|                         |   |                            |
|-------------------------|--------|----------------------------|
|                    |   |                       |
| Neil McMillan           |   | Rick Johnson, C.A.         |
| President and           |   | Vice President Finance and |
| Chief Executive Officer |   | Chief Financial Officer    |

----

----

|                                                                                           |   |   |    |   |   |   |
|------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                           |   | 2010   |    |   | 2009   |   |
| Assets                                                                                         |   |   |    |   |   |   |
|     Current assets:                                                        |   |   |    |   |   |   |
|        Cash and cash equivalents                            |   | $      | 6,401   |   |   | $      | 11,948 |   |
|        Restricted cash (Note 4)                             |   |   | 4,389   |   |   |   | - |   |
|        Accounts receivable                                  |   |   | 2,716   |   |   |   | 4,806 |   |
|        Interest receivable on restricted promissory notes   |   |   | 4,904   |   |   |   | 4,866 |   |
|        Inventories and stockpiled ore (Note 5)              |   |   | 9,241   |   |   |   | 11,448 |   |
|        Shrinkage stope platform costs (Note 6)              |   |   | 11,199  |   |   |   | 11,293 |   |
|        Prepaids                                             |   |   | 496     |   |   |   | 327 |   |
|        Assets held for sale (Note 8)                        |   |   | -       |   |   |   | 570 |   |
|                                                                                           |   |   | 39,346  |   |   |   | 45,258 |   |
|                                                                                           |   |   |    |   |   |   |   |   |
|     Mineral properties (Note 7)                                            |   |   | 116,336 |   |   |   | 94,277 |   |
|     Assets held for sale (Note 8)                                          |   |   | -       |   |   |   | 4,398 |   |
|     Investments (Note 9)                                                   |   |   | 4,328   |   |   |   | 643 |   |
|     Deposits for reclamation costs (Note 15)                               |   |   | 2,277   |   |   |   | 2,277 |   |
|     Restricted promissory notes (Note 10)                                  |   |   | 83,219  |   |   |   | 82,568 |   |
|                                                                                           |   | $      | 245,506 |   |   | $      | 229,421 |   |
|                                                                                           |   |   |    |   |   |   |   |   |
| Liabilities and Shareholders’ Equity                                                     |   |   |    |   |   |   |   |   |
|     Current liabilities:                                                   |   |   |    |   |   |   |   |   |
|        Accounts payable and accrued liabilities             |   | $      | 5,537   |   |   | $      | 4,100 |   |
|        Interest payable on royalty obligations              |   |   | 4,770   |   |   |   | 4,729 |   |
|        Demand loans (Note 11)                               |   |   | 2,499   |   |   |   | 4,586 |   |
|        Liabilities related to assets held for sale (Note 8) |   |   | -       |   |   |   | 370 |   |
|        Other liabilities (Note 13)                          |   |   | 2,634   |   |   |   | 2,942 |   |
|                                                                                           |   |   | 15,440  |   |   |   | 16,727 |   |
|                                                                                           |   |   |    |   |   |   |   |   |
|     Obligations under capital lease (Note 14)                              |   |   | 873     |   |   |   | 1,240 |   |
|     Debenture (Note 12)                                                    |   |   | 9,257   |   |   |   | 9,192 |   |
|     Royalty obligations (Note 10)                                          |   |   | 84,220  |   |   |   | 83,554 |   |
|     Deferred revenue (Note 10)                                             |   |   | 4,582   |   |   |   | 5,531 |   |
|     Liabilities related to assets held for sale (Note 8)                   |   |   | -       |   |   |   | 117 |   |
|     Asset retirement obligations (Note 15)                                 |   |   | 4,221   |   |   |   | 2,965 |   |
|     Future tax liability (Note 18)                                         |   |   | 1,975   |   |   |   | - |   |
|                                                                                           |   |   | 120,568 |   |   |   | 119,326 |   |
|                                                                                           |   |   |    |   |   |   |   |   |
|     Shareholders’ equity:                                            |   |   |    |   |   |   |   |   |
|        Share capital (Note 16)                              |   |   | 117,974 |   |   |   | 111,957 |   |
|        Contributed surplus                                  |   |   | 2,754   |   |   |   | 2,465 |   |
|        Retained earnings (deficit)                          |   |   | 1,457   |   |   |   | (4,361 | ) |
|     Accumulated other comprehensive income                                 |   |   | 2,753   |   |   |   | 34 |   |
|                                                                                           |   |   | 124,938 |   |   |   | 110,095 |   |
|                                                                                           |   |   |    |   |   |   |   |   |
|     Subsequent Events (Note 23)                                            |   |   |    |   |   |   |   |   |
|                                                                                           |   | $      | 245,506 |   |   | $      | 229,421 |   |

|          |   |                           |
|---------------|--------|---------------------------|
|          |   |                      |
| Ted J. Nieman |   | Ronald J. Hicks, CA       |
| Chairman      |   | Chairman, Audit Committee |

----

|                                                                                               |   | 2010   |    |   | 2009   |   |
|----------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                               |   |   |    |   |   |   |
| Revenue                                                                                            |   | $      | 55,998  |   |   | $      | 48,525 |   |
|                                                                                               |   |   |    |   |   |   |   |   |
| Expenses:                                                                                          |   |   |    |   |   |   |   |   |
|     Operating expenses                                                         |   | $      | 31,364  |   |   | $      | 30,491 |   |
|     Depreciation, depletion and accretion                                      |   |   | 14,617  |   |   |   | 19,593 |   |
|     General and administrative                                                 |   |   | 5,213   |   |   |   | 4,629 |   |
|     Interest and other (Note 17)                                               |   |   | 285     |   |   |   | (458 | ) |
|     Write-down of mineral properties                                           |   |   | -       |   |   |   | 1,067 |   |
|     Loss on investments                                                        |   |   | 207     |   |   |   | 664 |   |
|                                                                                               |   |   | 51,686  |   |   |   | 55,986 |   |
|                                                                                               |   |   |    |   |   |   |   |   |
| Earnings (loss) from continuing operations before income taxes                                     |   |   | 4,312   |   |   |   | (7,461 | ) |
|     Income taxes (Note 18)                                                     |   |   | -       |   |   |   | - |   |
|                                                                                               |   |   |    |   |   |   |   |   |
| Earnings (loss) from continuing operations                                                         |   |   | 4,312   |   |   |   | (7,461 | ) |
|                                                                                               |   |   |    |   |   |   |   |   |
| Earnings from operations held for sale (Note 8)                                                    |   |   | 1,506   |   |   |   | 1,204 |   |
| Net earnings (loss)                                                                                |   | $      | 5,818   |   |   | $      | (6,257 | ) |
|                                                                                               |   |   |    |   |   |   |   |   |
| Net earnings (loss) per share (Note 19)                                                            |   |   |    |   |   |   |   |   |
|     Basic and diluted                                                          |   |   |    |   |   |   |   |   |
|        From continuing operations                               |   | $      | 0.03    |   |   | $      | (0.07 | ) |
|        Net earnings (loss)                                      |   | $      | 0.04    |   |   | $      | (0.06 | ) |
|                                                                                               |   |   |    |   |   |   |   |   |
| Weighted average number of common shares outstanding (in 000’s) (Note 19)                    |   |   |    |   |   |   |   |   |
|                                                                                               |   |   |    |   |   |   |   |   |
| Basic                                                                                              |   |   | 131,193 |   |   |   | 108,504 |   |
| Diluted                                                                                            |   |   | 133,411 |   |   |   | 108,504 |   |
|                                                                                               |   |   |    |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                                       |   |   |    |   |   |   |   |   |
|                                                                                               |   |   |    |   |   |   |   |   |
|                                                                                               |   |   |    |   |   |   |   |   |
| Consolidated Statements of Comprehensive Income (Loss)                                             |   |   |    |   |   |   |   |   |
| YEARS ENDED DECEMBER 31 (CANADIAN DOLLARS IN THOUSANDS)                                            |   |   |    |   |   |   |   |   |
|                                                                                               |   |   |    |   |   |   |   |   |
|                                                                                               |   |   | 2010    |   |   |   | 2009 |   |
|                                                                                               |   |   |    |   |   |   |   |   |
| Net earnings (loss)                                                                                |   | $      | 5,818   |   |   | $      | (6,257 | ) |
|                                                                                               |   |   |    |   |   |   |   |   |
| Other comprehensive income (loss)(1)                                                               |   |   |    |   |   |   |   |   |
|     Losses on available-for-sale securities transferred to net earnings (loss) |   |   | 176     |   |   |   | 664 |   |
|     Unrealized gain (loss) on available-for-sale securities                    |   |   | 2,543   |   |   |   | (98 | ) |
|                                                                                               |   |   |    |   |   |   |   |   |
| Other comprehensive income                                                                         |   |   | 2,719   |   |   |   | 566 |   |
| Total comprehensive income (loss)                                                                  |   | $      | 8,537   |   |   | $      | (5,691 | ) |

----

|                                                                                       |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                       |   |   |    |   |   |   |
| Share Capital(Note 16)                                                                     |   |   |    |   |   |   |
|     Balance, beginning of year                                         |   | $      | 111,957 |   |   | $      | 83,960 |   |
|     Common shares and warrants, issued for cash                        |   |   | 7,267   |   |   |   | 27,997 |   |
|    Tax effect of flow-through shares                                        |   |   | (1,611  | )      |   |   | - |   |
|     Other                                                              |   |   | 361     |   |   |   | - |   |
|     Balance, end of year                                               |   | $      | 117,974 |   |   | $      | 111,957 |   |
|                                                                                       |   |   |    |   |   |   |   |   |
| Contributed Surplus                                                                        |   |   |    |   |   |   |   |   |
|     Balance, beginning of year                                         |   | $      | 2,465   |   |   | $      | 1,748 |   |
|     Stock-based compensation                                           |   |   | 736     |   |   |   | 745 |   |
|     Transfers to share capital                                         |   |   | (447    | )      |   |   | (28 | ) |
|     Balance, end of year                                               |   | $      | 2,754   |   |   | $      | 2,465 |   |
|                                                                                       |   |   |    |   |   |   |   |   |
| Retained Earnings (Deficit)                                                                |   |   |    |   |   |   |   |   |
|     Balance, beginning of year                                         |   | $      | (4,361  | )      |   | $      | 1,896 |   |
|     Net earnings (loss)                                                |   |   | 5,818   |   |   |   | (6,257 | ) |
|     Balance, end of year                                               |   | $      | 1,457   |   |   | $      | (4,361 | ) |
|                                                                                       |   |   |    |   |   |   |   |   |
| Accumulated Other Comprehensive Income                                                     |   |   |    |   |   |   |   |   |
|     Balance, beginning of year                                         |   | $      | 34      |   |   |   | (532 | ) |
|     Other comprehensive income                                         |   |   | 2,719   |   |   |   | 566 |   |
|     Balance, end of year(1)                                            |   | $      | 2,753   |   |   | $      | 34 |   |
|                                                                                       |   |   |    |   |   |   |   |   |
|     Total retained earnings and accumulated other comprehensive income |   | $      | 4,210   |   |   | $      | (4,327 | ) |
|                                                                                       |   |   |    |   |   |   |   |   |
| Shareholders’ equity, end of year                                                    |   | $      | 124,938 |   |   | $      | 110,095 |   |

----

|                                                                               |   | 2010   |    |   | 2009   |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Cash provided from (used in):                                                      |   |   |    |   |   |   |
|                                                                               |   |   |    |   |   |   |
| Operations:                                                                        |   |   |    |   |   |   |
|     Earnings (loss) from continuing operations                 |   | $      | 4,312   |   |   | $      | (7,461 | ) |
|     Non-cash items:                                            |   |   |    |   |   |   |   |   |
|        Depreciation, depletion and accretion    |   |   | 14,617  |   |   |   | 19,593 |   |
|        Loss on investments                      |   |   | 207     |   |   |   | 664 |   |
|        Stock-based compensation                 |   |   | 736     |   |   |   | 745 |   |
|        Write-down of mineral properties         |   |   | -       |   |   |   | 1,067 |   |
|        Interest and other                       |   |   | (733    | )      |   |   | (634 | ) |
|     Net changes in non-cash operating working capital:         |   |   |    |   |   |   |   |   |
|        Accounts receivable                      |   |   | 2,052   |   |   |   | (4,567 | ) |
|        Inventories and stockpiled ore           |   |   | 1,038   |   |   |   | (1,745 | ) |
|        Shrinkage stope platform costs           |   |   | 94      |   |   |   | 798 |   |
|        Prepaids                                 |   |   | (169    | )      |   |   | (134 | ) |
|        Accounts payable and accrued liabilities |   |   | 1,478   |   |   |   | (1,674 | ) |
|     Cash provided by continuing operations                     |   |   | 23,632  |   |   |   | 6,652 |   |
|     Cash provided by operations held for sale (Note 8)         |   |   | 623     |   |   |   | 985 |   |
|                                                                               |   |   | 24,255  |   |   |   | 7,637 |   |
|                                                                               |   |   |    |   |   |   |   |   |
| Investing:                                                                         |   |   |    |   |   |   |   |   |
|     Mineral properties                                         |   |   | (35,028 | )      |   |   | (25,260 | ) |
|     Assets held for sale                                       |   |   | (220    | )      |   |   | (115 | ) |
|     Proceeds on disposition of assets held for sale            |   |   | 6,006   |   |   |   | 440 |   |
|     Restricted cash                                            |   |   | (4,389  | )      |   |   | - |   |
|     Restricted promissory notes                                |   |   | (651    | )      |   |   | (630 | ) |
|     Investments                                                |   |   | (51     | )      |   |   | (134 | ) |
|     Cash used in investing                                     |   |   | (34,333 | )      |   |   | (25,699 | ) |
|                                                                               |   |   |    |   |   |   |   |   |
| Financing:                                                                         |   |   |    |   |   |   |   |   |
|     Issue of common shares and warrants, net of issue costs    |   |   | 6,760   |   |   |   | 27,970 |   |
|     Debenture:                                                 |   |   |    |   |   |   |   |   |
|        Amortized cost of redemption             |   |   | -       |   |   |   | (7,606 | ) |
|     Royalty obligations                                        |   |   | 666     |   |   |   | 424 |   |
|     Demand loans:                                              |   |   |    |   |   |   |   |   |
|        Proceeds                                 |   |   | -       |   |   |   | 2,800 |   |
|        Repayments                               |   |   | (2,086  | )      |   |   | (2,183 | ) |
|     Obligations under capital lease:                           |   |   |    |   |   |   |   |   |
|        Proceeds                                 |   |   | 1,961   |   |   |   | 2,353 |   |
|        Repayments                               |   |   | (2,770  | )      |   |   | (2,138 | ) |
|     Cash provided by financing activities                      |   |   | 4,531   |   |   |   | 21,620 |   |
| Increase (decrease) in cash and cash equivalents                                   |   |   | (5,547  | )      |   |   | 3,558 |   |
| Cash and cash equivalents, beginning of year                                       |   |   | 11,948  |   |   |   | 8,390 |   |
| Cash and cash equivalents, end of year                                             |   | $      | 6,401   |   |   | $      | 11,948 |   |
|                                                                               |   |   |    |   |   |   |   |   |
| Supplemental cash flow disclosure:                                                 |   |   |    |   |   |   |   |   |
|        Interest paid                            |   | $      | 1,623   |   |   | $      | 2,132 |   |
|                                                                               |   |   |    |   |   |   |   |   |

----

----

----

----

|   | • | Accounts receivable and Restricted promissory notes relating to the Red Mile Resources Limited Partnerships are designated as loans and receivables and are accounted for at amortized cost. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Deposits for reclamation costs, designated as held to maturity, consist of investment certificates held as security for reclamation requirements and are carried at amortized cost. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Derivative financial instruments, which include foreign exchange and gold derivative contracts, are not designated as hedges.  These instruments are recorded using the mark-to-market method of accounting whereby instruments are recorded in the consolidated balance sheets as either an asset or liability with changes in fair value recognized in net earnings (loss). |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                   |   | 2010   |   |   | 2009   |   |
|------------------------|--------|--------|--------|--------|--------|--------|
|                   |   |   |   |   |   |   |
| Gold in-circuit (1)    |   | $      | 1,429  |   |   | $      | 2,126 |   |
| Stockpiled ore (1)     |   |   | 329    |   |   |   | 1,140 |   |
| Materials and supplies |   |   | 7,483  |   |   |   | 8,182 |   |
|                   |   | $      | 9,241  |   |   | $      | 11,448 |   |

|   | (1) | Depreciation and depletion of $0.4 million (2009 - $1.2 million) is included in the above noted balances. |
|--------|-----|-----------------------------------------------------------------------------------------------------------|

|                           |   | 2010   |   |   | 2009   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|
|                           |   |   |   |   |   |   |
| Shrinkage stope platform costs |   | $      | 11,199 |   |   | $      | 11,293 |   |

|                                            |   |   |    |   | 2010          |   |    |   |   |
|-------------------------------------------------|--------|--------|---------|--------|---------------|--------|---------|--------|--------|
|                                            |   |   |    |   | Accumulated   |   |    |   |   |
|                                            |   |   |    |   | depreciation, |   |    | Net    |   |
|                                            |   |   |    |   | depletion and |   |    | Book   |   |
|                                            |   | Cost   |    |   | write-down    |   |    | Value  |   |
|                                            |   |   |    |   |          |   |    |   |   |
| Property acquisition and mine development costs |   | $      | 120,700 |   |          | $      | 88,030  |   |   | $ | 32,670 |   |
| Buildings, plant and equipment                  |   |   | 104,303 |   |          |   | 81,597  |   |   |   | 22,706 |   |
| Exploration properties                          |   |   | 67,456  |   |          |   | 6,496   |   |   |   | 60,960 |   |
|                                            |   | $      | 292,459 |   |          | $      | 176,123 |   |   | $ | 116,336 |   |

|                                            |   |   |    |   | 2009          |   |    |   |   |
|-------------------------------------------------|--------|--------|---------|--------|---------------|--------|---------|--------|--------|
|                                            |   |   |    |   | Accumulated   |   |    |   |   |
|                                            |   |   |    |   | depreciation, |   |    | Net    |   |
|                                            |   |   |    |   | depletion and |   |    | Book   |   |
|                                            |   | Cost   |    |   | write-down    |   |    | Value  |   |
|                                            |   |   |    |   |          |   |    |   |   |
| Property acquisition and mine development costs |   | $      | 111,592 |   |          | $      | 83,063  |   |   | $ | 28,529 |   |
| Buildings, plant and equipment                  |   |   | 94,387  |   |          |   | 76,270  |   |   |   | 18,117 |   |
| Exploration properties                          |   |   | 54,685  |   |          |   | 7,054   |   |   |   | 47,631 |   |
|                                            |   | $      | 260,664 |   |          | $      | 166,387 |   |   | $ | 94,277 |   |

----

----

|                           |   | 2010   |   |   | 2009   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|
|                           |   |   |   |   |   |   |
| Assets                         |   |   |   |   |   |   |
| Accounts receivable            |   | $      | -      |   |   | $      | 570 |   |
| Oil and natural gas properties |   |   | -      |   |   |   | 4,398 |   |
|                           |   | $      | -      |   |   | $      | 4,968 |   |

| Liabilities                              |   |   |   |   |   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|
| Accounts payable and accrued liabilities |   | $      | -      |   |   | $      | 370 |   |
| Asset retirement obligations             |   |   | -      |   |   |   | 117 |   |
|                                     |   | $      | -      |   |   | $      | 487 |   |

|                                                                   |   | 2010   |   |   | 2009   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                   |   |   |   |   |   |   |
| Revenue                                                                |   | $      | 1,785  |   |   | $      | 2,405 |   |
| Less: royalties                                                        |   |   | (531   | )      |   |   | (315 | ) |
| Revenue, net of royalties                                              |   |   | 1,254  |   |   |   | 2,090 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Operating expenses                                                     |   |   | 831    |   |   |   | 1,085 |   |
| Depreciation, depletion, and accretion                                 |   |   | 5      |   |   |   | 47 |   |
|                                                                   |   |   | 836    |   |   |   | 1,132 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Earnings from operations held for sale                                 |   |   | 418    |   |   |   | 958 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Other income                                                           |   |   |   |   |   |   |   |   |
|                                                                   |   |   |   |   |   |   |   |   |
|     Asset retirement obligation change in estimate |   |   | -      |   |   |   | 246 |   |
|     Gain on sale of assets                         |   |   | 1,088  |   |   |   | - |   |
| Net earnings from operations held for sale                             |   | $      | 1,506  |   |   | $      | 1,204 |   |

----

----

|                                                                         |   | 2010   |   |   | 2009   |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                         |   |   |   |   |   |   |
| Net earnings from operations held for sale                                   |   | $      | 1,506  |   |   | $      | 1,204 |   |
| Adjustments for:                                                             |   |   |   |   |   |   |   |   |
|     Accretion                                            |   |   | 5      |   |   |   | 47 |   |
|     Asset retirement obligation change in estimate       |   |   | -      |   |   |   | (246 | ) |
|     Gain on sale of assets                               |   |   | (1,088 | )      |   |   | - |   |
|     Decrease in Accounts receivable                      |   |   | 570    |   |   |   | 200 |   |
|     Decrease in Prepaids                                 |   |   | -      |   |   |   | 142 |   |
|     Decrease in Accounts payable and accrued liabilities |   |   | (370   | )      |   |   | (362 | ) |
|                                                                         |   | $      | 623    |   |   |   | 985 |   |

|                                                    |   | 2010   |   |   | 2009   |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                    |   |   |   |   |   |   |
| Available-for-sale securities, beginning of year        |   | $      | 643    |   |   | $      | 607 |   |
| Acquisition of available-for-sale securities(1)         |   |   | 749    |   |   |   | 149 |   |
| Disposal of available-for-sale securities               |   |   | -      |   |   |   | (15 | ) |
| Unrealized gain (loss) on available-for-sale securities |   |   | 2,936  |   |   |   | (98 | ) |
| Available-for-sale securities, end of year              |   | $      | 4,328  |   |   | $      | 643 |   |

|   | (1) | Acquisition of $749,000 in 2010 includes $698,000 worth of shares in a public company received in conjunction with Claude’s disposition of a mineral property interest. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

| In thousands of Canadian dollars |   | 2010   |   |   | 2009   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |
| Balance, beginning of year       |   | $      | 82,568 |   |   | $      | 81,938 |   |
| Interest earned                  |   |   | 651    |   |   |   | 630 |   |
| Balance, end of year             |   | $      | 83,219 |   |   | $      | 82,568 |   |

| In thousands of Canadian dollars |   | 2010   |   |   | 2009   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |
| Balance, beginning of year       |   | $      | 83,554 |   |   | $      | 83,130 |   |
| Interest accrued                 |   |   | 666    |   |   |   | 424 |   |
| Balance, end of year             |   | $      | 84,220 |   |   | $      | 83,554 |   |

| In thousands of Canadian dollars              |   | 2010   |   |   | 2009   |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                          |   |   |   |   |   |   |
| Balance, beginning of year                    |   | $      | 6,434  |   |   | $      | 7,291 |   |
| Indemnification fee income recognized         |   |   | (342   | )      |   |   | (325 | ) |
| Recognition of loan fees and prepaid interest |   | $      | (561   | )      |   | $      | (532 | ) |
| Balance, end of year                          |   |   | 5,531  |   |   |   | 6,434 |   |
| Less:  current portion (Note 13)    |   |   | (949   | )      |   |   | (903 | ) |
|                                          |   | $      | 4,582  |   |   | $      | 5,531 |   |

----

----

|                                                                                                            |   | 2010   |   |   | 2009   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                                            |   |   |   |   |   |   |
| Demand loan, repayable in monthly payments of $83,333 plus interest at prime plus 1.50 percent, due August 2011 |   | $      | 667    |   |   | $      | 1,667 |   |
| Demand loan, repayable in monthly payments of $96,514 including interest at 5.99 percent, due February 2010     |   |   | -      |   |   |   | 192 |   |
| Demand loan, repayable in monthly payments of $83,371 including interest at 4.575 percent, due November 2012    |   |   | 1,832  |   |   |   | 2,727 |   |
|                                                                                                            |   | $      | 2,499  |   |   | $      | 4,586 |   |

|                                                     |   | 2010   |   |   | 2009   |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                     |   |   |   |   |   |   |
| Debenture payable, beginning of year                     |   | $      | 9,192  |   |   | $      | 16,575 |   |
|    Amortization of debt issue costs       |   |   | 152    |   |   |   | 223 |   |
|    Amortized cost of debenture redemption |   |   | -      |   |   |   | (7,606 | ) |
| Debenture payable, end of year                           |   | $      | 9,344  |   |   | $      | 9,192 |   |
| Less: current portion (Note 13, 23)                      |   |   | 87     |   |   |   | - |   |
|                                                     |   | $      | 9,257  |   |   | $      | 9,192 |   |

|                                                  |   | 2010   |   |   | 2009   |   |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                  |   |   |   |   |   |   |
| Deferred revenue (Note 10)                            |   | $      | 949    |   |   | $      | 903 |   |
| Current portion of Debenture  (Note 12, 23) |   |   | 87     |   |   |   | - |   |
| Obligations under capital lease (Note 14)             |   |   | 1,598  |   |   |   | 2,039 |   |
|                                                  |   | $      | 2,634  |   |   | $      | 2,942 |   |

----

----

|                                                          |   | 2010   |   |   | 2009   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                          |   |   |   |   |   |   |
| Asset retirement obligations, beginning of year               |   | $      | 2,965  |   |   | $      | 2,758 |   |
| Accretion expense                                             |   |   | 200    |   |   |   | 207 |   |
| Revisions due to sale of properties and technical adjustments |   |   | (361   | )      |   |   | - |   |
| Revisions in estimated future cash flows                      |   |   | 1,417  |   |   |   | - |   |
| Asset retirement obligations, end of year                     |   | $      | 4,221  |   |   | $      | 2,965 |   |

|                               |   |   |        |   | 2010   |   |    |   |   |   | 2009        |   |
|------------------------------------|--------|--------|-------------|--------|--------|--------|---------|--------|--------|--------|-------------|--------|
|                               |   | Shares |        |   | Amount |   |    | Shares |   |   | Amount      |   |
| Common shares:                     |   |   |        |   |   |   |    |   |   |   |        |   |
| Outstanding, beginning of year     |   |   | 118,478,686 |   |   | $      | 94,713  |   |   |   | 97,112,030  |   |   | $ | 83,410 |   |
| ESPP (a)                           |   |   | 430,395     |   |   |   | 537     |   |   |   | 421,056     |   |   |   | 177 |   |
| Exercise of stock options (b)      |   |   | 422,414     |   |   |   | 402     |   |   |   | 13,500      |   |   |   | 3 |   |
| Equity issue (c)                   |   |   | 12,000,000  |   |   |   | 11,100  |   |   |   | -           |   |   |   | - |   |
| Equity issue (d)                   |   |   | 325,000     |   |   |   | 361     |   |   |   | -           |   |   |   | - |   |
| Equity issue (e)                   |   |   | -           |   |   |   | -       |   |   |   | 8,599,100   |   |   |   | 5,546 |   |
| Flow-through shares (e)            |   |   | -           |   |   |   | -       |   |   |   | 5,333,000   |   |   |   | 4,266 |   |
| Warrant exercise (e)               |   |   | 4,299,550   |   |   |   | 4,773   |   |   |   | -           |   |   |   | - |   |
| Broker warrant exercise (e)        |   |   | 557,284     |   |   |   | 647     |   |   |   | -           |   |   |   | - |   |
| Equity issue (f)                   |   |   | -           |   |   |   | -       |   |   |   | 5,000,000   |   |   |   | 900 |   |
| Warrant exercise (f)               |   |   | 2,400,000   |   |   |   | 3,456   |   |   |   | -           |   |   |   | - |   |
| Flow-through shares (f)            |   |   | -           |   |   |   | -       |   |   |   | 2,000,000   |   |   |   | 1,700 |   |
| Issue costs, net of income taxes   |   |   | -           |   |   |   | (876    | )      |   |   | -           |   |   |   | (1,289 | ) |
| Tax effect of flow-through shares  |   |   | -           |   |   |   | (1,611  | )      |   |   | -           |   |   |   | - |   |
|                               |   |   | 138,913,329 |   |   |   | 113,502 |   |   |   | 118,478,686 |   |   |   | 94,713 |   |
|                               |   |   |        |   |   |   |    |   |   |   |        |   |   |   |   |   |
|                               |   |   |        |   |   |   |    |   |   |   |        |   |   |   |   |   |
| Warrants and other equity:         |   |   |        |   |   |   |    |   |   |   |        |   |   |   |   |   |
| Common share purchase warrants (c) |   |   |        |   |   |   | 2,700   |   |   |   |        |   |   |   | - |   |
| Special warrant issue (c)          |   |   |        |   |   |   | -       |   |   |   |        |   |   |   | 13,800 |   |
| Common share purchase warrants (e) |   |   |        |   |   |   | -       |   |   |   |        |   |   |   | 903 |   |
| Broker purchase warrants (e)       |   |   |        |   |   |   | 46      |   |   |   |        |   |   |   | 232 |   |
| Common share purchase warrants (f) |   |   |        |   |   |   | 1,404   |   |   |   |        |   |   |   | 2,700 |   |
| Debenture purchase warrants (g)    |   |   |        |   |   |   | 550     |   |   |   |        |   |   |   | 550 |   |
| Issue costs, net of income taxes   |   |   |        |   |   |   | (228    | )      |   |   |        |   |   |   | (941 | ) |
| Outstanding, end of year           |   |   | 138,913,329 |   |   | $      | 117,974 |   |   |   | 118,478,686 |   |   | $ | 111,957 |   |

----

----

|                        |   |    |      |   | Weighted |   |   |    |   |   | Weighted  |   |
|-----------------------------|--------|---------|-----------|--------|----------|--------|--------|---------|--------|--------|-----------|--------|
|                        |   |    |      |   | Average  |   |   |    |   |   | Average   |   |
|                        |   | 2010    |      |   | Exercise |   |   | 2009    |   |   | Exercise  |   |
|                        |   | Options |      |   | Price    |   |   | Options |   |   | Price     |   |
|                        |   |    |      |   |     |   |   |    |   |   |      |   |
| Beginning of year           |   |    | 3,259,028 |   |     | $      | 1.08   |    |   | $      | 3,541,335 |   |   | $ | 1.19 |   |
| Options granted             |   |    | 1,166,546 |   |     |   | 1.15   |    |   |   | 701,828   |   |   |   | 0.80 |   |
| Options exercised           |   |    | (422,414  | )      |     |   | 0.66   |    |   |   | (13,500   | )      |   |   | 0.37 |   |
| Options expired / forfeited |   |    | (86,423   | )      |     |   | 0.98   |    |   |   | (970,635  | )      |   |   | 1.30 |   |
| End of year                 |   |    | 3,916,737 |   |     | $      | 1.15   |    |   | $      | 3,259,028 |   |   | $ | 1.08 |   |

|                   |   | Number      |      |   | Number |   |      | Weighted Average |   |   | Weighted Average |
|------------------------|--------|-------------|-----------|--------|--------|--------|-----------|------------------|--------|--------|------------------|
| Option Price Per Share |   | Outstanding |      |   | Vested |   |      | Exercise Price   |   |   | Remaining Life   |
|                   |   |        |      |   |   |   |      |             |   |   |             |
| $0.50 - $0.99          |   |        | 1,186,917 |   |   |   | 1,173,584 |             |   | $      | 0.70             |   |   |   | 5.31 years |
| $1.02 - $1.47          |   |        | 1,724,820 |   |   |   | 1,156,407 |             |   |   | 1.14             |   |   |   | 7.74 years |
| $1.54 - $2.10          |   |        | 1,005,000 |   |   |   | 893,000   |             |   |   | 1.68             |   |   |   | 6.53 years |
|                   |   |        | 3,916,737 |   |   |   | 3,222,991 |             |   | $      | 1.15             |   |   |   | 6.69 years |

----

----

----

----

|   |   |              | Number            |   |      |      |   | Number            |
|--------|--------|-------------------|-------------------|--------|-----------|-----------|--------|-------------------|
|   |   |              | Outstanding at    |   |      |      |   | Outstanding at    |
|   | Price  | Expiry Date       | December 31, 2009 |   | Issued    | Exercised |   | December 31, 2010 |
| $      | 1.60   | May 22, 2013      | 1,809,500         |   | -         | -         |   | 1,809,500         |
| $      | 0.90   | October 9, 2010   | 4,299,550         |   | -         | 4,299,550 |   | -                 |
| $      | 0.83   | April 9, 2011     | 696,605           |   | -         | 557,284   |   | 139,321           |
| $      | 0.90   | November 16, 2012 | 5,000,000         |   | -         | 2,400,000 |   | 2,600,000         |
| $      | 1.75   | December 30, 2011 |              |   | 6,000,000 | -         |   | 6,000,000         |
|   |   |              | 11,805,655        |   | 6,000,000 | 7,256,834 |   | 10,548,821        |

|                                       |   | 2010   |   |   | 2009   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                       |   |   |   |   |   |   |
| Interest expense on long term debt         |   | $      | 1,366  |   |   | $      | 1,800 |   |
| Royalty expense                            |   |   | 5,453  |   |   |   | 5,405 |   |
| Other interest expense                     |   |   | 58     |   |   |   | 101 |   |
| Interest capitalized to mineral properties |   |   | (543   | )      |   |   | (733 | ) |
| Royalty income                             |   |   | (6,508 | )      |   |   | (6,419 | ) |
| Other income and expense              |   |   | 459    |   |   |   | (612 | ) |
| Interest and other                         |   | $      | 285    |   |   | $      | (458 | ) |

|                                                                        |   | 2010   |   |   | 2009   |   |
|-----------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                        |   |   |   |   |   |   |
| Future income tax assets:                                                   |   |   |   |   |   |   |
|     Mineral properties                                  |   | $      | -      |   |   | $      | 5,079 |   |
|     Asset retirement obligations                        |   |   | 870    |   |   |   | 832 |   |
|     Share issue costs                                   |   |   | 564    |   |   |   | 844 |   |
|     Future income tax assets before valuation allowance |   |   | 1,434  |   |   |   | 6,755 |   |
| Valuation allowance                                                         |   |   | (200   | )      |   |   | (6,755 | ) |
| Future income tax assets                                                    |   |   | 1,234  |   |   |   | - |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Liabilities                                                                 |   |   |   |   |   |   |   |   |
| Mineral properties                                                          |   |   | 2,884  |   |   |   | - |   |
| Investments                                                                 |   |   | 325    |   |   |   | - |   |
| Net future income tax liabilities                                           |   | $      | 3,209  |   |   | $      | - |   |
|                                                                        |   |   | 1,975  |   |   |   | - |   |

|                                                                                 |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                 |   |   |   |   |   |   |
| Earnings (loss) before income taxes                                                  |   | $      | 5,818  |   |   | $      | (6,257 | ) |
| Combined federal and provincial tax rate                                             |   |   | 30     | %      |   |   | 31 | % |
|     Expected tax expense (recovery)                              |   |   | 1,745  |   |   |   | (1,940 | ) |
| Increase (decrease) in taxes resulting from:                                         |   |   |   |   |   |   |   |   |
|     Permanent differences                                        |   |   | 228    |   |   |   | 232 |   |
|     Effect of change in effective tax rates                      |   |   | (242   | )      |   |   | 220 |   |
|     Loss of successor costs on disposition of mineral properties |   |   | 4,824  |   |   |   | - |   |
|     Valuation allowance                                          |   |   | (6,555 | )      |   |   | 1,488 |   |
|                                                                                 |   | $      | -      |   |   | $      | - |   |

----

----

|                                                    |   | 2010   |    |   | 2009   |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                    |   |   |    |   |   |   |
|                                                    |   |   |    |   |   |   |
| Net earnings (loss) attributable to common shareholders |   | $      | 5,818   |   |   | $      | (6,257 | ) |
| Weighted average number of common shares outstanding    |   |   | 131,193 |   |   |   | 108,504 |   |
| Basic net earnings (loss) per share                     |   | $      | 0.04    |   |   | $      | (0.06 | ) |

|                                                    |   | 2010   |    |   | 2009   |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                    |   |   |    |   |   |   |
|                                                    |   |   |    |   |   |   |
| Net earnings (loss) attributable to common shareholders |   | $      | 5,818   |   |   | $      | (6,257 | ) |
|                                                    |   |   |    |   |   |   |   |   |
| Weighted average number of common shares outstanding    |   |   | 131,193 |   |   |   | 108,504 |   |
| Dilutive effect of stock options                        |   |   | 1,084   |   |   |   | - |   |
| Dilutive effect of warrants                             |   |   | 1,134   |   |   |   | - |   |
| Weighted average number of common shares outstanding    |   |   | 133,411 |   |   |   | 108,504 |   |
| Diluted net earnings (loss) per share                   |   | $      | 0.04    |   |   | $      | (0.06 | ) |

| i) | options outstanding on 1,005,000 shares with an average exercise price greater than the average market price of the Company’s common shares; and |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii) | 7,809,500 warrants with an average exercise price greater than the average market price of the Company's common shares. |
|-----|-------------------------------------------------------------------------------------------------------------------------|

----

----

|                         |   | Payments/Commitments due by period |    |
|------------------------------|--------|------------------------------------|---------|
|                         |   | Total                              |    |   | Less than1 year |   |   | 2-3Years |   |   | 4-5Years |   |   | More than5 years |   |
| Contractual Obligation       |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand loans (1)             |   |                               | 2,499   |   |   |   | 2,499 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Interest on demand loans (1) |   |                               | 102     |   |   |   | 102 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Debenture                    |   |                               | 9,838   |   |   |   | 87 |   |   |   | 9,751 |   |   |   | - |   |   |   | - |   |
| Debenture interest           |   |                               | 2,799   |   |   |   | 1,170 |   |   |   | 1,629 |   |   |   | - |   |   |   | - |   |
| Capital lease obligations    |   |                               | 2,471   |   |   |   | 1,598 |   |   |   | 873 |   |   |   | - |   |   |   | - |   |
| Interest on capital leases   |   |                               | 127     |   |   |   | 99 |   |   |   | 28 |   |   |   | - |   |   |   | - |   |
| Office lease                 |   |                               | 416     |   |   |   | 105 |   |   |   | 236 |   |   |   | 75 |   |   |   | - |   |
| Royalty payments (2)         |   |                               | 42,178  |   |   |   | 5,814 |   |   |   | 12,736 |   |   |   | 13,950 |   |   |   | 9,678 |   |
| Royalty obligations (2)      |   |                               | 84,220  |   |   |   | - |   |   |   | - |   |   |   | 21,112 |   |   |   | 63,108 |   |
|                         |   |                               | 144,650 |   |   |   | 11,474 |   |   |   | 25,253 |   |   |   | 35,137 |   |   |   | 72,786 |   |

----

----

|                                                                                   |   | December 31, 2010 |   |   | December 31, 2009 |   |
|----------------------------------------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                                                                   |   | Carrying          |   |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|                                                                                   |   | Value             |   |   | Fair Value        |   |   | Value |   |   | Fair Value |   |
|                                                                                   |   |              |   |   |              |   |   |   |   |   |   |   |
| Loans and Receivables                                                                  |   |              |   |   |              |   |   |   |   |   |   |   |
|      Accounts receivable (1)                                  |   |              | 2,716  |   |              |   | 2,716 |   |   |   | 4,806 |   |   |   | 4,806 |   |
|      Interest receivable on restricted promissory note (1)    |   |              | 4,904  |   |              |   | 4,904 |   |   |   | 4,866 |   |   |   | 4,866 |   |
|      Restricted promissory note (2)                           |   |              | n/a    |   |              |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Available-for-sale financial assets                                                    |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|      Investments (3)                                          |   |              | 4,328  |   |              |   | 4,328 |   |   |   | 643 |   |   |   | 643 |   |
| Held-for-trading                                                                       |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|      Cash and cash equivalents (1)                            |   |              | 6,401  |   |              |   | 6,401 |   |   |   | 11,948 |   |   |   | 11,948 |   |
|      Restricted cash (1)                                      |   |              | 4,389  |   |              |   | 4,389 |   |   |   | - |   |   |   | - |   |
|      Reclamation deposits (1)                                 |   |              | 2,277  |   |              |   | 2,277 |   |   |   | 2,277 |   |   |   | 2,277 |   |
|      Gold forward contract (4)                                |   |              | (257   | )      |              |   | (257 | ) |   |   | (119 | ) |   |   | (119 | ) |
|      Foreign currency forward contract (4)                    |   |              | -      |   |              |   | - |   |   |   | 270 |   |   |   | 270 |   |
| Other financial assets                                                                 |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|      Assets held for sale (Note 8) (1)                        |   |              | -      |   |              |   | - |   |   |   | 570 |   |   |   | 570 |   |
| Other financial liabilities                                                            |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|      Demand loans (1)                                         |   |              | 2,499  |   |              |   | 2,499 |   |   |   | 4,586 |   |   |   | 4,586 |   |
|      Accounts payable (1)                                     |   |              | 5,280  |   |              |   | 5,280 |   |   |   | 4,251 |   |   |   | 4,251 |   |
|      Liabilities related to assets held for sale (Note 8) (1) |   |              | -      |   |              |   | - |   |   |   | 370 |   |   |   | 370 |   |
|      Interest payable on royalty obligations (1)              |   |              | 4,770  |   |              |   | 4,770 |   |   |   | 4,729 |   |   |   | 4,729 |   |
|      Debenture (3)                                            |   |              | 9,344  |   |              |   | 9,838 |   |   |   | 9,192 |   |   |   | 9,838 |   |

----

----

|                                              |   | 2010   |    |   | 2009   |   |
|---------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                              |   |   |    |   |   |   |
| Demand loan # 1 (Note 11)                         |   | $      | -       |   |   | $      | 192 |   |
| Demand loan # 2 (Note 11)                         |   |   | 667     |   |   |   | 1,667 |   |
| Demand loan # 3 (Note 11)                         |   |   | 1,832   |   |   |   | 2,727 |   |
| Debenture (Note 12)                               |   |   | 9,344   |   |   |   | 9,192 |   |
| Total debt                                        |   |   | 11,843  |   |   |   | 13,778 |   |
| Less: cash, cash equivalents, and restricted cash |   |   | 10,790  |   |   |   | 11,948 |   |
| Net debt                                          |   |   | 1,053   |   |   |   | 1,830 |   |
| Shareholders’ equity                        |   |   | 124,938 |   |   |   | 110,095 |   |
| Total capital                                     |   | $      | 125,991 |   |   | $      | 111,925 |   |