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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 20-F [   ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(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 ended December 31, 2015 OR [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OR [   ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report Commission file number 001-14598 RICHMONT MINES INC.(Exact name of Registrant as specified in its charter) Quebec, Canada(Jurisdiction of incorporation or organization) 161, Avenue Principale, Rouyn-Noranda, Quebec, Canada J9X 4P6(Address of principal executive offices) Renaud Adams Telephone: 819 797-2465 Facsimile: 819 797-0166161, Avenue Principale, Rouyn-Noranda, Quebec, Canada J9X 4P6(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered pursuant to Section 12(b) of the Act: Title of each Class

   Name of each Exchange on which RegisteredCommon Stock, no par value

   The Toronto Stock Exchange and the NYSE MKT
 Securities registered or to be registered pursuant to Section 12(g) of the Act: None


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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: As of December 31, 2015: 58,339,963. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes[   ]   No[ X ] 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 [   ] No [ X ] 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. Yes [ X ]   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 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 [ X ] 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 [   ]   Accelerated Filer [ X ]   Non-Accelerated Filer [   ] Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing. US GAAP [   ]

   International Financial Reporting Standards as issued by the International Accounting Standards Board [ X ]

   Other [   ]
 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 [   ]   No [ X ]


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TABLE OF CONTENTS PAGE ITEM 1.

   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

   7ITEM 2.

   OFFER STATISTICS AND EXPECTED TIMETABLE

   7ITEM 3.

   KEY INFORMATION

   7ITEM 4.

   INFORMATION ON THE CORPORATION

   10ITEM 4A.

   UNRESOLVED STAFF COMMENTS

   65ITEM 5.

   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

   65ITEM 6.

   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

   86ITEM 7.

   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

   109ITEM 8.

   FINANCIAL INFORMATION

   112ITEM 9.

   THE OFFER AND LISTING

   112ITEM 10.

   ADDITIONAL INFORMATION

   116ITEM 11.

   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   127ITEM 12.

   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

   127ITEM 13.

   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

   128ITEM 14.

   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

   128ITEM 15.

   CONTROLS AND PROCEDURES

   128ITEM 16.A.

   AUDIT COMMITTEE FINANCIAL EXPERT

   129ITEM 16.B.

   CODE OF ETHICS

   129ITEM 16.C.

   PRINCIPAL ACCOUNTANT FEES AND SERVICES

   129ITEM 16.D.

   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

   130ITEM 16.E.

   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

   130ITEM 16.F.

   CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

   131ITEM 16.G.

   CORPORATE GOVERNANCE

   131ITEM 16.H.

   MINE SAFETY DISCLOSURE

   132ITEM 17.

   CONSOLIDATED FINANCIAL STATEMENTS

   132ITEM 18.

   CONSOLIDATED FINANCIAL STATEMENTS

   132ITEM 19.

   EXHIBITS

   133


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Forward-Looking Statements This Annual Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Annual Report, including, without limitation, those regarding the Corporation’s opinions, financial position, business strategy, budgets, reserve estimates, development and exploitation opportunities and projects, classification of reserves, and plans and objectives of management for future operations, are forward-looking statements. Although the Corporation believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such forward-looking statements reflect the Corporation’s views as at the date of this Form 20-F and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the Risk Factors set forth in “ITEM 3. KEY INFORMATION – D. Risk Factors”. Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, the Corporation expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Corporation’s expectations or any change in events, conditions or circumstances on which any such statement is based. Note to Investors Concerning Certain Measures of Performance Throughout this document, the Corporation uses performance indicators that are not defined according to International Financial Reporting Standards (“IFRS”), such as the total cash cost of production per ounce sold for each of the Corporation’s properties, excluding the rates of depreciation per ounce, and All-In Sustaining costs. These performance indicators are in no way a standard prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Corporation believes that, in addition to conventional measures prepared in accordance with IFRS, the Corporation and certain investors use this information to evaluate the Corporation's performance. 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 IFRS. 4


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Terminology Unless otherwise specified, all units of measurement used in this report are expressed according to the metric system. The most commonly used conversion factors and their respective abbreviations are shown below: 1 troy ounce (oz) = 31.1035 grams (g) 1 metric tonne (t) = 1.1023 short ton (st) 1 metre (m) = 3.28 feet Au: gold g/t: gram per metric tonne ha: hectare NSR: Net Smelter Return t/d: metric tonnes per day cm: centimetre mm: millimetre kg: kilogram g: gram t/m3: metric tonnes per cubic metre km: kilometre NPI: Net Profit Interest ppb: parts per billion TSX: Toronto Stock Exchange NYSE MTK: New York Stock Exchange market Currency In this Annual Report, all dollar amounts are in Canadian dollars unless otherwise stated. Definitions Mineral Reserves Mineral reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve provides a lower level of confidence than a Proven Mineral Reserve. A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a preliminary feasibility study. Such study must include adequate information on mining, processing, metallurgical, economic parameters 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. 5


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Proven Mineral Reserves A 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 parameters and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified. Probable Mineral Reserves A Probable Mineral Reserve is the economically mineable part of an Indicated Mineral Resource and, in some cases, a Measured Mineral Resource, demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic parameters, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. Cash Costs and All-In Sustaining costs (Non-IFRS Financial Performance Measures) Cash cost is a common performance measure in the gold mining industry, but does not have any standardized definition. The Corporation reports cash cost per ounce based on ounces sold. Cash costs include mine site operating costs, administration and royalties but are exclusive of depreciation, accretion expense, capital expenditures and exploration and project evaluation costs. All-in sustaining costs or “AISC” is an extension of the existing “cash cost” metrics and incorporates costs related to sustaining production. The Corporation believes that, although relevant, the cash cost measure does not capture the sustaining expenditures incurred, and therefore, may not present a complete picture of the Corporation’s operating performance or its ability to generate free cash flows from its operations. AISC includes cost of sales, excluding depreciation, and includes sustaining capital expenditures, sustaining exploration and evaluation costs, corporate general and administrative costs, and environmental rehabilitation accretion and depreciation. Cash cost and all-in sustaining costs are Non-International Financial Reporting Standards (“IFRS”) performance measures, and may not be comparable to similar measures presented by other companies. The Corporation believes that, in addition to conventional measures prepared in accordance with IFRS, the Corporation and certain investors use this information to evaluate the Corporation's performance. 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 IFRS. Net Profit Interest (NPI) A percentage interest in the net profit as defined in the following manner: gross revenues realized from the sale or deemed sale as herein provided, of ores produced from the property or concentrates derived therefrom less costs (all costs and expenses attributable to exploration, development, mining, milling, concentrating, production, handling, delivery and/or sale of ores or concentrates). Net Smelter Return (NSR) A royalty payment made by a producer of metals based on gross metal production from the property, less deduction of certain limited costs including refining, transportation and insurance costs. Regulation 43-101 Standards of disclosure for mineral projects adopted by the Canadian Securities Administrators. This Regulation applies to all oral statements and written disclosure of scientific or technical information, including disclosure of a mineral resource or mineral reserve, made by or on behalf of an issuer in respect of a mineral project of the issuer. 6


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ITEM 1.

   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 Not applicable. ITEM 2.

   OFFER STATISTICS AND EXPECTED TIMETABLE
 Not applicable. ITEM 3.

   KEY INFORMATION
  A.

   Selected Financial Data
 The selected financial data of Richmont Mines Inc. (consolidated with its wholly-owned subsidiaries, Camflo Mill Inc., Patricia Mining Corporation (“Patricia Mining”) and Louvem Mines Inc. (“Louvem”); herein referred to collectively as “Richmont Mines,” “Richmont” or the “Corporation”) set forth below has been derived from the consolidated financial statements of the Corporation which have been audited by Raymond Chabot Grant Thornton LLP, Chartered Accountants, as indicated in their Independent Registered Public Accounting Firm’s report as at December 31, 2015, 2014 and 2013 and which are included elsewhere in this Annual Report. The selected financial data were extracted from the more detailed consolidated financial statements of the Corporation and related notes included in this Annual Report and should be read in conjunction with such consolidated financial statements and related notes and with the information appearing under the heading “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.” Unless otherwise indicated, all amounts presented herein are based on IFRS. Herein, all references to “$” and “CAN$” refer to Canadian dollars and all references to “US$” refer to United States dollars. The information contained in this Annual Report on Form 20-F is current as at December 31, 2015, except where a different date is specified. The Corporation has not declared or paid any dividends on its capital stock during the past five years and currently has no intention of paying dividends subject to a periodic review of this policy by the Board of Directors. 7


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Selected Financial Data (IFRS)1(in thousands of Canadian dollars except per share and share data) 2015

   

   2014

   

   2013

   

   

   2012

   

   

   2011Revenues

   

   143,733

   

   132,196

   

   90,213

   

   

   101,718

   

   

   118,518Net earnings (loss) from continuing operations

   

   6,788

   

   8,182

   

   (33,162

   )

   

   (2,977

   )

   

   26,043Net loss from discontinued operation

   

   -

   

   -

   

   (1,098

   )

   

   (42,038

   )

   

   (125

   )Net earnings (loss)

   

   6,788

   

   8,182

   

   (34,260

   )

   

   (45,015

   )

   

   25,918Earnings (loss) per shareBasic earnings (loss) per shareEarnings (loss) from continuing operations

   

   $0.12

   

   $0.18

   

   ($0.84

   )

   

   ($0.08

   )

   

   $0.81Loss from discontinued operation

   

   -

   

   -

   

   ($0.03

   )

   

   ($1.20

   )

   

   -$0.12

   

   $0.18

   

   ($0.87

   )

   

   ($1.28

   )

   

   $0.81Diluted earnings (loss) per shareEarnings (loss) from continuing operations

   

   $0.12

   

   $0.18

   

   ($0.84

   )

   

   ($0.08

   )

   

   $0.80Loss from discontinued operation

   

   -

   

   -

   

   ($0.03

   )

   

   ($1.20

   )

   

   -$0.12

   

   $0.18

   

   ($0.87

   )

   

   ($1.28

   )

   

   $0.80Total assets

   

   207,052

   

   148,771

   

   123,328

   

   

   148,244

   

   

   167,990Long-term debt

   

   7,264

   

   5,724

   

   5,196

   

   

   702

   

   

   -Working capital

   

   47,340

   

   34,837

   

   13,952

   

   

   54,296

   

   

   68,711EquityTotal

   

   153,602

   

   107,957

   

   86,353

   

   

   118,363

   

   

   134,134Share capital

   

   181,712

   

   144,535

   

   132,202

   

   

   132,113

   

   

   104,872Number of outstanding common shares at year end (000’s)

   

   58,340

   

   48,276

   

   39,596

   

   

   39,566

   

   

   33,110
 1The selected financial data have been prepared using accounting policies specified by IFRS that are in effect at December 31, 2015. 8


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Exchange Rates The Government of Canada permits a floating exchange rate to determine the value of the Canadian dollar against the U.S. dollar. Set forth below are the average rates of exchange for the Canadian dollar and the U.S. dollar for each of the past five fiscal years, and the range of high and low rates for each of the past six calendar months. For purposes of these tables, the rate of exchange is presented as published by the Bank of Canada. The tables set forth the number of Canadian dollars required under that formula to buy one U.S. dollar. The average rate means the average of the exchange rates of each day around noon during the period. U.S. Dollar/Canadian Dollar Exchange Rates Year endedDecember 31

   Average2011

   0.98912012

   0.99962013

   1.02992014

   1.10452015

   1.2787
 The following table sets forth the high and low closing exchange rate for the past six months. As of April 19, 2016, the exchange rate was 1.2660. U.S. Dollar/Canadian Dollar Exchange Rates Month

   Low

   HighNovember 2015

   1.3052

   1.3373December 2015

   1.3338

   1.3965January 2016

   1.3941

   1.4559February 2016

   1.3514

   1.4027March 2016

   1.2965

   1.3427April 1stto April 19st, 2016

   1.2660

   1.3157
  B.

   Capitalization and Indebtedness
 Not applicable. C.

   Reasons for the Offer and Use of Proceeds
 Not applicable. D.

   Risk Factors
 See the discussion regarding forward-looking statements on page 4. In addition to the other information contained herein, the following risk factors should be carefully considered when evaluating an investment in the Corporation’s common shares. Some of these risks include, but are not limited to the following: 9


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Risks Associated with the Mining Industry The exploration of mineral properties is highly speculative, involves substantial expenditures and is frequently unsuccessful. The Corporation's profitability is significantly affected by the costs and results of its exploration and development programs. As mines have limited lives based on proven and probable mineral reserves, the Corporation actively seeks to replace and expand its mineral reserves, primarily through exploration and development as well as through strategic acquisitions. Exploration for minerals is highly speculative in nature, involves many risks and is frequently unsuccessful. Among the many uncertainties inherent in any gold exploration and development program are the location of economic ore bodies, the development of appropriate metallurgical processes, the receipt of necessary governmental permits and the construction of mining and processing facilities. Substantial expenditures are required to pursue such exploration and development activities. Assuming discovery of an economic ore body, depending on the type of mining operation involved, several years may elapse from the initial phases of drilling until commercial operations are commenced and during such time the economic feasibility of production may change. Accordingly, the Corporation's current or future exploration and development programs may not result in any new economically viable mining operations or yield new mineral reserves to replace and expand current mineral reserves. The Corporation's financial performance and results may fluctuate widely due to volatile and unpredictable commodity prices and changes in the exchange rate between the U.S. and Canadian Dollars. The Corporation's earnings are directly related to commodity prices as revenues are derived principally from the sale of gold. Gold prices fluctuate widely and are affected by numerous factors beyond the Corporation's control, including central bank purchases and sales, producer hedging and de-hedging activities, expectations of inflation, the relative exchange rate of the U.S. dollar with other major currencies, global and regional demand, political and economic conditions, production costs in major gold-producing regions and worldwide production levels. The aggregate effect of these factors is impossible to predict with accuracy. In addition, the price of gold has on occasion been subject to very rapid short-term changes because of speculative activities. Fluctuations in gold prices may materially adversely affect the Corporation's financial performance or results of operations. If the market price of gold falls below the Corporation's total cash costs per ounce of production at one or more of its projects at that time and remains so for any sustained period, the Corporation may experience losses and/or may curtail or suspend some or all of its exploration, development and mining activities at such projects or at other projects. Also, the Corporation's evaluations of the proven and probable reserves at its current mines were based on a market price of gold of CAN$1,300 per ounce. If the market price of gold falls below this level, the mines may be rendered uneconomic and production may be suspended. The Corporation's policy and practice is not to sell forward its future gold production; however, under the Corporation's price risk management policy, approved by the Corporation's board of directors (the "Board"), the Corporation may review this practice on a project by project basis. The Corporation may occasionally use derivative instruments to mitigate the effects of fluctuating by-product metal prices; however, these measures may not be successful. The volatility of gold prices is illustrated in the following table which sets out, for the periods indicated, the high, low and average afternoon fixing prices for gold on the London Bullion Market (the "London P.M. Fix"). (US$ per ounce)

   2015

   

   2014

   

   2013

   

   2012

   

   2011High price

   1,296

   

   1,385

   

   1,694

   

   1,792

   

   1,895Low price

   1,049

   

   1,142

   

   1,192

   

   1,540

   

   1,319Average price

   1,160

   

   1,266

   

   1,411

   

   1,669

   

   1,572
 On April 19, 2016, the London P.M. Fix was US$1,255 per ounce of gold. 10


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The Corporation has no gold hedging contracts and no U.S. dollar exchange contracts. However, the Corporation may engage in hedging activities in the future. Hedging activities are intended to protect a corporation from the fluctuations of the price of gold and to minimize the effect of declines in gold prices on results of operations for a period of time. Hedging activities may protect a corporation against low gold prices, however, they may also limit the price that can be realized on gold that is subject to forward sales and call options where the market price of gold exceeds the gold price in a forward sale or call option contract. The Corporation continually evaluates the potential short- and long-term benefits of engaging in such derivative strategies based upon current market conditions. However, the use of by-product metal derivative strategies may not benefit the Corporation in the future. There is a possibility that the Corporation could lock in forward deliveries at prices lower than the market price at the time of delivery. In addition, the Corporation could fail to produce enough precious metals to offset its forward delivery obligations, causing the Corporation to purchase the metal in the spot market at higher prices to fulfill its delivery obligations or, for cash settled contracts, make cash payments to counterparties in excess of precious metals revenue. If the Corporation is locked into a lower than market price forward contract or has to buy additional quantities at higher prices, its net income could be adversely affected. The Corporation's operating results and cash flows are significantly affected by changes in the U.S. dollar/Canadian dollar exchange rate. All of the Corporation's precious metals revenues are earned in U.S. dollars but the majority of its operating costs at its mines, are in Canadian dollars. The U.S. dollar/Canadian dollar exchange rate has fluctuated significantly over the last several years. From January 1, 2010 to January 1, 2016, the closing Rate fluctuated from a high of CAN$1.3990 per US$1.00 to a low of CAN$0.9449 per US$1.00. On April 19, 2016, the U.S. dollar/Canadian exchange rate was CAN$1.2660 per US$1.00. Historical fluctuations in the U.S. dollar/Canadian dollar exchange rate are not necessarily indicative of future exchange rate fluctuations. Also, the Corporation may in the future, if it considers it advisable, enter into hedging arrangements with a view to reducing some risks associated with foreign exchange exposure. However, such hedging strategies may not prove to be successful and foreign exchange fluctuations may materially adversely affect the Corporation's financial performance and results of operations. The exploration and development of new mineral deposits is subject to numerous risks and uncertainties which may adversely affect the Corporation’s ability to expand or replace its existing production. The exploration process generally begins with the identification and appraisal of mineral prospects. Exploration and development projects have no operating history upon which to base estimates of future operating costs and capital requirements. Mining projects frequently require a number of years and significant expenditures during the mine development phase before production is possible. Development projects are subject to the completion of successful feasibility studies and environmental assessments, issuance of necessary governmental permits, acquiring title to prospects and the receipt of adequate financing. The economic feasibility of development projects is based on many factors such as: estimation of reserves;anticipated metallurgical recoveries;environmental considerations and permitting;estimates of future gold prices; andanticipated capital and operating costs of such projects. 11


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Exploration and development of mineral deposits thus involve significant financial risks which a combination of careful evaluation, experience and knowledge may not eliminate. The discovery of an ore body may result in substantial rewards, however, few properties which are explored are ultimately developed into producing mines. A mine must generate sufficient revenues to offset operating and development costs such as the costs required to establish reserves by drilling, to develop metallurgical processes, to construct facilities and to extract and process metals from the ore. Once in production, it is impossible to determine whether current exploration and development programs at any given mine will result in the establishment of new reserves. The estimates of mineral reserves and forecasts of the production are subject to numerous uncertainties, and the production and recovery of the reserve estimates appearing in the Annual Report may not be realized. The ore reserves presented in the Annual Report are in large part estimates, and production of the anticipated tonnages and grades may not be achieved or the indicated level of recovery may not be realized. There are numerous uncertainties inherent in estimating proven and probable reserves including many factors beyond the Corporation’s control. The estimation of reserves is a complex and subjective process and the accuracy of any such estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Reserve estimates may require revision based on various factors such as actual production experience, exploration results, market price fluctuations of gold, results of drilling, metallurgical testing, production costs or recovery rates. These factors may render the proven and probable reserves unprofitable to develop at a particular property or for a specific mine. Any material reduction in estimates of the Corporation’s reserves or its ability to extract these reserves could have a material adverse effect on its future cash flows, results of operations and financial condition. Also, the grade of ore mined may differ from that indicated by drilling results, and this variation may have an adverse impact on production results. In addition, the reliability of estimates of future production might also be affected by factors such as weather, strikes and environmental occurrences. The Corporation’s annual production estimates are developed based on, among other things, mining experience, reserve estimates, assumptions regarding ground conditions and physical characteristics of ores (such as hardness and presence or absence of certain metallurgical characteristics) and estimated rates and costs of production. Actual production may vary from estimates for a variety of reasons, including risks and hazards of the types discussed above. Newly opened mines, mine construction projects and expansion projects are subject to risks associated with new mine development, which may result in delays in the start-up of mining operations, delays in existing operations and unanticipated costs. The Corporation's ability to replace its existing mineral reserves as they are produced and depleted will be dependent upon locating new or expanding production from existing economic mineral reserves and developing new mines or extending and expanding existing mining operations. The Corporation’s ability to achieve full production rates at its new and expanded mines on schedule is subject to a number of risks and uncertainties. New mines may require the construction of significant new underground mining operations and may present problems in acquiring and achieving access to mine locations. The construction of underground mining facilities is subject to a number of risks, including unforeseen geological formations, implementation of new mining processes, delays in obtaining required title to mining deposits and access to locations, construction, environmental or operating permits and engineering and mine design adjustments and construction delays. These occurrences may result in delays in the planned start up dates and in additional costs being incurred by the Corporation beyond those budgeted. Moreover, the construction activities at possible mine extensions may take place concurrently with normal mining operations at, which may result in conflicts with, or possible delays to, existing mining operations. 12


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If the Corporation experiences mining accidents or other adverse conditions, the Corporation's mining operations may yield less gold than indicated by its estimated gold production and to the extent not adequately covered by insurance may result in possible adverse financial consequences to the Corporation. The Corporation's gold production may fall below estimated levels as a result of mining accidents such as cave-ins, rock falls, rock bursts, slope and pit wall failures, dams, fires or flooding or as a result of other operational problems such as a failure of mining, production and milling equipment. In addition, production may be reduced or curtailed if, during the course of mining, unfavourable, unusual or unexpected geological or geotechnical formations or seismic activity are encountered, ore grades are lower than expected, the physical or metallurgical characteristics of the ore are less amenable than expected to mining or treatment, data on which engineering assumptions are made prove faulty or dilution increases. The Corporation may also encounter shortages or interruptions of economical electricity and adequate water supplies at its mines and production facilities which may adversely affect operations. Finally, inclement weather conditions, floods and the occurrence of other adverse natural phenomena at its mine and production sites may curtail, interrupt or delay mining and production operations and the ability of the Corporation to transport and market its production. Occurrences of this nature and other accidents, adverse conditions or operational problems in future years may result in the Corporation's failure to achieve current or future production estimates and may make profitable mineral deposits unprofitable for continued production. In addition, the occurrence of industrial accidents may result in personal injury or death and damage to property which may result in possible legal liability to the Corporation and if not adequately covered by insurance possible adverse financial consequences to the Corporation. The occurrence of any of these factors could materially and adversely affect a project and as a result materially and adversely affect the Corporation’s business, financial condition, results of operations and cash flows. Due to the nature of the Corporation's mining operations, the Corporation may face liability, delays and increased production costs from environmental and industrial accidents and pollution, and the Corporation's insurance coverage may prove inadequate to satisfy future claims against the Corporation. The business of gold mining is generally subject to risks and hazards, including environmental hazards, industrial accidents, unusual or unexpected rock formations, changes in the regulatory environment, cave-ins, rock bursts, rock falls, slope and pit wall failures and flooding and gold bullion losses. Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. The Corporation carries insurance to protect itself against certain risks of mining and processing which may not provide adequate coverage in certain unforeseen circumstances. The Corporation may also become subject to liability for pollution, cave-ins or other hazards against which it cannot insure or against which it has elected not to insure because of high premium costs or other reasons, or the Corporation may become subject to liabilities which exceed policy limits. In these circumstances, the Corporation may be required to incur significant costs that could have a material adverse effect on its financial performance and results of operations. The Corporation's operations are subject to numerous laws and extensive government regulations which may cause a reduction in levels of production, delay or the prevention of the development of new mining properties or otherwise cause the Corporation to incur costs that adversely affect the Corporation's results of operations. The Corporation's mining and mineral processing operations and exploration activities are subject to the laws and regulations of federal, provincial, and local governments in the jurisdictions in which the Corporation operates. These laws and regulations are extensive and govern prospecting, exploration, development, production, exports, taxes, labour standards, occupational health and safety, waste disposal, toxic substances, environmental protection, mine safety and other matters. Compliance with such laws and regulations increases the costs of planning, designing, drilling, developing, constructing, operating, closing, reclaiming and rehabilitating mines and other facilities. New laws, regulations or taxes, amendments to current laws, regulations or taxes governing operations and activities of mining corporations or more stringent implementation or interpretation thereof could have a material adverse impact on the Corporation, cause a reduction in levels of production and delay or prevent the development of new mining properties. 13


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The Canadian mining industry is subject to federal and provincial environmental protection legislation. This legislation sets high standards on the mining industry in order to reduce or eliminate the effects of waste generated by extraction and processing operations and subsequently emitted into the air or water. Consequently, drilling, refining, extracting and milling are all subject to the restrictions imposed by such legislation. In addition, the construction and commercial operation of a mine typically entail compliance with applicable environmental legislation and review processes, as well as the obtaining of permits, particularly for the use of the land, permits for the use of water, and similar authorizations from various governmental bodies. Compliance with such laws and regulations increases the costs of planning, designing, drilling, developing, constructing, operating and closing mines and other facilities. All of the Corporation’s operations are subject to reclamation, site restoration and closure requirements. Costs related to ongoing site restoration programs are expensed when incurred. The Corporation calculates its estimates of the ultimate reclamation liability based on current laws and regulations and the expected future costs to be incurred in reclaiming, restoring and closing its operating mine sites. It is possible that the Corporation’s estimates of its ultimate reclamation liability could change as a result of possible changes in laws and regulations and changes in cost estimates. Failure to comply with applicable laws and regulations may result in enforcement actions thereunder, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may become subject to civil or criminal fines or penalties for violations of applicable laws or regulations. New or expanded environmental regulations, if adopted, or more stringent enforcement of existing laws and regulations, could affect the Corporation’s projects or otherwise have a material adverse effect on its operations. As a result, expenditures on any and all projects, actual production quantities and rates and cash operating costs, among other things, may be materially and adversely affected and may differ materially from anticipated expenditures, production quantities and rates, and costs, and estimated production dates may be delayed materially, in each case. Any such event would materially and adversely affect the Corporation’s business, financial condition, results of operations and cash flows. Aboriginal rights and duty to consult The Corporation operates and does exploration on properties, which are subject to Aboriginal rights or titles. The Corporation, under its Corporate Social Responsibility program, and local laws and regulations, is committed to consult with the First Nations group about any impact of its activities on such rights, titles or claims, which may cause delays in making decisions or project startups. Further, there is no assurance of favourable outcomes of these consultations. The Corporation may have to face adverse consequences such as significant expenses on account of lawsuits and loss of reputation. The conduct of mining operations is dependent upon obtaining and renewing applicable governmental permits the issuance of which may be subject to meeting certain conditions which may prove difficult and costly. Mineral exploration and mining activities may only be conducted by entities that have obtained or renewed exploration or mining permits and licenses in accordance with the relevant mining laws and regulations. No guarantee can be given that the necessary exploration and mining permits and licenses will be issued to the Corporation in a timely manner, or at all, or, if they are issued, that they will be renewed, or that the Corporation will be in a position to comply with or can afford to comply with all conditions that may be imposed. 14


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Increased regulation of greenhouse gas emissions and climate change issues may adversely affect the Corporation's operations. The Corporation operates in a number of jurisdictions in which regulatory requirements would require it to report and/or reduce greenhouse gas emissions. The Corporation's operations in Quebec use primarily hydroelectric power and, consequently, are not large producers of greenhouse gases. Title to the Corporation's properties may be uncertain and subject to risks. The acquisition of title to mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral deposits may be disputed. Although the Corporation believes it has taken reasonable measures to ensure proper title to its properties, there is no guarantee that title to any of its properties will not be challenged or impaired. Third parties may have valid claims on underlying portions of the Corporation's interests, including prior unregistered liens, agreements, transfers or claims, including native land claims, and title may be affected by, among other things, undetected defects. In addition, the Corporation may be unable to operate its properties as permitted or to enforce its rights in respect of its properties. Moreover, where the Corporation’s interest in a property is less than 100%, or a third party holds a form of profit sharing interest, the Corporation’s entitlement to, and obligations in respect of, the property are subject to the terms of the agreement relating to that property, or in the absence of an agreement subject to provincial or federal laws and regulations, which in certain circumstances may be the subject of differing interpretations between the parties. The success of the Corporation is dependent on good relations with its employees and on its ability to attract and retain key personnel. Production at the Corporation's mines and mine projects is dependent on the efforts of the Corporation's employees and contractors. Relationships between the Corporation and its employees may be affected by changes in the scheme of labour relations that may be introduced by relevant government authorities in the jurisdictions that the Corporation operates. Changes in applicable legislation or in the relationship between the Corporation and its employees or contractors may have a material adverse effect on the Corporation's business, results of operations and financial condition. The Camflo Mill collective agreement that expired on December 31, 2015 is currently being negotiated with the labor union. The Corporation is also dependent upon a number of key management personnel. The loss of the services of one or more of such key management personnel could have a material adverse effect on the Corporation. The Corporation's ability to manage its operating, development, exploration and financing activities will depend in large part on the efforts of these individuals. The Corporation faces significant competition for qualified personnel and the Corporation may not be able to attract and retain such personnel. The mining industry is highly competitive, and the Corporation may not be successful in competing for new mining properties. The mining industry is intensely competitive and the Corporation is in competition with other mining corporations for the acquisition of interests in precious and other metal or mineral mining properties which are in limited supply. In the pursuit of such acquisition opportunities, the Corporation competes with other Canadian and foreign companies that may have substantially greater financial and other resources. As a result of this competition, the Corporation may be unable to maintain or acquire attractive mining properties on acceptable terms, or at all. 15


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On a regular basis, the Corporation evaluates potential acquisitions of mining properties and/or interests in other mining corporations which may entail certain risks. Consistent with its growth strategy, the Corporation evaluates the potential acquisition of advanced exploration, development and production assets on a regular basis. From time to time, the Corporation may also acquire securities of or other interests in corporations with whom the Corporation may complete acquisition or other transactions. These transactions involve inherent risks, including, without limitation: accurately assessing the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition candidates;ability to achieve identified and anticipated operating and financial synergies;unanticipated costs;diversion of management attention from existing business;potential loss of key employees or the key employees of any business the Corporation acquires;unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying the acquisition; anddecline in the value of acquired properties, corporations or securities. Any one or more of these factors or other risks could cause the Corporation not to realize the benefits anticipated to result from the acquisition of properties or corporations, and could have a material adverse effect on the Corporation’s ability to grow and, consequently, on the Corporation’s financial condition and results of operations. The Corporation continues to seek acquisition opportunities consistent with its acquisition and growth strategy, however, it may not be able to identify additional suitable acquisition candidates available for sale at reasonable prices, to consummate any acquisition, or to integrate any acquired business into its operations successfully. Acquisitions may involve a number of special risks, circumstances or legal liabilities, some or all of which could have a material adverse effect on the Corporation’s business, results of operations and financial condition. In addition, to acquire properties and corporations, the Corporation could use available cash, incur debt, issue common shares or other securities, or a combination of any one or more of these. This could limit the Corporation’s flexibility to raise additional capital, to operate, explore and develop its properties and to make additional acquisitions, and could further dilute and decrease the trading price of the common shares. When evaluating an acquisition opportunity, the Corporation cannot be certain that it will have correctly identified and managed the risks and costs inherent in the business that it is acquiring. From time to time, the Corporation engages in discussions and activities with respect to possible acquisitions. At any given time, discussions and activities can be in process on a number of initiatives, each at different stages of development. Potential transactions may not be successfully completed, and, if completed, the business acquired may not be successfully integrated into the Corporation’s operations. If the Corporation fails to manage its acquisition and growth strategy successfully it could have a material adverse effect on its business, results of operations and financial condition. 16


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The Corporation may not have insurance or its insurance coverage may prove inadequate to reimburse the Corporation for liabilities encountered from operations. The Corporation carries insurance against property damage and comprehensive general liability insurance for all operations. It is also insured against gold and silver bullion thefts and losses of goods in transit. Such insurance, however, contains exclusions and limitations on coverage. The Corporation believes that its insurance coverage is adequate and appropriate for the perceived risks of its current operations, however, such insurance may not continue to be available, or if available may not continue to be available at economically acceptable premiums or may not continue to be adequate to cover the Corporation’s anticipated liabilities. In some cases, however, risk coverage is not available or is considered too expensive relative to the perceived risk. Risks not insured against include mine cave-ins, mine flooding or other comparable hazards. Furthermore, there are risks attributable to most types of environmental pollution against which the Corporation cannot insure or against which it has elected not to insure. The Corporation may have difficulty financing its additional capital requirements for its planned mine construction, exploration and development. The construction of mining facilities and commencement of mining operations, the expansion of existing capacity and the exploration and development of the Corporation's properties, including continuing exploration and development projects, will require substantial capital expenditures. Based on current funding available to the Corporation and expected cash from operations, the Corporation believes it has sufficient funds available to fund its projected capital expenditures for all of its current mining operations. However, if cash from operations is lower than expected or capital costs at these current mining operations or future projects exceed current estimates, or if the Corporation incurs major unanticipated expenses related to exploration, development or maintenance of its properties, the Corporation may be required to seek additional financing to maintain its capital expenditures at planned levels. In addition, the Corporation will have additional capital requirements to the extent that it decides to expand its present operations and exploration activities; construct additional new mining and processing operations at any of its properties; or take advantage of opportunities for acquisitions, joint ventures or other business opportunities that may arise. Additional financing may not be available when needed or, if available, the terms of such financing may not be favorable to the Corporation and, if raised by offering equity securities, or securities convertible into equity securities, any additional financing may involve substantial dilution to existing shareholders. Failure to obtain any financing necessary for the Corporation's capital expenditure plans may result in a delay or indefinite postponement of exploration, development or production on any or all of the Corporation's properties, which may have a material adverse effect on the Corporation's business, financial condition and results of operations. Weakness in the global credit and capital markets could have a material adverse impact on the Corporation's liquidity and capital resources. The credit and capital markets experienced significant deterioration in 2008, including the failure of significant and established financial institutions in the United States and abroad, and continued to show weakness and or uncertainty in 2015. These unprecedented disruptions in the credit and capital markets have negatively impacted the availability and terms of credit and capital. If uncertainties in these markets continue, or these markets deteriorate further, it could have a material adverse effect on the Corporation's liquidity, ability to raise capital and costs of capital. Failure to raise capital when needed, or on reasonable terms, may have a material adverse effect on the Corporation's business, financial condition and results of operations. 17


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The Corporation may be party to certain mining joint ventures in the future, under which the Corporation’s joint venture partners may be in a position to prevent the Corporation from meeting its objectives. Mining projects are often conducted through an unincorporated joint venture or an incorporated joint venture corporation. Joint ventures can often require unanimous approval of the parties to the joint venture or their representatives for certain fundamental decisions, such as an increase or reduction of registered capital, merger, division, dissolution, including indebtedness and the pledge of the joint venture assets, which means that each joint venture party has a veto right with respect to such decisions, which could in turn lead to a deadlock. The Corporation’s existing or future joint venture partners may veto the Corporation’s business plans, with regard to a specific joint venture, and prevent the Corporation from achieving its objectives. Also, any failure of any partner to meet its obligations to the Corporation or other third parties, or any disputes with respect to third parties' respective rights and obligations, could have a negative impact on the Corporation. Risks related to owning the Corporation’s common shares The Corporation’s shares fluctuate in price. The market price of the Corporation’s common shares may fluctuate due to a variety of factors relating to the Corporation’s business, including the announcement of expanded exploration, development and production activities by the Corporation and its competitors, gold price volatility, exchange rate fluctuations, consolidations, dispositions, acquisitions and financings, changes or restatements in the amount of the Corporation’s mineral reserves, fluctuations in the Corporation’s operating results, sales of the Corporation’s common shares in the marketplace, failure to meet analysts’ expectations, changes in quarterly revenue or earnings estimates made by the investment community, speculation in the press or investment community about the Corporation’s strategic position, results of operations, business or significant transactions and general conditions in the mining industry or the worldwide economy. In addition, wide price swings are currently common in the markets on which the Corporation's securities trade. This volatility may adversely affect the prices of the Corporation's common shares regardless of the Corporation's operating performance. The market price of the Corporation’s common shares may experience significant fluctuations in the future, including fluctuations that are unrelated to the Corporation’s performance. Securities class action litigation has often been brought against companies following periods of volatility in the market price of their securities. The Corporation may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management's attention and resources. Issuance by the Corporation of additional common shares could affect the market price of the shares and dilute existing shareholders. Issuance of a substantial number of the Corporation’s common shares by the Corporation, for example, in connection with a potential acquisition or to raise additional capital for operations, or to reduce indebtedness, or pursuant to existing agreements, or the availability of a large number of Corporation common shares that may be available for sale, could adversely affect the prevailing market prices for the Corporation’s outstanding common shares. A decline in the market price of the Corporation’s outstanding common shares could impair the Corporation’s ability to raise additional capital through the issuance of securities should the Corporation desire to do so. The Corporation does not currently anticipate declaring any dividends on its common shares. The Corporation has not declared or paid any dividends on its common shares since its incorporation and it has no current plans to pay dividends on its common shares. Its present policy is to retain earnings to finance its capital expenditures program. The Board of Directors assesses its dividend policy on a yearly basis. In the future, the Board of Directors may declare dividends according to its assessment of the financial position of the Corporation, taking into account its financing requirements for future growth and other factors that the Board of Directors may deem relevant in the circumstances. 18


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IT System Security risks The Corporation may be exposed to pilferage of private and sensitive data to deliberate cyber attacks or inadvertent loss of media, such as loss of laptops, phones etc. in public places. Furthermore, unauthorized access to confidential information would have a negative effect on the Corporation's reputation, business, prospects, results of operations and financial condition. The systems that are in place may not be enough to guard against loss of data due to the rapidly evolving cyber threats. The Corporation may be required to increasingly invest in better systems, software, and use of consultants to periodically review and adequately adapt and respond to dynamic cyber risks. Conflicts of Interest Certain of the directors and officers of the Corporation also serve as directors and/or officers of other companies involved in natural resource exploration, development and mining operations. Consequently, there exists the possibility for such directors and officers to be in a position of conflict. The directors of the Corporation are required by law to act honestly and in good faith with a view to the best interests of the Corporation, and to disclose any interest they may have in any project or opportunity of the Corporation. In addition, each of the directors is required by law to declare his or her interest in and refrain from voting on any matter in which he or she may have a conflict of interest, in accordance with applicable laws. Potential unenforceability of civil liabilities and judgments. The Corporation is incorporated under the laws of the Province of Quebec, Canada. All of the Corporation’s directors and officers as well as the experts named in the Form 20-F are residents of Canada. Also, all of the Corporation’s assets and substantially all of the assets of these persons are located outside of the United States. As a result, it may be difficult for shareholders to initiate a lawsuit within the United States against these non-U.S. residents, or to enforce U.S. judgments against the Corporation or these persons. The Corporation’s Canadian counsel has advised the Corporation that a monetary judgment of a U.S. court predicated solely upon the civil liability provisions of U.S. federal securities laws would likely be enforceable in Canada if the U.S. court in which the judgment was obtained had a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes. This result may not always be the case. It is less certain that an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such laws. As a “foreign private issuer”, the Corporation is exempt from the Section 14 proxy rules and Section 16 of the U.S. Securities Exchange Act of 1934 and this may result in shareholders having less complete and timely data. The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K may result in shareholders having less complete and timely data. The exemption from Section 16 rules regarding sales of common shares by insiders may result in shareholders having less data in this regard. 19


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ITEM 4.

   INFORMATION ON THE CORPORATION
  A.

   History and Development of the Corporation
 General The legal and commercial name of the Corporation is Richmont Mines Inc. The Corporation is a corporation domiciled in Quebec, Canada. The Corporation was incorporated pursuant to Part 1A of the Companies Act(Quebec) on February 12, 1981 (File number 1843-2286) under the corporate name of Ressources Minières Rouyn Inc. Pursuant to an Article of Amendment filed February 10, 1987 the Corporation added the English version Rouyn Mining Resources Inc. and by another Amendment filed with the Government of Quebec on June 20, 1991, the Corporation changed its name to Richmont Mines Inc., now governed by the Business Corporations Act(Quebec). The Articles of the Corporation are registered by the Government of Quebec in register S02473, folio 10. Richmont Mines holds all of the shares of Camflo Mill Inc., a corporation incorporated under the Canada Business Corporations Act, all of the shares of Patricia Mining Corporation (“Patricia Mining”), a corporation continued under the Ontario Business Corporation Actand all of the shares of Louvem Mines Inc. (“Louvem”), a corporation incorporated under the Companies Act(Quebec) now governed by the Business Corporations Act(Quebec). The head office and principal place of business of the Corporation is located at offices of approximately 8,391 square feet at 161 avenue Principale, Rouyn-Noranda, Quebec, J9X 4P6, telephone number: 819 797-2465. The Corporation also utilizes an executive office of approximately 2,156 square feet in rented premises at 181 Bay Street, Suite 810, Bay Wellington Tower, Brookfield Place, Toronto, Ontario M5J 2T3. The common shares of Richmont Mines are listed and posted for trading on the Toronto Stock Exchange (TSX: RIC) and the New York Stock Exchange Market (NYSE MKT: RIC). The co-transfer agent for the Corporation in the United States is Computershare Trust Company, N.A., 350 Indiana Street, Suite 800, Golden, Colorado 80401. Richmont Mines is principally engaged in activities related to the acquisition, exploration, development and operation of mineral properties. The Corporation began its exploration activities in northwestern Quebec in the spring of 1984. During the following years, it acquired a portfolio of properties with gold-bearing potential with a view to development and commercial operation. Three-year History Richmont Mines currently produces gold from the Island Gold Mine in Ontario and the Beaufor Mine in Quebec. The Corporation is also advancing development of the mineralized extension at depth of the Island Gold Mine in Ontario. On January 9, 2013, the Corporation announced that it had received the required mining permits for its 100%-owned Monique Gold Project. The Corporation subsequently began overburden removal with a view to extracting a 5,000 tonnes bulk sample in 2013. On February 25, 2013, Richmont announced estimated preliminary Inferred resources of 1.5 million tonnes grading 10.73 g/t Au for 508,000 ounces for the Island Gold Deep C Zone, located below the existing infrastructure and reserve and resource base of its Island Gold Mine. Believed to be an extension of the existing mine at depth, the C Zone is sub-vertical and occurs at approximately 450 metres to 1,000 metres below surface. For full details, refer to February 25, 2013 press release entitled “Richmont Mines Adds New High Grade Inferred Mineral Resources of 508,000 Au Ounces at 10.73 g/t at Island Gold Deep”. On February 25, 2013, the Corporation announced the appointment of Mr. Daniel Adam as Vice-President, Exploration. Mr. Adam had been working for Richmont Mines since March 10, 2008 and had held various positions over the years. 20


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On April 12, 2013, Richmont announced that an Island Gold Deep NI 43-101 technical report was filed on SEDAR, and the Corporation noted that new drill results continued to show Island Gold Mine potential at depth. For full details, refer to the April 12, 2013 press release entitled “Island Gold Deep 43-101 Report filed on SEDAR; New drill results continue to show Island Gold Mine deep potential” On May 9, 2013, the scheduled four month de-commissioning process of the Francoeur Mine was completed following the November 29, 2012 mine closure and approximately $1.6 million of equipment from the operation was redeployed to the other mine sites during the year 2013. On June 17, 2013, Richmont Mines obtained a letter of offer for a senior credit facility for up to US$50 million from Macquarie Bank Limited (“MBL”) to advance the Island Gold Deep project. The US$50 million facility consisted of three tranches, all of which were subject to certain conditions being met prior to drawdown. The Corporation issued call warrants for the purchase of 1,250,000 Richmont shares to MBL at closing of the facility agreement. The warrants had an exercise price of $2.45 per share, and they subsequently expired 3 years from the original date of their issue to MBL. A total of 812,500 warrants vested immediately upon closing of the facility agreement. The remaining 437,500 warrants were to have vested when the Corporation fully meets the conditions to drawdown Tranche B, which did not occur. On June 19, 2013, Richmont Mines announced the successful completion of the bulk sampling phase for its W Zone Gold Project. As a result, the Corporation decided to proceed to the commercial production phase of the project. On July 31, 2013, Richmont Mines announced the successful completion of the bulk sampling phase for its Monique Gold Project. As a result, the Corporation established estimated mineral reserves for the project, and decided to proceed to commercial production. On August 2, 2013, Richmont Mines announced that Mr. Sam Minzberg had resigned from the Corporation’s Board of Directors. On August 23, 2013, Richmont Mines closed the previously announced senior credit facility for up to $50 million with Macquarie Bank Limited to advance Island Gold Deep project. On October 4, 2013, Richmont Mines announced that the Monique Gold project had successfully completed the three month pre-production phase and commercial production was declared on October 1, 2013. The Corporation noted that Monique was expected to produce 4,500 ounces of commercial gold production during the fourth quarter of 2013, and had an estimated life of mine commercial gold production of 30,000 ounces, over 19 months, at an average cash cost per ounce of $904. A NI 43-101 technical report for Monique’s mineral reserve estimate, published July 31, 2013, was filed on SEDAR (www.sedar.com) on September 13, 2013. On October 7, 2013, Richmont Mines announced an updated Inferred mineral resource estimate of 2.3 million tonnes grading 10.53 g/t for 771,000 ounces of gold for the Island Gold Deep project and provided information regarding the ownership of certain claims at the project. It came to management’s attention that a portion of the Island Gold Deep project’s estimated Inferred resource base lay within four patented claims for which Richmont owned 69% with the remaining 31% being held by a third party. Refer to the October 7, 2013 press release entitled “Richmont Mines announces updated Inferred mineral resource estimate of 771,000 ounces of gold for Island Gold Deep project; Provides information regarding ownership of certain claims at project” for full details. 21


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On October 16, 2013, Richmont Mines entered into a land and mining rights agreement with Argonaut Gold, owner of the Magino Gold Project that is adjacent to the Corporation’s Island Gold Mine. The agreement will enable Richmont to extend the western boundary of its Island Gold Deep project by approximately 585 metres thus increasing the project’s exploration potential towards the west. Mining rights below a depth of 400 metres were also secured on several claims to the south of the Island Gold Deep project, thus adding to the project’s exploration potential at depth. As part of the agreement, Richmont will acquire Claim SSM 722481 in its entirety, which immediately abuts Island Gold’s Lochalsh Zone, where reserves and resources already existed and where mining was taking place. In exchange, Argonaut will receive exploration and mining rights from surface to a maximum depth of 400 metres on certain Richmont claims that border the Magino Gold Project, providing it with greater flexibility in its project development. Under the terms of the agreement, Richmont will receive a net payment of $2.0 million in cash from Argonaut upon completion of the land transactions. This Agreement was slightly modified in June 2014. Under the revised terms, Argonaut will receive one claim in its entirety and surface and mining rights down to a depth of 400 metres on six claims. It will also receive surface rights on two claims down to a depth of 100 metres. The Corporation will receive two additional claims for a total of three and mining rights below a depth of 400 metres on three claims. As previously reported, under the terms of the Agreement, the Corporation will receive a net payment of $2.0 million in cash from Argonaut upon completion of the land transactions, which are now expected to take place in 2016. On October 17, 2013, Richmont Mines announced that the W Zone Gold Project had successfully completed the three month pre-production phase and that commercial production was declared on October 1, 2013 On November 7, 2013, Richmont Mines announced that Mr. Christian Pichette, Richmont’s Chief Operating Officer, would retire at the end of 2013 after more than 35 years in the mining industry. During the last 8 of these years, Mr. Pichette spent as an integral part of Richmont’s team. Similarly, it was announced that Mr. Ebe Scherkus had resigned from Richmont’s Board of Directors for personal reasons. In addition, it was announced that Mr. René Marion had joined Richmont’s Board of Directors effective November 6, 2013. A mining engineer by training, Mr. Marion brought over 30 years of industry experience to the Corporation’s Board. On December 10, 2013, Richmont Mines announced that Dr. James W. Gill would join its Board of Directors. In addition, the Corporation appointed Mr. Rosaire Émond, Eng., to the position of Vice-President and Chief Operating Officer, replacing Mr. Christian Pichette.It was also announced that Mr. Jean Bastien, Eng., MBA, had been appointed to the position of Mine Manager of the Corporation’s Island Gold Mine and that Mr. Raynald Vincent, Eng. M.G.P., had been appointed to the position of Chief Geologist for the Corporation’s Island Gold Mine. On December 20, 2013, Richmont Mines announced that it had decided to terminate the Senior Secured Credit Facility (the “Facility”) for up to $50 million with MBL in August 2013. No amounts had been drawn on the Facility, and no gold hedging contracts had been put in place. The Corporation, in conjunction with MBL, began the process of releasing the securities that were put in place as part of the Facility. As per the terms of the Facility, the Corporation did not incur any cancellation costs. On January 28, 2014, Richmont Mines announced an increase in Indicated and Inferred gold resources at its Island Gold Deep Project. Previously reported Inferred resources containing 771,000 ounces of gold were upgraded to Indicated resources of 456,000 tonnes at an average grade of 11.52 g/t for 169,000 ounces of gold, and Inferred resources were increased to 3,200,000 tonnes at an average grade of 9.29 g/t for 955,000 ounces of gold. The increase continued to indicate Island Gold Deep’s potential to be developed into an important high grade and long life contributor to Richmont’s Island Gold Mine. On February 11, 2014, Richmont Mines announced updated corporate mineral reserve and resource estimates as of December 31, 2013, along with forecasted 2014 production, capital expenditures and exploration budget. The Corporation also announced that, as a result of a downward adjustment to the W Zone Mine reserve base, it would incur a $13.5 million non-cash write-down on the W Zone Mine in the fourth quarter of 2013. 22


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On April 1, 2014, Richmont Mines announced that an updated NI 43-101 technical report was filed for the Corporation’s Island Gold Mine Property, which encompassed the producing Island Gold Mine and the Island Gold Deep resource located directly below. As per this update, the Island gold Mine Property contained estimated Proven and Probable Reserves of 143,506 gold ounces (733,347 tonnes grading 6.09 g/t Au), Measured and Indicated resources of 233,330 ounces of gold (739,700 tonnes grading 9.81 g/t Au) and Inferred resources of 1,037,327 ounces of gold (3.6 million tonnes grading 9.07 g/t Au) as of December 31, 2013. On April 23, 2014, Richmont Mines announced that it had closed the bought deal financing previously announced on April 3, 2014. The Corporation issued a total of 8.05 million common shares at a price of $1.45 per share, including the entire over-allotment option of 1.05 million common shares, on a bought-deal basis, for aggregate gross proceeds of $11.67 million (the “Offering”), through a syndicate of underwriters lead by Macquarie Capital Markets Canada Ltd. and including BMO Nesbitt Burns Inc., CIBC World Markets Inc. and Desjardins Securities Inc (the "Offering"). The proceeds from the Offering were to be used for working capital and general corporate purposes. On April 24, 2014, Richmont Mines announced that access to the upper portion of the Island Gold Deep resource had been achieved with approximately 130 metres of development into the C Zone, on claims that are 100% owned by the Corporation, at a vertical depth of 560 metres (the 560 level). An approximate 92 metre length of this development was well mineralized, and corresponded well with the previously established resource. Chip sample results (face) obtained for the C mineralized zone during lateral drift development over the 92 metres averaged a cut grade of 12.73 g/t over an average width of 2.92 metres. This grade was seen as indicative, as the capping value used (75 g/t) needed to be confirmed by further studies. Results from definition drilling completed within the deep resource offer additional confirmation of prior exploration data for Island Gold Deep. Approximately 5,000 metres of definition drilling had been completed in the upper part of the C zone resource at 25 metre spacing, and results enabled a better definition of the resource limits for both the C and B zones. Ramp development was ahead of schedule and was at the 610 metre level, and was on pace to reach a depth of 635 metres before year-end. On July 2, 2014, Richmont Mines announced that Mr. Paul Carmel, Richmont’s President and Chief Executive Officer, was relieved of his duties with the Corporation effective immediately. Ms. Elaine Ellingham was appointed interim President and CEO. On August 5, 2014, Richmont Mines announced that it signed a definitive agreement to acquire the outstanding 31% ownership of four patented claims on the Island Gold Mine property, thereby increasing its ownership of these claims to 100% from 69% previously. The 31% ownership held by the third party was to be acquired by Richmont in return for a 3% Net Smelter Return (“NSR”) royalty that is payable on 100% of the mineral production from the four claims. The transaction was closed on August 6, 2014, resulting in consolidation of Richmont’s ownership of the Island Gold Mine property. On September 15, 2014, Richmont Mines Inc. announced that it would be commencing an additional exploration drilling program from surface to test part of the down plunge projection of the Island Gold deposit. This was in addition to the remaining budgeted 2014 exploration and definition drill programs that was currently underway from underground. The new program consisted of four diamond drill holes for approximately 4,800 metres at an estimated cost of $0.5 million. On September 25, 2014, Richmont Mines Inc. announced that the Board of Directors had promoted Nicole Veilleux to Vice-President, Finance. The Corporation concurrently announced that Pierre Rougeau, Chief Financial Officer, resigned from the Corporation to pursue other opportunities. On September 30, 2014, Richmont Mines Inc. announced an accelerated and expanded development plan for the estimated 1.1 million ounce inferred resource extension below the Corporation’s Island Gold Mine in Ontario, as well as chip sampling results from lateral development on the 535 and 585 metre levels of the mine. 23


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On October 17, 2014, Richmont Mines Inc. announced the appointment of Mr. Renaud Adams to the position of President and Chief Executive Officer effective November 15, 2014. On October 17, 2014, Richmont Mines Inc. announced the resignation of Dr. James Gill from the Corporation’s Board of Directors, effective October 17, 2014. On January 8, 2015, Richmont Mines Inc. provided results from its deep exploration drilling that was announced in September 2014 to test part of the down plunge projection of the Island Gold deposit to the east. Highlights included intersections of 19.87 g/t Au over 3.93 metres at a vertical depth of 1,203 metres and 7.44 g/t Au over 8.49 metres at a vertical depth of 858 metres. Richmont also announced a $7.6 million exploration program for Island Gold Mine in 2015. On January 15, 2015, Richmont Mines Inc. reported 2014 gold production of 95,208 ounces, a 45% increase over 2013. Full details regarding 2014 production and guidance for 2015 were provided, as well as transformational development plans for the Corporation’s 1.1 million gold ounce global higher-grade resource at the Island Gold Mine in Ontario. On January 20, 2015, Richmont Mines Inc. announced that it entered into an agreement with Macquarie Capital Markets Canada Ltd. (“Macquarie”) as lead underwriter, on behalf of a syndicate of underwriters, for the issuance of 7.5 million common shares of the Corporation, on a bought-deal basis, at a price of $4.00 per share (the “Offering Price”) for gross proceeds of $30 million (the “Offering”). The syndicate of underwriters also included CIBC World Markets Inc., National Bank Financial Inc., BMO Capital Markets, TD Securities Inc., and PI Financial Corp. On January 21, 2015, Richmont Mines Inc. announced that it had agreed to increase the size of this bought deal offering to $34 million. Pursuant to a revised agreement, the syndicate of underwriters led by Macquarie Capital Markets Canada Ltd. agreed to purchase on a bought deal basis 8.5 million shares of the Corporation, at a price of $4.00 per share for gross proceeds of $34 million. In addition, the underwriters were granted an over-allotment option to purchase an additional 1.125 million common shares from the corporation, for additional gross proceeds of approximately $4.5 million. This transaction was successfully closed on February 11, 2015. On February 23, 2015, Richmont Mines Inc. announced the appointment of Mr. Steve Burleton to the position of Vice-President, Business Development. On February 27, 2015, Richmont Mines Inc. announced that Mr. Rosaire Emond, Chief Operating Officer, decided to leave Richmont to pursue other career opportunities. Mr. Emond’s last day was March 6, 2015. Mr. Renaud Adams, President and CEO, would oversee the operations and the transformational development currently underway at Richmont’s cornerstone Island Gold Mine. On July 14, 2015, Richmont Mines Inc. announced its plan to proceed with the development of the deeper Q zone at Beaufor Mine. This was based on a comprehensive analysis of both geological and economic factors. With this development, life of Beaufor Mine was extended by two years, with an annual estimated production rate of 20,000 to 25,000 ounces in 2016 and 2017. On August 6, 2015, Richmont Mines Inc. announced record revenues of $40.6M for the second quarter and increased its production guidance to 87,000 – 95,000 ounces, from 78,000 – 88,000 ounces previously, as a result of strong results realized in the first six months of the year. On September 10, 2015, Richmont Mines Inc. announced commencement of a 23,000 metre deep directional drill program at its Island Gold Mine to further expand its resources at depth below its current 1.0 million ounce global gold resource. This drill program was to follow up on very encouraging results of a single drill hole from surface announced on January 8, 2015. Refer to the September 10, 2015 press release entitled “Deep drilling to commence at Richmont’s Island Gold Mine to pursue resource expansion potential, following up on 2014 high-grade intersection at depth” for full details. 24


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On September 14, 2015, Richmont Mines Inc. announced its inclusion in the S&P/TSX SmallCap Index, effective after the close of trading on Friday, September 18, 2015. On September 15, 2015, Richmont Mines Inc. announced strengthening of its executive team by appointment of Anne Day, as Vice President, Investor Relations. On September 16, 2015, Richmont Mines Inc. provided an update on its previously announced 20,000 metre surface exploration program on its Island Gold property to test the east and west extensions of the Island Gold deposit along strike as well as new deposits within the regional Goudreau zone, which hosts the mine’s operations. The updated program included drilling of selected high-priority gold targets identified by the exploration team, based on their previous work and compilations, elsewhere on the highly prospective 77 km2Island Gold Property. The exploration drilling began earlier that year with 1,800 metres completed at the end of the second quarter. The program was to follow up on high quality gold targets well characterized by the Corporation’s exploration team, while leveraging more advantageous drilling costs. Refer to the September 16, 2015 press release entitled “Richmont Mines Provides an Update on the Surface Step-Out Exploration Drilling to Test Along Strike and Priority Regional Targets on Its Island Gold Mine Property” for full details. On October 28, 2015, Richmont Mines announced the completion of a Preliminary Economic Assessment (“the PEA”) for its cornerstone Island Gold Mine. The PEA considered an 800 tonne per day mining operation that solely evaluated the December 31, 2014 Mineral Resources that were located in the most continuous portion of the deposit between the 450 metre and 860 metre levels. For the purposes of this PEA, the Corporation had excluded Resources above the 450 metre level, isolated Resource blocks and parallel zones outside the main area of the study. Further ongoing engineering studies are investigating a possible expansion to 1,150 tonnes per day. Refer to the October 28, 2015 press release entitled “Richmont Mines Announces Results of a Preliminary Economic Assessment for a Portion of the Deeper Resources of the Island Gold Mine” for full details. On December 7, 2015, Richmont Mines announced the appointment of Christian Bourcier to the Richmont executive team as Vice-President, Operations effective January 11, 2016. Mr. Bourcier will be responsible for all operational programs for Richmont and will be based in Rouyn-Noranda, Quebec. On December 11, 2015, the Corporation filed an NI 43-101 Technical Report on SEDAR that contained the “PEA” results announced earlier on October 28, 2015. Refer to the December 15, 2015 press release entitled “Richmont Mines Announces Filing of NI 43-101 Technical Report for its Island Gold Mine” for full details. On December 21, 2015, Richmont Mines provided an initial update on the previously announced Island Gold exploration drilling program. The overall program had four main objectives: 1) To test the near-mine potential to extend mine life above the 860 metre level; 2) to test the down plunge extension of the deposit between the 860 and 1,500 metre levels; 3) to test the east-west lateral extension beyond the known deposit; and 4) to test high-priority gold targets on the prospective Island Gold Property. It is now expected that the entire drilling program will be completed by the end of June, 2016. Refer to the December 21, 2015 press release entitled “Richmont Mines provides exploration update for Island Gold” for full details. On December 22, 2015, Richmont Mines announced that Mr. Greg Chamandy would be resigning as Executive Chairman of the Board effective January 1, 2016, but would remain as a director of the Corporation and continue to be a member of the Corporation’s Technical and Corporate Responsibility Committee. Mr. René Marion, then currently an independent director, would be appointed as non-executive Chairman of the Board at that time. On February 9, 2016, the Corporation announced an increase of 187% (net of depletion) in its Mineral Reserves on December 31, 2015. This included a 206% increase in Mineral Reserves at the cornerstone Island Gold Mine to 561,700 ounces (net of depletion) at a Mineral Reserve grade of 8.26 g/t. Mineral Reserves at Beaufor Mine increased 95% to 63,850 (net of depletion) at a Mineral Reserve grade of 6.57 g/t, extending Beaufor mine life by more than two years. Refer to the February 9, 2016 press release entitled “Richmont Mines increases Mineral Reserves by 187% and Island Gold Mine increases Mineral Reserves by 206%, with a 29% increase in Reserve grade” for full details. 25


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On February 12, 2016, Richmont provided production and costs guidance for 2016, which included a potential increase of 22% from Island Gold Mine expecting to drive a decrease in AISC. Major consolidated operational estimates included the following: Gold ounces produced

   87,000-97,000Cash Costs per ounce (CAD)

   $930-$1,000All-in sustaining costs per ounce (CAD)

   $1,275-$1,390Cash Costs per ounce (US$)1

   $680-730All-in sustaining costs per ounce (US$)1

   $935-1,015
 1

   assuming an exchange rate of 1.364 Canadian dollars to the US dollar Capital investment estimates included $24.1 million of sustaining capital and $43.4 million of project capital. The Corporation indicated that it will remain focused on a disciplined and prudent capital allocation strategy to ensure expenditures are fully funded internally with sustaining capital investment requirements. Exploration costs for 2016 were estimated at $8.4 million, of which $7.3 million relates to costs required to complete the drilling programs announced in September 2015. Refer to the February 12, 2016 press release entitled “Richmont Mines announces 2016 operational outlook” for full details. On February 24, 2016, Mr. Peter Barnes was appointed as an independent member of the Richmont Board of Directors and joined the Corporation’s Audit and HR and Compensation Committees. On February 25, 2016, the Corporation announced an update on its drilling program0s, demonstrating the significant potential of Island Gold Mine, laterally and at depth. Refer to the February 25, 2016 press release entitled “Richmont Mines Continues to Intersect Significant Gold Mineralization at Island Gold Laterally and at Depth” for more details. On March 28, 2016, the Corporation announced the filing of technical reports for the Island Gold Mine and Beaufor Mine with respect to the updated 2015 Reserves and Resources announced on February 9, 2016. Capital Expenditures The following table sets forth the Corporation’s capital expenditures on its properties for the past three fiscal years. (in thousands of $)

   2015

   2014

   2013$

   $

   $Island Gold Mine

   48,938

   20,168

   27,770Beaufor Mine

   1,390

   1,623

   980W Zone Mine

   -

   234

   3,779Monique Mine

   -

   21

   8,358Other

   1,770

   1,006

   1,001Total

   52,098

   23,052

   41,888
 26


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As part of its strategy of accelerated development and potential production expansion at Island Gold Mine, the Corporation invested $48.9 million in 2015. This included $7.8 million for extending the main ramp to a vertical depth of 740 metres, $8.5 million for a secondary eastern ramp to a vertical depth of 500 metres and $4.8 million for an exploration drift that extends to the east by approximately 440 metres. A $2.8 million delineation drilling program of 50,089 metres was also completed in 2015. Other significant infrastructure upgrades included $8.7 million for the tailings dam expansion, $5.0 million for electrical upgrades and $1.6 million for bunkhouse buildings. Richmont invested $23.1 million in its assets in 2014, a decrease from the $41.9 million in 2013. The decrease largely reflects the lower development costs associated with the Monique Mine following its commencement of commercial production in the fourth quarter of 2013, lower investments in the W Zone following the decision to cease operations in the second quarter of 2014, and decreased year-over-year investments at the Island Gold Mine. Property Interests The following table outlines Richmont Mines’ interest in its exploration properties as at December 31, 2015. Property

   Year of acquisition

   Number of Mining titles

   Participation1QuebecWasamac

   1988

   4

   100%Camflo Northwest

   2005

   13

   80%OntarioSewell

   2002

   6

   100%Cripple Creek

   2002

   27

   100%
 1

   The Corporation will be required to pay royalties if some of these properties are brought into commercial production.
 27


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Exploration and Project Evaluation Expenditures The following table presents Richmont Mines’ exploration expenses in 2013, 2014, 2015 and the budgeted estimated amounts for 2016. (in thousands of $)

   2016

   

   2015

   

   2014

   

   2013$

   

   $

   

   $

   

   $EstimatedExploration costs - MinesIsland Gold

   7,300

   

   4,600

   

   771

   

   4,532Beaufor

   1,700

   

   2,679

   

   1,733

   

   1,9299,000

   

   7,279

   

   2,504

   

   6,461Exploration costs - Other propertiesWasamac

   140

   

   94

   

   169

   

   1,102Monique

   -

   

   -

   

   2

   

   221Other

   100

   

   32

   

   154

   

   347Project evaluation

   825

   

   521

   

   357

   

   474Exploration and project evaluation before depreciation and exploration tax credits

   10,065

   

   7,926

   

   3,186

   

   8,605Depreciation

   35

   

   41

   

   71

   

   229Exploration tax credits

   -

   

   (532

   )

   515

   

   (959

   )10,100

   

   7,435

   

   3,772

   

   7,875
 2016 Trends The cost-effective development of its mining assets, both current and future, has always been at the heart of Richmont Mines’ success over the years, and this remains a top priority for the Corporation. Richmont is committed to generating positive cash flows, and delivering organic growth. With over 30 years of experience in gold production, exploration and development, along with prudent financial management, Richmont is well-positioned to cost-effectively build its Canadian reserve base and to successfully enter its next phase of growth. Richmont currently operates two gold mines – the Island Gold Mine in Ontario and the Beaufor Mine in Quebec. Consolidated production for 2016 is expected to be consistent with 2015, as increased production from Island Gold is expected to fully offset the production decrease related to the 2015 closure of the Monique Mine. Company-wide cash costs and AISC are expected to be largely in-line with the prior year. In 2016, the Corporation will continue to actively explore and develop the Island Gold deposit laterally and at depth, consistent with its goal to increase the production profile, decrease costs and grow its cash flow streams. Further, as the processing of the Monique stockpile will be completed in the first quarter, the tonnes processed at Camflo Mill are expected to decrease during 2016. Richmont will pursue and evaluate opportunities to fully utilize excess capacity. It currently has custom milling contracts in place with local mining companies to process approximately 55,000 tonnes in the first half of 2016. 28


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The Corporation will remain focussed on a disciplined and prudent capital allocation strategy to ensure expenditures are fully funded internally with sustaining capital investment requirements expected to reduce as compared with the prior year. Project capital investment for the year will continue to focus on unlocking the potential of the Island Gold Mine and investment is primarily allocated to allow for accelerated development, related infrastructure upgrades and equipment purchases as described in the PEA. Delineation drilling in 2016 will target the conversion of the remaining resources within the scope of the PEA deposit area. Sustaining capital at Beaufor is expected to be in-line with 2015 and includes 625 m of ramp development and 100 m of vertical development. Exploration drilling programs at Island Gold Mine are expected to be completed at the end of June 2016, at which time the Corporation will review the results and will plan its drilling program for the second half of 2016 accordingly. For the Beaufor Mine, the drilling program will focus on the Q Zone extension and in the upper mine to target new resources and potential mine life extension. 29


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B.

   Business Overview
  1.

   Island Gold Mine, Dubreuilville, Ontario, Canada
 Location and Property Description The Island Gold Mine is located approximately 83 km northeast of Wawa, Ontario, in the Sault Ste. Marie Mining Division. Dubreuilville, Ontario, is approximately 10 km northwest of the Island Gold Mine. Description of Mining Rights The Island Gold property is divided into nine parts and consists of 219 patented, leased and staked claims totaling 7,772 ha, located mainly within the Finan and Jacobson townships. These claims are grouped into nine (9) different properties: Kremzar, Localsh, Goudreau, Goudreau Lake, Edwards, Salo, Ego, Argonaut and Island Gold. Property

   Number of

   Area (ha)

   Expiration date

   Richmont Minesclaims

   

   

   Ownership (%)Kremzar

   21

   383

   Patented Claims:

   100taxes are paid every year,2 Mining Leases: 02/28/2022 to06/30/2030Lochalsh

   33

   348

   Patented Claims:

   100taxes are paid every yearMining Leases: 06/30/2030 to03/31/2033Claims: 02/06/2017 to 04/25/2018Goudreau

   65

   988

   58 Patented Claims:

   1006 Patented Claims:

   100 below 400mPart of 1 patented claim:

   100 below 100mtaxes are paid every year1 Claim: 08/20/2018Goudreau Lake

   4

   58

   4 Patented Claims:

   100Taxes are paid every yearIsland Gold

   41

   5,119

   Claims: 07/29/2016 to 07/14/2019

   100Edwards

   43

   703

   Patented Claims:

   100taxes are paid every yearClaims: 04/05/2017 to 08/28/2019Ego

   3

   64

   Patented Claims:

   100taxes are paid every yearClaims: 06/05/2016Salo

   3

   40

   Claims: 06/08/2017 to12/28/2018

   100Argonaut

   6

   72

   3 Patented Claims:

   100 below 400m1 mining lease: 04/30/2030

   1002 claims: 02/05/2018 to 04/18/2018

   100taxes are paid every year
 30


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The claims are expected to be renewed by applying excess credits available before the anniversary date. Taxes are paid annually to the government to keep Patented Claims and Mining Leases in good standing. Richmont Mines has an internal procedure to ensure monitoring of the claim expiry dates. All of these mining claims, mining leases and patented leases were in good standing in 2015 and are expected to remain in good standing for 2016 as well. A detailed list and map of locations can be found in the Island Gold NI 43-101 technical report dated December 31, 2015, which will be filed under the Corporation’s profile on the SEDAR website at www.sedar.com. Summary of Agreements Richmont Mines entered into an agreement with Patricia Mining on August 28, 2003. Under the agreement, Richmont Mines completed a private placement investment of $1.0 million in common shares of Patricia Mining at $0.50 per share and obtained an option to acquire a 55% interest in the Island Gold property by investing up to $10 million or by bringing the project into commercial production. This initial investment was used to partly finance a $3 million exploration program on the Island Gold property. On December 3, 2004, Richmont Mines decided to invest up to an additional $10 million in order to acquire a 55% interest in the project. Richmont Mines became the project operator as of January 1, 2005. The Corporation acquired its 55% interest during the course of the fourth quarter of 2005, after having fulfilled its obligation to invest $10 million toward the project’s development. In January 2006, Richmont Mines and Patricia Mining announced the purchase of the remaining joint venture interest of Algoma Steel Inc. (“Algoma”) in the Goudreau property near Dubreuilville, Ontario, for $100,000. The property remains subject to a 15% net profits interest (“NPI”) royalty as per the original joint venture agreement between Algoma and Patricia Mining. On December 16, 2008, Richmont Mines acquired all of the common shares of Patricia Mining that it did not already own pursuant to a plan of arrangement under the Business Corporations Act(Ontario). Following this transaction, Richmont’s ownership interest of the Island Gold Mine increased to 100% (except for the 4 claims of the Goudreau Lake property where the ownership interest was 69%). On May 9, 2012, Richmont Mines acquired Red Pine Exploration’s remaining 25% interest in the Edwards property, bringing the Corporation’s ownership to 100%, and on June 13, 2012, the Corporation acquired the Salo property, which includes 3 claims located to the east of the Island Gold Mine. On October 16, 2013, Richmont Mines entered into a land and mining rights agreement with Argonaut Gold Inc. (“Argonaut”), owner of the Magino Gold Project adjacent to the Island Gold mine. The agreement enables Richmont to extend the western boundary of its Island Gold Lower Zones by a distance of approximately 585 m thus increasing the project’s exploration potential towards the west. Mining rights below a depth of 400 m were also secured on several claims to the south of the Island Gold Lower Zones, thus adding to the project’s exploration potential at depth. As part of the agreement, Richmont will acquire Claim SSM 722481 in its entirety, which immediately abuts Island Gold’s Lochalsh Zone, where reserves and resources currently exist and where mining is currently taking place. In exchange, Argonaut will receive exploration and mining rights from surface to a maximum depth of 400 m on certain Richmont claims that border the Magino Gold Project, providing it with greater flexibility in its project development. Under the terms of the agreement, Richmont will receive a net payment of C$2.0 million in cash from Argonaut upon completion of the land transactions. This Agreement was modified slightly in June 2014. Under the revised terms, Argonaut will receive one claim in its entirety and surface and mining rights down to a depth of 400 m on six (6) claims. It will also receive surface rights on two claims down to a depth of 100 m. Richmont will receive two additional claims for a total of three (3) and mining rights below a depth of 400 m on three (3) claims. As previously reported, under the terms of the Agreement, Richmont will receive a net payment of C$2.0 million in cash from Argonaut upon completion of the land transactions, which are now expected to take place in 2016. 31


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On August 5, 2014 - Richmont Mines Inc. announced that it had signed a definitive agreement to acquire the outstanding 31% ownership of four patented claims on the Island Gold Mine property, thereby increasing its ownership of these claims to 100% from 69% previously. The 31% ownership held by the third party will be acquired by Richmont in return for a 3% Net Smelter Return (“NSR”) royalty that is payable on 100% of the mineral production from the four claims, SSM2490, SSM2491, SSM2666 and SSM2667 (the Goudreau Lake property).As part of this agreement Richmont made the following advance royalty payments: $1 million upon closing of the transaction, and $1 million on each of January 3, 2015 and January 3, 2016. Advance royalty payments will decrease to $0.3 million as of January 3, 2017, and will be paid annually until such time as a total of $5.1 million has been paid in royalties (including advance royalties) to the third party, after which advance royalty payments will cease. All advance royal payments will be credited against any future NSR payments. Ownership of Mining Rights Richmont currently holds all the mining rights for the Island Gold project. All mining titles on the Island Gold were jointly held by Richmont Mines (55%), and Patricia Mining (45%). Since the acquisition of Patricia Mining on December 16, 2008, Richmont Mines held 100% of all mining titles relating to the Island Gold property with the exception of 4 patented claims of the Goudreau property (2490, 2491, 2666 and 2667), for which Richmont Mines owned 69%. The remaining 31% was held by a third party. Following the acquisition, the mining rights owned by Patricia (45%) were transferred to Richmont Mines in February and March 2009. Since the signing in 2014 of a definitive agreement to acquire the outstanding 31% ownership of the four patented claims of the Goudreau property on the Island Gold Mine property, Richmont Mines holds 100% of all mining titles relating to the Island Gold property. Mining Royalties Island Gold properties held by Richmont Mines are subject to the payment of royalties and financial contractual obligations. Details can be found in the Island Gold NI 43-101 technical report dated December 31, 2015 and which will be filed under the Corporation’s profile on the SEDAR website at www.sedar.com. The Kremzar property is subject to a 4% NSR payable to Algoma which becomes payable to Algoma pursuant to the Algoma Royalty Agreement. The Kremzar property is also subject to a 3% NSR payable to Osisko Gold Royalties Ltd (“Osisko”), which is payable until such time as the Algoma NSR becomes payable. In the event that the Algoma NSR becomes payable and is reduced below 4%, Osisko will be entitled to receive an NSR equal to 50% of the amount by which the Algoma royalty is reduced, payable on the same terms as the Algoma NSR. The Lochalsh property is subject to a 3% NSR payable to Osisko. The Island Main and Lochalsh zones, as well as a part of the Island Gold mineral resources below the 400 level, are located on this property. The Goudreau property is subject to a 2% NSR payable to Osisko and a 15% net profit interest (“NPI”) royalty payable to Algoma. The Goudreau Lake property is subject to the 3% NSR royalty payable to Host’s Gold Incorporated. This property is also subject to 1.38% NSR royalty payable to Osisko and a 10.38% NPI royalty in favour of Algoma Steel. In February 2016, Osisko sold 15 % of the Island Gold Mine Royalty interests to Caisse de dépôt et placement du Québec ("CDPQ") and Fonds de solidarité des travailleurs du Québec (F.T.Q.) The Salo property is subject to an NSR royalty of 2% in favour of M.A. Tremblay, J. Robert, R. Salo and P. Robert. Red Pine Exploration owns a 2% NSR on the Edwards property. 32


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There is a 10% NPI payable to Cavendish on four (4) claims of the Argonaut property. Environmental Obligations and Permits All permitting activities identify and address the various municipal, provincial, and federal environmental and social requirements and standards applicable to the IG project. These include the statutory requirements, stakeholder interests, and environmental, social and economic aspects. Agencies include Environment Canada (EC), Ontario Ministry of Environment and Climate Change (MOECC), Ministry of Natural Resources and Forestry (MNRF), and Ministry of Northern Development and Mines (MNDM). IGM is permitted to be designed and operated at a production rate of 27,000 tonnes per month of gold bearing ore. Listed below are the major Environmental Compliance Approvals (ECA) from MOECC that are applicable to the site: Air and Noise ECA # 8549-9BPP7LV issued September 21, 2015. This now includes limited operational flexibility, which allows minor changes to equipment/infrastructure without having to amend the ECA.Septic System ECA # 3989-8XUPS9 issued September 27, 2012. An application for an Amendment was submitted in August 2015 for the Sewage System Expansion Project, Richmont expects to receive approval in first quarter of 2016.Industrial Sewage Works ECA (for tailings management area) ECA # 0440-9YLHG7 issued September 9, 2015. (Previously treated discharge was seasonal, with the issuance of ECA, it is now continuous discharge, allowing increased operational flexibility). Water taking is conducted within acceptable limits to protect fish habitat, as well as under the regulation of a Permit to Take Water (PTTW) from the MOECC. An amendment to the Closure Plan was submitted to MNDM in April 2013, to amalgamate the Closure Plan (for Lochalsh and Kremzar) and include infrastructure associated with the Island Gold Deep project. Richmont received approval in June 2014. Based on the Dam Raise Project 2015, another Amendment to the 2013 Closure Plan was submitted in September 2015, along with the increase in Financial Assurance, which currently is $1,683,942. The process of review and comments is ongoing, Richmont expects to receive approval in the second quarter of 2016. Infrastructure The Island Gold infrastructure includes a primary tailings pond, secondary settling pond, Kremzar Mill (a carbon-in-pulp mill), Lochalsh ramp and portal, mine access road, and hydro-electric power lines, all of which are located on the property. An office, core logging and storage facility, and a mine dry are also located on the previously producing Kremzar mine site. When the Kremzar carbon-in-pulp mill was constructed in 1988, it was capable of handling 650 tpd. Since then, its milling capacity was increased to 850 tpd in 2010 and finally 900 tpd in October 2015. Miller Lake, which is located west of the Kremzar mine, is a fully permitted tailings area. The tailings and waste rock have been tested and are not acid generating. All permits for mining and milling operations have been maintained. Location of Mineralized Zones The mineralized zones, including the reserves and resources of the Island Zone and underground infrastructure, are located on mining leases 991853, 991854 and 991852 and patented claim 2075 of the Lochalsh property, and the ramp and waste pad are on patented claims 1776 and 1710 of the Goudreau property. The reserves and resources of Lochalsh are located on mining leases 825288 and 825287 of the Lochalsh property. The Goudreau resources are located on patented claim 3817 of the Goudreau property. The deep C Zone estimated mineral resources at the Island Gold Mine are principally located on the Lochalsh mining lease 825288 and 991855 and on Goudreau patented claim 2490, 2491 and 2666. 33


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Accessibility Access to the Island Gold Mine is via an all-weather road from Highway 519, just west of Dubreuilville, Ontario. This village is located approximately 35 km east of the junction between Highways 17 and 519. It takes approximately one hour to drive from Wawa, Ontario, to the mine site. Climate The mine is located within the Lake Superior Regional climatic zone, moderated by the influence of Lake Superior. The average daytime temperature is 2°C, ranging from -41°C to 31°C throughout the year. Annual precipitation is normally 669 mm of rain and 278 cm of snow. Winter winds are from the northwest and north, and during the summer south-westerly to westerly winds prevail. The climate does not affect the mining operation, which extends all year long. Local Resources and Infrastructure Wawa has a population of approximately 3,500. Dubreuilville, originally a forestry community, has a population of approximately 900. The Island Gold Mine is also within a few kilometres of railway lines operated by Canadian National Railways and Algoma Railways. Sidings for each of these railway lines are located in the villages of Goudreau and Lochalsh. A power substation connected to the provincial power grid, water supply, gravel roads, offices, maintenance buildings and living accommodations are all available within the mine area. Power is supplied by Algoma Power Inc. (formerly Great Lakes Power Corporation). Richmont Mines also offers living accommodations and flexible schedules to its employees. Training is offered in order to maintain a local qualified workforce. Physiography The property area is within the Precambrian Shield adjacent to Lake Superior, in an area of low rolling hills that trend in an east-west direction with widespread swamps, and mixed forests of broadleafs and conifers. Property relief is low, from a high point of 488 metres above sea level near the Miller and Maskinonge Lakes, to a topographic low point of 381 metres above sea level near Goudreau Creek. The Mine area has been partially logged. Exploration History In 1983 Canamax Resources Inc. (“Canamax”) and Algoma formed a joint venture to evaluate the mineral potential of Algoma’s 117 patented claims covering the Goudreau iron range. In 1985, drilling by Canamax about two kilometres south of the Kremzar mine intersected a series of sub-parallel lenses containing gold mineralization within deformed rocks of the Goudreau Lake Deformation Zone (“GLDZ”). These lenses are known as the Lochalsh, Island Gold, Shore and Goudreau Lake zones. During 1989 and 1990, a 1,280 metre long ramp was driven into the Island deposit beneath Goudreau Lake from an adit on the north shore. Drifts and raises totalling 382 metres were developed on two levels at depths of 125 metres and 140 metres below the Goudreau Lake elevation. A bulk sample weighing 4,167 tonnes was extracted and processed at the Kremzar Mill. Patricia Mining acquired the project in 1996 and completed 16,862 metres of diamond drilling in 49 holes on the Island deposit and Lochalsh Zone between 1996 and 2002. In 2004, Patricia Mining started an underground exploration program and completed a resource estimate at a cost of $3.0 million. A total of 125 metres of exploration drifts, 53 metres of ore sill and 8,137 metres of drilling were completed. In 2005, Richmont Mines completed 2,111 metres of underground development and 7,903 metres of delimitation drilling. A total of 7,259 tonnes with a content of 6.23 g/t Au from ore development were stockpiled on the surface. 34


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In 2006, Richmont Mines continued the exploration program. A total of 3,469 metres of development were completed including 506 metres of ramps and 1,700 metres of ore silling. A total of 56,861 tonnes of development ore with a content of 6.96 g/t Au were stockpiled on the surface. At the end of December 2006, a total of 41,531 tonnes of mineralized material grading 4.80 g/t Au were processed at the mill. A total of 28,149 metres of underground diamond drilling were performed on the Island Zone, and 10,602 metres of drilling were completed from the surface on the Lochalsh and Goudreau zones. Reserve and resource estimates were performed by Genivar in 2007 based on this work. On October 1, 2007, Island Gold began commercial production. On December 16, 2008, Richmont Mines acquired all of the outstanding shares of Patricia Mining, increasing its ownership of the property to 100%, with the exception of four claims on the Goudreau property, for which Richmont owns a 69% interest. During 2009, underground drilling at the Island Gold Mine included 212 drill holes totaling 26,914 metres. Approximately half of these metres were exploration holes in the Lochalsh, Goudreau and Extension-2 zones. The drilling confirmed the presence and continuity of the targeted zones. A surface diamond drilling program was implemented in conjunction with the underground drilling. The goal of this program was to primarily test the near surface eastern and western extensions of the known zones in the vicinity of Island Gold Mine. In 2010, Richmont Mines continued its underground exploration program via drilling and drifting in order to improve the quality of the resources, convert resources to reserve categories and increase the overall resource base. The excavations were done in waste rock to continue the exploration access drifts towards the Extension-2 sector of the E1E Zone, the Goudreau and the Lochalsh zones. This development also permitted exploration diamond drilling in the Extension-2 sector of the E1E Zone, the Lochalsh and the Goudreau zones. During 2010, underground drilling at the Island Gold Mine included 12,110 metres of definition drilling and 24,423 metres of exploration drilling. These metres were exploration holes in the Lochalsh, Extension-1, Goudreau and Extension-2 zones. Drilling confirmed the presence and continuity of the targeted zones. The delineation drilling into the Extension-1 sector of the E1E and the Lochalsh sector permitted the conversion of Probable reserves into Proven reserves. The exploration drilling in the Extension-2 sector of the E1E confirmed the location of the known resource, and resulted in the conversion of a portion of the resources into Probable reserves. A surface diamond drilling program was implemented in conjunction with the underground drilling during 2010. The goal of this program was to primarily test the eastern, western and depth extensions of the known zones in the vicinity of Island Gold Mine. The 2010 surface exploration drill program was completed in December 2010, and consisted of 30,015 metres. The drilling on the projected eastern, western and depth extensions of the mine structure horizon was successful in identifying the continuance of similar alteration, mineralization and shearing over one kilometre east of the Island Gold Deposit under Goudreau Lake. A total of 58,958 metres of drilling were completed in 2011. Nearly 26,000 metres of underground definition drilling were completed in the areas of Lochalsh, Goudreau and Extensions 2 and 3. These and other holes allowed for the conversion of a portion of the resources into reserves. Drilling below the 400 level was mainly done from the surface and once again demonstrated the mine’s potential at depth. More specifically, drilling identified four main areas (G, C, D and E1E) between the -500 and -900 m levels over a 150 metre corridor extending between the Main Island and Lochalsh areas. A total of 85,509 metres of drilling were completed at Island Gold in 2012, nearly 60,534 metres of which were done underground. Definition drilling, in Lochalsh, Goudreau and Extensions 2 and 3 along with other drill holes, permitted part of the resources to be converted into reserves. Drilling below the 400 metre level was done from surface and from underground, and demonstrated the mine’s potential at depth. (Island Gold Deep program). More specifically, the drilling resulted in a first mineral resource estimation for the C Zone at depth in January 2013. 35


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In 2013, nearly 100,000 metres of drilling were completed underground at the Island Gold Mine, including approximately 62,000 metres for the Island Gold Deep exploration program, 20,000 metres of definition drilling and 18,000 metres of exploration drilling in the other areas of the mine. Exploration holes in Island Gold Deep sectors from the west, below Lochalsh, to the east, below Extension 1, confirmed the presence and continuity of the deep C Zone and of some parallel zones, and resulted in an important increase in gold resources. The definition-delineation drilling into the upper sectors of the mine and below Extension-2 also renewed the mineral reserves of the mine. During 2014, approximately 35,000 metres of mainly delineation and definition drilling were performed underground at the Island Gold Mine. The definition-delineation drilling occurred mainly in the lower sectors of the mine, below the 400 level: upper part of the Deep C zone and below Extension 1 and 2. This program has renewed and also increased the mineral reserves of the mine. With some underground drilling, there were also 1,000 metres of surface exploration drilling which were performed in 2014. Recent drill results (cut grades over true widths): in hole GD-14-01C from surface, intersections of 19.87 g/t Au over 3.93 metres in the C Zone, and 21.1 g/t Au over 0.95 metres in an undetermined zone, and in hole 400-528 09 drilled from underground, an intersection of 7.44 g/t Au over 8.49 metres in the C Zone. For 2015 exploration details, refer to section ‘exploration and delineation drilling’ on page 39-41 of this document. Geological Setting Regional Geology The Island Gold property is located in the Michipicoten greenstone belt, which is part of the Wawa sub-province and Superior Province of Archean age. The property is stratigraphically positioned in the upper portion of the Wawa Assemblage, composed by intermediate to felsic volcanic rocks capped by pyrite-bearing iron formations. Project Geology The Island Gold property covers part of the interface between the Catfish assemblage, composed of mafic rocks, and the Wawa assemblage, which consists of felsic rocks. The pyrite-rich Goudreau iron formation lies at the contact between the Wawa and Catfish assemblages. A unit of pyroclastic rocks marks the transition between the two assemblages and hosts the gold occurrences encountered on the property. This gold mineralization is controlled by the Goudreau Lake Deformation zone (the “GLDZ”). The GLDZ hosts the Island, Lochalsh, Goudreau, Shore, and north shear gold zones, all located within the Island Gold property. Mineralization Within the GLDZ there are a series of parallel shear zones, up to 25 metres wide by several hundred metres long, with dips ranging from -70° to -90°, which host the gold mineralization. Moderate to high strain intensity is present within the shear zones containing pervasive alterations occurring in the form of iron carbonate, silica and calcite. Gold is found primarily in quartz stringers and in veins, 1 cm to 1.5 metres wide, within areas of intense sericitization and silicification with 2% to 5% pyrite. Finely disseminated gold occurs in clusters up to 3 mm in diameter. At the Island Gold deposit, 5 zones referred to as E1, E, D1, D, and C, are defined and characterized by the presence of alteration halos ranging from 0.5 metres to over 8 metres in thickness, and are comprised of intense silica alteration, albite alteration and quartz-carbonate veins. Two dominant envelopes are defined, namely the C/D envelope and the E/E1 envelope, which includes the D1 Zone. An anastamosing pattern defines the relationship between the zones. 36


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The mineralized Island Gold Lower C Zone, which is now well defined, corresponds to the continuation at depth of the mineralized zones that are presently mined above the -400 m level. The mineralization undergoes an inflection southward between the -400 m and -500 m levels, before returning with a high dip southward at depth. The average width of the deep C Zone resource is approximately 4.5 metres, which is above the average of 2.7 metres in mineralized zones above the -400 m level. Also, it seems that the number of gold-bearing quartz veins inside the alteration zone of the C Zone is slightly greater, with approximately 60% of the drill holes inside the first resource containing some visible gold, which translates into a higher average grade. Island Gold Lower mineral resources also include 6 additional zones that are sub-parallel to the C Zone. 2015 Results 2015

   

   2014

   

   2013Total tonnes of Ore and waste mined

   535,601

   

   453,243

   

   484,992Gold ProducedTonnes milled

   242,137

   

   230,828

   

   239,766Head grade (g/t)

   7.31

   

   5.91

   

   4.57Gold recovery (%)

   96.8

   

   96.3

   

   96.1Ounces produced

   55,040

   

   42,206

   

   33,836Revenues

   77,721

   

   58,971

   

   50,487Gold SoldOunces sold

   52,363

   

   42,078

   

   35,113Average selling price per ounce

   1,481

   

   1,398

   

   1,434Cash cost per ounce

   1,034

   

   982

   

   1,124AISC per ounce

   1,460

   

   1,317

   

   1,495Average selling price per ounce (US$)

   1,158

   

   1,266

   

   1,392Cash cost per ounce (US$)

   808

   

   889

   

   1,092AISC per ounce (US$)

   1,141

   

   1,192

   

   1,452Sustaining costs

   22,330

   

   14,110

   

   13,034Project and non-sustaining exploration costs

   35,494

   

   12,538

   

   20,909
 Production Total tonnes mined, including ore and waste, were 535,601, an 18% increase over 453,243 tonnes of ore and waste mined in 2014. Development ore increased significantly by 79% bringing the development ore to total ore ratio to almost 50%. The amount of development ore is expected to decrease in future years, which should correspondingly reduce costs. Waste mined increased by 26% to 294,895 tonnes from 233,867 tonnes in 2014, in line with the mine’s accelerated development plans. 242,137 tonnes of ore were processed in 2015 at an average grade of 7.31 g/t resulting in a total production of 55,040 ounces. This compared to 2014 when 230,828 tonnes of ore were processed at average grade of 5.91 g/t resulting in 42,206 ounces of gold produced. Cash costs per ounce increased to CAN$1,034 from CAN$982 in 2014, as the impact of higher development ore was partially offset by higher grades during the year. In U.S. dollar terms, cash costs per ounce decreased from US$889 to US$808, due to the weakened Canadian dollar during the year. All-in sustaining costs (AISC) of CAN$1,460 per ounce was higher than AISC of CAN$1,317 in 2014, due to higher sustaining costs during the year. Sustaining costs for the year were $22.3 million or 58% higher than $14.1 million in 2014, as the mine spent $10.3 million on buildings, equipment, ventilation, electrical upgrades and tailings expansion, $9.1 million on extension of the East Ramp and $2.9 million on 37


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exploration and delineation drilling. 52,363 ounces of gold were sold during the year at an average realized gold price of CAN$1,481 per ounce (US$1,158) generating revenues of $77.6 million, an increase of 32%, as compared to 42,078 ounces sold in 2014 at an average realized gold price of CAN$1,398 per ounce (US$1,266) that generated $58.8 million in revenues. For the 12 months ended December 31, 2014, gold production was 42,206 ounces as 230,828 tonnes of ore were processed at an average grade of 5.91 g/t. This compared to 2013 results, in which 239,766 tonnes of ore were processed at an average grade of 4.57 g/t resulting in gold production of 33,836 ounces. The higher year-over-year gold production reflects a 29% improvement in grade, partially offset by a slight 4% decrease in processed tonnage. The grade improved with the increased cut-off grade from 3 g/t to 3.75 g/t and also with the mining of higher grade areas: Extension 2, Goudreau and C Zone at depth. Cash costs at Island Gold decreased year-over-year to CAN$982 (US$889) from CAN$1,124 (US$1,092) in 2013, with the improvement being driven by the higher recovered grade. This was partially offset by a higher year-over-year mining cost per tonne, which stemmed from a greater amount of development work and a lower amount of processed tonnage year-over-year, as well as the short-term rental of crushing equipment from an outside supplier. AISC per ounce dropped to $1,317 from $1,495 in 2013, largely due to lower cash costs and also as 8% higher sustaining costs in 2014 ($14.1 million vs $13.0 million) were spread over 20% higher number of ounces sold. During the year, the Corporation strategically leveraged the devalued Canadian dollar, to invest in accelerated development at the Island Gold Mine. With a seven-year mine life based on reserves, the Corporation has pre-developed more than three years of production life. As part of its strategy of accelerated development and potential production expansion at Island Gold Mine, the Corporation invested $48.9 million in 2015. This included $7.8 million for extending the main ramp to a depth of 740 metres, $8.5 million for a secondary eastern ramp to a depth of 500 metres and $4.8 million for an exploration drift that extends to the east by approximately 440 metres. A $2.8 million delineation drilling program of 50,089 metres was also completed in 2015. Other significant infrastructure upgrades included $8.7 million for the tailings dam expansion, $5.0 million for electrical upgrades and $1.6 million for bunkhouse buildings. Project capital in 2016 will continue to focus on unlocking the potential of the Island Gold Mine and is primarily allocated to accelerated mine development as well as related infrastructure upgrades and equipment purchases as described in the PEA. The amount of handled waste is expected to begin diminishing in 2016, which will reduce costs and increase profitability, while also freeing up capacity for additional ore tonnage as a greater percentage of mining is migrated to the lower levels of the mine. Development of the main access ramp, or West Ramp, will continue to be advanced by the contractor, and is expected tobe extended from its current depth of -740 metres to a depth of approximately -860 metres before the end of 2016. The Corporation continues to use its own teams to advance the secondary East Ramp, located approximately 450 metres to the east of the main access ramp. This ramp will open development and mining for 2015 and 2016 on the Extension 1 and Extension 2 areas of the mine below the -400 metre level. The main objective is to increase mining flexibility moving forward by splitting mining efforts between the Western and Eastern parts of the deposit. Approximately 2,500 metres of ore development and 5,300 metres of waste development is expected to be completed during the year. It is expected that by the end of 2016, the east ramp will reach a vertical depth of 655 metres. Given the significant near-mine exploration potential identified directly to the east of the main deposit area considered in the PEA, the Corporation will review the optimal location of the dual ramp system as described in the PEA, in order to accommodate any additional resources located outside the scope of the PEA. 38


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Exploration and Delineation drilling Richmont’s objective is to increase the reserves and the resources of this property and the Corporation remains confident regarding the long-term possibilities for Island Gold. The Delineation drilling program in the Lower C Zone that was included in the 2015 PEA successfully converted nearly 80% of the inferred resources and increased reserves by 206% to 561,700 ounces of gold, net of depletion. Exploration costs at Island Gold in 2015 increased to $4.6 million from $0.8 million in 2014 as a result of increased exploration drilling during the year, which included two drilling programs that were initiated in the latter part of the year. The objective of the first drilling program (63,500 metres) was to test the east and west extensions of the Island Gold deposit from surface and underground along strike as well as to test for new deposits within the regional Goudreau shear Zone. The second is a deep directional drilling program (23,000 metres) to test the potential for higher grade resources at depth below the 1,000 metre level. The entire drilling program is expected to be completed by the end of June 2016. Highlights from the drilling at the end of 2015 include: Near-Mine Lateral Exploration: Approximately 19,348 metres of a planned 36,000 metres (5,000 metres from the 450 metre level and 31,000 metres from the 620 metre level) have been completed to date. The drilling is focused on east-west targets that are contiguous to the main deposit area considered in the PEA. Deep Directional Drilling: The objective of the deep drilling program is to test the deposit at depth and to increase confidence in the vertical extension of the deposit for potential resource growth. To date, approximately 6,272 metres (4 holes) of the planned 23,000 metres of drilling have been completed, including 3 pilot holes and 1 exploration hole. Eastern Lateral Exploration: Drilling results to date from the exploration drilling program to the east of the main deposit area successfully demonstrated the potential to increase the resource inventory to the east of the mine. Approximately 6,500 metres of a planned 12,000 metres (7,000 metres from surface and 5,000 metres from the 340 metre level) have been completed to date with results indicating potential extension of the system to the east, including a new area of interest located approximately 600 metres to the east of the main deposit, below and to the east of the Goudreau Zone. Western Lateral Exploration: Drilling results to date from the west of the main deposit area provided additional confidence in the potential extension of the mineralized system. Drilling has been suspended in this area and is expected to resume in 2016. Approximately 5,900 metres of a planned 8,000 metres (2,500 metres from surface and 5,500 metres from the 190 metre level) have been completed to date and results show potential extensions of the known deposit. Regional Surface Exploration: A 7,500 metre regional exploration program that was previously announced to test the east and west regional extensions of the Island Gold deposit along strike as well as for new deposits within the Goudreau shear zone has been launched in early 2016. For more details, see February 26, 2016 press release. For full details, please refer to the December 21, 2015 press release entitled “Richmont Mines Provides Exploration Update for Island Gold”. 39


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Drilling Most of the delineation/definition drill holes are planned on vertical cross-sections, in order to intercept mineralized zones at right angles along a grid spacing of 20 metres by 20 metres. Drilling operations are performed by a drilling contractor, under the supervision of the geological staff at the Island Gold Mine. Underground drill holes are BQ or NQ calibre. Core recovery is approximately 100%. The drill core is logged in detail by experienced and highly skilled staff, following established guidelines for the Island Gold Mine. A rock quality designation (“RQD”) analysis was completed for most of the drill holes drilled in the 2015 program and the RQD for the zones are generally excellent (› 90%). The interpretation and development of each section was completed after receipt of the drill hole assays and section plots. This interpretation served to complete the reserve and resource estimates. Sampling The drill hole sampling approach coincides with lithological contacts. Samples have a minimum length of 0.3 metres and a maximum length of one metre. The core recovery is very good and can be considered to be representative. The panel (or chip) sampling method consisted of taking horizontal representative samples of the geology (units or alteration) that was exposed either in the face or in the adjacent walls. The samples weighed an average of 1.5 kg to 2 kg for a zone of 1.5 vertical metres by 0.3 to 1.0 horizontal metres. Each face was sampled and the number of assays varied based on the geology and the opening. The drill cores and chip samples are representative and the mineralization style, with the presence of quartz veins and free gold, shows a nugget effect. Assays During 2015, core samples were sent mainly to Expert Laboratory (LabExpert) in Rouyn-Noranda, Québec. Underground muck and chip samples were sent to Wesdome (Wesdome) Laboratory in Wawa, Ontario. Gold assays are completed by fire assay with 30 g of material with either a gravimetric or AA finish. The cut-off for gravimetric versus AA finish, has been established at 3 g/t Au. The detection limit for gold is 3 ppb. Rejects and pulps are kept by the laboratory or stored at the Island Gold site. These methods and the routine sample preparation are described in the following section. A detailed procedure can be found in the Technical Report for the Island Gold Mine as of December 31, 2015, which will be filed under the Corporation’s profile on the SEDAR website at www.sedar.com. The step-by-step procedure for sample analyses is briefly described as follows: Dry samples, if required;

Crush total sample to 1⁄2 inch (Jaw Crusher);

Split approximately 350 g using a Riffle Jones;

Remaining rejects are placed in a plastic bag and packed in cartons with sample numbers listed on the outside;

Pulverize the 350 g sample;

Homogenize the pulp: it is then ready for assay;

Samples are then analyzed by fire assay with an absorption atomic or gravimetric finish. A total of 30 g of representative material are subjected to the fire assay and to gravimetric finish. 40


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Quality Control In 2007, during the course of the geological confirmation program, an evaluation of “Quality Assurance/Quality Control” (“QA/QC”) data was done to address the three main areas of analytical determination protocols, namely: (i) contamination, (ii) accuracy, and (iii) precision, as measured by the results obtained from field and analytical blank standards, certified reference standards and an assortment of specific duplicate samples collected and/or prepared, in addition to the regular samples submitted to the laboratory. A certified standard and blank assay were run with each sample batch. In addition, a replicate assay was run on every 10thsample to check reproducibility of the assays. The results of the field and analytical blanks used to monitor potential contamination during sample processing and assaying indicate that no significant contamination is likely to have occurred during the sampling/assaying programs completed for 2007. In 2015, ASL Solution audited the Island Gold Mine QA/QC program which consists of insertion blanks and certified reference materials to samples submitted to the laboratory (Wesdome, LabExpert and ActLab). Each laboratory has its own QA/QC program with the addition of analytical blank standards and certified reference standards to each batch of assays. Also, some core and chip sample duplicates were taken in 2015 and sent to the laboratories as part of the QA/QC program. ASL Solutions concluded that the Richmont assay quality control program meets or exceeds industry standards and gold assays from the 2015 drill campaign are considered to be reliable for the purpose of resource estimation. The assays supporting the Island Gold Mineral Resource estimate are based on sample preparation and analytical protocols that meet standard industry practice. Security of Samples In 2005, the core logging facility and core storage area were established on the Kremzar Mine and milling site. A trailer was installed on site and was used as a core logging facility. A separate room was installed for core sawing and sample preparation. In 2012, a new coreshack was built near the old one on the Island Gold Mine site. The cores are stored outdoors in covered racks or as separate cross-piles. There is a gate on the mine access road and there are personnel working on site at all times. Individual sample bags are sealed. The samples are placed in large rice fiber bags and placed on pallets. Samples are transported by a third party transportation company. The underground channel samples are shipped to the River Gold laboratory in Wawa, Ontario, by Island Gold staff. Mineral Reserve Estimates Proven and Probable Reserves at Island Gold were increased by 206%, net of 2015 mining depletion. As of December 31, 2015, total Proven and Probable Reserves at the Island Gold Mine were 561,700 gold ounces, of which 485,000 ounces, are located in zones below –400 metres. This compared to the Proven and Probable Reserves of 183,750 gold ounces at the end of December 2014. The updated Reserve estimate reflects the 50,089 metres of delineation drilling completed during the year, which successfully replaced Reserves that were mined during the year and enabled the conversion of nearly 80% of the resources from the Lower C Zone that were included in the 2015 Preliminary Economic Assessment (“PEA”). Proven and Probable reserves at December 31, 2013 were 143,500 ounces of gold. Please refer to the detailed Mineral Reserve table on page 63. Capping of the Lower C Zone is 95 g/t. At the end of 2014, capping was reduced from 95 to 70 g/t Au for the B Zone and from 40 to 31 g/t Au for the D, D1 and E1E zones following a new statistical review. Roscoe Postle Associates Inc. (RPA) was retained to review and audit the Island Gold Mineral Reserve estimates. The review was started in January 2016 and was completed in February 2016. Mineral reserve estimates were realized on December 31, 2015 by Raynald Vincent, P. Eng., M.G.P., and Jean Bastien, P. Eng. MBA, employees of the Corporation, who are qualified persons under NI 43-101. Factors and 41


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parameters used in the determination of the mineral reserve estimates are based on the knowledge of the employees of the Island Gold Mine as of December 31, 2015. The mineral reserve estimates were carried out in accordance with NI 43-101 recommendations and regulations. Mineral reserves were classified according to the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) classification and adopted by the CIM Council on December 11, 2005. All standards generally accepted in the mineral industry as well as NI 43-101 recommendations and CIM regulations for both mineral resource and reserve estimates have been fully complied with. Mineral Reserve Estimates General The database and the parameters used to estimate the mineral reserves are based on the results from 2015, the forecast for 2016 and information available as at December 31, 2015. The technical parameters were reviewed by Daniel Adam, P.Geo., Ph.D., Vice-President, Exploration, an employee of the Corporation. Dilution and ore recovery factors used in the reserve estimate are based on mining methods. These factors and parameters will be updated on an annual basis in order to account for changes in mining operations. The conversion of mineral resources to reserves is based on economic studies. As per NI 43-101, only mineral resources in the Measured and Indicated categories can be used to establish the estimate of mineral reserves. See “ITEM 3. KEY INFORMATION – D. Risk Factors – Risks associated with the Mining Industry– The estimates of mineral reserves and forecasts of the production are subject to numerous uncertainties, and the production and recovery of reserve estimates appearing in the Annual Report may not be realized” for a discussion of the risks inherent in estimating reserves and production. Technical Parameters The main parameters used to estimate mineral reserves as at December 31, 2015 are as follows: A cut-off grade of 4.00 g/t Au estimated using a gold price of CAN$1,300 per ounce and an exchange rate of CAN$1.2037/US$1.00;Grades were capped at 75 g/t Au for all zones, with the exception of Island Gold lower zones: 95 g/t for the C, 70 g/t for the B, 40 g/t for the G and G1 and 31 g/t for the D, D1 and E1E;A minimum true thickness of 2.0 metres based on the mining method (longitudinal long holes);An average rock density of 2.82 t/m3is defined, 2.80 t/m3for Island Gold lower zones;Ore mining recovery: 95% for designed stopes - pillars between stopes have been excluded;External dilution: an average dilution rate of 19% of waste at a grade of 0.5 g/t Au is assumed for stopes. A dilution rate of 30% at a grade of 0.5 g/t Au is assumed for development;Excluded mill recovery of approximately 96%. 42


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Estimation Methods At the Island Gold Mine, the Gemcom GEMS 6.7 software was used to prepare the resource estimation. The reserve and resources estimates were calculated following two distinct methods. Reserve estimation was done with block model using an inverse distance to the power 2 calculation for Island Main, Lochalsh and Goudreau sectors and also Island Gold lower D, D1, E1E, G and G1 zones. Ordinary Kriging has been used for Extension 1 and 2 as well as for Island Gold lower C and B zones. The polygonal method was used for Extension 3 resource estimation. Regardless of the methods used, composites were established by the geological department for each drill hole and underground development face. The diamond drill hole composites were determined following an interpretation on vertical cross-sections and horizontal plans while the development composites were interpreted using the face mapping and assay results of each development face. Once individual composites were determined, each one was tagged in the database according to their individual zone name. Individual pierce points were generated on longitudinal sections for each zone. These longitudinal sections are a representation of an average plane through each mineralized zone. For the polygonal method, construction of the polygons is completed on longitudinal sections. An area of influence of 20 metres was determined for the development composite and the diamond drill holes. A 10 metre influence was used on the lateral extremities of the development composite to limit their influence. When all polygons are generated, a combination of the development and drill hole pierce points is created. After the ore block limits are determined and the grade and tonnes of each reserve block are calculated, specific dilution and ore recovery are factored into the final reserve estimate. All of the geo-scientific data collected at the Island Gold Mine are entered into a Gemcom database. Internal procedures have been prepared in order to validate the information in the database. All of this work is performed by the Island Gold Mine geology department and all steps, from data entry to layout drawings, follow strict and established procedures, including crosschecks to ensure full validity. Access to all databases is restricted to selected personnel in order to ensure complete integrity. Cut-off Grade The cut-off grade for stopes was established at 4.00 g/t Au. This cut-off was calculated using, among other things, 2015 production costs and anticipated 2016 production costs. Reserve Classification More detailed descriptions regarding classification of mineral reserves at the Island Gold Mine are set out below. Proven Mineral Reserves Ore development was completed above, below or on both levels of the ore block. If only one level was developed, a minimum drill spacing of 20 metres was necessary to confirm the vein continuity. An economic study was done by the engineering department of the Island Gold Mine to validate the block as reserves. Probable Mineral Reserves No development was done above or below the ore block. Since the information from the ore development was lacking, a maximum drill hole spacing of 20 metres center to center was necessary to validate the vein continuity inside the ore block. Economic study was done by the engineering department of the Island Gold Mine to validate the block as reserves. Dilution of 19% and mining recovery rates of 95% are included in the reserve estimation. 43


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As of December 31, 2015, the mineral reserves of the Island Gold Mine are estimated at: Reserve Categories

   Tonnes

   

   Grade

   

   Au1(metric)

   

   (g/t Au)

   

   (oz)Proven

   97,000

   

   7.00

   

   21,800Proven (below -400 m)

   266,500

   

   7.72

   

   66,100Probable

   248,000

   

   6.88

   

   54,900Probable (below -400 m)

   1,504,000

   

   8.66

   

   418,900Total (Proven + Probable)

   2,115,500

   

   8.26

   

   561,700
 1

   Before mill recovery of 96%. As of December 31, 2015, the mineral reserves at Island Gold were 561,700 ounces of gold, calculated using a long-term gold price of CAN$1,300 per ounce, an exchange rate of CAN$1.2037 = US$1.00, and an expected mine life of approximately seven years. Mining Operations and Metallurgy The extraction method is by longitudinal long holes with a maximum panel length fixed by a hydraulic radius of 4.5. The Island Gold ore is hauled by truck to the Kremzar mill located at an approximate distance of 0.8 km from the portal of the ramp. The Kremzar mill is a traditional gold recovery mill using a conventional Carbon in Pulp (“CIP”) process, with circuits for crushing, grinding, gold cyanidation and carbon-in-pulp and two electrowinning (“EW”) cells. Gold recovery of the CIP circuit at the Kremzar mill is approximately 96%. 2.

   Beaufor Mine, Val-d’Or, Quebec, Canada
 Location and Property Description The Beaufor Mine property along with other adjacent properties such as Pascalis, Perron, Colombière, Courvan and Perron Blocks 2 and 3, are located approximately 20 kilometres northeast of the town of Val-d’Or, in the Abitibi-East county, in the Province of Quebec. 44


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Description of Mining Rights The property, which contains the mineral reserves and resources of the Beaufor and W Zone mines, consists of a series of adjacent mining rights subdivided into three projects: Perron, Beaufor, and Pascalis. Another group of properties adjacent to the mine includes the Courvan project (containing the past producing Bussière Mine), the Colombière project and the Perron Block 2 and Block 3 projects. Property

   Number of

   Area

   Expiration datemining

   (ha)titlesBeaufor

   1

   112.91

   Mining concession 280PTA: 01/31/2016Colombière

   10

   226.90

   Claims expire on 04/05/2017Courvan

   33

   1,106.91

   Mining concession 295 and 280PTB: 01/31/2016 and 31 claims expire on 03/04/2017Pascalis

   1

   37.50

   Mining Lease BM 750: 06/02/2016Perron

   12

   261.99

   2 mining leases BM 858: 03/11/2023 and BM 1018: 09/16/2033 and 10 claims expire on 05/04/2017Perron Blocks 2 and 3

   8

   164.96

   Claims expire 11/23/2016Total

   65

   1,911.17
 All of these claims are expected to be renewed before the anniversary date by applying excess credits available or by the execution of the required works. For the mining leases, taxes are paid to the government every year and for mining concessions, geological work is performed to keep them in good standing. Richmont Mines has an internal procedure and an external control to ensure appropriate follow up regarding claim expiry dates. One isolated claim, Perron Block 4, was allowed to lapse as it was not viewed as prospective and no work was conducted on the block. All the other mining claims, mining concessions and mining leases were in good standing in 2015 and are expected to remain so in 2016. A detailed list and map of locations can be found in the Technical Report for the Beaufor Mine as of December 31, 2015 which was filed on March 24, 2016 under the Corporation’s profile on the SEDAR website at www.sedar.com. Ownership of Mining Rights All the mining titles of the Beaufor property are held by Richmont Mines. Mining Royalties All the Beaufor division’s properties are subject to the payment of royalties and financial contractual obligations. Details can be found in the Technical Report for the Beaufor Mine as of December 31, 2015, which was filed on 45


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March 24, 2016 under the Corporation’s profile on the SEDAR website at www.sedar.com. Beaufor Property (Royalty payable on 50% of the production) The Beaufor production is subject to a quarterly royalty payment to Hecla Mining Company (formerly Aurizon Mines Ltd): Gold Price (US$/oz)

   Royalties per ounce on 50% of ounces produced<300

   CAN$0.00300– 325

   CAN$17.00325– 350

   CAN$18.50350– 375

   CAN$20.00375– 400

   CAN$22.50400– 500

   CAN$24.00>500

   CAN$30.00
 Perron Property and Perron Block 2 (payable on 100% of the production) The Perron property is subject to a quarterly royalty payment to Hecla Mining Company (formerly Aurizon Mines Ltd): Gold Price (US$/oz)

   Royalties per ounce produced<300

   CAN$0.00300– 325

   CAN$17.00325– 350

   CAN$18.50350– 375

   CAN$20.00375– 400

   CAN$22.50400– 500

   CAN$24.00>500

   CAN$30.00
 Perron Block 3 The Perron Block 3 property is subject to a 2% NSR payable to Northwest Gold Corporation (“Northwest”). The Northwest NSR is payable when the gold price is higher than US$300 per ounce. Pascalis (payable on 100% of the production) The Pascalis property is subject to a 25% NPI royalty payable to New Pascalis Mines Limited. Colombière (payable on 100% of the production) The Colombière property is subject to a 2% NSR payable to IAMGOLD Corporation (formerly Cambior Inc.). Environmental Obligations and Permits Over 75% of the development waste material is either hoisted or trucked from the underground mine to the surface and placed in a waste dump. The waste rock is not acid generating and does not require any particular environmental measures. 46


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The latest revision of the closure plan was submitted in February 2014 in collaboration with ROCHE engineering firm and approved by the Ministère de l’Énergie et des Ressources naturelles (“MERN”) November 6, 2014. The next revision must be submitted no later than February 27, 2019. The total closure cost estimate is $790,100 and only includes the Beaufor Mine site. Camflo Mill is an independent entity that has its own separate closure plan. As of December 31, 2015, Richmont has provided a financial security for the closure costs of the Beaufor Mine site totaling $595,006 to the Québec MERN. The final payment is expected to be made on November 6th2016. The Corporation is of the opinion that all necessary permits and authorizations have been requested and obtained. Infrastructure Two active mine shafts are located on the Beaufor Mine site: the Perron No. 5 shaft is currently used for hoisting and the Pascalis shaft is used for the ventilation air intake. A raise between the 1,250 level and surface is used as an escape way. A ramp collar is located 350 metres southeast of the Perron shaft. The ramp provides access to the 350 Zone to the west. A series of buildings have been erected including warehouses, workshops, garages, core shack and offices. There are no milling or tailings activities on site. The waste pad is permitted for a maximum capacity of 880,000 tonnes and currently holds 560,000 tonnes. The waste rock is non-acid generating. The settling pond has a maximum usable volume of 3,335,000 litres and is sufficient for the mining activities. There were a total of 129 employees and 29 independent contractors as of December 31, 2015 active at the Beaufor Mine. Location of Mineralized Zones The mineralized zones, including the mineral reserves and mineral resources, underground infrastructure and the waste pad are located on mining concession 280 PTA of the Beaufor property, mining lease 750 of the Pascalis property and mining leases 858 and 1018 of the Perron property. Accessibility The mines can be accessed from Highway 117 by going east from Val-d’Or to the Perron Road, and then north towards the village of Perron. The mines can also be accessed by using the secondary road 397 from Val-d’Or to Val-Senneville, and then going south on Paré Road to the village of Perron. Climate The average annual precipitation is approximately 914 mm, with the highest level of precipitation occurring in September (approximately 102 mm). Snowfalls occur between October and May, with the greatest amount of snowfall occurring between November and March. The monthly average for that period is about 50 mm (expressed in mm of water). The average daily temperature in Val-d’Or is 1.2° C, which is slightly above freezing. The average temperature for July reaches 17.2° C, while in January the average temperature falls to –17.2° C. The lowest temperature measured was -43.9° C and the highest temperature measured was 36.1° C. Although the temperature of the area is below the freezing point an average of 209 days per year, mining operations are not affected by the climate. 47


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Local Resources and Infrastructure The area is well served by existing infrastructure and human resources. The population of the town of Val-d’Or is approximately 32,000 people. The town is accessible from the national road network and commercial flights are available daily at the local airport. The town also hosts an appropriate base of suppliers and manufacturers for the mining industry. A railroad is located a few km to the south of the property and power is supplied by Hydro-Québec. The ore from the Beaufor Mine is hauled by truck to the Camflo Mill located at an approximate distance of 49 km from the mine site. Waste rock is stored on site.Skilled administrative personnel, technicians, geologists, mining engineers and experienced miners are available in the area. Physiography The regional landscape is typical of the Abitibi lowlands, with its small rolling hills and widespread swamps, and its mixed forests of broadleafs and conifers. The forest cover is relatively young, as a forest fire devastated the area in 1942. The elevation is approximately 300 metres above sea-level. Exploration History Intermittent exploration fieldwork has been conducted on the Beaufor property since the 1930s. Following a development period, Aurizon Mines (50%) and Louvem (50%) started commercial production at the Beaufor Mine in January 1996. In August 2000, Aurizon Mines stopped mining operations at the Beaufor Mine. In spring 2001, Aurizon Mines transferred the mining rights of the Perron, Beaufor, Pascalis, Colombière and Courvan properties to Richmont Mines for an amount of $1.8 million. In September 2001, Richmont Mines undertook construction work to secure the stability of the crown pillar and commercial production resumed at the Beaufor Mine jointly with Louvem in January 2002. In March 2010, the Beaufor Mine reached the notable historical production milestone level of 1,000,000 gold ounces over its mine life. In June 2010, Richmont Mines acquired all of the issued and outstanding shares of Louvem not already owned by Richmont Mines. As a result of this transaction, Richmont Mines owns a 100% interest in the Beaufor Mine and has assumed ownership of all Louvem properties. Geological Setting Regional Geology The mining town of Val-d’Or is located in the southeastern part of the Abitibi greenstone belt formed of Archean volcanic and sedimentary rocks of the Superior Province. The mining camp of Val-d’Or is located in the Malartic area, which is comprised of a volcanic pile including ultramafic, basaltic and rhyolitic flows. The Bourlamaque granodiorite intrusion hosts significant gold concentrations, namely at the Beaufor Mine. 48


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Beaufor Mine Geology The Beaufor, Perron, Pascalis, Colombière and Courvan properties belong to the same gold-bearing hydrothermal system with a similar geometry. The Beaufor deposit is included in the Bourlamaque granodiorite. Gold mineralization occurs in veins associated with shear zones that moderately dip south. The mineralization is associated with quartz-tourmaline veins resulting from the filling of shear and extension fractures. The gold-bearing veins show a close association with mafic dykes intruding on and undercutting the granodiorite. The dykes seem to have influenced the structural control of the gold-bearing veins. Mineralization Gold-bearing veins at the Beaufor Mine consist of quartz-tourmaline-pyrite veins, typical of Archean epigenetic lode gold deposits, that cross-cut the Bourlamaque Batholith. Mafic dykes that predate the mineralization are associated with shear-hosted gold-bearing veins. Shallowly dipping extensional gold-bearing veins are commonly observed at the Beaufor Mine. Shear zones striking N70oand dipping steeply to the southwest control the opening and gold enrichment of veins. All the gold-bearing veins are contained in a strongly-altered granodiorite in the form of chlorite-silica forming anastomosing corridors of 5 m to 30 m in thickness. The veins at the Beaufor Mine form panels of more than 300 m in length by 350 m in height. The thickness of the veins varies from 5 cm to 5 m. The zones are limited by the Beaufor fault (N115o/65o-75o) at 380 metres from the surface and by a parallel system of shears (N70o/sub vertical). 2015 Results 2015

   

   2014

   

   2013Gold ProducedTonnes milled

   125,447

   

   115,573

   

   124,570Head grade (g/t)

   6.64

   

   6.86

   

   5.89Gold recovery (%)

   98.6

   

   97.9

   

   97.8Ounces produced

   26,411

   

   24,959

   

   23,076Revenues

   39,714

   

   33,624

   

   32,669Gold SoldOunces sold

   26,875

   

   24,006

   

   23,028Average selling price

   1,474

   

   1,399

   

   1,417Cash cost per ounce

   995

   

   946

   

   1,082AISC per ounce

   1,216

   

   1,024

   

   1,186Average selling price (US$)

   1,153

   

   1,267

   

   1,376Cash cost per ounce (US$)

   778

   

   856

   

   1,051AISC per ounce (US$)

   951

   

   927

   

   1,152Sustaining costs

   5,942

   

   1,880

   

   2,392Project and non-sustaining exploration costs

   340

   

   1,733

   

   1,929
 49


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Production In 2015, total tonnes milled increased by 9% to 125,447 as compared to 115,573 tonnes milled in 2014. The higher tonnes were offset by slightly lower grades, resulting in a 6% increase in gold production as compared to the prior year (26,411 ounces versus 24,959 ounces). Cash costs per ounce increased by 5% to $995 from $946 a year earlier, largely due to higher waste development and higher milling costs allocated from Camflo Mill, as the mill processed fewer tonnes during the year. AISC per ounce increased by 19% to $1,216 from $1,024 in the prior year due to higher sustaining exploration costs, higher sustaining capital for Q Zone development and higher capital at the Camflo Mill, which are recorded within the Beaufor Mine AISC per ounce. For 2014, a total of 115,573 tonnes of ore were processed from the Beaufor Mine at an average grade of 6.86 g/t for an annual production of 24,959 ounces. This compared to tonnage of 124,570 at an average grade of 5.89 g/t, and gold production of 23,076 ounces in 2013. Cash costs at the Beaufor Mine for the 12 months of 2014 decreased 13% to CAN$946 (US$856) from the prior year’s level of CAN$1,082 (US$1,051), which was primarily a function of the improved grade. Exploration Proven and Probable Reserves at the Beaufor Mine property increased to 63,850 gold ounces at December 31, 2015, a 95% increase over the 32,750 gold ounces at December 31, 2014. There was an increase of 31,100 ounces, net of depletion. The conversion to reserves from the Q Zone accounted for 80% of the reserves increase. With the approval of the exploitation of the Q Zone, the mine life of Beaufor has been extended to more than 2 years. The Beaufor mining history suggests a strong potential to extend the mine’s life beyond that period. Mine site exploration is now focused on three fronts: 1) expand Q Zone at depth and westward along strike, 2) build new resources in the upper mine, particularly in the extension of the old Perron Mine and 3) test the previously discovered deep R Zone for continuity from the new Q Zone infrastructure. In 2015, the Corporation conducted a surface drilling campaign on the southern part of the Beaufor property near the northern boundary of the Courvan property. Ten holes were completed during summertime for a total of 5,968 metres. Drilling demonstrated that the geological context prevailing at the Beaufor deposit extends 1.2 km to the south. The same key lithological units (chloritized granodiorite, dioritic dykes and ductile shear zone) were recognized during core logging. Several significant quartz veins within altered granodiorite were encountered at depth varying between 50m and 450m, however those structures were barren. Drilling At Beaufor Mine, most of the drill holes are planned on vertical cross-sections in order to undercut the shear veins at right angles. Drilling programs are sub-divided into two main categories: Exploration drilling using a 40 to 80 metre by 40 to 80 metre grid;Definition drilling based on a 10 to 20 metre by 10 to 20 metre grid. Drilling operations are performed by a drilling contractor, under the supervision of the geological staff at the Beaufor Mine. Underground drill holes are LTK48 (35.6 mm) and BQTK (40.7 mm) calibre. The core recovery is better than 90%, including the fault zones where the RQD (“rock quality designation”) is more than 75%. Detailed descriptions of the drill core are prepared in accordance with established Beaufor Mine guidelines by experienced and qualified personnel. The Corporation is planning 15,540 metres of definition drilling and 24,480 metres of exploration drilling at the Beaufor Mine in 2016. No drilling is planned on the Colombière and Courvan properties. 50


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Sampling Sampling of the rock mass is performed using drill cores and blasted rock. Results of the drill core analyses as well as the grades of ore samples taken in the car wagon are taken into account for mineral reserve estimation. The weight of each sample is around 0.5 kg per 5 tonne wagon. For development purposes, the weight of each sample is around 0.5 kg per 12-15 tonnes of blasted rock. There are currently no face-sampling “chips” taken at the Beaufor mine. In definition drill holes, samples are collected between 0.5 m and 1 metre intervals, and frequently include both vein material and wall rocks, since veins are often less than 1 metre thick. Core recovery is over 90%. The entire core is then analyzed at the chemical assay laboratory. For exploration holes, the length of the sample varies from 0.5 to 1 metre. The core is sawed in half using a core saw. The recuperation of core is over 90%. Assays ALS Minerals Laboratories in Val-d’Or was selected to analyze the samples from the Beaufor Mine. This laboratory is certified ISO 9001-2000 for the supply of assays and geochemical analysis services by QMI, an ISO certification firm. The step-by-step procedure for sample analysis is briefly described as follows: Upon receipt of sample bags, all sample numbers are verified and entered into the Laboratory Information Management System (LIMS), a sample tracking system used by the laboratory;Samples are dried and crushed to 70% passing 2 mm using a jaw crusher. A representative sub-sample weighing 250 to 300 g of the –2 mm fraction is prepared using a “Riffle Jones” splitter. The sub-sample is then pulverized to 85% passing –200 mesh using a ring pulverizer;Samples are then analyzed by fire assay with gravimetric finish using 30 g per sample. Quality Control The laboratory’s quality control program, at different steps of the process, includes: Crushing, pulverizing, weighing: daily monitoring;Fire assay: 1 blank, 2 standards and 3 duplicates are inserted in each batch of 84 samples. A second quality control program established at the Beaufor Mine involves the insertion of blanks and standards. Furthermore, rejects for all samples between 10 g/t Au and 100 g/t Au are systematically re-assayed. Security of Samples Samples are gathered in plastic boxes by the Beaufor Mine geological personnel and stored in a core shack. The samples are collected by the laboratory staff and brought to the laboratory directly. Historical production and milling data indicate reliability of the laboratory results. When there is doubt as to the location of a sample, the sampling number or any other anomaly, the data is not used for resource estimation. 51


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Mineral Reserve Estimates In 2015, the mineral reserve estimates for the Beaufor Mine were performed by Jessy Thelland, P.Geo. and Louis Nkoy, P.Eng., employees of Richmont Mines and qualified persons pursuant to NI 43-101. The methodology and procedures for mineral reserve estimates have been adopted from a study completed in 2006 by Golder Associates, an independent firm. The database, factors and parameters used in the determination of the mineral reserves are based on the available information as of December 31, 2015. However, these parameters are revised on an annual basis in order to take into consideration the experience gathered from the current mining operation. The mineral reserve estimates are carried out in accordance with NI 43-101. Mineral reserves are classified according to the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) classification as adopted by the CIM Council on August 20, 2000. All standards generally accepted in the mineral industry as well as NI 43-101 requirements and CIM regulations for mineral reserve estimates have been fully complied with in this study. All the geo-scientific data collected at the Beaufor Mine is grouped into two main databases. Internal procedures have been prepared in order to validate the information in the databases. All the work performed by the Beaufor Mine geology department, from data entry to layout drawings follows strict and established procedures, including crosschecks to ensure full validity. Access to all databases is restricted to selected personnel in order to ensure complete integrity. Mineral Reserve Estimates The database and the parameters used to estimate the mineral reserves are based on past mining experience and the information available as of December 31, 2015. The parameters were reviewed and modified by Golder Associates in 2006. Thus, both the dilution and the ore recovery factors by mining methods used in the reserve estimate are based on actual results obtained in 2015. All these factors and parameters are updated on an annual basis in order to account for changes in the mining operations. The conversion of mineral resources to reserves is based on economic feasibility. An economic study is done for each resource block or group of resource blocks, and if positive, the resource can be converted into reserve. As per NI 43-101, only mineral resources in the Measured and Indicated categories can be used to establish the estimate of mineral reserves. The budgeted costs used are based on actual and historic data of the mining operation and are updated to reflect actual experience and any changes in the prevailing economic situation. See “ITEM 3. KEY INFORMATION - D. Risk Factors – Risks Associated with the Mining Industry– The estimates of mineral reserves and forecasts of the production are subject to numerous uncertainties, and the production and recovery of reserve estimates appearing in the Annual Report may not be realized” for a discussion of the risks inherent in estimating reserves and production. Technical Parameters The basis and the parameters used for reserve estimation are given in the following sections. Mining Methods The two major underground extraction methods currently used at the Beaufor Mine are the room and pillar and long-hole methods, while only the long-hole mining method was used at the W Zone Mine. Room and Pillar Mining Method Geometry: stope width of 6 metres in the plane of the vein with in-stope pillars of 2.5 metres x 2.5 metres; 52


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Maximum dip of vein: 40°;Ore mining recovery: 80% used in the economic evaluation;Internal dilution: the ore block is designed with a true thickness of 2.4 metres. The drilling intercepts are projected to the same lengths. The minimum mining width is 2.4 metres. The dilution grade is assumed to be 0 g/t Au;External dilution: a dilution of 5% at a grade of 0 g/t Au is added in the determination of the economic mineral reserves. Long-Hole Mining Method Geometry: maximum panel length of 25 metres;Minimum dip of vein: 45°;Ore mining recovery: 100% for designed stopes with all pillars between stopes clearly identified during the process of mineral reserve estimation, and 90% for the stopes not yet designed;Internal dilution: minimum mining width is 2.4 metres. The drilling intersections are projected to a minimum width of 2.4 metres;External dilution: a dilution rate of 10% for waste at a grade of 0 g/t Au is assumed for primary stopes. Cut-off Grades Cut-off grade averages have been calculated based on both developed and un-developed workings for the two major mining methods used at the Beaufor Mine, which are room and pillar and long-hole. The main criteria are as follows: No profit margin is built into the estimate;Deferred development costs or capital expenditures are not used;Only the price of gold is taken into account in the economic calculation;The price of gold used was US$1,080 per ounce using an exchange rate of CAN$1.2037:US$1.00;Operating costs include fixed costs budgeted for 2016 and variable costs (production and development) based on the results from January to October 2015 for each method. Results of the cut-off grade study by mining method for both developed and undeveloped underground workings are listed in the following table: Mining Method

   Workings

   Cut-off Grade(g/t)Room and pillar

   Developed

   5.25Room and pillar

   Undeveloped

   6.04Long hole

   Developed

   4.31Long hole

   Undeveloped

   5.10
 Reserve Classification More detailed descriptions about the classification of reserves at the Beaufor Mine are detailed below. 53


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Proven Mineral Reserves At the Beaufor Mine, Proven reserves are based on ore blocks developed from drifts or raises up to a maximum of 8 metres from these openings. The level of accuracy of the economic evaluation in the estimation of reserves is that of a feasibility study. Probable Mineral Reserves The mineral reserve estimate in the Probable category is based on an economic study in order to determine the economically mineable part of an Indicated mineral resource. At the Beaufor Mine, Probable reserves extend to a maximum of 10 metres from drilling data. Dilution and mining recovery rates are included in the reserve estimation. In accordance with the mineral reserve estimation, the mineral reserves of the Beaufor Mine as at December 31, 2015, are estimated as follows: Reserve Categories

   Tonnes

   

   Grade

   

   Au1(metric)

   

   (g/t Au)

   

   (oz)Proven

   35,600

   

   7.31

   

   8,350Probable

   266,500

   

   6.48

   

   55,500Total (Proven + Probable)

   302,100

   

   6.57

   

   63,850
 1

   Before mill recovery of 98.0%. Mining Operations and Metallurgy The two major underground mining methods currently used at the Beaufor Mine are the room and pillar and long-hole methods. Ore from the Beaufor Mine is trucked to the Corporation’s 100% owned Camflo Mill, which is located approximately 49 kilometres from the mine site. The Camflo Mill, with a rated capacity of 1,200 tonnes per day, is a Merrill-Crow conventional type mill with circuits for crushing, grinding, gold cyanidation and precipitation using zinc powder. The historic average rate of recovery of the mill is 98% when ore extracted from the Beaufor Mine is milled. No major operating problems have been experienced at this mill and none are anticipated in the near future. The usual maintenance and repairs are carried out when deemed appropriate. 54


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3.

   W Zone Mine, Val-d’Or, Quebec, Canada
 There was no gold production from W Zone Mine in 2015, as the operation was closed in the second quarter of 2014. 2015

   

   2014

   

   20131Gold ProducedTonnes milled

   -

   

   36,789

   

   23,185Head grade (g/t)

   -

   

   4.25

   

   3.28Gold recovery (%)

   -

   

   97.5

   

   95.1Ounces produced

   -

   

   4,900

   

   2,324Revenues

   -

   

   6,938

   

   3,096Gold SoldOunces sold

   -

   

   4,929

   

   2,326Average selling price

   -

   

   1,405

   

   1,328Cash cost per ounce

   -

   

   992

   

   1,441AISC per ounce

   -

   

   1,010

   

   1,961Average selling price (US$)

   -

   

   1,272

   

   1,265Cash cost per ounce (US$)

   -

   

   899

   

   1,373AISC per ounce (US$)

   -

   

   915

   

   1,869Sustaining costs

   -

   

   88

   

   1,209Project and non-sustaining exploration costs

   -

   

   -

   

   -
 1

   Includes only data following the beginning of commercial production on October 1, 2013. In 2014, a total of 36,789 tonnes of ore were processed from the W Zone at an average grade of 4.25 g/t for annual production of 4,900 ounces. This compared to 23,185 tonnes at an average grade of 3.28 g/t, and gold production of 2,324 ounces in the prior year. Cash costs at the operation were CAN$992 (US$899) in 2014, versus CAN$1,441 (US$1,373) in 2013, with the decrease reflecting the discontinuation of development costs when operations were closed in the second quarter of 2014. 4.

   Monique Mine, Val-d’Or, Quebec, Canada
 Location and Property Description The Monique Mine is located 25 km east of Val-d’Or, in the province of Quebec. The property is located approximately 10 km east of the Beaufor Mine and 50 km from the Corporation’s Camflo Mill. Description of Mining Rights The Monique property consists of 17 claims and 1 mining lease covering a total area of 546.16 ha. More specifically, it covers the northern part of lots 38 to 45 in Range VIII and the southern part of lots 36 to 45 in Range IX of the Louvicourt township. The mining lease (1012) was obtained on February 14, 2012, from the Ministère de l’Énergie et des Ressources naturelles du Québec, and the environmental certificates of authorization for an open pit operation were received at the beginning of 2013. Open pit mining ended in January 2015, and surface infrastructure was removed during the year. Monique mine is now closed. 55


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A detailed list and map of locations can be found in the Monique NI 43-101 technical report dated September 13, 2013, and filed under the Corporation’s profile on the SEDAR website at www.sedar.com. All the mining titles were in good standing in 2013, and Richmont expects that they will remain so in the future. Property

   Number of

   Area

   Expiration datemining titles

   (ha)Monique

   17 mining claims

   446.75

   Claims expire between 11/18/2016 and 05/23/20171 mining lease

   99.41

   Mining lease 1012, expire on 02/13/2032Total

   18

   546.16
 Mining Royalties As part of Richmont’s successful acquisition of the outstanding 19% interest in the Monique property a 0.38% NSR (Net Smelter Return) royalty was granted to SOQUEM, payable at the time the property reaches commercial production. Similarly, Richmont Mines assumed existing royalty obligations on 8 of the property’s 17 claims, payable to Exploration Concorde Ltd., and equal to 5% net profit interest. The northern part of five of these claims are now partly covered by the Mining Lease 1012; however the present open pit lies outside of the original limit of these claims. Environmental Obligations and Permits A closure plan was developed in conjunction with Roche Ltd, Consulting Group, and was submitted to the Ministère de l’Énergie et des Ressources naturelles (“MERN”) on March 18, 2013. Financial guarantees amounting to $947,663 have been submitted to MERN at the end of 2015. The Corporation is of the opinion that all the necessary permits and authorizations have been requested and obtained. Geological Setting Mineralization Gold mineralization on the Monique property is mainly associated with three deformation zones that cross the property with an orientation of 280° and a 75° - 80° dip to the north. Gold mineralization is defined by a network of quartz/tourmaline/carbonate veins and veinlets, measuring 1 cm to 10 cm, with disseminated sulphides in the altered wall rocks. Free gold is frequently observed in the veins. A total of 12 gold zones have been observed on the property over the years, the most promising being the A, B, G and J zones. The mineralized zones have been defined from surface to a depth of 400 m (in the G and J zones). They vary in width from less than 1 m to almost 20 m. Mineralized lenses extend laterally over few hundred metres. Gold is generally associated with 1% to 5% finely disseminated pyrite, and visible gold is common in the quartz and carbonate veins and veinlets. Albite and fuschite alteration are locally observed. 56


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2015 Results In early January 2013, Richmont announced that it had received the required mining permits for the Monique property. Following the completion of a bulk sample in the second quarter of 2013, and the subsequent completion of the three month pre-production phase, the Monique open pit Mine began commercial production on October 1, 2013. Mining activities were continuous during all the 2014 year. Operating results 2015

   

   2014

   

   20131Gold ProducedTonnes milled

   224,673

   

   283,009

   

   60,536Head grade (g/t)

   2.37

   

   2.71

   

   2.35Gold recovery (%)

   96.7

   

   96.0

   

   93.6Ounces produced

   16,580

   

   23,675

   

   4,274Revenues

   26,298

   

   32,663

   

   3,961Gold SoldOunces sold

   17,657

   

   23,490

   

   2,976Average selling price

   1,486

   

   1,387

   

   1,328Cash cost per ounce

   782

   

   910

   

   1,290AISC per ounce

   798

   

   958

   

   2,304Average selling price (US$)

   1,162

   

   1,256

   

   1,265Cash cost per ounce (US$)

   612

   

   824

   

   1,230AISC per ounce (US$)

   625

   

   867

   

   2,196Sustaining costs

   277

   

   1,119

   

   3,016Project and non-sustaining exploration costs

   -

   

   2

   

   221
 Mining activities at the Monique open-pit ceased at the end of January 2015 as the mine was fully depleted and a low-grade stockpile, at an average grade of 2.37 g/t, was established for future processing. The majority of the stockpile was processed over the balance of the year, with approximately 16,000 tonnes remaining that was processed in January 2016. Total tonnes milled in 2015 were 21% lower as compared to prior year’s tonnage of 283,009. Consequently, gold production of 16,580 ounces in 2015 was 30% lower than 23,675 ounces produced in 2014. Cash costs and AISC per ounce were $782 (US$612) and $798 (US$625) respectively, lower than cash costs and AISC for 2014 of $910 per ounce (US$824) and $958 (US$867) respectively, as mining operations ceased and stockpiles were processed for most part of the year. Non-cash charges of $250 per ounce were included in 2015 cash costs and AISC, relating to mining costs incurred and paid for in 2014, but which were accounted for when the resulting ounces were sold. A total of 283,009 tonnes of ore were processed at an average grade of 2.71 g/t from the Monique Mine during the 12 months of 2014. This compared to processed tonnage of 60,536 tonnes at an average grade of 2.35 g/t and consequent production of 4,274 ounces in 2013, which included only 3 months of commercial production. Annual cash costs of CAN$910 (US$824) reflect the distribution of costs over a full year of production in 2014, versus the higher cash costs of CAN$1,290 (US$1,230) during the first three months of commercial operation in 2013 as production was being ramped up. 57


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Mineral Reserve Estimates The mineral reserves estimate was carried out under the supervision of Daniel Adam, P.Geo., Ph.D., Vice-President, Exploration (Ordre des Géologues du Québec #229), an employee of Richmont. He is a qualified person and member of a professional association as defined by NI 43-101 requirements. This mineral inventory was realized in accordance with the recommendations and regulations as set by the NI 43-101 committee. An NI 43-101 technical report was completed for the first Reserve estimation of the Monique property on July 1st, 2013, and was filed on SEDAR on September 13, 2013. Reserve Classification As at December 31, 2015, the Monique open-pit was depleted with no more Mineral Reserves on the property. Mining Operations and Metallurgy Open pit mining was completed at the end of January 2015. Stockpiled ore was processed at the Camflo Mill in 2015, with the exception of a small amount to be processed early in 2016. 5.

   Exploration Projects and Other Properties
 For information of exploration properties, and exploration costs for last three years, including estimates for 2016, refer to sections ‘Property interests’ and ‘Exploration and project evaluation expenditures on pages 27 and 28 of this Annual Report. 5.1

   Francoeur Property, Rouyn-Noranda, Quebec, Canada
 The Francoeur Mine was closed on November 30, 2012 and ceased mining operations on March 6, 2013 (within the meaning of federal regulations). On March 3, 2016, Globex Inc. (“Globex”) announced that it has signed a Binding Letter of Intent with Richmont Mines Inc. wherein Globex will acquire 100% interest in the Francoeur Mine, Arntfield Mine and a large package of mining concessions, mining leases and claims in Beauchastel and Dasserat Townships, west of Rouyn-Noranda, Quebec. Globex has agreed to pay Richmont a 1.5% Net Smelter Royalty (NSR) on a portion of the property that includes the former Francoeur mine and Arncoeur property up to a total of $1,300,000 after which the NSR will be reduced to 0.5% NSR. As part of the transaction, Globex will transfer title of 11 claims located in Beauchastel Township adjoining the East boundary of Richmont’s Wasamac gold property to Richmont. These claims will be subject to a 0.5% NSR. More details are provided in the March 3, 2016 press release issued by Globex. Location and Property Description The Francoeur property is located 25 km west of Rouyn-Noranda, Abitibi, Beauchastel Township, ranges IV and V, lots 1 to 9. 58


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Description of Mining Rights The Francoeur property consists of 16 mining claims, 3 mining concessions and 5 mining leases totalling approximately 505 ha. Number of mining titles

   Area

   Expiration date(ha)16 mining claims

   170.57

   Claims expire between 04/24/2016 and 05/23/20173 mining concessions

   230.21

   Mining concessions 194, 322 and 326: 01/31/20165 mining leases

   103.95

   Mining leases 776, 825, 826 ,849 and 1006 expire between 07/13/2018 and 06/26/203224

   504.73
 All of these claims are anticipated to be renewed before the anniversary date by applying excess credits available or by the execution of the required works. For the mining leases, taxes are paid to the government every year to keep them in good standing. For mining concessions, geological work is performed to keep it in good standing and taxes are paid every year. Richmont Mines has an internal procedure and an external control to insure appropriate follow up regarding claim expiry dates. All the mining claims, mining concessions and mining leases were in good standing in 2015 and are expected to be in good standing for 2016. A detailed list and map of locations can be found in the amended technical report for the Francoeur Gold Property as of August 17, 2012 filed under the Corporation’s profile on the SEDAR website at www.sedar.com. Ownership of Mining Rights All mining titles on the Francoeur property are held by Richmont Mines. Mining Royalties There are no royalties or back-in-rights related to any of the mining claims, mining leases and mining concessions. Environmental Obligations and Permits Following the announcement of the end the mining activities, Richmont Mines stopped mine dewatering on March 18, 2013 and ceased mining operations on March 6, 2013 (within the meaning of federal regulations). The notice of final cessation of mining activities was sent April 4, 2014 to MDDELCC. Richmont has begun the preliminary cleaning and restoration work on this property and awarded a contract to a consultant for the Environmental Site Assessment on May 2014. They made a site assessment based on historical activities (phase I) and made collection and chemical analysis of soil and groundwater samples on the site (phase II). Following these results, decontamination work began in 2014 and continued in 2015. At the end of 2015, some contaminated soils are still present below the hoist room. This building will have to be removed in order to complete the rehabilitation. Geological Setting Mineralization The ore zones of the Francoeur deposits are generally made up of distinct lenticular and tabular bodies up to one metre in thickness, and form buff or beige coloured bands, called BB bands. All the BB bands are mainly composed of carbonate, albite, pyrite and minor amounts of quartz and rutile, with trace amounts of sericite and gold. 59


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Instead, the gold emplacement apparently developed in the shear zone and is partially related to albitite dikes. The nature of the contacts of gold ore bodies with enclosing mylonitic schist is quite variable. The BB bands display a wide variety of textures ranging from a foliated micro-breccia, to more common fine grained and very well laminated rock. They contain on average 20 to 40 g/t Au and the grade can reach 50 g/t Au locally. The gold is commonly in its native form and is very fine-grained. Gold grains are usually associated with small pyrite crystals, but a proportion is also disseminated in the finely recrystallized carbonate-albite matrix. Mineral Reserve Estimates All the results of the definition drilling done in 2011 and in the beginning of 2012 were used to do the re-estimation of the Francoeur mineral reserve and resource in June 2012. Technical parameters used for this reserve and resource estimation are described in the Technical Report filed on SEDAR on August 17, 2012. At the end of 2013, there were no more reserves at the Francoeur Mine, as the last shipment of ore was sent to the Camflo Mill in March 2013 and the mine was subsequently closed. 6.

   Wasamac, Rouyn-Noranda, Quebec, Canada
 Location and Property Description The Wasamac property is located approximately 15 km west of Rouyn-Noranda, Quebec, within the heart of the Abitibi gold mining district. Description of Mining Rights The Wasamac property consists of 3 mining concessions (CM 349, CM 364, and CM 370 for 757.65 ha) and a mining claim (CDC20098 for 1.71 ha) which cover a total area of 759.36 hectares in the Beauchastel township. Ownership of Mining Rights The Corporation owns 100% of the Wasamac property. Mining Royalties There are no royalties or back-in-rights related to any of the mining concessions. Location of Mineralized Zones The main mineralized zones currently known on the Wasamac property are located within the Wasa shear zone. This shear zone runs through the center of the property, and has an east-west orientation and a dip of about 50° to the North. Exploration History In 2002, Richmont re-activated exploration work on the Wasamac property in an attempt to evaluate the down plunge extension of zones 1 and 2 at depth. In 2011, a total of approximately 52,000 metres of drilling was completed on the Wasamac property. 60


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In March 2012, the Corporation announced the results of an independent NI 43-101 compliant Preliminary Economic Assessment (“PEA”) for the Wasamac gold project. According to the PEA which assumed a gold price of CAN$1,350 (US$1,300) per ounce, the estimated total potential mine life would be 14 years with production of 6,000 tonnes per day, and an annual production of 140,000 ounces of gold. The PEA similarly estimated that the total life of mine recovered production would be 1.75 million ounces of gold at an average cash cost of US$688 per ounce, or CAN$46.15 per tonne. The undiscounted cash flows of this project were estimated to be $405 million with an internal rate of return of 7% and a payback of 8 years. Following 2012 drilling results, Richmont announced that scheduled technical work and permitting efforts would continue as planned in 2013 at Wasamac; however, no additional exploration and development activities would be undertaken on the asset. This decision was made following several months of project optimization studies, which caused Richmont to conclude that alternative scenarios did not currently offer a meaningful economic improvement in the current gold price environment, over the initial Preliminary Economic Assessment outlined in the Corporation’s March 28, 2012 press release. Geological Setting Mineralization The Wasa shear zone runs through the centre of the property in an east-west fashion. This shear zone, which trends at an azimuth of 265°, has a 50-60° dip to the north and a maximum thickness of 80 metres. To the west, the shear zone splits into two separate branches and becomes thinner, while to the east, the shear zone weakens as well and displays an average thickness of 25 metres. This shear zone is characterized by the development of a strong mylonitic fabric and an intense hydrothermal alteration which completely destroyed the primary structures and textures of the protolith. Mineral assemblages of rocks within the shear zone consist of chlorite, carbonate, hematite, albite and sericite in the middle of the zone. Gold is associated with a dissemination of fine pyrite in the altered portions of the shear zone. Drilling 2015 Program One exploration hole was completed in 2015 to test the extension of a small gold mineralized zone located south of the Wasamac shear zone. This hole was done in order to keep the mining titles in good standing. Only a few gold values were encountered. On the next page you will find a map of the Corporation’s properties. 61


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62


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7.

   Table of reserves
  Richmont Mines 2015 Mineral Reserve EstimatesDecember 31, 2015

   December 31, 2014Tonnes

   Grade

   Ounces

   Tonnes

   Grade

   Ounces(metric)

   (g/t Au)

   

   (metric)

   (g/t Au)Island Gold MineProven Reserves1(above -400m)

   97,000

   7.00

   21,800

   173,000

   6.25

   34,700Probable Reserves1(above -400m)

   248,000

   6.88

   54,900

   290,500

   5.91

   55,300Total Proven & Probable(above -400m)

   345,000

   6.91

   76,700

   463,500

   6.04

   90,000Proven Reserves1(below -400m)

   266,500

   7.72

   66,100

   86,000

   6.57

   18,150Probable Reserves1(below -400m)

   1,504,000

   8.66

   418,900

   345,500

   6.81

   75,600Total Proven & Probable(below -400m)

   1,770,500

   8.52

   485,000

   431,500

   6.76

   93,750Total Proven & Probable Reserves1

   2,115,500

   8.26

   561,700

   895,000

   6.39

   183,750Beaufor Mine2Proven Reserves1

   35,600

   7.31

   8,350

   53,000

   7.13

   12,100Probable Reserves1

   266,500

   6.48

   55,500

   91,500

   7.02

   20,650Total Proven and Probable Reserves1

   302,100

   6.57

   63,850

   144,500

   7.06

   32,750Monique Mine3Proven Reserves1

   -

   -

   -

   -

   -

   -Probable Reserves1

   -

   -

   -

   14,500

   3.16

   1,450Total Proven & Probable Reserves1

   -

   -

   -

   14,500

   3.16

   1,450Total GoldProven & Probable Reserves

   2,417,600

   8.05

   625,550

   1,054,000

   6.43

   217,950
 1

   In 2015, based on a gold price of CAN$1,300 per ounce and an exchange rate of CAN$1.2037 = US$1.00. (In 2014: gold price of CAN$1,300 per ounce and CAN$1.0833 = US$1.00).2

   W Zone and 350 Zone Mineral Reserves are included with the Beaufor Mine as at December 31, 2015 and 2014.3

   Monique Mineral Reserves are open-pit.
 National Instrument 43-101 – Standards of Disclosure of Mineral Projects Mineral reserve estimations for the Corporation’s material properties were established by “qualified persons” as defined under NI 43-101, and their names are set out in the table below. These reserve estimations were reviewed by Mr. Daniel Adam, P.Geo., Ph.D., Vice-President, Exploration, an employee of Richmont Mines. Mines

   Qualified Persons

   TitlesBeaufor Mine

   Jessy Thelland, P.Geo.

   Chief Geologist, Beaufor MineMarc-André Lavergne, P.Eng

   Manager, Beaufor Mine and Camflo Mill divisionsLouis Nkoy, P.Eng.

   Chief EngineerIsland Gold Mine

   Raynald Vincent, P.Eng., M.G.P.

   Chief GeologistJean Bastien, P.Eng., MBA

   Technical Services ManagerFrancoeur Property

   Marc-André Lavergne, Eng.

   Former Francoeur Mine ManagerDaniel Adam, P.Geo., Ph.D.

   Vice-President, Exploration Corporate divisionPierre Rivard, P.Geo.

   Former Production GeologistWasamac Project

   Daniel Adam, P.Geo., Ph.D.

   Vice-President, Exploration, Corporate divisionMonique Mine

   Daniel Adam, P.Geo., Ph.D.

   Vice-President, Exploration, Corporate division
 63


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8.

   Gold Marketing and Sales
 The profitability of gold mining is directly related to the market price of gold as compared to the cost of production. Gold prices fluctuate widely and are affected by numerous factors, including expectations with respect to the rate of inflation, exchange rates (specifically the U.S. dollar relative to other currencies), interest rates, global and regional political and economic situations and governmental policies with respect to gold holdings by a nation’s central bank. The demand and supply of gold usually affect gold prices but not necessarily in the same manner as supply and demand affect the prices of other commodities. The amount of gold available for sale includes a combination of mine production, stock and gold bullion held by governments, public and private financial institutions, industrial organizations and private individuals. As the amounts produced in any single year account for a small portion of the total available supply of gold, normal variations in current production do not have a significant impact on the supply of gold or its price. The following table sets out the annual average gold price (London PM fix) in U.S. over the past five years: Exchange(US$)

   rate1

   (CAN$)2011

   1,572

   0.99

   1,5562012

   1,669

   1.00

   1,6692013

   1,411

   1.03

   1,4532014

   1,266

   1.10

   1,3932015

   1,160

   1.28

   1,485As at April 19, 2016

   1,192

   1.36

   1,6211Source: Bank of Canada
 Gold can be sold on numerous markets throughout the world and it is not difficult to ascertain its market price at any particular time. Richmont Mines is not dependent upon the sale of its gold to any one customer because of the large number of available gold purchasers. Richmont Mines may occasionally use put and call options on gold, and forward sales contracts on gold and U.S. dollars. All such contracts are previously approved by the Corporation’s Board of Directors. Gold dore bars are transported between the mills and the refinery by commercial armoured truck. These bars are refined at the Royal Canadian Mint of Ottawa refinery under a service contract at competitive rates. Refined metal is sold on the spot market to commercial bullion dealers (or under forward sales contracts if previously approved by the Corporation’s Board of Directors). In 2015, 2014 and 2013, Richmont Mines had not entered into any gold derivatives contracts. 9.

   Governmental Regulation (Environment)
 Richmont Mines’ principal business activities include the production of gold from mining development, extraction and processing of minerals, and mining exploration to maintain and increase its ore reserves. These operations are subject to various levels of control and strict government regulations, such as laws and regulations with respect to activities related to natural resources and the protection of the environment. Environmental protection legislation applicable to the Canadian mining industry mandates high standards for the reduction or elimination of emissions, deposits, and issuance or release into the environment of contaminants caused by the extraction or processing of ore. In addition, certificates of authorization must be obtained in advance for the construction and commercial operation of a mine, plant, concentrator or refinery, since such types of operations that are specific to the mining industry may result in emissions, deposits, issuance or release of contaminants into the environment or may affect the quality of the environment. 64


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Quebec & Ontario Provincial legislation in Quebec and Ontario in mining matters includes the acquisition and ownership of mining titles, safety standards, royalties and mining taxes. The Mining Actprovides for the rehabilitation and restoration of lands affected by mining activities. In Ontario, approval for any plan for the rehabilitation and restoration of land affected by a Corporation’s operations is given by the Ministry of Northern Development and Mines (“MNDM”), while in Quebec it is given by the Ministère des Ressources naturelles(“MRN”). Corporations must comply with the plan and provide a financial guarantee to that effect. In Quebec, when a corporation commences mining operations, it must submit its rehabilitation and closure plan before the beginning of its activities. In Ontario, the plan must be approved before the beginning of commercial production; moreover, a local public consultation must also be held. The Ministries may enjoin a corporation which has already ceased its mining operations on a particular site to perform the rehabilitation and restoration work required by the presence of tailings. In the event that the Corporation does not comply with such requirements, the MRN and the MNDM may have the rehabilitation and restoration work executed by a third party, at the Corporation’s expense. Richmont Mines does not foresee any specific difficulty in meeting the requirements under the Mining Act(Quebec) and the Mining Act(Ontario). Richmont Mines holds certificates of authorization issued by the Ministère du Développement durable, de l’Environnement, et de la Lutte contre les Changements Climatiques (the “MDDELCC”) with respect to its mining operations in Quebec (Beaufor Mine, W Zone Mine, Monique Mine and Camflo Mill) and by the Ontario’s Ministry of the Environment for its Island Gold Mine, located in Ontario. C.

   Organization Structure
 See Exhibit 8.1 to this Annual Report. D.

   Property, Plants and Equipment
 See Section B. “Business Overview” above. ITEM 4A.

   UNRESOLVED STAFF COMMENTS
 None. ITEM 5.

   OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 The discussion and analysis of the operating results and financial position of the Corporation for the three years ended December 31, 2015, 2014 and 2013 should be read in conjunction with the Corporation’s consolidated financial statements and the accompanying notes included in this Annual Report. Notice should also be taken of the cautionary statement regarding forward-looking statements on page 4 of this Annual Report, in particular with respect to trend and other forward looking information and disclosure regarding the Corporation’s contractual obligations. The preparation of financial statements involves making estimates and assumptions that have a significant impact on the reported amounts of revenues, expenses, assets and liabilities. The items most dependent on the use of estimates include the useful life of assets, amortization and depletion calculations based on proven and probable reserves, impairment test of property, plant and equipment, calculation of asset retirement obligations, share based remuneration expense, dismantling costs and severance costs, the evaluation of provisions and contingent liabilities, start of advanced exploration phase, start of commercial production, recoverability of credits relating to resources and credits on duties refundable for losses as well as deferred income and mining taxes. Consequently, future results may differ from these estimates. 65


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A.

   Operating Results
 Year ended December 31, 2015 compared to year ended December 31, 2014 and year ended December 31, 2013 (all dollar amounts are in thousands of Canadian dollars unless otherwise stated except for share and per ounce data). Overview Gold Prices Gold price has been very volatile during 2015 due to uncertainty in global growth and the timing of a US Federal Reserve rate increase, creating more uncertainty among both, investors and gold producers. The gold price has fallen for the third consecutive year – down about 8% in 2015 alone. Following graph shows the gold price trend for last five years. Historical five years gold prices  The volatility in gold prices in 2015 makes it difficult to forecast 2016 prices with any kind of certainty. However with the uncertainty around interest rates removed, we expect the gold market to return to focus on fundamentals in the industry characterized by declining supply and still robust physical demand. 66


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Production (ounces of gold)

   2015

   

   2014

   

   2013Island Gold

   55,040

   

   42,206

   

   33,836Beaufor

   26,411

   

   24,959

   

   23,076Monique

   16,580

   

   23,675

   

   4,2741W Zone

   -

   

   4,900

   

   2,3241Total production

   98,031

   

   95,740

   

   63,510
 1

   Includes only data following the beginning of commercial production on October 1, 2013.
 Richmont produced 98,031 ounces of gold in 2015, which exceeded the increased annual production guidance of between 87,000 and 95,000 ounces that was announced on August 6, an increase of 2% over 2014. Island Gold Mine accounted for 56% of total 2015 production, which largely offset the decrease in production from Quebec operations. Since 2013, production has increased by 54%. This increase has primarily been driven by strong performance from the Island Gold Mine and by the contribution of the Monique Mine, which began commercial production in the fourth quarter of 2013. The Island Gold Mine produced a record 55,040 ounces in 2015, 16% above annual production guidance levels and 30% above the 42,206 ounces of gold produced in 2014. The increase is largely due to a 24% increase in grade to 7.31 g/t as compared to 5.91 g/t in 2014. Production for 2014 was a 25% increase over the 33,836 ounces produced in 2013, primarily due to a 29% improvement in grade to 5.91 g/t as compared to 4.57 g/t in 2013. The Beaufor Mine produced 26,411 ounces in 2015, a 6% improvement over 2014 gold production of 24,959 ounces. The improvement was driven by 9% higher tonnage offset by 3% lower grade as compared to the prior year. Production for 2014 was an 8% improvement over 2013 production of 23,076 ounces. Production of 16,580 ounces at the Monique open-pit mine was 30% lower than the prior year, as the mine was depleted early in the 2015 year, at which point the operation started processing the lower grade stockpile. Investments As part of its strategy of accelerated development and potential production expansion at Island Gold Mine, the Corporation invested $48.9 million in 2015. This included $7.8 million for extending the main ramp to a depth of 740 metres, $8.5 million for a secondary eastern ramp to a depth of 500 metres and $4.8 million for an exploration drift that extends to the east by approximately 440 metres. A $2.8 million delineation drilling program of 50,089 metres was also completed in 2015. Other significant infrastructure upgrades included $8.7 million for the tailings dam expansion, $5.0 million for electrical upgrades and $1.6 million for bunkhouse buildings. Richmont invested $23.1 million in its assets in 2014, a decrease from the $41.9 million in 2013. The decrease largely reflects the lower development costs associated with the Monique Mine following its commencement of commercial production in the fourth quarter of 2013, lower investments in the W Zone following the decision to cease operations in the second quarter of 2014, and decreased year-over-year investments at the Island Gold Mine. Summary of Operational and Financial Results Net earnings in 2015 were $6.8 million or $0.12 per share, compared to net earnings in 2014 of $8.2 million or $0.18 per share and to a net loss in 2013 of ($34.3 million) or ($0.87) per share. 67


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The cash and cash equivalent balance was $61.0 million at December 31, 2015, an increase of $25.7 million over the $35.3 million at December 31, 2014. The cash and cash equivalent balance was $17.6 million at December 31, 2013. At December 31, 2015, Richmont had working capital of $47.3 million compared with $34.8 million at December 31, 2014 and $14.0 million at December 31, 2013. Changes to accounting policies New Accounting Pronouncements There were no new accounting pronouncements for annual periods beginning on or after January 1st, 2015. Future Accounting Pronouncements At the date of authorization of these consolidated financial statements, new standards, amendments and interpretations to existing standards have been published by the International Accounting Standards Board (“IASB”) but are not yet effective, and have not been adopted early by the Corporation. Management anticipates that all of the pronouncements not yet effective will be adopted in the Corporation’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Corporation’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Corporation’s consolidated financial statements. IFRS 9 – Financial instruments (IFRS 9) In July 2014, the IASB published IFRS 9 which replaces IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 introduces improvements which include a logical model for classification and measurement of financial assets, a single, forward-looking “expected loss” impairment model and a substantially-reformed approach to hedge accounting. IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018. Earlier application is permitted. The Corporation has yet to assess the impact of this new standard on its consolidated financial statements. IFRS 15 – Revenues from contracts with Customers (IFRS 15) In May 2014, the IASB published IFRS 15 which replaces IAS 18 Revenue, IAS 11 Construction Contracts and some revenue-related interpretations. IFRS 15 establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized at a point in time or over time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018. Earlier application is permitted. The Corporation has yet to assess the impact of this new standard on its consolidated financial statements. IFRS 16 – Leases (IFRS 16) In January 2016, the IASB published IFRS 16 which replaces IAS 17 Leases. IFRS 16 eliminates the classification as an operating lease and requires lessees to recognize a right-of-use asset and a lease liability in the statement of financial position for all lease with exemptions permitted for short-term leases and leases of low value assets. In addition, IFRS 16: changes the definition of a lease; sets requirements on how to account for the asset and liability, including complexities such as non-lease elements, variable lease payments and options periods; changes the accounting for sale and leaseback arrangements; largely retains IAS 17’s approach to lessor accounting and introduces new disclosure requirements. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019 with early application permitted in certain circumstances. The Corporation has yet to assess the impact of this new standard on its consolidated financial statements. 68


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Revenue Total annual revenues increased 9% in 2015 to $143.7 million from $132.2 million in 2014, due to the 3% increase in the number of gold ounces sold and a 6% increase in the average realized gold price in Canadian dollars. For the 2015 fiscal year, a total of 96,895 ounces of gold were sold at an average realized price of CAN$1,480 (US$1,157) per ounce. This compared to gold sales of 94,503 ounces at an average realized price of CAN$1,396 (US$1,264) per ounce in 2014, and gold sales of 63,443 in 2013 at an average realized price of CAN$1,419 (US$1,378) per ounce. The Island Gold Mine sold 52,363 ounces of gold in 2015 at an average realized price of CAN$1,481 (US$1,158) as compared to 42,078 ounces of gold sold in 2014 at an average realized price of CAN$1,398 (US$1,266), and 35,113 ounces of gold in 2013 at an average price of CAN$1,434 (US$1,392). The Beaufor Mine sold 26,875 ounces of gold at an average realized sale price of CAN$1,474 (US$1,153) versus 24,006 ounces of gold sold at an average realized price of CAN$1,399 (US$1,267) in 2014, and 23,028 ounces of gold sold at an average realized price of CAN$1,417 (US$1,376) per ounce in 2013. The Monique Mine sold 17,657 ounces of gold in 2015 at an average realized price of CAN$1,486 (US$1,162) as compared to 23,490 ounces of gold sold in 2014 at an average realized price of CAN$1,387 (US$1,256) and 2,976 ounces of gold sold at an average realized price of CAN$1,328 (US$1,265) in its first three months of commercial production during the last quarter of 2013. There were no sales from the W Zone Mine in 2015, as the operations were closed in the second quarter of 2014. The W Zone Mine contributed gold sales of 4,929 ounces at an average price of CAN$1,405 (US$1,272) in 2014, and gold sales of 2,326 ounces at an average price of CAN$1,328 (US$1,265) in 2013. Expenses Cost of sales for 2015 was $118.3 million, an increase of 6% over 2014, due to higher volumes of ore mined at Island Gold and Beaufor, and a higher ratio of development ore to production ore at Island Gold, which were partially offset by lower milled tonnage at Monique. Cost of sales at Island Gold was 40% higher in 2015 due to increased tonnage and the higher ratio of higher-cost development ore to production ore mined during the year. Salaries and contractor costs increased as the mine increased ore production and focused on new maintenance initiatives for equipment and electrical installations. Depreciation increased over the prior year due to a higher depreciation rate per ounce of gold and a 3% increase in ounces sold. Cost of sales at Beaufor increased mainly due to a 9% increase in tonnage over the prior year. Monique reported much lower cost of sales, as the mine was depleted early in the year and only the stockpiles were processed over the balance of the year. Cash costs increased by 2% to $977 per ounce (US$764) in 2015 from $956 (US$866) in 2014, that include 5% higher costs at both Island Gold and Beaufor, which were partially offset by 14% lower costs at Monique and the impact of a 3% increase in ounces sold. 2014 cost of sales increased 30% over prior year levels to $111.9 million, with 87% of this increase attributable to the higher costs associated with a full year of commercial operations at the Monique Mine in 2014, versus only three months in 2013. Cost of sales levels at the Island Gold Mine increased 9% year-over-year, largely due to higher cost per tonne attributable to the previously announced expense associated with the scheduled installation of a new cone crusher at the end of the second quarter, and the rental of a temporary primary jaw crusher and conveyor during the fourth quarter while new crushing equipment was being installed. The Beaufor Mine contributed $25.0 million toward consolidated cost of sales, below prior year levels due to lower tonnage. Operating costs at the Corporation’s Camflo Mill increased slightly as capacity utilisation was maximized with the contribution of a full year of Monique ore, and also increased marginally at the W Zone as remaining areas were mined prior to the cessation of operations at the end of the second quarter. The average cash cost of production decreased by a notably 15% in Canadian dollars to CAN$956 (US$866) in 2014 from CAN$1,128 (US$1,095) in 2013, primarily driven by improved grades at all three of the Corporation’s operating mines, and the resulting higher gold sales. 69


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Royalties for 2015 were $2.0 million or 16% lower than 2014 royalties of $2.3 million due to an adjustment from previous years. The amount of royalties paid out in 2014 increased to $2.3 million from $1.9 million the prior year, driven by higher royalty levels at all three of the Corporation’s operating mines as a result of the higher gold ounce production levels. 2013 royalty payments decreased to $1.9 million from $2.3 million in 2012, reflecting lower royalty levels at the Island Gold Mine as a result of the 16% year-over-year decrease in gold ounces sold and lower gold prices. This was only partially mitigated by slightly higher royalties at the Beaufor Mine as a result of increased gold sales in 2013, and royalties at both the Monique and W Zone mines following their transition into commercial production. The Corporation is subject to pay the following royalties: Beaufor Mine and the W Zone Mine: $30 per ounce produced on 50% of the production from Beaufor property, $30 per ounce produced from Perron property and a 25% net profit interest royalty per ounce produced from Pascalis property;Island Gold Mine: a 3% net smelter return royalty per ounce produced from the Lochalsh claims, a 2% net smelter return royalty in addition to a 15% net profit interest royalty per ounce produced from the Goudreau claims and a 4.38% net smelter return royalty and a 10.38% net profit interest royalty per ounce produced from Goudreau Lake property;Monique Mine: a 0.38% smelter return royalty per ounce produced. Royalty payments could be payable on other properties if such other properties are brought into commercial production. Custom milling– In 2015, Richmont processed 55,337 tonnes of ore from local mining companies in the Abitibi region, to utilize excess milling capacity at its Camflo Mill. The Corporation did not process any custom milling ore in 2014 and in 2013. Administration- Administration expenses totaled $9.8 million in 2015 versus $7.6 million in 2014. This represented a $2.2 million increase over 2014, reflecting higher salaries attributable to the greater number of employees, severance of the Executive Chairman and higher share-based compensation and consultant-related costs in the current period. Administration expenses of $7.6 million in 2014 were slightly higher than $7.5 million in 2013. However, excluding severance payments in both periods, administration expenses in 2014 were 12% below the 2013 levels. The total cost in 2014 reflects lower levels of salaries and related benefits stemming from the decrease in the number of administrative employees, the effects of which were offset by higher severance compensation following the departure of the President and CEO in early July, and departure of the CFO in September. 70


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Exploration and project evaluation–Richmont Mines continued to make investments related to exploration and project evaluation as shown below: (in thousands of $)

   2015

   

   2014

   2013$

   

   $

   $Exploration costs MinesIsland Gold

   4,600

   

   771

   4,532Beaufor

   2,679

   

   1,733

   1,9297,279

   

   2,504

   6,461Exploration costs - Other propertiesWasamac

   94

   

   169

   1,102Monique

   -

   

   2

   221Other

   32

   

   154

   347Project evaluation

   521

   

   357

   474Exploration and project evaluation before depreciation and exploration tax credits

   7,926

   

   3,186

   8,605Depreciation

   41

   

   71

   229Exploration tax credits

   (532

   )

   515

   (959

   )7,435

   

   3,772

   7,875
  Accretion expense of asset retirement obligations– The Corporation’s production and exploration activities are subject to various federal and provincial laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Corporation conducts its operations so as to protect public health and the environment. The Corporation has recorded the asset retirement obligations of its mining sites on the basis of management’s best estimates of future costs, based on information available on the reporting date. Best estimates of future costs are the amount the Corporation would reasonably pay to settle its obligation on the closing date. Future costs are discounted using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the liability. Such estimates are subject to change based on modifications to laws and regulations or as new information becomes available. This charge was $82 thousand in 2015 as compared to $111 thousand in 2014, and $81 thousand in 2013. Loss (gain) on disposal of long-term assets– The loss (gain) on disposal of long-term assets includes the following items: (in thousands of $)

   2015

   

   2014

   

   2013$

   

   $

   

   $Exploration mining assets

   -

   

   493

   

   -Mining equipment

   (102

   )

   146

   

   105(102

   )

   639

   

   105
  71


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Impairment loss on W Zone Mine Property, plant and equipment that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is determined on the basis of value-in-use. For the purpose of this test, the Corporation has determined that each mine site represented a cash-generating unit. Subsequent to 2013 production and a re-interpretation of the geology following exposure from mining, the reserve base of the W Zone Mine was significantly reduced. As a result of this reduction, and the ensuing impact on expected future production from this operation, the Corporation took a $13.5 million, or $0.34 per share, non-cash write-down on the asset base in the fourth quarter of 2013. A discount rate of 9% was used by the Corporation to determine the value-in-use. Mining and Income Taxes (in thousands of $)

   2015

   

   2014

   

   2013$

   

   $

   

   $Current taxes

   1,698

   

   78

   

   785Future taxes

   99

   

   427

   

   7,2091,797

   

   505

   

   7,994
 For the fiscal year 2015, the mining and income tax expense was $1.8 million, which includes $1.0 million of federal income taxes payable and $0.8 million of mining taxes payable. For the fiscal year 2014, mining and income taxes totaled $0.5 million. This amount mainly includes $2.3 million of mining and income tax, or 27% of the pre-tax income of $8.7 million, offset by a $1.2 million credit on mining duties from previous years, and the $0.3 million reversal of a 2010 charge that had been booked (for part XII-6 of the tax return of a subsidiary), but will no longer have to be paid by the Corporation. For the fiscal year 2013, mining and income taxes totalled $8.0 million, including a write-off of $7.5 million of deferred income and mining tax assets. In the charge there is an amount of $0.5 million for current tax expense and a same amount booked against exploration expense. Net loss from discontinued operation At the end of November 2012, management made the decision to cease commercial gold production at the Francoeur Mine. This Mine was part of the Corporation’s Quebec segment. As a result, revenues, expenses and losses relating to the discontinuation of this operation were segregated from the Corporation’s results from continuing operations, and are shown as a single line item in the consolidated income statement. The remaining property, plant and equipment from this mine were valued at their recoverable amount, and the majority of these assets are now redeployed within the Corporation’s other mines. The recoverable value of assets was established by three internal experts with the necessary expertise to determine the value of mining assets. They evaluated the fair value for each asset considering the general condition of the asset as well as the actual conditions of the market. Total charges related to the mine closure including asset write-down, closure costs and operational losses, totaled $1.1 million in 2013 after mining and income taxes. 72


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Net Earnings (loss) The Corporation generated net earnings of $6.8 million, or $0.12 per share for the fiscal year 2015, a decrease over net earnings of $8.2 million or $0.18 per share in 2014, due to higher exploration expenditures at Island Gold and higher administration costs as compared to 2014. Net earnings on per share basis were 33% lower also because of increase in share capital resulting from issuance of 9.625 million common shares on a bought-deal basis in February 2015. Net earnings for 2014 were $8.2 million, or $0.18 per share, a significant improvement over 2013 net loss from continuing operations of ($33.2) million, or ($0.84) per share, which included charges totaling $22.1 million, or $0.56 per share, stemming from a non-cash write-down of the W Zone Mine assets, a write-off of deferred income and mining tax assets, and a write-off of financing costs following the termination of a debt-financing agreement. The annual variance in results also reflects the 49% increase in the number of gold ounces sold, and a 15% decrease in the average cash cost per ounce stemming from improved mined grades at all three operating mines, the effects of which were only partially mitigated by the slight 2% decrease in the average sales price per ounce in Canadian dollar terms. Balance Sheet Assets The total assets of Richmont increased to $207.1 million from $148.8 million at the end of 2014 and $123.3 million at the end of 2013. The Corporation’s cash balance was $61.0 million at December 31, 2015, a $25.7 million, or 73%, increase from the $35.3 million balance at December 31, 2014. Year-end cash levels includes $42.4 million of cash generated from operations, $36.1 million of net proceeds from a bought deal financing completed in February 2015 reduced by investment of $52.1 million in property, plant and equipment during the year, largely spent on the ongoing development of the Island Gold Mine. Cash balance of $35.3 million at December 31, 2014, up from the $17.6 million balance at December 31, 2013, included investments of $23.1 million in property, plant and equipment during the year, which were more than offset by $27.3 million of cash generated from operations and the $10.7 million of net proceeds from a bought deal financing completed in April 2014. Working capital of $47.3 million as of December 31, 2015 was an increase of $12.5 million as compared to December 31, 2014. The increase is largely attributable to an increase of $25.7 million in cash and an increase of $2.0 million in receivables, partially offset by a decrease of $2.5 million in inventories, a decrease of $3.3 million exploration tax credits receivable, and an increase of $9.4 million in current liabilities. At December 31, 2014, Richmont had working capital of $34.8 million compared with $14.0 million at December 31, 2013. The $20.8 million increase is mainly attributable to a $17.7 million increase in the Corporation’s cash balance, a $4.7 million increase in inventories, a $2.0 million increase in income and mining taxes payable, and a $1.0 million increase in the current portion levels of long-term debt related to advance Island Gold Mine royalty payments payable to a third party in January 2015. Liabilities The liabilities of Richmont were $53.5 million as at December 31, 2015 and are composed of current liabilities, asset retirement obligations, royalty payments payable, finance lease obligations, contract payment holdbacks, long-term share based compensation, closure allowance and deferred income and mining tax liabilities.The liabilities of the Corporation were $40.8 million as at December 31, 2014, compared with $37.0 million at December 31, 2013. 73


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Asset retirement obligations The rate used to determine the future value of the obligations is based on the expected life of the operation and varies between 3.0% and 3.5% (between 3.0% and 3.5% in 2014) while the rate reflecting the current market assessments (adjusted for the risks specific to this liability) used to determine the present value of the obligations varies between 0.6% and 1.3% (between 1.0% and 1.6% in 2014). The payments schedule was determined by taking into account the proven and probable reserves (and a portion of measured and indicated resources for Island Gold Mine), the estimated annual production level and the estimated mine life. The following table sets forth the estimated cash flows of future retirement costs used in the calculation of the asset retirement obligations for the year ended December 31, 2015: (in thousands of $)

   

   

   AnticipatedTotal amount

   

   cash flowof the estimated

   

   paymentcash flow

   

   schedule2015

   $Island Gold Mine

   2,217

   

   2023Beaufor Mine and W Zone Mine

   1,386

   

   2019Camflo Mill

   4,289

   

   2019Monique Mine

   1,541

   

   2016 and afterFrancoeur Mine

   849

   

   2016 and after10,282
 Long-Term Debt Long-term debt includes the following financial liabilities: (in thousands of $)

   December 31,

   

   December 31,2015

   

   2014$

   

   $Royalty payments payable a)

   1,000

   

   2,000Finance lease obligations b)

   6,057

   

   2,912Contract payment holdbacks c)

   1,500

   

   1,116Long-term share-based compensation (note 7.2 c)

   1,234

   

   982Closure allowance d)

   537

   

   51310,328

   

   7,523Current portion

   3,064

   

   1,7997,264

   

   5,724
  a)

   On August 5, 2014, the Corporation signed a definitive agreement to acquire the outstanding 31% ownership of four patented claims on the Island Gold Mine property, thereby increasing its ownership of these claims to 100% from 69% previously. The 31% ownership held by the third party was acquired by the Corporation in return for a 3% net smelter return (NSR) royalty that is payable on 100% of mineral production from the four claims. As part of this agreement, the Corporation made an advance royalty payment of $1.0 million at the closing of the transaction, made a payment of
  74


---

$1.0 million on January 3, 2015 and made an additional payment of $1.0 million on January 3, 2016. In the event that there is production from these claims, advance royalty payments will continue, and will decrease to $0.3 million as of January 3, 2017, and will be paid annually until such time as a total of $5.1 million has been paid in royalties (including advance royalties) to the third party, after which advance royalty payments will cease. All advance royalty payments will be credited against any future NSR payments.b)

   During the year ended December 31, 2015, the Corporation acquired mobile equipment at a cost of $4.7 million via six finance leases ($4.4 million via five finance leases in 2014). The Corporation benefits from an option of a lower purchase price at the end of these contracts.The net carrying value of the mobile equipment under finance leases amounts to $7.0 million ($3.3 million in 2014).Future minimum finance lease payments at December 31, 2015 are as follows:
  (in thousands of $)

   Minimum lease payments due2016

   

   2017

   

   2018

   

   2019

   

   TotalDecember 31, 2015:Lease payments

   2,306

   

   2,633

   

   937

   

   632

   

   6,508Finance charges

   (242

   )

   (142

   )

   (52

   )

   (15

   )

   (451

   )Net present values

   2,064

   

   2,491

   

   885

   

   617

   

   6,057
  c)

   Contract payment holdbacks represent amounts that are payable to suppliers for work that has already been completed. The holdback is payable upon completion of the contract, once the Corporation has deemed that the work meets requirements or when the contract is terminated. As at December 31, 2015, the Corporation has not yet deemed that the work done by the supplier meets requirements and estimates that the payment of the holdback will not occur in the next year.d)

   This closure allowance is payable upon the closure of the Beaufor Mine anticipated to be in 2018. Although no specific date or timeframe has been established for the closure of the mine, this closure allowance has been established using the best estimation of the amount that would be payable when the division will close.
 Deferred income and mining tax assets and liabilities Note 12 of the Corporation’s consolidated financial statements included in this Annual Report provides detailed information about tax reconciliation as well as deferred income and mining tax assets and liabilities. Shareholders’ equity Shareholders’ equity totaled $153.6 million as at December 31, 2015 as compared to $108.0 million as at December 31, 2014 and with $86.4 million as at December 31, 2013. At December 31, 2015, Richmont Mines had 58,339,963 shares outstanding, 812,500 warrants, 2,199,630 options granted under its stock option plans, 800,000 options outside of the Corporation’s plans and 193,400 restricted share units under the Corporation’s long-term incentive plan. At December 31, 2014, Richmont Mines had 48,276,223 shares outstanding, 812,500 warrants, 2,911,450 options granted under its stock option plans, 800,000 options outside of the Corporation’s plans and 186,900 restricted share units under the Corporation’s long-term incentive plan. At December 31, 2013, Richmont Mines had 39,596,103 shares outstanding, 812,500 warrants, 3,439,950 options granted under its stock option plans and 324,675 options outside of the Corporation’s plans. 75


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Commitments and contingencies Commitments The Corporation is subject to pay the following royalties: Beaufor Mine and the W Zone Mine: $30 per ounce produced on 50% of the production from Beaufor property, $30 per ounce produced from Perron property and a 25% net profit interest royalty per ounce produced from Pascalis property;Island Gold Mine: a 3% net smelter return royalty per ounce produced from the Lochalsh claims, a 2% net smelter return royalty in addition to a 15% net profit interest royalty per ounce produced from the Goudreau claims and a 4.38% net smelter return royalty and a 10.38% net profit interest royalty per ounce produced from Goudreau Lake property;Monique Mine: a 0.38% smelter return royalty per ounce produced. Royalty payments could be payable on other properties if such other properties are brought into commercial production. On August 5, 2014, the Corporation announced that it had signed a definitive agreement to acquire the outstanding 31% ownership of four patented claims on the Island Gold Mine property, thereby increasing its ownership of these claims to 100% from 69% previously. The 31% ownership held by the third party was acquired by the Corporation in return for a 3% net smelter return royalty (NSR) that is payable on 100% of mineral production from the four claims. As part of this agreement, the Corporation made an advance royalty payment of $1.0 million at the closing of the transaction, made a payment of $1.0 million on January 3, 2015 and made an additional payment of $1.0 million on January 3, 2016. In the event that there is production from these claims, advance royalty payments will continue, and will decrease to $0.3 million as of January 3, 2017, and will be paid annually until such time as a total of $5.1 million has been paid in royalties (including advance royalties) to the third party, after which advance royalty payments will cease. All advance royal payments will be credited against any future NSR payments. The Corporation is committed, under two operating leases expiring in December 2017 and May 2020, to pay a total sum of $0.9 million for office space. Minimum rental payments amount to $0.3 million for 2016 and 2017 and $0.1 million for 2018 to 2020. One operating lease is subject to sublease expiring in December 2017, for an annual amount of $0.1 million. The Corporation entered into six financial lease agreements for mobile equipment during the year ended December 31, 2015 (five financial lease agreements in 2014). These financial lease agreements have a carrying value of $6.1 million. At the end of these contracts, the Corporation benefits from an option of a lower purchase price. In March 2012, the Corporation signed agreements with several employees considered as key personnel. These agreements incorporate a retention payment (“Retention Awards”) provided certain conditions are met by the employee, most notably that the employee continues his or her employment with the Corporation until March 2017. These retention payments would be payable in 2017 in either of the Corporation’s common shares or cash, at the discretion of the employee, with the number of common shares to be determined by the current value of the common shares at the time of payment. As at December 31, 2015, the total amount that could be paid as Retention Awards under these agreements is $1.8 million. ($2.0 million as at December 31, 2014). In light of a modification to the Quebec Mining Law, the financial guarantee for each of the Corporation’s Quebec mining sites must now cover 100% of the anticipated restoration work costs for each mining site. Consequently, the Corporation increased the letters of credit issued as financial guarantee by $1.0 million in 2014 and by $1.8 million in 2015 and must increase the financial guarantees by $1.2 million in 2016. 76


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In mid-October 2013, the Corporation announced that it had signed a land and mining rights agreement with Argonaut Gold Inc. (“Argonaut”), owner of the Magino Gold Project that is adjacent to the Corporation’s Island Gold Mine. This Agreement was slightly modified in June 2014. Under the revised terms, Argonaut will receive one claim in its entirety and surface and mining rights down to a depth of 400 metres on six claims. It will also receive surface rights on two claims down to a depth of 100 metres. The Corporation will receive two additional claims for a total of three and mining rights below a depth of 400 metres on three claims. As previously reported, under the terms of the Agreement, the Corporation will receive a net payment of $2.0 million in cash from Argonaut upon completion of the land transactions, which are now expected to take place in 2016. Please refer to the contractual obligations table on page 85. Contingencies The Corporation is involved in the following legal proceedings against the Corporation: a)

   The Corporation filed a lawsuit against a supplier (the “supplier”) for non-compliance of a supply agreement, which has resulted in additional costs for the Corporation. The supplier disputed the amount claimed by the Corporation, and counter-sued the Corporation for an amount higher than the Corporation’s original claim amount, on the basis that the supplier had to absorb substantial costs following the breach of contract;b)

   The second dispute is related to an invoice that the Corporation is contesting as the amount invoiced included costs stemming from work that the Corporation had not previously authorized. This work was not specified in the contract, and did not meet the parameters of the signed contract that stated that any additional work required prior approval. The parties have chosen to transfer the case to arbitrators as stipulated in the contract. The Corporation has made a counter-claim for reimbursement of the amount spent on remedial work.
 Management is of the opinion that the basis of the legal proceedings against the Corporation is unfounded and, consequently, no provision has been accounted for in the financial statements in this respect. Furthermore, in 2013, the Corporation began legal procedures against its former Monique Mine mining contractor for work that had been poorly executed or not executed at all. In November 2014, the Corporation received a defense and counterclaim from this former contractor for an amount of $15.5 million. Management is of the opinion that the basis of this counterclaim is unfounded and, consequently, no provision has been accounted for in the financial statements in this respect. As at December 31, 2015, a contract holdback amount of $1.0 million remains unpaid by the Corporation related to this work. As at April 19, 2016, Richmont Mines is not aware of any other legal proceedings involving the Corporation. Critical Accounting Estimates The preparation of financial statements requires the use of estimates and the formulation of assumptions that have a significant impact on revenue and expenses as well as on the amounts of assets and liabilities. The following factors represent the estimates that management considers the most significant, and for which the actual amounts may differ considerably thereby affecting operating results. 77


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Mineral reserves The main parameters used to determine the mineral reserves of Island Gold, Beaufor Mine and Monique Mine1are the following: 2015

   

   

   2014

   

   2013Gold (US$/ounce)

   1,080

   

   

   1,200

   

   1,225Exchange rate (US$/CAN$)

   1.204

   

   

   1.083

   

   1.060Gold (CAN$/ounce)

   1,300

   

   

   1,300

   

   1,300
 1

   Monique Mine had no reserves at the end of 2015.
 Basis of depletion of mining sites in production Property, plant and equipment of mining sites in production are depleted according to the units-of-production method to write down the cost to residual value. Management estimates the residual value of property, plant and equipment based on the estimated fair value as of the financial position date. For these assets, the depletion rate is calculated based on the number of ounces of gold sold in proportion to the number of ounces in proven and probable reserves and, for Island Gold Mine, a portion of measured and indicated resources. The Corporation estimates its reserves and resources using information compiled by qualified persons who work for the Corporation. This information relates to geological data on the size, depth and shape of the deposit and requires geological assessments to interpret the data. The assessment of proven and probable reserves and measured and indicated resources is based on factors such as the estimated exchange rate, price of metals, capital investments required and production costs stemming from geological assumptions based on the size and grade of the deposit. Changes in proven and probable reserves and measured and indicated resources could have an impact on the net carrying amount of property, plant and equipment, asset retirement obligations, recognition of deferred tax assets and amortization, depreciation and depletion expenses. Asset retirement obligations The Corporation assesses its asset retirement obligations annually. Determining these obligations requires significant estimates and assumptions due to the numerous factors that affect the amount ultimately payable. Such factors include estimates of the scope and cost of restoration activities, legislative amendments, known environmental impacts, the effectiveness of reparation and restoration measures and changes in the discount rate. This uncertainty may lead to differences between the actual expense and the allowance. At the date of the statement of financial situation, asset retirement obligations represent management’s best estimate of the charge that will result when the actual obligation is terminated. Impairment test of property, plant and equipment Determining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgment and a number of estimates and interpretations in many cases. When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the individual asset must be estimated. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs must be determined. In 2015, no impairment tests were required, because there was no indication that an impairment loss could exist. In 2014, the assumption used in the asset valuation process was a price of CAN$1,300 per ounce of gold in 2015, CAN$1,370 per ounce of gold in 2016 and CAN$1,374 per ounce of gold in 2017 and after. These prices were used in order to estimate future revenues and are based on an average of recent prices. 78


---

In the process of measuring expected future cash flows, management makes assumptions about future operating results, such as future metal production (proven and probable reserves and, for Island Gold Mine, a portion of measured and indicated resources), estimated future metal prices, operating costs, capital and site restoration expenses and estimated future foreign exchange rates. These assumptions relate to future events and circumstances. Actual results may differ from estimated results. Income taxes and deferred mining taxes The Corporation is subject to taxes from different tax jurisdictions. Management continually evaluates the likelihood that its deferred tax assets could be realized. This requires management to assess whether it is probable that sufficient taxable income will exist in the future to utilize these losses within the carry-forward period. The Corporation also maintains allowances for uncertain tax positions that, in its opinion, appropriately reflect the risks related to the tax positions subject to discussions, audits, differences of opinion and appeals with the tax authorities or that are otherwise uncertain. These allowances are determined using best estimates of the amount payable based on a qualitative assessment of all relevant information. These allowances are reassessed at the end of each financial reporting period to determine if the amount is sufficient. However, audits by the tax authorities could subsequently result in an additional liability. Upon the definite resolution of a tax issue resulting in a tax amount that differs from the initially recognized tax expense, the difference is recognized in the tax expense of the period of definitive settlement. Share-based compensation expense The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Corporation has made estimates as to the volatility of its own shares, the probable life of options and the time of exercise of those options. The model used by the Corporation is the Black-Scholes model. The Corporation similarly evaluated the expected extinguishments for each remuneration program within the parameters of each individual program. Dismantling costs and severance costs The Corporation estimates dismantling costs and severance costs by making assumptions such as retention of employees and timing of dismantling. The uncertainty of these estimations may lead to differences between the actual expenses and the estimated costs. Recoverability of credits relating to resources and credits on duties refundable for losses Uncertainties related to the review by government authorities of the Corporation’s current and prior years’ claims for the refundable tax credit relating to resources and the credit on duties refundable for losses, based on qualifying exploration expenditures under the Taxation Act (Quebec) and the Mining Tax Act (Quebec), require management to assess whether these claims will be settled in full or in part. Uncertainties exist with respect to the interpretation of tax legislation and regulations by government authorities, the amount of expenditures that may be disallowed by such authorities as a result of their interpretation of tax legislation and regulations and the timing of recovery of the credits. Start of advanced exploration phase The Corporation evaluates the potential of each project to determine when the project should progress from the exploration phase to the advanced exploration phase. Once management has determined that a project has demonstrated a potential for development, and an economic analysis supports its commercial viability and its economic benefit, the project moves into the advanced exploration phase once approval has been given by the Board of Directors. Expenditures related to the project are capitalized as of this time. 79


---

Start of commercial production Management assesses the stage of completion of each advanced exploration project to determine when it begins commercial production. The Corporation considers a number of criteria to determine when a mine enters into commercial production, thereby resulting in reclassification from “Advanced exploration project” to “Mining site in production”. The following criteria are used: Production capacity achievedRecovered gradeStage of completion of development work Provisions and contingent liabilities Judgments are made as to whether a past event has led to a liability that should be recognized in the consolidated financial statements or disclosed as a contingent liability. Quantifying any such liability often involves judgments and estimations. These judgments are based on a number of factors including the nature of the claims or dispute, the legal process and potential amount payable, legal advice received, past experience and the probability of a loss being realized. Several of these factors are sources of estimation uncertainty. Reconciliation of total cash cost per ounce to production costs: (in thousands of $ other than exchange rate and per ounce data)

   2015

   

   2014

   

   2013Operating costs as per note 4 of the consolidated financial statements (CAN$)

   92,719

   

   87,984

   

   69,688Royalties as per note 4 of the consolidated financial statements (CAN$)

   1,953

   

   2,335

   

   1,910Total cash costs (CAN$)

   94,672

   

   90,319

   

   71,598Ounces of gold sold

   96,895

   

   94,503

   

   63,443Total cash cost in CAN$/per ounce

   977

   

   956

   

   1,128Average exchange rate (US$/CAN$)

   1.2787

   

   1.1045

   

   1.0299Total cash cost in US$/per ounce

   764

   

   866

   

   1,095
  80


---

Reconciliation of cost of sales to cash costs and to all-in sustaining costs per ounce sold for 2015, 2014 and 2013 2015

   

   

   Island Gold

   

   Beaufor

   

   Monique

   

   Corporate

   

   Total RIC(in thousands of $, except per share amounts)Gold sold (ounces)

   

   

   52,363

   

   26,875

   

   17,657

   

   -

   

   96,895Cost of sales

   

   

   72,413

   

   29,419

   

   16,502

   

   -

   

   118,334Depreciation and depletion

   

   

   (18,291

   )

   (2,675

   )

   (2,696

   )

   -

   

   (23,662

   )Cost of sales, excluding depreciation expense

   

   54,122

   

   26,744

   

   13,806

   

   -

   

   94,672Cash cost ($/ounce)

   

   

   1,034

   

   995

   

   782

   

   -

   

   977Sustaining costs

   

   

   22,330

   

   5,942

   

   277

   

   106

   

   28,655Corporate general and administrative costs

   

   -

   

   -

   

   -

   

   9,809

   

   9,809All-in sustaining costs

   

   

   76,452

   

   32,686

   

   14,083

   

   9,915

   

   133,136All-in sustaining costs ($/ounce)

   

   

   1,460

   

   1,216

   

   798

   

   102

   

   1,3732014

   Island Gold

   

   Beaufor

   

   Monique

   

   W Zone

   

   Corporate

   

   Total RIC*(in thousands of $, except per share**amounts)*Gold sold (ounces)

   42,078

   

   24,006

   

   23,490

   

   4,929

   

   -

   

   94,503Cost of sales

   51,766

   

   26,338

   

   27,421

   

   6,373

   

   -

   

   111,898Depreciation and depletion

   (10,429

   )

   (3,637

   )

   (6,031

   )

   (1,481

   )

   -

   

   (21,578

   )**Cost of sales, excluding depreciation****expense**

   41,337

   

   22,701

   

   21,390

   

   4,892

   

   -

   

   90,320Cash cost ($/ounce)

   982

   

   946

   

   910

   

   992

   

   -

   

   956Sustaining costs

   14,110

   

   1,880

   

   1,119

   

   88

   

   -

   

   17,197Corporate general and administrativecosts

   -

   

   -

   

   -

   

   -

   

   7,627

   

   7,627All-in sustaining costs

   55,447

   

   24,581

   

   22,509

   

   4,980

   

   7,627

   

   115,144All-in sustaining costs ($/ounce)

   1,317

   

   1,024

   

   958

   

   1,010

   

   81

   

   1,2192013

   Island Gold

   

   Beaufor

   

   Monique

   

   W Zone

   

   Corporate

   

   Total RIC*(in thousands of $, except per share**amounts)*Gold sold (ounces)

   35,113

   

   23,028

   

   2,976

   

   2,326

   

   -

   

   63,443Cost of sales

   47,475

   

   27,725

   

   4,675

   

   5,957

   

   -

   

   85,832Depreciation and depletion

   (7,992

   )

   (2,800

   )

   (837

   )

   (2,605

   )

   -

   

   (14,234

   )**Cost of sales, excluding depreciation****expense**

   39,483

   

   24,925

   

   3,838

   

   3,352

   

   -

   

   71,598Cash cost ($/ounce)

   1,124

   

   1,082

   

   1,290

   

   1,441

   

   -

   

   1,128Sustaining costs

   13,034

   

   2,392

   

   3,016

   

   1,209

   

   837

   

   20,488Corporate general and administrativecosts

   -

   

   -

   

   -

   

   -

   

   7,514

   

   7,514All-in sustaining costs

   52,517

   

   27,317

   

   6,854

   

   4,561

   

   8,351

   

   99,600All-in sustaining costs ($/ounce)

   1,495

   

   1,186

   

   2,304

   

   1,961

   

   132

   

   1,569
  B.

   Liquidity and Capital Resources (all dollar amounts are in thousands of Canadian dollars, unless otherwise stated)
 As at December 31, 2015, Richmont had a cash balance of $61.0 million, a $25.7 million, or 73%, increase from the $35.3 million balance at December 31, 2014. The increased cash balance islargely due to the net proceeds of $36.1 million from the bought deal financing completed in the first quarter. 81


---

The Corporation’s cash balance of $35.3 million at December 31, 2014 was an increase from the $17.6 million balance at December 31, 2013,largely due to the $10.7 million of net proceeds from a bought deal financing completed in April 2014 and net free cashflow generation. Most of the restricted deposits relate specifically to site restoration. As at December 31, 2015, the Corporation has $117 thousand in restricted deposits with the Quebec government, $708 thousand in restricted deposits with the Ontario government and a credit facility is available to the Corporation up to an amount of $5.9 million for the issuance of letters of credit as guarantees for the settlement of asset retirement obligations. The credit facility has a fixed annual fee of 0.95% (0.95% in 2014). The following table provides the allocation of restricted deposits and letters of credit issued as at December 31, 2015: (in thousands of $)

   2015

   

   2014$

   

   $Restricted depositsIsland Gold Mine (Island Gold Deep and Lochalsh property)

   708

   

   601Beaufor Mine

   107

   

   107Other

   10

   

   10825

   

   718Other

   6

   

   298831

   

   1,016Letters of credit1Camflo Mill

   2,505

   

   1,332Island Gold Mine (Kremzar property)

   979

   

   979Francoeur Mine

   471

   

   314Monique Mine

   948

   

   948Beaufor Mine

   488

   

   -5,391

   

   3,573
 1

   Since June 30, 2014, letters of credit have been secured by a first rank movable mortgage for a maximum amount of $6,785, guaranteed by equipment and mobile equipement which has a net carrying value of $21,151 ($14,667 in 2014). Prior to that, letters of credit were secured by the guaranteed investment certificate. Cash flows from operating activities In 2015, cash flows from operations increased to $42.4 million from $27.3 million in 2014. This increase was driven by a decrease in non-cash working capital items of $8.1 million as compared to an increase in non-cash working capital of $6.9 million in 2014. Cash flow from operations before working capital adjustments were almost in-line with the prior year, as 9% higher revenues during the year were offset by 6% higher cost of sales, 97% higher exploration and project evaluation costs and 29% higher administration costs in 2015. Cash flows from operations increased from $3.5 million in 2013 to $27.3 million in 2014. This increase reflects net earnings in 2014 of $8.2 million, or $0.18 per share, compared with a net loss of ($34.3) million or ($0.87) per share in 2013 reflecting a 49% increase in ounces of gold sold and a 15% decrease, in Canadian dollars, of the average cash cost of production primarily driven by improved grades and the resulting higher gold sales. Futhermore Richmont spent $3.8 million in exploration costs in 2014 compared to $7.9 million in 2013. 82


---

Cash flows used in investing activities The Corporation invested $48.9 million in 2015 focussing largely on the accelerated development and potential production expansion at Island Gold Mine. This included $7.8 million for extending the main ramp to a depth of 740 metres, $8.5 million for a secondary eastern ramp to a depth of 500 metres and $4.8 million for an exploration drift that extends to the east by approximately 440 metres. A $2.8 million delineation drilling program of 50,089 metres was also completed in 2015. Other significant infrastructure upgrades included $8.7 million for the tailings dam expansion, $5.0 million for electrical upgrades and $1.6 million for bunkhouse buildings. Investments in assets of $23.1 million in 2014 were significantly lower than 2013 investments of $41.9 million. The decrease was largely due to the lower development costs associated with the Monique Mine following its commencement of commercial production in the fourth quarter of 2013, lower investments in the W Zone following the decision to cease operations in the second quarter of 2014, and decreased year-over-year investments at the Island Gold Mine. (in thousands of $)

   2015

   

   2014

   

   2013$

   

   $

   

   $Island Gold Mine

   48,938

   

   20,168

   

   27,770Beaufor Mine

   1,390

   

   1,623

   

   980W Zone Mine

   -

   

   234

   

   3,779Monique Mine

   -

   

   21

   

   8,358Other

   1,770

   

   1,006

   

   1,001Total

   52,098

   

   23,052

   

   41,888
 Cash flows from financing activities On February 11, 2015, the Corporation issued a total of 9.625 million common shares on a bought-deal basis through a syndicate of underwriters, at a price of $4.00 per share. This included the entire over-allotment option of 1.125 million common shares, and generated aggregate gross proceeds of $38.5 million. A share issue cost of $2.4 million was incurred relating to the issuance of common shares. In 2015, the Corporation issued 438,740 common shares (630,120 in 2014 and 30,000 in 2013) following the exercise of stock options and received cash proceeds in the amount of $0.7 million ($1.1million in 2014 and $0.1 million in 2013). On April 23, 2014, the Corporation issued a total of 8.05 million common shares on a bought-deal basis through a syndicate of underwriters, at a price of $1.45 per share. This included the entire over-allotment option of 1.05 million shares, and generated aggregate gross proceeds of $11.7 million. An expense of $0.9 million was incurred relating to the issuance of common shares. On January 3, 2015, the Corporation made an advance royalty payment of $1.0 million at the closing of a transaction to acquire the outstanding 31% ownership of four patented claims on the Island Gold Mine property, thereby increasing its ownership of these claims to 100% from 69% previously. According to the terms of a Senior Secured Credit Facility established in 2013, 812,500 warrants were issued to the lender, each warrant allowing for the acquisition of one common share at a price of $2.45 prior to August 2016. These warrants vested immediately and an amount of $0.4 million was registered in shareholder’s equity in contributed surplus and the counterpart as financing costs. 83


---

Capital disclosures Richmont’s cash and cash equivalents balance was $61.0 million at December 31, 2015, $35.3 million at December 31, 2014, and $17.6 million at December 31, 2013. The Corporation invests its cash in high-quality securities issued by government agencies, financial institutions and major corporations, and limits its amount of credit exposure by diversifying its holdings. The Corporation’s objectives when managing its capital are to safeguard the Corporation’s ability to continue as a going concern, in order to support the development of its mining assets and ongoing exploration programs, to provide sufficient working capital to meet its ongoing obligations and to pursue potential investments. The Corporation defines its capital as its equity. The Corporation manages its capital structure and makes adjustments to it in accordance with the aforementioned objectives, as well as in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, the Corporation may purchase some of its shares for cancellation pursuant to normal course issuer bids, issue new shares, issue new debt, acquire or dispose of assets. The Corporation is not subject to externally imposed capital requirements. The Corporation’s management of capital remained unchanged since the previous year. Although in the Corporation’s opinion, its working capital is sufficient for ongoing operation for the next twelve months, the Corporation is forecasting significantly higher capital expenditures of $67.5 million in 2016. The Corporation will remain focused on a disciplined and prudent capital allocation strategy to ensure expenditures are fully funded internally, with sustaining capital investment requirements expected to reduce compared with the prior year. Project capital investment for the year is focused on the continued development of the Island Gold Mine. Total capital investment estimates for the year include a potential $10.0 million in discretionary capital with allocation of these funds contingent upon the prevailing gold price sustainably exceeding $1,500 per ounce in 2016. On February 11, 2015 the Corporation announced that it closed a bought deal financing, subsequent to which a total of 9.625 million shares were issued, including the entire over-allotment option, at a price of $4.00, generating gross proceeds of $38.5 million. (See ITEM 8. FINANCIAL INFORMATION - B. Significant change, for more information). Richmont applied the net proceeds of the financing toward accelerating the transformational development of the higher-grade Resource extension at its Island Gold Mine in Ontario. On April 23, 2014, the Corporation issued a total of 8.1 million common shares of the Corporationat a price of $1.45 per share, including the entire over-allotment option of 1.05 million common shares, for aggregate gross proceeds of $11.7 million which were used for working capital and general corporate purposes. The Corporation’s profitability may vary significantly as a result of many factors, including, the price of gold, Canadian dollar/United States dollar exchange rate, fluctuations in commodity prices and unforeseen variations from expected grade, tonnage levels and production costs at its operating mines, most of which are not under the Corporation’s control. Accordingly, no assurance can be given that the Corporation’s working capital will continue to be sufficient to support its ongoing operations. The Corporation has no material commitments for either capital expenditures or its exploration program. The Corporation’s budget can be modified and its investments adjusted depending on available funds and operating and exploration results. The exploration and development of new mineral deposits is subject to numerous risks, discussed in greater detail on page 10. As at December 31, 2015, Richmont Mines had no hedging contracts. In order to finance additional exploration activities or to maintain or increase its liquidity and capital resources, the Corporation may decide to issue new shares or to issue new debt. 84


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C.

   Research and Development, Patents and Licenses, etc.
 None. D.

   Trend Information
 See discussions in Parts A and B of “ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS”. E.

   Off-Balance Sheet Arrangements
 The Corporation does not have any off-balance-sheet arrangements. F.

   Tabular Disclosure of Contractual Obligations
 As of December 31, 2015, the Corporation had the following long-term liabilities required to be reflected on the Corporation’s balance sheet under International Financial Reporting Standard. (in million of $)

   Payments due by periodContractual obligations

   

   2016

   

   2017

   

   2018

   

   2019 and after

   

   TotalRoyalty payment payable

   

   $1.0

   

   -

   

   -

   

   -

   

   $1.0Finance lease obligations

   

   $2.1

   

   $2.5

   

   $0.9

   

   $0.6

   

   $6.1Contract payment holdbacks

   

   -

   

   $1.5

   

   -

   

   -

   

   $1.5Long-term share-based compensation

   

   -

   

   $1.2

   

   -

   

   -

   

   $1.2Closure allowance

   

   -

   

   -

   

   $0.5

   

   -

   

   $0.5Asset retirement obligations

   

   $0.3

   

   $1.0

   

   $0.3

   

   $8.3

   

   $9.9Operating leases

   

   $0.3

   

   $0.3

   

   $0.1

   

   $0.2

   

   $0.9Total

   

   $3.7

   

   $6.5

   

   $1.8

   

   $9.1

   

   $21.1
 85


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ITEM 6.

   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
  A.

   Directors and Officers
 Names, municipalities of residence, offices and principal occupations of the directors and executives officers of the Corporation are as follows: Number ofshares owned

   Number ofName and Municipality of

   Office held with

   Principal

   Director or

   on March 21,

   options held onResidence

   the Corporation

   Occupation

   Officer since

   20161

   March 21, 2016

   RSUs (15)

   DSUs (16)H. Greg Chamandy4Westmount, QC, Canada

   Director14

   Business Executive

   May 14, 2009

   5,016,3632

   667,000

   14,000

   47,000Renaud Adams, Eng.10Oakville, ON, Canada

   President andCEO

   President and CEO ofRichmont Mines Inc.

   Nov. 17, 2014

   70,000

   800,000

   86,000

   -René Marion, Eng. 4,6Toronto, ON, Canada

   Director

   Mining Consultant

   Nov. 6, 2013

   40,000

   33,334

   11,000

   27,000Elaine Ellingham, P.Geo.,M. Sc., MBA3,4, 5, 6,Toronto, ON, Canada

   Director

   Management Consultant

   Feb. 4, 2010

   34,196

   225,000

   11,000

   18,000Michael Pesner, CPA, CA3,5, 6Montreal, QC, Canada

   Director

   President, HermitageCanada Finance Inc.

   Nov. 1, 2010

   10,000

   153,000

   11,000

   18,000Peter Barnes, FCPA, FCA,ICD.D3,5,13North Vancouver, BC, Canada

   Director

   Retired, CorporateDirector

   Feb 24, 2016

   5,000

   100,000

   10,000

   -Daniel Adam, P.Geo., Ph.D.7Rouyn-Noranda, QC, Canada

   Vice-President,Exploration

   Vice-President,Exploration ofRichmont Mines Inc.

   Mar 10, 2008

   56,873

   88,800

   20,267

   -Rosaire Émond, Eng,8Val-d’Or, QC, Canada

   Vice-Presidentand ChiefOperating Officer

   Vice–President andChief Operating Officerof Richmont Mines Inc.

   Jan. 13, 2014

   -

   -

   -

   -Nicole Veilleux, CPA, CA9Rouyn-Noranda, QC, Canada

   Vice-President,Finance

   Vice-President, Financeof Richmont Mines Inc.

   Mar 1, 2006

   32,000

   159,000

   23,667

   -Steve BurletonToronto, ON, Canada

   Vice-President,BusinessDevelopment

   Vice-President,Business Development

   Feb 17, 2015

   -

   100,000

   23,800

   -Anne DayToronto, ON, Canada

   Vice-President,InvestorRelations

   Vice-President, InvestorRelations

   Sep 15, 2015

   -

   100,000

   10,000

   -Mélissa TardifSte-Gertrude-Manneville, QC,Canada

   CorporateSecretary

   Lawyer at RichmontMines Inc.

   May 9, 2013

   708

   50,000

   2,700

   -
 1)

   As the Corporation has no direct knowledge of the number of shares controlled by the above-mentioned directors and officers, the information was provided by each of them.2)

   Of this number, 961,805 common shares are directly held by Mr. Chamandy. The remaining 4,020,854 and 33,704 common shares are held by Oxbridge Group Inc., an entity ultimately controlled by Mr. Chamandy and Ms. Chantal Condoroussis, Mr. Chamandy’s spouse.3)

   Member of the Audit Committee.4)

   Member of the Technical and Corporate Responsibility Committee.5)

   Member of the Human Resources and Compensation Committee.6)

   Member of the Corporate Governance and Nominating Committee.7)

   Mr. Daniel Adam was nominated Vice-President, Exploration on February 25, 2013.8)

   Mr. Rosaire Émond was appointed Vice-President and Chief Operating Officer on January 13, 2014 and resigned on March 6, 2015.9)

   Ms. Nicole Veilleux was appointed Vice-President, Finance on September 25, 2014.10)

   Mr. Renaud Adams was appointed President and Chief Executive Officer on November 17, 2014. 86


---

11)

   Mr. Steve Burleton was appointed Vice-President, Business Development on February 23, 2015.12)

   Ms. Anne Day was appointed Vice-President, Investor Relations on September 15, 2015.13)

   Mr. Peter Barnes replaced Mr. René Marion on the Audit Committee and the Human Resources and Compensation Committee.14)

   Mr. Greg Chamandy resigned as Executive Chairman of the Board effective January 1, 2016, but remained as a Director of the Corporation.15)

   Restricted Share Units (see “Ominibus Long Term Incentive plan at page 101).16)

   Defered Share Units (see “Deferred Share Unit Plan” at page 106). The Corporation does not have any other committees other than those mentioned above. The above-mentioned individuals have held their principal occupation as indicated beside their respective names during the last five years, with the exception of Mr. Rosaire Émond who, prior to January 13, 2014, was Island Gold Deep Project Manager for Richmont; Mr. Daniel Adam, who, prior to February 25, 2013 was General Manager, Exploration at Richmont; Ms. Mélissa Tardif who, prior to May 9, 2013, was Richmont’s Assistant Corporate Secretary and prior to August 8, 2011, was a lawyer in a property management company; Ms. Nicole Veilleux, who, prior to September 25, 2014 was the Financial Director for Richmont Mines; Mr. Renaud Adams, who, prior to November 17, 2014 worked as President and COO of Primero Mining Corp.; Mr. René Marion, who, prior to November 6, 2013, worked as President and CEO and Director of AuRico Gold; Mr. Steve Burleton, who, prior to February 23, 2015 worked as Vice-President, Corporate Development for MBAC Fertilizer Corp.; Ms. Anne Day, who prior to September 15, 2015 worked as Vice-President, Investor Relations for AuRico Gold; and Ms. Elaine Ellingham, who between July 2, 2014 and November 17, 2014 was Interim President and CEO of Richmont Mines. Director

   Other Reporting IssuersH. Greg Chamandy

   Liquid Nutrition Group Inc.Michael Pesner

   Quest Rare Minerals Ltd., Alexandria Minerals Corporation, Le Château Inc., and Wi2Wi2 Corporation.René Marion

   Guyana Goldfields Inc. and Continental Gold Inc.Elaine Ellingham

   Aurania Resources Ltd., Wallbridge Mining Company Ltd. and Williams Creek Gold LimitedPeter Barnes

   Mag Silver Corp.
 Each director shall, unless he or she resigns or his or her office becomes vacant for any reason, hold office until the close of the next annual meeting of shareholders or until his or her successor is elected or appointed. The directors and officers mentioned above own a total of 5,265,140 common shares of Richmont Mines, which represents 8.99% of the Corporation’s 58,550,440 common shares issued and outstanding as at March 21, 2016. 87


---

B.

   Compensation (all the amounts are in Canadian dollars)
 Compensation of the Named Executive Officers for the Financial Year Ended December 31, 2015 During the financial year ended December 31, 2015, the Named Executive Officers of the Corporation (identified above (the “NEOs”)) were paid an aggregate remuneration of $3,174,724. The following information sets forth the remuneration paid for the financial year ended December 31, 2015 by the Corporation and its subsidiaries to the Corporation’s NEOs who have received in return for services rendered to the Corporation or its subsidiaries in any capacity, an aggregate compensation exceeding $150,000 during the latest fiscal year. In March 2012, the Corporation offered an employment agreement to Mr. Daniel Adam, the Vice-President, Exploration, since he is considered to be key personnel. That agreement incorporates a retention payment provided certain conditions are met by the employee, most notably that the employee continues his employment with the Corporation until March 2017. That retention payment of $500,000 would be payable in 2017 either through the issuance of the Corporation’s common shares or cash, at the discretion of the employee, with the number of common shares to be determined based on the market value of the common shares at the time of payment. Summary Compensation Table of the Named Executive Officers **Share****-**Name and principal

   Fiscal

   

   

   based

   

   

   Option-based

   

   Non-equity incentive plan

   Pension

   

   All other

   

   Totalposition

   year

   Salary

   

   awards

   

   

   awards

   

   compensation

   Value

   

   compensation

   

   compensation($)

   

   **($)****(1)**

   

   

   **($)****(2)**

   

   ($)

   ($)

   

   **($)****(3)**

   

   ($)Annual

   Long termincentive

   incentive plansplans (Bonus)H. Greg Chamandy(4)

   2015

   270,000

   

   -

   

   

   30,460

   

   -

   n/a

   -

   

   847,298

   

   1,147,758Director and Member of

   2014

   270,000

   

   52,220

   

   

   259,000

   

   -

   

   -

   

   2,720

   

   583,940the Board

   2013

   270,000

   

   -

   

   

   100,160

   

   -

   

   -

   

   -

   

   370,160Renaud Adams

   2015

   430,000

   

   -

   

   

   -

   

   492,264

   n/a

   21,500

   

   8,843

   

   952,607President and Chief

   2014

   33,080

   

   -

   

   

   990,560

   

   -

   

   1,655

   

   380

   

   1,025,675Executive OfficerNicole Veilleux

   2015

   222,764

   

   -

   

   

   -

   

   92,997

   n/a

   11,138

   

   9,486

   

   336,385Vice-President, Finance

   2014

   180,230

   

   31,705

   

   

   156,280

   

   55,000

   

   8,942

   

   9,038

   

   441,1952013

   180,000

   

   -

   

   

   25,000

   

   35,000

   

   8,971

   

   9,009

   

   257,980Daniel Adam

   2015

   194,616

   

   -

   

   

   -

   

   66,015

   n/a

   9,731

   

   5,607

   

   275,969Vice-President,

   2014

   185,380

   

   26,110

   

   

   83,630

   

   41,250

   

   9,269

   

   5,221

   

   350,860Exploration

   2013

   181,700

   

   -

   

   

   25,000

   

   20,000

   

   9,212

   

   4,048

   

   239,960Steve Burleton(5)

   2015

   172,861

   

   -

   

   

   202,710

   

   76,146

   n/a

   4,847

   

   5,441

   

   462,005Vice-President, BusinessDevelopment
 Notes:1)

   The valuation of the awards of RSUs is calculated based on the closing price of the Corporation’s common shares on the TSX of $3.73 on December 9, 2014, the day prior to the date of the award.2)

   On February 4, 2015, the Corporation granted 15,000 options to Greg Chamandy, 100,000 options to Steve Burleton on February 19, 2015.

   The fair value of the options granted annually is determined by multiplying the number of options granted by their value under the Black Scholes model or is based on the value of the services rendered, in accordance with International Financial Reporting Standards. The value determined under Black Scholes corresponds to the fair accounting value established according to the following assumptions: 2015

   

   2014

   

   2013Risk-free rate:

   0.7%

   

   1.4%

   

   1.5%Expected option life:

   3.7 years

   

   3.9 years

   

   3.8 yearsVolatility:

   61%

   

   63%

   

   56%Expected dividends yield:

   0%

   

   0%

   

   0%
 88


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3)

   The heading “All Other Compensation” includes: a)

   the amount that was paid to each of the senior management for health and life insurance fees, car allowance, parking allowance, professional fees and other fees.b)

   any amount that was paid on January 22, 2016 as termination benefits for Mr. Chamandy. For more details see page 94.c)

   please note that the amount of taxable benefit, associated with the exercising of options, is now presented in the section Aggregated Option Exercised by Named Executive Officers during the Financial Year Ended December 31, 2015 and Financial Year-End Option Values. 4)

   On January 1, 2016, Mr. Chamandy resigned as Executive Chairman of the Board.5)

   On February 17, 2015, Mr. Burleton was appointed Vice-President, Business Development. The Corporation had a past compensation practice of granting NEOs and Directors share-based awards at the end of the fiscal year for the corporate and individual performances achieved during the year. Following a decision of the Board of Directors in November 2015, it has been decided to wait until the beginning of the following fiscal year to determine whether share-based awards were to be granted to NEOs and Directors based on the Corporate and individual performances for the previous fiscal year. As a result of such decision, no share-based awards were granted to NEOs and Directors for fiscal year ended December 31, 2015. Director Compensation (other than the Executive Chairman of the Board and the CEO) for the financial year ended on December 31, 2015 During a meeting held in December 2014, the members of the Board of Directors determined the annual compensation granted to the members of the Board for the fiscal year ended December 31, 2015. During this meeting, it was decided that the members of the Board (with the exception of the Executive Chairman of the Board and the CEO) would be paid a sum of $35,000 in annual compensation for the 2015 year, that an additional sum of $12,000 per year would be paid to each Chair of a sub-committee of the Board of Directors, and that members of committees would be paid $5,000 per year per committee. On November 4, 2015, the Board of Directors decided by resolution that the annual retainer would be increase to $45,000 effective the same date, that an additional sum of $15,000 per year would be paid to the Chair of the Audit Committee and the Chair of the Technical and Corporate Responsibility Committee and an additional sum of $12,000 per year to the Chair of the HRCC and to the Chair of the Corporate Governance Committee. Members of the Audit Committee and the Technical and Corporate Responsibility Committees would receive a sum of $6,000 per year and members of the HRCC and the Corporate Governance Committee would receive a sum of $5,000 per year. The level of the annual compensation of the members of the Board of Directors (with the exception of the Executive Chairman of the Board and the CEO) is based on the HRCC’s analysis regarding compensation levels of directors of mining companies that are similar to Richmont Mines. The HRCC retained a consultant to provide relevant data on comparable companies to assist in their analysis. Executive Chairman of the Board compensation for the financial year ended on December 31, 2015 On December 9, 2014, the HRCC recommended to the Board of Directors and the Board of Directors ratified, that the Executive Chairman’s compensation of $270,000 should remain for the 2015 fiscal year. On an aggregate basis, the Corporation’s Board members therefore received total compensation of $437,738 during the 2015 fiscal year, as detailed in the table below. Please note that this table does not include the compensation granted to the Executive Chairman of the Board and the CEO, who is also a director of the Board. For more details about the Chairman’s and CEO’s compensation, please consult the section “Compensation of the Named Executive Officers for the Financial Year Ended December 31, 2015”. 89


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Director Compensation Table for the financial year ended on December 31, 2015 Non-EquityShare-

   Option-

   Incentive PlanFiscal

   Fees

   based

   based

   Compensation

   Pension

   All otherName

   Year

   Earned

   Awards(1)

   Awards(2)

   (bonus)

   Value

   Compensation(3)(4)

   Total($)

   ($)

   ($)

   ($)

   

   ($)

   ($)Elaine Ellingham

   2015

   62,750

   -

   130,093

   

   

   -

   192,843Director

   2014

   48,000

   41,030

   245,000

   n/a

   n/a

   192,000

   526,0302013

   52,000

   -

   80,128

   

   

   -

   132,128Michael Pesner

   2015

   58,750

   -

   115,145

   

   

   -

   173,895Director

   2014

   59,000

   41,030

   121,750

   n/a

   n/a

   15,000

   236,7802013

   55,000

   -

   80,128

   

   

   -

   135,128René Marion

   2015

   71,000

   -

   -

   

   

   -

   71,000Director

   2014

   43,250

   41,030

   121,750

   n/a

   n/a

   28,750

   234,7802013

   8,500

   -

   67,128

   

   

   -

   75,628
 Notes:1)

   The valuation of the grants of RSUs is calculated based on the closing price of the Corporation’s common shares on the TSX of $3.73 on December 9, 2014, the day prior to the date of the grant.2)

   In 2015, the Corporation granted a total of 128,000 options to two directors of the Corporation.

   The fair value of the options granted annually is determined by multiplying the number of options granted by their value under the Black & Scholes model, in accordance with International Financial Reporting Standards. The value determined under Black & Scholes corresponds to the fair accounting value established according to the following assumptions: 2015

   

   2014

   

   2013Risk-free rate:

   0.7%

   

   1.4%

   

   1.5%Expected option life:

   3.7 years

   

   3.9 years

   

   3.8 yearsVolatility:

   61%

   

   63%

   

   56%Expected dividends yield:

   0%

   

   0%

   

   0%
 3)

   Please note that the amount of taxable benefit, associated with the exercising of options are now presented in the section Options Exercised by Named Executive Directors during the Most Recently Completed Financial Year Ended December 31, 2015.4)

   In 2014, additional fees of $15,000 were paid to each director during the interim mandate of Elaine Ellingham as President and CEO. In the case of Michael Pesner, these fees were paid to Hermitage Canada Finance Inc., a company wholly owned by Michael Pesner. An amount of $192,000 was paid to Ellingham Consulting Ltd., a company wholly-owned by Elaine Ellingham for services as interim President and CEO of the Corporation. The Corporation has not set aside or accrued any amounts to provide pension, retirement or similar benefits to the directors or executive officers. C.

   Board Practices
 The directors serve as directors of the Corporation from their election until the next Annual General Meeting that will be held on May 12, 2016 or until a successor is duly elected. Directors Name

   Elected or Appointed DirectorH. Greg Chamandy

   May 2009Elaine Ellingham

   February 2010Michael Pesner

   November 2010René Marion

   November 2013Renaud Adams

   November 2014Peter Barnes

   February 2016
 90


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Employment Contracts The Corporation has entered into employment contracts with the following NEOs: Renaud Adams, as CEO, Nicole Veilleux, as Vice-President, Finance, Daniel Adam, as Vice-President, Exploration and Steve Burleton as Vice-President, Business Development. The contract of Renaud Adams provides that in the event that, after the first twelve (12) months following the effective date, (A) the employment of the executive is terminated by the Corporation without cause or (B) the executive resigns for good reason, in both cases whether or not the termination of the executive's employment occurs following a change in control, the Corporation shall pay the following amounts to the executive: (i) the basic payments, and (ii) an amount representing two (2) times the executive's annual base salary at his most recent base salary rate plus two (2) times the average of the annual bonuses awarded to the executive in the two (2) full years preceding the date of termination. If the executive has not been employed by the Corporation for two (2) full bonus years, then the executive shall be deemed to have received his annual bonus at target in the two (2) years preceding the date of termination. The payment provided shall be payable, at the Corporation's discretion, by way of (i) salary continuance until the full amount of said payment is remitted, or (ii) a lump sum. In addition to the amounts payable above, in the event that (A) the employment of the executive is terminated by the Corporation without cause or (B) the executive resigns for good reason, in both cases whether or not the termination of the executive's employment occurs following a change in control, (i) the Corporation shall continue to provide the executive with group insurance benefits for such period as is required pursuant to the Ontario Employment Standards Act (2000), as amended from time to time, if applicable, subject to the terms and conditions of the applicable plan and to the approval of the insurance carrier; and (ii) all unvested options held by the executive on the date of termination shall automatically vest on this day and shall remain available for exercise until the earlier of the following dates: the expiry of a sixty (60) day period following the date of termination or the expiry of the original term of the options. The estimated amount that could be paid by the Corporation in these given circumstances, assuming that the termination occurred on the last working day of the most recent financial year of the Corporation is $1,720,000 inclusive of base salary and bonus, for the CEO. The estimated value of stock options that the CEO would received assuming that the termination occurred on the last working day of the most recent financial year of the Corporation is $1,056,000. Please refer to «Table of Compensation after a Change of Control» on page 93. The estimated amount that could be paid by the Corporation in these given circumstances, assuming that the change of control occurred on the last working day of the most recent financial year of the Corporation is $1,720,000 inclusive of base salary and bonus, for the CEO. The estimated value of stock options that the CEO would received assuming that the change of control occurred on the last working day of the most recent financial year of the Corporation is $1,056,000. Please refer to «Table of Compensation after a Change of Control» on page 93. The contract of Nicole Veilleux provides that, in the event of termination initiated by the Corporation without cause or termination by the Executive with good reason, or if the contract is not renewed, the Vice-President, Finance, will be entitled to one month of total compensation by year of service, whether such year of service is completed or not. For the purposes of calculating the severance payment, the executive’s total compensation will be based on the annual average of the two (2) complete fiscal years immediately preceding the date of termination. Moreover, and notwithstanding the provisions contained in the Omnibus LTIP and the conditions of the options held by the executive, a part of the options held by the executive will become vested on the termination date. Also, the options thus vested on the termination date will be exercisable on the earliest of the following two dates: (i) on the dates initially stipulated; or (ii) two years after the termination date. The other options, thus vested on the termination date will be exercisable before the expiry term of sixty (60) days. 91


---

The estimated amount that could be paid by the Corporation in these given circumstances, assuming that the termination occurred on the last working day of the most recent financial year of the Corporation and that this date falls during the renewal term of the contract of employment of the executive is $542,857 for the Vice-President, Finance. In the event that, during a three-year period after the date of a “change of control”, the employment contract of Nicole Veilleux was to be terminated by her resignation for valid cause or by the severing by the Corporation of the employment relationship binding her to the Corporation for cause other than serious cause or her permanent incapacity, then the Corporation shall pay her, in addition to the payment of any amount owed to her as unpaid salary and vacation accumulated but not yet taken on the termination date, within 30 days of the termination date, a lump sum equivalent to twice her total average annual compensation (total compensation is defined as all the components which have monetary value and, without limiting the scope of the foregoing, any salary, bonuses (applicable for the period, regardless of whether they are calculated at that time), benefits, insurance), based on the average annual amount of total compensation for the two full calendar years preceding the termination date, minus applicable deductions. Also, the options held by the Vice-President, Finance will become vested on the termination date and thereupon may be exercised. Moreover, and notwithstanding the provisions contained in the Omnibus LTIP and the conditions of the options held by the Vice-President, Finance, the maturity dates of the options thus exercisable will be those initially stipulated, but without exceeding three years after the termination date. The change of control agreements will end upon the termination of the Vice-President, Finance within the Corporation if it occurs before the occurrence of a change of control. The estimated amount that could be paid by the Corporation in these given circumstances, assuming that the change of control occurred on the last working day of the most recent financial year of the Corporation is $760,653 inclusive of base salary and bonus, for the Vice-President, Finance. The estimated value of stock options that the Vice-President, Finance would received assuming that the change of control occurred on the last working day of the most recent financial year of the Corporation is $89,205. Please refer to «Table of Compensation after a Change of Control» on page 93. In the event that following termination of employment, amounts are payable to an NEO pursuant to an employment contract and a change of control agreement, the Corporation would only have to pay the greater of the two amounts for the Vice-President, Finance. The contract of Daniel Adam provides that, in the event of termination initiated by the Corporation with cause, the Vice-President, Exploration will not receive any compensation including his retention payment. In the event of termination initiated by the Corporation without cause, the compensation (including the salary and the annual bonus) will be determined by the HRCC at their discretion and following the law. His retention payment will be given to him prorated to the number of months he worked. If the Vice-President, Exploration becomes invalid, or dies before the termination date of his contract, he or his succession will receive the retention payment prorated to the number of months he worked. All his options exercisable or that will become exercisable before the expiry term of 60 days will become vested. The estimated amount that could be paid by the Corporation in these given circumstances, assuming that the termination occurred on the last working day of the most recent financial year of the Corporation is $383,333 for the Vice-President, Exploration. The contract of Daniel Adam provides that, after a change of control, if the contract is terminated within twelve (12) months following the change in control, the Vice-President, Exploration will be entitled to the entire payment of his retention payment. If the contract is terminated after the period of twelve (12) months, following a change of control, the Vice-President, Exploration will be entitled to receive his retention payment prorated to the number of months he worked. 92


---

The estimated amount that could be paid by the Corporation to the Vice-President, Exploration in these given circumstances, assuming that the contract is terminated within twelve months following the change of control is $500,000. The estimated amount that could be received by the Vice-President, Exploration in these given circumstances, assuming that the contract is terminated after the period of twelve months following the change of control, on the last business day of the most recent financial year of the Corporation, is $383,333. Please refer to «Table of Compensation after a Change of Control» on page 93. The contract of Steve Burleton provides that in the event that, within sixty (60) days immediately following any change in control, (A) the employment of the executive is terminated by the Corporation without cause or (B) the executive resigns for good reason, in both cases, I) during the first twelve (12) months following the effective date, the Corporation shall pay the following amounts to the executive: (i) the basic payments, and (ii) an amount representing twelve (12) months of the executive's annual base salary at his most recent base salary rate plus one (1) time the targeted annual bonuses awarded under the short-term incentive plan; II) more than twelve (12) months following the effective date, the Corporation shall pay the following amounts to the executive: (i) the basic payments, and (ii) an amount representing eighteen (18) months of the executive's annual base salary at his most recent base salary rate plus one and a half (1.5) time the targeted annual bonuses awarded to the executive in the last two complete years. The payment provided shall be payable by way of a lump sum. The estimated amount that could be received by the Vice-President, Business Development in these given circumstances, assuming that a change of control occurred on the last business day of the most recent financial year of the Corporation, is $294,000. Please refer to «Table of Compensation after a Change of Control» on page 93. Table of Compensation after a Change of Control Compensation after a change

   Renaud Adams

   

   Nicole Veilleux

   

   Daniel Adam

   

   Steve Burletonof control

   President and

   

   Vice-President,

   

   Vice-President,

   

   Vice-President,CEO

   

   Finance

   

   Exploration

   

   BusinessDevelopmentCash SeveranceBase salary

   860,000

   

   405,000

   

   -

   

   210,000Bonus

   860,000

   

   148,000

   

   383,333(2)

   

   84,000Others

   -

   

   207,653

   

   -

   

   -Paid by the Corporation

   1,720,000

   

   760,653

   

   383,333

   

   294,000Stock options(1)

   1,056,000

   

   89,205

   

   -

   

   -TOTAL

   2,776,000

   

   849,858

   

   383,333

   

   294,000
 1)

   These amounts reflect the aggregate dollar value that would be realized by multiplying the number of unvested options (the vesting of which would be accelerated as a result of such change of control) by the difference between $4.44, being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2015 and the respective exercise price of such options.2)

   The estimated amount of retention bonus that could be received by the Vice-President, Exploration in these given circumstances, assuming that the contract is terminated within twelve months following the change of control is $500,000. The estimated amount of retention bonus that could be received by the Vice-President, Exploration in these given circumstances, assuming that the contract is terminated after the period of twelve months following the change of control, on the last business day of the most recent financial year of the Corporation, is $383,333. 93


---

Termination Benefits of the Executive Chairman of the Board As previous disclosed by the Corporation, Mr. Greg Chamandy resigned as Executive Chairman of the Board of Directors effective January 1, 2016 but remained as a director of the Corporation and continued to be a member of the Corporation’s Technical and Corporate Responsibility Committee. On January 1, 2016, Mr. René Marion was appointed as non-executive Chairman of the Board of Directors. The Corporation and Mr. Chamandy agreed to certain compensation arrangements in connection with Mr. Chamandy’s resignation. In determining Mr. Chamandy’s severance entitlement, the Board of Directors considered, among other things, his previous contributions to the Corporation as well as Canadian statutory and common law. In addition, the Corporation and Mr. Chamandy agreed to, among other things, confidentiality restrictions and a mutual release of claims. Mr. Chamandy’s compensation arrangement included: Mr. Chamandy received a lump sum payment of $810,000, less statutory deductions, as a retiring allowance. Mr. Chamandy also received a lump sum payment of $18,000, without any statutory or other deductions, as reimbursement of expenses.Mr. Chamandy received a lump sum of $30,000, less statutory deductions, representing the costs that he is expected to incur (up to a maximum of $10,000 per year) for the continuation of his group insurance benefits (excluding disability insurance benefits) for the period from January 1, 2016 to January 1, 2019.In March 2016, Mr. Chamandy was awarded 47,000 DSUs in connection with his continuing role as a director. In the cases noted above, for the Executive Chairman, the Vice-President Finance and the Vice-President, Exploration, a change of control occurs when: (i) another party acquires, directly or indirectly, alone or with any person acting in concert with him, more than 331/3% of the outstanding voting securities of the Corporation, (ii) after a takeover bid, a public offer of exchange, a merger, an arrangement, another form of business combination, a sale of assets of the Corporation or a contested election, or any combination of these transactions, the persons who are directors of the Corporation immediately prior to these transactions cease, after these transactions, to represent the majority of the directors on the Board, or on the Board of Directors of any parent Corporation or successor of the Corporation, or (iii) the shareholders of another entity hold more than 331/3% of the outstanding voting securities of the entity resulting from a merger, arrangement or other form of business combination with the other entity. For the President and Chief Executive Officer and the Vice-President Business Development, a change of control occurs when (i) any Person becomes the beneficial owner, directly or indirectly, of 50% or more of either the issued and outstanding common shares in the share capital of the Corporation or the combined voting power of the Corporation's then outstanding voting securities entitled to vote generally; (ii) any Person acquires, directly or indirectly, securities of the Corporation to which is attached the right to elect the majority of the directors of the Corporation; or (iii) the Corporation undergoes a liquidation or dissolution or sells all or substantially all of its assets. 94


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Human Resources and Compensation Committee The Board has a Human Resources and Compensation Committee composed of Elaine Ellingham, Chair of the Committee, Michael Pesner and Peter Barnes, all are independent directors. The Human Resources and Compensation Committee meets at least once a year to make recommendations to the Board on the remuneration of Corporation’s employees, executive officers and directors. The Human Resources and Compensation Committee takes into consideration the achievement of corporate objectives, operational and financial performance of the Corporation, as well as the responsibilities and workload of executive officers in formulating its recommendations and favors giving key personnel competitive compensation in order to keep them with the Corporation. Each member of the Human Resources and Compensation Committee has been in a senior leadership position in various organizations, and in those capacities obtained direct experience relevant to executive compensation, and has the skills and experience that enable the Human Resources and Compensation Committee to make decisions on the suitability of the Corporation’s compensation policies and practices. Corporate Governance and Nominating Committee The Board has a Corporate Governance and Nominating Committee, which meets at least once a year. The Corporate Governance and Nominating Committee is composed entirely of independent directors. The Committee is composed of Mr. René Marion, Chair of the Committee, Ms. Elaine Ellingham and Mr. Michael Pesner, all of whom are independent directors. The Corporate Governance and Nominating Committee’s mandate is to evaluate every aspect of the Corporation’s governance practices. In particular, the Corporate Governance and Nominating Committee examines the effectiveness of the Corporation’s governance practices at regular intervals, and reviews the role and the mandate of the Board and its committees. The Corporate Governance and Nominating Committee has the responsibility for identifying new candidates for Board nomination. Comprised of all independent directors, the Corporate Governance and Nominating Committee makes recommendations to the Board regarding selection criteria for directors, and periodically reviews the criteria the Board has adopted, as the case may be. When candidates are needed, the Corporate Governance and Nominating Committee looks for candidates with varied backgrounds, who can contribute to the overall performance of the Board, and who have demonstrated integrity, independence, experience and leadership in the past. Directors and members of senior management may recommend a candidate to the Corporate Governance and Nominating Committee if he or she believes that the individual possesses the required abilities to successfully perform the duties of a director. The Corporate Governance and Nominating Committee is responsible for conducting an interview with the candidate, from which it will form recommendations that will then be given to the Board of Directors. Audit Committee The Board has an Audit Committee and at year end it was composed of Michael Pesner, Chair of the Committee, René Marion and Elaine Ellingham, all of whom are independent directors as defined in National Instrument 52-110 Audit Committees (“NI 52-110”). The information on the Audit Committee is presented in Part VIII of the Corporation’s Annual Information Form for the year ended December 31, 2015, a copy of which is available on SEDAR at www.sedar.com. The Audit Committee is a standing committee of the Board of Directors whose primary function is to carry out a detailed and thorough review of audit matters, to be responsible for the oversight of the work of any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit or review services for the Corporation (including resolution of disagreements between management and the auditor regarding financial reporting), to consider and approve related party transactions and to offer the Corporation’s auditors, shareholders and employees a direct link to the non-executive directors. This Committee will assist the Board in fulfilling its oversight responsibilities by reviewing the financial information which will be provided to the 95


---

shareholders and others, the internal auditing and disclosure controls and procedures, the audit process, and adherence to applicable laws and regulations. In carrying out its duties, the Committee will apply reasonable materiality standards to all matters under review. Technical and Corporate Responsibility Committee On December 8, 2010, the Board of Directors created the Environmental, Health and Safety Committee, composed of a majority of independent directors. In early 2015, the Board agreed, in order to align with industry standards, the mandate of the Environmental, Health & Safety Committee be broadened to include Corporate Social Responsibility. New terms of reference and respective charters were then developed and approved by the Board on March 10, 2015 and the Corporate Social Responsibility Committee was mandated. On November 2015, the Board of Directors approved that the terms of reference and respective charters be further broadened to include the technical aspects. The main purpose of the Technical & Corporate Responsibility Committee is to review, monitor and make recommendations to the Board of Directors in respect of the technical, health and safety, environmental, community, business conduct, risk management and human rights policies and activities of the Corporation in order to verify that such policies and activities reflect, and are in accordance with their respective Charters. Additionally, the Committee will assist the Board in carrying out its responsibilities with respect to overseeing the exploration and operating activities of the Corporation, including the construction, development and operation of the Island Gold Deeps Project (the “I.G. Operation”), from a technical, financial and scheduling perspective. The Committee is also responsible for Board oversight of production forecasts, budgets, life of mine plans, reserves and resources and Management’s proposed public disclosure of said technical nature. At year end, 2015, the Technical & Corporate Responsibility Committee was composed of Mr. René Marion, Chair of the Committee, Ms. Elaine Ellingham and Mr. Greg Chamandy. Assessment Annually, under the supervision of the Corporate Governance and Nominating Committee, the directors conduct a formal evaluation of the performance and effectiveness of the Board. As part of this process, each director completes a detailed questionnaire which requires them to assess the performance of the Board, which includes a self-evaluation and peer review. The questionnaire requires input on the role, responsibilities and effectiveness of the Board, its membership, the conduct of meetings, and any improvements that could be made to enhance its effectiveness. The results of the evaluations will be reviewed by an independent external lawyer, which will be reporting to the Corporate Governance and Nominating Committee, who reports to the full Board. 96


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D.

   Employees
 The number of employees of the Corporation as of December 31, 2015, 2014 and 2013, was 435, 373 and 442 respectively. The distribution of the employees was the following: Category of Activity orGeographical Location

   December 31,2015

   

   2014

   

   2013Head Office / Montreal

   19

   

   15

   

   25Beaufor

   133

   

   117

   

   173Island Gold

   248

   

   205

   

   202Exploration

   3

   

   2

   

   2Camflo

   31

   

   31

   

   35Monique

   1

   

   3

   

   5Total

   435

   

   373

   

   442
  E.

   Share Ownership
 See “ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES - A. Directors and Senior Management” above for the number of shares of the Corporation’s common shares held by directors and executive officers of the Corporation. Information regarding the outstanding stock options held by directors and senior management of the Corporation as of December 31, 2015, is set forth below. Stock Options Outstanding to Named Executive Officers and Directors as at December 31, 2015 Unexercised OptionsUnexercised

   at Year-Endunderlying

   (#)

   Exercise price ofsecurities

   Exercisable/

   share options

   Share optionsName

   (unit)

   Unexercisable

   ($)

   expiry dateRenaud Adams President and Chief Executive Officer

   800,000

   266,667 / 533,333

   2.46

   Oct. 15, 2019TOTAL

   800,000Nicole Veilleux

   3,500

   

   12.03

   Dec. 8, 2016Vice-President, Finance

   15,800

   77,186 / 81,814

   3.05

   Dec. 11, 201754,300

   1.08

   Dec. 11, 201885,400

   

   3.73

   Dec. 9, 2019TOTAL

   159,000Daniel Adam

   4,200

   

   12.03

   Dec. 8, 2016Vice-President, Exploration

   6,320

   33,453 / 55,347

   3.05

   Dec. 11, 201732,580

   1.08

   Dec. 11, 201845,700

   

   3.73

   Dec. 9, 2019TOTAL

   88,800Steve Burleton(1) Vice-President, Business Development

   100,000

   Nil / 100,000

   4.20

   Feb. 18, 2020TOTAL

   100,000
 97


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Unexercised OptionsUnexercised

   at Year-Endunderlying

   (#)

   Exercise price ofsecurities

   Exercisable/

   share options

   Share optionsName

   (unit)

   Unexercisable

   ($)

   expiry dateH. Greg Chamandy(2)

   352,000

   

   6.57

   May. 9, 2018Director

   50,000

   

   1.29

   Nov. 11, 201825,000

   277,866 / 289,134

   2.55

   Oct. 15, 2019125,000

   

   3.73

   Dec. 9, 201915,000

   

   4.18

   Feb. 3, 2020TOTAL

   567,000Elaine Ellingham

   40,000

   

   1.29

   Nov. 11, 2018Director

   50,000

   

   2.70

   Nov. 10, 2019100,000

   83,333 / 171,667

   3.73

   Dec. 9, 201925,000

   

   4.02

   Jan.11, 202040,000

   

   4.18

   Feb.3, 2020TOTAL

   255,000Michael Pesner

   40,000

   

   1.29

   Nov. 11, 2018Director

   25,000

   

   2.55

   Oct. 15, 201950,000

   41,666 / 136,334

   3.73

   Dec. 9, 201925,000

   

   4.02

   Jan.11, 202038,000

   

   3.92

   Nov. 9, 2020TOTAL

   178,000René Marion

   25,000

   41,666 / 33,334

   2.55

   Oct. 15, 2019Director

   50,000

   3.73

   Dec. 9, 2019TOTAL

   75,000
 1)

   On February 17, 2015, Mr. Burleton was appointed Vice-President, Business Development.2)

   On January 1, 2016, Mr. Chamandy resigned as Executive Chairman of the Board. 98


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Information regarding RSUs held by directors and senior management of the Corporation as of December 31, 2015, is set forth below. RSUs toNamed Executive Officers and Directorsas at December 31, 2015 Securities Under RSUs

   Market or PayoutAwarded that have not

   Value of RSUs Awards

   ExpirationName and Principal Position

   Vested

   that have not Vested(1)

   Date(#)

   ($)Nicole Veilleux Vice-President, Finance

   5,667

   25,161

   Dec. 10, 2017Daniel Adam Vice-President, Exploration

   4,667

   20,721

   Dec. 10, 2017Steve Burleton (2)Vice-President, Business Development

   7,000

   31,080

   Feb. 19 2018H. Greg Chamandy (3)Director and Member of the Board

   14,000

   62,160

   Dec. 10, 2017Elaine Ellingham Director

   11,000

   48,840

   Dec. 10, 2017Michael Pesner Director

   11,000

   48,840

   Dec. 10, 2017René Marion Director

   11,000

   48,840

   Dec. 10, 2017
 Note:1)

   Based on a closing price of the Corporation’s shares on the TSX of $4.44 on December 31, 2015.2)

   On February 17, 2015, Mr. Burleton was appointed Vice-President, Business Development.3)

   On January 1, 2016, Mr. Chamandy resigned as Executive Chairman of the Board. Description of the Share Option Plans Outstanding Awards and DSUs The Omnibus LTIP provides that the aggregate number of common shares of the Corporation issuable to insiders and associates of such insiders at any time under the Omnibus LTIP or any other proposed or established share compensation arrangement, including the DSU Plan, cannot exceed ten percent (10%) of the issued and outstanding common shares of the Corporation. As at December 31, 2015, the total shares outstanding were 58,339,963 and therefore the total 10% Awards (options, RSUs and DSUs) issuable from the plan were 5,833,996. As at December 31, 2015, options to acquire a total of 2,139,880 common shares were granted under the Omnibus LTIP, with exercise prices ranging from $1.08 to $6.57 per share, representing approximately 3.7% of the common shares issued and outstanding. A total of 193,400 RSUs have been granted under the Omnibus LTIP and no DSUs have been granted under the DSU plan as at December 31, 2015. 99


---

Other than the Omnibus LTIP, and the DSU Plan, the Corporation had only one equity-based compensation plan previously in existence, a share option plan, for the benefit of the Corporation’s and its affiliate’s officers, directors, employees and service providers (the “Share Option Plan”). Following the approval and adoption of the Omnibus Long-Term Incentive Plan in May 2012, options are no longer granted under the Share Option Plan and all grants of awards are now made under the Omnibus Long-Term Incentive Plan and the DSU Plan. As at December 31, 2015, options to acquire a total of 59,750 common shares were outstanding under the Share Option Plan, at an exercise price of $10.53 per share. The total Awards and DSUs granted as at December 31, 2015 were 2,393,030, out of a maximum 5,833,966 (10% of issued and outstanding common shares) issuable under the plans. Information Regarding Equity Compensation Plans as at December 31, 2015 Number of shares tobe issued upon exercise

   Weighted-average

   Number of sharesof outstanding options,

   exercise price of

   available for futurewarrants and rights

   outstanding options

   grants under the planShare Option Plan (approved by the shareholders)

   59,750

   $10.53Omnibus LTIP (options) (approved by the shareholders)

   2,139,880

   $3.61RSUs (approved by the holders)

   193,400DSUs (approved by the shareholders)

   -

   -

   -TOTAL

   2,393,030

   

   2,834,366
 Additionally, on October 16, 2014, inducement options were granted to the new President and CEO to acquire a total of 800,000 common shares were granted outside the Omnibus LTIP at an exercise price of $2.46 per share, representing approximately 1.4% of the common shares issued and outstanding. The total Awards granted as at December 31, 2015, were 3,193,030, which includes all Awards granted under and outside the plans. During the year 2015, fourteen option holders exercised a total of 438,740 options. Information regarding options outside the share option plans as at December 31, 2015 Number of shares issued outside

   Weighted-average exercise price ofthe share option plans

   optionsOutside the Share Option Plans (not approved by the holders)

   800,000

   $2.46
 100


---

Omnibus Long-Term Incentive Plan The Corporation has in place an Omnibus LTIP. The Omnibus LTIP is intended to provide a long-term incentive to directors, officers, senior executives and other employees of the Corporation and its subsidiaries as well as consultants and service providers providing ongoing services to the Corporation and its subsidiaries (collectively, “participants”) to continue to provide services to the Corporation and to encourage the retention of such persons whose skills, performance and loyalty to the objectives and interests of the Corporation are necessary to its success. The Omnibus LTIP permits the granting of options, restricted share units (RSUs), share appreciation rights (SARs) and retention awards (together with the options, the RSUs and the SARs, collectively referred to as “Awards”) to eligible participants of the Corporation. The Omnibus LTIP is administered by the Board of Directors. Pursuant to the Omnibus LTIP, the total number of common shares reserved and available for grant and issuance pursuant to Awards (including the common shares issuable upon exercise of the options granted under the Share Option Plan) cannot exceed a number of common shares equal to ten percent (10%) of the total issued and outstanding common shares of the Corporation at the time of granting of Awards (on a non-diluted basis) or such other number as may be approved by the TSX and the shareholders of the Corporation from time to time, assuming there is no adjustment in accordance with the Omnibus LTIP. Any increase in the issued and outstanding common shares (whether as a result of exercise of Awards or otherwise) will result in an increase in the number of common shares that may be issued on Awards outstanding at any time and any increase in the number of Awards granted will, upon exercise, make new grants available under the Omnibus LTIP. The Omnibus LTIP provides that the aggregate number of common shares of the Corporation: (a) issued to insiders and associates of such insiders under the Omnibus LTIP or any other proposed or established share compensation arrangement (including the DSU Plan (as defined below)) within any one-year period; and (b) issuable to insiders and associates of such insider at any time under the Omnibus LTIP or any other proposed or established share compensation arrangement (including the DSU Plan), cannot in each case exceed ten percent (10%) of the issued and outstanding common shares of the Corporation. Awards granted or awarded under the Omnibus LTIP may not be assigned or transferred with the exception of an assignment made to a personal representative of a deceased participant. The Board of Directors may, in its sole discretion, appoint from time to time one or more entities to act as administrative agent to administer the Awards under the Omnibus LTIP. The Board of Directors will not provide financial assistance to participants to assist them in exercising their Awards; however, the Board of Directors may, in its discretion, amend the Omnibus LTIP to authorize the administrator under the Omnibus LTIP to make arrangements to provide a form of financial assistance to the participants. Computershare acts as transfer agent, registrar and dividend disbursing agent for Richmont Mines pursuant to an agreement dated September 3, 2015. Specific Terms Related to the Options The Board of Directors will: (i) set the term of the options granted under the Omnibus LTIP which term cannot exceed ten (10) years; and (ii) fix the vesting terms of options as it deems appropriate at the time of the grant of such options. Should the expiration date for an option fall within a period during which designated persons cannot trade in any securities of the Corporation pursuant to the Corporation’s policy respecting restrictions on insider trading which is in effect at that time (a “Black-Out Period”) or within nine (9) business days following the expiration of a Black-Out Period, the expiry date of the option will be extended until that date which is the tenth business day following the end of the Black-Out Period. 101


---

The exercise price of any options granted pursuant to the Omnibus LTIP will be determined by the Board of Directors at the time of the grant, provided that the exercise price cannot be less than the Market Value (as defined below) of the common shares at the time of the grant. The “Market Value” means either (A) the closing price of the Shares on the TSX on the trading day immediately prior to the date the Award is granted or (B) such other price as is permitted under the rules of the TSX. With the consent of the Board, a participant may, rather than exercise the option which the participant is entitled to exercise under the Omnibus LTIP, elect to exercise such option, in whole or in part and, in lieu of receiving the common shares to which the exercised option relates, receive the number of common shares, disregarding fractions, which, when multiplied by the Market Value of the common shares to which the exercised option relates, have a value equal to the product of the number of common shares to which the exercised option relates multiplied by the difference between the Market Value of such common shares and the price of such option, less any amount withheld on account of income taxes, which withheld income taxes will be remitted by the Corporation. Specific Terms Related to the RSUs The Board of Directors will fix the period during which RSUs may vest, which period will end no later than December 31 of the calendar year which is three (3) years after the calendar year in which the RSU is granted (the “Restriction Period”). Each RSU grant will be subject to certain vesting conditions (including performance criteria, if any) such conditions to be determined by the Board of Directors and to be provided to the participant under a separate agreement. The vesting of the RSUs may be subject to the expiration of a performance period which corresponds to the period over which the performance criteria, if any, and other vesting conditions will be measured and which cannot end after the Restriction Period (the “Performance Period”). The participant will be entitled to receive, after the vesting determination date, which is the date on which, after the end of the Performance Period, if any, the Board of Directors determines that the vesting conditions (including the performance criteria, if any) are met, but no later than the last day of the Restriction Period (the “RSU Vesting Determination Date”), payment for each awarded RSU in the form of common shares of the Corporation, cash in an amount equal to the Market Value of a common share of the Corporation on the day on which the payment is made, or a combination of common shares and cash, at the discretion of the Board of Directors. Specific Terms Related to the SARs The Board of Directors will: (i) set the term of the SARs granted under the Omnibus LTIP which term cannot exceed ten (10) years; and (ii) fix the vesting terms of SARs, (including performance criteria, if any) as it deems appropriate at the time of the grant of such SARs. Should the expiration date for a SAR fall within a Black-Out Period or within nine (9) business days following the expiration of a Black-Out Period, the expiry date of the SAR will be extended until that date which is the tenth business day following the end of the Black-Out Period. The exercise price of any SAR granted pursuant to the Omnibus LTIP will be determined by the Board of Directors at the time of the grant, provided that the exercise price cannot be less than the Market Value of the common shares at the time of the grant. The exercise of a SAR with respect to any number of common shares of the Corporation will entitle the participant to a payment, in cash or common shares, or a combination of cash and common shares, for each SAR, equal to the excess of the Market Value of the common shares on the effective date of such exercise over the exercise price per SAR. 102


---

Specific Terms Related to the Retention Awards The Board of Directors will: (i) set the term of the retention awards granted under the Omnibus LTIP; and (ii) fix the vesting terms of retention awards (including performance criteria, if any) as it deems appropriate at the time of the grant of such retention awards. Each retention award awarded to a participant will entitle the participant to receive, on the vesting date of the retention award, such number of common shares of the Corporation which, when multiplied by the Market Value of the common shares on the vesting date of the retention award, have a value equal to the amount determined by the Board of Directors at the time of the grant (the “Retention Payment”), less any amount withheld on account of income taxes, which withheld income taxes will be remitted by the Corporation. A participant may, in lieu of receiving the common shares to which the retention awards relate, elect to receive, in cash, the Retention Payment, less any amount withheld on account of income taxes, which withheld income taxes will be remitted by the Corporation. Cessation in Case of Grant of Options, SARs and Retention Awards Unless the Board of Directors decides otherwise, options, SARs or retention awards granted under the Omnibus LTIP will expire at the earlier of the expiration of the original term of the options, SARs or retention awards, and (i) the effective date of the termination as specified in the notice of termination provided by the Corporation to the participant that its employment or other contractual relationship with the Corporation has been terminated for cause; (ii) one (1) year after the participant’s death; (iii) one (1) year after the participant’s employment has been terminated by reason of injury or disability or a participant becomes eligible to receive long-term disability benefits; or (iv) sixty (60) days following a participant ceasing to be an eligible participant for any other reason (including, but not limited to, termination without cause, resignation or retirement). Cessation in Case of RSUs Grant Unless the Board of Directors decides otherwise, upon (i) the termination of a participant’s employment or other contractual relationship with the Corporation for “cause” or (ii) the resignation of a participant, the participant’s participation in the Omnibus LTIP will be immediately terminated and all RSUs credited to such participant’s account that have not vested will be forfeited and cancelled. Unless the Board of Directors decides otherwise, upon a participant’s (i) death; (ii) termination of employment for reason of injury or disability; (iii) voluntary leave of absence; (iv) eligibility to receive long-term disability benefits; (iii) termination of employment for reasons other than for “cause”; or (iv) ceasing to be an eligible participant for any other reason not described above, the participant’s participation in Omnibus LTIP in respect of RSUs will be immediately terminated; however, all unvested RSUs will remain in effect until the applicable RSU Vesting Determination Date. On the RSU Vesting Determination Date or any earlier date as may be determined by the Board of Directors, the Board of Directors will evaluate whether the vesting conditions and performance criteria, if any, were met in order to determine the amount of the payment to which the participant is entitled, if any, in accordance with the following formula: D multiplied by E/F where: D is equal to the number of RSUs outstanding in the participant’s account;E is equal to the number of completed months during the applicable Performance Period; andF is equal to the total number of months included in the applicable Performance Period. 103


---

Amendments The Board of Directors has the discretion to make amendments to the Omnibus LTIP which it may deem necessary, without the consent of the participants, provided that such amendment will: (a)

   not adversely alter or impair any Award previously granted except as permitted by the provisions of Omnibus LTIP;(b)

   be subject to any regulatory approvals including, where required, the approval of the TSX; and(c)

   be subject to the shareholder approval, where required, by law or the requirements of the TSX, provided that shareholder approval will not be required for the following amendments and the Board of Directors may make any changes which may include but are not limited to: (i)

   amendments of a “housekeeping” nature;(ii)

   a change to the vesting provisions of any Award;(iii)

   the introduction or amendment of a cashless exercise feature payable in securities, whether or not such feature provides for a full deduction of the number of underlying securities from the Omnibus LTIP reserve;(iv)

   the addition of a form of financial assistance and any amendment to a financial assistance provision which is adopted; and(v)

   the addition of a deferred or restricted share unit or any other provision which results in participants receiving securities while no cash consideration is received by the Corporation. The Board of Directors will be required to obtain shareholder approval to make the following amendments: (a)

   any change to the maximum number of common shares of the Corporation issuable from treasury under the Omnibus LTIP, except such increase resulting from any increase in the issued and outstanding common shares of the Corporation (whether as a result of exercise of Awards or otherwise) and in the event of an adjustment pursuant to the Omnibus LTIP;(b)

   any amendment which reduces the exercise price of any Award after such Awards have been granted or any cancellation of an Award and the substitution of that Award by a new Award with a reduced price, except in the case of an adjustment pursuant to the Omnibus LTIP;(c)

   any amendment which extends the expiry date of any Award or the Restriction Period of any RSU beyond the original expiry date, except in case of an extension due to a Black-Out Period;(d)

   any amendment which would permit a change to the eligible participants, including a change which would have the potential of broadening or increasing participation by insiders;(e)

   any amendment which would permit any Award granted under the Omnibus LTIP to be transferable or assignable by any participant other than by will or by the laws of succession of the domicile of a deceased participant;(f)

   any amendment which increases the maximum number of common shares of the Corporation (i) issued to insiders and associates of such insiders under the Omnibus LTIP or any other proposed or established share compensation arrangement within one-year period; or (ii) issuable to insiders and associates of such insiders at any time under the Omnibus LTIP or any other proposed or established share compensation arrangement; and 104


---

(g)

   any amendment to the amendment provisions of the Omnibus LTIP provided that common share of the Corporation held directly or indirectly by insiders benefiting from such amendments will be excluded when obtaining such shareholder approval. Impact of a Change of Control Subject to the provisions contained in any employment agreement between a holder of Awards and the Corporation, if: (i) any person becomes the beneficial owner, directly or indirectly, of 50% or more of either the issued and outstanding common shares of the Corporation or the combined voting power of the Corporation’s then outstanding voting securities entitled to vote generally; (ii) any person acquires, directly or indirectly, securities to which is attached the right to elect the majority of the directors of the Corporation; (iii) the Corporation undergoes a liquidation or dissolution or sells all or substantially all of its assets; or (iv) the Corporation is involved in, or becomes subject to, a reorganization, an amalgamation, an arrangement, a take-over bid (as that term is defined in the Securities Act(Québec)) for all of the common shares of the Corporation or the sale or disposition of all or substantially all of the property and assets of the Corporation, the Board of Directors may make such provision for the protection of the rights of the participants as the Board of Directors, in its discretion, considers appropriate in the circumstances, including, without limitation, changing the performance criteria and/or the vesting conditions for the Awards and/or the date on which any Award expires or the Restricted Period or the Performance Period for the Awards. 2016 Amendments On March 1, 2016, the Board of Directors approved various amendments to the Omnibus LTIP. A number of the amendments were amendments of a “housekeeping” nature. In addition, the following amendments were made: 1.

   The definition of “Market Value” was amended to mean the closing price of the common shares on the trading day immediately prior to the grant date or such other price as permitted by TSX rules. While the Board of Directors expects to set the exercise price of an option based on the closing price of the common shares on the day before the grant, the Board of Directors maintains discretion to set the exercise price in a different manner that is consistent with TSX rules. Previously, Market Value was defined under the Omnibus LTIP to mean: (A) if the grant was made during a Black-Out Period, the volume weighted average trading price of the common shares on the TSX for the five (5) trading day period following the last day of such Black-Out Period; (B) if the grant was made outside a Black-Out Period, the volume weighted average trading price of the common shares on the TSX for the five (5) trading day period ending on the last trading day before the date of the grant; or (C) such other price as is permitted under the rules of the TSX.2.

   The Omnibus LTIP was amended to clarify that an employee who is terminated or resigns but remains a participant under the Omnibus LTIP (i.e. remains a director) will continue to be eligible to receive Awards.3.

   The Omnibus LTIP was amended to clarify that no Awards can be granted during a Black-Out Period.4.

   The Omnibus LTIP was amended to clarify the treatment of Awards in the event that a participant ceases to be an eligible participant. In addition, in certain circumstances, the amount of time that a participant who ceases to be an eligible participant may exercise any vested Awards was reduced such that no participant will have longer than one (1) year from the date that such participant ceases to be an eligible participant to exercise any vested Awards.5.

   The Board of Directors was granted the authority, subject to applicable regulatory approvals, to accelerate vesting of all or any portion of an Award. 105


---

Pursuant to the TSX rules, shareholder approval is not required for the amendments to the Omnibus LTIP as the Board has the authority, pursuant to the Omnibus LTIP, to make these types of amendments and the amendments are not the type that require shareholder approval under TSX rules. Deferred Share Unit Plan The purpose of the Corporation’s Deferred Share Unit Plan (the “DSU Plan”) is to promote a greater alignment of interests between directors and senior officers (collectively, “DSU Participants”) and shareholders of the Corporation. The DSU Plan was adopted by the Board effective May 7, 2015. DSUs are units that are credited to an eligible DSU Participant’s account, the value of which, on a particular date, is equal to the Market Value of a common share for such date. Under no circumstances will DSUs be considered common shares nor will they entitle any DSU Participant to exercise voting rights or any other rights attaching to the ownership or control of common shares, including, without limitation, rights on liquidation, nor will any DSU Participant be considered the owner of any common shares to be delivered under the DSU Plan until the date of purchase or issuance of such common shares, as elected by the Board of Directors. The Board of Directors may grant awards from time to time to each eligible DSU Participant. The DSUs are then credited to the DSU Participant’s account on the award date, unless a vesting schedule or performance criteria has been approved by the Board of Directors, at its discretion. The DSU Plan is administered by the Board of Directors. Subject to the limitations set forth in the DSU Plan, the Board’s authority includes: (a) determining the number of DSUs that will be awarded; (b) determining the terms and conditions of each award; and (c) specifying and approving the provisions of the payment delivered to a DSU Participant in connection with their account, whether it be in the form of common shares from treasury, common shares purchased on the TSX on behalf of such participants, cash, or a combination thereof. The DSUs will be redeemed by a DSU Participant on up to two dates elected by such DSU Participant which are at least sixty days following the separation date and no later than December 15 of the calendar year following the calendar year in which the separation date occurs. The separation date is the earliest date on which all three of the following conditions are satisfied: (i) the DSU Participant ceases to be a director or senior officer of the Corporation for any reason other than death; (ii) the DSU Participant is neither a director nor a senior officer of the Corporation; and (iii) the DSU Participant is no longer employed by the Corporation in any capacity. In the event of the death of a DSU Participant, the Corporation will pay the DSUs credited to such DSU Participant’s account within fifteen (15) days of the DSU Participant’s death or by the last day of the calendar year commencing immediately after the DSU Participant’s separation date if earlier, in each case to or for the benefit of the beneficiary of the DSU Participant. If the DSU Participant filed an election of a redemption date prior to his or her death, the payment of the DSU Participant’s DSUs will be made within fifteen (15) days of the DSU Participant’s elected redemption date. The Board of Directors may, in its absolute discretion, elect one or any combination of the following payment methods for the DSUs credited to a DSU Participant’s account on the DSU Participant’s termination date: (a) issuing common shares to the DSU Participant or the DSU Participant’s beneficiary, as the case may be; (b) causing a broker to purchase shares on the TSX for the account of the DSU Participant or the DSU Participant’s beneficiary, as the case may be; or (c) paying cash to the DSU Participant or the DSU Participant’s beneficiary, as the case may be. 106


---

Where the Board of Directors does not specify any payment method for the DSUs credited to a DSU Participant’s account, the form of payment will be in cash. The maximum number of common shares which may be reserved for issuance to insiders under the DSU Plan and all other share compensation plans (including the Omnibus LTIP), collectively, is ten (10%) percent of the common shares outstanding at the time of the grant (on a non-diluted basis). The maximum number of common shares which may be issued to insiders under the DSU Plan and all other share compensation plans (including the Omnibus LTIP), collectively, within a one-year period is ten (10%) percent of the common shares outstanding at the time of the issuance (on a non-diluted basis). Any increase in the common shares reserved under the DSU Plan will be subject to the approval of the shareholders of the Corporation in accordance with the rules of the TSX. Where common shares are purchased on the TSX to be delivered to the DSU Participant, the Corporation will remit, in cash, to a broker the product of (a) the number of DSUs credited to the DSU Participant’s account as at the separation date which the participant has elected to have redeemed and (b) the Market Value on the redemption date, net of applicable withholding taxes. Common shares purchased by the broker and any cash remaining from the amount remitted by the Corporation to purchase common shares will then be delivered to the DSU Participant. Where the Board elects to pay the DSUs in cash, the payment will be equal to the product of (a) the number of DSUs credited to the participant’s account as at the separation date which the DSU Participant has elected to have redeemed, and (b) the Market Value on the redemption date, net of applicable withholding taxes. The DSU Plan may be amended, suspended or terminated in whole or in part at any time and for any reason by the Board of Directors, without prior notice to or approval by any participants or shareholders of the Corporation, provided that no such amendment, suspension or termination will: (i) adversely affect the rights of any DSU Participant with respect to DSUs to which the DSU Participant is then entitled under the DSU Plan without the consent of the affected participant; or (ii) contravene applicable laws or regulations. Shareholder approval will be required in the case of: (i) any amendment to the number of shares reserved for issuance under the DSU Plan; (ii) any amendment to the eligibility requirements for participating in the DSU Plan, where such amendment would have the potential of broadening or increasing the participation of insiders of the Corporation; (iii) the extension of any right of a DSU Participant under the DSU Plan beyond the date on which such right would originally have expired; and (iv) any amendment to the amending provisions of the DSU Plan. In the event of a change in control (as defined in the DSU Plan), any DSUs outstanding immediately prior to the occurrence of the change in control, but which are not then vested, will become fully vested on the separation date if such separation date occurs within one (1) year of the occurrence of the change in control. In the event of reorganization (as defined in the DSU Plan), the Board of Directors will take all necessary action so as to make all necessary adjustments in the number and kind of securities subject to any DSUs outstanding at the time of such reorganization and the exercise price thereof. Except as required by law, the rights of a DSU Participant under the DSU Plan are not capable of being assigned, transferred, alienated, sold, encumbered, pledged, mortgaged or charged and are not capable of being subject to attachment or legal process for the payment of any debts or obligations of the DSU Participant. 2016 Amendments On March 1, 2016, the Board of Directors approved certain amendments to the DSU Plan. The majority of the amendments were of a “housekeeping” nature. In addition, the definition of “Award Market Value” was amended to be consistent with the amended definition of “Market Value” in the Omnibus LTIP. 107


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Pursuant to the TSX rules, shareholder approval is not required for the amendments to the DSU Plan as the Board has the authority, pursuant to the DSU Plan, to make these types of amendments and the amendments are not the type that require shareholder approval under TSX rules. The table below describes the share options exercised during the financial year ended December 31, 2015 by Named Executive Officers and Directors and the aggregate value realized on unexercised options at Year-End. Options Exercised by Named Executive Officers and Directors during the Most Recently Completed Financial Year Ended December 31, 2015 Unexercised Options at

   Value of Unexercised in-the-Shares

   Aggregate

   Year-End

   Money Options at Year-End(2)Name and principal

   Acquired on

   Value

   (#)

   ($)position

   Exercise

   Realized(1)

   Exercisable/

   Exercisable/(#)

   ($)

   Unexercisable

   UnexercisableH. Greg Chamandy Director (3)

   100,000

   238,979

   277,866 / 289,134

   76,833 / 220,567Renaud Adams President and Chief Executive Officer

   n/a

   n/a

   266,667 / 533,333

   528,000 /1,056,000Nicole Veilleux Vice-President, Finance

   n/a

   n/a

   77,186 / 81,814

   147,249 / 117,795Daniel Adam Vice-President, Exploration

   31,200

   75,435

   33,453 / 55,347

   51,697 / 99,003Steve Burleton Vice-President, Business Development (4)

   n/a

   n/a

   Nil /100,000

   Nil / 24,000Elaine Ellingham Director

   80,000

   174,800

   83,333 / 171,667

   110,666 / 194,234Michael Pesner Director

   80,000

   189,200

   41,666 / 136,334

   59,083 / 179,927René Marion Director

   40,000

   109,200

   41,666 / 33,334

   59,083 / 23,667
 Notes:1)

   The aggregate dollar value realized is equal to the indicated number in the column entitled “Shares acquired on Exercise” times the difference between the market price of the common shares of the Corporation on the TSX on the day that the NEO exercised his or her options and the exercise price of the options.2)

   The value is based on the closing price of the common shares of the Corporation on the TSX on December 31, 2015, which was $4.44.3)

   On January 1, 2016, Mr. Chamandy resigned as Executive Chairman of the Board.4)

   On February 17, 2015, Mr. Burleton was appointed Vice-President, Business Development. 108


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ITEM 7.

   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
  A.

   Major Shareholders
 On September 30, 2014, Oxbridge Bank & Trust Scc sold all its shares to Oxbridge Group Inc. by way of transfer. As of April 21, 2015, to the knowledge of the directors and executive officers of the Corporation, Oxbridge Group Inc. (“Oxbridge”), an entity ultimately controlled by H. Greg Chamandy, the former Executive Chairman of the Board of the Corporation, is the only shareholder, directly or indirectly, beneficially owning or controlling over more than 5% of the outstanding common shares of the Corporation. Oxbridge, with its affiliates, beneficially owns or controls directly or indirectly 5,016,363 common shares representing approximately 8.55% of the outstanding common shares of the Corporation (excluding common shares underlying outstanding options). See “ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES – E. Share Ownership” above. Mr. Chamandy and Oxbridge became a shareholder of the Corporation in 2009. Mr. Chamandy or Oxbridge does not have any different voting rights compared with the Corporation’s other shareholders. As of April 19, 2016, a total of 7,227,954 shares of the Corporation’s common shares, representing 12.32% of the issued and outstanding shares of the Corporation’s common shares, were held by a total of 123 U.S. record holders. The Corporation is not directly or indirectly owned or controlled by another corporation or by any foreign government or by any other natural or legal person, severally or jointly. The Corporation has no knowledge of any arrangement that may, at a subsequent date, result in a change of control of the Corporation. B.

   Related Party Transactions
 A Related Party Transaction is any transaction between the Corporation and (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the Corporation; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the Corporation that gives them significant influence over the Corporation, and close members of any such individual’s family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the Corporation, including directors and senior management and close members of such individuals’ families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. Throughout the year 2013, and until the date of this Annual Report, certain Related Party Transactions occurred with the Corporation, as described below: Oxbridge Bank & Trust SCC On May 12, 2009, Oxbridge announced that it had acquired common shares of the Corporation and that, together with its joint actors, it owned and controlled an aggregate of approximately 10% of the issued and outstanding common shares of the Corporation. 109


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On November 24, 2009, Oxbridge amended its public disclosure related to the Corporation, and announced that it had acquired common shares from a private investor and that, subject to the completion of such acquisition, Oxbridge, together with its joint actors, would own and control common shares and options to purchase common shares representing an aggregate amount of approximately 19.49% of the issued and outstanding common shares (excluding common shares underlying outstanding options). Oxbridge also indicated that it intended to engage in discussions with the Board and management of the Corporation, as well as other shareholders, regarding the Corporation, its prospects and potential means for enhancing shareholder value, including potential changes in the business, strategy or Board composition of the Corporation. On November 25, 2009, in a letter duly authorized by the Board of Directors of Oxbridge and delivered to Denis Arcand, Chairman of the Board, and to the other members of the Board, Mr. Chamandy outlined certain proposals from Oxbridge (the “Oxbridge Proposals”) including the addition of Elaine Ellingham, A. Michel Lavigne, Samuel Minzberg and Jean-Pierre Ouellet (the “Proposed Directors”) to the Board, all with a view to maximizing the Corporation’s potential value for all of its shareholders. On November 30, 2009, Oxbridge announced the completion of the acquisition of common shares announced on November 24, 2009. Based on the Oxbridge Proposals and the Board’s own independent review of the Proposed Director’s qualifications, credentials, expertise, and experience, the directors determined that there existed no impediment, legally or from a corporate governance perspective, to the Proposed Directors acting as directors of the Corporation or holding their proposed positions on the Board committees, for reasons of conflict of interests or otherwise, and that the Proposed Directors, together with the current directors, have the qualifications, credentials, expertise and experience to implement the execution of the contemplated strategic plan for the Corporation’s future growth. Accordingly, on December 15, 2009, the Board unanimously determined that it is in the best interests of the Corporation and all its stakeholders to call a meeting of the shareholders of the Corporation for the purposes of electing the Proposed Directors. In addition, Mr. Chamandy was appointed Chairman of the Board and Mr. Arcand was appointed Vice-Chairman of the Board. Finally, the Board approved and the Corporation executed a mutual undertaking whereby (A) Mr. Chamandy and Oxbridge, in their capacity as shareholders of the Corporation, have undertaken to vote, and to cause to be voted, all shares of the Corporation that they, or any person with whom they are acting jointly or in connection with the Corporation, control directly or indirectly, in favour of the election of the current directors of the Corporation, as directors of the Corporation at all meetings of the shareholders of the Corporation to be held prior to December 31, 2012, at which directors are to be elected; and (B) the Corporation has undertaken (i) to cause the Proposed Directors (or any replacement) to be included as nominees proposed by the Corporation to its shareholders for election at the meeting; (ii) to ensure that the Proposed Directors and one additional individual (the “Additional Director”) to be identified by Mr. Chamandy, duly authorized by Oxbridge, before the next annual meeting of the shareholders of the Corporation (or any replacement), be included as nominees proposed by the Corporation to its shareholders for election to the Board of Directors at all meetings of the shareholders of the Corporation at which directors are to be elected prior to December 31, 2011; and (iii) to use its commercially reasonable efforts to cause the election of such Proposed Directors at such meetings in each case, provided that (x) there exists no impediment, legal or from a corporate governance perspective, to such replacement person or Additional Director, as the case may be, acting as a director of the Corporation, for reasons of conflict of interest or otherwise, and (y) such replacement person or Additional Director, as the case may be, has the qualifications, credentials, expertise and experience to oversee the execution of the Corporation’s strategic plan for future growth together with the current directors, in each case as determined by the Board of Directors of the Corporation. 110


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Davies, Ward, Phillips & Vineberg On February 4, 2010, Director Samuel Minzberg, was elected a Director of the Corporation by a majority of shareholders during a special meeting held for that purpose. Mr. Minzberg is a senior partner at the law firm Davies Ward Phillips & Vineberg LLP (“Davies”) and until August 1st, 2013, he was a member of the Corporation’s Board of Directors. In 2011, the Corporation paid fees to Davies in the amount of approximately $27 thousand (including taxes) for professional services rendered mainly in connection with legal tax advice ($14 thousand, in 2010, mainly in connection with legal tax advice). Stikeman, Elliott On December 15, 2009, Sidney Horn was named as Corporate Secretary of the Corporation. Mr. Horn is a senior partner at the law firm Stikeman, Elliott LLP (“Stikeman”). Until his resignation as Corporate Secretary effective May 9, 2013, the Corporation paid fees to Stikeman in 2013 in the amount of approximately $65 thousand (including taxes) for professional services rendered mainly in connection with general matters. In 2012, the Corporation paid fees to Stikeman in the amount of approximately $333 thousand (including taxes) for professional services rendered mainly in connection with general matters and financings. In 2011, the Corporation paid fees to Stikeman in the amount of approximately $225 thousand (including taxes) for professional services rendered mainly in connection with general corporate matters, financings and the option agreement with Globex Mining Enterprises Inc. Oxbridge Aviation On May 14, 2009, Mr. H. Greg Chamandy was appointed as Director of the Corporation and subsequently Executive Chairman of the Board. Oxbridge Aviation is owned by Mr. H. Greg Chamandy. In 2011, the Corporation paid fees to Oxbridge Aviation in the amount of approximately $4 thousand for a meeting of the Board of Directors in Rouyn-Noranda (Quebec), ($3 thousand, in 2010). Subsequent Transaction See “ITEM 8. FINANCIAL INFORMATION - B. Significant Change” for a discussion of the issuance of 9.625 million of common shares. C.

   Interests of Experts and Counsel
 Not applicable. 111


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ITEM 8.

   FINANCIAL INFORMATION
  A.

   Consolidated Statements and Other Financial Information
 The following consolidated financial statements of the Corporation are attached to this Annual Report: Independent Auditor’s report of registered public accounting firm dated February 19, 2016 on Internal Control over financial reporting and on the Consolidated Statements of Financial Position as at December 31, 2015 and 2014, Consolidated Income Statements, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity, and Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013. Notes to Consolidated Financial Statements. The Corporation has not declared or paid any dividends on its common shares since its incorporation. Richmont Mines has no current plans to pay dividends on its common shares. Its present policy is to retain earnings to finance its capital expenditures program. In the future, the Board of Directors may declare dividends according to its assessment of the financial position of the Corporation, taking into account its financing requirements for future growth and other factors that the Board of Directors may deem relevant in the circumstances. The Corporation had no export sales during 2015. Except for the three litigation matters discussed above in the section entitled “Commitments and contingencies,” the Corporation knows of no active, pending or overtly threatened legal or arbitration proceeding to which the Corporation is a party or to which any of its properties is subject which may have, or has had in the recent past, a significant effect on the Corporation’s financial position or profitability. B.

   Significant Change
 The Corporation has no significant change since the date of the annual financial statements included. ITEM 9.

   THE OFFER AND LISTING
 The Corporation’s common shares are traded on the TSX under the symbol “RIC” and on the NYSE MKT also under the symbol “RIC”. Toronto Stock Exchange Set forth below are the high and low sell prices on the TSX for actual trades of shares of the Corporation’s common shares for the periods indicated. Last Five Full YearsToronto Stock ExchangeCommon Shares Trading Activity - Price -Canadian DollarsYear Ended

   High

   LowDecember 31, 2011

   $13.39

   $4.28December 31, 2012

   $12.98

   $2.69December 31, 2013

   $3.44

   $1.00December 31, 2014

   $4.00

   $1.09December 31, 2015

   $4.55

   $3.14
 112


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Last Two Full Years Toronto Stock Exchange Common Shares Trading Activity - Price -Canadian DollarsQuarter Ended

   High

   LowMarch 31, 2014

   $2.07

   $1.09June 30, 2014

   $1.63

   $1.21September 30, 2014

   $3.07

   $1.36December 31, 2014

   $4.00

   $2.07March 31, 2015

   $4.55

   $3.51June 30, 2015

   $4.13

   $3.54September 30, 2015

   $4.23

   $3.14December 31, 2015

   $4.50

   $3.56
 Last Six Months Toronto Stock Exchange Common Shares Trading Activity - Price -Canadian DollarsMonth Ended

   High

   LowOctober 31, 2015

   $4.32

   $3.56November 30, 2015

   $4.15

   $3.73December 31, 2015

   $4.50

   $3.88January 31, 2016

   $5.27

   $4.39February 29, 2016

   $6.90

   $4.86March 31, 2016

   $7.50

   $5.99
 *

   The closing price of the Corporation’s common shares on the TSX on April 19, 2016 was CAN$9.39. 113


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American Stock Exchange and NYSE Amex, NYSE MKT The Corporation’s common shares were listed for trading on the American Stock Exchange effective on March 6, 1997. In 2008, the American Stock exchange was bought by NYSE Alternext and became NYSE Amex in the beginning of 2009. On May 2012, NYSE Amex became NYSE MKT. Set forth below are the high and low sell prices on and NYSE Amex until May 2012, and NYSE MKT thereafter for actual trades of shares of the Corporation’s Common shares for the periods indicated. Last Five Full Years American Stock Exchange / NYSE Amex, NYSE MKTCommon Shares Trading Activity - Price -US DollarsYear Ended

   High

   LowDecember 31, 2011

   $13.40

   $4.28December 31, 2012

   $12.91

   $2.71December 31, 2013

   $3.44

   $0.94December 31, 2014

   $3.49

   $1.04December 31, 2015

   $3.68

   $2.27
 Last Two Full Years NYSE MKTCommon Shares Trading Activity - Price -US DollarsQuarter Ended

   High

   LowMarch 31, 2014

   $1.85

   $1.04June 30, 2014

   $1.52

   $1.11September 30, 2014

   $2.82

   $1.27December 31, 2014

   $3.49

   $1.86March 31, 2015

   $3.68

   $2.78June 30, 2015

   $3.44

   $2.96September 30, 2015

   $3.26

   $2.27December 31, 2015

   $3.29

   $2.67
  114


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Last Six Months NYSE MKTCommon Shares Trading Activity - Price -US DollarsMonth Ended

   High

   LowOctober 31, 2015

   $3.28

   $2.67November 30, 2015

   $3.17

   $2.80December 31, 2015

   $3.29

   $2.79January 31, 2016

   $3.75

   $3.01February 28, 2016

   $5.00

   $3.46March 31, 2016

   $5.81

   $4.45
 *

   The closing price of the Corporation’s common shares on the NYSE MKT on April 19, 2016 was US$7.42. 115


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ITEM 10.

   ADDITIONAL INFORMATION
  A.

   Share Capital
 Not applicable. B.

   Memorandum and Articles of Association
 The Corporation was incorporated pursuant to Part 1A of the Companies Act(Quebec) on February 12, 1981 (File number 1843-2286) under the name Ressources Minières Rouyn inc. by Article of Amendment filed February 10, 1987 the Corporation added the English version Rouyn Mining Resources Inc. and by another amendment filed with the Government of Quebec on June 20, 1991, the Corporation changed its name to Richmont Mines Inc., now governed by the Business Corporations Act(Quebec) (the “Business Corporations Act”) which replaced the Companies Act(Quebec) on February 14, 2011. The Articles of the Corporation are registered by the Government of Quebec in register S02473, folio 10. The Corporation has perpetual duration and no specific objects or purposes are set forth in its Articles or ByLaws. Amendments to Articles On February 14, 2011, the Companies Act(Quebec) was replaced by the new Business Corporations Act(Quebec) (the “Business Corporations Act”). The new Business Corporations Act provides that a corporation may hold shareholder meetings at a place outside of the Province of Quebec if the Articles so allow. The Board of Directors believes that it would be beneficial both to the Corporation and its shareholders to give the Board flexibility to permit shareholder meetings to be held outside of the Province of Quebec. The new Business Corporations Act further provides that if the Articles so allow, the directors of a corporation that is a reporting issuer may appoint one or more additional directors to hold office for a term expiring not later than the close of the annual shareholders meeting following their appointment, provided that the total number of directors so appointed may not exceed one third of the number of directors elected at the annual shareholders meeting preceding their appointment. The Board believes that it would be beneficial to the Corporation and its shareholders to give the Board flexibility to add directors who possess expertise and knowledge relevant to the Corporation’s operations from time to time between two annual shareholder meetings. Pursuant to its Articles, the business of the Corporation is managed by a Board of Directors composed of a maximum of eleven directors Accordingly, the Board of Directors, at its meeting held on March 28, 2011, adopted a resolution to amend the Articles approving the foregoing proposed amendments subject to the receipt of the approval of shareholders. In accordance with the Business Corporations Act, the proposed amendments to the Articles were approved by the shareholders at the Annual and Special General Meeting of shareholders held on May 13, 2011 (the “Meeting”). By-Laws The Corporation updated its General By-laws enacted by the Board of Directors on February 25, 1981, which have been amended since and are now known as the “By-laws”. To align the By-laws with the terminology and principles set out in the new Business Corporations Act as well as governance best practices, the Board of Directors elected to adopt the By-laws on April 5, 2012. (For more information, see Exhibit 1.3 of 2011 Annual Report). 116


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Omnibus Long-Term Incentive Plan The Board of Directors has approved the Omnibus Long-Term Incentive Plan (the "Omnibus Plan" or "Omnibus LTIP") of the Corporation, (a copy of which has been disclosed in Exhibit "4.2" of 2011 Annual Report), and approved by the shareholders of the Corporation. The Omnibus Plan was drafted to comply with the policies of the TSX and remains subject to any requirements the NYSE MKT may have for the Omnibus Plan to be in compliance with the NYSE standards. The following information is intended as a summary of the Omnibus Plan, and is qualified in its entirety by the more detailed provisions of the Omnibus Plan in the form disclosed as Exhibit "4.2" in 2011 Annual Report. C.

   Material Contracts
 On June 17, 2013, Richmont Mines obtained a letter of offer for a senior credit facility for up to US$50 million from Macquarie Bank Limited (“MBL”) to advance the Island Gold Deep project. The US$50 million facility consisted of three tranches, all of which were subject to certain conditions being met prior to drawdown. The Corporation issued call warrants for the purchase of 1,250,000 Richmont shares to MBL upon closing of the facility agreement on August 23, 2013. The warrants had an exercise price of CAN$2.45 per share, and expire 3 years from the original date of their issue to MBL. A total of 812,500 warrants vested immediately upon closing of the facility agreement. The remaining 437,500 warrants were to have vested when the conditions to drawdown Tranche B had been fully met by the Corporation, and were cancelled on December 20, 2013. On August 5, 2014, Richmont Mines announced that it has signed a definitive agreement to acquire the outstanding 31% ownership of four patented claims on the Island Gold Mine property, thereby increasing its ownership of these claims to 100% from 69% previously. The 31% ownership held by the third party will be acquired by Richmont in return for a 3% Net Smelter Return (“NSR”) royalty that is payable on 100% of the mineral production from the four claims. Public Prospectus On April 23, 2014, Richmont Mines announced that it closed the bought deal financing previously announced on April 3, 2014. The Corporation issued a total of 8.05 million common shares at a price of $1.45 per share, including the entire over-allotment option of 1.05 million common shares, on a bought-deal basis, for aggregate gross proceeds of $11.67 million, through a syndicate of underwriters lead by Macquarie Capital Markets Canada Ltd. and including BMO Nesbitt Burns Inc., CIBC World Markets Inc. and Desjardins Securities Inc (the "Offering"). The proceeds from the Offering would be used for working capital and general corporate purposes. On February 11, 2015, Richmont Mines Inc. announced that it closed the bought deal financing previously announced on January 20, 2015, and increased on January 21, 2015. Indeed, on January 20, 2015, Richmont Mines Inc. announced that it entered into an agreement with Macquarie Capital Markets Canada Ltd. (“Macquarie”) as lead underwriter, on behalf of a syndicate of underwriters, for the issuance of 7.5 million common shares of the Corporation, on a bought-deal basis, at a price of $4.00 per share (the “Offering Price”) for gross proceeds of $30 million (the “Offering”). The syndicate of underwriters also included CIBC World Markets Inc., National Bank Financial Inc., BMO Capital Markets, TD Securities Inc., and PI Financial Corp. On January 21, 2015, Richmont Mines Inc. announced that it has agreed to increase the size of its previously announced bought deal offering to $34 million. 117


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Land and mining rights agreement On October 16, 2013, Richmont Mines entered into a land and mining rights agreement with Argonaut Gold, owner of the Magino Gold Project that is adjacent to the Corporation’s Island Gold Mine. The agreement will enable Richmont to extend the western boundary of its Island Gold Deep project by a distance of approximately 585 metres thus increasing the project’s exploration potential towards the west. Mining rights below a depth of 400 metres were also secured on several claims to the south of the Island Gold Deep project, thus adding to the project’s exploration potential at depth. As part of the agreement, Richmont will acquire Claim SSM 722481 in its entirety, which immediately abuts Island Gold’s Lochalsh Zone, where reserves and resources currently exist and where mining is currently taking place. In exchange, Argonaut will receive exploration and mining rights from surface to a maximum depth of 400 metres on certain Richmont claims that border the Magino Gold Project, providing it with greater flexibility in its project development. Under the terms of the agreement, Richmont will receive a net payment of $2.0 million in cash from Argonaut upon completion of the land transactions. This Agreement was slightly modified in June 2014. Under the revised terms, Argonaut will receive one claim in its entirety and surface and mining rights down to a depth of 400 metres on six claims. It will also receive surface rights on two claims down to a depth of 100 metres. The Corporation will receive two additional claims for a total of three and mining rights below a depth of 400 metres on three claims. As previously reported, under the terms of the Agreement, the Corporation will receive a net payment of $2.0 million in cash from Argonaut upon completion of the land transactions, which are now expected to take place in 2016. Amended and Restated Shareholders Rights Plan Introduction On March 28, 2011, the Corporation amended and restated the existing shareholder rights plan which was set to terminate in accordance with its terms in 2012 (the “Amended and Restated Rights Plan”). The Amended and Restated Rights Plan was approved by the shareholders of the Corporation at a meeting of shareholders held on May 31, 2011 (Reference is made at Item 19. in Exhibit 2.2 of 2011 Annual Report). Background A shareholder rights plan was adopted by the Corporation’s shareholders in 2002 and, in accordance with the terms set out at that time, the plan required ratification at the Corporation’s annual meetings in 2005, 2008 and 2011, and would expire in April 2012. In lieu of shareholders ratifying the plan in 2011 for one year only (the plan would have expired in 2012), the Board of Directors thought it was appropriate to bring the shareholder rights plan up to date. Consequently a new shareholder rights plan was approved by the shareholders at the Corporation’s annual and special meeting on May 13, 2011, subject to reconfirmation by shareholders every three years. The plan was renewed on May 8, 2014. The primary objective of a rights plan is (a) to prevent creeping acquisition of control or an acquisition of control through a partial bid; (b) to provide adequate time to the Board of Directors and shareholders to properly consider and evaluate any unsolicited takeover bid without undue pressure; (c) to provide the Board of Directors and shareholders adequate time to value all of the assets of the Corporation and for the Corporation to undertake a value recognition program if necessary to demonstrate the value of one or more assets; (d) to provide the Board of Directors of the Corporation adequate time to explore and develop alternatives for maximizing shareholder value if an unsolicited takeover bid is made for the Corporation and to possibly allow competing bids to emerge; and (e) to provide every shareholder of the Corporation an equal opportunity to participate in such a bid and to ensure the equal treatment of all shareholders of the Corporation under such bid. The Amended and Restated Rights Plan encourages a potential acquiror to proceed either by way of a Permitted Bid (as defined in the Amended and Restated Rights Plan), which requires the takeover bid to satisfy certain minimum standards designed to promote fairness, or with the concurrence of the Board of Directors. The Amended and Restated Rights Plan is not intended to prevent takeover bids that treat shareholders of the Corporation fairly and has not been adopted in response to any proposal to acquire control of the Corporation. On the effective Date, one Right (as defined in the Amended and Restated Rights Plan) was issued and attached to each common share of the 118


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Corporation then outstanding, and one Right will be issued and attached to each common share of the Corporation subsequently issued. In choosing to implement a rights plan, the Board of Directors of the Corporation considered the legislative framework in Canada governing takeover bids. Under provincial securities legislation, a takeover bid means an offer to acquire voting or equity shares of a corporation, where the shares subject to the offer to acquire, together with shares already owned by the bidder and any person or Corporation acting jointly or in concert with the bidder, aggregate 20% or more of the outstanding shares of a corporation, but does not include an offer to acquire if the offer to acquire is a step in an amalgamation, merger, reorganization or arrangement that requires approval in a vote of security holders. The Corporation has reviewed the Amended and Restated Rights Plan for conformity with current practices of Canadian companies with respect to shareholder protection rights plan. The Corporation believes that the Amended and Restated Rights Plan preserves the fair treatment of shareholders, is consistent with current best Canadian corporate practice and addresses institutional investor guidelines. The Amended and Restated Rights Plan contains substantially the same terms and conditions as the 2008 Rights Plan and has been updated to meet current best Canadian corporate practices. The existing legislative framework for takeover bids in Canada continues to raise the following concerns for shareholders of the Corporation: Time– Canadian securities laws permit a takeover bid to expire 35 days after it is initiated. The Board of Directors of the Corporation is of the view that this is not sufficient time to permit shareholders to consider a takeover bid and make a reasoned and unhurried decision as well as permit directors to evaluate a takeover bid, explore, develop and pursue alternatives which it believes are preferable to the takeover bid or which could maximize shareholder value, and make reasoned recommendations to the shareholders.Pressure to Tender- A shareholder may feel compelled to tender to a takeover bid which the shareholder considers to be inadequate out of concern that in failing to do so, the shareholder may be left with illiquid or minority discounted Common Shares. This is particularly so in the case of a partial takeover bid for less than all of the Common Shares, where the bidder wishes to obtain a control position but does not wish to acquire all of the Common Shares. The Amended and Restated Rights Plan provides the shareholder with a tender approval mechanism which is intended to ensure that the shareholder can separate the decision to tender from the approval or disapproval of a particular takeover bid.Unequal Treatment: Full Value- While existing Canadian securities legislation has substantially addressed many concerns in this regard, there remains the possibility that control of the Corporation may be acquired pursuant to a private agreement in which one or a small group of shareholders dispose of Common Shares at a premium to market price which premium is not shared with the other shareholders or through a partial bid that may be oppressive to the shareholders of the Corporation. In addition, a person may slowly accumulate Common Shares through stock exchange acquisitions which may result, over time, in an acquisition of control without payment of fair value for control or a fair sharing of a control premium among all shareholders. Summary The following is a summary of the principal terms of the Amended and Restated Rights Plan for the Corporation which is qualified in its entirety by reference to the text of the Amended and Restated Rights Plan. A shareholder or any other interested party may obtain a copy of the Amended and Restated Rights Plan by contacting the Corporate Secretary, 161 Avenue Principale, Rouyn-Noranda, Québec, J9X 4P6; telephone (819) 797-2465; fax (819) 797-0166, by consulting the Web Site SEDAR at www.sedar.com or by consulting the Corporation’s Web Site at www.richmont-mines.com. 119


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In management’s opinion, the terms of the Amended and Restated Rights Plan conform to the terms of plans now in place in many other Canadian public companies. Effective Date The effective date of the Amended and Restated Rights Plan is March 28, 2011 (the “Effective Date”). Term The Amended and Restated Rights Plan was reconfirmed at the meeting of shareholders scheduled on May 8, 2014, it is in effect until the end of the annual meeting of shareholders of the Corporation to be held in 2017 unless the Amended and Restated Rights Plan is reconfirmed at that meeting by the shareholders. If the Amended and Restated Rights Plan is so reconfirmed, it will then need to be reconfirmed at every third annual meeting. If it is not reconfirmed it will terminate. Even if reconfirmed by the shareholders, it expires ten years after the Effective Date or in 2021, at which time a new plan can be adopted. Issue of Rights On the Effective Date, one Right was issued and attached to each Common Share outstanding of the Corporation and will be issued and attached to each Common Share of the Corporation subsequently issued. Rights Exercise Privilege The Rights will separate from the Common Shares and will be exercisable 10 trading days (the “Separation Time”) after a person has acquired, or commenced a takeover bid to acquire, 20% or more of the Common Shares, other than by an acquisition pursuant to a takeover bid permitted by the Amended and Restated Rights Plan (a “Permitted Bid”). The acquisition by any person (an “Acquiring Person”) of 20% of the Common Shares, other than by way of a Permitted Bid, is referred to as a “Flip-in Event”. Any Rights held by an Acquiring Person will become void upon the occurrence of a Flip-in Event. Ten trading days after the occurrence of the Flip-in Event, each Right (other than those held by an Acquiring Person) will permit the purchase by holders of Rights, other than an Acquiring Person, of Common Shares at a 50% discount to their market price. The issue of the Rights is not initially dilutive. Upon a Flip-in Event occurring and the Rights separating from the Common Shares, reported earnings per share of the Corporation on a fully diluted or non-diluted basis may be affected. Holders of Rights not exercising their Rights upon the occurrence of a Flip-in Event may suffer substantial dilution. Certificates and Transferability Prior to the Separation Time, the Rights are evidenced by a legend imprinted on certificates for the Common Shares and are not transferable separately from the Common Shares. From and after the Separation Time, the Rights will be evidenced by Rights certificates which will be transferable and traded separately from the Common Shares. Permitted Bid Requirements The requirements for a Permitted Bid include the following: the takeover bid must be made by way of a takeover bid circular; 120


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the takeover bid must be made to all shareholders of the Corporation as registered on the books of the Corporation, other than the Offeror; the takeover bid must be outstanding for a minimum period of 60 days and Common Shares tendered pursuant to the takeover bid may not be taken up prior to the expiry of the 60 day period and only if at such time more than 50% of the Common Shares of the Corporation held by shareholders, other than the Offeror, its affiliates and persons acting jointly or in concert and certain other persons (the “Independent Shareholders”), have been tendered to the takeover bid and not withdrawn; andif more than 50% of the Common Shares held by Independent Shareholders are tendered to the takeover bid within the 60 day period, the Offeror must make a public announcement of that fact and the takeover bid must remain open for deposits of Common Shares for not less than 10 business days from the date of such public announcement. The Amended and Restated Rights Plan allows for a competing Permitted Bid (a “Competing Permitted Bid”) to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all the requirements of a Permitted Bid except that it may expire on the same date as the Permitted Bid, subject to the requirement that it be outstanding for a minimum period of 35 days. Waiver The Board of Directors, acting in good faith, may, prior to the occurrence of a Flip-in Event, waive the application of the Amended and Restated Rights Plan to a particular Flip-in Event (an “Exempt Acquisition”) where the takeover bid is made by a takeover bid circular to all holders of Common Shares of the Corporation. When the Board of Directors exercises the waiver power for one takeover bid, the waiver will also apply to any other takeover bid for the Corporation made by a takeover bid circular to all holders of Common Shares prior to the expiry of any other bid for which the Amended and Restated Rights Plan has been waived. Additionally, the Board of Directors, acting in good faith, may waive the application of the Amended and Restated Rights Plan for any Flip-in Event by written notice delivered to the Rights Agent (as such term is defined in the Amended and Restated Rights Plan). Redemption The Board of Directors with the approval of a majority of the votes cast by shareholders (or holders of Rights if the Separation Time has occurred) voting in person or by proxy at a meeting duly called for that purpose may redeem the Rights at $0.000001 per share. Rights will be deemed to have been redeemed by the Board of Directors following completion of a Permitted Bid, Competing Permitted Bid or Exempt Acquisition. Amendment Prior to the meeting of shareholders, the Board of Directors may make any changes to the Amended and Restated Rights Plan which the Board of Directors acting in good faith may deem necessary or desirable without the approval of any holders of Rights or Common Shares. After the meeting, the Board of Directors may amend the Amended and Restated Rights Plan with the approval of a majority vote of the votes cast by shareholders (or the holders of Rights if the Separation time has occurred) voting in person and by proxy at a meeting duly called for that purpose. The Board of Directors without such approval may correct clerical or typographical errors and, subject to approval at the next meeting of the shareholders (or holders of Rights, as the case may be) may make amendments to the Amended and Restated Rights Plan to maintain its validity due to changes in applicable legislation. Board of Directors The Amended and Restated Rights Plan will not detract from or lessen the duty of the Board of Directors to act honestly and in good faith with a view to the best interests of the Corporation. The Board of Directors, when a Permitted Bid is made, will continue to have the duty and power to take such actions and make such recommendations to shareholders as are considered appropriate. 121


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Exemptions for Investment Advisors Investment advisors (for fully managed accounts), trust companies (acting in their capacities as trustees and administrators), statutory bodies whose business includes the management of funds and administrators of registered pension plans acquiring 20% or more of the Common Shares of the Corporation are exempted from triggering a Flip-in Event, provided that they are not making, or are not part of a group making, a takeover bid. Approval of the Directors The directors of the Corporation have unanimously adopted and approved the renewal of the Amended and Restated Rights Plan. In renewing the Amended and Restated Rights Plan, the directors concluded, for the reasons discussed above, that it was in the best interests of the Corporation and the shareholders to do so. The directors believe that the Amended and Restated Rights Plan preserves the fair treatment of shareholders of the Corporation, is consistent with Canadian’s corporate practice and addresses institutional investor guidelines. Shareholder Approval The Amended and Restated Rights Plan was confirmed and approved by the affirmative vote of a majority of the votes cast by shareholders of the Corporation at the Annual Meeting of shareholders on May 8, 2014. The Amended and Restated Rights Plan have been approved by resolution by the shareholders at May 8, 2014 annual meeting of shareholders. D.

   Exchange Controls
 There are no governmental laws, decrees, regulations or other legislation in Canada that may affect the export or import of capital, or the remittance of interest, dividends or other payments to non-residents holders of the Corporation’s common shares, except that any remittance of dividends to United States residents is subject to a 15% withholding tax (5% if the shareholder is a corporation owning at least 10% of the common shares of the Corporation) pursuant to Article X of the reciprocal income tax treaty between Canada and the United States. E.

   Taxation
 The following summary of the material Canadian federal income tax considerations generally applicable in respect of the common shares reflect the Corporation’s opinion. The tax consequences to any particular holder of common shares will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holder’s particular circumstances. This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arm’s length with the Corporation, hold their common shares as capital property and who will not use or hold the common shares in carrying on business in Canada. Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere. This summary is not exhaustive of all possible income tax consequences. It is not intended as legal or tax advice to any particular holder of common shares and should not be so construed. Each holder should consult his own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances. 122


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Disposition of common shares If a non-resident were to dispose of common shares of the Corporation to another Canadian corporation which deals or is deemed to deal on a non-arm’s length basis with the non-resident and which, immediately after the disposition, is connected with the Corporation (i.e., the non-resident and any person with whom the non-resident does not deal at arm’s length holds directly or indirectly shares representing more than 10% of the voting power and more than 10% of the market value of all issued and outstanding shares of the Corporation), the amount by which the fair market value of any consideration (other than any shares of the purchaser corporation) exceeds the paid-up capital of the common shares sold will be deemed to be taxable as a dividend paid by the purchasing corporation, either immediately or eventually by means of a deduction in computing the paid-up capital of the purchasing corporation, and subject to withholding taxes as described below. Under the Income Tax Act(Canada), a gain from the sale of common shares of the Corporation by a non-resident will not be subject to Canadian tax since the common shares of the Corporation are listed on a prescribed stock exchange, provided the shareholder (and persons who do not deal at arm’s length with the shareholder) have not held a “substantial interest” in the Corporation (25% or more of the shares of any class of the Corporation’s stock) at any time in the five years preceding the disposition. Generally, the Canada-United States Income Tax Convention (1980) (the “Treaty”) will exempt from Canadian taxation any capital gain realized by a resident of the United States, provided that the value of the common shares is not derived principally from real property situated in Canada. Dividends In the case of any dividends paid to non-residents, the Canadian tax is withheld by the Corporation, which remits only the net amount to the shareholder. By virtue of Article X of the Treaty, the rate of tax on dividends paid to residents of the United States is generally limited to 15% of the gross dividend (or 5%, in the case of certain corporate shareholders owning at least 10% of the Corporation’s voting shares). In the absence of treaty provisions, the rate of Canadian withholding tax imposed on non-residents is 25% of the gross dividend. Stock dividends received by non-residents from the Corporation are taxable by Canada as ordinary dividends. If a non-resident holder disposes of common shares to the Corporation (unless the Corporation acquired the common shares in the open market in the manner in which shares would normally be purchased by any member of the public), this will result in a deemed dividend to the non-resident holder equal to the amount by which the consideration paid by the Corporation exceeds the paid-up capital of such stock. The amount of such dividend will be subject to withholding tax as described above. Capital Gains A non-resident of Canada is not subject to tax under the Income Tax Act(Canada) in respect of a capital gain realized upon the disposition of a share of a class that is listed on a prescribed stock exchange unless the share represents “taxable Canadian property” to another holder thereof. A common share of the Corporation will be taxable Canadian property to a non-resident holder if, at any time during the period of five years immediately preceding the disposition, the non-resident holder, persons with whom the non-resident holder did not deal at arm’s length, or the non-resident holder and persons with he/she did not deal at arm’s length owned 25% or more of the issued shares of any class or series of the Corporation. In the case of a non-resident holder to whom shares of the Corporation represent taxable Canadian property and who is resident in the United States, American tax will be payable on a capital gain realized on such shares by reason of the Treaty unless the value of such shares is derived principally from real property situated in Canada or the non-resident holder previously held the shares while resident in Canada. However, in such a case, certain transitional relief under the Treaty may be available. 123


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Certain United States Federal Income Tax Consequences The following is a summary of the material United States federal income tax consequences of the acquisition, ownership and disposition of common shares of the Corporation by a United States Holder (as defined below) that holds the common shares as a capital asset. The discussion does not cover all aspects of United States federal income taxation that may be relevant to, or the actual tax effect that any of the matters described herein will have on, the acquisition, ownership or disposition of common shares of the Corporation by particular shareholders, and does not address state, local, foreign or other tax laws. In particular, this summary does not address tax considerations applicable to any United States Holder (as defined below) that owns (directly or indirectly) 10 percent or more of the Corporation’s voting shares, nor does this summary discuss all of the tax considerations that may be relevant to certain types of persons subject to special treatment under the United States federal income tax laws (such as financial institutions, insurance companies, persons liable for the alternative minimum tax, individual retirement accounts and other tax-deferred accounts, tax-exempt organizations, dealers in securities or currencies, persons that hold the common shares as part of straddles, hedging transactions or conversion transactions for United States federal income tax purposes or persons whose functional currency is not the United States dollar). As used herein, the term “United States Holder” means a beneficial owner of the Corporation’s common shares that is (i) a citizen or resident of the United States for United States federal income tax purposes, (ii) a corporation, or other entity treated as a corporation, created or organized under the laws of the United States or any State thereof, (iii) an estate the income of which is subject to United States federal income tax without regard to its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. The summary is based on the tax laws of the United States, including the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations thereunder, published rulings and court decisions, as well as on the Treaty, all as currently in effect and all subject to change at any time, possibly with retroactive effect. Distributions on common shares of the Corporation General. United States Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Corporation are required to include in gross income for United States federal income tax purposes the gross amount of such distributions to the extent that the Corporation has current or accumulated earnings and profits (as determined for United States federal income tax purposes), without reduction for any Canadian income tax withheld from such distributions. Such income will be foreign source dividend income and generally will not be eligible for the dividends received deduction allowed to corporations. Canadian tax withheld from such distributions may be credited, subject to certain limitations, against the United States Holder’s United States federal income tax liability or, alternatively, may be deducted in computing the United States Holder’s United States federal taxable income by those who itemize deductions. (See more detailed discussion in the section captioned “Foreign Tax Credit” below). To the extent that distributions exceed current or accumulated earnings and profits of the Corporation, they will be treated first as a return of capital up to the United States Holder’s adjusted basis in the common shares, and then as capital gain. Preferential tax rates for long-term capital gains are applicable to a United States Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a United States Holder that is a corporation. The Corporation does not maintain calculations of its earnings and profits in accordance with United States Federal income tax accounting principles. 124


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For taxable years beginning on or after January 1, 2013, dividends paid by foreign qualified corporations to United States Holders that are non-corporate taxpayers will be taxed at the same rate as long-term capital gains, rather than at the higher ordinary income tax rate. A foreign corporation such as the Corporation is a qualified corporation (i) if the corporation is eligible for the benefits of a comprehensive income tax treaty with the United States which the United States Internal Revenue Service (“IRS”) determines is satisfactory and which contains an exchange of information provision, or (ii) to the extent that the dividends are paid with respect to stock that is readily tradable on an established securities market in the United States. The IRS has ruled that the Treaty is a satisfactory treaty for this purpose. Accordingly, dividends paid to non-corporate taxpayers with respect to shares of the Corporation should be eligible for the reduced tax rate. Eligibility for the reduced tax rate is dependent on satisfying a holding period and certain other limitations. The reduced tax rate also cannot be claimed with respect to dividends that are included as investment income for purposes of the limitation on the deduction of investment interest. For tax years beginning after 2012, dividends paid to U.S. citizens and residents with modified adjusted gross income above $200,000 ($250,000 for joint returns) also will be subject to a 3.8% tax on net investment income. The 3.8% tax is imposed on the lesser of net investment income or the excess of modified adjusted gross income above $200,000 for single and head of household tax returns ($250,000 for joint returns). For estates and trusts the threshold applies at the top marginal bracket, which for 2015 starts at $12,300 and for 2016 starts at $12,400. There is an exemption for foreign trusts except to the extent the foreign trust has United States beneficiaries. Foreign Currency Dividends. Dividends paid in Canadian dollars will be included in income in a US dollar amount calculated by reference to the exchange rate in effect on the day the dividends are received by the United States Holder, regardless of whether the Canadian dollars are converted into US dollars at that time. If dividends received in Canadian dollars are converted into US dollars on the day they are received, the United States Holder generally will not be required to recognize foreign currency gain or loss with respect to the dividend income. A United States Holder may have foreign currency gain or loss if it does not convert the amount of such dividend into U.S. dollars on the date of its receipt. Effect of Canadian Withholding Taxes. As discussed above in Taxation, Dividends, under current law payments by the Corporation to foreign investors are subject to a 25% Canadian withholding tax. The rate of withholding applicable to United States Holders that are eligible for benefits under the Treaty generally is reduced to a maximum rate of 15% (except for certain corporate holders). For United States federal income tax purposes, United States Holders will be treated as having received the amount of Canadian taxes withheld by the Corporation, and as then having paid over the withheld taxes to the Canadian taxing authorities. As a result of this rule, the amount of dividend income included in gross income for United States federal income tax purposes by a United States Holder with respect to the payment of dividends may be greater than the amount of cash actually received (or receivable) by the United States Holder from the Corporation with respect to the payment. Foreign Tax Credit Subject to certain limitations, a United States Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the Corporation may be entitled, at the option of the United States Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. United States Holders that are eligible for benefits under the Treaty will not be entitled to a foreign tax credit for the amount of Canadian taxes withheld in excess of the 15% maximum rate available under the Treaty, and with respect to which the United States Holder can obtain a refund from the Canadian taxing authorities. The limitation in foreign taxes eligible for credit is calculated separately with respect to specific classes of income. The rules governing foreign tax credits are complex and, therefore, United States Holders should consult their tax advisor regarding the availability of foreign tax credits in their particular circumstances. 125


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United States Holders that are accrual basis taxpayers must translate Canadian taxes into United States dollars at a rate equal to the average exchange rate for the taxable year in which the taxes accrue, while all United States Holders must translate taxable dividend income into U.S. dollars at the spot rate on the date received. This difference in exchange rates may reduce the U.S. dollar value of the credits for Canadian taxes relative to the United States Holder’s United States federal income tax liability attributable to a dividend. Disposition of common shares of the Corporation A United States Holder will recognize gain or loss from the sale of common shares of the Corporation equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder’s tax basis in the common shares of the Corporation. This gain or loss will be capital gain or loss if the common shares are a capital asset in the hands of the United States Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the United States Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For United States Holders that are not corporations, net capital loss may be offset against up to $3,000 of ordinary income each tax year, and any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For United States Holders that are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward from the loss year to be offset against capital gains until the earlier of five years or the exhaustion of the net capital loss. As with dividends, for tax years beginning after 2012, capital gains of U.S. citizens and residents with modified adjusted gross income above $200,000 ($250,000 for joint returns) will be subject to an additional 3.8% tax on net investment income. Backup Withholding and Information Reporting Payments of dividends or other proceeds with respect to common shares of the Corporation by a United States paying agent or other United States intermediary will be reported to the IRS and to the United States Holder as may be required under applicable regulations. Backup withholding at a rate of 28 per cent may apply to these payments if the United States Holder fails to provide an accurate taxpayer identification number or certification of foreign or other exempt status or fails to report all interest and dividends required to be shown on its United States federal income tax returns. Certain United States Holders (including, among others, corporations) are not subject to backup withholding. United States Holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining exemption. F.

   Dividends and Paying Agents
 Not applicable. G.

   Statement by Experts
 Not applicable. H.

   Documents on Display
 Subject to confidentiality concerns, all documents concerning the Corporation that are referred to in this Report may be inspected by shareholders upon reasonable advance notice, at the Corporation’s headquarters at 161, avenue Principale, Rouyn-Noranda, Quebec, J9X 4P6. A summary in English of any such document not in English will be provided. 126


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I.

   Subsidiary Information
 Not applicable. ITEM 11.

   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Price and Foreign Currency Risk Disclosure See “ITEM 4. INFORMATION ON THE CORPORATION – B. Business Overview - Gold Marketing and Sales” above. The Corporation’s revenues are mainly denominated in US dollars, while investments and operating costs, primarily accrue in Canadian dollars. The Corporation’s cash flows and results of operations will therefore be affected by fluctuations in the US/CAN dollar exchange rate. The Corporation’s financial results are sensitive to movements in the price of gold, and the US$/CAN$ exchange rate, as the Corporation mostly generates revenue in U.S. dollars and generally incurs expenses in Canadian dollars. The following table describes, for demonstration purposes only, the financial impact that changes in certain variables would generally have had on the Corporation’s 2015 net earnings, all other variables being constant. SENSITIVITY ANALYSISVariable

   Change

   Impact on net earnings(in thousands of CAN$)Price of gold (US$)

   +/-10% per ounce

   +/- 10,367Exchange rate (US$/CAN$)

   +/- 17% (US$/CAN$)

   +/- 17,544
 To reduce the effects of fluctuations in US/CAN dollar exchange rates, the Corporation may use financial instruments to hedge currency exposures in the ordinary course of business. The Corporation has not entered into such agreements over the last three (3) years. The Corporation does not require or place collateral for its foreign currency and gold hedging derivatives. However, the Corporation seeks to minimize its credit risk by dealing with only major international banks and financial institutions. Interest Rate Risk Disclosure At December 31, 2015, the Corporation had long-term Finance lease obligations, Contract payment holdbacks, Royalty payments payable, Long-term share-based compensation and Closure allowance . See “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS - A. Operating Results – Long-Term Debt” above. The Corporation does not believe it is exposed to significant interest rate risk. ITEM 12.

   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 Not applicable. 127


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PART II ITEM 13.

   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
 There have been no defaults, dividend arrearages or delinquencies. ITEM 14.

   **MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE****OF PROCEEDS**
 There have been no material modifications to the rights of security holders. See “ITEM 10. ADDITIONAL INFORMATION – C. Material Contracts” for a description of the Corporation’s Amended and Restated Shareholders’ Rights Plan. ITEM 15.

   CONTROLS AND PROCEDURES
  a)

   Disclosure Controls and Procedures. Based on their evaluation of the Corporation’s disclosure controls and procedures as of the end of the period covered by this Annual Report, and pursuant to Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, Renaud Adams, President and Chief Executive Officer and Nicole Veilleux, Vice-President, Finance have concluded that the Corporation’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e)) are designed to ensure that information required to be disclosed by the Corporation in the reports that it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and are operating in an effective manner.b)

   Management’s Annual Report on Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act. The Corporation’s internal control system was designed to provide reasonable assurance to the Corporation’s management and Board of Directors regarding the reliability of financial reporting and the preparation of published financial statements in accordance with IFRS. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment, management used the criteria for effective internal control over financial reporting set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013 Internal Control-Integrated Framework. Based on this assessment, management has concluded that, as of December 31, 2015, the Corporation’s internal control over financial reporting was effective based on those criteria. The effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2015 has been audited by Raymond Chabot Grant Thornton LLP, an independent registered public accounting firm, as stated in their report which appears herein. The Corporation will continue to periodically review its disclosure controls and procedures and internal controls over financial reporting and may make modifications from time to time as considered necessary or desirable. c)

   Attestation Report of the Registered Public Accounting Firm. The attestation report of Raymond Chabot Grant Thornton LLP, an independent registered public accounting firm, regarding the Corporation’s internal control over financial reporting is included under Item 18. 128


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d)

   Changes in Internal Control Over Financial Reporting. Management regularly reviews its system of internal control over financial reporting and makes changes to the Corporation’s processes and systems to improve controls and increase efficiency, while ensuring that the Corporation maintains an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes. There were no changes in the Corporation’s internal control over financial reporting that occurred during the period covered by this Annual Report on Form 20-F that have materially affected, or are reasonable likely to materially affect, the Corporation’s internal control over financial reporting. ITEM 16.A.

   AUDIT COMMITTEE FINANCIAL EXPERT
 The Corporation’s Board of Directors has determined that Michael Pesner, CPA, CA, chair of the Audit Committee, serves as “audit committee financial expert” on its audit committee and that he is also an “independent” director as defined under the listing standards of the NYSE MKT. ITEM 16.B.

   CODE OF ETHICS
 The Board has a Code of Ethics for employees responsible for financial information, including the CEO, the Vice-President, Finance, the Vice-President, Operations and any other person performing functions that are connected to the objectives of the Code of Ethics for Financial Reporting individuals. The Code of Ethics for Financial Reporting individuals, which is under the responsibility of the Audit Committee, is reviewed and reassessed annually and must be signed by all employees every year. A copy of such code may be obtained by making a request to the Corporate Secretary of the Corporation. The Board also has a Code of Business Conduct and Ethics for its directors, officers and employees. This Code was modified to insert a clause on exceptions and overrides. The Corporation similarly has a whistle blower policy under the terms of which employees can report a violation of the Code of Business Conduct and Ethics, or voice a concern relating to possible irregularities with regards to internal accounting, auditing or internal controls, by communicating by email, mail or telephone, confidentially with an appointed director. A memo was sent to all employees of the Corporation explaining this procedure. A memo was sent to inform employees of new coordinates of the newly appointed director. Furthermore, no director may participate in any Board discussion regarding a matter in which he or she has a conflict of interest, and may not vote on any such matter. Copies of the Business Conduct and Ethics Code and the Code of Ethics for Financial Reporting Employees are available on EDGAR at www.sec.gov/edgar.shtml. ITEM 16.C.

   PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Audit Committee’s Pre-Approval Policies and Procedures Beginning in 2004, the Corporation’s Audit Committee provided to the Corporation’s principal independent accounting firm a list of preapproved services. If officers of Richmont Mines request such firm to perform other services on behalf of the Corporation, the independent accounting firm must have the approval of the Audit Committee chairman before accepting the mandate, which request must also be formally approved by the Audit Committee at the next Audit Committee meeting. The list of services provided to the Corporation’s principal independent accounting firm is subject to revision every year by the Audit Committee and can be modified by the Audit Committee at any time by sending written notice to the Corporation’s principal independent accounting firm. The following tables show the total fees billed for each of the three past financial years by the Corporation’s principal independent accounting firm. 129


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Audit Fees The aggregate fees billed by the external auditors for audit services for each of the last three financial years are the following: Nature of services(in CAN$)

   2015

   2014

   2013Audit services*

   162,750

   154,875

   141,750
 *

   Includes the audit of the internal controls and financial reporting as required by the Sarbanes-Oxley legislation. Audit-Related Fees The aggregate fees billed for each of the last three financial years for certification services and related services provided by the external auditors which are reasonably related with the performance of the audit or review of the Corporation’s financial statements are described in the following table: Nature of services(in CAN$)

   2015

   2014

   2013Special work

   49,560

   46,337

   27,403
 Taxation Fees The aggregate fees billed for each of the last three financial years for the professional services provided by the external auditors with regards to tax compliance, tax advice and tax planning are described in the following table: Nature of services(in CAN$)

   2015

   2014

   2013Review quarterly estimate

   7,025

   11,625

   10,125Planning and tax advice

   3,288

   5,750

   6,400Preparation of tax returns

   15,750

   13,125

   12,955
 All Other Fees The aggregate fees billed for each of the last three financial years for the products and services provided by the external auditors, other than the services previously stated, are described in the following table: Nature of services(in CAN$)

   2015

   2014

   2013Other consultations

   614

   869

   997
 100% of all Audit Related Fees, Tax Fees and All Other Fees reported above were approved by the Corporation’s Audit Committee. ITEM 16.D.

   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
 The Corporation did not rely on any exemption from the listing standards for audit committees. ITEM 16.E.

   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND **AFFILIATED****PURCHASERS**
 The Corporation had no share repurchase program in effect in 2015. 130


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ITEM 16.F.

   CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
 Not applicable. ITEM 16.G.

   CORPORATE GOVERNANCE
 NYSE MKT Corporate Governance Matters The Corporation’s common shares are listed on NYSE MKT. Section 110 of the NYSE MKT Corporation Guide permits the NYSE MKT to consider the laws, customs and practices of the foreign issuer’s country of domicile in relaxing certain NYSE MKT listing criteria, and to grant exemptions from NYSE MKT listing criteria based on these considerations. A corporation seeking relief under these provisions is required to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law. A description of the significant ways in which the Corporation’s governance practices differ from those followed by domestic companies pursuant to NYSE MKT standards is as follows: Shareholder Meeting Quorum Requirement: The NYSE MKT recommended minimum quorum requirement for a shareholder meeting is one-third of the outstanding common shares. In addition, a corporation listed on NYSE MKT is required to state its quorum requirement in its By-Laws. The Corporation’s quorum requirement as set forth in its By-Laws is two shareholders with at least 10% of the issued and outstanding common shares entitled to vote at a meeting of shareholders whether present in person or represented by proxy.

Proxy Delivery Requirement: NYSE MKT requires the solicitation of proxies and delivery of proxy statements for all shareholder meetings, and requires that these proxies shall be solicited pursuant to a proxy statement that conforms to SEC proxy rules. The Corporation is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the Securities Act and the equity securities of the Corporation are accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act. The Corporation solicits proxies in accordance with applicable rules and regulations in Canada.

Shareholder Approval Requirement:The Corporation will follow the Canadian securities regulatory authorities and Toronto Stock Exchange rules for shareholder approval of new issuances of its common shares. Following such securities and exchange rules, shareholder approval is required for certain issuances of shares that: (i) materially affect control of the Corporation; or (ii) provide consideration to insiders in aggregate of 10% or greater of the market capitalization of the listed issuer and have not been negotiated at arm’s length. Shareholder approval is also required, pursuant to Toronto Stock Exchange rules, in the case of most private placements: (x) for an aggregate number of listed securities issuable greater than 25% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of closing of the transaction if the price per security is less than the market price; or (y) that during any six month period are to insiders for listed securities or options, rights or other entitlements to listed securities greater than 10% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of the closing of the first private placement to an insider during the six month period.

The Corporation believes that foregoing are consistent with the laws, customs and practices in Canada. In addition, the Corporation may from time-to-time seek relief from NYSE MKT corporate governance requirements on specific transactions under Section 110 of the NYSE MKT Corporation Guide by providing written certification from independent local counsel that the non-complying practice is not prohibited by the Corporation’s home country law. 131


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ITEM 16.H.

   MINE SAFETY DISCLOSURE
 None of the mines operated by the Corporation or its subsidiaries is subject to the provisions of the United States Federal Mine Safety and Health Act of 1977 and, accordingly, no disclosure is required. PART III ITEM 17.

   CONSOLIDATED FINANCIAL STATEMENTS
 The Corporation has elected to provide consolidated financial statements pursuant to Item 18 of Form 20-F. ITEM 18.

   CONSOLIDATED FINANCIAL STATEMENTS
 The audited consolidated financial statements referred to below are included herein and found immediately following the text of this Annual Report. The report of the Independent Auditor on such consolidated financial statements is included herein immediately preceding such audited consolidated financial statements. Audited Consolidated Financial Statements Independent Auditor’s report of registered public accounting firm dated February 19, 2016 on Internal Control over financial reporting and on the Consolidated Statement of Financial Position as at December 31, 2015 and 2014, Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statements of Changes in Equity, and Consolidated Statement of Cash Flows for the years ended December 31, 2015, 2014 and 2013, and a summary of significant accounting policies, and other explanatory information. 132


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ITEM 19.

   EXHIBITS
  Exhibit**No.**

   Exhibit1.1

   Articles of the Corporation, including all amendments thereto(1)1.2

   By-Laws of the Corporation, including all amendments thereto(2)1.3

   New By-Laws No. 2012-1 adopted by the shareholders at the Annual Meeting on May 10, 2012(3)2.1

   Shareholder Rights Plan(4)2.2

   Amended and Restated Shareholders’ Rights Plan(5)4.1

   Acquisition Agreement and Amalgamation Agreement (Acquisition of Louvem Mines Inc.)(5)4.2

   Omnibus Long-Term Incentive Plan adopted by the shareholders at the Annual Meeting on May 10, 2012(6)4.3

   Private Financing: Fonds de solidarité des travailleurs du Québec (F.T.Q.); Fonds régional de solidarité Abitibi-Témiscamingue, société en commandite(7)4.4

   Private Financing: Robert Buchan; Fraser Buchan; Jennifer Buchan(7)4.5

   Private Financing: Non-brokered private placement with four institutional funds(8)4.6

   Prospectus Financing(9)4.7

   Prospectus Financing(10)4.8

   Agreement of Purchase and Sale dated October 15, 2013 between Prodigy Gold Inc. (“Argonaut”) and Richmont Mines Inc. (“Richmont”)(11)4.9

   Amending Agreement of Purchase and Sale dated June 6, 2014 between Prodigy Gold Inc. (“Argonaut”) and Richmont Mines Inc. (“Richmont”)(12)4.10

   Purchase and Sale Agreement dated August 1, 2014 between Richmont Mines Inc. (“Purchaser”) and Host’s Gold Incorporated (“Vendor”); and Royalty Agreement dated August 1, 2014 between Richmont Mines Inc. (“Grantor”) and Host’s Gold Incorporated (“Payee”)(13)8.1

   List of Subsidiaries †12.1

   Rule 13a-14(a)/15d-14(a) Certifications †13.1

   Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Actof 2002, 18 U.S.C. Section 1350 †
  † Filed herewith.
  (1)

   Incorporated by reference to Exhibit No. 1 to the Company’s Registration Statement on Form 20-F dated September 25, 1996 filed with the Securities and Exchange Commission and Amendments to Articles mentioned under “Item 10 Additional Information” into the Corporation’s Annual Report on Form 20-F for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission on May 5, 2011.(2)

   Incorporated by reference to Exhibit No. 1 to the Company’s Registration Statement on Form 20-F dated September 25, 1996 filed with the Securities and Exchange Commission and Amendment to By-Laws mentioned under “Item 10 Additional Information” into the Corporation’s Annual Report on Form 20-F for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission on May 5, 2011.(3)

   Incorporated by reference to Exhibit No. 1 to the Corporation’s Annual Report under “Item 10 Additional Information” on Form 20- F for the fiscal year ended December 31, 2011 filed with the Securities and Exchange Commission on April 27, 2012.(4)

   Incorporated by reference to the identically numbered Exhibit to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2006 filed with the Securities and Exchange Commission on May 10, 2007. 133


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(5)

   The Acquisition and Amalgamation Agreements were filed on EDGAR on May 28, 2010 and the Amended and Restated Shareholders Rights Plan was filed on EDGAR on April 14, 2011. The Plan was renewed on May 8, 2014. These documents are incorporated by reference in this Annual Report.(6)

   The Omnibus Long-Term Incentive Plan incorporated in the 2011 Management Information Circular and in the 2011 Annual Report on Form 20-F was filed on EDGAR on April 27, 2012. The Plan will be renewed on May 7, 2015. That document is incorporated by reference in this Annual Report.(7)

   The two Private Financing (the first one with Fonds de solidarité des travailleurs du Québec (F.T.Q.) and Fonds régional de solidarité Abitibi-Témiscamingue, société en commandite), (the second one with Robert Buchan; Fraser Buchan; Jennifer Buchan) were filed on Form 20-F on EDGAR on April 27, 2012. Those documents are incorporated by reference in this Annual Report.(8)

   Incorporated by reference to the identically numbered Exhibit to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2012 filed with the Securities and Exchange Commission on April 24, 2013.(9)

   Richmont Mines closed a bought deal financing on April 23, 2014, for aggregate gross proceeds of CAN$11.67 million. Incorporated by reference to the identically numbered Exhibit to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2013 filed with the Securities and Exchange Commission on April 28, 2014.(10)

   Incorporated by reference to the identically numbered Exhibit to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2014 filed with the Securities and Exchange Commission on April 27, 2015.(11)

   Incorporated by reference to the identically numbered Exhibit to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2014 filed with the Securities and Exchange Commission on April 27, 2015.(12)

   Incorporated by reference to the identically numbered Exhibit to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2014 filed with the Securities and Exchange Commission on April 27, 2015.(13)

   Incorporated by reference to the identically numbered Exhibit to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2014 filed with the Securities and Exchange Commission on April 27, 2015. 134


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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. RICHMONT MINES INC.Registrant Dated: April 19, 2016

   By:

   (/s/) Nicole VeilleuxNicole VeilleuxVice-President, Finance
 0


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Consolidated Financial Statements of RICHMONT MINES INC. Years ended December 31, 2015 and 2014


---

INDEPENDENT AUDITOR’S REPORT OF REGISTERED PUBLICACCOUNTING FIRM To the shareholders of Richmont Mines Inc. We have completed integrated audits of Richmont Mines Inc.’s 2015, 2014 and 2013 consolidated financial statements and of its internal control over financial reporting as at December 31, 2015. Our opinions, based on our audits, are presented below. Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Richmont Mines Inc., which comprise the consolidated statements of financial position as at December 31, 2015 and 2014 and the consolidated income statements, the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows for each of the years in the three-year period ended December 31, 2015, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, as established by the International Accounting Standards Board, and for such internal control as management determines necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our 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 comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. 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 risks 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. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Richmont Mines Inc. as at December 31, 2015 and 2014 and its financial performance and its cash flows for each of the years in the three-year period ended December 31, 2015 in accordance with International Financial Reporting Standards as established by the International Accounting Standards Board. Report on internal control over financial reporting We have also audited Richmont Mines Inc. internal control over financial reporting as at December 31, 2015, based on the criteria established in “2013 Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).


---

INDEPENDENT AUDITOR’S REPORT OF REGISTERED PUBLICACCOUNTING FIRM Management’s responsibility Management 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 the accompanying Management’s report on Internal Control over Financial Reporting. Auditor’s responsibility Our 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. Our 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 assessed risk and performing such other procedures as we considered necessary in the circumstances. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal control over financial reporting. Definition of internal control over financial reporting A 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 consolidated financial statements for external purposes in accordance with International Financial Reporting Standards. A Company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with International Financial Reporting Standards, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) 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 consolidated financial statements. Inherent limitations Because 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. Opinion In our opinion, Richmont Mines Inc. maintained, in all material respects, effective internal control over financial reporting as at December 31, 2015, based on the criteria established in “2013 Internal Control—Integrated Framework”issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  1 Montreal (Canada) February 19, 2016 1CPA auditor, CA public accountancy permit no. A105359


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RICHMONT MINES INC.Consolidated Financial StatementsYears ended December 31, 2015 and 2014 Consolidated Financial Statements Consolidated Income Statements
        1Consolidated Statements of Comprehensive Income
        2Consolidated Statements of Changes in Equity
        3Consolidated Statements of Financial Position
        6Consolidated Statements of Cash Flows
        7Notes to Consolidated Financial Statements
        8


---

CONSOLIDATED INCOME STATEMENTYears ended December 31 (in thousands of Canadian dollars) 2015
        
        2014
        
        2013$
        
        $
        
        $CONTINUING OPERATIONSRevenues (note 3)
        143,733
        
        132,196
        
        90,213Cost of sales (note 4)
        118,334
        
        111,898
        
        85,832GROSS PROFIT
        25,399
        
        20,298
        
        4,381OTHER EXPENSES (REVENUES)Exploration and project evaluation (note 5)
        7,435
        
        3,772
        
        7,875Administration (note 6)
        9,809
        
        7,627
        
        7,514Loss (gain) on disposal of long-term assets (note 8)
        (102
        )
        639
        
        105Changes in asset retirement obligations at closed sites (note 19)
        814
        
        -
        
        -Impairment loss on W Zone Mine (note 17.1)
        -
        
        -
        
        13,472Other expenses
        1,693
        
        -
        
        -Other revenues (note 9)
        (2,130
        )
        (102
        )
        (154
        )17,519
        
        11,936
        
        28,812OPERATING EARNINGS (LOSS)
        7,880
        
        8,362
        
        (24,431
        )Financial expenses (note 10)
        82
        
        111
        
        1,263Financial revenues (note 11)
        (787
        )
        (436
        )
        (526
        )EARNINGS (LOSS) BEFORE MINING AND INCOME TAXES
        8,585
        
        8,687
        
        (25,168
        )MINING AND INCOME TAXES (note 12)
        1,797
        
        505
        
        7,994NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS
        6,788
        
        8,182
        
        (33,162
        )NET LOSS FROM DISCONTINUED OPERATION (note 13)
        -
        
        -
        
        (1,098
        )NET EARNINGS (LOSS)
        6,788
        
        8,182
        
        (34,260
        )EARNINGS (LOSS) PER SHARE(note 14)Basic earnings (loss) per shareEarnings (loss) from continuing operations
        0.12
        
        0.18
        
        (0.84
        )Loss from discontinued operation
        -
        
        -
        
        (0.03
        )Basic net earnings (loss)
        0.12
        
        0.18
        
        (0.87
        )Diluted earnings (loss) per shareEarnings (loss) from continuing operations
        0.12
        
        0.18
        
        (0.84
        )Loss from discontinued operation
        -
        
        -
        
        (0.03
        )Diluted net earnings (loss)
        0.12
        
        0.18
        
        (0.87
        )BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in thousands)
        56,936
        
        45,261
        
        39,594DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in thousands)
        57,697
        
        45,700
        
        39,594
 The accompanying notes are an integral part of the consolidated financial statements. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 1


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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEYears ended December 31 (in thousands of Canadian dollars) 2015
        
        
        2014
        
        
        2013$
        
        
        $
        
        
        $NET EARNINGS (LOSS)
        
        6,788
        
        
        8,182
        
        
        (34,260
        )OTHER COMPREHENSIVE LOSS, NET OF TAXESITEMS THAT WILL BE RECLASSIFIED SUBSEQUENTLY TO NET EARNINGS (LOSS)Fair value variation on available-for-sale financial assets
        
        -
        
        
        -
        
        
        (18
        )Realized gain on sale of available-for-sale financial assets transferred to net earnings
        
        -
        
        
        -
        
        
        (12
        )OTHER COMPREHENSIVE LOSS, NET OF TAXES
        
        -
        
        
        -
        
        
        (30
        )TOTAL COMPREHENSIVE INCOME (LOSS)
        
        6,788
        
        
        8,182
        
        
        (34,290
        )
 The accompanying notes are an integral part of the consolidated financial statements. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 2


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CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended December 31, 2015 (in thousands of Canadian dollars) ContributedShare capital
        
        surplus
        
        Deficit
        
        Total equity$
        
        $
        
        $
        
        $BALANCE AT DECEMBER 31, 2014
        144,535
        
        12,342
        
        (48,920
        )
        107,957Issue of sharesCommon
        38,500
        
        -
        
        -
        
        38,500Exercise of share options
        1,088
        
        (343
        )
        -
        
        745Common shares issue costs
        (2,411
        )
        -
        
        -
        
        (2,411
        )Share-based compensation
        -
        
        2,023
        
        -
        
        2,023Transactions with Richmont Mines shareholders
        37,177
        
        1,680
        
        -
        
        38,857Net earnings and total comprehensive income
        -
        
        -
        
        6,788
        
        6,788BALANCE AT DECEMBER 31, 2015
        181,712
        
        14,022
        
        (42,132
        )
        153,602
 The accompanying notes are an integral part of the consolidated financial statements. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 3


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CONSOLIDATED SATEMENT OF CHANGES IN EQUITYYear ended December 31, 2014 (in thousands of Canadian dollars) ContributedShare capital
        
        surplus
        
        Deficit
        
        Total equity$
        
        $
        
        $
        
        $BALANCE AT DECEMBER 31, 2013
        132,202
        
        11,253
        
        (57,102
        )
        86,353Issue of sharesCommon
        11,673
        
        -
        
        -
        
        11,673Exercise of share options
        1,594
        
        (505
        )
        -
        
        1,089Common shares issue costs
        (934
        )
        -
        
        -
        
        (934
        )Share-based compensation
        -
        
        1,594
        
        -
        
        1,594Transactions with Richmont Mines shareholders
        12,333
        
        1,089
        
        -
        
        13,422Net earnings and total comprehensive income
        -
        
        -
        
        8,182
        
        8,182BALANCE AT DECEMBER 31, 2014
        144,535
        
        12,342
        
        (48,920
        )
        107,957
 The accompanying notes are an integral part of the consolidated financial statements. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 4


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CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended December 31, 2013 (in thousands of Canadian dollars) Available-for-Contributed
        
        
        
        sale financialShare capital
        
        surplus
        
        Deficit
        
        assets
        
        Total equity$
        
        $
        
        $
        
        $
        
        $BALANCE AT DECEMBER 31, 2012
        132,113
        
        9,062
        
        (22,842
        )
        30
        
        118,363Issue of sharesExercise of share options
        89
        
        (27
        )
        -
        
        -
        
        62Issue of warrants
        -
        
        439
        
        -
        
        -
        
        439Share-based compensation
        -
        
        1,779
        
        -
        
        -
        
        1,779Transactions with Richmont Mines shareholders
        89
        
        2,191
        
        -
        
        -
        
        2,280Net loss
        -
        
        -
        
        (34,260
        )
        -
        
        (34,260
        )Other comprehensive loss, net of taxesItems that will be reclassified subsequently to net earnings (loss)Fair value variation on available-for-sale financial assets
        -
        
        -
        
        -
        
        (18
        )
        (18
        )Realized gain on sale of available-for-sale financial assets transferred to net earnings
        -
        
        -
        
        -
        
        (12
        )
        (12
        )Total comprehensive loss
        -
        
        -
        
        (34,260
        )
        (30
        )
        (34,290
        )BALANCE AT DECEMBER 31, 2013
        132,202
        
        11,253
        
        (57,102
        )
        -
        
        86,353
 The accompanying notes are an integral part of the consolidated financial statements. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 5


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CONSOLIDATED STATEMENT OF FINANCIAL POSITIONDecember 31 (in thousands of Canadian dollars) December 31,
        
        December 31,2015
        
        2014$
        
        $ASSETSCURRENT ASSETSCash
        61,028
        
        35,273Guaranteed investment certificate, 0.9%, maturing in February 2015
        -
        
        474Receivables (note 15)
        5,111
        
        3,139Income and mining tax assets
        2,091
        
        1,558Exploration tax credits receivable
        1,965
        
        5,300Inventories (note 16)
        11,285
        
        13,81481,480
        
        59,558RESTRICTED DEPOSITS (note 19 d)
        831
        
        1,016PROPERTY, PLANT AND EQUIPMENT (note 17)
        124,741
        
        88,197TOTAL ASSETS
        207,052
        
        148,771LIABILITIESCURRENT LIABILITIESPayables, accruals and provisions
        28,907
        
        19,487Income and mining taxes payable
        1,909
        
        3,241Current portion of long-term debt (note 18)
        3,064
        
        1,799Current portion of asset retirement obligations (note 19 c)
        260
        
        19434,140
        
        24,721LONG-TERM DEBT (note 18)
        7,264
        
        5,724ASSET RETIREMENT OBLIGATIONS (note 19 c)
        9,621
        
        8,043DEFERRED INCOME AND MINING TAX LIABILITIES (note 12)
        2,425
        
        2,326TOTAL LIABILITIES
        53,450
        
        40,814EQUITYShare capital (note 20)
        181,712
        
        144,535Contributed surplus
        14,022
        
        12,342Deficit
        (42,132
        )
        (48,920
        )TOTAL EQUITY
        153,602
        
        107,957TOTAL LIABILITIES AND EQUITY
        207,052
        
        148,771Commitments and subsequent event (note 23)
 The accompanying notes are an integral part of the consolidated financial statements. On behalf of the Board: /s/ Renaud Adams
      /s/ Michael PesnerRenaud Adams
      Michael PesnerDirector
      Director   RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 6


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CONSOLIDATED STATEMENT OF CASH FLOWSYears ended December 31 (in thousands of Canadian dollars) 2015
        
        2014
        
        2013$
        
        $
        
        $OPERATING ACTIVITIESNet earnings (loss)
        6,788
        
        8,182
        
        (34,260
        )Adjustments for:Depreciation and depletion
        24,198
        
        21,808
        
        14,674Impairment loss on W Zone Mine’s assets
        -
        
        -
        
        13,472Adjustment to estimated recoverable value of remaining Francoeur Mine’s assets
        -
        
        -
        
        867Income and mining taxes received (paid)
        (1,123
        )
        1,304
        
        (1,541
        )Interest revenues
        (686
        )
        (409
        )
        (409
        )Interest expenses on long-term debt
        191
        
        161
        
        66Share-based compensation
        2,258
        
        2,008
        
        2,521Share-based compensation settled in cash
        -
        
        (60
        )
        (725
        )Adjustment to closure allowance
        24
        
        (60
        )
        -Changes in asset retirement obligations at closed sites
        814
        
        -
        
        -Accretion expense – asset retirement obligations
        81
        
        111
        
        81Financing expenses
        -
        
        -
        
        1,165Loss (gain) on disposal of long-term assets
        (102
        )
        639
        
        193Gain on disposal of shares of publicly-traded companies
        -
        
        -
        
        (12
        )Mining and income taxes
        1,797
        
        505
        
        7,99434,240
        
        34,189
        
        4,086Net change in non-cash working capital items (note 21)
        8,124
        
        (6,910
        )
        (630
        )Cash flows from operating activities
        42,364
        
        27,279
        
        3,456INVESTING ACTIVITIESDisposition of shares of publicly-traded companies
        -
        
        -
        
        12Interest received
        683
        
        390
        
        420Restricted deposits
        185
        
        (704
        )
        (2,737
        )Guaranteed investment certificate
        474
        
        2,650
        
        -Property, plant and equipment – Island Gold Mine
        (48,938
        )
        (20,168
        )
        (27,770
        )Property, plant and equipment – Beaufor Mine
        (1,390
        )
        (1,623
        )
        (980
        )Property, plant and equipment – W Zone Mine
        -
        
        (234
        )
        (3,779
        )Property, plant and equipment – Monique Mine
        -
        
        (21
        )
        (8,358
        )Property, plant and equipment – Other
        (1,770
        )
        (1,006
        )
        (1,001
        )Disposition of property, plant and equipment
        201
        
        390
        
        869Cash flows used in investing activities
        (50,555
        )
        (20,326
        )
        (43,324
        )FINANCING ACTIVITIESPayment of royalty payments payable
        (1,000
        )
        -
        
        -Payments of asset retirement obligations
        (157
        )
        (74
        )
        -Issue of common shares
        39,245
        
        12,762
        
        62Common shares issue costs
        (2,411
        )
        (934
        )
        -Interest paid
        (191
        )
        (160
        )
        (66
        )Financing expenses
        -
        
        -
        
        (727
        )Payments of finance lease obligations
        (1,540
        )
        (825
        )
        (1,660
        )Cash flows from (used in) financing activities
        33,946
        
        10,769
        
        (2,391
        )Net change in cash
        25,755
        
        17,722
        
        (42,259
        )Cash, beginning of year
        35,273
        
        17,551
        
        59,810Cash, end of year
        61,028
        
        35,273
        
        17,551
 The accompanying notes are an integral part of the consolidated financial statements. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 7


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2015, 2014 and 2013 (in thousands of Canadian dollars) 1.
      General information and compliance with IFRS Richmont Mines Inc. (the “Corporation“), is incorporated under the Business Corporations Act (Quebec) and is engaged in mining, exploration and development of mining properties, principally gold. The consolidated financial statements have been prepared by the Corporation’s management in accordance with International Financial Reporting Standards (“IFRS”) that are in effect at December 31, 2015, as established by the International Accounting Standards Board. Richmont Mines inc. is the parent company. The address of the head office is 161 avenue Principale, Rouyn-Noranda, Quebec, Canada. The Corporation’s shares are listed on the Toronto Stock Exchange (TSX) and on the New York Stock Exchange Market (NYSE MKT), under the symbol “RIC”. 2.
      Summary of accounting policies 2.1.
      Overall considerations The significant accounting policies that have been applied in the preparation of these consolidated financial statements are summarized below. 2.2.
      Basis of evaluation These consolidated financial statements have been prepared on a going concern basis, under the historical cost method, except for available-for-sale financial assets which are measured at fair value. 2.3.
      Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Corporation At the date of authorization of these consolidated financial statements, new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Corporation. Management anticipates that all of the pronouncements not yet effective will be adopted in the Corporation’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Corporation’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Corporation’s consolidated financial statements. IFRS 9 – Financial instruments (IFRS 9) In July 2014, the International Accounting Standards Board (“IASB”) published IFRS 9 which replaces IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 introduces improvements which include a logical model for classification and measurement of financial assets, a single, forward-looking “expected loss” impairment model and a substantially-reformed approach to hedge accounting. IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018. Earlier application is permitted. The Corporation has yet to assess the impact of this new standard on its consolidated financial statements. IFRS 15 – Revenues from contracts with Customers (IFRS 15) In May 2014, the IASB published IFRS 15 which replaces IAS 18 Revenue, IAS 11 Construction Contracts and some revenue-related interpretations. IFRS 15 establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized at a point in time or over time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018. Earlier application is permitted. The Corporation has yet to assess the impact of this new standard on its consolidated financial statements. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 8


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IFRS 16 – Leases (IFRS 16) In January 2016, the IASB published IFRS 16 which replaces IAS 17 Leases. IFRS 16 eliminates the classification as an operating lease and requires lessees to recognize a right-of-use asset and a lease liability in the statement of financial position for all lease with exemptions permitted for short-term leases and leases of low value assets. In addition, IFRS 16: changes the definition of a lease; sets requirements on how to account for the asset and liability, including complexities such as non-lease elements, variable lease payments and options periods; changes the accounting for sale and leaseback arrangements; largely retains IAS 17’s approach to lessor accounting and introduces new disclosure requirements. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019 with early application permitted in certain circumstances. The Corporation has yet to assess the impact of this new standard on its consolidated financial statements. 2.4.
      Basis of consolidation The consolidated financial statements consolidate those of the parent company and all of its subsidiaries as at December 31, 2015. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. The Corporation’s subsidiaries are all 100% owned by the parent company. The financial year end of all subsidiaries is December 31. All transactions and balances between corporations are eliminated upon consolidation, including unrealized gains and losses on transactions between these consolidated corporations. When unrealized losses on intragroup asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Corporation perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Corporation. Earnings and loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognized from the effective date of the acquisition, or up to the effective date of disposal, as applicable. Subsidiaries Details of the Corporation’s subsidiaries at December 31, 2015, are as follows: Name of subsidiary
        Principal activity
        Incorporation law
        Interest and voting shareCamflo Mill Inc.
        Ore milling
        Canada Business
          Corporations Act
        100%Patricia Mining Corp.
        Inactive
        Ontario Incorporation
        100%Louvem Mines Inc.
        Inactive
        Business Corporations
          Act (Quebec)
        100%
  2.5.
      Foreign currency translation The consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the parent company and all subsidiaries. The functional currency has remained unchanged during the reporting periods for all entities of the Corporation. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items using year-end exchange rates are recognized in the income statement in “Financial revenues” or “Financial expenses”. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 9


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2.6.
      Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Corporation and the revenue can be reliably measured. Revenue is measured at fair value of the consideration received or receivable, excluding taxes. Revenues include precious metals revenue and other revenues include milling revenue.
    Precious metals revenue, based on spot metal prices, is recorded on delivery when rights and obligations related to ownership are transferred to the purchaser and assurance regarding collectability of the consideration exists. Milling revenue is recorded when the ore processing service is rendered by the Corporation, accepted by the client and reasonable assurance regarding collectability of the consideration exists. Interest revenue is reported on an accrual basis using the effective interest method and is included in “Financial revenues” in the income statement. 2.7.
      Post employment benefits and short-term employee benefits The Corporation provides post employment benefits through a defined contribution plan. A defined contribution plan is a pension plan under which the Corporation pays contributions, established according to a percentage of the employee’s salary, to an independent entity. The Corporation has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. The Corporation also contributes to state plans for certain employees that are considered defined contribution plans. Contributions to plans are recognized as an expense in the period that relevant employee services are received. Short-term employee benefits, including vacation entitlement, are current liabilities included in “payables, accruals and provisions", measured at the undiscounted amount that the Corporation expects to pay as a result of the unused entitlement. 2.8.
      Share-based compensation The Corporation offers a long-term incentive plan that permits the granting of options (“Options”), restricted share units (“RSUs”), share appreciation rights (“SARs”) and retention awards (“Retention Awards”) to directors, officers, senior executives and other employees, consultants and service providers providing ongoing services to the Corporation. In the event that participants are rewarded using share-based payments, the fair values of participants' services are determined by reference to the fair value of the services received or of the equity instruments granted if the Corporation cannot estimate reliably the fair value of the services received. When applicable, the fair value of each grant is evaluated using the Black-Scholes pricing model at the date of grant. Each share-based payment is ultimately recognized as an expense (except warrants to brokers). For grants settled in equity instruments such as Options and RSUs, the compensation is considered as “contributed surplus”. For grants settled in cash or in equity instruments, at the discretion of the participant, such as SARs and Retention Awards, the fair value is the sum of the fair values of the liability component and the equity component. The Corporation first assesses the fair value of the liability component, and then the fair value of the equity component. Any subsequent change in the fair value of the liability component is recognized in the consolidated income statement. For grants settled in cash or equity instrument at the discretion of the Corporation such as RSUs, the compensation is considered as contributed surplus because the Corporation has no past practice to settle such grants in cash. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of grants expected to vest. Estimates are subsequently revised if there is any indication that the number expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense in prior periods. At the date of settlement of Options and RSUs, the proceeds received are allocated to share capital, and the accumulated expenses recorded in contributed surplus are then transferred to share capital. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 10


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At the date of settlement of SARs and Retention Awards, the Corporation shall re-measure the liability to its fair value. If the entity issues equity instruments on settlement rather than paying cash, the liability shall be transferred directly to equity, as consideration for the equity instruments issued. If the entity pays in cash on settlement rather than issuing equity instruments, that payment amount shall be applied to settle the liability in full. 2.9.
      Exploration and project evaluation Exploration and project evaluation expenditure comprises costs, depreciation and exploration tax credits that are directly attributable to: researching and analysing existing exploration data;conducting geological studies, exploratory drilling and sampling;examining and testing extraction and treatment methods;compiling pre-feasibility and feasibility studies. Exploration expenditures relate to the initial search for deposits. Project evaluation expenditure arises from a detailed assessment of deposits or other projects that have been identified as having geological potential. Exploration and project evaluation expenditures are not capitalized. Capitalization of expenditures begins when management and the Board of Directors have determined that a project has demonstrated a potential for development and an economic analysis which will be presented to, and formally approved by the Board of Directors, demonstrates the commercial viability and economic benefits of the project. There can be two different types of economic analysis that can be produced and relied upon, which indicate whether development of a property is economically feasible: One type is in the form of preliminary economic analysis showing the profitability of the project based on Measured or Indicated Resources;The second type is in the form of a pre-feasibility study or a feasibility study, which is a more detailed analysis, where the margin of error is lower. To the extent that pre-feasibility study or the feasibility study has a positive outcome, then resources are converted to reserves. This type of analysis details all costs required for the development of the project as well as production costs. When required, third party bids for part of the project are also provided. The actual type of analysis that is prepared either internally or with the help of, or by third parties depends on factors such as the level of knowledge about the property and the project, the potential size of such project and whether the project is related or in close proximity to an existing Corporation mining site. If the analysis demonstrates the technical feasibility and commercial viability of developing a mineral deposit identified through the exploration phase or if the analysis demonstrates a significant potential for probable future economic benefits, and if management decides to pursue the project, it is then presented to the Corporation’s Board of Directors for review and approval. Once the commercial viability and economic benefits has been determined and approved by the Board of directors the project is classified as an Advance Exploration Project (note 2.15). Subsequent costs relating to further exploring or developing the property for eventual production are capitalized. Although the Corporation has taken steps to verify title to the mining properties in which it holds an interest, in accordance with industry practices for the current stage of exploration and development of such properties, these procedures do not guarantee the validity of the titles. Property titles may be subject to unregistered prior agreements. They can be lost or revoked if regulatory measures are not respected. 2.10.
        **Mining and income taxes**
 The income tax expense is composed of current and deferred taxes. Taxes are recognized in the income statement unless they are related to items carried in other comprehensive income or directly in shareholders’ equity. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 11


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Current income taxes and mining taxesCurrent income tax and mining tax assets and/or liabilities comprise those obligations to, or claims from, tax authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. The current income tax expense is based on income for the period adjusted for non-taxable or non-deductible items. The mining tax expense is based on income for the period for each mining site in production adjusted for non-taxable or non-deductible items. Calculation of current tax and mining tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Management regularly examines positions in tax returns where tax regulations are subject to interpretation. Where appropriate, the Corporation sets up a provision based on amount likely to be paid to tax authorities. Deferred income taxes and deferred mining taxesDeferred income taxes are recognized using the liability method on temporary differences between the tax basis of the assets and liabilities and their carrying amount in the statement of financial position. However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred income tax assets and liabilities are calculated without discounting at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred income and mining tax liabilitiesAre generally recognized for temporary taxable differences and are always provided in full;
    Are recognized for temporary differences associated with investments in subsidiaries unless the Corporation controls the timing of the reversal and it is probable that the temporary difference will not reverse in the foreseeable future; 
    Are not recognized for temporary differences resulting from goodwill that is not deductible for tax purposes. Deferred income and mining tax assetsAre recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income 
    Are examined at the end of the reporting period and reduced when, in the opinion of management, it is more likely than not that the deferred income and mining tax assets will not be realized. Deferred income and mining tax assets and liabilities are offset only when the Corporation has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred income and mining tax assets or liabilities are recognized as a component of tax income or expense in net earnings, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively. Under the provisions of tax legislation relating to flow-through shares, the Corporation is required to renounce its right to tax deductions for expenses related to exploration activities to the benefit of the investors. When the Corporation has renounced to its tax deductions and has incurred its admissible expenditures, the sale of tax deductions is recognized in profit or loss as a reduction to deferred tax expense and a deferred tax liability is recognized for the taxable temporary difference that arises from the difference between the carrying amount of admissible expenditures capitalized as an asset and its tax base. 2.11.
        **Basic and diluted earnings per share**
 Basic earnings per share is calculated by dividing the earnings attributable to common equity holders of the parent company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by adjusting earnings attributable to common equity holders and the weighted average number of common shares outstanding for dilutive potential common shares. The Corporation’s potentially dilutive common shares comprise stock options, warrants and RSUs. The number of shares included is computed unless they are anti-dilutive. The calculation considers that dilutive potential common shares are deemed to have been converted into common shares at the beginning of the period or, if later, at the date of issue of the potential common share. The proceeds from the exercise of such instruments are assumed to be used to purchase common shares at the average market price for the period and the difference between the number of shares and the number of shares assumed to be purchased are included in the calculation. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 12


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2.12.
        **Cash and cash equivalents**
 Cash and cash equivalents comprise cash and term deposits with original maturities of three months or less, and that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 2.13.
        **Exploration tax credits receivable**
 The Corporation is entitled to a refundable tax credit on qualified expenditures incurred in the province of Quebec. The refundable tax credits may reach 12% of qualified exploration expenditures incurred. The corporation is also entitled to a Federal tax credit on qualified exploration expenditures incurred. The exploration tax credits are recognized when the eligible expenses are incurred and when the refundable amounts can be reasonably estimated. The exploration tax credits have been applied against the costs incurred, either as a reduction of exploration expenses or of capitalized development costs. A valuation allowance is provided against tax credits claimed or received to the extent that recovery is not considered to be more likely than not. 2.14.
      Inventories Supply, ore and precious metals inventories are valued at the lower of cost and net realizable value. The cost of supply, ore and precious metals inventories are determined using the weighted average cost formula. The cost of ore and precious metals inventories includes all expenses directly attributable to the mineral extraction and processing process, including a systematic allocation of fixed and variable production overheads that are incurred in extracting and processing ore. Net realizable value is the estimated selling price in the ordinary course of business less any applicable estimated cost to completion and estimated selling expenses. The amount of inventories recognized as an expense is included in the cost of sales under operating costs (note 4). 2.15.
        **Property, plant and equipment**
 Property, plant and equipment are recorded at cost, net of related government assistance, accumulated depreciation and accumulated impairment. Cost includes all costs incurred initially to acquire or construct an item of property, plant and equipment, costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and costs incurred subsequently to add to or replace part thereof. Advanced exploration projectsExpenditures incurred on properties identified as having commercial viability and economic benefits (note 2.9) are capitalized as property, plant and equipment under this category. The costs of advanced exploration projects are not amortised. Costs include in particular, salaries and related benefits, retirement costs (note 2.17) and are accounted for net of secondary products generated during the advanced exploration phase. Upon commencement of commercial production, advanced exploration costs are transferred to the various categories of property, plant and equipment of mining sites in production and are depleted. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 13


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Depletion of mining sites in productionProperty, plant and equipment of mining sites in production are depleted according to the units-of-production method to write down the cost to estimated residual value. For mines other than Island Gold, the depletion rate is calculated in accordance with the number of ounces of gold sold using proven and probable reserves. The estimated period of depletion is determined according to the reserves of each mining site in production. During the year ended December 31, 2015, for the Island Gold Mine, in order to better reflect the estimated period during which this mine will remain in production, the Corporation started to account for depletion considering the development costs incurred to develop the lower levels of the mine and also changed the depletion estimation methodology for the remaining development and other capitalized costs of the mine. The depletion rate of the Island Gold Mine is now calculated in accordance with the number of ounces of gold sold using proven and probable reserves and a portion of measured and indicated resources. The depletion calculation also takes into account future developments and equipment costs necessary to access these reserves and resources. This change in methodology is considered a change in estimate and has been accounted for prospectively from January 1, 2015. The effect of this change in estimate was a decrease of the depletion expense by $1.9 million for the year ended December 31, 2015. As at December 31, 2015, it is impracticable for the Corporation to determine the impact of this change in accounting estimate on future periods. The depreciation is presented as depreciation and depletion and is included in the cost of sales. DepreciationDepreciation of an asset begins when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation of property, plant and equipment is calculated using the straight-line method based on their anticipated useful lives as follows: Buildings: 20 yearsLeasehold improvements: 5 yearsEquipment and rolling stock: 2 to 5 years OthersDepreciation of an asset ceases when it is classified as held for sale or when it is derecognized. Therefore, depreciation does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. Material residual value estimates, estimates of useful life, proven and probable reserves and the depreciation method are updated as required, at least annually. Any changes in residual value, estimated useful life and proven and probable reserves are recognized prospectively as they occur. The carrying amount of an item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognized separately in the consolidated income statement. 2.16.

   **Impairment testing of property, plant and equipment**
 For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at a cash-generating unit level. Reviews of the net carrying amount of mining sites in production and advanced exploration projects are carried out on a property-by-property basis, with each site representing a potential single cash-generating unit. Whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, an asset or cash-generating unit is reviewed for impairment. An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value in use, management estimates expected future cash flows from each asset or cash-generating unit, and then determines an appropriate discount rate for the calculation of the expected present value of the cash flows. Discount factors are determined individually for each asset or cash-generating unit and reflect their respective risk profiles as assessed by management. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 14


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Impairment losses for cash-generating units, that is mining sites, are allocated on a pro-rata basis to the assets of that site. All the assets are assessed in each reporting period to determine whether there is any indication that an impairment loss recognized in prior periods may no longer exist. An impairment charge is reversed if the asset’s or mining site’s recoverable amount exceeds its carrying amount. However, a reversal of an impairment loss cannot exceed the carrying amount that would have been determined (net of amortization or depreciation) if no impairment loss had been recognized for the asset in prior years. 2.17.

   **Provisions, contingent liabilities and contingent assets**
 Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Corporation and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes, property, plant and equipment retirement obligations, and similar liabilities, or onerous contracts. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted when the time value of money is significant. Any reimbursement that the Corporation can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized, unless it was assumed in the course of a business combination. In a business combination, contingent liabilities are recognized in the course of the allocation of the purchase price to the assets and liabilities acquired in the business combination. They are subsequently measured at the higher amount of a comparable provision as described above and the amount initially recognized, less any amortization. The Corporation is subject to environmental laws and regulations enacted by federal and provincial authorities. As of the reporting date, management believes that the Corporation’s operations are in compliance with current laws and regulations. To take account of estimated cash flows required to settle the obligations arising from environmentally acceptable closure plans (such as dismantling and demolition of infrastructures, removal of residual matter and site restoration), provisions are recognized in the year that the harm to the environment occurs, that is when the Corporation has an actual obligation resulting from harm to the environment, it is likely that an outflow will be required in settlement of the obligation and the obligation is reasonably determinable. These provisions are determined on the basis of the best estimates of future costs, based on information available on the reporting date. Best estimates of future costs are the amount the Corporation would reasonably pay to settle its obligation on the closing date or to transfer it to a third party on the same date. Future costs are discounted using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the liability. A corresponding asset is recognized in property, plant and equipment when establishing the provision. The provision is reviewed annually to reflect changes in the estimated outflow of resources as a result of changes in obligations or legislation, changes in the current market-based discount rate or an increase that reflects the passage of time. The accretion expense is recognized in net earnings as a finance expense as incurred. For operating sites, the cost of the related asset is adjusted to reflect changes (other than accretion) in the reporting period. For properties where mining activities have ceased, changes are charged directly to earnings. Costs of asset retirement are deducted from the provision when incurred. 2.18.

   Leases The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognized at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognized as a finance leasing liability. The corresponding finance leasing liability is reduced by lease payments less finance charges, which are expensed as part of finance expenses. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 15


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All other leases are treated as operating leases. Payments on operating lease agreements are recognized as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred. 2.19.

   **Segment information**
 In identifying its operating segments, management generally uses the physical location of mining sites in production. Two segments are analyzed, sites in Quebec and sites in Ontario. Segments are reported on the same basis as the internal information reported to the chief decision makers in allocating resources to operating segments and assessing the performance of these segments. The chief decision makers are represented by the management committee. All inter-segments transfers are carried out at arm’s length prices. The measurement policies the Corporation uses for segment reporting are the same as those used in its financial statements, except that the following are not included in arriving at the operating earnings of the Corporation’s operating segments: Administration expenses (including share-based compensation and corporate office remuneration);Exploration expenses of mining properties not located on mining sites in production;Exploration tax credits of mining properties not located on mining sites in production. In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. In the financial periods under review, this primarily applies to the Corporation’s assets at the headquarters. 2.20.

   Equity Share capital represents the amount received on the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. If shares are issued when stock options, warrants and RSUs are exercised, the share capital account also comprises the compensation costs previously recorded as contributed surplus. Unit placementsProceeds from unit placements are allocated between shares and warrants issued using the residual method. Proceeds are first allocated to shares according to the quoted price of existing shares at the time of issuance and any residual in the proceeds is allocated to warrants. Other elements of equityContributed surplus includes the value attributable to warrants and charges related to share-based compensation until the exercise of options issued and the settlement of the RSUs as remuneration. This account also includes the value of equity conversion option associated with the issuance of convertible debentures, net of tax. Retained earnings (deficit) include all current and prior period retained profits or losses. Gains and losses on available-for-sale financial assets are included in accumulated other comprehensive income in the section entitled “available-for-sale financial assets”. All transactions with owners of the Corporation are recorded separately within equity. 2.21.

   **Financial instruments**
 Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value plus transaction costs, except for financial assets and financial liabilities carried at fair value through net earnings, which are measured initially at fair value. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires. Financial assets and financial liabilities are measured subsequently as described below. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 16


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Financial assets For the purpose of subsequent measurement, financial assets of the Corporation are classified into the following categories upon initial recognition: loans and receivables;available-for-sale financial assets. The category determines subsequent measurement and whether any resulting income and expense is recognized in net earnings or in other comprehensive income. All financial assets are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognized in net earnings are presented within financial revenues or administrative expenses, if applicable. Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortized cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. Cash, guaranteed investment certificate and receivables (except taxes receivable) fall into this category of financial instruments. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. As at December 31, 2015 and 2014 the Corporation has no financial assets in this category. All available-for-sale financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses, which are recognized in net earnings. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognized in other comprehensive income is reclassified to net earnings in and presented as a reclassification adjustment within other comprehensive income. Reversals of impairment losses are recognized in other comprehensive income, except for financial assets that are debt securities which are recognized in net earnings only if the reversal can be objectively related to an event occurring after the impairment loss was recognized. Financial liabilities The Corporation’s financial liabilities include payables, accruals (except salaries and related benefits payable), royalty payments payable, contract payment holdbacks and the closure allowance. Financial liabilities are measured subsequently at amortized cost using the effective interest method. 2.22.

   Accounting estimates and critical judgments The preparation of financial statements requires management to make estimates, assumptions and judgments with respect to future events. These estimates and judgments are constantly challenged. They are based on past experience and other factors, in particular, forecasts of future events that are reasonable in the circumstances. The actual results are likely to differ from the estimates, assumptions and judgments made by management, and will seldom equal the estimated results. The following paragraphs describe: the most critical management estimates and assumptions in the recognition and measurement of assets, liabilities and expenses;the most critical management judgments in applying accounting policies. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 17


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Critical accounting estimates and assumptions Basis of depletion of mining sites in productionProperty, plant and equipment of mining sites in production are depleted according to the units-of-production method to write down the cost to residual value. Management estimates the residual value of property, plant and equipment based on the estimated fair value as of the financial position date. For these assets, the depletion rate is calculated based on the number of ounces of gold sold in proportion to the number of ounces in proven and probable reserves and, for Island Gold Mine, a portion of measured and indicated resources. The Corporation estimates its reserves and resources using information compiled by qualified persons who work for the Corporation. This information relates to geological data on the size, depth and shape of the deposit and requires geological assessments to interpret the data. The assessment of proven and probable reserves and measured and indicated resources is based on factors such as the estimated exchange rate, price of metals, capital investments required and production costs stemming from geological assumptions based on the size and grade of the deposit. Changes in proven and probable reserves and measured and indicated resources could have an impact on the net carrying amount of property, plant and equipment, asset retirement obligations, recognition of deferred tax assets and amortization, depreciation and depletion expenses. Asset retirement obligationsThe Corporation assesses its asset retirement obligations annually. Determining these obligations requires significant estimates and assumptions due to the numerous factors that affect the amount ultimately payable. Such factors include estimates of the scope and cost of restoration activities, legislative amendments, known environmental impacts, the effectiveness of reparation and restoration measures and changes in the discount rate. This uncertainty may lead to differences between the actual expense and the allowance. At the date of the statement of financial situation, asset retirement obligations represent management’s best estimate of the charge that will result when the actual obligation is terminated. Impairment test of property, plant and equipmentDetermining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgment and a number of estimates and interpretations in many cases. When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the individual asset must be estimated. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs must be determined. In the process of measuring expected future cash flows, management makes assumptions about future operating results, such as future metal production (proven and probable reserves and, for Island Gold Mine, a portion of measured and indicated resources), estimated future metal prices, operating costs, capital and site restoration expenses and estimated future foreign exchange rates. These assumptions relate to future events and circumstances. Actual results may differ from estimated results. Income taxes and deferred mining taxesThe Corporation is subject to taxes from different tax jurisdictions. Management continually evaluates the likelihood that its deferred tax assets could be realized. This requires management to assess whether it is probable that sufficient taxable income will exist in the future to utilize these losses within the carry-forward period. The Corporation also maintains allowances for uncertain tax positions that, in its opinion, appropriately reflect the risks related to the tax positions subject to discussions, audits, differences of opinion and appeals with the tax authorities or that are otherwise uncertain. These allowances are determined using best estimates of the amount payable based on a qualitative assessment of all relevant information. These allowances are reassessed at the end of each financial reporting period to determine if the amount is sufficient. However, audits by the tax authorities could subsequently result in an additional liability. Upon the definite resolution of a tax issue resulting in a tax amount that differs from the initially recognized tax expense, the difference is recognized in the tax expense of the period of definitive settlement. Share-based compensation expenseThe estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Corporation has made estimates as to the volatility of its own shares, the probable life of options and the time of exercise of those options. The model used by the Corporation is the Black-Scholes model. The Corporation similarly evaluated the expected extinguishments for each remuneration program within the parameters of each individual program. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 18


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Dismantling costs and severance costsThe Corporation estimates dismantling costs and severance costs by making assumptions such as retention of employees and timing of dismantling. The uncertainty of these estimations may lead to differences between the actual expenses and the estimated costs. Recoverability of credits relating to resources and credits on duties refundable for lossesUncertainties related to the review by government authorities of the Corporation’s current and prior years’ claims for the refundable tax credit relating to resources and the credit on duties refundable for losses, based on qualifying exploration expenditures under the Taxation Act (Quebec) and the Mining Tax Act (Quebec), require management to assess whether these claims will be settled in full or in part. Uncertainties exist with respect to the interpretation of tax legislation and regulations by government authorities, the amount of expenditures that may be disallowed by such authorities as a result of their interpretation of tax legislation and regulations and the timing of recovery of the credits. Significant management judgments in applying accounting policies Start of advanced exploration phaseThe Corporation evaluates the potential of each project to determine when the project should progress from the exploration phase to the advanced exploration phase. Once management has determined that a project has demonstrated a potential for development, and an economic analysis supports its commercial viability and its economic benefit, the project moves into the advanced exploration phase once approval has been given by the Board of Directors. Expenditures related to the project are capitalized as of this time. Start of commercial productionManagement assesses the stage of completion of each advanced exploration project to determine when it begins commercial production. The Corporation considers a number of criteria to determine when a mine enters into commercial production, thereby resulting in reclassification from “Advanced exploration project” to “Mining site in production”. The following criteria are used: Production capacity achievedRecovered gradeStage of completion of development work Provisions and contingent liabilitiesJudgments are made as to whether a past event has led to a liability that should be recognized in the consolidated financial statements or disclosed as a contingent liability. Quantifying any such liability often involves judgments and estimations. These judgments are based on a number of factors including the nature of the claims or dispute, the legal process and potential amount payable, legal advice received, past experience and the probability of a loss being realized. Several of these factors are sources of estimation uncertainty. 2.23.

   Earnings or loss from discontinued operation
 A discontinued operation is a component of the Corporation that either has been disposed of, or is classified as held for sale, and: represents a separate major line of business or geographical area of operations;is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; oris a subsidiary acquired exclusively with a view to resale. Earnings or loss from discontinued operation, including prior year components of earnings or loss, is presented in a single amount in the consolidated income statement. This amount, which comprises the post–tax earnings or loss of discontinued operation and the post-tax gain or loss resulting from the measurement of assets is further analysed in note 13. 3.

   Revenues Revenues include revenue from gold sales and silver sales. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 19


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4.

   Cost of sales The cost of sales includes the following items: 2015

   

   

   2014

   

   

   2013$

   

   

   $

   

   

   $Operating costs

   

   92,719

   

   

   87,984

   

   

   69,688Royalties

   

   1,953

   

   

   2,335

   

   

   1,910Depreciation and depletion

   

   23,662

   

   

   21,579

   

   

   14,234118,334

   

   

   111,898

   

   

   85,832
  5.

   Exploration and project evaluation The exploration and project evaluation expenses were incurred for the following mines and properties: 2015

   

   

   2014

   

   

   2013$

   

   

   $

   

   

   $Beaufor Mine

   

   2,679

   

   

   1,733

   

   

   1,929Island Gold Mine

   

   4,600

   

   

   771

   

   

   4,532Wasamac property

   

   94

   

   

   169

   

   

   1,102Monique Mine

   

   -

   

   

   2

   

   

   221Other properties

   

   32

   

   

   154

   

   

   347Project evaluation

   

   521

   

   

   357

   

   

   474Exploration and project evaluation before depreciation and exploration tax credits

   

   7,926

   

   

   3,186

   

   

   8,605Depreciation

   

   41

   

   

   71

   

   

   229Exploration tax credits, including adjustments1

   

   (532

   )

   

   515

   

   

   (959

   )7,435

   

   

   3,772

   

   

   7,875
 1

   In 2012, the Corporation received a draft assessment from the Quebec tax authorities, who were not allowing the Corporation to claim certain exploration tax credits for years 2009 to 2011, and an amount of $4,141 initially recorded as exploration tax credits receivable was then reversed and reflected as an increase to property, plant and equipment. In the first quarter of 2014, the Corporation received the final notice of reassessment and settled the financial reporting for this contingency by recording a further $302 reduction of the exploration tax credits and an interest expense of $210, included in « administration ».In the first quarter of 2015, the Corporation received the final notice of reassessment from the Quebec tax authorities, who were not allowing the Corporation to claim certain exploration tax credits for the year 2012. Consequently, the Corporation recorded a $350 reduction of the exploration tax credits. 6.

   Administration The administration expenses include the following items: 2015

   

   

   2014

   

   

   2013$

   

   

   $

   

   

   $Salaries, director’ fees and related benefits

   

   3,678

   

   

   2,484

   

   

   3,320Severance compensation to Executives and other employees

   

   902

   

   

   1,2691

   

   

   269Share-based compensation

   

   2,081

   

   

   1,506

   

   

   1,887Consultants

   

   1,203

   

   

   851

   

   

   1,176Depreciation

   

   151

   

   

   158

   

   

   211Miscellaneous

   

   1,794

   

   

   1,359

   

   

   6519,809

   

   

   7,627

   

   

   7,514
 1

   Severance compensation is related to the departure of the President and Chief Executive Officer and the Executive Vice-President and Chief Financial Officer and comprises $945 of cash severance and $324 of share-based compensation expense. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 20


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7.

   Employees and directors remuneration 7.1.

   Employees and directors remuneration Expenses recognised for employees and directors remuneration are presented below: 2015

   

   

   2014

   

   

   2013$

   

   

   $

   

   

   $Salaries and related benefits

   

   45,902

   

   

   40,432

   

   

   44,497Severance compensation

   

   902

   

   

   1,050

   

   

   700Directors’ fees and related benefits

   

   463

   

   

   515

   

   

   563Share-based compensation

   

   2,258

   

   

   2,008

   

   

   2,521Defined contribution plans

   

   1,240

   

   

   1,085

   

   

   1,220State plans

   

   1,125

   

   

   1,115

   

   

   1,28251,890

   

   

   46,205

   

   

   50,783Less: salaries capitalized in property, plant and equipment

   

   5,767

   

   

   5,297

   

   

   8,68046,123

   

   

   40,908

   

   

   42,103
  7.2.

   Share-based compensation a)

   In effect since May 2012, the Corporation’s long-term incentive plan (the “New Plan”) permits the granting of options, restricted share units (“RSUs”), share appreciation rights (“SARs”) and retention awards (“Retention Awards”) to directors, officers, other employees, consultants and service providers providing ongoing services to the Corporation. The exercise price of each option granted is the market price of the Corporation’s stock on the Toronto Stock Exchange, on the day prior to the grant. Currently the policy of the Corporation is to issue options that vest one third one year after the grant date, one third on the second anniversary of the grant date, and one third at the third anniversary of the grant date and expire five years after the date of grant. In previous years, options vested as above or in tranches of 20% beginning one year after the grant date, thereafter vesting cumulatively on every anniversary date over a length of four years, and expire six years after the date of grant; or options that vested 20% on the grant date and vest cumulatively thereafter on every anniversary date over a length of four years, and expire five years after the date of grant; or options that vested on August 8, 2016 and expire five years after the date of grant; or options that vest 100% on the grant date and expire five years after the date of grant. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 21


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A summary of the status of options outstanding under the Corporation’s New Plan and changes during the years 2015, 2014 and 2013 is presented below: 2015

   

   

   

   2014

   

   

   

   2013Weighted

   

   

   

   Weighted

   

   

   

   WeightedNumber

   

   average

   

   Number

   

   average

   

   Number

   

   averageof options

   

   exercise

   

   of options

   

   exercise

   

   of options

   

   exercise(in thousands)

   

   price

   

   (in thousands)

   

   price

   

   (in thousands)

   

   price$

   

   

   

   $

   

   

   

   $Options outstanding,beginning of year

   2,345

   

   3.14

   

   2,505

   

   2.64

   

   900

   

   5.05Granted

   403

   

   3.90

   

   879

   

   3.38

   

   1,639

   

   1.30Exercised

   (439

   )

   1.70

   

   (605

   )

   1.65

   

   -

   

   -Forfeited

   (169

   )

   2.76

   

   (434

   )

   2.84

   

   (34

   )

   3.54Optionsoutstanding,end of year

   2,140

   

   3.61

   

   2,345

   

   3.14

   

   2,505

   

   2.64Exercisable options,end of year

   849

   

   3.78

   

   876

   

   2.87

   

   854

   

   2.36
 The following table summarizes information about the options issued under the Corporation’s New Plan at December 31, 2015: Options outstanding at

   Exercisable options atDecember 31, 2015

   December 31, 2015WeightedExercise

   

   

   

   average

   

   

   Weighted

   

   

   

   

   

   Weightedprice

   Number of

   

   

   remaining

   

   

   average

   

   

   Number of

   

   

   averageoptions

   

   

   contractual life

   

   

   exercise price

   

   

   options

   

   

   exercise price(in thousands)

   

   

   (years)

   

   

   $

   

   

   (in thousands)

   

   

   $$1.08 to $1.29

   397

   

   

   2.9

   

   

   1.15

   

   

   132

   

   

   1.08$2.19 to $2.34

   94

   

   

   3.6

   

   

   2.31

   

   

   34

   

   

   2.30$2.51 to $3.31

   330

   

   

   3.5

   

   

   2.94

   

   

   201

   

   

   2.75$3.73 to $4.36

   967

   

   

   3.8

   

   

   3.89

   

   

   271

   

   

   3.87$6.57

   352

   

   

   2.4

   

   

   6.57

   

   

   211

   

   

   6.572,140

   

   

   3.4

   

   

   3.61

   

   

   849

   

   

   3.78
 The weighted average market share price at the date of exercise was $3.97 in 2015 ($2.88 in 2014). During the year ended December 31, 2015, the Corporation granted 16,200 restricted share units (186,900 in 2014) at a weighted average price of $4.08 per share ($3.73 per share in 2014) and 9,700 restricted share units were forfeited at a weighted average price of $3.73 per share. Each restricted share unit is equal in value to one common share of the Corporation at the date of grant. The fair value is amortized over the vesting period of three years. The number of restricted share units outstanding as at December 31, 2015, totaled 193,400 units. Two types of restricted share units are issued: (1) restricted share units that vest in thirds one year after the grant date, then vest cumulatively thereafter on every anniversary date over a total length of three years, (2) restricted share units that fully vest at the earliest of three years after the grant date or upon the Director leaving the Board. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 22


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b)

   The Corporation had a Stock Option Purchase Plan (the “Initial Plan”) under which options to acquire common shares were granted to its directors, officers, employees and non-employees. The exercise price of each option was determined by the market price of the Corporation’s stock on the Toronto Stock Exchange, on the day prior to the grant, and the maximum term of the options granted was ten years. 20% of the options were vested on the grant date and vested cumulatively thereafter on every anniversary date over a length of four years. The Corporation ended the Initial Plan in 2012. Outstanding options that were issued under this previous plan, will continue to have the same terms and conditions as when they were initially issued. A summary of the status, in 2015, 2014 and 2013, of the options outstanding under the Corporation’s Initial Plan, and changes during the years then ended, is presented below: 2015

   

   

   

   2014

   

   

   

   2013Weighted

   

   

   

   Weighted

   

   

   

   WeightedNumber

   

   average

   

   Number

   

   average

   

   Number

   

   averageof options

   

   exercise

   

   of options

   

   exercise

   

   of options

   

   exercise(in thousands)

   

   price

   

   (in thousands)

   

   price

   

   (in thousands)

   

   price$

   

   

   

   $

   

   

   

   $Options outstanding,beginning of year

   567

   

   7.62

   

   935

   

   6.93

   

   1,378

   

   6.44Exercised

   -

   

   -

   

   (25

   )

   3.55

   

   (30

   )

   2.07Forfeited

   (50

   )

   10.87

   

   (193

   )

   7.76

   

   (312

   )

   6.76Expired

   (457

   )

   6.89

   

   (150

   )

   3.79

   

   (101

   )

   2.24Optionsoutstanding,end of year

   60

   

   10.53

   

   567

   

   7.62

   

   935

   

   6.93Exercisable options,end of year

   60

   

   10.53

   

   444

   

   6.60

   

   629

   

   5.71
 The following table summarizes information about the options issued under the Corporation’s Initial Plan at December 31, 2015: Exercisable options atOptions outstanding at December 31, 2015

   December 31, 2015Exercise

   

   

   Weightedprice

   

   

   average

   

   Weighted

   

   

   

   WeightedNumber

   

   remaining

   

   average

   

   Number

   

   averageof options

   

   contractual

   

   exercise price

   

   of options

   

   exercise price(in thousands)

   

   life (years)

   

   $

   

   (in thousands)

   

   $$6.86

   12

   

   0.5

   

   6.86

   

   12

   

   6.86$10.87 to $12.03

   48

   

   0.9

   

   11.45

   

   48

   

   11.4560

   

   0.8

   

   10.53

   

   60

   

   10.53
 The weighted average market share price at the date of exercise was $3.69 in 2014 and $3.25 in 2013. c)

   In March 2012, the Corporation signed agreements with several employees considered as key personnel. These agreements incorporate a retention payment (“Retention Awards”) provided certain conditions are met by the employee, most notably that the employee continues his or her employment with the Corporation until March 2017. These retention payments would be payable in 2017 in either of the Corporation’s common shares or cash, at the discretion of the employee, with the number of common shares to be determined by the current value of the common shares at the time of payment. As at December 31, 2015, the total amount that could be paid as Retention Awards under these agreements is 1.75 million dollars (2.0 million dollars in 2014, 2.25 million dollars in 2013). The cost recorded in 2015 is $235 ($456 in 2014, $742 in 2013) and the liability to this effect amounts to $1,234 as at December 31, 2015 ($982 in 2014, $711 in 2013), which corresponds to the best estimate of the amount to be paid relating to the Retention Awards, based on estimated forfeitures and a 1.3% discount rate. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 23


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d)

   In addition, 800,000 inducement options were granted on October 16, 2014 to the incoming CEO. In compliance with TSX rules, these are considered outside of the Corporation’s plan. These options vested in thirds on December 1st, 2015, and thereafter on December 1st 2016 and 2017, and expire five years after the date of grant. These options have an exercise price of $2.46. As at December 31, 2015, all options are outstanding and 266,666 are exercisable. e)

   During 2015, the Corporation granted 403,000 share options to directors, officers and employees (1,679,100 in 2014 and 1,639,000 in 2013). The weighted average fair value of these share options at the grant date, calculated using the Black-Scholes option pricing model was $1.81 ($1.45 in 2014 and $0.58 in 2013). The compensation costs were calculated using the Black-Scholes option pricing model with the following assumptions: 2015

   2014

   2013Exercise price

   $3.90

   $2.99

   $1.34Share price

   $3.90

   $2.99

   $1.34Risk-free interest rate

   0.7%

   1.4%

   1.5%Expected life

   3.7 years

   3.9 years

   3.8 yearsExpected volatility

   61%

   63%

   56%Expected dividend yield

   0.0%

   0.0%

   0.0%
 The expected underlying volatility was based on the historical data of the Corporation’s shares over a period equivalent to the expected average life of the options. The Corporation may grant rights to acquire shares totalling up to 10% of the total issued and outstanding common shares of the Corporation at the time of the granting. Options issued outside of plans are not accounted for in this calculation. As of December 31, 2015, a total of 3,634,366 options could still be issued. 8.

   Loss (gain) on disposal of long-term assets The loss (gain) on disposal of long-term assets includes the following items: 2015

   

   2014

   

   2013$

   

   $

   

   $Exploration mining assets

   -

   

   493

   

   -Mining equipment

   (102

   )

   146

   

   105(102

   )

   639

   

   105
  9.

   Other revenues Other revenues include, among others, custom milling, revenues from the sale of scrap material and rental revenue. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 24


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10.

   Financial expenses The financial expenses consist of the following items: 2015

   

   2014

   

   2013$

   

   $

   

   $Accretion expense – asset retirement obligations

   82

   

   111

   

   81Interest on finance lease obligations1

   -

   

   -

   

   17Financing expenses (note 20 b)

   -

   

   -

   

   1,16582

   

   111

   

   1,263
 1

   The interest on operating mine finance lease obligations is included in operating costs and amounted to $191 in 2015 (in 2014, $161 was included in operating costs and in 2013, $14 was recorded as property, plant and equipment and a financial expense of $52 was included in operating costs). 11.

   Financial revenues The financial revenues consist of the following items: 2015

   

   2014

   

   2013$

   

   $

   

   $Interest on cash and cash equivalents

   686

   

   409

   

   405Gain on disposal of shares of publicly-traded companies

   -

   

   -

   

   12Foreign exchange gain

   101

   

   27

   

   109787

   

   436

   

   526
  12.

   Mining and income taxes Income taxes Mining and income tax expense consists of: 2015

   

   2014

   

   2013$

   

   $

   

   $Current taxes

   1,698

   

   78

   

   785Deferred taxes

   99

   

   427

   

   7,2091,797

   

   505

   

   7,994
  RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 25


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The income tax expense attributable to earnings from continuing operations differs from the amounts computed by applying the combined federal and provincial income tax rate of 26.68% (26.71% in 2014 and 26.71% in 2013) to earnings before mining and income taxes as a result of the following: 2015

   

   2014

   

   2013$

   

   $

   

   $Earnings (loss) before mining and income taxes

   8,585

   

   8,687

   

   (25,168

   )Tax expense (recovery) at combined statutory rate

   2,290

   

   2,320

   

   (6,722

   )Increase (decrease) in mining and income taxes resulting from:Resource allowance deduction

   (408

   )

   (354

   )

   (104

   )Deductible mining taxes

   716

   

   (130

   )

   58Recording of deferred income tax assets unrecognized previously

   (829

   )

   (2,877

   )

   -Impact of the change in tax rates

   (109

   )

   1,418

   

   410Adjustment of previously deferred taxes

   (1,217

   )

   (327

   )

   311Non deductible expenses

   554

   

   492

   

   608Deferred income tax assets unrecognized on temporary differences during the year

   -

   

   71

   

   13,705Other

   (35

   )

   12

   

   3Income taxes

   962

   

   625

   

   8,269Mining tax

   835

   

   (120

   )

   (275

   )Total mining and income tax expense

   1,797

   

   505

   

   7,994
 During the year ended in 2014 and 2015, the Corporation amended prior years’ mining tax returns following the refusal by the Quebec tax authorities to allow the payment of credits relating to resources which had been previously claimed. The amendments to tax attributes results in the Corporation now claiming the payment of $2.1 million for credits on duties refundable for losses for prior years under the Mining Tax Act (Quebec). The calculation of the Corporation’s credits is subject to review by government authorities that may disallow certain expenditures based on their interpretation of tax legislation and regulations and the tax treatment of such expenditures cannot be finally determined until notices of assessment and payments have been received. The Corporation decided to take a conservative approach and to account for only a portion of the claimed amounts as income and mining tax assets. Differences arising between the actual results following final resolution of some of these claims and the assumptions made could necessitate adjustments to the credit on duties refundable for losses and income tax expenses in future periods. Balance

   

   

   

   BalanceDecemberJanuary 1,

   

   Recognized

   

   31,2015

   

   in net income

   

   2015$

   

   $

   

   $Deferred income and mining taxes assets (liabilities)Property, plant and equipment – creditor

   (2,521

   )

   (133

   )

   (2,654

   )Property, plant and equipment – debtor

   259

   

   (1

   )

   258Asset retirement obligations

   176

   

   24

   

   200Exploration credits

   (265

   )

   1

   

   (264

   )Severance pay

   25

   

   10

   

   35(2,326

   )

   (99

   )

   (2,425

   )Presented in the consolidated statementof financial position:Deferred income and mining tax assets

   

   

   

   

   -Deferred income and mining tax liabilities

   

   

   

   

   (2,425

   )
  RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 26


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Balance

   

   

   

   BalanceJanuary 1,

   

   Recognized

   

   December 31,2014

   

   in net income

   

   2014$

   

   $

   

   $Deferred income and mining taxes assets (liabilities)Property, plant and equipment - creditor

   (2,088

   )

   (433

   )

   (2,521

   )Property, plant and equipment - debtor

   263

   

   (4

   )

   259Asset retirement obligations

   188

   

   (12

   )

   176Exploration credits

   (274

   )

   9

   

   (265

   )Severance pay

   12

   

   13

   

   25(1,899

   )

   (427

   )

   (2,326

   )Presented in the consolidated statementof financial position:Deferred income and mining tax assets

   

   

   

   

   -Deferred income and mining tax liabilities

   

   

   

   

   (2,326

   )
 Deferred tax assets and liabilities The following differences between the carrying amounts and tax bases from timing differences, unused tax losses and unused tax credits give rise to the following recognized deferred tax assets and liabilities: December 31, 2015Deferred tax

   

   Deferred taxassets

   

   liabilities

   

   NetRecognized deferred tax assets and liabilitiesProperty, plant and equipment

   258

   

   (2,654

   )

   (2,396

   )Asset retirement obligations

   200

   

   -

   

   200Exploration credits

   -

   

   (264

   )

   (264

   )Severance pay

   35

   

   -

   

   35Recognized deferred tax assets and liabilities

   493

   

   (2,918

   )

   (2,425

   )
  December 31, 2014Deferred tax

   

   Deferred taxassets

   

   liabilities

   

   NetRecognized deferred tax assets and liabilitiesProperty, plant and equipment

   259

   

   (2,521

   )

   (2,262

   )Asset retirement obligations

   176

   

   -

   

   176Exploration credits

   -

   

   (265

   )

   (265

   )Severance pay

   25

   

   -

   

   25Recognized deferred tax assets and liabilities

   460

   

   (2,786

   )

   (2,326

   )
  RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 27


---

The Corporation has the following timing differences: December 31, 2015QuebecMiningFederal

   

   Provincial

   

   Duties$

   

   $

   

   $Property, plant and equipment

   67,352

   

   114,275

   

   1,237Asset retirement obligations

   9,881

   

   9,881

   

   3,727Deductible future mining taxes

   2,425

   

   2,425

   

   -Severance pay

   2,209

   

   2,209

   

   749Share issue costs

   2,697

   

   2,697

   

   -84,564

   

   131,487

   

   5,713
 The ability to realize the tax benefits is dependent upon a number of factors, including the future profitability of operations. Deferred tax assets are recognized only to the extent that it is more likely than not that the timing differences will reverse, that sufficient taxable profits will be available to allow the asset to be recovered. Accordingly, all deferred tax assets have not been recognized, these deferred tax assets not recognized equal an amount of $24,922. December 31, 2014QuebecMiningFederal

   

   Provincial

   

   Duties$

   

   $

   

   $Property, plant and equipment

   70,553

   

   125,839

   

   32,719Asset retirement obligations

   8,061

   

   8,061

   

   2,569Deductible future mining taxes

   2,326

   

   2,326

   

   -Severance pay

   1,931

   

   1,931

   

   667Share issue costs

   1,254

   

   1,254

   

   -84,125

   

   139,411

   

   35,955
 The ability to realize the tax benefits is dependent upon a number of factors, including the future profitability of operations. Deferred tax assets are recognized only to the extent that it is more likely than not that the timing differences will reverse, that sufficient taxable profits will be available to allow the asset to be recovered. Accordingly, some deferred tax assets have not been recognized, these deferred tax assets not recognized equal an amount of $30,409. 13.

   Net loss from discontinued operation At the end of November 2012, management made the decision to cease commercial gold production at the Francoeur Mine. This Mine was part of the Corporation’s Quebec segment. As a result, revenues, expenses and losses relating to the discontinuation of this operation were segregated from the Corporation’s results from continuing operations, and are shown as a single line item in the consolidated income statement. RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 28


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Operational results for the Francoeur Mine which closed on November 30, 2012 and charges related to the dismantling and closure after this date are summarized as follows: 2015

   

   2014

   

   2013$

   

   $

   

   $RevenuesRevenues

   -

   

   -

   

   1,837Cost of sales

   -

   

   -

   

   1,807Gross profit

   -

   

   -

   

   30Other expenses (revenues)Loss on disposal of long-term assets

   -

   

   -

   

   88Adjustment to estimated recoverable value of remaining Francoeur Mine assets

   -

   

   -

   

   867Dismantling costs

   -

   

   -

   

   182Other revenues

   -

   

   -

   

   (9

   )-

   

   -

   

   1,128Operating loss

   -

   

   -

   

   (1,098

   )Net loss from discontinued operation

   -

   

   -

   

   (1,098

   )
 Cash flows used in discontinued operation 2015

   

   2014

   

   2013$

   

   $

   

   $Cash flows used in operating activities

   -

   

   -

   

   (5,271

   )Cash flows from investing activities

   -

   

   -

   

   825-

   

   -

   

   (4,446

   )
  14.

   Earnings per share Both the basic and diluted earnings per share have been calculated using net earnings attributable to Richmont Mines shareholders as the numerator. The weighted average number of shares for the purposes of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: 2015

   

   2014

   

   2013Weighted average number of shares used in basic earnings per share (in thousands)

   56,936

   

   45,261

   

   39,594Shares deemed to be issued in respect of stock option purchase plans, warrants and RSUs (in thousands)

   761

   

   439

   

   -Weighted average number of shares used in diluted earnings per share (in thousands)

   57,697

   

   45,700

   

   39,594
  RICHMONT MINES INC.
      FINANCIAL STATEMENTS|Page 29


---

15.

   Receivables
 The receivables include the following items: December 31,

   

   December 31,2015

   

   2014$

   

   $Taxes receivable

   3,789

   

   2,574Prepayments and deposits

   821

   

   298Others

   501

   

   2675,111

   

   3,139
  16.

   Inventories The inventories include the following items: December 31,

   

   December 31,2015

   

   2014$

   

   $Precious metals

   1,313

   

   2,067Ore

   5,328

   

   7,939Supplies

   4,644

   

   3,80811,285

   

   13,814
 During the year ended December 31, 2015, a write-down of inventories of $61 was recognized as an expense (write-down of inventories of $41 in 2014 and write-down of inventories of $332 in 2013, including $80 from discontinued operation). There was no reversal of write-down in 2015, 2014 and 2013. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 30


---

17.

   Property, plant and equipment
 The property, plant and equipment includes the following items: Mining sites in production

   Corporate office and others

   TotalMining properties

   

   Development costs

   

   Buildings

   

   Equipment

   

   Total

   

   Lands, buildings and leasehold improvements

   

   Equipment and rolling stock

   

   Total$

   

   $

   

   $

   

   $

   

   $

   

   $

   

   $

   

   $

   

   $Gross carrying amountBalance at January 1, 2015

   5,111

   

   112,710

   

   15,529

   

   38,472

   

   171,822

   

   1,621

   

   1,074

   

   2,695

   

   174,517Additions

   -

   

   29,266

   

   15,344

   

   15,218

   

   59,828

   

   15

   

   91

   

   106

   

   59,934Disposals and write-off

   -

   

   -

   

   (20

   )

   (405

   )

   (425

   )

   (5

   )

   (74

   )

   (79

   )

   (504

   )Transfers

   -

   

   -

   

   1

   

   14

   

   15

   

   (1

   )

   (14

   )

   (15

   )

   -Adjustments to the asset retirement obligations

   -

   

   906

   

   -

   

   -

   

   906

   

   -

   

   -

   

   -

   

   906Balance at December 31, 2015

   5,111

   

   142,882

   

   30,854

   

   53,299

   

   232,146

   

   1,630

   

   1,077

   

   2,707

   

   234,853Depreciation and depletionBalance at January 1, 2015

   1,270

   

   53,794

   

   9,221

   

   21,123

   

   85,408

   

   456

   

   456

   

   912

   

   86,320Depreciation and depletion

   631

   

   15,705

   

   2,598

   

   5,081

   

   24,015

   

   109

   

   74

   

   183

   

   24,198Disposals and write-off

   -

   

   -

   

   (20

   )

   (361

   )

   (381

   )

   -

   

   (25

   )

   (25

   )

   (406

   )Balance at December 31, 2015

   1,901

   

   69,499

   

   11,799

   

   25,843

   

   109,042

   

   565

   

   505

   

   1,070

   

   110,112**Carrying amount at****December 31, 2015**

   3,210

   

   73,383

   

   19,055

   

   27,456

   

   123,104

   

   1,065

   

   572

   

   1,637

   

   124,741
  RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 31


---

Mining sites in production

   Corporate office and others

   **Advanced****exploration projects**

   TotalMining properties

   

   Development costs

   

   Buildings

   

   Equipment

   

   Total

   

   Lands, buildings and leasehold improvements

   

   Equipment and rolling stock

   

   Total$

   

   $

   

   $

   

   $

   

   $

   

   $

   

   $

   

   $

   

   $

   

   $Gross carrying amountBalance at January 1, 2014

   1,965

   

   76,888

   

   13,443

   

   36,039

   

   128,335

   

   2,211

   

   1,468

   

   3,679

   

   16,444

   

   148,458Additions

   3,146

   

   15,397

   

   1,433

   

   2,280

   

   22,256

   

   -

   

   -

   

   -

   

   4,948

   

   27,204Disposals and write-off

   -

   

   -

   

   -

   

   (420

   )

   (420

   )

   (590

   )

   (330

   )

   (920

   )

   -

   

   (1,340

   )Exploration tax credits

   -

   

   (72

   )

   -

   

   -

   

   (72

   )

   -

   

   -

   

   -

   

   -

   

   (72

   )Transfers

   -

   

   20,230

   

   653

   

   573

   

   21,456

   

   -

   

   (64

   )

   (64

   )

   (21,392

   )

   -Adjustments to the asset retirement obligations

   -

   

   267

   

   -

   

   -

   

   267

   

   -

   

   -

   

   -

   

   -

   

   267Balance at December 31, 2014

   5,111

   

   112,710

   

   15,529

   

   38,472

   

   171,822

   

   1,621

   

   1,074

   

   2,695

   

   -

   

   174,517Depreciation and depletionBalance at January 1, 2014

   1,027

   

   41,391

   

   6,520

   

   15,049

   

   63,987

   

   393

   

   400

   

   793

   

   -

   

   64,780Depreciation and depletion

   243

   

   12,403

   

   2,701

   

   6,251

   

   21,598

   

   127

   

   83

   

   210

   

   -

   

   21,808Disposals and write-off

   -

   

   -

   

   -

   

   (197

   )

   (197

   )

   (64

   )

   (7

   )

   (71

   )

   -

   

   (268

   )Transfers

   -

   

   -

   

   -

   

   20

   

   20

   

   -

   

   (20

   )

   (20

   )

   -

   

   -Balance at December 31, 2014

   1,270

   

   53,794

   

   9,221

   

   21,123

   

   85,408

   

   456

   

   456

   

   912

   

   -

   

   86,320**Carrying amount at****December 31, 2014**

   3,841

   

   58,916

   

   6,308

   

   17,349

   

   86,414

   

   1,165

   

   618

   

   1,783

   

   -

   

   88,197
 During the year ended December 31, 2014, the Corporation started mining the deep zone of Island Gold Mine. As a result, assets for this project were transferred from “advanced exploration projects” classification into the “Mining Sites in Production” classification. During the year ended December 31, 2015, the Beaufor Mine’s average depletion rate was 56 dollars per ounce sold (96 dollars in 2014), the Island Gold Mine’s average depletion rate was 349 dollars per ounce sold (248 dollars in 2014) and the Monique Mine’s average depletion rate was 153 dollars per ounce sold (257 dollars in 2014). Camflo Mill had an average depletion rate of 3.75 dollars per processed tonnes for the year ended December 31, 2015 (3.06 dollars in 2014). 17.1. Impairment loss Property, plant and equipment that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is determined on the basis of value-in-use. For the purpose of this test, the Corporation has determined that each mine site represented a cash-generating unit. For the year ended December 31, 2013, considering a reduction in proven and probable reserves at the W Zone Mine, management determined that an impairment loss of $13,472 was required. A discount rate of 9% was used by the Corporation to determine the value-in-use. Value-in-use was estimated at $3,087. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 32


---

18.

   Long-term debt
 Long-term debt includes the following financial liabilities: December 31,

   

   December 31,2015

   

   2014$

   

   $Royalty payments payable a)

   1,000

   

   2,000Finance lease obligations b)

   6,057

   

   2,912Contract payment holdbacks c)

   1,500

   

   1,116Long-term share-based compensation (note 7.2 c)

   1,234

   

   982Closure allowance d)

   537

   

   51310,328

   

   7,523Current portion

   3,064

   

   1,7997,264

   

   5,724
  a)

   On August 5, 2014, the Corporation signed a definitive agreement to acquire the outstanding 31% ownership of four patented claims on the Island Gold Mine property, thereby increasing its ownership of these claims to 100% from 69% previously. The 31% ownership held by the third party was acquired by the Corporation in return for a 3% net smelter return (NSR) royalty that is payable on 100% of mineral production from the four claims. As part of this agreement, the Corporation made an advance royalty payment of $1,000 at the closing of the transaction, made a payment of $1,000 on January 3, 2015 and made an additional payment of $1,000 on January 3, 2016. In the event that there is production from these claims, advance royalty payments will continue, and will decrease to $300 as of January 3, 2017, and will be paid annually until such time as a total of $5,100 has been paid in royalties (including advance royalties) to the third party, after which advance royalty payments will cease. All advance royalty payments will be credited against any future NSR payments.b)

   During the year ended December 31, 2015, the Corporation acquired rolling stock at a cost of $4,685 via six finance leases ($4,402 via five finance leases in 2014). The Corporation benefits from an option of a lower purchase price at the end of these contracts. The net carrying value of the rolling stock under finance leases amounts to $7,020 ($3,300 in 2014). Future minimum finance lease payments at December 31, 2015 are as follows: Minimum lease payments due2016

   

   2017

   

   2018

   

   2019

   

   TotalDecember 31, 2015:Lease payments

   2,306

   

   2,633

   

   937

   

   632

   

   6,508Finance charges

   (242

   )

   (142

   )

   (52

   )

   (15

   )

   (451

   )Net present values

   2,064

   

   2,491

   

   885

   

   617

   

   6,057
  c)

   Contract payment holdbacks represent amounts that are payable to suppliers for work that has already been completed. The holdback is payable upon completion of the contract, once the Corporation has deemed that the work meets requirements or when the contract is terminated. As at December 31, 2015, the Corporation has not yet deemed that the work done by the supplier meets requirements and estimates that the payment of the holdback will not occur in the next year (note 24).d)

   This closure allowance is payable upon the closure of the Beaufor Mine anticipated to be in 2018. Although no specific date or timeframe has been established for the closure of the mine, this closure allowance has been established using the best estimation of the amount that would be payable when the division will close. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 33


---

19.

   Asset retirement obligations
 The Corporation’s production and exploration activities are subject to various federal and provincial laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Corporation conducts its operations so as to protect public health and the environment. The Corporation has recorded the asset retirement obligations of its mining sites on the basis of management’s best estimates of future costs, based on information available on the reporting date. Best estimates of future costs are the amount the Corporation would reasonably pay to settle its obligation on the closing date. Future costs are discounted using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the liability. Such estimates are subject to change based on modifications to laws and regulations or as new information becomes available. a)

   Changes in asset retirement obligations
 The following table sets forth the variation in the asset retirement obligations for the years ended December 31, 2015 and 2014: 2015

   

   2014$

   

   $Balance, beginning of year

   8,237

   

   7,933Accretion expense

   81

   

   111Payments – Monique Mine

   (135

   )

   -Payments – Francoeur Mine

   (22

   )

   (74

   )Changes to estimated cash flow and payment schedules at operating sites

   906

   

   267Changes to estimated cash flow and payment schedules at closed sites

   814

   

   -Balance, end of year

   9,881

   

   8,237
  b)

   Information used in the calculation of obligations
 The rate used to determine the future value of the obligations is based on the expected life of the operation and varies between 3.0% and 3.5% (between 3.0% and 3.5% in 2014) while the rate reflecting the current market assessments (adjusted for the risks specific to this liability) used to determine the present value of the obligations varies between 0.6% and 1.3% (between 1.0% and 1.6% in 2014). The payments schedule was determined by taking into account the proven and probable reserves (and a portion of measured and indicated resources for Island Gold Mine), the estimated annual production level and the estimated mine life. The following table sets forth the estimated cash flows of future retirement costs used in the calculation of the asset retirement obligations for the year ended December 31, 2015: Total amount

   

   Anticipatedof the estimated

   

   cash flowscash flows

   

   payment schedule2015

   $Island Gold Mine

   2,217

   

   2023Beaufor Mine

   1,386

   

   2019Camflo Mill

   4,289

   

   2019Monique Mine

   1,541

   

   2016 and afterFrancoeur Mine

   849

   

   2016 and after10,282
 In 2015, the schedules of the estimated cash flows of future retirement costs of the Beaufor Mine, Camflo Mill and the Island Gold Mine were revised to take into account their updated estimated reserves (and a portion of resources for Island Gold Mine) and their estimated mine life. In 2014, the schedules of the estimated cash flows of future retirement costs of the Beaufor Mine and the Island Gold Mine were revised to take into account their updated estimated reserves and their estimated mine life. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 34


---

c)

   Distribution of the asset retirement obligations
 The following table sets forth the distribution of the asset retirement obligations: December 31,

   

   December 31,2015

   

   2014$

   

   $Camflo Mill

   4,154

   

   3,731Island Gold Mine

   2,000

   

   1,937Monique Mine

   1,536

   

   976Beaufor Mine

   1,342

   

   846Francoeur Mine

   849

   

   7479,881

   

   8,237Current portion

   260

   

   1949,621

   

   8,043
  d)

   Restricted deposits and letters of credit
 Most of the restricted deposits relate specifically to site restoration. As at December 31, 2015, the Corporation has $117 in restricted deposits with the Quebec government, $708 in restricted deposits with the Ontario government and a credit facility is available to the Corporation up to an amount of $5,900 for the issuance of letters of credit as guarantees for the settlement of asset retirement obligations. The credit facility has a fixed annual fee of 0.95% (0.95% in 2014). The following table provides the allocation of restricted deposits and letters of credit issued as at December 31, 2015: 2015

   

   2014$

   

   $Restricted depositsIsland Gold Mine (Island Gold Deep and Lochalsh property)

   708

   

   601Beaufor Mine

   107

   

   107Other

   10

   

   10825

   

   718Other

   6

   

   298831

   

   1,016Letters of credit1Camflo Mill

   2,505

   

   1,332Island Gold Mine (Kremzar property)

   979

   

   979Francoeur Mine

   471

   

   314Monique Mine

   948

   

   948Beaufor Mine

   488

   

   -5,391

   

   3,573
 1

   Since June 30, 2014, letters of credit have been secured by a first rank movable mortgage for a maximum amount of $6,785, guaranteed by equipment and rolling stock which has a net carrying value of $21,151 ($14,667 in 2014). Prior to that, letters of credit were secured by the guaranteed investment certificate. In light of a modification to the Quebec Mining Law, the financial guarantee for each of the Corporation’s Quebec mining sites must now cover 100% of the anticipated restoration work costs for each mining site. Consequently, the Corporation increased the letters of credit issued as financial guarantee by $1,818 in 2015 and must increase the financial guarantees by $1,190 in 2016. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 35


---

As at December 31, 2014, the Corporation had guaranteed the restoration of its mining sites by $117 in restricted deposits with the Quebec government, $601 in restricted deposits with the Ontario government and by the pledge of letters of credit amounting to $3,573. 20.

   Share capital
 Authorized: Unlimited number of common shares with no par value Number

   

   2015

   

   Number

   

   2014

   

   Number

   

   2013of shares

   

   Amount

   

   of shares

   

   Amount

   

   of shares

   

   Amount(thousands)

   

   $

   

   (thousands)

   

   $

   

   (thousands)

   

   $Issued and paid: Common sharesBalance, beginning of year

   48,276

   

   144,535

   

   39,596

   

   132,202

   

   39,566

   

   132,113Issue of shares for cash a)Common

   9,625

   

   38,500

   

   8,050

   

   11,673

   

   -

   

   -Exercise of stock options

   439

   

   1,088

   

   630

   

   1,594

   

   30

   

   89Common shares issue costs, net of future tax asset a)

   -

   

   (2,411

   )

   -

   

   (934

   )

   -

   

   -Balance, end of year

   58,340

   

   181,712

   

   48,276

   

   144,535

   

   39,596

   

   132,202
  a)

   Issue of shares
 On February 11, 2015, the Corporation issued a total of 9.625 million common shares on a bought-deal basis through a syndicate of underwriters, at a price of $4.00 per share. This included the entire over-allotment option of 1.125 million common shares, and generated aggregate gross proceeds of $38,500. A share issue cost of $2,411 was incurred relating to the issuance of common shares. A deferred tax asset of $637 related to the share issue cost was not recognized. In 2015, the Corporation issued 438,740 common shares (630,120 in 2014 and 30,000 in 2013) following the exercise of stock options and received cash proceeds in the amount of $745 ($1,089 in 2014 and $62 in 2013). Contributed surplus was reduced by $343 ($505 in 2014 and $27 in 2013) which represents the fair value of the exercised stock options. On April 23, 2014, the Corporation issued a total of 8.05 million common shares on a bought-deal basis through a syndicate of underwriters, at a price of $1.45 per share. This included the entire over-allotment option of 1.05 million shares, and generated aggregate gross proceeds of $11,673. A share issue cost of $934 was incurred relating to the issuance of common shares. A deferred tax asset of $249 related to the share issue cost was not recognized. b)

   Warrants
 During the year ended December 31, 2013, the Corporation established a Senior Secured Credit Facility for up to US$50.0 million. By mutual agreement between the Corporation and the lender, the Facility was terminated on December 20, 2013. The Corporation incurred financing costs of $1,165 related to this Facility, which was recorded as financial expenses. As part of the terms of the Facility, 812,500 warrants were issued to the lender, each warrant allowing for the acquisition of one common share at a price of $2.45 prior to August 2016. The method used to recognize the value of these warrants is the fair value method which at the grant date, calculated using the Black and Scholes pricing model, is $0.54 per warrant. Consequently, an amount of $439 was registered in shareholder’s equity in contributed surplus and the counterpart as financing costs. The assumptions used in the Black & Scholes model were a strike price of $2.45, a stock price of $1.77, a risk-free interest rate of 1.18%, an expected life of 3 years, an expected volatility of 59% and an expected dividend yield of 0%. The expected underlying volatility was based on the historical volatility of the Corporation’s shares over a period of 3 years. As at December 31, 2015, 2014 and 2013, 812,500 warrants are issued and exercisable. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 36


---

21.

   Consolidated statements of cash flows
  2015

   

   2014

   

   2013$

   

   $

   

   $Net change in non-cash working capital itemsReceivables

   (1,969

   )

   (207

   )

   (98

   )Exploration tax credits receivable

   895

   

   442

   

   (959

   )Inventories

   2,529

   

   (4,739

   )

   (1,311

   )Payables, accruals and provisions

   6,669

   

   (2,406

   )

   1,7388,124

   

   (6,910

   )

   (630

   )Supplemental informationTransactions with no impact on cash flows:Property, plant and equipment increase (decrease) as a result of the revision of the estimated payment schedule and the estimated cash flow of the asset retirement obligation

   906

   

   266

   

   127Property, plant and equipment increase as a result of a new asset retirement obligations –Monique Mine

   -

   

   -

   

   980Payables, accruals and provisions related to property, plant and equipment

   6,645

   

   3,894

   

   1,898Increase in long-term debt related to property, plant and equipment

   5,069

   

   2,116

   

   1,000
 In 2015, an amount of $17, included in long-term share-based compensation, was recorded as an increase in property, plant and equipment ($42 in 2014 and $117 in 2013). This amount is not included in the investing activities section. Furthermore, in 2014, an amount of $72 ($1,125 in 2013), included in exploration tax credits receivable, was recorded as a reduction in property, plant and equipment. During the year 2014, an amount of $3,124 was transferred from restricted deposits to guaranteed investment certificates. This is not reflected in the consolidated statement of cash flows as it is a non-cash event. During the year 2015, $2,440 in exploration tax credits receivable was used to reduce income and mining taxes payable. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 37


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22.

   Related party transactions
  22.1

   Transactions with key management personnel
 The key management personnel include members of the Board of Directors and named executive officers of the Corporation consisting of the President and Chief Executive Officer, the Vice-President, Business Development, the Vice-President, Exploration, the Vice-President, Finance and the Vice-President, Investor Relations. Key management personnel remuneration includes the following expenses. 2015

   

   2014

   

   2013$

   

   $

   

   $Short-term benefitsSalaries, directors’fees, bonuses and other benefits

   2,598

   

   1,957

   

   2,336Professional fees

   -

   

   249

   

   -Severance compensation

   840

   

   945

   

   266Related benefits

   148

   

   110

   

   78Total short-term benefits

   3,586

   

   3,261

   

   2,680Post-employment benefitsDefined contribution pension plan

   32

   

   22

   

   9State plan

   26

   

   23

   

   23Total post-employment benefits

   58

   

   45

   

   32Stock-based compensation

   1,497

   

   1,169

   

   1,3285,141

   

   4,475

   

   4,040
 During 2015, key management exercised 331,200 share options (105,000 in 2014), with a total exercise price of $525 ($192 in 2014). During 2013, key management did not exercise any share options. 22.2

   Other transaction
 The former corporate secretary, who is a partner at a law firm, resigned from the position as corporate secretary on May 9, 2013. From January 2013 until the date of his resignation, the Corporation received professional services from this firm for a total consideration of $60, including taxes. 23.

   Commitments
 The Corporation is subject to pay the following royalties: Beaufor Mine and the W Zone Mine: $30 per ounce produced on 50% of the production from Beaufor property, $30 per ounce produced from Perron property and a 25% net profit interest royalty per ounce produced from Pascalis property;Island Gold Mine: a 3% net smelter return royalty per ounce produced from the Lochalsh claims, a 2% net smelter return royalty in addition to a 15% net profit interest royalty per ounce produced from the Goudreau claims and a 4.38% net smelter return royalty and a 10.38% net profit interest royalty per ounce produced from Goudreau Lake property;Monique Mine: a 0.38% smelter return royalty per ounce produced. Royalty payments could be payable on other properties if such other properties are brought into commercial production. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 38


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On August 5, 2014, the Corporation announced that it had signed a definitive agreement to acquire the outstanding 31% ownership of four patented claims on the Island Gold Mine property, thereby increasing its ownership of these claims to 100% from 69% previously. The 31% ownership held by the third party was acquired by the Corporation in return for a 3% net smelter return royalty (NSR) that is payable on 100% of mineral production from the four claims. As part of this agreement, the Corporation made an advance royalty payment of $1,000 at the closing of the transaction, made a payment of $1,000 on January 3, 2015 and made an additional payment of $1,000 on January 3, 2016. In the event that there is production from these claims, advance royalty payments will continue, and will decrease to $300 as of January 3, 2017, and will be paid annually until such time as a total of $5,100 has been paid in royalties (including advance royalties) to the third party, after which advance royalty payments will cease. All advance royal payments will be credited against any future NSR payments. The Corporation is committed, under two operating leases expiring in December 2017 and May 2020, to pay a total sum of $954 for office space. Minimum rental payments amount to $297 for 2016 and 2017, $149 for 2018 and 2019 and $62 for 2020. One operating lease is subject to sublease expiring in December 2017, for an annual amount of $96. In mid-October 2013, the Corporation announced that it had signed a land and mining rights agreement with Argonaut Gold Inc. (“Argonaut”), owner of the Magino Gold Project that is adjacent to the Corporation’s Island Gold Mine. This Agreement was slightly modified in June 2014. Under the revised terms, Argonaut will receive one claim in its entirety and surface and mining rights down to a depth of 400 metres on six claims. It will also receive surface rights on two claims down to a depth of 100 metres. The Corporation will receive two additional claims for a total of three and mining rights below a depth of 400 metres on three claims. As previously reported, under the terms of the Agreement, the Corporation will receive a net payment of $2,000 in cash from Argonaut upon completion of the land transactions, which are now expected to take place in 2016. 24.

   Contingencies
 The Corporation is involved in the following legal proceedings against the Corporation: a)

   The Corporation filed a lawsuit against a supplier (the “supplier”) for non-compliance of a supply agreement, which has resulted in additional costs for the Corporation. The supplier disputed the amount claimed by the Corporation, and counter-sued the Corporation for an amount higher than the Corporation’s original claim amount, on the basis that the supplier had to absorb substantial costs following the breach of contract;b)

   The second dispute is related to an invoice that the Corporation is contesting because the amount invoiced included costs stemming from work that the Corporation had not previously authorized. This work was not specified in the contract, and did not meet the parameters of the signed contract that stated that any additional work required prior approval. The parties have chosen to transfer the case to arbitrators as stipulated in the contract. The Corporation made a counter-claim to be reimbursed for the amount that had to be spent in order to redo the repairs. Management is of the opinion that the basis of the litigation is unfounded and, consequently, no provision has been accounted for in the financial statements in this respect. Furthermore, in 2013, the Corporation began legal procedures against its former Monique Mine mining contractor for work that had been poorly executed or not executed at all. In November 2014, the Corporation received a defense and counterclaim from this former contractor for an amount of $15,500. Management is of the opinion that the basis of this counterclaim is unfounded and, consequently, no provision has been accounted for in the financial statements in this respect. As at December 31, 2015, a contract holdback amount of $1,000 remains unpaid by the Corporation related to this work. 25.

   Capital disclosures
 The Corporation’s objectives when managing its capital are to safeguard the Corporation’s ability to continue as a going concern in order to support the development of its mining assets and ongoing exploration programs, to provide sufficient working capital to meet its ongoing obligations and to pursue potential investments. The Corporation defines its capital as its equity. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 39


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The Corporation manages its capital structure and makes adjustments to it in accordance with the aforementioned objectives, as well as in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, the Corporation may purchase some of its shares for cancellation pursuant to normal course issuer bids, issue new shares, issue new debt, acquire or dispose of assets. The Corporation is not subject to externally imposed capital requirements. The Corporation’s management of capital remained unchanged since the previous year. 26.

   Financial instruments and risk management
  a)

   Fair value
 The following table presents the carrying amounts and fair values of each financial instruments category: December 31, 2015

   December 31, 2014Book

   

   Fair

   

   Book

   

   FairFair value

   value

   

   value

   

   Value

   

   Valuehierarchy

   $

   

   $

   

   $


   

   $Loans and receivablesCash1

   

   61,028

   

   61,028

   

   35,273

   

   35,273Guaranteed investment certificate1

   

   -

   

   -

   

   474

   

   474Receivables1

   

   501

   

   501

   

   267

   

   26761,529

   

   61,529

   

   36,014

   

   36,014Financial liabilities, at amortized costPayables, accruals and provisions1

   

   20,226

   

   20,226

   

   12,681

   

   12,681Royalty payments payable2

   Level 2

   1,000

   

   1,000

   

   2,000

   

   2,000Finance lease obligations2

   Level 2

   6,057

   

   6,057

   

   2,912

   

   2,912Contract payment holdbacks2

   Level 2

   1,500

   

   1,500

   

   1,116

   

   1,116Closure allowance2

   Level 2

   537

   

   537

   

   513

   

   51329,320

   

   29,320

   

   19,222

   

   19,222
 1

   The Corporation owns and assumes financial assets and liabilities such as cash, guaranteed investment certificate and receivables (except taxes receivable), as well as payables, accruals and provisions (except salaries and related benefits payable). The fair value of these financial assets and liabilities approximates their book value as these items will be realized or settled in the short term.2

   The fair value was determined by calculating the discounted cash flows using market interest rates for financial instruments with similar characteristics. The fair value of the royalty payments payable, the finance lease obligations, the contract payment holdbacks and the closure allowance approximate the book value.  b)

   Fair value hierarchy
 Financial instruments recognized at fair value and financial instruments measured at amortized cost for which the fair value is disclosed on the Consolidated Statement of Financial Position must be classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurement, the fair value hierarchy levels are as follow: Level 1:

   quoted prices (unadjusted) observed in active markets for identical assets or liabilities;Level 2:

   valuation techniques based on inputs other than quoted prices included in level 1, that are either directly or indirectly observable;Level 3:

   valuation techniques with significant unobservable market inputs.
  c)

   Market risk
 The Corporation is exposed to gold price fluctuations and to fluctuations of the US dollar compared to the Canadian dollar. The Corporation could manage its exposure to these risks through the occasional use of derivative financial instruments and gold commodity contracts. The Corporation is also exposed to fluctuations of interest rates for its cash. The risks and the management of those risks were unchanged compared to previous years. The exposure to fluctuations of interest rates is not significant. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 40


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The Board of Directors approves all policies concerning the use of derivative financial instruments and gold sales contracts. The Corporation does not hold any financial instrument or derivative financial instrument for trading or speculative purposes. Foreign exchange riskExposure to currency exchange rates arises from revenues from the sale of precious metals and purchases that the Corporation carries out abroad. All of the Corporation’s precious metal revenues are either earned in or based on U.S. dollars precious metal prices, while the majority of its operating costs are in Canadian dollars. The price of gold is established in US dollars; to manage its exposure due to the fluctuation of the US dollar, the Corporation can occasionally enter into various types of foreign exchange contracts. During the years 2015 and 2014 the Corporation did not enter into any forward exchange contracts. At December 31, 2015 and 2014, assets and liabilities denominated in US dollars are not significant. The following table illustrates the sensitivity of net earnings and equity in regards to the US dollar/ Canadian dollar exchange rate, all other variables being constant. It assumes a +/- 17% change of the US dollar/ Canadian dollar exchange rate for the reporting period ended December 31, 2015 (+/- 9% for the reporting period ended December 31, 2014 and +/- 8% for the reporting period ended December 31, 2013). These percentages have been determined based on the average market volatility in exchange rates in the preceding twelve months. The sensitivity analysis assumes that all the Corporation revenues are U.S. dollars based for the reporting period. SENSITIVITY ANALYSISChange

   Impact on net earnings(in thousands of CAN$)2015

   +/- 17% (US$ / CAN$)

   +/- 17,5442014

   +/- 9% (US$ / CAN$)

   +/- 8,5922013

   +/- 8% (US$ / CAN$)

   +/- 5,424
 Commodity price riskThe Corporation’s earnings are directly related to commodity prices as revenues are derived principally from the sale of gold. For its gold production, the Corporation can reduce its risk of a decrease in the price of gold through the occasional use of forward sales contracts and put and call options. The risk related to fluctuation of gold price is unchanged from the previous years. In 2015, 2014 and 2013, the Corporation did not enter into any hedging contracts for its gold production. The following table illustrates the sensitivity of net earnings and equity to movements in the price of gold, all other variables being constant. It assumes a +/- 10% change in the average selling price of gold realized (US$ per ounce), taking into account the average exchange rate for the corresponding year. SENSITIVITY ANALYSISChange

   Impact on net earnings(in thousands of CAN$)2015Average exchange rate (US$/CAN$) 1.2787

   +/- 10%

   +/- 10,3672014Average exchange rate (US$/CAN$) 1.1045

   +/- 10%

   +/- 9,5662013Average exchange rate (US$/CAN$) 1.0299

   +/- 10%

   +/- 6,328
  RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 41


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d)
      Credit risk
 Financial instruments that expose the Corporation to a credit risk consist of receivables (except taxes receivable) and cash. The receivables partially consist of prepayments and consequently the exposure to credit risk for the receivables is reduced. The Corporation invests its cash in high-quality securities issued by government agencies, financial institutions and major corporations, and limits the amount of credit exposure by diversifying its holdings. At December 31, 2015 and 2014, the Corporation’s cash and guaranteed investment certificate are held through one financial institution. As at December 31, 2015, the cash was invested with an effective rate of 0.9% (1.20% as at December 31, 2014). e)

   Liquidity risk
 The objective of management with respect to liquidity risk is to hold enough cash and cash equivalents in order to ensure that the Corporation has the necessary funds to meet its obligations. The liquidity risk and its management were the same as during the previous year. Payables, accruals and provisions are due in the next financial year. Payments for the royalty payments payable, finance lease obligations, contracts payment holdbacks and closure allowance are disclosed in note 18. 27.

   Segmented information
 The Corporation operates gold mines at different sites in Quebec and Ontario. These operating sites are managed separately given their different locations. The Corporation assesses the performance of each segment based on earnings before taxes and discontinued operation. Accounting policies for each segment are the same as those used for the preparation of the consolidated financial statements. There was no difference in 2015 compared to annual financial statements of 2014 and 2013 in the basis of segmentation or the basis of evaluation of segment result. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 42


---

2015Segmented information

   

   

   

   

   

   

   Exploration,concerning the consolidated

   

   

   

   

   Total

   

   corporateincome statement

   Quebec

   

   Ontario

   

   segments

   

   and others

   

   Total$

   

   $

   

   $

   

   $

   

   $Revenues

   66,012

   

   77,721

   

   143,733

   

   -

   

   143,733Cost of sales

   45,921

   

   72,413

   

   118,334

   

   -

   

   118,334Gross profit

   20,091

   

   5,308

   

   25,399

   

   -

   

   25,399Exploration and projectEvaluation

   2,683

   

   4,600

   

   7,283

   

   152

   

   7,435Administration

   -

   

   -

   

   -

   

   9,809

   

   9,809Loss (gain) on disposal of long-term assets

   (111

   )

   15

   

   (96

   )

   (6

   )

   (102

   )Changes in asset retirement obligations at closed sites

   691

   

   -

   

   691

   

   123

   

   814Other expenses

   1,693

   

   -

   

   1,693

   

   -

   

   1,693Other revenues

   (2,109

   )

   (20

   )

   (2,129

   )

   (1

   )

   (2,130

   )2,847

   

   4,595

   

   7,442

   

   10,077

   

   17,519Operating earnings (loss)

   17,244

   

   713

   

   17,957

   

   (10,077

   )

   7,880Financial expenses

   51

   

   31

   

   82

   

   -

   

   82Financial revenues

   (3

   )

   (6

   )

   (9

   )

   (778

   )

   (787

   )Earnings (loss) before taxes

   17,196

   

   688

   

   17,884

   

   (9,299

   )

   8,585Addition of property, plant and equipment

   3,054

   

   48,938

   

   51,992

   

   106

   

   52,098Current assets

   9,284

   

   10,211

   

   19,495

   

   61,985

   

   81,480Restricted deposits

   107

   

   714

   

   821

   

   10

   

   831Property, plant and equipment

   7,548

   

   115,202

   

   122,750

   

   1,991

   

   124,741Total assets

   16,939

   

   126,127

   

   143,066

   

   63,986

   

   207,052Current liabilities

   6,315

   

   22,071

   

   28,386

   

   5,754

   

   34,140Long-term debt

   1,537

   

   4,493

   

   6,030

   

   1,234

   

   7,264Asset retirement obligations

   6,822

   

   2,000

   

   8,822

   

   799

   

   9,621Deferred income and mining tax liabilities

   -

   

   -

   

   -

   

   2,425

   

   2,425Total liabilities

   14,674

   

   28,564

   

   43,238

   

   10,212

   

   53,450
  RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 43


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2014Segmented information

   

   

   

   

   

   

   Exploration,concerning the consolidated

   

   

   

   

   Total

   

   corporateincome statement

   Quebec

   

   Ontario

   

   segments

   

   and others

   

   Total$

   

   $

   

   $

   

   $

   

   $Revenues

   73,225

   

   58,971

   

   132,196

   

   -

   

   132,196Cost of sales

   60,132

   

   51,766

   

   111,898

   

   -

   

   111,898Gross profit

   13,093

   

   7,205

   

   20,298

   

   -

   

   20,298Exploration and projectEvaluation

   1,735

   

   771

   

   2,506

   

   1,266

   

   3,772Administration

   -

   

   -

   

   -

   

   7,627

   

   7,627Loss on disposal of long-term assets

   10

   

   132

   

   142

   

   497

   

   639Other revenues

   (63

   )

   (32

   )

   (95

   )

   (7

   )

   (102

   )1,682

   

   871

   

   2,553

   

   9,383

   

   11,936Operating earnings (loss)

   11,411

   

   6,334

   

   17,745

   

   (9,383

   )

   8,362Financial expenses

   83

   

   28

   

   111

   

   -

   

   111Financial revenues

   4

   

   (8

   )

   (4

   )

   (432


   )

   (436

   )Earnings (loss) before taxes

   11,324

   

   6,314

   

   17,638

   

   (8,951

   )

   8,687Addition of property, plant and equipment

   2,884

   

   20,168

   

   23,052

   

   -

   

   23,052Current assets

   16,727

   

   8,041

   

   24,768

   

   34,790

   

   59,558Restricted deposits

   369

   

   601

   

   970

   

   46

   

   1,016Property, plant and equipment

   8,861

   

   77,184

   

   86,045

   

   2,152

   

   88,197Total assets

   25,957

   

   85,826

   

   111,783

   

   36,988

   

   148,771Current liabilities

   6,918

   

   12,504

   

   19,422

   

   5,299

   

   24,721Long-term debt

   1,513

   

   3,229

   

   4,742

   

   982

   

   5,724Asset retirement obligations

   5,477

   

   1,937

   

   7,414

   

   629

   

   8,043Deferred income and mining tax liabilities

   -

   

   -

   

   -

   

   2,326

   

   2,326Total liabilities

   13,908

   

   17,670

   

   31,578

   

   9,236

   

   40,814
  RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 44


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2013Segmented information

   

   

   

   

   

   

   Exploration,concerning the consolidated

   

   

   

   

   Total

   

   corporate

   

   Discontinuedincome statement

   Quebec

   

   Ontario

   

   segments

   

   and others

   

   operation

   

   Total$

   

   $

   

   $

   

   $

   

   $

   

   $Revenues

   41,563

   

   50,487

   

   92,050

   

   -

   

   (1,837

   )

   90,213Cost of sales

   40,164

   

   47,475

   

   87,639

   

   -

   

   (1,807

   )

   85,832Gross profit (loss)

   1,399

   

   3,012

   

   4,411

   

   -

   

   (30

   )

   4,381Exploration and projectEvaluation

   2,240

   

   4,532

   

   6,772

   

   1,103

   

   -

   

   7,875Administration

   -

   

   -

   

   -

   

   7,514

   

   -

   

   7,514Loss (gain) on disposal of long-term assets

   (89

   )

   79

   

   (10

   )

   26

   

   89

   

   105Impairment loss on W Zone Mine

   13,472

   

   -

   

   13,472

   

   -

   

   -

   

   13,472Other revenues

   (20

   )

   (132

   )

   (152

   )

   (6

   )

   4

   

   (154

   )15,603

   

   4,479

   

   20,082

   

   8,637

   

   93

   

   28,812Operating loss

   (14,204

   )

   (1,467

   )

   (15,671

   )

   (8,637

   )

   (123

   )

   (24,431

   )Financial expenses

   62

   

   19

   

   81

   

   1,182

   

   -

   

   1,263Financial revenues

   (4

   )

   (2

   )

   (6

   )

   (523

   )

   3

   

   (526

   )Loss before taxes and discontinued operation

   (14,262

   )

   (1,484

   )

   (15,746

   )

   (9,296

   )

   (126

   )

   (25,168

   )Net loss from discontinuedOperation

   (1,098

   )

   -

   

   (1,098

   )

   -

   

   -

   

   (1,098

   )Addition of property, plant and equipment

   13,681

   

   27,770

   

   41,451

   

   437

   

   -

   

   41,888Current assets

   11,479

   

   7,710

   

   19,189

   

   17,040

   

   -

   

   36,229Restricted deposits

   107

   

   594

   

   701

   

   2,720

   

   -

   

   3,421Property, plant and equipment

   18,193

   

   62,184

   

   80,377

   

   3,301

   

   -

   

   83,678Total assets

   29,779

   

   70,488

   

   100,267

   

   23,061

   

   -

   

   123,328Current liabilities

   7,876

   

   9,943

   

   17,819

   

   4,458

   

   -

   

   22,277Long-term debt

   1,573

   

   2,912

   

   4,485

   

   711

   

   -

   

   5,196Asset retirement obligations

   5,451

   

   1,662

   

   7,113

   

   490

   

   -

   

   7,603Deferred income and mining tax liabilities

   -

   

   -

   

   -

   

   1,899

   

   -

   

   1,899Total liabilities

   14,900

   

   14,517

   

   29,417

   

   7,558

   

   -

   

   36,975
 In 2015, 65% of precious metals have been sold through US financial institutions (59% in 2014 and 67% in 2013). 28.
       Approval of Financial Statements
 The consolidated financial statements for the year ended December 31, 2015 were approved for publication by the Board of Directors on February 19, 2016. RICHMONT MINES INC.
    FINANCIAL STATEMENTS|Page 45


---