internal control over financial reporting as at December 31, 2011, based on
criteria established in Internal Control - Integrated Framework issued by COSO.

Signed PricewaterhouseCoopers LLP

Chartered Accountants

Vancouver, Canada

|F-4 | P a g e
|-------------

---

|Silver Standard Resources Inc.                
|----------------------------------------------
|Consolidated Financial Statements             
|December 31, 2011 and 2010 and January 1, 2010

CONTENTS

| | Primary financial statements                                    
| | ----------------------------------------------------------------
| |                                                                 
| | Consolidated Statements
      of Financial Position             
| | Consolidated Statements of Income                               
| | Consolidated Statements
      of Comprehensive Income           
| | Consolidated Statements of Changes in
      Shareholders Equity
| | Consolidated Statements
      of Cash Flows                     
| |                                                                 
| | Notes to consolidated financial
      statements                
| |                                                                 
| | Note 1  Nature of
      operations                             
| | Note 2  Summary of significant
      accounting policies       
| |                                                                 
| | Statement of Financial Position                                 
| | Note 3  Cash and cash
      equivalents                        
| | Note 4  Trade and other receivables                            
| | Note 5  Other assets                                           
| | Note 6  Inventory                                              
| | Note 7  Property, plant
      and equipment                    
| | Note 8  Investment in associate                                
| | Note 9  Current and
      deferred income tax                  
| | Note 10  Value added tax receivable                            

| | Note 11  Trade and
      other payables                                 
| | -------------------------------------------------------------------------
| | Note 12  Warrant liability                                              
| | Note 13  Close down and
      restoration provision                     
| | Note 14  Convertible notes                                              
| |                                                                          
| | Shareholders Equity                                                     
| | Note 15  Share capital
      and share-based payments                   
| | Note 16  Other reserves                                                 
| |                                                                          
| | Statement of Income                                                      
| | Note 17  Operating
      costs by nature                                
| | Note 18  Finance income and expenses                                    
| | Note 19  Other income
      (other expenses)                            
| | Note 20  Earnings per share                                             
| |                                                                          
| | Additional disclosures                                                   
| | Note 21  Operating
      segments                                       
| | Note 22  Financial instruments                                          
| | Note 23  Financial risk
      management                                
| | Note 24  Related party transactions                                     
| | Note 25  Supplemental
      cash flow information                       
| | Note 26  Transition to International
      Financial Reporting Standards

|F-5 | P a g e
|-------------

---

|Silver Standard Resources Inc.                            
|----------------------------------------------------------
|Consolidated Statements of Financial Position             
|As at
      December 31, 2011 and 2010 and January 1, 2010
|(expressed in thousands of United States dollars)         

|                                                                             |      |  | December 31 |  |  | December 31 |  |  | January 1 |  
|---------------------------------------------------------------------------- | ---- |  | ----------- |  |  | ----------- |  |  | --------- | -
|                                                                             | Note |  | 2011        |  |  | 2010        |  |  | 2010      |  
|                                                                             |      |  | $           |  |  | $           |  |  | $         |  
|Current assets                                                               |      |  |             |  |  |             |  |  |           |  
|Cash and cash equivalents                                                    | 3    |  | 329,055     |  |  | 232,311     |  |  | 26,659    |  
|Trade and other receivables                                                  | 4    |  | 19,401      |  |  | 35,916      |  |  | 8,251     |  
|Other current assets                                                         | 5    |  | 33,539      |  |  | 33,651      |  |  | 19,722    |  
|Inventory                                                                    | 6    |  | 94,681      |  |  | 40,176      |  |  | 20,565    |  
|                                                                             |      |  | 476,676     |  |  | 342,054     |  |  | 75,197    |  
|Non-current assets                                                           |      |  |             |  |  |             |  |  |           |  
|Property, plant and equipment                                                | 7    |  | 544,111     |  |  | 499,632     |  |  | 496,824   |  
|Investment in associate                                                      | 8    |  | 136,342     |  |  | 226,271     |  |  | -         |  
|Deferred income tax assets                                                   | 9    |  | 21,591      |  |  | -           |  |  | -         |  
|Value added tax receivable                                                   | 10   |  | 89,160      |  |  | 70,782      |  |  | 54,094    |  
|Other non-current assets                                                     | 5    |  | 8,222       |  |  | 9,251       |  |  | 8,015     |  
|Total assets                                                                 |      |  | 1,276,102   |  |  | 1,147,990   |  |  | 634,130   |  
|                                                                             |      |  |             |  |  |             |  |  |           |  
|Current liabilities                                                          |      |  |             |  |  |             |  |  |           |  
|Trade and other payables                                                     | 11   |  | 48,023      |  |  | 35,163      |  |  | 50,682    |  
|Taxes payable                                                                |      |  | 22,498      |  |  | -           |  |  | -         |  
|Warrant liability                                                            | 12   |  | 7,067       |  |  | -           |  |  | -         |  
|                                                                             |      |  | 77,588      |  |  | 35,163      |  |  | 50,682    |  
|Non-current liabilities                                                      |      |  |             |  |  |             |  |  |           |  
|Deferred income tax liabilities                                              | 9    |  | 41,331      |  |  | 26,765      |  |  | 1,949     |  
|Non-current taxes payable                                                    |      |  | -           |  |  | 3,671       |  |  | 3,373     |  
|Close down and restoration provision                                         | 13   |  | 46,653      |  |  | 12,671      |  |  | 10,340    |  
|Convertible notes                                                            | 14   |  | 125,313     |  |  | 116,125     |  |  | 107,895   |  
|Derivative
      liability                                                   | 14   |  | 1,242       |  |  | 21,735      |  |  | 20,728    |  
|Total liabilities                                                            |      |  | 292,127     |  |  | 216,130     |  |  | 194,967   |  
|                                                                             |      |  |             |  |  |             |  |  |           |  
|Shareholders' equity                                                         |      |  |             |  |  |             |  |  |           |  
|Share capital                                                                | 15   |  | 705,876     |  |  | 676,651     |  |  | 538,700   |  
|Other reserves                                                               | 16   |  | 6,515       |  |  | 63,257      |  |  | 46,966    |  
|Retained earnings
      (accumulated deficit)                                |      |  | 271,584     |  |  | 191,456     |  |  | (146,999  | )
|Total shareholders' equity attributable
      to shareholders of the Company |      |  | 983,975     |  |  | 931,364     |  |  | 438,667   |  
|                                                                             |      |  |             |  |  |             |  |  |           |  
|Non-controlling interest                                                     | 7    |  | -           |  |  | 496         |  |  | 496       |  
|                                                                             |      |  |             |  |  |             |  |  |           |  
|Total liabilities and equity                                                 |      |  | 1,276,102   |  |  | 1,147,990   |  |  | 634,130   |  
|Events after the reporting date (note 8)                                     |      |  |             |  |  |             |  |  |           |  
|Commitments (note 23 (c))                                                    |      |  |             |  |  |             |  |  |           |  

The accompanying notes are an integral part of the consolidated
financial statements

Approved by the Board of Directors and authorized for issue
on March 11, 2012

|John R.
      Brodie        |  | John Smith        
|----------------------------- |  | --------------------
|John R. Brodie, FCA, Director |  | John Smith, Director

|F-6 | P a g e
|-------------

---

|Silver Standard Resources Inc.                                                   
|---------------------------------------------------------------------------------
|Consolidated Statements of Income                                                
|For
      the years ended December 31, 2011 and 2010                             
|(expressed in thousands of United States dollars, except
      per share amounts)

|                                                            | Note |   | 2011    |   |   | 2010    |  
|----------------------------------------------------------- | ---- | - | ------- | - | - | ------- | -
|                                                            |      |   | $       |   |   | $       |  
|                                                            |      |   |         |   |   |         |  
|Revenue                                                     |      |   | 147,845 |   |   | 112,256 |  
|Cost of sales                                               | 17   |   | (95,926 | ) |   | (98,122 | )
|Income from mine operations                                 |      |   | 51,919  |   |   | 14,134  |  
|                                                            |      |   |         |   |   |         |  
|General and administrative expenses                         | 17   |   | (23,651 | ) |   | (28,896 | )
|Exploration and
      evaluation expenses                   |      |   | (5,703  | ) |   | (2,400  | )
|Operating income (loss)                                     |      |   | 22,565  |   |   | (17,162 | )
|                                                            |      |   |         |   |   |         |  
|Gain on sale of mineral property                            | 7    |   | 49,856  |   |   | 402,009 |  
|Gain on partial disposal of associate                       | 8    |   | 38,776  |   |   | -       |  
|Interest earned and other finance income                    | 18   |   | 2,291   |   |   | 1,400   |  
|Interest expense and other finance costs                    | 18   |   | (17,392 | ) |   | (16,363 | )
|Other income (other expenses)                               | 19   |   | 18,080  |   |   | 1,706   |  
|Foreign exchange
      loss                                 |      |   | (2,651  | ) |   | (942    | )
|Income before tax                                           |      |   | 111,525 |   |   | 370,648 |  
|                                                            |      |   |         |   |   |         |  
|Income tax expense                                          | 9    |   | (31,397 | ) |   | (32,193 | )
|                                                            |      |   |         |   |   |         |  
|Net income and net incomeattributable to
      shareholders |      |   | 80,128  |   |   | 338,455 |  
|                                                            |      |   |         |   |   |         |  
|Weighted average shares outstanding
      (thousands)       |      |   |         |   |   |         |  
|Basic                                                       | 20   |   | 80,324  |   |   | 77,972  |  
|Diluted                                                     | 20   |   | 80,660  |   |   | 78,356  |  
|                                                            |      |   |         |   |   |         |  
|Earnings per share                                          |      |   |         |   |   |         |  
|Basic                                                       | 20   | $ | 1.00    |   | $ | 4.34    |  
|Diluted                                                     | 20   | $ | 0.99    |   | $ | 4.32    |  

The accompanying notes are an integral part of the consolidated
financial statements

|F-7 | P a g e
|-------------

---

|Silver Standard Resources Inc.                       
|-----------------------------------------------------
|Consolidated Statements of Comprehensive
      Income
|For
      the years ended December 31, 2011 and 2010 
|(expressed in thousands of United States dollars)    

|                                                                                                           | **Note** |  | 2011    |   |  | 2010    |  
|---------------------------------------------------------------------------------------------------------- | -------- |  | ------- | - |  | ------- | -
|                                                                                                           |          |  | $       |   |  | $       |  
|                                                                                                           |          |  |         |   |  |         |  
|                                                                                                           |          |  |         |   |  |         |  
|Net income for the period attributable to shareholders                                                     |          |  | 80,128  |   |  | 338,455 |  
|Other comprehensive income (loss):                                                                         |          |  |         |   |  |         |  
|Unrealized gain (loss)
      on marketable securities, net of tax                                          |          |  | (13,820 | ) |  | 15,907  |  
|Realized gain on the disposal of
      marketable securities      recycled to net income,
      net of tax |          |  | (4,731  | ) |  | (2,645  | )
|Share of other
      comprehensive loss of associate                                                       | 8        |  | (3,516  | ) |  | -       |  
|Cumulative translation adjustment                                                                          |          |  | (2,163  | ) |  | 1,832   |  
|Other comprehensive income (loss)                                                                          |          |  | (24,230 | ) |  | 15,094  |  
|                                                                                                           |          |  |         |   |  |         |  
|Total comprehensive income attributable to
      shareholders                                              |          |  | 55,898  |   |  | 353,549 |  
|Non-controlling
      interests                                                                            |          |  | -       |   |  | -       |  
|Total comprehensive income                                                                                 |          |  | 55,898  |   |  | 353,549 |  

The accompanying notes are an integral part of the consolidated
financial statements

|F-8 | P a g e
|-------------

---

|Silver Standard Resources Inc.                                  
|----------------------------------------------------------------
|Consolidated Statements of Changes in
      Shareholders Equity
|For
      the years ended December 31, 2011 and 2010            
|(expressed in thousands of United States dollars)               

|                                                                 | Note |  | Common Shares |  |  | Other   |  |  | Retained earnings |   |  | Total        |   |  | Non-                |   |  | Total           |  
|---------------------------------------------------------------- | ---- |  | ------------- |  |  | ------- |  |  | ----------------- | - |  | ------------ | - |  | ------------------- | - |  | --------------- | -
|                                                                 |      |  | Shares        |  |  | Amount  |  |  | reserves          |   |  | (accumulated |   |  | **attributable to** |   |  | **controlling** |  
|                                                                 |      |  |               |  |  |         |  |  | (note 16          | ) |  | deficit)     |   |  | shareholders        |   |  | Interest        |  
|                                                                 |      |  | 000's         |  |  | $       |  |  | $                 |   |  | $            |   |  | $                   |   |  | $               |  
|Balance, January 1, 2010                                         |      |  | 71,965        |  |  | 538,700 |  |  | 46,966            |   |  | (146,999     | ) |  | 438,667             |   |  | 496             |  
|                                                                 |      |  |               |  |  |         |  |  |                   |   |  |              |   |  |                     |   |  |                 |  
|Issue of ordinary shares,
      net of costs                     |      |  | 6,729         |  |  | 114,677 |  |  | -                 |   |  | -            |   |  | 114,677             |   |  | -               |  
|Exercise of stock options                                        |      |  | 971           |  |  | 23,274  |  |  | (6,956            | ) |  | -            |   |  | 16,318              |   |  | -               |  
|Share-based compensation                                         |      |  | -             |  |  | -       |  |  | 8,153             |   |  | -            |   |  | 8,153               |   |  | -               |  
|Total comprehensive income for the
          
     year          |      |  | -             |  |  | -       |  |  | 15,094            |   |  | 338,455      |   |  | 353,549             |   |  | -               |  
|Balance, December 31, 2010                                       |      |  | 79,665        |  |  | 676,651 |  |  | 63,257            |   |  | 191,456      |   |  | 931,364             |   |  | 496             |  
|                                                                 |      |  |               |  |  |         |  |  |                   |   |  |              |   |  |                     |   |  |                 |  
|                                                                 |      |  |               |  |  |         |  |  |                   |   |  |              |   |  |                     |   |  |                 |  
|Balance, January 1, 2011                                         |      |  | 79,665        |  |  | 676,651 |  |  | 63,257            |   |  | 191,456      |   |  | 931,364             |   |  | 496             |  
|Exercise of stock options                                        |      |  | 1,028         |  |  | 29,225  |  |  | (8,990            | ) |  | -            |   |  | 20,235              |   |  | -               |  
|Share-based compensation                                         |      |  | -             |  |  | -       |  |  | 4,676             |   |  | -            |   |  | 4,676               |   |  | -               |  
|Transactions with
      non-controlling       interests          | 7    |  | -             |  |  | -       |  |  | (28,198           | ) |  | -            |   |  | (28,198             | ) |  | (496            | )
|Total comprehensive income (loss) for 
          
    the period |      |  | -             |  |  | -       |  |  | (24,230           | ) |  | 80,128       |   |  | 55,898              |   |  | -               |  
|Balance, December 31, 2011                                       |      |  | 80,693        |  |  | 705,876 |  |  | 6,515             |   |  | 271,584      |   |  | 983,975             |   |  | -               |  

The accompanying notes are an integral part of the consolidated
financial statements

|F-9 | P a g e
|-------------

---

|Silver Standard Resources Inc.                      
|----------------------------------------------------
|Consolidated Statements of Cash Flows               
|For
      the years ended December 31, 2011 and 2010
|(expressed in thousands of United States dollars)   

|                                                                        | Note |  | 2011    |   |  | 2010     |  
|----------------------------------------------------------------------- | ---- |  | ------- | - |  | -------- | -
|                                                                        |      |  | $       |   |  | $        |  
|Cash flows from operating activities                                    |      |  |         |   |  |          |  
|Net income for the year                                                 |      |  | 80,128  |   |  | 338,455  |  
|Adjustments for:                                                        |      |  |         |   |  |          |  
|Depletion, depreciation and amortization                                |      |  | 16,832  |   |  | 22,436   |  
|Share-based payments                                                    |      |  | 4,754   |   |  | 7,877    |  
|Close down and restoration provision                                    |      |  | 1,596   |   |  | 1,798    |  
|Gain on sale of mineral
      property and property plant and equipment |      |  | (49,856 | ) |  | (402,009 | )
|Write-down of inventory to net realizable
      value                   |      |  | 1,625   |   |  | 6,700    |  
|Accretion expense on
      convertible notes                            |      |  | 9,188   |   |  | 8,230    |  
|Accretion income on convertible debenture                               |      |  | (691    | ) |  | (865     | )
|Other income                                                            |      |  | (19,136 | ) |  | (1,690   | )
|Gain on partial disposal of associate                                   |      |  | (38,776 | ) |  | -        |  
|Deferred income tax expense
      (recovery)                            |      |  | (4,950  | ) |  | 29,594   |  
|Foreign exchange loss (gain)                                            |      |  | 6,618   |   |  | 4,309    |  
|Net changes in non-cash working capital items                           | 25   |  | (1,653  | ) |  | (25,944  | )
|                                                                        |      |  |         |   |  |          |  
|Cash used in operating activities                                       |      |  | 5,679   |   |  | (11,110  | )
|                                                                        |      |  |         |   |  |          |  
|Cash flows from investing activities                                    |      |  |         |   |  |          |  
|Purchase of property, plant and equipment                               |      |  | (29,055 | ) |  | (50,564  | )
|Mineral property expenditures                                           |      |  | (36,379 | ) |  | (52,912  | )
|Value added tax recoverable                                             |      |  | (24,302 | ) |  | (19,344  | )
|Proceeds from sale of marketable securities                             |      |  | -       |   |  | 11,015   |  
|Acquisition of non-controlling interest                                 |      |  | (18,172 | ) |  | -        |  
|Proceeds from repayment of convertible
      debenture receivable       |      |  | 10,060  |   |  | -        |  
|Net proceeds from partial disposal of associate                         |      |  | 112,381 |   |  | -        |  
|Net proceeds from sale of mineral properties                            |      |  | 56,447  |   |  | 204,491  |  
|                                                                        |      |  |         |   |  |          |  
|Cash generated by investing activities                                  |      |  | 70,980  |   |  | 92,686   |  
|                                                                        |      |  |         |   |  |          |  
|Cash flows from financing activities                                    |      |  |         |   |  |          |  
|Proceeds from issuance of common shares (net of costs)                  |      |  | -       |   |  | 107,758  |  
|Proceeds from exercise of stock options                                 |      |  | 20,085  |   |  | 16,318   |  
|                                                                        |      |  |         |   |  |          |  
|Cash generated by financing activities                                  |      |  | 20,085  |   |  | 124,076  |  
|                                                                        |      |  |         |   |  |          |  
|Increase in cash and cash
      equivalents                             |      |  | 96,744  |   |  | 205,652  |  
|Cash and cash
      equivalents, beginning of period                    |      |  | 232,311 |   |  | 26,659   |  
|Cash and cash equivalents, end of period                                |      |  | 329,055 |   |  | 232,311  |  
|                                                                        |      |  |         |   |  |          |  
|Supplemental cash flow information (note
      25)                      |      |  |         |   |  |          |  

The accompanying notes are an integral part of the consolidated
financial statements

|F-10 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States
      dollars unless otherwise stated)

|1.     | NATURE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | Silver Standard Resources Inc. (the Company) is a
      limited liability company incorporated under the laws of the Province of
      British Columbia, Canada and its shares are publicly listed on the Toronto
      Stock Exchange in Canada and the NASDAQ in the United States. The Company
      together with its subsidiaries (the Group) are principally engaged in
      the acquisition, exploration, development and operation of silver-dominant
      resource properties located in the Americas. The Company is the ultimate
      parent of the Group.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | The Companys address is Suite 1400, 999 West Hastings
      Street, Vancouver, British Columbia, V6C 2W2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | The Companys strategic focus is to optimize the
      production of silver from its Pirquitas mine in Argentina, and to advance
      other principal development and exploration projects including San Luis in
      Peru, Diablillos in Argentina, and Pitarrilla and San Agustin in Mexico.
      In addition to its principal projects, the Company holds a
      geologically-diverse portfolio of other predominantly silver projects in
      various stages of exploration.                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|**2.** | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | The principal accounting policies applied in the
      preparation of these consolidated financial statements are set out
      below.                                                                                                                                                                                                                                                                                                                                                                                                                                      

a)Basis of preparation and first time adoption of International Financial
Reporting Standards

The Company prepares its financial
statements in accordance with Canadian generally accepted accounting principles
(Canadian GAAP) as set out in the Handbook of the Canadian Institute of
Chartered Accountants (CICA Handbook). In 2010, the CICA Handbook was revised
to incorporate International Financial Reporting Standards (IFRS), and to
require publicly accountable enterprises to apply such standards effective for
years beginning on or after January 1, 2011. Accordingly, these are the
Companys first annual consolidated financial statements prepared in accordance
with IFRS. In the financial statements, the term Canadian GAAP refers to
Canadian GAAP before the adoption of IFRS.

These consolidated financial statements
have been prepared in accordance with IFRS as issued by the International
Accounting Standards Board (IASB) and Interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC). The
comparative information has also been prepared on this basis, with the exception
of certain items, details of which are given below, for which comparative
information has not been restated.

The basis of preparation of these annual
  consolidated financial statements is different to that of the most recent
  comparative years annual consolidated financial statements due to the first
  time adoption of IFRS. An explanation of how the transition to IFRS has affected
  the reported statement of income and statement of financial position is provided
  in note 26. This note includes reconciliations of equity and of income for the
  period ended December 31, 2010 previously reported under Canadian GAAP to those
  amounts reported under IFRS.

The policies applied in these
consolidated financial statements are based on IFRS issued and outstanding as of
March 11, 2012, the date the statements were issued.

|F-11 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Companys transition date to IFRS is January 1, 2010.
      The rules for first-time adoption of IFRS are set out in IFRS 1,
      First-time adoption of International Financial Reporting Standards. In
      preparing the Companys first IFRS financial statements these transition
      rules have been applied to the amounts previously reported under Canadian
      GAAP. In general IFRS 1 requires accounting policies to be applied
      retrospectively, however it allows certain exemptions in order to assist
      companies with the transition process. The Company has applied the
      following optional exemptions:

| | - | IFRS 3 Business combinations has not been applied to
      business combinations that occurred before the date of transition.                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | - | The Company has deemed cumulative translation differences
      for foreign operations to be zero at the date of transition, transferring
      any balances to the opening accumulated deficit at that date. Any gains or
      losses on subsequent disposals of foreign operations will not therefore
      include translation differences arising prior to the transition date.
| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | - | IFRS 2 Share-based payment has only been applied to
      share-based payments which had not vested at January 1, 2010.                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | - | Full retrospective application of IFRIC 1, Changes in
      existing decommissioning, restoration and similar liabilities has not
      been applied to the Companys close down and restoration provision that
      existed prior to the transition to IFRS.                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | - | The Company has elected to deem the fair value of the
      Pirquitas mine at the date of transition to IFRS to be its cost as of that
      date.                                                                                                                                                                                                                                  

IFRS 1 also requires that estimates
made under IFRS must be consistent with estimates made for the same date under
Canadian GAAP except where adjustments are required to reflect any differences
in accounting policies.

The preparation of financial statements
in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process
of applying the Companys accounting policies. The areas involving judgement or
complexity, or areas where assumptions and estimates are significant and could
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the period, are discussed
in note 2 (u).

b)Accounting convention

These consolidated financial statements
have been prepared on the historical cost basis, except for the revaluation of
certain financial instruments, which are measured at fair value as described in
note 2 (r).

c)Basis of consolidation

These consolidated financial statements
incorporate the financial statements of the Company, its associate (note 8), and
its controlled subsidiaries (note 24(c)).

|F-12 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Control exists when the Company has the power, directly
      or indirectly, to govern the financial and operating policies of an entity
      so as to obtain benefits from its activities, generally accompanying a
      shareholding of more than one half of the voting rights. The existence and
      effect of potential voting rights that are currently exercisable or
      convertible are considered when assessing whether the Company controls
      another entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The financial statements of subsidiaries are included in
      the consolidated financial statements from the date that control commences
      until the date that control ceases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | All inter-company transactions and balances have been
      eliminated on consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Where the Companys interest is less than 100%, the
      interest attributable to outside shareholders is reflected in non-
      controlling interest. Non-controlling interests in the net assets of
      consolidated subsidiaries are identified separately from the Companys
      equity therein. Non-controlling interests consist of the amount of those
      interests at the date of the original business combination and the
      non-controlling interests share of changes in equity since the date of
      the combination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Associates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | An associate is an entity over whose operating and
      financial policies the Company exercises significant influence.
      Significant influence is presumed to exist where the Company has between
      20 per cent and 50 per cent of the voting rights, but can also arise where
      the Company holds less than 20 per cent of the voting rights, but it has
      power to be actively involved and influential in policy decisions
      affecting the entity. The Companys share of the net assets, post tax
      results and reserves of the associate are included in the financial
      statements using the equity accounting method. This involves recording the
      investment initially at cost to the Company, and then, in subsequent
      periods, adjusting the carrying amount of the investment to reflect the
      Companys share of the associates results. Unrealized gains on
      transactions between the Company and its associate are eliminated to the
      extent of the Companys interest in the associate.

d)Foreign currency translation

(i)Functional and presentation currency

Items included in the financial
statements of each of the Companys subsidiaries are measured using the currency
of the primary economic environment in which the entity operates (the
functional currency).

The consolidated financial statements
are presented in United States dollars.

(ii)Transactions and balances

Foreign currency transactions are
translated into the functional currency using the exchange rates prevailing at
the date of the transaction. Foreign currency gains and losses resulting from
the settlement of such transactions and from the translation at period-end
exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of income.

|F-13 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)
|-- | ---------------------------------------------------------

(iii)Subsidiaries

The results and financial position of
subsidiaries and of the associate that have a functional currency different from
the presentation currency are translated into the presentation currency as
follows:

| | - | Assets and liabilities are translated at the period-end
      exchange rate;                                                
| | - | ----------------------------------------------------------------------------------------------------------------------------
| | - | Income and expenses for each statement of income are
      translated at average exchange rates for the period; and         
| | - | All resulting exchange differences are recognized in
      other comprehensive income as cumulative translation adjustments.

On consolidation, exchange differences
arising from the translation of the net investment in foreign entities are taken
to the foreign currency translation reserve. When a foreign operation is sold,
such exchange differences are recognized in the statement of income as part of
the gain or loss on sale.

e)Revenue recognition

The Companys primary source of revenue
is from the sale of metal-bearing concentrate. Revenue from the sale of
concentrate is recognized in the financial statements when the following
criteria have been met:

| | - | the significant risks and rewards of ownership have
      passed to the customer;                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | neither continuing managerial involvement, to the degree
      usually associated with ownership, nor effective control over the good
      sold, has been retained;
| | - | the amount of revenue can be measured reliably;                                                                                                                     
| | - | it is probable that economic benefits associated with the
      sale will flow to the Company; and                                                                  
| | - | the costs incurred or to be incurred in respect of the
      sale can be measured reliably.                                                                         

Revenue from the sale of concentrate is
recorded in the statement of income net of charges for shipping, refining and
smelting. Revenues from the sale of significant by-products are included within
revenue. Where a by-product is not regarded as significant, sales proceeds may
be credited against cost of sales.

Concentrate sales typically are
provisionally valued upon shipment, with the final value of the concentrate sale
determined after receipt of final weights and assays and after the
contractually-agreed metal pricing period, which typically occurs two to six
months after shipment. Once the recognition criteria are met, fair value is
estimated and revenues are recorded, based on metal spot prices at that date,
provisionally-estimated amounts of metals contained, and processing charges. As
a result of this process, the value of concentrate receivables changes during
the period between initial recognition and final pricing. This component of the
contract is an embedded derivative, which is recognized at fair value based on
the forward sales price at the end of the reporting period with changes in value
recorded in revenue. Such adjustments to revenue for metal prices are recorded
at each reporting date, until the final sales price has been determined.

|F-14 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)
|-- | ---------------------------------------------------------

f)Cash and cash equivalents

Cash and cash equivalents include cash
on hand and held at banks and short-term investments with an original maturity
of three months or less. Short-term investments consist of treasury bills issued
by the governments of Canada and the United States of America.

g)Inventory

Stockpiled ore, work in process and
finished goods inventory are valued at the lower of cost and estimated net
realizable value (NRV). Cost includes all direct costs incurred in production
including direct labour and materials, freight, depreciation and amortization
and directly attributable overhead costs. Production stripping costs are
included in inventory as incurred. NRV is calculated using the estimated price
at the time of sale based on prevailing and future metal prices less estimated
future production costs to convert the inventory into saleable form and all
associated selling costs.

Any write-downs of inventory to NRV are
recorded as cost of sales in the statement of income. If there is a subsequent
increase in the value of inventory, the previous write-downs to NRV are reversed
up to cost to the extent that the related inventory has not been sold.

Stockpiled ore inventory represents ore
that has been extracted from the mine and is available for further processing.
Low-grade resources which are not scheduled for processing within the next
twelve months are classified as long-term inventory. Costs added to stockpiled
ore inventory are derived from the current mining costs incurred up to the point
of stockpiling the ore and are removed at average cost. Quantities of stockpiled
ore are verified by periodic surveys.

Work in process inventory includes the
fine ore stockpile and in-circuit inventories in the milling process. Finished
goods inventory includes metal concentrates at our operations and in
transit.

Materials and supplies inventories are
valued at the lower of average cost and NRV. Costs include acquisition, freight
and other directly attributable costs.

h)Exploration and evaluation expenditure

Exploration and evaluation activity
involves the search for mineral resources, the determination of technical
feasibility and the assessment of commercial viability of an identified mineral
resource. Exploration and evaluation activity includes:

| | - | acquiring the rights to explore;                                                            
| | - | --------------------------------------------------------------------------------------------
| | - | researching and analyzing
      historical exploration data;                                
| | - | gathering exploration data
      through topographical, geochemical and geophysical studies;
| | - | exploratory drilling, trenching
      and sampling;                                         
| | - | determining and examining the
      volume and grade of the resource;                       
| | - | surveying transportation and
      infrastructure requirements; and                         
| | - | compiling pre-feasibility and
      feasibility studies.                                    

|F-15 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | General exploration costs are expensed in the period
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Exploration and evaluation expenditures on identifiable
      non-operating properties are capitalized. Capitalized costs are considered
      to be tangible assets as they form part of the underlying mineral property
      and are recorded within exploration and development expenditure, a
      separate component of property, plant and equipment, at cost less
      impairment charges, if applicable. No amortization is charged during the
      exploration and evaluation phase as the asset is not available for
    use.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | All exploration costs at operating properties are
      expensed as incurred until a proven economically recoverable reserve is
      identified.                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Once a mining project has been established as
      commercially viable, expenditures other than those on land, buildings,
      plant and equipment are capitalized as mineral properties together with
      any amount transferred from exploration and development
    expenditure.                                                                                                                                                                                                                                                  

i)Property, plant and equipment

Property, plant and equipment is stated
at cost less accumulated depreciation and accumulated impairment losses.

The cost of an item of property, plant
and equipment includes the purchase price or construction cost, any costs
directly attributable to bringing the asset to the location and condition
necessary for its intended use, an initial estimate of the costs of dismantling
and removing the item and restoring the site on which it is located, and for
qualifying assets, the associated borrowing costs.

Where an item of property, plant and
equipment is comprised of major components with different useful lives, the
components are accounted for as separate items of property, plant and equipment.

Costs incurred for new construction,
mine development, the major overhaul of existing equipment, and sustaining
capital are capitalized as property, plant and equipment on the statement of
financial position and are subject to depreciation once they are put into use.
The costs of routine maintenance and repairs are expensed as incurred.

j)Depreciation of property, plant and equipment

The carrying amounts of property, plant
and equipment are depreciated to their estimated residual value over the
estimated useful lives of the specific assets concerned, or the estimated life
of mine or lease, if shorter. Depreciation starts on the date of commissioning.
The major categories of property, plant and equipment are depreciated on a
units-of-production or straight-line basis using the estimated lives indicated
below:

Computer equipment
    3 - 5 yearsFurniture and fixtures
    7 yearsVehicles
    3 yearsMining equipment
    3 - 10 yearsMine plant equipment
    11 yearsLeasehold improvements
    Lease term


|F-16 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Land is not depreciated.                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Mineral properties are depreciated using the
      units-of-production method. In applying the units-of-production method
      depreciation is calculated using the quantity of material extracted from
      the mine in the period as a percentage of the total quantity of material
      expected to be extracted in current and future periods based on proven and
      probable mineral reserves.
|   |                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company conducts an annual review of residual values,
      useful lives and depreciation methods employed for property, plant and
      equipment. Any changes in estimate that arise from this review are
      accounted for prospectively.                                                                                                                                                         

k)Stripping costs

Stripping costs comprise the removal of
overburden and other waste material from the mine. Stripping costs incurred
during the development of a mine are capitalized and recorded within mineral
properties and subsequently amortized over the life of the mine on a
units-of-production basis.

Stripping costs incurred during the
production phase are variable production costs that are included in the costs of
inventory produced during the period that the stripping costs are incurred.
Stripping costs resulting in a future benefit of the mineral property by
providing access to additional sources of ore are capitalized and amortized over
the relevant mineral reserves.

l)Borrowing costs

Borrowing costs directly attributable
to the acquisition, construction or production of qualifying assets are
capitalized as part of the cost of the asset until the asset is substantially
ready for its intended use. Other borrowing costs are recognized as an expense
in the period incurred.

m)Impairment of long-lived assets

Assets that have an indefinite useful
life are not subject to amortization and are tested annually for impairment or
at any time if an indicator of impairment is considered to exist. Assets that
are subject to amortization or depreciation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable.

The Company conducts internal reviews
of asset values which are used to assess for any indications of impairment.
External factors such as changes in expected future prices, costs and other
market factors are also monitored to assess for indications of impairment.

If any such indication exists an
estimate of the recoverable amount is undertaken, being the higher of an assets
fair value less costs to sell and value in use. If the assets carrying amount
exceeds its recoverable amount then an impairment loss is recognized in the
statement of income.

|F-17 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)                                                                                                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Fair value is determined as the amount that would be
      obtained from the sale of the asset in an arms length transaction between
      knowledgeable and willing parties. Fair value of mineral assets is
      generally determined as the present value of the estimated future cash
      flows expected to arise from the continued use of the asset, including any
      expansion prospects.                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Value in use is determined as the present value of the
      estimated future cash flows expected to arise from the continued use of
      the asset in its present form and from its ultimate disposal.                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Impairment is normally assessed at the level of
      cash-generating units (CGUs), which are identified as the smallest
      identifiable group of assets that generates cash inflows that are largely
      independent of the cash inflows from other assets.                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Non-financial assets other than goodwill that have
      suffered impairment are tested for possible reversal of the impairment
      whenever events or changes in circumstances indicate that the impairment
      may have reversed. When a reversal of a previous impairment is recorded,
      the reversal amount is adjusted for depreciation that would have been
      recorded had the impairment not taken place.

n)Share capital

Common shares issued by the Company are
  recorded at the net proceeds received which is the fair value of the consideration
  received less costs incurred in connection with the issue.

o)Share-based payments

Equity-settled share-based payment
arrangements such as the Companys stock option plan are initially measured at
fair value at the date of grant and recorded within shareholders equity.
Cash-settled arrangements such as the Non-employee Directors Deferred Share
Unit plan (DSU Plan), the Restricted Share Unit Plan (RSU Plan) and the
Performance Share Unit Plan (PSU Plan) are initially recorded at fair value
and classified as accrued liabilities and subsequently remeasured at fair value
at each reporting date.

The fair value at grant date of all
share-based payments is recognized as compensation expense over the period for
which benefits of services are expected to be derived, with a corresponding
credit to shareholders equity or other payables depending on whether they are
share-settled or cash-settled. The Company estimates the fair value of stock
options granted using the Black-Scholes option pricing model and estimates the
expected forfeiture rate at the date of grant. The fair value of DSUs and RSUs
is based on the quoted market price of the Companys common shares, and the
PSUs are valued using a Monte Carlo simulation. When awards are forfeited
because non-market based vesting conditions are not satisfied, the expense
previously recognized is proportionately reversed.

Where share-based payments are granted
in exchange for services directly related to specific exploration, development
or producing properties, the expense is capitalized against that asset.

p)Taxation

The tax expense for the period is
comprised of current and deferred tax. Taxation is recognized in the statement
of income except to the extent that it relates to items recognized directly in
shareholders equity, in which case the tax is recognized in equity.

|F-18 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)
|-- | ---------------------------------------------------------

(i)Current income tax

Current tax for each taxable entity in
the Company is based on the local taxable profit for the period at the local
statutory tax rates enacted or substantively enacted at the date of the
statement of financial position.

(ii)Deferred tax

Deferred tax is recognized, using the
liability method, on temporary differences between the carrying value of assets
and liabilities in the statement of financial position and the corresponding tax
bases used in the computation of taxable profit. Deferred tax is determined
using tax rates and tax laws that are enacted or substantively enacted at the
date of the statement of financial position and are expected to apply when the
related deferred tax asset is realized or the deferred tax liability is settled.

Deferred tax assets and liabilities are
not recognized if the temporary difference arises on the initial recognition of
assets and liabilities in a transaction other than a business combination, that
at the time of the transaction, affects neither the taxable nor the accounting
profit or loss.

Deferred tax liabilities are recognized
for taxable temporary differences associated with investments in subsidiaries
and associates, and interests in joint ventures, except where the timing of the
reversal of the temporary difference is controlled by the Company and it is
probable that the temporary difference will not reverse in the foreseeable
future.

Deferred tax assets are recognized for
all deductible temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible temporary
differences can be utilized. Deferred tax assets are reviewed at each reporting
date and amended to the extent that it is no longer probable that the related
tax benefit will be realized. Deferred tax assets and liabilities are offset
when there is a legally enforceable right to set off the current tax assets
against the current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Company intends to settle its current tax
assets and liabilities on a net basis.

(iii)  Royalties and other tax
arrangements

Royalties and other arrangements are
treated as taxation arrangements when they have the characteristics of tax. This
is considered to be the case when they are imposed under government authority
and the amount payable is calculated by reference to an income measure.
Obligations arising from royalty arrangements that do not satisfy these criteria
are recognized as current provisions and included within the cost of sales.

q)Earnings per share

Basic earnings per share for the year
is calculated by dividing the profit attributable to shareholders of the Company
by the weighted average number of shares outstanding during the reporting
period.

Diluted earnings per share is
calculated by adjusting the weighted average number of shares outstanding to
assume conversion of all potentially dilutive share equivalents, such as stock
options and convertible notes. The treasury stock method is used for the
assumed proceeds upon exercise of the dilutive instruments to determine the
number of shares assumed to be purchased at the average market price during the
period.

A portion of the convertible notes may
be converted into common shares and hence the maximum dilution impact of these
is determined.

|F-19 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                             
|   | When a loss is incurred during the year, basic and
      diluted loss per share are the same because the exercise of options and
      convertible notes are considered to be
anti-dilutive.

r)Financial instruments

(i)Financial assets and liabilities

The Company classifies its financial
instruments in the following categories: at fair value through profit and loss
(FVTPL), loans and receivables, available-for-sale, held to maturity, and
other financial liabilities. The classification depends on the purpose for which
the financial assets or liabilities were obtained. Management determines the
classification of financial assets and liabilities at initial recognition.

The Company has not classified any
financial instruments as held to maturity. The accounting policy for each of the
other categories is as follows:

Financial assets and liabilities at FVTPLFinancial assets and liabilities carried at FVTPL are recorded at fair value
  and transaction costs are expensed in the statement of income. Realized and
  unrealized gains and losses arising from changes in the fair value of the
  financial assets or liabilities held at FVTPL are included in the statement of
  income in the period in which they arise. Derivatives are included in this
  category unless they are designated as hedges. Generally, the Company does not
  acquire financial assets for the purpose of selling in the short term.

Loans and receivablesLoans and
receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are classified as current
assets or non-current assets based on their maturity date. Loans and receivables
are initially recognized at fair value and subsequently carried at amortized
cost less any impairment.

Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that are either
designated as available for sale or not classified in any of the other
categories.

Available-for-sale assets are initially
recorded at fair value plus transaction costs, and are subsequently carried at
fair value. All unrealized gains and losses arising from changes in the fair
value of assets classified as available-for-sale are recognized directly in
other comprehensive income, except for unrealized foreign exchange gains or
losses on monetary financial assets and impairment losses which are recognized
in the statement of income. Any reversal of a previously recognized impairment
loss on a non-monetary asset is recognized directly in other comprehensive
income. Realized gains and losses from the derecognition of available for sale
assets are recognized in the statement of income in the period derecognized with
any unrealized gains or losses being recycled from other comprehensive income.

Other financial liabilitiesOther financial liabilities are recognized initially at fair value, net of
transaction costs incurred and are subsequently stated at amortized cost. Any
difference between the initial cost and the redemption value is recognized in
the statement of income over the period to maturity using the effective interest
method.

Derivative financial instrumentsThe Companys policy with regard to Financial Risk Management is set out
in note 23. When the Company enters into derivative contracts these are designed
to reduce the exposures related to assets and liabilities, or anticipated
transactions.

|F-20 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Derivatives embedded in other financial instruments or
      other host contracts are treated as separate derivatives when their risks
      and characteristics are not closely related to their host contracts.
      Commodity-based embedded derivatives resulting from provisional sales
      prices of metals in concentrate are recognized in revenue as described in
      note 2 (e). Embedded derivatives in the convertible debenture receivable
      and the convertible notes are described in notes 5 and 14
    respectively.

(ii)Fair
value of financial instruments

The fair values of quoted investments
are based on current bid prices. If the market for a financial asset is not
active (and for unlisted securities), the Company establishes fair value by
using valuation techniques. These include the use of recent arms length
transactions, reference to other instruments that are substantially the same,
discounted cash flow analysis, and option pricing models refined to reflect the
issuers specific circumstances.

(iii)Impairment
of financial assets

The Company assesses at each reporting
date whether there is objective evidence that a financial asset or a group of
financial assets is impaired. An evaluation is made as to whether a decline in
fair value is significant or prolonged based on indicators such as
significant adverse changes in the market, economic or legal environment.

Impairment losses on financial assets
carried at amortized cost are reversed in subsequent periods if the amount of
the loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized.

(iv)   Derecognition of
financial assets and liabilities

Financial assets are derecognized when
the investments mature or are sold, and substantially all the risks and rewards
of ownership have been transferred. A financial liability is derecognized when
the obligation under the liability is discharged, cancelled or expired. Gains
and losses on derecognition are recognized within other income and finance costs
respectively.

s)Provisions for close down and restoration and for environmental clean-up
costs

Close down and restoration costs
include dismantling and demolition of infrastructure and the removal of residual
materials and remediation of disturbed areas. Estimated close down and
restoration costs are provided for in the accounting period when the obligation
arising from the related disturbance occurs, based on the net present value of
estimated future costs. The cost estimates are updated during the life of the
operation to reflect known development, e.g. revisions to cost estimates and to
the estimated lives of the operations, and are subject to formal reviews at
regular intervals.

The initial closure provision together
with changes resulting from changes in estimated cash flows or discount rates
are capitalized within property, plant and equipment. These costs are then
depreciated over the lives of the asset to which they relate, typically using
the units-of-production method. The amortization or unwinding of the discount
applied in establishing the net present value of provisions is charged to the
statement of income as a financing cost.

Provision is made for the estimated
present value of the costs of environmental clean-up obligations outstanding at
the statement of financial position date. These costs are charged to the
statement of income as an operating cost.

|F-21 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)
|-- | ---------------------------------------------------------

t)Leases

Leases which transfer substantially all
of the benefits and risks incidental to the ownership of property are accounted
for as finance leases. Finance leases are capitalized at the lease commencement
at the lower of the fair market value of the leased property and the net present
value of the minimum lease payments. Each lease payment is allocated between the
liability and finance charge. The property, plant and equipment acquired under
finance leases is depreciated over the shorter of the assets useful life and
the lease term.

All other leases are accounted for as
operating leases wherein rental payments are expensed as incurred.

u)Significant accounting judgements and estimates

The preparation of financial statements
in conformity with IFRS requires the use of judgements and/or estimates that
affect the amounts reported and disclosed in the consolidated financial
statements and related notes. These judgments and estimates are based on
managements best knowledge of the relevant facts and circumstances, having
regard to previous experience, but actual results may differ materially from the
amounts included in the financial statements. Information about such judgements
and estimation is contained in the accounting policies and/or notes to the
financial statements, and the key areas are summarized below.

Areas of judgement that have the most
significant effect on the amounts recognized in these consolidated financial
statements are:

| | - | Review of asset carrying values
      and impairment assessment;     
| | - | ---------------------------------------------------------------------
| |   |                                                                      
| | - | Mineral reserve and mineral
      resource estimates;                
| |   |                                                                      
| | - | Determination of useful lives of
      property, plant and equipment;
| |   |                                                                      
| | - | Valuation of inventory;                                              
| |   |                                                                      
| | - | Close down and restoration
      provision;                          
| |   |                                                                      
| | - | Deferred tax assets and
      liabilities; and                       
| |   |                                                                      
| | - | Functional currency.                                                 

Key sources of estimation uncertainty
that have the most significant effect on the amounts recognized in these
consolidated financial statements are:

| | - | Review of asset carrying values
      and impairment assessment;                                    
| | - | ----------------------------------------------------------------------------------------------------
| |   |                                                                                                     
| | - | Mineral reserve and mineral
      resource estimates;                                               
| |   |                                                                                                     
| | - | Valuation of inventory;                                                                             
| |   |                                                                                                     
| | - | Close down and restoration
      provision;                                                         
| |   |                                                                                                     
| | - | Determination of the fair values
      of share-based compensation and of financial instruments; and
| |   |                                                                                                     
| | - | Deferred tax assets and
      liabilities.                                                          

Each of these judgements and estimates
is considered in more detail below.

|F-22 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Review of asset carrying values and impairment assessmentIn accordance with the Company’s accounting policy (note 2 (m)), each asset or cash generating unit is evaluated every reporting period to determine whether
there are any indications of impairment. If any such indication exists, which is often judgmental, a formal estimate of recoverable amount is performed and an impairment loss is recognized to the extent that the carrying amount exceeds the
recoverable amount. The recoverable amount of an asset or cash generating group of assets is measured at the higher of fair value less costs to sell and value in use.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The evaluation of asset carrying values for indications of impairment includes consideration of both external and internal sources of information, including such factors as market and economic conditions, production budgets and
forecasts, and life-of-mine estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The determination of fair value and value in use requires management to make estimates and assumptions about expected production, sales volumes, commodity prices, mineral reserves, operating costs, closure and rehabilitation costs
and future capital expenditures. The estimates and assumptions are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In
such circumstances some or all of the carrying value of the assets may be further impaired or the impairment charge reduced with the impact recorded in the statement of income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Mineral reserve and mineral resource estimatesThe Company estimates its mineral reserves and mineral resources based on information compiled by qualified persons as defined by National Instrument (“NI”) 43-101.
Mineral reserves determined in this way are used in the calculation of depreciation, amortization and impairment charges, and for forecasting the timing of the payment of close down and restoration costs. In assessing the life of a mine for
accounting purposes, mineral resources are only taken into account where there is a high degree of confidence of economic extraction. There are numerous uncertainties inherent in estimating mineral reserves, and assumptions that are valid at the
time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of mineral reserves and may,
ultimately, result in mineral reserve estimates being revised. Such changes in mineral reserves could impact on depreciation and amortization rates, asset carrying values and the provision for close down and restoration costs.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Determination of useful lives of property, plant and equipmentThe Company uses the units-of-production method to depreciate mineral property expenditures, whereby depreciation is calculated using the tonnage of ore
extracted from the mine in the period as a percentage of the total tonnage of ore expected to be extracted in current and future periods based on proven and probable mineral reserves. As noted above there are numerous uncertainties inherent in
estimating ore reserves which are fundamental to this calculation. Other assets are depreciated using the straight-line method, which includes significant management judgement to determine useful lives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Valuation of inventoryStockpiled ore, work in process and finished goods are valued at the lower of cost and NRV. NRV is calculated as the estimated price at the time of sale based on prevailing and future metal prices
less estimated future production costs to convert the inventory into saleable form and associated selling costs. The determination of estimated future sales price, production and selling costs requires significant assumptions that may significantly
impact the stated value of the Company’s inventory.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|F-23 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Close down and restoration provisionClose down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditures are incurred near the end of the life of the mine. The
Company’s accounting policy requires the recognition of such provisions when the obligation occurs. The initial provisions are periodically reviewed during the life of the operation to reflect known developments, e.g. updated cost estimates
and revisions to the estimated lives of operations. Although the ultimate cost to be incurred is uncertain, the Company estimates its costs based on studies using current restoration standards and techniques. The initial closure provisions together
with changes, other than those arising from the unwinding of the discount applied in establishing the net present value of the provision, are capitalized within property plant and equipment and depreciated over the lives of the assets to which they
relate.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The ultimate magnitude of these costs is uncertain, and cost estimates can vary in response to many factors including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other
mine sites, local inflation rates and exchange rates when liabilities are anticipated to be settled in a currency other than the United States dollar. The expected timing of expenditure can also change, for example, in response to changes in mineral
reserves or production rates or economic conditions. As a result there could be significant adjustments to the provision for close down and restoration, which would affect future financial results.                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Determination of the fair value of share-based compensationThe fair value of share options and other forms of share-based compensation granted is computed to determine the relevant charge to the statement of income. In
order to compute this fair value the Company uses option pricing models that require management to make various estimates and assumptions in relation to the expected life of the awards, volatility, risk-free interest rates, and forfeiture rates.
Valuation of financial instrumentsThe Company is required to determine the valuation of its convertible debenture receivable, convertible notes (at inception), and the embedded derivatives within sales contracts. The convertible debenture
  and notes required discounted cash flow analyses and option pricing models that involved various estimates and assumptions, whilst the valuation of the revenue derivatives requires estimates of settlement dates.                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Deferred tax assets and liabilitiesThe determination of the Company’s tax expense for the period and deferred tax assets and liabilities involves significant estimation and judgement by management. In determining
these amounts, management interprets tax legislation in a variety of jurisdictions and makes estimates of the expected timing of the reversal of deferred tax assets and liabilities. Management also makes estimates of future earnings which affect the
extent to which potential future tax benefits may be used. The Company is subject to assessments by various taxation authorities, which may interpret legislation differently. These differences may affect the final amount or the timing of the payment
of taxes. The Company provides for such differences where known based on management’s best estimate of the probable outcome of these matters.                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Functional currencyThe determination of a subsidiary’s functional currency often requires significant judgement where the primary economic environment in which they operate may not be clear. This can have a
significant impact on the consolidated results of the Company based on the foreign currency translation methods described in note 2(d).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|F-24 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)
|-- | ---------------------------------------------------------

v)Future accounting changes

IFRS 9, Financial Instruments
(IFRS 9) was issued in November 2009 and contained requirements for financial
assets. This standard addresses classification and measurement of financial
assets and replaces multiple category and measurement models in IAS 39 for debt
instruments with a new mixed measurement model having only two categories:
amortized cost and FVTPL. IFRS 9 also replaces the models for measuring equity
instruments, and such investments are either recognized at FVTPL or at fair
value through other comprehensive income. Where such equity instruments are
measured at fair value through other comprehensive income, dividends are

recognized in profit or loss to the extent not clearly representing a return of
investment; however, other gains and losses (including impairments) associated
with such instruments remain in accumulated comprehensive income indefinitely.

Requirements for financial liabilities
were added in October 2010 and they largely carried forward existing
requirements in IAS 39, Financial Instruments  Recognition and Measurement,
except that fair value changes due to credit risk for liabilities designated at
fair value through profit and loss would generally be recorded in other
comprehensive income.

This standard is required to be applied
for accounting periods beginning on or after January 1, 2015, with earlier
adoption permitted. The Company has not yet assessed the impact of the standard
or determined whether it will adopt the standard early.

On May 12, 2011, the IASB issued the
following statements:

| | i.   | IFRS 10, Consolidated Financial Statements(IFRS
      10) (see further details below)                                                                                                        
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                
| | ii.  | IFRS 11, Joint Arrangements(IFRS 11) ( see
      further details below)                                                                                                                      
| |      |                                                                                                                                                                                                
| | iii. | IFRS 12, Disclosure of Interests in Other Entities(IFRS 12) (see further details below)                                                                                                      
| |      |                                                                                                                                                                                                
| | iv.  | IAS 27, Separate Financial Statements(revised
      2011) (IAS 27), has been amended for issuance of IFRS 10 while
      maintaining the current guidance for separate financial
  statements
| |      |                                                                                                                                                                                                
| | v.   | IAS 28, Investments in Associates(revised 2011)
      (IAS 28), has been amended for conforming changes based on the issuance
      of IFRS 10 and IFRS 11.                                  

Each of these standards has an
effective date for annual periods beginning on or after January 1, 2013. Early
adoption of any of these standards is permitted only if the other standards are
also adopted early.

| | i. | IFRS 10 establishes control as the single basis for
      consolidation of entities, regardless of the nature of the investee. An
      entity has control over an investee when it has power over it; it is
      exposed, or has the rights, to variable returns from its involvement with
      the investee; and has the ability to use its power over the investee to
      affect those returns. IFRS 10 replaces IAS 27s guidance that addresses
      when and how an investor should prepare consolidated financial statements
      and replaces all of SIC-12. The Company has not yet assessed the impact of
      the standard or determined whether it will adopt the standard
  early.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F-25 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      (Contd)
|-- | ----------------------------------------------------------

| | ii.  | IFRS 11 requires a venturer to classify its interest in a
      joint arrangement as a joint venture or joint operation. A joint operation
      is a joint arrangement whereby the parties that have joint control have
      rights to the assets and the obligations for the liabilities. A joint
      venture is a joint arrangement whereby the parties that have joint control
      of the arrangement have rights to the net assets of the arrangement. The
      determination whether a joint arrangement constitutes a joint operation or
      a joint venture is based on the parties rights and responsibilities under
      the arrangement and thus the existence of a separate legal vehicle is no
      longer the main factor in making such determination. Joint ventures will
      be accounted for using the equity method of accounting thereby eliminating
      the option available under existing IFRS to use either the proportionate
      consolidation method or the equity method. Joint operations are accounted
      for by a venturer by recognizing its share of the assets, liabilities,
      revenues and expenses of the joint operation. The Company has not yet
      assessed the impact of the standard or determined whether it will adopt
      the standard early.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | iii. | IFRS 12 sets out the required disclosures relating to an
      entitys interest in subsidiaries, joint arrangements, associates and
      unconsolidated structured entities. An entity is required to disclose
      information that enable users of its financial statements to assess the
      nature of, and risks associated with, its interests in other entities and
      the effects of those interests on its financial statements. The Company
      has not yet assessed the impact of the standard or determined whether it
      will adopt the standard early.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

IFRS 13 Fair Value Measurement(IFRS 13) was issued on May 12, 2011 and establishes a single framework
for measuring fair value where it is required by other standards. IFRS 13
applies to all transactions (whether financial or non-financial) for which IFRS
requires or permits fair value measurements, with the exception of share-based
payment transactions accounted for under IFRS 2 Share-based Payment and
leasing transactions within the scope of IAS 12 Leases, and measurements
that have some similarities to fair value but are not fair value such as net
realisable value under IAS 2 Inventories or value in use under IAS 36
Impairment of assets. Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (i.e. an exit
price).

This standard is required to be applied
for accounting periods beginning on or after January 1, 2013, with earlier
adoption permitted. The Company has not yet assessed the impact of the standard
or determined whether it will adopt the standard early.

On June 16, 2011, the IASB issued
Presentation of Items of Other Comprehensive Income (amendments to IAS 1,
Presentation of Financial Statements). The amendments require the
grouping of items presented in other comprehensive income into items that might
be reclassified to profit or loss in subsequent periods and items that will not
be reclassified to profit or loss in subsequent periods. The amendments are
effective for annual periods beginning on or after July 1, 2012, with full
retrospective application. The adoption of this standard will impact the
presentation of the statement of other comprehensive income from the date of
adoption; the Company has not determined whether it will adopt the standard
early.

|F-26 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In October 2011 the IASB issued IFRIC 20 Stripping
      Costs in the Production Phase of a Surface Mine(IFRIC 20). This
      interpretation provides guidance on the accounting for the costs of
      stripping activity in the production phase when two benefits accrue to the
      entity: usable ore that can be used to produce inventory and improved
      access to further quantities of material that will be mined in future
      periods. IFRIC 20 is applicable for annual periods beginning on or after
      January 1, 2013 with early adoption permitted. The Company has not yet
      assessed the impact of the standard or determined whether it will adopt
      the standard early.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3. | CASH AND CASH
EQUIVALENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                              |  | December 31, |  |  | December 31, |  |  | January 1, | 
| | ---------------------------- |  | ------------ |  |  | ------------ |  |  | ---------- | 
| |                              |  | 2011         |  |  | 2010         |  |  | 2010       | 
| |                              |  | $            |  |  | $            |  |  | $          | 
| | Cash and bank balances       |  | 94,711       |  |  | 61,663       |  |  | 21,659     | 
| | Short-term
      investments |  | 234,344      |  |  | 170,648      |  |  | 5,000      | 
| |                              |  | 329,055      |  |  | 232,311      |  |  | 26,659     | 

|4. | TRADE AND OTHER
RECEIVABLES
|-- | ---------------------------

| |                          |  | December 31, |  |  | December 31, |  |  | January 1, | 
| | ------------------------ |  | ------------ |  |  | ------------ |  |  | ---------- | 
| |                          |  | 2011         |  |  | 2010         |  |  | 2010       | 
| |                          |  | $            |  |  | $            |  |  | $          | 
| | Trade receivables        |  | -            |  |  | 15,409       |  |  | 3,335      | 
| | Tax receivables          |  | 7,040        |  |  | 10,989       |  |  | 1,018      | 
| | Prepayments and deposits |  | 6,656        |  |  | 5,779        |  |  | 2,013      | 
| | Other receivables        |  | 5,705        |  |  | 3,739        |  |  | 1,885      | 
| |                          |  | 19,401       |  |  | 35,916       |  |  | 8,251      | 

The Company expects full recovery of
the amounts outstanding and therefore no allowance has been recorded against
these receivables. No receivables are past due and all are expected to be
settled within twelve months.

Credit risk has been further discussed
in note 23(b). The Company did not hold any collateral for any receivable
amounts outstanding at December 31, 2011, December 31, 2010, or January 1, 2010.

|F-27 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|5. | OTHER ASSETS
|-- | ------------

| |                                      |  | December 31, 2011 |  |  | December 31, 2010 |  |  | January 1, 2010 | 
| | ------------------------------------ |  | ----------------- |  |  | ----------------- |  |  | --------------- | 
| |                                      |  | Non-current       |  |  | Current           |  |  | **Non-current** | 
| |                                      |  | $                 |  |  | $                 |  |  | $               | 
| | Financial assets:                    |  |                   |  |  |                   |  |  |                 | 
| | Restricted cash (a)                  |  | 1,768             |  |  | -                 |  |  | 2,071           | 
| | Marketable securities (b)            |  | -                 |  |  | 33,539            |  |  | -               | 
| | Convertible debenture receivable (c) |  | -                 |  |  | -                 |  |  | 7,180           | 
| |                                      |  | 1,768             |  |  | 33,539            |  |  | 9,251           | 
| | Other assets:                        |  |                   |  |  |                   |  |  |                 | 
| | Long-term inventory
      (note 6)   |  | 6,454             |  |  | -                 |  |  | -               | 
| |                                      |  | 8,222             |  |  | 33,539            |  |  | 9,251           | 

| | (a) | The Company has security deposits with various government
      agencies in relation to its close down and restoration provisions. $25,000
      (December 31, 2010 - $328,000; January 1, 2010 - $191,000) is in the form
      of cash deposits and $1,743,000 (December 31, 2010 - $1,743,000; January
      1, 2010 - $1,743,000) is security for a reclamation bond.                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (b) | Marketable securities cost at December 31, 2011 was
      $29,793,000 (December 31, 2010 - $8,604,000; January 1, 2010 -
      $7,732,000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (c) | The Company received a $10,060,000 (C$10,000,000)
      convertible debenture with a coupon rate of 3% per annum from Aurcana
      Corporation (Aurcana) as part of the consideration received for the sale
      of the Shafter Silver property in 2008. The convertible debenture was
      repayable on July 15, 2011, and the Company had the option to convert any
      portion of the principal amount into Aurcana common shares at a deemed
      conversion price of C$1.52 per share (up to 6,600,000 shares) until that
      date. In 2009, the coupon rate on the debenture was revised from 3% per
      year to 1.5% in the first year and 4% per year thereafter, which resulted
      in an impairment of $2,002,000 for the year ended December 31,
  2009.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | On March 25, 2011, the terms of the convertible debenture
      receivable were renegotiated so that Aurcana was required to pay
      C$7,000,000 on July 15, 2011 and the remaining C$3,000,000 in quarterly
      instalments until July 15, 2012. The interest rate for the remainder of
      the arrangement was increased to 9%. This resulted in a recovery of the
      previous impairment of $2,400,000, recorded within other income (note 19).
      The Company retained the option to convert any portion of the remaining
      principal amount into Aurcana common shares at the deemed conversion price
      of C$1.52 per share (up to 1,980,000 shares) until July 15,
2012.                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company settled the debenture receivable in full on
      December 22, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Prior to being settled the Company presented the note
      receivable separately from the conversion feature. The Company estimated
      the carrying value of the note receivable component using a discounted
      cash flow model, and estimated the fair value of the conversion feature
      using the Black-Scholes model. The value of the conversion feature was
      remeasured at each reporting date until settlement, with changes in the
      fair value recorded in other income (other expenses) (note
  19).                                                                                                                                                                                                                                               

|F-28 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|5. | OTHER ASSETS (Contd)
|-- | ---------------------

Movement in the convertible debenture
receivable was as follows:

December 31,
    
    
    December 31,2011
    
    
    2010$
    
    
    $Balance, beginning of year
    
    7,366
    
    
    6,258Interest accrued
    
    1,158
    
    
    1,253Interest received
    
    (658
    )
    
    (412
    )Principal received
    
    (10,060
    )
    
    -Fair value of conversion feature adjustment
    
    (386
    )
    
    (102
    )Impairment reversal
    
    2,400
    
    
    -Foreign exchange impact
    
    180
    
    
    369Balance, end of
      year
    
    -
    
    
    7,366


The components of the convertible
debenture receivable were as follows:

| |                                  |  | December 31, |  |  | December 31, |  |  | January 1, | 
| | -------------------------------- |  | ------------ |  |  | ------------ |  |  | ---------- | 
| |                                  |  | 2011         |  |  | 2010         |  |  | 2010       | 
| |                                  |  | $            |  |  | $            |  |  | $          | 
| | Accrued interest                 |  | -            |  |  | 186          |  |  | 177        | 
| | Fair value of conversion feature |  | -            |  |  | 386          |  |  | 475        | 
| | Debt portion                     |  | -            |  |  | 6,794        |  |  | 5,606      | 
| | Total                            |  | -            |  |  | 7,366        |  |  | 6,258      | 

For the year ended December 31, 2010
and as at January 1, 2010, the fair value of the conversion feature was
determined using the Black-Scholes valuation model under the following
assumptions:

December 31,
    
    
    January 1,2010
    
    
    2010Expected dividend yield (%)
    
    -
    
    
    -Average risk-free interest rate (%)
    
    1.68
    
    
    1.43Expected life (years)
    
    0.5
    
    
    1.5Expected volatility (%)
    
    89.7
    
    
    119.8


|F-29 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|6. | INVENTORY
|-- | ---------

| |                              |  | December 31, |  |  | December 31, |  |  | January 1, | 
| | ---------------------------- |  | ------------ |  |  | ------------ |  |  | ---------- | 
| |                              |  | 2011         |  |  | 2010         |  |  | 2010       | 
| |                              |  | $            |  |  | $            |  |  | $          | 
| | Current:                     |  |              |  |  |              |  |  |            | 
| | Finished goods               |  | 44,524       |  |  | 6,919        |  |  | 6,141      | 
| | Stockpiled ore               |  | 36,414       |  |  | 26,327       |  |  | 9,310      | 
| | Materials and
      supplies |  | 13,743       |  |  | 6,930        |  |  | 5,114      | 
| |                              |  | 94,681       |  |  | 40,176       |  |  | 20,565     | 
| | Non-current:                 |  |              |  |  |              |  |  |            | 
| | Stockpiled ore               |  | 6,454        |  |  | -            |  |  | -          | 
| |                              |  | 101,135      |  |  | 40,176       |  |  | 20,565     | 

The Company holds low grade stockpiled
ore that will be processed at the end of the life of the mine. The NRV is
computed using long term metal prices and in 2011 this resulted in the write
down in value noted below. Inventory held at NRV at December 31, 2011 was
$6,454,000 (December 31, 2010 - nil; January 1, 2010 - $9,115,000).

For the year ended December 31, 2011, a
NRV write-down of inventory of $1,625,000 (2010 - $6,700,000) was included in
the statement of income as a cost of sale.

|F-30 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|7. | PROPERTY, PLANT AND EQUIPMENT                            
|-- | ---------------------------------------------------------
|   |                                                          
|   | Property, plant and equipment comprise the
    following:

December 31, 2011Plant and
      
      
      Mineral
      
      
      Assets
      
      
      **Exploration and**
      
      
      Totalequipment
      
      
      properties
      
      
      under
      
      
      developmentconstruction
      
      
      expenditure(note 7(a))CostBalance, January 1, 2011
      
      263,305
      
      
      76,209
      
      
      8,695
      
      
      190,909
      
      
      539,118Additions
      
      3,611
      
      
      33,827
      
      
      27,751
      
      
      33,494
      
      
      98,683Disposals
      
      (4,569
      )
      
      (256
      )
      
      -
      
      
      (19,623
      )
      
      (24,448
      )Costs written off
      
      -
      
      
      -
      
      
      -
      
      
      (4,624
      )
      
      (4,624
      )Transfers
      
      18,333
      
      
      -
      
      
      (18,333
      )
      
      -
      
      
      -Balance, end of period
      
      280,680
      
      
      109,780
      
      
      18,113
      
      
      200,156
      
      
      608,729Accumulated depreciationBalance, January 1, 2011
      
      (35,450
      )
      
      (4,036
      )
      
      -
      
      
      -
      
      
      (39,486
      )Charge for the year
      
      (25,869
      )
      
      (3,513
      )
      
      -
      
      
      -
      
      
      (29,382
      )Disposals
      
      4,250
      
      
      -
      
      
      -
      
      
      -
      
      
      4,250Balance, end of period
      
      (57,069
      )
      
      (7,549
      )
      
      -
      
      
      -
      
      
      (64,618
      )Net book value at December 31, 2011
      
      223,611
      
      
      102,231
      
      
      18,113
      
      
      200,156
      
      
      544,111


December 31, 2010Plant and
      
      
      Mineral
      
      
      Assets
      
      
      **Exploration and**
      
      
      Totalequipment
      
      
      properties
      
      
      under
      
      
      developmentconstruction
      
      
      expenditure(note 7(a))CostBalance, January 1, 2010
      
      250,085
      
      
      76,841
      
      
      8,015
      
      
      179,445
      
      
      514,386Additions
      
      7,644
      
      
      5,017
      
      
      15,806
      
      
      55,942
      
      
      84,409Disposals
      
      (8,455
      )
      
      (5,649
      )
      
      (1,095
      )
      
      (44,478
      )
      
      (59,677
      )Transfers
      
      14,031
      
      
      -
      
      
      (14,031
      )
      
      -
      
      
      -Balance, end of period
      
      263,305
      
      
      76,209
      
      
      8,695
      
      
      190,909
      
      
      539,118Accumulated depreciationBalance, January 1, 2010
      
      (16,944
      )
      
      (618
      )
      
      -
      
      
      -
      
      
      (17,562
      )Charge for the year
      
      (19,370
      )
      
      (3,418
      )
      
      -
      
      
      -
      
      
      (22,788
      )Disposals
      
      864

      
      
      -
      
      
      -
      
      
      -
      
      
      864Balance, end of period
      
      (35,450
      )
      
      (4,036
      )
      
      -
      
      
      -
      
      
      (39,486
      )Net book value at December 31, 2010
      
      227,855
      
      
      72,173
      
      
      8,695
      
      
      190,909
      
      
      499,632


No items of property, plant and
equipment have been pledged as security for liabilities.

During the year ended December 31,
2011, the Company identified certain indicators that the mineral property asset
constituting the Pirquitas mine, the CGU, may have been impaired. The indicators
included a reduction in the mineral reserves and resources and an increase in
the close down and restoration provision (note 13) which resulted in an increase
to mineral properties. The Company therefore assessed the recoverable amount of
this CGU and concluded that it exceeded the carrying value, so no impairment was
recorded. The recoverable amount was estimated using a discounted cash flow
approach based upon the most recent life-of-mine plan, and an estimated silver
price based on market consensus, and a discount rate of 9%.

|F-31 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|7. | PROPERTY, PLANT AND EQUIPMENT
  (Contd)
|-- | ----------------------------------------

|(a) | Exploration and development expenditures on mineral
      properties were as follows:
|--- | -------------------------------------------------------------------------------------

| |                                 |  |             |  |  |                 |  |  | December 31, 2011 |  |  | December 31, 2010 | 
| | ------------------------------- |  | ----------- |  |  | --------------- |  |  | ----------------- |  |  | ----------------- | 
| |                                 |  | Acquisition |  |  | **Exploration** |  |  | Total             |  |  | Total             | 
| |                                 |  | costs       |  |  | costs           |  |  |                   |  |  |                   | 
| |                                 |  | $           |  |  | $               |  |  | $                 |  |  | $                 | 
| | Exploration projects            |  |             |  |  |                 |  |  |                   |  |  |                   | 
| | Bowdens, Australia (i)          |  | -           |  |  | -               |  |  | -                 |  |  | 19,685            | 
| | Challacollo, Chile              |  | 2,990       |  |  | 5,668           |  |  | 8,658             |  |  | 9,206             | 
| | San Agustin, Mexico             |  | 101         |  |  | 2,150           |  |  | 2,251             |  |  | 1,654             | 
| | Veta Colorada, Mexico           |  | 3,851       |  |  | 1,025           |  |  | 4,876             |  |  | 4,845             | 
| | Nazas, Mexico (ii)              |  | 565         |  |  | 511             |  |  | 1,076             |  |  | 1,423             | 
| | Berenguela, Peru                |  | 10,645      |  |  | 6,167           |  |  | 16,812            |  |  | 16,480            | 
| | Candelaria, United States       |  | 2,434       |  |  | 3,874           |  |  | 6,308             |  |  | 6,022             | 
| | Maverick Springs, United States |  | 565         |  |  | 2,125           |  |  | 2,690             |  |  | 2,628             | 
| | Other exploration projects (iv) |  | 2,907       |  |  | 3,405           |  |  | 6,312             |  |  | 5,743             | 
| |                                 |  |             |  |  |                 |  |  |                   |  |  |                   | 
| | Development projects            |  |             |  |  |                 |  |  |                   |  |  |                   | 
| | Diablillos, Argentina           |  | 4,530       |  |  | 16,836          |  |  | 21,366            |  |  | 18,765            | 
| | Pitarrilla, Mexico              |  | 17,806      |  |  | 78,194          |  |  | 96,000            |  |  | 77,796            | 
| | San Luis, Peru
      (iii)      |  | 668         |  |  | 33,139          |  |  | 33,807            |  |  | 26,662            | 
| |                                 |  | 47,062      |  |  | 153,094         |  |  | 200,156           |  |  | 190,909           | 

|(i)   | On September 23, 2011, the Company completed the sale of
      its 100% interest in the Bowdens project located in Australia to Kingsgate
      Consolidated Limited (Kingsgate). Under the terms of the agreement, the
      Company received total consideration of $70,655,000. The consideration
      comprised cash payments of $45,090,000 (of which $40,045,000 was received
      during the year and $5,045,000 is due to be paid on June 30, 2012), and
      3,440,367 common shares of Kingsgate with a fair value of $25,565,000. The
      total gain recorded on the sale of this mineral property was $51,359,000
      before tax expense of $16,058,000.                                                                                                                                                                                                                                                                                                                                                         
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(ii)  | During the year ended December 31, 2011, the Company
      elected not to continue its option on the Navidad claims group, which
      constitute one area of the Nazas property. As a result the Company wrote
      off accumulated costs of $4,514,000, reflected in other expenses (note
      19).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(iii) | On July 28, 2011, the Company completed the 100%
      acquisition of the San Luis property in Peru (70% interest held at
      December 31, 2010) from Esperanza Resources Corp. (Esperanza). The
      Company paid consideration of $17,865,000 in cash and transferred to
      Esperanza the 6,459,000 shares of Esperanza that it owned. In addition,
      under the terms of the agreement the Company will provide a 1% net smelter
      return royalty (NSR) on future production. The total fair value of the
      consideration paid to acquire the 30% interest held by Esperanza was
      $28,694,000, which includes transaction costs of $306,000. The carrying
      amount of the non-controlling interest in the San Luis project on the date
      of acquisition was $496,000. This transaction did not result in a change
      of control and therefore the Company recognized a decrease in
      non-controlling interest of $496,000 and a decrease in other reserves of
      $28,198,000 (note 16).

|F-32 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|7. | PROPERTY, PLANT AND EQUIPMENT
  (Contd)
|-- | ----------------------------------------

|(iv) | In February 2010 the Company completed the sale of its
      100% interest in the Silvertip property located in British Columbia,
      Canada to Silvercorp Metals Inc. (Silvercorp). Under the terms of the
      agreement, Silvercorp paid total consideration of $14,957,000, comprising
      cash of $7,125,000 and 1,200,000 common shares of Silvercorp with a fair
      value of $7,832,000, for an after-tax gain of
  $13,073,000.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | INVESTMENT IN ASSOCIATE                           
|-- | --------------------------------------------------
|   |                                                   
|   | Investment in associate comprises the
  following:

December 31, 2011
    
    
    December 31, 2010$
    
    
    $Common shares of Pretium
      Resources Inc.
    
    136,342
    
    
    187,202Convertible note from Pretium Resources Inc.
    
    -
    
    
    39,069136,342
    
    
    226,271


Investment in associate reflects
activity for the years as follows:

December 31, 2011
    
    
    December 31, 2010$
    
    
    $Carrying amount, beginning of
      year
    
    226,271
    
    
    -Acquisition
    
    -
    
    
    226,348Partial disposition
    
    (82,138
    )
    
    -Dilution
    
    1,803
    
    
    -Share of net loss
    
    (6,078
    )
    
    (77
    )Share of other comprehensive loss
    
    (3,516
    )
    
    -Carrying amount, end of year
    
    136,342
    
    
    226,271


On December 21, 2010, the Company
completed the sale of its 100% interest in the Snowfield and Brucejack
properties located in British Columbia, Canada, to Pretium Resources Inc.
(Pretium). Total consideration was $442,260,000, which comprised 32,537,833
Pretium common shares at their fair value of $191,869,000, cash of $211,322,000
(before underwriters fees of $12,427,000), and a non-interest-bearing
convertible promissory note in the principal amount of $39,069,000. The Company
recognized a gain on sale of mineral properties from this transaction of
$388,761,000 net of selling costs of $5,922,000 (after-tax gain $360,612,000).
The Companys ownership interest in Pretium as a result of this transaction was
41.27% .

|F-33 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|8. | INVESTMENT IN ASSOCIATE (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | At December 31, 2010, the convertible note was included
      in the carrying value of the investment in Pretium as this most accurately
      reflected the substance of the arrangement. The note was partially repaid
      on January 6, 2011, whereby the Company received gross proceeds of
      $18,083,000. On January 31, 2011, the balance of the note in the amount of
      $20,986,000 was converted into 3,625,500 common shares of Pretium at their
      fair value of $22,946,000, resulting in a $1,092,000 gain on settlement.
      The Company recognized transaction costs of $1,631,000 in the statement of
      income for the year ended December 31, 2011. The transaction costs and the
      gain on settlement of the note are recognized within the gain on sale of
      mineral property in the statement of income, as they are interrelated with
      the original sale transaction for the Snowfield and Brucejack
      properties.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On April 8, 2011, the Company sold 11,500,000 of its
      Pretium common shares by completing a secondary offering of 11,500,000
      units at C$10.00 per unit. Each unit consisted of one Pretium common share
      and half of a warrant to acquire an additional Pretium common share for
      C$12.50 within twelve months. The Company received cash proceeds from this
      offering of $120,117,000 before transaction costs of $7,734,000. As a
      result of this transaction, the Company recognized a gain on partial
      disposal of its associate of $38,776,000 (an after-tax gain of
      $34,687,000). The warrants issued in the unit offering were recognized as
      a liability and are recorded at fair value (note 12). Following the
      closing of the offering, the Companys ownership interest in Pretium was
      28.86%.                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On July 15, 2011, Pretium completed a private placement
      of 1,390,000 flow-through common shares, in which the Company elected not
      to participate. This share issuance by Pretium resulted in a dilution of
      the Companys interest (to 28.39%) and a dilution gain of $1,803,000,
      which was recognized in other income (note 19).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The fair value of Pretium's common shares at December 31,
      2011, excluding potential selling costs, according to published price
      quotations was $303,359,000 (December 31, 2010 - $209,040,000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Summarized financial information for Pretium is as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

December 31, 2011
    
    
    December 31, 2010$
    
      
    $Assets
    
    506,167
    
    
    499,158Liabilities
    
    (7,350
    )
    
    (40,876
    )Revenues
    
    -
    
    
    -Net
      loss
    
    (17,573
    )
    
    (14,127
    )


Subsequent to the reporting date, on
February 17, 2012, Pretium completed a private placement of 1,250,000
flow-through common shares, in which the Company elected not to participate.
This share issuance by Pretium resulted in a dilution of the Companys interest
to 27.99% and a dilution gain of $4,260,000.

|F-34 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|9. | CURRENT AND DEFERRED INCOME TAX                                                                          
|-- | ---------------------------------------------------------------------------------------------------------
|   |                                                                                                          
|   | Significant components of income tax expense recognized
      in the statements of income are as follows:

| |                                                         |  | December 31, |   |  | December 31, | 
| | ------------------------------------------------------- |  | ------------ | - |  | ------------ | 
| |                                                         |  | 2011         |   |  | 2010         | 
| |                                                         |  | $            |   |  | $            | 
| | Current tax:                                            |  |              |   |  |              | 
| | Current tax on taxable income of the current
      year |  | 36,347       |   |  | 2,599        | 
| | Deferred tax:                                           |  |              |   |  |              | 
| | Origination and reversal of temporary differences       |  | (4,950       | ) |  | 29,594       | 
| | Total tax expense                                       |  | 31,397       |   |  | 32,193       | 

The tax expense on the Companys income
before tax is reconciled to the amount that would arise using the Canadian tax
rate applicable to income of the consolidated entities as follows:

| |                                                                         |  | December 31, |   |  | December 31, |  
| | ----------------------------------------------------------------------- |  | ------------ | - |  | ------------ | -
| |                                                                         |  | 2011         |   |  | 2010         |  
| |                                                                         |  |              |   |  |              |  
| | Statutory tax rate                                                      |  | 26.50%       |   |  | 28.50%       |  
| |                                                                         |  |              |   |  |              |  
| |                                                                         |  | $            |   |  | $            |  
| |                                                                         |  |              |   |  |              |  
| | Income for the year before taxes                                        |  | 111,525      |   |  | 370,648      |  
| |                                                                         |  |              |   |  |              |  
| | Provision for income taxes based on
      statutory rates               |  | 29,554       |   |  | 105,634      |  
| | Differences in foreign and future tax rates                             |  | 5,844        |   |  | (2,893       | )
| | Foreign exchange                                                        |  | 4,349        |   |  | 489          |  
| | Partial sale of associate and sale of mineral properties
      taxed at |  |              |   |  |              |  
| | capital gains rates                                                     |  | (4,522       | ) |  | (60,324      | )
| | Tax benefits (not
      recognized) and other                           |  | (3,828       | ) |  | (10,713      | )
| |                                                                         |  | 31,397       |   |  | 32,193       |  

The applicable tax rate in Canada for
the year ended December 31, 2011 was 26.5%, which reflects the legislated
provincial tax rate decrease from the prior year of 28.5% .

|F-35 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|9. | CURRENT AND DEFERRED INCOME TAX (Contd)                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                       
|   | The company recognizes certain deferred tax assets and
      liabilities relating to temporary differences as
follows:

| |                                             |  | December 31, |   |  | December 31, |   |  | January 1, |  
| | ------------------------------------------- |  | ------------ | - |  | ------------ | - |  | ---------- | -
| |                                             |  | 2011         |   |  | 2010         |   |  | 2010       |  
| |                                             |  | $            |   |  | $            |   |  | $          |  
| | Deferred tax assets                         |  |              |   |  |              |   |  |            |  
| | Property, plant and equipment               |  | 10,853       |   |  | -            |   |  | -          |  
| | Foreign exchange losses                     |  | 3,554        |   |  | -            |   |  | -          |  
| | Inventory                                   |  | 2,290        |   |  | -            |   |  | -          |  
| | Other                                       |  | 4,894        |   |  | -            |   |  | -          |  
| | Total deferred tax
      assets             |  | 21,591       |   |  | -            |   |  | -          |  
| |                                             |  |              |   |  |              |   |  |            |  
| | Deferred tax liabilities                    |  |              |   |  |              |   |  |            |  
| | Mineral properties                          |  | (28,111      | ) |  | (7,037       | ) |  | (1,949     | )
| | Marketable
      securities and investments |  | (13,220      | ) |  | (19,728      | ) |  | -          |  
| | Total deferred tax liabilities              |  | (41,331      | ) |  | (26,765      | ) |  | (1,949     | )
| |                                             |  |              |   |  |              |   |  |            |  
| | Net deferred tax liabilities                |  | (19,740      | ) |  | (26,765      | ) |  | (1,949     | )

The analysis of deferred tax assets and
deferred tax liabilities is as follows:

| |                                                                           |  | December 31, |   |  | December 31, |  
| | ------------------------------------------------------------------------- |  | ------------ | - |  | ------------ | -
| |                                                                           |  | 2011         |   |  | 2010         |  
| |                                                                           |  | $            |   |  | $            |  
| | Deferred tax assets                                                       |  |              |   |  |              |  
| | Deferred tax assets to be recovered after more than 12
      months       |  | 15,047       |   |  | -            |  
| | Deferred tax assets to be recovered within 12 months                      |  | 6,544        |   |  | -            |  
| | Total deferred tax
      assets                                           |  | 21,591       |   |  | -            |  
| |                                                                           |  |              |   |  |              |  
| | Deferred tax liabilities                                                  |  |              |   |  |              |  
| | Deferred tax liabilities to be discharged
      after more than 12 months |  | (36,547      | ) |  | (19,566      | )
| | Deferred tax
      liabilities to be discharged within 12 months          |  | (4,784       | ) |  | (7,199       | )
| | Total deferred tax liabilities                                            |  | (41,331      | ) |  | (26,765      | )
| |                                                                           |  |              |   |  |              |  
| | Net deferred tax liabilities                                              |  | (19,740      | ) |  | (26,765      | )

|F-36 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|9. | CURRENT AND DEFERRED INCOME TAX (Contd)                                           
|-- | -----------------------------------------------------------------------------------
|   |                                                                                    
|   | The movement in the net deferred income tax liability
      account was as follows:

| |                                                                               |  | December 31, |   |  | December 31, |  
| | ----------------------------------------------------------------------------- |  | ------------ | - |  | ------------ | -
| |                                                                               |  | 2011         |   |  | 2010         |  
| |                                                                               |  | $            |   |  | $            |  
| |                                                                               |  |              |   |  |              |  
| | Balance, beginning of year                                                    |  | (26,765      | ) |  | (1,949       | )
| | Recovered from (charged to) the statement of income                           |  | 4,950        |   |  | (29,594      | )
| | (Tax charge)/credit related to components
      of other comprehensive income |  | 1,982        |   |  | (1,833       | )
| | Recovery to share capital                                                     |  | -            |   |  | 5,109        |  
| | Exchange differences                                                          |  | 93           |   |  | 1,502        |  
| | Balance, end of
      year                                                    |  | (19,740      | ) |  | (26,765      | )

The following items were charged
(credited) to the statement of income during the year:

| |                                       |  | December 31, |   |  | December 31, |  
| | ------------------------------------- |  | ------------ | - |  | ------------ | -
| |                                       |  | 2011         |   |  | 2010         |  
| |                                       |  | $            |   |  | $            |  
| |                                       |  |              |   |  |              |  
| | Property plant and equipment          |  | (10,853      | ) |  | 199          |  
| | Capital and non capital losses        |  | 95           |   |  | 1,280        |  
| | Foreign resource pools                |  | (283         | ) |  | -            |  
| | Share issuance costs                  |  | 1,275        |   |  | -            |  
| | Marketable securities and investments |  | (12,571      | ) |  | 31,753       |  
| | Other                                 |  | (3,688       | ) |  | (8,526       | )
| | Mineral properties                    |  | 21,075       |   |  | 4,888        |  
| |                                       |  | (4,950       | ) |  | 29,594       |  

The Company also has the following
balances in respect of which no deferred tax asset was recognized:

| |                                |  | December 31, |  |  | December 31, | 
| | ------------------------------ |  | ------------ |  |  | ------------ | 
| |                                |  | 2011         |  |  | 2010         | 
| |                                |  | $            |  |  | $            | 
| |                                |  |              |  |  |              | 
| | Property plant and equipment   |  | 3,155        |  |  | 21,898       | 
| | Capital and non capital losses |  | 60           |  |  | 373          | 
| | Foreign resource pools         |  | 316          |  |  | 618          | 
| | Other                          |  | 1,875        |  |  | 3,572        | 
| |                                |  | 5,406        |  |  | 26,461       | 

The company has an unrecognised
deferred tax asset in respect of potential foreign tax credits that may be used
to offset taxes paid in Argentina. These have not been recognised due to
measurement uncertainty over the extent and timing of any potential benefit. If
recognized this will create a recovery of income tax expense in that period.

|F-37 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|9. | CURRENT AND DEFERRED INCOME TAX (Contd)                                                                                                                                                                                                                                                                        
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                 
|   | At December 31, 2011, the Company had the following
      estimated tax operating losses available to reduce future taxable income.
      The losses expire at various dates and amounts between 2012 and 2031, with
      the exception of tax losses incurred in Chile which are available
      indefinitely:

$Argentina
    
    7,153Chile
    
    355Mexico
    
    59,692Peru
    
    48U.S.A.
    
    2,006


|10. | VALUE ADDED TAX
RECEIVABLE
|--- | --------------------------

December 31,
    
    
    December 31,
    
    
    January 1,2011
    
    
    2010
    
    
    2010$
    
    
    $
    
    
    $Current
    
    1,482
    
    
    901
    
    
    19Non-current
    
    89,160
    
    
    70,782
    
    
    54,09490,642
    
    
    71,683
    
    
    54,113


In countries where value added tax
(VAT) has been paid but recoverability is uncertain, the VAT payments have
either been deferred within mineral property costs, or expensed if related to
general mineral exploration. If the Company ultimately recovers the amounts that
have been deferred, the amount received will be applied to reduce mineral
property costs. Current VAT is presented within current tax receivables (note
4).

VAT paid in Argentina in relation to
the Pirquitas mine is recoverable under Argentine law once the mine reaches the
production stage. Production commenced at the mine on December 1, 2009, and as a
result the Company has applied to the Argentine government to recover the
applicable VAT. The Company believes that the balance is fully recoverable and
has not provided an allowance.

|F-38 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|11. | TRADE AND OTHER
PAYABLES
|--- | ------------------------

| |                                                                         |  | December 31 |  |  | December 31 |  |  | January 1 | 
| | ----------------------------------------------------------------------- |  | ----------- |  |  | ----------- |  |  | --------- | 
| |                                                                         |  | 2011        |  |  | 2010        |  |  | 2010      | 
| |                                                                         |  | $           |  |  | $           |  |  | $         | 
| |                                                                         |  |             |  |  |             |  |  |           | 
| | Trade payables                                                          |  | 12,648      |  |  | 9,683       |  |  | 28,124    | 
| | Accrued liabilities                                                     |  | 32,174      |  |  | 22,449      |  |  | 20,141    | 
| | Current portion of close down and
      restoration provision (note 13) |  | 1,125       |  |  | 955         |  |  | 341       | 
| | Accrued interest
      on convertible notes (note 14)                   |  | 2,076       |  |  | 2,076       |  |  | 2,076     | 
| |                                                                         |  | 48,023      |  |  | 35,163      |  |  | 50,682    | 

All trade and other payables are
expected to be settled within twelve months.

|12. | WARRANT LIABILITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | As part of its offering of Pretium shares on April 8,
      2011 (note 8), the Company issued 5,750,000 Pretium common share purchase
      warrants (the Pretium warrants). Each Pretium warrant is exercisable at
      a price of C$12.50 until April 7, 2012. Upon issuance of the Pretium
      warrants the Company recognized a liability of $7,500,000 in the statement
      of financial position and recognized transaction costs of $433,000 in the
      statement of income. The liability is recorded at FVTPL. The trading price
      of the Pretium warrants at December 31, 2011 was C$1.25. This price was
      unchanged from the trading price at inception, and therefore, there was no
      remeasurement effect on the Consolidated Statement of Income for the year
      ended December 31, 2011 other than foreign exchange.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|13. | CLOSE DOWN AND RESTORATION
  PROVISION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

December 31,
    
    
    December 31,2011
    
    
    2010$
    
    
    $Balance, beginning of year
    
    13,626
    
    
    10,643Liabilities settled during
      the year
    
    (251
    )
    
    (223
    )Accretion expense
    
    1,596
    
    
    1,798Foreign exchange gain
    
    (1,020
    )
    
    (55
    )Revisions and new estimated cash flows
    
    33,827
    
    
    1,463Balance, end of year
    
    47,778
    
    
    13,626Less: current portion of close down and restoration
      provision in
    
    (1,125
    )
    
    (955
    )Long-term close down and restoration provision
    
    46,653
    
    
    12,671


|F-39 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|13. | CLOSE DOWN AND RESTORATION PROVISION
    (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The Companys close down and restoration provision
      relates to the restoration and closure of the Companys mining operations
      and projects under development (note 7). The provision is initially
      recorded at net present value, and subsequently re-measured at each
      reporting period. During the fourth quarter of the year ended December 31,
      2011, the Company recorded a change in its estimate for close down and
      restoration from the preliminary findings of a mine closure plan for its
      Pirquitas mine in Argentina, that is scheduled for completion in 2012.
      This is a prospective change in estimate and had no impact on the
      Consolidated Statement of Income for the year ended December 31, 2011.
      There is considerable measurement uncertainty with a provision of this
      nature (note 2(u)) from the timing of cash flows, inflationary environment
      and impact of exchange rates.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The provision is calculated as the present value of
      estimated future net cash outflows based on the following key
      assumptions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | - | Total undiscounted value of
      estimated future cash outflows: $100,297,000 (2010 - $26,642,000);
| | - | ----------------------------------------------------------------------------------------------------
| | - | Discount interest rate: 9.75%
      (2010 - 11%); and                                               
| | - | Settlement of obligations
      expected to occur over the next 12 years.                           

|14. | CONVERTIBLE NOTES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In February 2008, the Company sold $138,000,000 in senior
      convertible unsecured notes (Notes) for net proceeds of $132,754,000
      after payment of commissions and expenses related to the offering. The
      unsecured Notes mature on March 1, 2028 and bear an interest rate of 4.5%
      per annum, payable semi-annually. The Notes will be convertible into
      common shares of the Company at a fixed conversion rate, subject to
      certain anti-dilution adjustments, only in the following
  events:

| | a) | during specified consecutive trading periods, if the
      market price of our common shares exceeds 130% of the conversion price of
      the Notes;                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | the trading price of the Notes, per $1,000 principal
      amount, falls to 97% or less of the amount equal to the then prevailing
      price of our common shares, multiplied by the applicable conversion
      rate;
| | c) | the Notes are called for redemption;                                                                                                                                                                                    
| | d) | upon the occurrence of specified corporate transactions;
      or                                                                                                                                                       
| | e) | during specified periods in early 2013 and
  2028.                                                                                                                                                                      

On conversion, holders of the Notes
will receive cash and, if applicable, common shares (or, at the Companys
election, in lieu of such common shares, cash or any combination of cash and
common shares). In addition, if certain fundamental changes occur to the
Company, holders of the Notes may be entitled to an increased conversion rate.
The principal amount will be repaid in cash and any excess value will be settled
at the Companys election in either cash or shares or a combination of the two.
Any portion of the Notes not settled in cash will be convertible into the
Companys common shares at an initial conversion rate of 23.0792 common shares
per $1,000 principal amount of Notes converted, representing an initial
conversion price of approximately $43.33 per common share.

Holders of the Notes will have the
right to require the Company to repurchase all or part of their Notes on March 1
of each of 2013, 2018 and 2023, or upon certain fundamental corporate changes.
The repurchase price will be equal to 100% of the principal amount of the Notes
being converted, plus accrued and unpaid interest to the repurchase date.
Subject to specified conditions, the Company shall pay the purchase price in
cash. On and after March 5, 2013, the Company may redeem all or part of the
Notes for cash at a redemption price equal to 100% of the principal amount of
the Notes being redeemed, plus accrued and unpaid interest to, the redemption
date.

|F-40 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|14. | CONVERTIBLE NOTES (Contd)                                                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                          
|    | The Notes contain an embedded derivative due to the fact
      that if the holder elects to exercise their conversion option, the Company
      has the option to settle in either cash or common shares. At initial
      recognition the value of the Notes was allocated as
  follows:

Fair
    
    
    Transaction
    
    
    NetValue
    
    
    Costs
    
    
    Value$
    
    
    $
    
    
    $Fair value of debt
    
    99,144
    
    
    (3,773
    )
    
    95,371Fair
      value of derivative liability
    
    38,856
    
    
    (1,473
    )
    
    37,383138,000
    
    
    (5,246
    )
    
    132,754


The debt portion has been designated as
an other financial liability so that it is recorded at amortized cost, net of
transaction costs, and is accreted over an expected life of 5 years until March
2013 using the effective interest method.

The movement in the debt portion of the
Notes during the years comprised the following:

December 31,
    
    
    December 31,2011
    
    
    2010$
    
    
    $Balance, beginning of year
    
    118,201
    
    
    109,971Accretion of discount
    
    9,188
    
    
    8,230Interest accrued
    
    6,210
    
    
    6,210Interest paid
    
    (6,210
    )
    
    (6,210
    )Balance, end of year
    
    127,389
    
    
    118,201Accrued interest
    
    (2,076
    )
    
    (2,076
    )Non-current portion of convertible notes
    
    125,313
    
    
    116,125


The derivative liability is recognized
as FVTPL, all transaction costs were expensed upon recognition and the
instrument is re-measured at each reporting period using a binomial tree
approach. For the year ended December 31, 2011, the Company recorded an
unrealized gain on the derivative liability of $20,182,000 (2010 - unrealized
loss of $1,109,000) (note 19). The following key assumptions were used to obtain
the valuation:

December 31,
    
    
    December 31,
    
    
    January 1,
    
    
    February 27,2011
    
    
    2010
    
    
    2010
    
    
    2008Expected dividend yield (%)
    
    -
    
    
    -
    
    
    -
    
    
    -Average risk-free interest rate (%)
    
    2.57
    
    
    4.13
    
    
    4.58
    
    
    4.62Expected life (years)
    
    16.3
    
    
    17.3
    
    
    18.3
    
    
    20.0Expected volatility (%)
    
    65.0
    
    
    57.5
    
    
    60.0
    
    
    60.0Implied yield on straight debt (%)
    
    7.07
    
    
    11.39
    
    
    12.60
    
    
    11.85


|F-41 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|15. | SHARE CAPITAL AND SHARE-BASED
  PAYMENTS
|--- | ----------------------------------------

a)Authorized capital

The Company has unlimited authorized
common shares with no par value.

b)Public share
offering

In February 2010, the Company closed a
public share offering of 6,729,000 common shares at a price of $17.00 per share,
for aggregate gross proceeds of $114,389,000. After deducting underwriting fees
and estimated offering expenses of $4,821,000, net proceeds were $109,568,000.
The Company also recognized an income tax recovery of $5,109,000 relating to
share issuance costs.

c)Stock options

The Company has an incentive plan,
approved by the Companys shareholders at its annual general meeting held on May
14, 2008 and subsequently amended on May 11, 2011, under which options to
purchase common shares may be granted to directors, officers, employees and
others at the discretion of the Board of Directors. The plan provides for the
issuance of incentive options to acquire up to a total of 8.5% of the issued and
outstanding common shares of the company. The exercise price of each option is
set at the date of grant and shall not be less than the closing market price of
the companys stock on the award date. The options can be granted for a maximum
term of 10 years with vesting provisions determined by the Board of Directors.
Currently, the vesting periods range up to three years, and expire after 7
years. New shares from treasury are issued on the exercise of stock options.

The changes in stock options issued
during the year ended December 31, 2011 and the year ended December 31, 2010 was
as follows:

| |                                  |  |            |   |  | December 31 |   |  |           |   |  | December 31 |  
| | -------------------------------- |  | ---------- | - |  | ----------- | - |  | --------- | - |  | ----------- | -
| |                                  |  |            |   |  | 2011        |   |  |           |   |  | 2010        |  
| |                                  |  | Number     |   |  | Weighted    |   |  | Number    |   |  | Weighted    |  
| |                                  |  | of stock   |   |  | average     |   |  | of stock  |   |  | average     |  
| |                                  |  | options    |   |  | exercise    |   |  | options   |   |  | exercise    |  
| |                                  |  |            |   |  | price       |   |  |           |   |  | price       |  
| |                                  |  |            |   |  | (C$/option) |   |  |           |   |  | (C$/option) |  
| |                                  |  |            |   |  |             |   |  |           |   |  |             |  
| | Outstanding, beginning of period |  | 4,703,870  |   |  | 27.18       |   |  | 5,271,118 |   |  | 26.40       |  
| | Granted                          |  | 518,500    |   |  | 24.79       |   |  | 605,000   |   |  | 17.82       |  
| | Exercised                        |  | (1,028,391 | ) |  | (18.97      | ) |  | (971,578  | ) |  | (17.00      | )
| | Expired                          |  | (787,500   | ) |  | (34.48      | ) |  | -         |   |  | -           |  
| | Forfeited                        |  | (1,528,107 | ) |  | (32.21      | ) |  | (200,670  | ) |  | (27.72      | )
| |                                  |  |            |   |  |             |   |  |           |   |  |             |  
| | Outstanding, end of period       |  | 1,878,372  |   |  | 23.86       |   |  | 4,703,870 |   |  | 27.18       |  

During the year ended December 31,
2011, the Company granted 518,500 (December 31, 2010  605,000) options to
officers, employees, directors and other eligible persons at exercise prices
ranging from C$15.64 to C$28.78 (December 31, 2010  C$17.38 to C$26.55) and
expiry dates ranging from January 27, 2018 to November 17, 2018.

|F-42 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|15. | SHARE CAPITAL AND SHARE-BASED PAYMENTS
    (Contd)                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                        
|    | As of December 31, 2011, incentive stock options
      constitute 2.3% (December 31, 2010  5.9%) of issued and outstanding
      common capital. The aggregate intrinsic values of vested share options
      (the market value less the exercise value) at December 31, 2011 and
      December 31, 2010 were $107,000 and $20,242,000, respectively.
|    |                                                                                                                                                                                                                                                                                                                                                        
|    | The weighted average fair value of stock options granted
      during the year ended December 31, 2011 and year ended December 31, 2010
      were estimated to be C$11.28 and C$9.00 per stock option, respectively, at
      the grant date using the Black-Scholes option pricing model, using the
      following assumptions:                     

Year ended
    
    
    Year endedDecember 31
    
    
    December 312011
    
    
    2010Expected dividend yield (%)
    
    -
    
    
    -Average risk-free interest rate (%)
    
    2.20
    
    
    2.90Expected life (years)
    
    4.8
    
    
    6.5Expected volatility (%)
    
    55.0
    
    
    53.0


Option pricing models require the input
of highly subjective assumptions. The expected life of the options considered
such factors as the average length of time similar option grants in the past
have remained outstanding prior to exercise and the vesting period of the
grants. Volatility was estimated based upon historical price observations over
the expected term. Changes in the subjective input assumptions can materially
affect the estimated fair value of the options.

The weighted average share price, at
the date of grant, of stock options granted in the period was C$24.02 (2010 -
C$17.36) .

The weighted average share price at the
date of the exercise of stock options was C$26.60 (2010 - C$24.74) .

The following table summarizes
information about stock options outstanding and exercisable at December 31,
2011:

Stock options outstanding
      
      
      Stock options exercisableWeighted
      
      
      
      
      
      Weightedaverage
      
      
      
      
      
      averageStock options
      
      
      remaining
      
      
      Stock options
      
      
      exerciseoutstanding
      
      
      **contractual life**
      
      
      exercisable
      
      
      priceExercise prices
        (C$)
      
      
      
      
      (years)
      
      
      
      
      
      (C$/option)11.50  17.38
      
      711,136
      
      
      8.6
      
      
      271,135
      
      
      15.1921.07  24.61
      
      461,736
      
      
      7.4
      
      
      230,493
      
      
      23.9926.23  29.02
      
      432,500
      
      
      4.7
      
      
      153,333
      
      
      28.9734.71  40.62
      
      273,000
      
      
      0.8
      
      
      273,000
      
      
      35.971,878,372
      
      
      6.3
      
      
      927,961
      
      
      25.76


|F-43 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|15. | SHARE CAPITAL AND SHARE-BASED PAYMENTS
    (Contd)
|--- | ---------------------------------------------------

d)Deferred Share
Units (DSUs)

Non-executive directors may elect to
receive all or a portion of their annual compensation in the form of DSUs which
are linked to the value of the Companys common shares. DSUs are issued on a
quarterly basis under the terms of the DSU Plan, at the market value of the
Companys common shares at the date of grant. The DSUs vest immediately and are
redeemable in cash on the date the director ceases to be a director of the
Company.

December 31,
    
    
    
    
    
    December 31,2011
    
    
    
    
    
    2010Number
    
    
    Fair
    
    
    Number
    
    
    Fairof DSUs
    
    
    value
    
    
    of DSUs
    
    
    value$
    
    
    
    
    
    $Outstanding, beginning of year
    
    90,361
    
    
    2,527
    
    
    59,704
    
    
    1,312Granted
    
    21,151
    
    
    555
    
    
    39,398
    
    
    772Redeemed
    
    (13,223
    )
    
    (342
    )
    
    (8,741
    )
    
    (159
    )Fair value remeasurement
    
    -
    
    
    (1,377
    )
    
    -
    
    
    602Outstanding, end of year
    
    98,289
    
    
    1,363
    
    
    90,361
    
    
    2,527


The DSUs are cash-settled instruments
and therefore the fair value of the outstanding DSUs at the end of each
reporting period is recognized as an accrued liability with the associated
compensation cost recorded in general and administrative expenses.

e)Restricted Share
Units (RSUs)

During the year ended December 31,
2011, the Company implemented the RSU Plan. RSUs are granted to employees based
on the value of the Companys share price at the date of grant. The awards have
a graded vesting schedule over a three-year period, and are cash-settled

immediately upon vesting.

RSUs are cash-settled instruments and
therefore are recognized as a liability, with fair value remeasurement at each
reporting period. The associated compensation cost is recorded in general and
administrative expenses unless directly attributable to a mineral property.

December 31,2011Number
    
    
    Fairof RSUs
    
    
    value$/unitOutstanding, beginning of
      year
    
    -
    
    
    -Granted
    
    93,300
    
    
    26.61Settled
    
    -
    
    
    -Forfeited
    
    (16,500
    )
    
    -Fair value remeasurement
    
    -
    
    
    (12.35
    )Outstanding, end of year
    
    76,800
    
    
    14.26


At December 31, 2011, an accrued
liability of $382,000 (December 31, 2010 - nil; January 1, 2010 - nil) was
recorded with a corresponding share-based payment expense.

|F-44 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|15. | SHARE CAPITAL AND SHARE-BASED PAYMENTS
    (Contd)
|--- | ---------------------------------------------------

f)Performance Share
Units (PSU)

During the year ended December 31, 2010
the Company implemented the PSU Plan for grants commencing in 2011. PSUs are
granted to senior executives, and vest after a performance period of three
years. During 2011, in addition to a normal annual grant there was also a
one-off grant of transitional PSUs, which vest after a two-year performance
period. The vesting of these awards is based on the Companys total shareholder
return in comparison to its peer group, and awards range from 0% to 200% of
initial PSUs granted.

PSUs are cash-settled instruments and
therefore are recognized as a liability, with fair value remeasurement at each
reporting period using a Monte Carlo simulation. The associated compensation
cost is recorded in general and administrative expenses.

December 31,2011Number
    
    
    Fairof PSUs
    
    
    value$/unitOutstanding, beginning of
      year
    
    -
    
    
    -Granted
    
    141,800
    
    
    31.70Settled
    
    -
    
    
    -Forfeited
    
    (32,100
    )
    
    -Fair value remeasurement
    
    -
    
    
    (24.01
    )Outstanding, end of year
    
    109,700
    
    
    7.69


At December 31, 2011, an accrued
liability of $311,000 (December 31, 2010 - nil; January 1, 2010 - nil) was
recorded with a corresponding share-based payment expense.

g)Share-based
compensation

Share-based compensation consists of
the fair values of both equity-settled and cash-settled awards as follows:

2011
    
    
    2010$
    
    
    $Equity-settled
    
    4,676
    
    
    8,153Cash-settled
    
    (589
    )
    
    1,162Total
    
    4,087
    
    
    9,315


Share-based compensation for the years
ended December 31, 2011 and 2010 has been recognized in the financial statements
as follows:

2011
    
    
    2010$
    
    
    $General and administrative
      expense
    
    4,052
    
    
    8,984Property, plant and equipment
    
    35
    
    
    331Total share-based compensation
    
    4,087
    
    
    9,315


|F-45 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|16. | OTHER RESERVES
|--- | --------------

| |                                                                                                 |  | December 31, |   |  | December 31, |  
| | ----------------------------------------------------------------------------------------------- |  | ------------ | - |  | ------------ | -
| |                                                                                                 |  | 2011         |   |  | 2010         |  
| |                                                                                                 |  | $            |   |  | $            |  
| | Foreign currency translation reserve                                                            |  |              |   |  |              |  
| |                                                                                                 |  |              |   |  |              |  
| | At January 1                                                                                    |  | 1,832        |   |  | -            |  
| | Parent company and subsidiary companies' currency
      translation adjustments                 |  | (4,781       | ) |  | 1,832        |  
| | Currency translation adjustments recycled to net income on
      disposals                      |  | (898         | ) |  | -            |  
| |                                                                                                 |  |              |   |  |              |  
| | At
      December 31                                                                            |  | (3,847       | ) |  | 1,832        |  
| |                                                                                                 |  |              |   |  |              |  
| | Available for sale revaluation
      reserves                                                   |  |              |   |  |              |  
| |                                                                                                 |  |              |   |  |              |  
| | At January 1                                                                                    |  | 19,301       |   |  | 6,039        |  
| | Unrealized gains (losses) on available for sale securities                                      |  | (15,778      | ) |  | 17,142       |  
| | Foreign exchange gains                                                                          |  | 699          |   |  | 1,117        |  
| | Deferred income tax recovery (expense)                                                          |  | 1,259        |   |  | (2,352       | )
| | Realized gains on available for sale securities recycled to net
      income (loss), net of tax |  | (4,731       | ) |  | (2,645       | )
| |                                                                                                 |  |              |   |  |              |  
| | At
      December 31                                                                            |  | 750          |   |  | 19,301       |  
| |                                                                                                 |  |              |   |  |              |  
| | Transactions with non-controlling
      interests                                               |  |              |   |  |              |  
| |                                                                                                 |  |              |   |  |              |  
| | At January 1                                                                                    |  | -            |   |  | -            |  
| | Acquisition of
      non-controlling interest in subsidiary                                     |  | (28,198      | ) |  | -            |  
| |                                                                                                 |  |              |   |  |              |  
| | At December 31                                                                                  |  | (28,198      | ) |  | -            |  
| |                                                                                                 |  |              |   |  |              |  
| | Share-based compensation reserve                                                                |  |              |   |  |              |  
| |                                                                                                 |  |              |   |  |              |  
| | At January 1                                                                                    |  | 42,124       |   |  | 40,927       |  
| | Stock options exercised                                                                         |  | (8,990       | ) |  | (6,956       | )
| | Share-based
      compensation                                                                  |  | 4,676        |   |  | 8,153        |  
| | At
      December 31                                                                            |  | 37,810       |   |  | 42,124       |  
| |                                                                                                 |  |              |   |  |              |  
| | Total other reserves                                                                            |  | 6,515        |   |  | 63,257       |  

|F-46 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|17. | OPERATING COSTS BY
NATURE
|--- | -------------------------

| | a) | Cost of sales
| | -- | -------------

| |                                          |  | December 31, |  |  | December 31, | 
| | ---------------------------------------- |  | ------------ |  |  | ------------ | 
| |                                          |  | 2011         |  |  | 2010         | 
| |                                          |  | $            |  |  | $            | 
| | Cost of inventory                        |  | 66,694       |  |  | 67,231       | 
| | Depletion, depreciation and amortization |  | 16,546       |  |  | 22,151       | 
| | Export duties (1)                        |  | 12,686       |  |  | 8,740        | 
| |                                          |  | 95,926       |  |  | 98,122       | 

| | (1) | The Pirquitas mine has a fiscal stability agreement with
      the government of Argentina dating from 1998. In 2002, the government of
      Argentina implemented an export duty on concentrates that did not apply to
      companies with pre-existing fiscal stability agreements. In December
      2007, the National Customs Authority of Argentina levied an export duty of
      approximately 10% on concentrates for projects with fiscal stability
      agreements predating 2002. The Company has been advised that the project
      is subject to this export duty despite rights under the fiscal stability
      agreement from 1998. The legality of the export duty applied to silver
      concentrates has been challenged and is currently under review by the
      court in Argentina. In July 2010, the Company filed a claim in the
      provincial Argentina court for repayment of export duties paid on silver
      concentrates, and for an order to cease payment of the export duty until
      the matter was decided by the court. An order was granted effective
      September 29, 2010 to cease payment of the export duty on silver
      concentrates pending the decision of the courts, and in April 2011 a
      government appeal against this order was denied.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Up to December 31, 2011, the Pirquitas mine had paid
      $6,649,000 in export duties against which it has filed for recovery. In
      accordance with the order to cease payment the Company has not been paying
      export duties on silver concentrate but continues to accrue duties in full
      until the outcome of the claim is known with certainty. At December 31,
      2011, the accrual totalled $13,101,000, and $10,538,000 has been included
      in cost of sales for the year. If this export duty is successfully
      overturned the benefit will be recognized in the Consolidated Statement of
      Income for the full amount of paid and unpaid duty in the period recovery
      becomes virtually certain.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| | b) | General and
administrative
| | -- | --------------------------

| |                                    |  | 2011   |  |  | 2010   | 
| | ---------------------------------- |  | ------ |  |  | ------ | 
| |                                    |  | $      |  |  | $      | 
| | Salaries and benefits              |  | 9,804  |  |  | 11,251 | 
| | Share-based compensation           |  | 4,052  |  |  | 8,984  | 
| | Consulting and professional fees   |  | 1,790  |  |  | 2,383  | 
| | Travelling expense                 |  | 1,673  |  |  | 968    | 
| | Shareholder and investor relations |  | 1,055  |  |  | 651    | 
| | Insurance expense                  |  | 846    |  |  | 784    | 
| | Directors fees and expenses        |  | 688    |  |  | 424    | 
| | Rent expense                       |  | 685    |  |  | 621    | 
| | Computer expenses                  |  | 456    |  |  | 310    | 
| | Listing and filing fees            |  | 374    |  |  | 204    | 
| | Recruiting expense                 |  | 323    |  |  | 364    | 
| | Depreciation and amortization      |  | 286    |  |  | 285    | 
| | Reclamation expense                |  | 251    |  |  | 166    | 
| | Other expenses                     |  | 1,368  |  |  | 1,501  | 
| |                                    |  | 23,651 |  |  | 28,896 | 

|F-47 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|18. | FINANCE INCOME AND
EXPENSES
|--- | ---------------------------

a) Interest earned and other finance
income

| |                                                            |  | 2011  |  |  | 2010  | 
| | ---------------------------------------------------------- |  | ----- |  |  | ----- | 
| |                                                            |  | $     |  |  | $     | 
| | Interest earned                                            |  | 1,600 |  |  | 535   | 
| | Accretion earned
      on convertible debenture receivable |  | 691   |  |  | 865   | 
| | Total interest earned and other finance income             |  | 2,291 |  |  | 1,400 | 

b) Interest expense and other
finance costs

| |                                                         |  | 2011    |   |  | 2010    |  
| | ------------------------------------------------------- |  | ------- | - |  | ------- | -
| |                                                         |  | $       |   |  | $       |  
| | Interest expense on convertible notes                   |  | (6,210  | ) |  | (6,210  | )
| | Accretion expense on convertible notes                  |  | (9,188  | ) |  | (8,230  | )
| | Accretion of close down and restoration
      provision |  | (1,596  | ) |  | (1,798  | )
| | Other interest
      expense                            |  | (398    | ) |  | (125    | )
| | Total interest expense and other finance costs          |  | (17,392 | ) |  | (16,363 | )

|F-48 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|19. | OTHER INCOME (OTHER
EXPENSES)
|--- | -----------------------------

| |                                                                   |  | 2011   |   |  | 2010   |  
| | ----------------------------------------------------------------- |  | ------ | - |  | ------ | -
| |                                                                   |  | $      |   |  | $      |  
| | Reversal of impairment of convertible
      debenture             |  | 2,400  |   |  | -      |  
| | Unrealized gain (loss) on financial instruments at
      FVTPL(1) |  | 20,182 |   |  | (1,109 | )
| | Gain on sale of marketable securities                             |  | 5,453  |   |  | 3,114  |  
| | Write-off of mineral property costs                               |  | (4,624 | ) |  | (238   | )
| | Gain on dilution of associate                                     |  | 1,803  |   |  | -      |  
| | Share of loss of associate                                        |  | (6,078 | ) |  | (77    | )
| | Miscellaneous income (expense)                                    |  | (1,056 | ) |  | 16     |  
| |                                                                   |  | 18,080 |   |  | 1,706  |  

(1) Financial instruments
held at FVTPL include the conversion feature of the convertible debenture
receivable (note 5), the warrant liability (note 12), and the conversion option
embedded in the convertible notes (note 14).

|20. | EARNINGS PER SHARE                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                               
|    | The calculations of basic and diluted earnings per share
      for the year ended December 31, 2011 and 2010 are based on the
      following:

| |                                                                                           |   | 2011   |  |   | 2010    | 
| | ----------------------------------------------------------------------------------------- | - | ------ |  | - | ------- | 
| |                                                                                           |   |        |  |   |         | 
| | Earnings used in the calculation of diluted
      earnings per share                      | $ | 80,128 |  | $ | 338,455 | 
| |                                                                                           |   |        |  |   |         | 
| | Weighted average number of common shares
      issued (thousands)                         |   | 80,324 |  |   | 77,972  | 
| | Adjustments for dilutive instruments:                                                     |   |        |  |   |         | 
| | Stock options
      (thousands)                                                           |   | 336    |  |   | 384     | 
| | Weighted average number of common shares for diluted
      earnings per share (thousands) |   | 80,660 |  |   | 78,356  | 
| |                                                                                           |   |        |  |   |         | 
| | Basic earnings per share                                                                  | $ | 1.00   |  | $ | 4.34    | 
| | Diluted earnings per share                                                                | $ | 0.99   |  | $ | 4.32    | 

The convertible notes (note 14) in
certain circumstances are convertible at the request of the holders. In such an
event the initial principal would be repayable in cash and any incremental value
settled at the election of the Company in either cash or common shares, or a
combination of the two. The potential dilutive impact of the shares is therefore
only that portion of the Notes where the share price exceeds the conversion
price of $43.33 per share. Given that at December 31, 2011 and December 31, 2010
the share price was significantly below the conversion price an assumed
conversion by holders would not have any dilution impact because the balance
would be repaid in full in cash.

|F-49 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|21. | OPERATING SEGMENTS                                                                                                                                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                      
|    | The Company is a resource company focused on acquisition,
      exploration, development and operation of silver- dominated projects
      primarily in the Americas.
|    |                                                                                                                                                                      
|    | An operating segment is defined as a component of the
      Company:                                                                                                 

| | - | that engages in business
      activities from which it may earn revenues and incur expenses;            
| | - | ---------------------------------------------------------------------------------------------------------
| | - | whose operating results are
      reviewed regularly by the entitys chief operating decision maker; and,
| | - | for which discrete financial
      information is available.                                             

The Company has identified its
operating segments based on the information used by the President and Chief
Executive Officer (who is considered to be the chief operating decision maker)
to manage the business. The Company primarily manages its business by looking at
individual extractive projects and typically segregates these projects between
production, development and exploration. For reporting purposes all exploration
and development projects have been aggregated into a single reportable segment
exploration and development properties because they all have similar
characteristics and none exceed the quantitative thresholds for individual
disclosure. The only production property, the Pirquitas mine, is considered a
single operating segment which derives its revenues from the sale of silver and
zinc concentrates. The corporate division only earns income that is considered
incidental to the activities of the Company and therefore does not meet the
definition of an operating segment. The following reporting segments have been
identified:

| | - | Pirquitas mine; and                          
| | - | ---------------------------------------------
| | - | Exploration and development
      properties.

The following is a summary of the
reported amounts of income or loss, and the carrying amounts of assets and
liabilities by operating segment:

| |                                                |  | Pirquitas mine |   |  | Exploration and |   |  | Other       |   |  | Total     |  
| | ---------------------------------------------- |  | -------------- | - |  | --------------- | - |  | ----------- | - |  | --------- | -
| |                                                |  |                |   |  | development     |   |  | reconciling |   |  |           |  
| | December 31, 2011                              |  |                |   |  | properties      |   |  | items(i,ii) |   |  |           |  
| |                                                |  | $              |   |  | $               |   |  | $           |   |  | $         |  
| | Revenue from external customers                |  | 147,845        |   |  | -               |   |  | -           |   |  | 147,845   |  
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Cost of inventory and export duties            |  | (79,380        | ) |  | -               |   |  | -           |   |  | (79,380   | )
| | Depletion,
      depreciation and amortization |  | (16,546        | ) |  | -               |   |  | -           |   |  | (16,546   | )
| | Cost of sales                                  |  | (95,926        | ) |  | -               |   |  | -           |   |  | (95,926   | )
| | Income from mine
      operations              |  | 51,919         |   |  | -               |   |  | -           |   |  | 51,919    |  
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Operating income (loss)                        |  | 47,691         |   |  | (1,143          | ) |  | (23,983     | ) |  | 22,565    |  
| | Income before income tax                       |  | 39,126         |   |  | 46,040          |   |  | 26,359      |   |  | 111,525   |  
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Interest income and other finance income       |  | -              |   |  | -               |   |  | 2,291       |   |  | 2,291     |  
| | Interest expense and other finance costs       |  | (1,542         | ) |  | (114            | ) |  | (15,736     | ) |  | (17,392   | )
| | Write-off of mineral property costs            |  | -              |   |  | (4,624          | ) |  | -           |   |  | (4,624    | )
| | Income tax expense                             |  | (21,050        | ) |  | (9,524          | ) |  | (823        | ) |  | (31,397   | )
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Total assets                                   |  | 568,212        |   |  | 232,038         |   |  | 475,852     |   |  | 1,276,102 |  
| | Non-current assets                             |  | 459,789        |   |  | 202,752         |   |  | 136,885     |   |  | 799,426   |  
| | Total liabilities                              |  | (94,395        | ) |  | (22,355         | ) |  | (175,377    | ) |  | (292,127  | )

(i)Other reconciling items
refer to items that are not reported as part of segment performance as they are
managed on a group basis. (ii)Includes the equity-accounted
investment in Pretium.

|F-50 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|21. | OPERATING SEGMENTS
(Contd)
|--- | ---------------------------

| |                                                |  | Pirquitas mine |   |  | Exploration and |   |  | Other       |   |  | Total     |  
| | ---------------------------------------------- |  | -------------- | - |  | --------------- | - |  | ----------- | - |  | --------- | -
| |                                                |  |                |   |  | development     |   |  | reconciling |   |  |           |  
| | December 31, 2010                              |  |                |   |  | properties      |   |  | items(i)    |   |  |           |  
| |                                                |  | $              |   |  | $               |   |  | $           |   |  | $         |  
| | Revenue from external customers                |  | 112,256        |   |  | -               |   |  | -           |   |  | 112,256   |  
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Cost of inventory and export duties            |  | (75,971        | ) |  | -               |   |  | -           |   |  | (75,971   | )
| | Depletion,
      depreciation and amortization |  | (22,151        | ) |  | -               |   |  | -           |   |  | (22,151   | )
| | Cost of sales                                  |  | (98,122        | ) |  | -               |   |  | -           |   |  | (98,122   | )
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Income from mine operations                    |  | 14,134         |   |  | -               |   |  | -           |   |  | 14,134    |  
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Operating income (loss)                        |  | 12,525         |   |  | (377            | ) |  | (29,310     | ) |  | (17,162   | )
| | Income (loss)
      before income tax          |  | 7,552          |   |  | (596            | ) |  | 363,692     |   |  | 370,648   |  
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Interest income and other finance income       |  | -              |   |  | -               |   |  | 1,400       |   |  | 1,400     |  
| | Interest expense and other finance costs       |  | (1,491         | ) |  | (220            | ) |  | (14,652     | ) |  | (16,363   | )
| | Income tax
      recovery (expense)            |  | (5,712         | ) |  | 654             |   |  | (27,135     | ) |  | (32,193   | )
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| |                                                |  |                |   |  |                 |   |  |             |   |  |           |  
| | Total assets                                   |  | 452,256        |   |  | 196,829         |   |  | 498,905     |   |  | 1,147,990 |  
| | Non-current assets                             |  | 378,352        |   |  | 191,698         |   |  | 235,886     |   |  | 805,936   |  
| | Total liabilities                              |  | (56,823        | ) |  | (2,064          | ) |  | (157,243    | ) |  | (216,130  | )

(i) Other reconciling items
refer to items that are not reported as part of segment performance as they are
managed on a group basis.

Segment revenue by product

2011
    2010%
    %Silver
    94
    100Zinc
    6
    -


Segment revenue by location of
customer

100% of revenues are attributable to
the Pirquitas mine segment. Revenues were from a single customer based in
Switzerland.

|F-51 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|21. | OPERATING SEGMENTS (Contd) Non-current assets by
      location
|--- | ----------------------------------------------------------------

December 31, 2011
    
    
    December 31, 2010$
    
    
    $Canada
    
    138,205
    
    
    235,563Argentina
    
    481,654
    
    
    397,447Mexico
    
    108,674
    
    
    89,540Peru
    
    50,950
    
    
    43,456United States
    
    10,942
    
    
    10,419Australia
    
    -
    
    
    19,970Chile
    
    9,001
    
    
    9,541Total
    
    799,426
    
    
    805,936


|22. | FINANCIAL INSTRUMENTS                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                               
|    | The Companys financial instruments include cash and cash
      equivalents, trade and other receivables, other financial assets, trade
      and other payables, warrant liabilities and convertible
  notes.

a)Financial assets
and liabilities by category

Loans and
    
    
    
    
    
    Available
    
    
    Other financialAt December 31, 2011
    
    receivables
    
    
    FVTPL
    
    
    for sale
    
    
    liabilities
    
    
    Total$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Financial assetsCash and cash equivalents
    
    329,055
    
    
    -
    
    
    -
    
    
    -
    
    
    329,055Trade and other receivables
    
    5,045
    
    
    -
    
    
    -
    
    
    -
    
    
    5,045Other financial assets (3)
    
    1,768
    
    
    -
    
    
    33,539
    
    
    -
    
    
    35,307Total financial assets
    
    335,868
    
    
    -
    
    
    33,539
    
    
    -
    
    
    369,407Financial liabilitiesTrade and other payables
    
    -
    
    
    -
    
    
    -
    
    
    46,898
    
    
    46,898Warrant liability
    
    -
    
    
    7,067
    
    
    -
    
    
    -
    
    
    7,067Convertible notes (4)
    
    -
    
    
    1,242
    
    
    -
    
    
    125,313
    
    
    126,555Total financial liabilities
    
    -
    
    
    8,309
    
    
    -
    
    
    172,211
    
    
    180,520


|F-52 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|22. | FINANCIAL INSTRUMENTS
(Contd)
|--- | ------------------------------

Loans and
    
    
    
    
    
    Available
    
    
    Other financialAt December 31, 2010
    
    receivables
    
    
    FVTPL
    
    
    for sale
    
    
    liabilities
    
    
    TotalFinancial assetsCash and cash equivalents
    
    232,311
    
    
    -
    
    
    -
    
    
    -
    
    
    232,311Trade and other receivables (1)
    
    -
    
    
    15,409
    
    
    -
    
    
    -
    
    
    15,409Other financial assets (2, 3)
    
    9,051
    
    
    386
    
    
    33,465
    
    
    -
    
    
    42,902Total financial assets
    
    241,362
    
    
    15,795
    
    
    33,465
    
    
    -
    
    
    290,622Financial liabilitiesTrade and other payables
    
    -
    
    
    -
    
    
    -
    
    
    34,208
    
    
    34,208Convertible notes (4)
    
    -
    
    
    21,735
    
    
    -
    
    
    116,125
    
    
    137,860Total financial liabilities
    
    -
    
    
    21,735
    
    
    -
    
    
    150,333
    
    
    172,068


Loans and
    
    
    
    
    
    Available
    
    
    Other financialAt January 1, 2010
    
    receivables
    
    
    FVTPL
    
    
    for sale
    
    
    liabilities
    
    
    TotalFinancial assetsCash and cash equivalents
    
    26,659
    
    
    -
    
    
    -
    
    
    -
    
    
    26,659Trade and other receivables (1)
    
    -
    
    
    3,335
    
    
    -
    
    
    -
    
    
    3,335Other financial assets (2,3)
    
    9,399
    
    
    475
    
    
    17,863
    
    
    -
    
    
    27,737Total financial assets
    
    36,058
    
    
    3,810
    
    
    17,863
    
    
    -
    
    
    57,731Financial liabilitiesTrade and other payables
    
    -
    
    
    -
    
    
    -
    
    
    50,341
    
    
    50,341Convertible notes (4)
    
    -
    
    
    20,728
    
    
    -
    
    
    107,895
    
    
    128,623Total financial liabilities
    
    -
    
    
    20,728
    
    
    -
    
    
    158,236
    
    
    178,964


| | (1) | Certain trade and other receivables are classified as
      FVTPL due to the embedded derivative identified through provisional
      pricing arrangements discussed in note 2(e).                                               
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | The convertible debenture receivable is allocated between
      FVTPL and loans and receivables. The conversion feature is recognized at
      FVTPL whilst the note receivable is designated within loans and
      receivables.
| | (3) | Other financial assets include marketable securities
      which have been designated as available for sale assets                                                                                                               
| | (4) | The embedded share purchase option of the convertible
      notes is recognized at FVTPL whilst the debt portion is designated as an
      other financial liability.                                                            

|F-53 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|22. | FINANCIAL INSTRUMENTS
(Contd)
|--- | ------------------------------

b)Fair value of financial instruments

December 31, 2011
      
      
      December 31, 2010
      
      
      January 1, 2010Carrying value
      
      
      Fair value
      
      
      Carrying value
      
      
      Fair value
      
      
      Carrying value
      
      
      Fair value$
      
      
      $
      
      
      $
      
      
      $
      
      
      $
      
      
      $Financial assetsTrade and other receivables
      
      5,045
      
      
      5,045
      
      
      15,409
      
      
      15,409
      
      
      3,335
      
      
      3,335Other financial assets
      
      35,307
      
      
      35,307
      
      
      42,902
      
      
      42,902
      
      
      27,737
      
      
      27,737Total financial assets
      
      40,352
      
      
      40,352
      
      
      58,311
      
      
      58,311
      
      
      31,072
      
      
      31,072Financial liabilitiesWarrant liability
      
      7,067
      
      
      7,067
      
      
      -
      
      
      -
      
      
      -
      
      
      -Convertible notes
      
      126,555
      
      
      136,275
      
      
      137,860
      
      
      143,506
      
      
      128,623
      
      
      129,030Total financial liabilities
      
      133,622
      
      
      143,342
      
      
      137,860
      
      
      143,506
      
      
      128,623
      
      
      129,030


The carrying values of cash and cash
equivalents, certain other financial assets, trade and other payables,
approximate their fair values due to their relatively short maturity.

|F-54 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|22. | FINANCIAL INSTRUMENTS (Contd)                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                        
|    | Fair value hierarchy                                                                                                                                                   
|    |                                                                                                                                                                        
|    | Financial instruments that are held at fair value are
      categorized based on a valuation hierarchy which is determined by the
      valuation methodology utilized:

Fair Value at December 31, 2011Level 1
      
      
      Level 2
      
      
      Level 3
      
      
      Total$
      
      
      $
      
      
      $
      
      
      $Marketable securities
      
      33,539
      
      
      -
      
      
      -
      
      
      33,539Warrant liability
      
      7,067
      
      
      -
      
      
      -
      
      
      7,067Derivative liability
      
      -
      
      
      1,242
      
      
      -
      
      
      1,24240,606
      
      
      1,242
      
      
      -
      
      
      41,848


Level 1  quoted prices (unadjusted) in
active markets for identical assets or liabilities

Marketable securities, consisting of
available-for-sale investments with no trading restrictions, and the warrant
liability are valued using a market approach based upon unadjusted quoted prices
in an active market obtained from securities exchanges.

Level 2  inputs other than quoted
prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from
prices); and Trade receivables from provisional invoices for concentrate sales
are included within Level 2, as the basis of valuation uses quoted commodity
prices.

The value of the Companys Notes
embedded share purchase option is also included in Level 2 of the fair value
hierarchy as they are valued using an option pricing model. This model requires
a variety of inputs, including, but not limited to, contractual terms, market
prices, forward price curves, yield curves and credit spreads.

Level 3  inputs for the asset or
liability that are not based on observable market data (unobservable inputs)

The Company has investments in
asset-backed commercial paper which are included within Level 3 in the fair
value hierarchy because they trade infrequently. At December 31, 2011, December
31, 2010, and January 1, 2010 the fair value was considered to be $nil.

There were no transfers between Level 1
and Level 2 during the years ended December 31, 2011 or 2010.

|F-55 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|23. | FINANCIAL RISK MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company is exposed to a variety of financial risks as
      a result of its operations, including market risk (which includes price
      risk, currency risk and interest rate risk), credit risk and liquidity
      risk. The Companys overall risk management strategy seeks to reduce
      potential adverse effects on the Companys financial performance. Risk
      management is carried out under policies approved by the Board of
      Directors.                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company may, from time to time, use foreign exchange
      contracts, commodity price contracts and interest rate swaps to manage its
      exposure to fluctuations in foreign currency, metal prices and interest
      rates. The Company does not have a practice of trading derivatives. In the
      past, the Companys use of derivatives was limited to specific programs to
      manage fluctuations in foreign exchange risk, which are subject to the
      oversight of the Board of Directors. The risks associated with the
      Companys financial instruments, and the policies on how the Company
      mitigates those risks are set out below.

a)Market Risk

This is the risk that the fair values
of financial instruments will fluctuate owing to changes in market prices. The
significant market risks to which the Company is exposed are price risk,
currency risk and interest rate risk.

(i)Price
Risk

This is the risk that the fair values
or future cash flows of the Companys financial instruments will fluctuate
because of changes in market prices. Income from mine operations in the next
year depends on the metal prices for silver and to a lesser extent zinc. These
prices are affected by numerous factors that are outside the control of the
Company such as:

| | - | global or regional consumption
      patterns;                                        
| | - | --------------------------------------------------------------------------------------
| | - | the supply of, and demand for,
      these metals;                                    
| | - | speculative activities;                                                               
| | - | the availability and costs of
      metal substitutes;                                
| | - | inflation; and                                                                        
| | - | political and economic
      conditions, including interest rates and currency values.

The principal financial instrument that
the Company holds which is impacted by commodity prices is the embedded
derivative within trade receivables. The majority of revenue agreements are
subject to pricing terms that settle within one to three months after delivery,
and this adjustment period represents the Companys trade receivable exposure to
variations in commodity prices.

The Company has not hedged the price of
silver as part of its overall corporate strategy.

The costs relating to the Companys
production, development and exploration activities vary depending on the market
prices of certain mining consumables including diesel fuel and natural gas. The
Company has not hedged any such costs.

|F-56 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|23. | FINANCIAL RISK MANAGEMENT (Contd)                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                   
|    | A 10% increase in the average commodity price for the
      year, with all other variables held constant, would have resulted in the
      following impact to the Companys after-tax net
income:

2011
    
    
    2010Products
    
    $
    
    
    $10% increase in silver price
    
    9,005
    
    
    7,35910% increase in zinc price
    
    605
    
    
    -10% increase in diesel and natural gas
      prices
    
    (1,192
    )
    
    (658
    )


The Company holds certain investments
in available for sale marketable securities which are measured at fair value,
being the closing price of each equity investment at the balance sheet date. The
Company is exposed to changes in share prices which would result in gains and
losses being recognized in other comprehensive income.

(ii)Currency
Risk

Currency risk is the risk that the fair
values or future cash flows of the Companys financial instruments will
fluctuate because of changes in foreign currency rates. The Companys financial
instruments are exposed to currency risk where those instruments are denominated
in currencies that are not the same as their functional currency; exchange gains
and losses in these situations impact earnings. The Companys sales of silver
and zinc are denominated in US dollars and thus the risk is related to costs
incurred and other non-USD financial instruments.

The following are the most significant
areas of exposure to currency risk:

| |                            |  | December 31, 2011 |  
| | -------------------------- |  | ----------------- | -
| |                            |  | Canadian dollar   |  
| | Cash                       |  | 80,480            |  
| | Marketable securities      |  | 13,753            |  
| | Accounts receivable        |  | -                 |  
| | Value added tax receivable |  | -                 |  
| | Trade and other payables   |  | (7,825            | )
| | Warrant liability          |  | (7,067            | )
| | Total                      |  | 79,341            |  

| |                            |  | December 31, 2010 |  
| | -------------------------- |  | ----------------- | -
| |                            |  | Canadian dollar   |  
| | Cash                       |  | 164,557           |  
| | Marketable securities      |  | 36,700            |  
| | Accounts receivable        |  | 4,821             |  
| | Value added tax receivable |  | -                 |  
| | Trade and other payables   |  | (5,984            | )
| | Total                      |  | 200,094           |  

|F-57 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|23. | FINANCIAL RISK MANAGEMENT (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | On October 26, 2011, the Argentina government announced a
      decree that requires all funds from export sales to be repatriated to
      Argentina and converted into Argentine pesos within the Sole Foreign
      Exchange Market in Argentina, and each transfer is subject to a 0.6%
      transfer tax. The Company will comply with all laws and regulations, and
      is monitoring the situation closely. The impact of the transfer tax should
      not have a material impact on the Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company monitors and manages this risk with the
      objective of ensuring its group-wide exposure to negative fluctuations in
      currencies against the U.S. dollars is managed. As at December 31, 2011
      the Company has not entered into any derivatives to mitigate this
    risk.                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | A 10% increase in the United States dollar exchange rate
      on financial assets and liabilities denominated in the following
      currencies, with all other variables held constant, would have resulted in
      the following impact to the Companys after-tax net
  income:                                                                                                                                                                                                                        

2011
    
    
    **2010**$
    
    
    $Canadian dollar
    
    (5,830
    )
    
    (12,183
    )Argentine peso
    
    (5,635
    )
    
    (4,514
    )Australian dollar
    
    (630
    )
    
    (10
    )Mexican peso
    
    (33
    )
    
    (19
    )


(iii)  Interest Rate Risk

Interest rate risk is the risk that the
fair values or future cash flows of the Companys financial instruments will
fluctuate because of changes in market interest rates. Interest rate risk mainly
arises from the interest rate impact on our cash and cash equivalents because
they are the only financial instrument the Company holds that earns interest
based on variable market interest rates. The long-term convertible notes have
fixed interest rates and are not exposed to fluctuations in interest rates; a
change in interest rates would impact the fair value of the instruments, but
because the notes are recorded at amortized cost there would be no impact on the
financial results of the Company. The Company monitors its exposure to interest
rates closely and has not entered into any derivative contracts to manage its
risk.

As at December 31, 2011, the weighted
average interest rate on our cash and cash equivalents was 0.14% (2010 - 0.89%)
.. With other variables unchanged, a 1% increase in the interest rate would
increase after tax net income by $2,340,000 (2010 - $450,000).

b)Credit Risk

Credit risk is the risk that a third
party might fail to discharge its obligations under the terms of a financial
contract. The Companys credit risk is limited to the collectability of trade
receivables in the ordinary course of business and the quality of its financial
investments.

Credit risk related to financial
institutions and cash deposits The Companys policy is only to utilise
highly rated financial institutions and only to invest in government securities.
The Company considers the risk of loss associated with cash deposits to be
low.

|F-58 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|23. | FINANCIAL RISK MANAGEMENT (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Credit risk related to trade receivablesThe
      Company is subject to significant concentrations of credit risk related to
      trade receivables because all of its sales through 2011 were to a single
      customer. However, the Company has not recorded an allowance against trade
      receivables because it is confident of the collectability based on the
      nature of its customer and all balances owed have been settled in full
      when due. In order to mitigate this risk, the Company ensures a minimum
      creditworthiness of customers, and has entered into sales agreements with
      additional customers in 2012.
      Credit risk related to other financial
        assetsAll other receivable balances are expected to be collectible in
        full due to the nature of the counterparties and/or a previous history of
    collectability.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company also has credit risk through its significant
      value added tax receivable balance that is collectible with the government
      of Argentina. The balance is expected to be recoverable in full but due to
      the legislative rules and complex collection process the asset has been
      classified as non-current. The Company believes that this balance is
      collectible in full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Companys maximum exposure to credit risk as at
      December 31 was as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

2011
    
    
    2010$
    
    
    $Cash and cash equivalents
    
    329,055
    
    
    232,311Value added tax receivable
    
    90,642
    
    
    71,683Trade and other receivables
    
    5,045
    
    
    35,916Other financial assets
    
    1,768
    
    
    9,051426,510
    
    
    348,961


At December 31, 2011, no amounts were
held as collateral.

c)Liquidity Risk

Liquidity risk is the risk that the
Company will not be able to meet its obligations over financial instruments as
they fall due. The Company manages its liquidity risk through a rigorous
planning and budgeting process, which is reviewed and updated on a regular
basis, to help determine the funding requirements to support the Companys
current operations, expansion and development plans, and by managing its capital
structure as described in note 23(d). The Companys objective is to ensure that
there are sufficient financial resources to meet its business requirements for a
minimum of twelve months.

|F-59 | P a g e
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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|23. | FINANCIAL RISK MANAGEMENT (Contd)                                                                                                                                                                                                                                                                                              
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                 
|    | In the normal course of business the Company enters into
      contracts that give rise to commitments for future minimum payments. The
      following is a maturity profile of financial liabilities and operating and
      capital commitments presenting contractual undiscounted cash flows as at
      December 31, 2011:

Payments due by periodContractual obligations
      
      Total
      
      
      Less than one year
      
      
      1 - 3 years
      
      
      4-5 years
      
      
      After 5 years$
      
      
      $
      
      
      $
      
      
      $
      
      
      $Trade and other payables
      
      46,898
      
      
      46,898
      
      
      -
      
      
      -
      
      
      -Convertible notes (i)
      
      138,000
      
      
      -
      
      
      138,000
      
      
      -
      
      
      -Interest on convertible notes (i)
      
      1,004
      
      
      -
      
      
      1,004
      
      
      -
      
      
      -Capital expenditure commitments
      
      9,635
      
      
      7,573
      
      
      2,062
      
      
      -
      
      
      -Minimum lease rental and lease payments
      
      505
      
      
      453
      
      
      52
      
      
      -
      
      
      -Total contractual obligations
      
      196,042
      
      
      54,924
      
      
      141,118
      
      
      -
      
      
      -


| | (i) | Convertible notes are due in 2028 but are redeemable in
      part or in full at the option of the holder on March 1 at each of 2013,
      2018, and 2023, or upon fundamental corporate changes. They are also
      redeemable by the Company in part or in full on and after March 5, 2013.
      The notes bear interest of 4.5% per annum and are convertible into common
      shares upon specified events at a fixed conversion price of approximately
      $44.33 per common share (note 14).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In the opinion of management, working
capital at December 31, 2011 together with future cash flows from operations is
sufficient to support the Companys commitments through 2012.

d)Capital management

The Companys objectives when managing
capital are:

| | - | to safeguard its ability to continue as a going concern
      in order to develop and operate its current projects and pursue strategic
      growth initiatives;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                  
| | - | to maintain a flexible capital structure which optimizes
      the cost of capital; and                                                                          
| |   |                                                                                                                                                                  
| | - | to provide an adequate return to shareholders.                                                                                                                   

In assessing the capital structure of
the Company, management includes in its assessment the components of
shareholders equity, non-current convertible notes, and cash and cash
equivalents. In order to facilitate the management of capital requirements, the
Company prepares annual expenditure budgets and continuously monitors and
reviews actual and forecasted cash flows. The annual and updated budgets are
monitored and approved by the Board of Directors.

To maintain or adjust the capital
structure, the Company may, from time to time, issue new shares, issue new debt,
repay debt or dispose of non-core assets. The Company expects its current
capital resources will be sufficient to carry out its exploration plans and
support operations through the current operating period.

The Company issued convertible notes
(note 14) but these do not contain any financial covenants. Accordingly, as of
December 31, 2011, there were no externally-imposed capital requirements.

|F-60 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|24. | RELATED PARTY TRANSACTIONS
|--- | --------------------------

a)Related party transactions

During the year ended December 31,
2011, the Company recorded administrative, technical services and expense
reimbursements of $82,000 (2010 - $19,000) from companies related by common
directors or officers, including Pretium. At December 31, 2011, trade and other
receivables include $101,000 (2010 - $2,000) and trade and other payables
include $688,000 (2010 - nil) with these related parties. Any amounts due from
and payable to related parties are non-interest bearing and without specific
terms of repayment. Any transactions for expense reimbursement with related
parties are under normal business terms.

b)    Key management
compensation

Key management includes directors
(executive and non-executive) and other key officers of the Company, including
the CEO, CFO and Senior Vice Presidents. The compensation paid or payable to key
management for employee services is shown below:

December 31,
    
    
    December 31,2011
    
    
    2010$
    
    
    $Salaries and other short-term employee
      benefits
    
    2,252
    
    
    3,507Post-employment benefits
    
    25
    
    
    55Termination benefits
    
    1,067
    
    
    1,160Share-based
      compensation (i)
    
    2,904
    
    
    6,619Total compensation
    
    6,248
    
    
    11,341


| | (i) | Share-based compensation includes mark-to-market
      adjustments on cumulative DSU positions as reported in the Consolidated
      Statements of Income.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

c)Principal Subsidiaries

The consolidated financial statements
include the accounts of the company and its wholly-owned subsidiaries, the most
significant of which are presented in the following table:

| | Subsidiary                                           | Location       | Ownership | **Project**                  
| | ---------------------------------------------------- | -------------- | --------- | -----------------------------
| | Pacific Rim Mining Corporation Argentina,
      S.A. | Argentina      | 100%      | Diablillos                   
| | Minera Silver Standard Chile S.A.                    | Chile          | 100%      | Challacollo                  
| | Silver Standard Durango S.A. de C.V.                 | Mexico         | 100%      | Pitarrilla                   
| | Silver Standard Exploraciones S.A. de C.V.           | Mexico         | 100%      | Veta Colorada and others     
| | Silver Standard Mexico S.A. de C.V.                  | Mexico         | 100%      | San Agustin, Nazas and others
| | Sociedad Minera Berenguela S.A.                      | Peru           | 100%      | Berenguela                   
| | Reliant Ventures S.A.C.                              | Peru           | 100%      | San Luis                     
| | Candelaria Mining Company                            | USA (Delaware) | 100%      | Candelaria                   
| | Mina Pirquitas, Inc.                                 | USA (Delaware) | 100%      | Pirquitas                    
| | Maverick Silver Inc.                                 | USA (Nevada)   | 100%      | Maverick Springs             

|F-61 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|25. | SUPPLEMENTAL CASH FLOW INFORMATION                                                                     
|--- | -------------------------------------------------------------------------------------------------------
|    |                                                                                                        
|    | Changes in working capital items during the year ended
      December 31, 2011 and 2010 are as follows:

2011
    
    
    2010$
    
    
    $Trade and other receivables
    
    19,831
    
    
    (20,245
    )Other financial assets
    
    -
    
    
    (201
    )Inventory
    
    (50,073
    )
    
    (26,945
    )Trade and other payables
    
    11,728
    
    
    21,447Taxes payable
    
    16,861
    
    
    -(1,653
    )
    
    (25,944
    )


During the year ended December 31, 2011
and 2010 the Company conducted the following non-cash investing and financing
transactions:

2011
    
    
    2010$
    
    
    $Shares received for sale of
      mineral property
    
    15,133
    
    
    187,202Fair value of marketable securities
      transferred to acquire non-controlling interest
    
    (10,522
    )
    
    -Transfer of share-based
      payment reserve upon exercise of stock options
    
    (8,990
    )
    
    (6,956
    )Promissory note received for sale of
      Snowfield and Brucejack properties
    
    -
    
    
    39,069


During the year ended December 31, 2011
and 2010 the Company made the following cash payments for interest and taxes:

2011
    
    
    2010$
    
    
    $Interest paid
    
    6,210
    
    
    6,210Taxes paid
    
    16,430
    
    
    -


|F-62 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|26. | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING
      STANDARDS                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The accounting policies set out in these consolidated
      financial statements have been applied for the years ended December 31,
      2011 and December 31, 2010, and in the preparation of an opening IFRS
      statement of financial position at January 1, 2010.                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In preparing its opening IFRS statement of financial
      position, the Company has adjusted amounts reported previously in
      accordance with its previous basis of accounting (Canadian GAAP). An
      explanation of how the transition from Canadian GAAP to IFRS has affected
      the Companys statement of financial position and statement of income is
      set out in the following tables and accompanying
notes.

a)Reconciliation of equity as at:

| |                                                     |       |  | December 31, |   |  | January 1, |  
| | --------------------------------------------------- | ----- |  | ------------ | - |  | ---------- | -
| |                                                     |       |  | 2010         |   |  | 2010       |  
| |                                                     |       |  | $            |   |  | $          |  
| | Total equity reported under Canadian GAAP           |       |  | 1,031,772    |   |  | 537,186    |  
| |                                                     |       |  |              |   |  |            |  
| | Increase (decrease) net of tax in respect
      of: |       |  |              |   |  |            |  
| |                                                     |       |  |              |   |  |            |  
| | Valuation of Pirquitas mine                         | (i)   |  | (79,842      | ) |  | (84,018    | )
| | Close down and restoration provision                | (ii)  |  | (76          | ) |  | -          |  
| | Share-based compensation                            | (iii) |  | (52          | ) |  | -          |  
| | Functional currency                                 | (iv)  |  | 4,654        |   |  | 5,030      |  
| | Convertible notes                                   | (v)   |  | (18,859      | ) |  | (17,086    | )
| | Deferred tax
      liabilities                      | (vii) |  | (5,737       | ) |  | (1,949     | )
| |                                                     |       |  |              |   |  |            |  
| | Total equity
      reported under IFRS              |       |  | 931,860      |   |  | 439,163    |  

b)Reconciliation of total comprehensive income for the year
ended December 31, 2010:

| |                                                                  |       |  | 2010    |  
| | ---------------------------------------------------------------- | ----- |  | ------- | -
| |                                                                  |       |  | $       |  
| | Total comprehensive income as reported
      under Canadian GAAP |       |  | 359,501 |  
| |                                                                  |       |  |         |  
| | Increase (decrease) net of tax in respect
      of:              |       |  |         |  
| | Valuation of Pirquitas mine                                      | (i)   |  | 4,176   |  
| | Close down and restoration provision                             | (ii)  |  | (76     | )
| | Share-based compensation                                         | (iii) |  | 991     |  
| | Functional currency                                              | (iv)  |  | (373    | )
| | Convertible notes                                                | (v)   |  | (1,773  | )
| | Deferred tax liabilities                                         | (vii) |  | (8,897  | )
| |                                                                  |       |  |         |  
| | Total comprehensive income as reported under IFRS                |       |  | 353,549 |  

|F-63 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|26. | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING
      STANDARDS (Contd)
|--- | ------------------------------------------------------------------------

|c) | Explanations of the key differences between Canadian
      GAAP and IFRS giving rise to adjustments in the
  reconciliations
|-- | ----------------------------------------------------------------------------------------------------------------------------

(i) Valuation of the Pirquitas mine

The Company elected under IFRS 1 to
deem the fair value of the Pirquitas mine as cost at January 1, 2010 (note
2(a)). The fair value of the mine was determined to be $317,275,000 following a
discounted cash flow analysis using a discount rate of 10%. The resulting
adjustment between the carrying value under Canadian GAAP and the deemed cost of
$84,018,000 was charged to the opening accumulated deficit.

In addition to the adjustment to the
carrying value of the Pirquitas mine additional adjustments following the
transition to IFRS were recorded. These relate to the close down and restoration
provision (note 26 (c)(ii)), capitalized interest (note 26(c)(vi)) and deferred
tax liabilities (note 26(c)(vii)). The impacts of these adjustments on the
carrying value of the Pirquitas mine at January 1, 2010 are detailed below:

Canadian GAAP
      
      
      Transition to IFRS adjustment
      
      
      IFRSFair value as
      
      
      Close down
      
      
      Capitaliseddeemed cost of
      
      
      and restoration
      
      
      borrowing
      
      
      DeferredJanuary 1, 2010
      
      
      Pirquitas
      
      
      provision
      
      
      costs
      
      
      taxes
      
      
      January 1, 2010(ii)
      
      
      (vi)
      
      
      (vii)Producing properties
      
      180,018
      
      
      (84,018
      )
      
      313
      
      
      797
      
      
      (20,262
      )
      
      76,848Construction in progress
      
      8,015
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      8,015Mining equipment
      
      12,478
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      12,478Plant and equipment
      
      219,305
      
      
      -
      
      
      407
      
      
      -
      
      
      -
      
      
      219,712Other
      
      222
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      222Total
      
      420,038
      
      
      (84,018
      )
      
      720
      
      
      797
      
      
      (20,262
      )
      
      317,275


The lower carrying value of the
producing property balance under IFRS also impacts the periodic depletion
expense charged. Depletion is charged using the percentage of completion method
based on the tonnage of ore mined as a ratio to the total ore expected to be
mined over the life of the mine. The lower cost base of the asset reduced cost
of sales by $4,176,000 for the year ended December 31, 2010.

|F-64 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|26. | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING
      STANDARDS (Contd)
|--- | ------------------------------------------------------------------------

(ii)Close
down and restoration provision

Under Canadian GAAP asset retirement
obligations for close down and decommissioning costs are measured at the initial
date of recognition using a discounted cash flow analysis with the Companys
credit-adjusted risk free interest rate. The liability (and corresponding asset)
is only re-measured in the event of changes in the amount or timing of cash
flows required to settle the obligation.

IFRS (IAS 37) requires initial
measurement of the obligation using a pre-tax discount rate that reflects the
risk associated with the liability; furthermore the liability is required to be
re-measured at each reporting date.

As described in note 2(a), the Company
elected to use the IFRS 1 transition exemption from full retrospective
adjustment that would have been required under IFRIC 1. The Company re-measured
the liability at the date of transition to IFRS and recorded an adjustment of
$810,000 to the carrying value of the liability and to the carrying value of the
corresponding property, plant and equipment asset, of which $720,000 related to
Pirquitas.

For the year ended December 31, 2010

  the Company recorded an adjustment of $713,000 to the carrying value of the
  liability and related mineral property asset, with a $76,000 impact on earnings.

(iii)  Share-based payments

The Companys accounting policy for
share-based payments under Canadian GAAP was broadly consistent with the
requirements of IFRS, however, under IFRS 2 the Company is required to make
adjustments to the compensation expense recorded for estimates of non-market
vesting conditions, such as stock options that are not expected to vest i.e.
forfeited. The initial estimation of non-market vesting conditions is not
mandatory under Canadian GAAP. As a result the Companys accounting policy
choice was to make adjustments only when events occurred so that non-market
vesting conditions were not met, such as when stock options were forfeited. The
Company elected to apply the IFRS 1 transition exemption (note 2(a)), whereby
adjustments were only required to be made to stock options that had been granted
after November 7, 2002 and had not vested at the date of transition to IFRS.

The Company estimated the amount of stock
  options that would not vest by using historical data, the resulting impact at
  January 1, 2010 was insignificant but for the year ended December 31, 2010 the
  impact was a reduction to stock based compensation of $1,046,000, of which $991,000
  was credited to the statement of income and the balance of $52,000 to property,
  plant and equipment.

(iv)Functional currency and cumulative translation adjustment
account

Under Canadian GAAP the Company
determines whether a subsidiary is an integrated operation or a self-sustaining
entity which determines the method of translation into the presentation currency
of the Group. IFRS requires that an entity determine the functional currency of
each subsidiary individually, prior to consolidation into the Groups
presentation currency.

|F-65 | P a g e
|--------------

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|26. | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING
      STANDARDS (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company determined that three subsidiaries had a
      functional currency other than the US dollar, which under Canadian GAAP
      had been classified as being integrated operations. Those subsidiaries
      under Canadian GAAP were consolidated using the temporal method (i.e.
      monetary assets and liabilities translated at the current rate and non-
      monetary assets and liabilities at historic exchange rates with gains or
      losses being charged to income), whereas under IFRS those entities with
      non US dollar functional currencies are translated into US dollars using
      the current rate method (whereby all assets and liabilities are translated
      using the reporting date exchange rates with any gains or losses being
      recorded in equity).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The net impact was an increase in mineral properties of
      $5,030,000, offset by a charge to currency translation adjustment (CTA).
      The Company also elected to take the IFRS 1 exemption to deem cumulative
      translation adjustments to be zero at the date of transition to IFRS.
      Hence all existing CTA balances and the impact of the above adjustments as
      of January 1, 2010 were recorded against the opening accumulated
      deficit.                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | For the year ended December 31, 2010 the impact was a
      reduction of the mineral properties of $373,000, with an equal and
      opposite effect on total comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

(v)Convertible notes

As discussed in note 14, the Company
issued $138,000,000 of convertible notes (Notes) in 2008. Under Canadian GAAP
the Company accounted for the Notes as a split instrument allocating the value
of the notes between the debt and equity components. The debt was valued using a
discounted cash flow model, with the residual balance being allocated to equity.
At initial recognition the transaction costs were allocated to the debt and
equity components pro rata. The debt portion was designated as an other
financial liability, those transaction costs allocated to the debt were
expensed, and those allocated to equity were treated as a reduction of the value
of the equity component. Subsequently, the difference in carrying value of the
debt and its final redemption amount is recognized as accretion expense in the
statement of income over the period to maturity using the effective interest
rate method.

There are two GAAP differences in
relation to this instrument. Firstly, under Canadian GAAP the conversion feature
is considered to be an equity instrument, but under IFRS it is considered as an
embedded derivative liability due to the fact that if the holder elects to
exercise their conversion option, the instrument can be cash-settled at the
option of the Company. Secondly, under Canadian GAAP the debt component of the
instrument was designated as an other financial liability, and it was
similarly designated under IFRS. However, under IFRS, transaction costs relating
to an instrument that is designated as an other financial liability must be
netted against the carrying value of the instrument, whereas under Canadian GAAP
the Company made an accounting policy election to expense those costs.

At initial recognition under IFRS,
similar to Canadian GAAP, the fair value of the debt component and conversion
option were estimated but under IFRS the conversion option was recognized as a
derivative liability. Transaction costs incurred were allocated pro rata to the
two components, again consistent with Canadian GAAP. For IFRS the debt has been
designated as an other liability, which means that the instrument is recorded
at amortized cost, net of transaction costs. Subsequently, the accounting is the
same as Canadian GAAP whereby the instrument is accreted over an expected life
of 5 years using the effective interest method.

|F-66 | P a g e
|--------------

---

|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|26. | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING
      STANDARDS (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The accretion expense each reporting period under IFRS is
      greater than under Canadian GAAP due to the lower value attributed to the
      debt portion upon initial recognition, due to the fact that transaction
      costs are netted against the carrying value of the debt. Differences in
      accretion expense have been charged to the opening accumulated deficit at
      the date of transition. Also a proportion of the accretion was capitalized
      to the Pirquitas mineral property asset and as such the amount capitalized
      under IFRS differs from that under Canadian GAAP (note
  26(c)(vi)).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Under IFRS the derivative liability is recognized as
      FVTPL so all transaction costs were expensed and the instrument is
      re-measured at each reporting period using a binomial tree approach. The
      following assumptions were used to obtain the
valuation:                                                                                                                                                                                                                                                                                                                                                       

December 31,
    
    
    January 1,
    
    
    February 27,2010
    
    
    2010
    
    
    2008Expected dividend yield (%)
    
    0.0
    
    
    0.0
    
    
    0.0Average risk-free interest rate (%)
    
    4.13
    
    
    4.58
    
    
    4.62Expected life (years)
    
    17.25
    
    
    18.25
    
    
    20.0Expected volatility (%)
    
    57.5
    
    
    60.0
    
    
    60.0Implied yield on straight debt (%)
    
    11.39
    
    
    12.6
    
    
    11.85


The following table illustrates the
differences in the carrying values of the debt and conversion option:

Canadian GAAP
    
    IFRS
    
    Canadian GAAP
    
    IFRS
    
    Canadian GAAP
    
    IFRSCarrying value
    
    Carrying value
    
    Carrying value
    
    Carrying value
    
    Carrying value
    
    Carrying valueInception
    
    Inception
    
    January 1, 2010
    
    January 1, 2010
    
    December 31, 2010
    
    December 31, 2010$
    
    $
    
    $
    
    $
    
    $
    
    $Statement of financial
      positionConvertible notes - current
    -
    
    -
    
    (2,076)
    
    (2,076)
    
    (2,076)
    
    (2,076)Convertible notes - long term
    (99,144)
    
    (95,371)
    
    (110,739)
    
    (107,895)
    
    (118,203)
    
    (116,125)Derivative liability
    -
    
    (38,856)
    
    -
    
    (20,728)
    
    -
    
    (21,735)Equity component of
      convertible notes
    (37,383)
    
    -
    
    (37,383)
    
    -
    
    (37,383)
    
    -Property, plant and equipment
      (i)
    -
    
    -
    
    -
    
    797
    
    -
    
    -Accumulated deficit
    3,773
    
    1,473
    
    7,592
    
    (12,705)
    
    -
    
    -Statement of incomeInterest expense
    -
    
    -
    
    -
    
    -
    
    6,210
    
    6,210Interest accretion
    -
    
    -
    
    -
    
    -
    
    7,531
    
    8,230Unrealized (gain) or loss on derivative instruments
    -
    
    -
    
    -
    
    -
    
    -
    
    1,007


(i) Impact of capitalized
interest on property, plant and equipment (see note 26(c)(vi))

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|26. | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING
      STANDARDS (Contd)
|--- | ------------------------------------------------------------------------

(vi)Borrowing costs

The Companys accounting policy for
capitalising borrowing costs during the construction of the Pirquitas mine was
unchanged between Canadian GAAP and IFRS. However, owing to the change in
accounting methodology for the Notes described in note 26(c)(v) above a greater
amount of accretion expense was available for capitalisation. The Company
retrospectively adjusted the accretion expense capitalized to mineral
properties.

The impact was an increase in the
mineral property asset of $797,000 at the date of transition to IFRS.
Construction was completed prior to the transition to IFRS so there are no
further GAAP differences recorded.

(vii)Deferred
income tax

Under Canadian GAAP deferred tax
liabilities were calculated following the acquisition of various mineral
property assets. IFRS does not allow the recognition of deferred tax liabilities
for temporary differences that arise in a transaction other than a business
combination that at the time of the transaction affects neither the taxable nor
accounting profit or loss. As a result deferred tax liabilities recognized on
asset acquisitions under Canadian GAAP have been derecognized under IFRS and
credited to the opening accumulated deficit.

Non-monetary assets and liabilities of
an entity are measured in its functional currency. If an entitys taxable income
or loss is determined in a different currency, changes in exchange rate will
give rise to a temporary difference that results in a deferred tax asset or
liability under IAS 12. Effectively, the carrying value of the non-monetary
asset/liability (as measured in the functional currency based on historical
exchange rates) is translated from the functional currency to the local currency
at the current rate and compared to the tax value in the local currency. The
resulting temporary difference (measured in the local currency) is multiplied by
the appropriate tax rate to arrive at the deferred tax balance in the local
currency. This deferred tax balance is then translated into the functional
currency at the current rate and charged/credited to profit or loss.

The above result is different from
Canadian GAAP which prohibits the recognition of deferred taxes for temporary
differences caused by exchange gains and losses related to foreign non-monetary
assets and liabilities that are remeasured into the functional currency using
historical exchange rates.

The result of these differences was a
reduction of $35,596,000 in the deferred tax liabilities recognized on the date
of transition to IFRS, reflected in aggregate credits to mineral properties of
$36,797,000 (of which $20,262,000 related to Pirquitas), and aggregate charges
to opening accumulated deficit of $1,201,000. The impact on retained earnings in
the year ended December 31, 2010 was a charge of $3,354,000.

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|Silver Standard Resources Inc.                                                                 
|-----------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                 
|December 31, 2011 and 2010 and January 1, 2010                                                 
|(tabular amounts expressed in thousands of United States dollars
      unless otherwise stated)

|26. | TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (Cont’d)
|--- | ------------------------------------------------------------------

|   | A GAAP difference also exists in respect of the treatment of the tax effects of share issuance costs. While a deferred tax asset for these costs is recognized under both standards, IFRS requires the benefit to be credited to
equity regardless of the period it was recognized, while under Canadian GAAP the benefit is reflected in net income if recognized in a period subsequent to when the issuance costs were incurred. As a result, for the year ended December 31, 2010,
under Canadian GAAP an income tax recovery of $5,109,000 relating to share issuance costs was credited to earnings, but under IFRS this recovery has been credited directly to share capital. The effect of this adjustment has been reflected in the
reconciliation of shareholders’ equity as at December 31, 2010.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company revised its previously published transition adjustment for deferred tax liabilities in relation to the tax basis of certain Argentine assets relating to certain foreign exchange and other adjustments. The impact was an
increase in the deferred tax liability of $748,000 as at January 1, 2010 and a further increase of $5,543,000 as at December 31, 2010, with a corresponding increase to the tax expense for that year. These adjustments are not material to the
previously presented financial information.                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|d) | Adjustments to Statement of Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The transition from Canadian GAAP to IFRS had no significant impact on cash flows generated or used by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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