---



TAHOE RESOURCES INC.5190 Neil Rd. Suite 460 Reno,
Nevada USA 89502

ANNUAL INFORMATION FORM

For the year ended December 31, 2012

Dated March 7, 2013

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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

TABLE OF CONTENTS

|                                                            | Page
|----------------------------------------------------------- | ----
|INTERPRETATION AND
      OTHER INFORMATION                  | 1   
|Definitions                                                 | 1   
|Glossary of Technical Terms                                 | 3   
|Currency
      Information                                  | 5   
|Forward-Looking Statements                                  | 6   
|Disclosure
      Standards                                  | 7   
|CORPORATE
      STRUCTURE                                   | 9   
|Incorporation
      and Offices                             | 9   
|GENERAL DEVELOPMENT
      OF OUR BUSINESS                   | 9   
|Development
      of Our Business                           | 9   
|Intercorporate Relationships                                | 10  
|The
      Transaction Agreement and Shareholders Agreement | 10  
|DESCRIPTION OF OUR
      BUSINESS                           | 11  
|Overview of
      Our Business and Strategy                 | 11  
|The Silver Industry                                         | 12  
|Products                                                    | 13  
|Specialized Skill and Knowledge                             | 13  
|Employees                                                   | 14  
|Foreign Operations                                          | 14  
|Competitive
      Conditions                                | 14  
|Cycles                                                      | 14  
|Social and
      Environmental Activities                   | 14  
|Doing Business In Guatemala                                 | 17  
|Risk Factors                                                | 21  
|The Escobal Project                                         | 32  
|DIVIDENDS AND DISTRIBUTIONS                                 | 47  
|DESCRIPTION OF
      CAPITAL STRUCTURE                      | 48  
|MARKET FOR SECURITIES                                       | 48  
|Trading History on the NYSE                                 | 48  
|Trading
      History on the TSX                            | 49  
|PRIOR SALES                                                 | 49  
|SHARES SUBJECT TO CONTRACTUAL
      RESTRICTION ON TRANSFER | 49  

|March 7, 2013 | i
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

|DIRECTORS
      AND EXECUTIVE OFFICERS                                          | 50
|------------------------------------------------------------------------------- | --
|Directors
      and Executive Officers                                          | 50
|Cease
      Trade Orders, Bankruptcies, Penalties or Sanctions                  | 53
|Conflicts
      of Interest                                                     | 54
|INTEREST
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS                | 54
|TRANSFER
      AGENTS AND REGISTRAR                                             | 54
|MATERIAL
      CONTRACTS                                                        | 54
|INTERESTS
      OF EXPERTS                                                      | 55
|SELECTED
      CONSOLIDATED FINANCIAL INFORMATION                               | 55
|ADDITIONAL
      CORPORATE AND FINANCIAL INFORMATION                            | 55
|INFORMATION
      CONCERNING THE COMPANYS AUDIT COMMITTEE AND EXTERNAL AUDITOR | 56
|The
      Audit Committees Duties and Charter                                  | 56
|Composition
      of the Audit Committee                                        | 56
|Relevant
      Education and Experience                                         | 56
|Pre-Approval
      Policies and Procedures                                      | 57
|External
      Auditor Service Fees                                             | 57
|APPENDIX
      A  TAHOE RESOURCES                                              | A 
|Second
      Amended Audit Committee Charter                                    | A 

|March 7, 2013 | ii
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

INTERPRETATION AND OTHER INFORMATION

|DEFINITIONS
|-----------

In this Annual Information Form, the following words and
phrases have the following meanings unless the context otherwise requires:

Acquisition means the acquisition by the Company of
the Escobal Project Assets in accordance with the terms and conditions of the
Transaction Agreement;

Audit Committee means the Audit Committee of the
Board;

Award means an award of Deferred Shares or Restricted
Shares under the Share Option and Share Incentive Plan;

BCA means the Business Corporations Act(British Columbia), as amended, including all regulations promulgated
thereunder;

Board means the board of directors of the Company;

Compensation Committee means the Compensation
Committee of the Board;

Company means Tahoe Resources Inc. together with,
unless the context indicates otherwise, all of its subsidiaries.

Deferred Shares means Shares subject to Awards that
will be issued upon the passage of time, continued employment of the recipient
by the Company or upon such other terms and conditions as the Compensation
Committee of the Company may determine in its discretion;

Entre Mares means Entre Mares de Guatemala, S.A., a
corporation wholly-owned by the Vendors;

ERHL means Escobal Resources Holdings Limited, a
company incorporated under the laws of Barbados which is owned by the
Company;

Escobal Project means the mineral exploration project
comprised of the Escobal Project Assets;

Escobal Project Assets means those assets exclusively
used in or related to the Escobal Project, including, among other things, mining
licenses and interests, surface rights, permits and real property, equipment and
supplies, all pits, shafts, haulageways and other underground workings, and all
buildings, plants and other structures, fixtures and improvements that exist in
or on the real property, the technical data and correspondence in the possession
of Entre Mares in respect of the real property and the mining licenses and
interests including all drill core, samples, reports, drill logs and digital
data files, whether or not located on the real property and certain agreements
which pertain to the Escobal Project, as more particularly defined in the
Transaction Agreement;

Escobal Preliminary Economic Assessment or May
2012 Escobal PEAmeans the independent technical report entitled NI 43-101
Preliminary Economic Assessment  Escobal Guatemala Project dated May 7, 2012
prepared under the guidance of Mr. Conrad Huss, P.E., of M3 Engineering & Technology Corporation (M3), together
with Mr. Daniel Roth, P.E., of M3, Mr. Thomas L. Drielick, P.E., of M3 and Mr.
Paul Tietz, C.P.G., of Mine Development Associates, an independent mining
consulting firm, all Qualified Persons under NI 43-101.

|March 7, 2013 | 1
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      Year Ended December 31, 2012
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Escobal Vein means the zone of mineralization on the
Oasis License that contains the Mineral Resources for the Escobal Project;

GHBL means Goldcorp Holdings (Barbados) Ltd., a
Barbados company that is an indirect wholly-owned subsidiary of Goldcorp;

GHL means Guatemala Holdings Ltd., a Cayman Islands
company that is an indirect wholly-owned subsidiary of Goldcorp;

Goldcorp means Goldcorp Inc., a Canadian public
company and where the context requires, includes affiliates of Goldcorp
Inc.;

IFRS means International Financial Reporting Standards
as issued by the International Accounting Standards Board;

MARN means the Ministry of Environment and Natural
Resources of Guatemala;

MEM means the Ministry of Energy and Mines of
Guatemala;

M3 means M3 Engineering & Technology Corporation,
an independent mining consulting firm;

NI 43-101 means National Instrument 43-101  Standards
of Disclosure for Mineral Projects;

Oasis License means the exploration license on which
the Escobal Vein is located;

Persons includes an individual, partnership,
association, body corporate, trustee, executor, administrator or legal
representative;

Restricted Shares means Shares subject to Awards that
are issued but which will only be delivered to the holder of the Award upon the
passage of time, continued employment of the holder by the Company or upon such
other terms and conditions as the Compensation Committee of the Company may
determine in its discretion;

Minera San Rafael means Minera San Rafael, S.A., a
Guatemala corporation that is owned by ERHL and Tahoe Swiss AG, a Swiss
corporation that is owned by the Company;

SEC means the Securities and Exchange Commission of
the United States of America;

SEDAR means the System for Electronic Document
Analysis and Retrieval, accessible through the internet at www.sedar.com;

Shares means common shares without par value of the
Company;

Shareholders Agreement means the amended and restated
shareholders agreement dated as of October 12, 2010, entered into between the
Company and Goldcorp pursuant to the terms of the Transaction Agreement;

|March 7, 2013 | 2
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      Year Ended December 31, 2012
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Share Option and Incentive Share Plan means the
Companys Share Option and Incentive Share Plan;

Transaction Agreement means the definitive purchase
and sale agreement made as of May 3, 2010, as amended on October 12, 2010, among
the Company and the Vendors relating to the acquisition by the Company of the
Escobal Project Assets and including any amending agreement or instrument
supplementary or auxiliary thereto;

TSX means the Toronto Stock Exchange; and

Vendors means GHBL and GHL.

|GLOSSARY OF
      TECHNICAL TERMS
|---------------------------------

|Ag:                                  | Silver.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Au:                                  | Gold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Contained Ounces:                    | The ounces of metal in reserves obtained by multiplying
      tonnage by grade.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Cut off Grade:                       | The grade below which mineralized material will be
      considered waste rather than ore.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|g/tonne or g/t:                      | Grams per metric tonne; 31.103 grams is equal to one troy
      ounce.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Development:                         | The preparation of a known commercially mineable deposit
      for mining.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Indicated Mineral
      Resource(1): | That part of a Mineral Resource for which quantity, grade
      or quality, densities, shape and physical characteristics can be estimated
      with confidence sufficient to allow the appropriate application of
      technical and economic parameters, to support mine planning and evaluation
      of the economic viability of the deposit. The estimate is based on
      detailed and reliable exploration and testing information gathered through
      appropriate techniques from locations such as outcrops, trenches, pits,
      workings and drill holes that are spaced closely enough for geological and
      grade continuity to be reasonably assumed.
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Inferred Mineral
      Resource(1):  | That part of a Mineral Resource for which quantity and
      grade or quality can be estimated on the basis of geological evidence and
      limited sampling and reasonably assumed, but not verified, geological and
      grade continuity. The estimate is based on limited information and
      sampling gathered through appropriate techniques from locations such as
      outcrops, trenches, pits, workings and drill holes.                                                                                                                                                                                                                                       
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|IRR:                                 | Internal Rate of Return.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|km:                                  | Kilometre.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|km2:                                 | Square Kilometre.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|March 7, 2013 | 3
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

|GLOSSARY OF
      TECHNICAL TERMS
|---------------------------------

|Measured Mineral
      Resource(1): | That part of a Mineral Resource for which quantity, grade
      or quality, densities, shape and physical characteristics are so well
      established that they can be estimated with confidence sufficient to allow
      the appropriate application of technical and economic parameters, to
      support production planning and evaluation of the economic viability of
      the deposit. The estimate is based on detailed and reliable exploration,
      sampling and testing information gathered through appropriate techniques
      from locations such as outcrops, trenches, pits, workings and drill holes
      that are spaced closely enough to confirm both geological and grade
      continuity.
|----------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|mtpd                                | metric tonnes per day                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Mineral Resource:                   | A concentration or occurrence of diamonds, natural solid
      inorganic material, or natural solid fossilized organic material including
      base and precious metals, coal, and industrial minerals in or on the
      Earths crust in such form and quantity and of such a grade or quality
      that it has reasonable prospects for economic extraction. The location,
      quantity, grade, geological characteristics and continuity of a Mineral
      Resource are known, estimated or interpreted from specific geological
      evidence and knowledge. Mineral Resources are sub-divided, in order of
      increasing geological confidence, into Inferred, Indicated and Measured
      categories.   
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Mineralized:                        | Mineral bearing; the metallic minerals may have been
      either a part of the original rock unit or injected at a later time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|NPV:                                | Net Present Value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|NSR or Net Smelter Returns:         | Gross sales proceeds received from the sale of production
      obtained from a property, less the costs of insurance, smelting, refining
      (if applicable) and the cost of transportation of production from the mine
      or mill to the point of sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Ore:                                | A metal or mineral or a combination of these of
      sufficient value as to quality and quantity to enable it to be mined and
      processed at a profit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|oz/t:                               | Troy ounces of metal per ton of material. One oz/t is
      equivalent to 31.103 grams per ton or 34.286 grams per tonne.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Pb:                                 | Lead.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|ppm:                                | Parts per million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Probable Mineral
      Reserve(1):  | The economically mineable part of an Indicated and in
      some circumstances a Measured Mineral Resource demonstrated by at least a
      preliminary feasibility study. This study must include adequate
      information on mining, processing, metallurgical, economic, and other
      relevant factors that demonstrate, at the time of reporting, that economic
      extraction can be justified.                                                                                                                                                                                                                                                                                                              

|March 7, 2013 | 4
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

|GLOSSARY OF
      TECHNICAL TERMS
|---------------------------------

|Proven Mineral Reserve(1): | The economically mineable part of a Measured Mineral
      Resource demonstrated by at least a preliminary feasibility study. This
      study must include adequate information on mining, processing,
      metallurgical, economic, and other relevant factors that demonstrate, at
      the time of reporting, that economic extraction is justified.
|-------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |                                                                                                                                                                                                                                                                                                                                                           
|QA/QC:                     | Quality Assurance/Quality Control.                                                                                                                                                                                                                                                                                                                        
|                           |                                                                                                                                                                                                                                                                                                                                                           
|Recovery Rate:             | The percentage of metals or minerals which are recovered
      from ore during processing.                                                                                                                                                                                                                                                                
|                           |                                                                                                                                                                                                                                                                                                                                                           
|Reserves:                  | Combined Proven and Probable Mineral Reserves.                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                           
|Silver Equivalent:         | An amount of silver that is represented by the value of
      silver in a concentrate plus a determined recovered value from a smelter
      for the gold, lead and zinc in the concentrate; also described as Ag
      Equivalent. See The Escobal Project  Mineral Resources.                                                                        
|                           |                                                                                                                                                                                                                                                                                                                                                           
|Zn:                        | Zinc.                                                                                                                                                                                                                                                                                                                                                     

|(1) | The definitions of Proven and Probable Mineral Reserves,
      and Measured, Indicated and Inferred Mineral Resources are set forth in NI
      43-101 of the Canadian Securities Administrators which establishes
      standards for all public disclosure an issuer makes of scientific and
      technical information concerning mineral projects. A reader in the United
      States should be aware that the definition standards enunciated in NI
      43-101 differ significantly from those set forth in SEC Industry Guide 7,
      and resource information disclosed pursuant to NI 43-101 may not be
      comparable to similar information disclosed by U.S. companies. See
      Disclosure Standards for more information.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|CURRENCY
      INFORMATION
|--------------------------

All currency amounts in this Annual Information Form are
expressed in United States dollars, unless otherwise noted. The following table
reflects the low and high rates of exchange for one United States dollar,
expressed in Canadian dollars, during the periods noted, the rates of exchange
at the end of such periods and the average rates of exchange during such
periods, based on the Bank of Canada noon spot rate of exchange.

**Two Months** Ended
    Year Ended December 31,Feb. 28, 2013
      (Cdn$)
    2012 (Cdn$)
    2011 (Cdn$)
    2010 (Cdn$)
    2009 (Cdn$)Low for the period
    $0.9839
    0.9710
    $0.9449
    $0.9946
    $1.0292High for the period
    1.0285
    1.0418
    1.0604
    1.0848
    1.3000Rate at the end of the period
    1.0285
    1.0051
    0.9833
    1.0054
    0.9555Average noon spot rate for the period
    1.0003
    0.9996
    0.9891
    1.0299
    1.1420


On March 7, 2013, the Bank of Canada noon spot rate of exchange
was $1.00 - Cdn$0.9707.

|March 7, 2013 | 5
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

|FORWARD-LOOKING
      STATEMENTS
|--------------------------------

This Annual Information Form (AIF) contains forward-looking
information within the meaning of applicable Canadian securities legislation
and forward looking statements within the meaning of Unites States Private
Securities Litigation Reform Act of 1995 (collectively referred to as
forward-looking information). Wherever possible, words such as plans,
expects, or does not expect, budget, scheduled, estimates,
forecasts, anticipate or does not anticipate, believe, intend and
similar expressions or statements that certain actions, events or results may,
could, would, might or will be taken, occur or be achieved, have been
used to identify forward-looking information.

Forward-looking information in this AIF may include, but is not
limited to: statements relating to changes in Guatemalan mining laws and
regulations, including the expected terms and timeline for finalization of the
Escobal Royalty Agreement; information with respect to our future financial and
operating performance and that of our subsidiaries, including our statement that
our objective is to develop the Escobal project into a profitable silver mining
operation; the estimation of Mineral Resources and our realization of mineral
resource estimates; our statements relating to the assessment of mineralization
such mineralization warranting further drilling of the property; our plan to
pursue the exploration, permitting, engineering and development of the Escobal
project and to expand its resource base; our mine development plan; costs,
including projected operating costs, and timing of development of the Escobal
project, including the resumption of work on and the completion of the power
line, commencing mill commissioning in the second half of 2013, completion of
paste plant construction in the second quarter of 2013, mill start up and full
production and statements related to commencing commercial production by early
2014 and achieving production in excess of 3500 metric tons per day and in
particular statements relating to project costs, economics, production and
timing for the 4500 metric tons per day scenario and timing for the 5500 metric
tons per day scenario; implementation of our comprehensive Environmental Impact
Management Program for production when mine production and plant operations
commence in the second half of 2013; our expectations with respect to
reclamation obligations; the acquisition of additional mineral resource
interests in the Americas; future exploration and development activities, and
the costs and timing of those activities; timing and receipt of approvals,
consents and permits under applicable legislation including the expected
timeline for receiving the exploitation permit for the Escobal project and
permits for other mining property concessions; results of future exploration and
drilling; metals prices; and adequacy of financial resources.

Forward-looking information is based on the reasonable
assumptions, estimates, analysis and opinions of management made in light of its
experience and its perception of trends, current conditions and expected
developments, as well as other factors that management believes to be relevant
and reasonable in the circumstances at the date that such statements are made,
but which may prove to be incorrect. We believe that the assumptions and
expectations reflected in such forward-looking information are reasonable.
Assumptions have been made regarding, among other things: our ability to carry
on exploration and development activities; the timely receipt of required
approvals; the price of silver and other metals; our ability to operate in a
safe; efficient and effective manner; and our ability to obtain financing as and
when required and on reasonable terms. Readers are cautioned that the foregoing
list is not exhaustive of all factors and assumptions which may have been
used.

|March 7, 2013 | 6
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Forward-looking information is subject to known and unknown
risks, uncertainties and other factors that may cause actual results to be
materially different from those expressed or implied by such forward-looking
information, including risks associated with our dependence on the Escobal
project and our limited operating history, risks associated with the fluctuation
of the price of silver and other metals, the risk of unrest and
political instability in Guatemala, the risk that an exploitation license and
environmental permits for development of the Escobal project cannot be obtained,
risks associated with the availability of additional funding as and when
required, exploration and development risks, permitting and licensing risks,
uncertainty in the estimation of mineral resources, geologic, hydrological, and
geotechnical risks, infrastructure risks, inflation risks, governmental
regulation risks, environmental risks and hazards, insurance and uninsured
risks, land title risks, risks associated with competition, risks associated
with currency fluctuations, labour and employment risks, risks associated with
dependence on key management personnel and executives, legislative, judicial and
litigation risks, the risk that dividends may never be declared, risks
associated with the repatriation of earnings, risks of continued negative
operating cash flow, risks associated with the Companys hedging policies, risks
associated with the interests of certain directors in other mining projects,
risks associated with dilution, risks associated with stock exchange prices and
risks associated with effecting service of process and enforcing judgments.

This forward-looking information is based on the reasonable
beliefs, expectations and opinions of management on the date of this AIF.
Although we have attempted to identify important factors that could cause actual
results to differ materially from those contained in forward-looking
information, there may be other factors that cause results not to be as
anticipated, estimated or intended. There is no assurance that such information
will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such information. Accordingly, readers
should not place undue reliance on forward-looking information. We do not
undertake to update any forward-looking information, except as, and to the
extent required by, applicable securities laws.

Cautionary Note to U.S. Investors Concerning Estimates of
Measured and Indicated and Inferred Resources:There are no Mineral Reserves
reported for the Escobal Project. Mineral Resources that are not Mineral
Reserves do not have demonstrated economic viability. This section uses the
terms Measured and Indicated Mineral Resources. We advise U.S. investors that
while those terms are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them. U.S. investors are
cautioned not to assume that any part or all of mineral deposits in these
categories will ever be converted into Reserves. This section also uses the term
Inferred Mineral Resources. We advise U.S. investors that while this term is
recognized and required by Canadian regulations, the U.S. Securities and
Exchange Commission does not recognize it. Inferred Mineral Resources have a
great amount of uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all or any part
of an Inferred Mineral Resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of Inferred Mineral Resources may not form the
basis of feasibility or pre-feasibility studies, except in rare cases. U.S.
investors are cautioned not to assume that part or all of an Inferred Mineral
Resource exists, or is economically or legally minable.

|DISCLOSURE
      STANDARDS
|--------------------------

The disclosure in this AIF uses terms that comply with
reporting standards in Canada and certain estimates are made in accordance with
Canadian National Instrument 43-101 Standards of Disclosure for Mineral
Projects(NI 43-101). NI 43-101 is a rule developed by the Canadian
Securities Administrators that establishes standards for all public disclosure
an issuer makes of scientific and technical information concerning mineral
projects. Unless otherwise indicated, all resource estimates contained in or
incorporated by reference in this AIF have been prepared in accordance with NI
43-101. These standards differ significantly from the requirements of the SEC,
and resource information contained herein and incorporated by
reference herein may not be comparable to similar information disclosed by U.S.
companies.

|March 7, 2013 | 7
|------------- | -

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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

There are no mineral reserves reported for the Escobal project.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability. Certain documents incorporated by reference herein use the
terms probable mineral reserve and proven mineral reserve, as permitted
under NI 43-101. For United States reporting purposes, SEC Industry Guide 7
(under the United States Securities Exchange Act of 1934 (the Exchange Act)),
as interpreted by Staff of the SEC, applies different standards in order to
classify mineralization as a reserve. As a result, the definitions of proven and
probable reserves used in NI 43-101 differ from the definitions in the SEC
Industry Guide 7. Under SEC standards, mineralization may not be classified as a
"reserve" unless the determination has been made that the mineralization could
be economically and legally produced or extracted at the time the reserve
determination is made. Among other things, all necessary permits would be
required to be in hand or issuance imminent in order to classify mineralized
material as reserves under the SEC standards. Accordingly, mineral reserve
estimates calculated in accordance with Canadian standards may not qualify as
reserves under SEC standards.

In addition, this AIF uses the terms measured mineral
resource, indicated mineral resource and inferred mineral resource to
comply with the reporting standards in Canada. The Company advises United States
investors that while those terms are recognized and required by Canadian
regulations, the SEC does not recognize them. United States investors are
cautioned not to assume that any part or all of the mineral deposits in these
categories will ever be converted into mineral reserves. These terms have a
great amount of uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility.

Further, inferred mineral resources have a great amount of
uncertainty as to their existence and as to whether they can be mined legally or
economically. Therefore, United States investors are also cautioned not to
assume that all or any part of the inferred mineral resources exist. In
accordance with Canadian rules, estimates of inferred mineral resources cannot
form the basis of feasibility or other economic studies.

It cannot be assumed that all or any part of measured mineral
resources, indicated mineral resources or inferred mineral resources will
ever be upgraded to a higher category. Investors are cautioned not to assume
that any part of the reported measured mineral resources, indicated mineral
resources or inferred mineral resources in this AIF is economically or
legally mineable.

In addition, disclosure of contained ounces is permitted
disclosure under Canadian regulations; however, the SEC only permits issuers to
report mineralization as in place tonnage and grade without reference to unit
measures.

For the above reasons, information concerning descriptions of
Mineralization and Mineral Resources contained in this AIF may not be comparable
to information made public by U.S. companies subject to the reporting and
disclosure requirements of the SEC.

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      Year Ended December 31, 2012
| | ------------------------------------------------------------------

CORPORATE STRUCTURE

|INCORPORATION
      AND OFFICES
|-------------------------------

We were incorporated under the BCA on November 10, 2009 under
the name CKM Resources Inc. Our name was changed to Tahoe Resources Inc. on
January 13, 2010. Our head office is located at 5190 Neil Road, Suite 460, Reno,
Nevada, United States 89502. Our registered and records office is located at
1500  1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E
4N7.

We currently have four wholly-owned subsidiaries: Tahoe
Resources USA Inc., a company incorporated under the laws of Nevada on February
2, 2010, Tahoe Swiss A.G., a company incorporated under the laws of Switzerland
on May 20, 2010, Escobal Resources Holdings Limited, a company incorporated
under the laws of Barbados on March 16, 2010, and Minera San Rafael, S.A., a
company incorporated under the laws of Guatemala on April 5, 2010.

In this Annual Information Form, unless the context indicates
otherwise, the term the Company refers to the Company together with all of its
subsidiaries.

GENERAL DEVELOPMENT OF OUR BUSINESS

|DEVELOPMENT OF
      OUR BUSINESS
|---------------------------------

We are an exploration and development stage company. Since our
incorporation in November of 2009, we have completed an initial public offering
of our Shares, listed our Shares on the TSX, acquired the Escobal Project Assets
in Guatemala, completed an offering of our Shares under a short form prospectus
filed in all provinces of Canada, commenced exploration and development
activities of the Escobal Project, completed Escobal Preliminary Economic
Assessment (PEA) Reports in November 2010 and May 2012, received approval of
our Escobal Environmental Impact Statement from Guatemalas Ministry of
Environment, listed our shares on the New York Stock Exchange in May 2012 and
spent $753.2 million on the Escobal Project as at December 31, 2012. This amount
includes capital additions, project expenses and initial acquisition costs.

The initial public offering of 58,000,000 Shares at a price of
Cdn$6.00 each for gross proceeds of Cdn$348 million was completed on June 8,
2010, the day of listing our Shares on the TSX. At that time, an additional
47,766,000 shares were paid to the vendor company as part of the acquisition
cost for the Escobal Project. On June 17, 2010, we issued a further 5,800,000
Shares at a price of Cdn$6.00 per Share, pursuant to the exercise of the
over-allotment option in connection with our initial public offering, for
additional gross proceeds of Cdn$34.8 million.

We acquired the Escobal Project Assets on June 8, 2010 pursuant
to the terms of the Transaction Agreement, which was negotiated at arms length.
The Acquisition was completed contemporaneously with the closing of our initial
public offering. The Escobal Project Assets were held by San Rafael, a Guatemala
corporation, owned by GHL and ERHL. In turn, ERHL was owned by the Vendors. On
June 8, 2010 and pursuant to the Acquisition, we acquired from the Vendors all
of the issued and outstanding shares of ERHL and the shares of San Rafael held
by GHL. Subsequent to the Acquisition, the Vendors transferred their Shares to
Goldcorp and Goldcorp and the Company entered into the Shareholders
Agreement.

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The sale of 24,959,692 Shares at a price of Cdn$14.10 each for
gross proceeds of Cdn$351,931,657 was completed on December 23, 2010 through a
short form prospectus filed in each of the provinces of Canada and by private
placement outside of Canada.

The Company expects to finalize a banking credit line of
approximately $50 million to be implemented in the first half of 2013. The
proceeds are intended to provide additional working capital to fund the 4500 tpd
expansion project which was approved in May 2012.

|INTERCORPORATE
      RELATIONSHIPS
|----------------------------------

Our corporate structure is as follows:



|THE TRANSACTION
      AGREEMENT AND SHAREHOLDERS AGREEMENT
|-----------------------------------------------------------

The significant terms of the Transaction Agreement and the
Shareholders Agreement entered into in connection with the Acquisition are:

- The purchase price (the Purchase Price) of approximately $500 million was
  satisfied by the payment of $224,570,000 in cash and the issuance to the
  Vendors of 47,766,000 Shares and the payment of a finders fee consisting of
  $2.2 million in cash and the issuance of 364,304 Shares.
- Goldcorp is entitled to have three nominees appointed to the Companys
  Board. Goldcorps current nominees on the Companys Board are A. Dan Rovig,
  Kenneth F. Williamson and John P. Bell (see Directors and Executive
  Officers), and so long as Goldcorp and its affiliates hold 20% or more of the
  issued Shares, Goldcorp will have the right to nominate three individuals as directors of the
  Company at each meeting of shareholders at which directors are to be elected.
  The number of individuals Goldcorp and its affiliates are entitled to nominate
  as directors is subject to adjustment for changes in the size of the Companys
  Board.

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- The Company has a 20 kilometre area of interest for its benefit around the
  Escobal Project until June 8, 2013 and Goldcorp and its affiliates have an
  area of interest for their benefit varying from 20 to 50 kilometres around
  certain of their projects until June 8, 2013.
- As long as Goldcorp and its affiliates hold at least 20% of the issued
  Shares, Goldcorp and its affiliates have a right to maintain their percentage
  interest in the issued Shares by participating in the issuance of additional
  Shares for cash or cash equivalents. If Shares are issued on a non-cash
  transaction, Goldcorp may maintain its percentage interest in the issued
  Shares through the next issue of Shares for cash or cash equivalents to be
  undertaken by the Company.
- Until the first to occur of (i) Goldcorp and its affiliates cumulatively
  ceasing to beneficially own at least 20% of the issued Shares, (ii) June 8,
  2015 or (iii) C. Kevin McArthur ceasing to be the Chief Executive Officer of
  the Company, Goldcorp is subject to standstill provisions in respect of the
  Company and its securities, subject to exceptions that relate to a change of
  control of the Company and, provided that the Company has allowed Goldcorp to
  nominate three persons to be directors of the Company (subject to adjustment
  in such number, as described above), Goldcorp will not vote its Shares at
  meetings of shareholders in favour of any nominee directors who are not
  nominated by the Board.
- So long as Goldcorp and its affiliates hold at least 20% of the issued
  Shares, the Company has a right to designate a purchaser for any Shares which
  Goldcorp wishes to sell, where such Shares to be sold represent 5% or more of
  the issued Shares.

DESCRIPTION OF OUR BUSINESS

|OVERVIEW OF OUR
      BUSINESS AND STRATEGY
|-------------------------------------------

Our overall strategy is to position ourselves as a leading
silver producer with quality assets in the Americas, significant silver
resources, low silver production costs and a strong growth profile. To those
ends, our principal objectives at this time are to develop the Escobal Project
(see Figure 1) into a profitable silver mining operation, and to expand the
Mineral Resource base of the Escobal Project through exploration and development
of the Escobal Vein and other veins identified in the region. The Escobal Vein
is one of numerous vein showings recognized in the district and the only vein
system that has been systematically drilled. Besides expansion of the Escobal
Vein, other drill-ready targets have been identified in the vicinity.

We will continue to identify, investigate and, where
appropriate, acquire interests in mineral properties in the Americas through
direct application to government authorities, joint venture activities or
acquisition from existing holders. As part of this process, we will undertake
early-stage exploration activities to ensure an orderly and steady development
of exploration targets.

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Figure 1  Escobal Project Location Map



|THE SILVER
      INDUSTRY
|-------------------------

Demand for silver is based on investment demand, industrial and
decorative uses, photography, jewellery and silverware. Together, these
categories represent more than 90% of annual silver consumption.

Silver has a number of unique properties including its
strength, malleability and ductility, its electrical and thermal conductivity,
its sensitivity to and high reflectance of light, and the ability to endure
extreme temperature ranges. Silvers unique properties restrict its substitution
in most applications.

Silver prices will have a direct impact on our business.
Declining prices can, for example, impact operations by requiring a
re-assessment of the feasibility of a particular project. See Description of
Our Business  Risk Factors  Risks Relating to the Companys Business  Metal
Price Fluctuations. A chart indicating silver prices since January 1, 1999, is
set out below. As of March 7, 2013, the London Fix price of silver was
US$29.01.

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|PRODUCTS
|--------

The Company does not have a commercialmining operation.
See Descriptionof Our Business -The Escobal Project for a
descriptionof the estimated costs to place this project into commercial
production.

|SPECIALIZED
      SKILL AND KNOWLEDGE
|-------------------------------------

Most aspects of our business requirespecialized skills
and knowledge in the areasof geology, exploration and development,
environmental issues and accounting. We havea number of employees with
extensive experiencein mining, geology, exploration and development in
Guatemala, including C. KevinMcArthur, President and Chief Executive
Officer,Ronald W. Clayton, Executive Vice Presidentand Chief
Operating Officer, Brian Brodsky,Vice President Exploration and Don
Gray, Escobal Project General Manager.

Mr. McArthur is an experienced miningengineer with over
30 years of engineering,mine building and mine operations experience,including over 8 years in the role of Presidentand Chief Executive
Officer of Glamis GoldLtd. (Glamis) and two years in the role of
Presidentand Chief Executive Officer of Goldcorp. Mr. Brodsky was
Goldcorps Exploration Managerfor Central America. Mr. Clayton was
SeniorVice President, Operations, for Hecla Mining Companybefore
joining the Company. He and Don Gray havemany years of undergroundsilver mining experience, including significant Latin American operating
experience.

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|EMPLOYEES
|---------

As at the date of this AIF, we have 22 employees at our office
in Reno, Nevada and approximately 560 employees in Guatemala.

|FOREIGN
      OPERATIONS
|------------------------

The Escobal Project is located in Guatemala, and as such is
exposed to various levels of political, economic and other risks and
uncertainties associated with operating in a foreign jurisdiction. See
Description of Our Business  Risk Factors  Risks Relating to the Companys
Business Operations in Guatemala,  Obtaining and Renewing Licenses and
Permits,  Title to Assets and  Governmental Regulation.

|COMPETITIVE
      CONDITIONS
|----------------------------

We compete with other entities in the search for and
acquisition of mineral properties. As a result of this competition, the majority
of which is with companies with greater financial resources, we may be unable to
acquire attractive properties in the future on terms we consider acceptable. We
also compete for financing with other resource companies, many of whom have more
advanced properties. There is no assurance that additional capital or other
types of financing will be available to us if needed or that, if available, the
terms of such financing will be favourable to us. See Description of Our
Business  Risk Factors  Risks Relating to the Companys Business 
Competition for New Properties and  Financing Requirements.

|CYCLES
|------

We intend to become a producer of silver. See Description of
Our Business  The Silver Industry for details of the demand for silver and the
market price for silver.

|SOCIAL AND
      ENVIRONMENTAL ACTIVITIES
|-----------------------------------------

The Company is committed to conducting business honestly and
ethically everywhere we operate. We aspire to deliver long term shareholder
value through sustainable economic and social development in the communities
where we work. We strive to minimize the environmental effects of our
operations, to provide a safe and healthy workplace for all our employees and
contractors and to promote sustainable businesses and social programs in the
communities where we operate.

In addition, the Company is in the process of negotiating a
voluntary royalty agreement with the Guatemalan government, expected to be
similar in terms of the general voluntary royalty agreement, negotiated by the
Mining Industry Association in January 2012. The Companys individual agreement
is expected to stipulate that 50% of the royalty shall be paid to the local
communities and 50% to the federal government. For details regarding the royalty
agreements, see Doing Business in GuatemalaMining.

Environment

We recognize that all development comes with some impacts. We
are dedicated to the highest standards of responsible environmental stewardship.
We honour this commitment by meeting or exceeding local governmental regulations
and operating our projects to North American Standards. See Description of Our Business  Escobal
Project  Environment and Reclamation. We have review processes in place
which are designed to prevent or minimize environmental incidents or impacts, to
evaluate incidents and operating practices and to create action plans and
operating procedures to prevent reoccurrence. The Board oversees the Companys
environmental management through the Health, Safety, Environment and Community
Committee.

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In 2012, we continued to work with local communities to help
them upgrade water systems and infrastructure programs. The Company also
advanced its partnership with San Carlos University in Guatemala to conduct
health and environmental baseline studies. We also worked with an independent
party on a full community needs assessment to guide further programs in the
general area of the Escobal Project.

Engagement and Communication

A key aspect of our sustainable development program is to
inform and educate communities about the implications of our project and its
potential impacts to the area. The team in Guatemala conducts workshops and
seminars to facilitate this process. Additionally, the Company has remedial
programs in place to systematically address complaints and grievances.

Our 2012 communication priorities included building enduring
CompanyCommunity relations; disseminating information about the Project to
community members; and executing an effective grievance/suggestion
procedure.

In 2012 the Community Relations team conducted 300 home visits.
These were focused on Project education, evaluating the concerns and needs of
local families, and providing educational, social and developmental
opportunities. The data the Company collects from these visits informs the
Companys CSR focus and planning.

In addition to home visits, the Company hosted over 450
visitors to the Project. Tours were conducted during 2012 for the Minister of
Finance, the Economic Minister, the Commissioner of Competitiveness, the Invest
in Guatemala Director, Congressmen representing the Congressional Mining
Committee, students from San Carlos University, former residents of San Rafael
that currently live in the United States, and Canadian Embassy representatives.

The Company also held 11 community events and coordinated
various meetings among MEM, other government officials and community leaders to
hear their views, learn about community impacts and educate them about the
Project.

The Company established the community Comments and
Suggestions policy in keeping with the United Nations Human Rights Council and
Special Representative John Ruggies Guiding Principles on Business and Human
Rights. The policy has been effective in addressing community suggestions and
redressing grievances.

Economic Growth and Development

During 2012, we focused on local stakeholder engagement and
assessing the needs of the communities in the area of the Escobal Project
through study and local consultation. The CSR team also held several planning
sessions with the Municipality of San Rafael and the COCODE Presidents from El
Copante, Sabana Redonda, Las Nueces, Los Vados, El Quequeque, San Rafalito, La
Lunilla, Colonias Unidas, La Cuchilla, Medi Cuesta, and El Fucio to develop
skills in community, financial and infrastructure planning.

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We have committed to a profit sharing program in respect of the
Escobal Project in the form of a Net Smelter Return (NSR) royalty to be paid
to a local association of land owners.

Throughout 2012 we provided education, training and employment
opportunities to locals and other Guatemalans. We made home improvements for
over 700 homeowners and schools including providing bio-gas stoves and
granaries. The Company also underwrote or implemented programs promoting local
soil conservancy, organic fertilizer, avocado nurseries, papaya cultivation,
swine husbandry, forestry, tree planting, and silversmithery.

We provided the Small Farmers Association home garden training
in the municipality. The program served over 300 residents and included training
for income generation, food safety and hygiene.

We supported the MSR Employees Association (Asociación
Solidarista) in preparing a coffee harvest and marketing plan. We worked with
the Instituto Técnico de Capacitación y Productividad (INTECAP) to develop
business plans for milk, milk products, apparel and other products for the
Asociación Solidarista.

In coordination with Anacafe (National Coffee Association) and
Comericalizadora Morales, we launched a treatment and prevention program serving
over 100 small farmers to combat the roya coffee disease that has been
reducing local harvests by 20% to 50%.

Regionally, we continued to collect baseline information
pertaining to social, environmental, and economic issues. The data is being used
to guide planning and strategy for our programs outside of the San Rafael
municipality including:

- Joint literacy projects with the Regional Illiteracy Council
- Supporting the Casillas for the Famine Rehabilitation Center in
  cooperation with the San Rafael Womens Affairs Council
- Leading infrastructure improvement projects at the Cuilapa regional
  hospital
- Providing educational support for the Ojo de Auga elementary school in
  Nueva Santa Rosa and the Barbarena High School
- Providing economic support to the Casillas Health Center

Capacity Building and Institutional Support

Our community relations group assisted the San Rafael
Municipality with feasibility and engineering support and construction oversight
for several community infrastructure projects:

- Bridge reconstruction--San Rafael
- Sewer reconstruction--San Rafael
- Bridge construction--Palo Negro community
- Middle School construction--Media Cuesta
- Road construction--El Chan Grande
- Evaluation of water treatment options--San Rafael
- Road maintenanceCasillas
- Bridge reconstructionLas Canas

Planning sessions were conducted in preparation for the phase
II health study for the area surrounding Escobal, a requirement of the
exploitation Environmental Impact Study (EIS). The Phase II study is designed
to promote the health and well-being of our neighbors and employees, provide early warning in the unlikely event that
negative health effects result from mining operations, and provide documentary
evidence that the mine will not cause negative health effects on surrounding
residents. The planning phase to determine the scope of the study was completed
in January. The study itself is expected to be conducted during the first half
of 2013.

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We worked with Del Valle University, Kinal Technical School and
the National Illiteracy Council (CONALFA) to develop and implement local
education strategies. Our goal is to dramatically improve literacy in the north
of the Department of Santa Rosa.

Through regular communication and partnerships with locals to
implement community projects, we continue to demonstrate our commitment to
environmental stewardship, employee safety and economic and social development
in the communities near the project.

|DOING BUSINESS
      IN GUATEMALA
|---------------------------------

MINING

The Escobal Project is located in Guatemala. The State of
Guatemala owns all mineral deposits within Guatemala. The Energy and Mines
Ministry (MEM) may grant reconnaissance, exploration and exploitation licenses
to any entity, whether Guatemalan or foreign. Applications for licenses are
typically granted on a first in time basis, with holders of reconnaissance
licenses given priority for an exploration license (over portions of the area
covered by the reconnaissance license) and holders of exploration licenses given
priority for an exploitation license (over portions of the area covered by the
exploration license), so long as applications are made before the expiration of
the existing license. There is legislation currently before Congress that would
amend the mining laws, but so far as we are aware, the amendments will not
affect mineral tenure. Details with respect to each type of license are set out
below.

License holders may use water, so long as such use does not
affect the permanent exercise of water rights by others, and subject to the
requirement that mining operations must not contaminate the environment.
Licensees are also granted rights of way, including the right to build roads,
with the proviso that surface owners be compensated.

Fees payable by licensees include surface rights fees, a
granting fee for a mining right and an area fee for the licenses. Under the
current mining law, a royalty of 1% is payable at the exploitation stage and
shared equally between the State and the municipality where the project is
situated. The royalty is determined by an affidavit of the volume of the
marketed product from mining operations and will be based on the value of sale
consigned in the national market or international exchange.

On January 26, 2012, the new administration and the Mining
Industry Association agreed to general terms in a royalty agreement (General
Royalty Agreement) that will result in the industry voluntarily paying higher
royalties to the national and local governments. Following execution of the
General Royalty Agreement, the Company and the federal government expect to sign
an individual royalty agreement (Escobal Royalty Agreement) in the near
future. The Escobal Royalty Agreement is expected to commit the Company to pay a
NSR royalty on the payable metals in concentrates that we sell from the Escobal
Projects mine production, based on 5% of the NSR derived from payable gold, 4%
of the NSR derived from payable silver and 3% of the NSR derived from payable
base metals. The Escobal Royalty Agreement is also expected to stipulate that
50% of the royalty shall be paid to the local communities and 50% to the federal
government. We also expect the royalty to revert to the current 1% NSR if silver prices fall below $16.00 per ounce.
Any new royalty law enacted by Congress will supersede and replace the General
Royalty Agreement and the anticipated Escobal Royalty Agreement.

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The MEM may suspend mining rights for, among other things,
safety and environmental concerns or failure to pay royalties or to submit
reports when due; may cancel mining for, among other things, failure to commence
field work or operations in the prescribed time; and may extinguish mining
rights upon expiration of the license term, depletion of the deposit or express
renouncement of the holder.

From 2008-2011 then President Colom imposed a de facto,
extralegal moratorium on the issuance of new mineral resource licenses. As a
result of the moratorium, MEM issued very few new licenses during Coloms
tenure. In November 2011, Otto Perez Molina was elected as the new Guatemalan
President. President Perez, who was inaugurated on January 14, 2012, has
committed to upholding the mining law as written and does not support the prior
administrations moratorium on new mining licenses. Several new licenses were
issued to mining Companies in Guatemala in 2012, including the Companys San
Juan Bosco exploration license.

During the second quarter of 2011, the Company submitted the
full Escobal Project EIS to the Environment Ministry (MARN). An approved EIS is
required to support the Companys application for an exploitation permit for the
Escobal Project. Following MARNs review and a public comment period, MARN
notified the Company that it had approved the full project EIS on October 21,
2011. The MEM Minister and President Perez have advised the Company that the
exploitation permit for Escobal will be issued in 2013 prior to mill
commissioning at Escobal. See Risk Factors  Obtaining and Renewing Licenses
and Permits in this AIF.

Licenses and Permitting

Reconnaissance Licenses: A reconnaissance license is
typically granted for a six month term, and may be extended on request for an
additional six months, or on application for an exploration license, until the
grant of the exploration license. This license can cover an area from 500 to
3,000 square kilometres and gives the holder the exclusive right to identify and
locate possible areas for exploration within the licenses boundaries. A holder
of a reconnaissance license is obligated to begin field projects within 30 days
after grant of the license, to give immediate notice to the regulators of
discovery of minerals other than those described in the license, to file reports
within three months after the completion of each period of reconnaissance, and
to compensate third parties, such as surface rights holders, for damages or
other adverse impacts caused by operations. An environmental mitigation study
must be filed with the MEM before undertaking reconnaissance activities. On
application, a reconnaissance license may be converted to an exploration
license.

Exploration Licenses: An exploration license is
typically granted for a three-year term and may be extended on request for two
additional two-year terms, or on application for an exploitation license, until
the grant of the exploitation license. With each extension, the surface area
must be reduced by 50%; however, in certain cases this 50% reduction requirement
can be modified and reduced. An exploration license covers an area of up to 100
square kilometres (the area may be greater than 100 square kilometres if deemed
necessary for the mining project as demonstrated by a technical-economic study;
however, such a decision would be at the discretion of the MEM). An exploration
license allows the holder the exclusive right to locate, study, analyze and
evaluate the deposits that have been granted within the licenses boundaries.
The licensee is obligated to begin field projects within 90 days after grant of
the license, to give immediate notice to regulators of discovery of minerals
different from those described in the license, to file reports within three months after the completion of the
exploration year, and to compensate third parties for damages or other adverse
impacts caused by operations. An environmental mitigation study must be filed
with the MEM before undertaking exploration activities. In addition, an
environmental assessment must be filed with the Guatemala Environment Ministry
for approval prior to undertaking exploration activities.

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Exploitation Licenses: An exploitation license is
typically granted for a 25-year term and may be extended, on request, for an
additional 25-year term. An exploitation license legally is considered to be a
real property title, of limited term, that may be recorded at the property
registry and may be mortgaged for the exclusive purpose of obtaining financing
for operations within the license of exploitation. Exploitation licenses cover
an area not greater than 20 square kilometres (the area may be larger if deemed
necessary for the mining project as demonstrated by a technical-economic study).
An exploitation licensee has the exclusive right to develop the deposits that
have been granted within the licenses boundaries. If minerals different from
those authorized in the license are discovered, the licensee has the right to
augment the license to include the new minerals.

To obtain an exploitation license, the applicant must prepare
an environmental impact study for review and approval by MARN. Upon grant of an
environmental approval, the applicant must also arrange for the issuance of a
bond for environmental protection. Once an exploitation license is granted, the
licensee must begin operations within 12 months after grant of the license,
present a copy of the Commercial Patent (also referred to as a business license)
within six months after grant of the license, file reports within three months
after the end of each calendar year, and compensate third parties for potential
damages and adverse impacts caused by operations.

Permitting: Other permits required in connection with
exploitation activities include a municipal construction license, a forestry
license, export credentials, a communications license, explosives storage, use
and transportation licenses, a substation and electric transmission permit and a
license for the import and use of raw materials and chemicals. The licensee must
also settle the mines closure plan and reclamation bond with the MEM, and may
be required to obtain surface rights for access, either by lease or
purchase.

FOREIGNINVESTMENT

Applicable Guatemalan law guarantees equal treatment and
enjoyment of constitutional rights to foreign and local investors in certain
areas including, but not limited to, private property, expropriation and
importing. Foreign investors are permitted to participate in any legal economic
activity, including provision of capital to companies incorporated in Guatemala
and repatriation of capital out of Guatemala.

TAXATION

Income tax must be paid on income generated in Guatemala and
may be paid either under the general regime or the optional regime. In 2012, the
optional regime rate was 31% of net income (total income less exempt income less
deductible costs and expenses) paid quarterly and on an annual basis. The
optional regime rate was 5% of taxable income (total income less exempt income)
paid monthly.

After tax legislation was passed in early 2012, the general
regime was changed to a rate of 31% of net income (total income less exempt
income less deductible costs and expenses) paid quarterly and on an annual
basis. The new regime went into effect January 1, 2013. The rate will be 28% in 2014 and 25% in 2015 and thereafter. The optional
regime rate is 6% of taxable income (total income less exempt income) paid
monthly. The tax rate of the optional regime starting in 2015 is 7%.
Corporations must adopt one of the two regimes and commit to a regime each
December. Failure to make income tax payments results in a penalty of 100% of
the unpaid tax, plus interest.

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In 2012, a withholding tax of between 10% and 31% applied to
payments made by a Guatemalan entity to an overseas entity or person. As at
January 1, 2013, the withholding tax rate will range from 5% to 25%.

In 2012, dividend payments were tax exempt. Starting January 1,
2013, dividend payments will have a tax rate of 5%. All dividend payments are
subject to tax, notwithstanding the shareholders nationality. A 3% stamp tax is
payable on dividends, civil and mercantile contracts and cash payments unless
the Companys operations are subject to the payment of a Value Added Tax of 12%
(which is applicable to sales of goods and services, as well as imports and
land). The holder of an export license may import, free from tariff and import
duties, machinery, equipment, parts, accessories, materials and explosives that
will be used in the production of the items to be exported.

Effective January 1, 2009, corporations and enterprises
domiciled in Guatemala must pay the Impuesto de Solidaridad, Decree 73-2008,
(ISO) quarterly. The annual ISO amount is calculated at the rate of 1% of the
greater of (i) the amount resulting after subtracting from total assets, the
fiscal credits (resolved through resolution), reserve for doubtful accounts,
accumulated depreciation and amortization for the last fiscal year, and (ii)
gross income for the last fiscal year. The ISO may be taken as a credit against
the income tax to be paid by the corporation. Taxpayers operating under the
optional regime are ISO exempt.

In addition to the above taxes, (a) all interest paid by
financial institutions on accounts is subject to a 10% tax that is withheld by
the financial institution when interest payments are made, (b) a 0.03% to 0.09%
tax is payable on a quarterly basis on real estate, and (c) social security
contributions of 12.67% by the employer and 4.83% by the employee, must be paid
every month.

ENVIRONMENTAL

Guatemala has environmental legislation that forbids bringing
into the country contaminating products and materials that are banned in their
country of origin, as well as various substances, residues, radioactive
materials and waste that can infect, contaminate or degrade the environment.

An environmental mitigation study must be filed with MEM before
undertaking reconnaissance or exploration activities. In addition, an
environmental assessment must be filed with MARN for approval prior to
undertaking exploration activities.

To obtain an exploitation license, the applicant must prepare
an environmental impact study for review and approval by MARN. Upon grant of an
environmental license the applicant must also arrange for the issuance of a bond
for environmental protection and obtain an environmental license. Once an
exploitation license is granted, the licensee must begin operations leading to
the exploitation of the deposit within 12 months after grant of the license,
present a copy of the Commercial Patent within six months after grant of the
license, file reports within three months after the end of each calendar year,
and compensate third parties for potential damages and adverse impact caused by
operations.

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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

COMMUNITIES ANDNON-GOVERNMENTALORGANIZATIONS

In recent years, communities of both indigenous people and
others, and non-governmental organizations (NGOs) in Guatemala have become
more vocal and negative with respect to mining activities at or near their
communities. These communities and NGOs have taken such actions as road
closures, work stoppages and initiating law suits for damages. In addition, they
have petitioned human rights organizations, including the Inter American
Commission on Human Rights (IACHR), alleging human rights violations
associated with mining operations, and the Canadian National Contact Point,
alleging violations of the Organisation for Economic Cooperation and Development
Guidelines for Multinational Enterprises, for support for their anti-mining
activities.

The Company is not aware of any significant indigenous
population residing in the area of the Escobal Project. According to Guatemalas
National Institute of Statistics (Census 2002) San Rafael Las Flores population
is 99.6% Ladino, i.e., of Hispanic origin and non-indigenous.

In 2012 and early in 2013 there were a number of NGO-led
protests opposing the development of the Escobal mine. Participation by local
community members in protests was limited.

In addition to protests, there were also a number of crimes
perpetrated against Project employees and contractors in 2012. These included
the detention of employees and contractors attempting to install a power line on
September 17, 2012. This culminated in criminal violence at the mine site on the
following day resulting in the destruction of vehicles, temporary facilities and
other private property. On January 12, 2013, two contract security guards were
killed and when project security personnel were ambushed just after midnight by
armed criminals planning to damage to the Project. This was one of three attacks
on Guatemalan resource companies in the same week.

Neither the legal protests nor the criminal acts have had a
material adverse effect on our operations at the Escobal Project or on our
financial position, cash flow and results of operations.

|RISK
      FACTORS
|------------------

Our operations are subject to the normal risks associated with
mineral exploration and development. Our future development of the Escobal
Project and the acquisition of additional mineral interests will be subject to
numerous factors beyond our control. Certain of these risk factors are discussed
below.

RISKSRELATING
TOOURBUSINESS

Dependence on the Escobal Project

We are an exploration and development stage company and as such
do not anticipate receiving revenue from our mineral properties until the second
half of 2013. We are primarily focused on the exploration and development of the
Escobal Project. The Escobal Project does not have identified Proven and
Probable Mineral Reserves. The costs, timing and complexities of upgrading the
Mineral Resources at the Escobal Project to Proven and Probable Mineral Reserves
may be greater than we anticipate. As a result, unless we acquire additional
property interests, any adverse development affecting the Escobal Project could
have a material adverse effect upon the Company and would materially and
adversely affect the potential production of Mineral Resources, profitability,
financial performance and results of operations of the Company.

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      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Mineral exploration and development involves a high degree of
risk and few properties that are explored are ultimately developed into
producing mines. There is no assurance that our mineral exploration and
development programs at the Escobal Project will result in the definition of
bodies of commercial mineralization. There is also no assurance that even if
commercial quantities of mineralization are discovered, the Escobal Project will
be brought into commercial production. The discovery of bodies of commercial
mineralization is dependent upon a number of factors, not the least of which is
the technical skill of the exploration personnel involved. The commercial
viability of a mineral deposit once discovered is also dependent upon a number
of factors, some of which are the particular attributes of the deposit (such as
size, grade and proximity to infrastructure), metal prices and government
regulations, including regulations relating to royalties, allowable production,
importing and exporting of minerals and environmental protection. Most of the
above factors are beyond our control. As a result, there can be no assurance
that our exploration and development programs at the Escobal Project will define
bodies of commercial mineralization or that the Escobal Project will ultimately
become a producing mine. Failure to do so will have a material adverse impact on
our operations and potential future profitability.

Operations in Guatemala

The Escobal Project is located in Guatemala. Guatemala has a
history of political unrest. Guatemala suffered an armed conflict for 36 years,
which was finally resolved through a peace agreement reached with the countrys
internal revolutionary movement in 1996. The last political crisis in Guatemala
occurred in 1983 and constitutional government was not restored until 1985.
Renewed political unrest or a political crisis in Guatemala could adversely
affect our business and results of operations.

Guatemala suffers from social problems, such as a high crime
rate and uncertain land tenure for many indigenous people, which could adversely
affect the Escobal Project. Such adverse effects could result from the efforts
of third parties to manipulate local populations into encroaching on the Escobal
Project land, challenging the boundaries of such land, impeding Escobal Project
activities through roadblocks or other public protests or attacks against
Escobal Project assets or personnel.

In November 2011, Otto Perez Molina was elected to serve as the
new Guatemalan President. President Perez, who was inaugurated on January 14,
2012, has taken a public stance that his administration supports sound mining
development in Guatemala. MEM submitted legislation in October that would permit
the state to acquire up to a 40% interest in natural resource projects in
Guatemala. After introducing the legislation, MEM officials stated that the
proposed amendment does not cover existing projects such as Escobal. However, it
is unclear how this may affect the Companys regional exploration program.

Our business may be exposed to a number of risks and
uncertainties, including terrorism and hostage taking, military repression,
extortion, expropriation or nationalization without adequate compensation,
labour unrest, high rates of inflation, changes to royalty and tax regimes,
extreme fluctuations in currency exchange rates, volatile local, political and
economic developments, difficulty with understanding and complying with the
regulatory and legal framework respecting the ownership and maintenance of
mineral properties, surface rights, mines and mining operations, and difficulty
obtaining key equipment and components for equipment.

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      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Obtaining and Renewing Licenses and Permits

In the ordinary course of business, we will be required to
obtain and renew governmental licenses or permits for the operation and
expansion of the Escobal Project or for the development, construction and
commencement of mining at the Escobal Project. Obtaining or renewing the
necessary governmental licenses or permits is a complex and time-consuming
process involving numerous jurisdictions and often involving public comment
periods and costly undertakings on our part. The duration and success of our
efforts to obtain and renew licenses or permits are contingent upon many
variables not within our control, including the interpretation of applicable
requirements implemented by the licensing authority. We may not be able (and no
assurances can be given with respect to our ability) to obtain or renew licenses
or permits that are necessary to our operations, including, without limitation,
obtaining the exploitation license for the Escobal Project or any renewal
thereof, or the cost to obtain or renew licenses or permits may exceed what we
believe we can recover from the Escobal Project if it is put into production. In
particular, the Company currently awaits final approval from MEM for the Escobal
Exploitation license. The Company requires the exploitation license in order to
commence mill commissioning at the Escobal Project in the latter half of 2013.
Any unexpected refusals of required licenses or permits or delays or costs
associated with the licensing or permitting process could prevent or delay the
development or impede the operation of a mine, which could adversely impact our
operations and profitability.

The Escobal Project exploitation license is required for the
Company to operate the mill and to produce concentrates from the mine. All other
permits required for continued exploration, construction and operations are in
place. However, as the Escobal Project is the Companys sole project, if the
exploitation permit for Escobal is not received in time for mill commissioning,
the Company will be unable to generate revenue. As a result and under such
circumstances, if the exploitation permit is not received within a reasonable
period of time thereafter, the Company expects this would adversely impact its
business, results of operations, financial performance and may result in
reduction of workforce at the project. There can be no assurance as to when or
if the necessary exploitation permit will be granted.

Construction and Start-up of New Mines

If we are successful in defining bodies of commercial
mineralization on the Escobal Project, the success of any construction project
and the start-up of a mine at the Escobal Project will be subject to a number of
factors including the availability and performance of engineering and
construction contractors, mining contractors, suppliers and consultants, the
receipt of required governmental approvals and licenses (including environmental
permits) in connection with the construction of mining facilities and the
conduct of mining operations within the regulatory framework and business
environment of Guatemala. Any delay in the performance of any one or more of the
contractors, suppliers, consultants or other persons on which we will depend in
connection with our construction activities, a delay in or failure to receive
the required governmental approvals and licenses in a timely manner or on
reasonable terms, or an operational delay or failure could delay or prevent the
construction and start-up of a mine at the Escobal Project. Even if we are
successful in defining bodies of commercial mineralization on the Escobal
Project and in receiving required governmental approvals and licenses (including
permits) for a mine at the Escobal Project, there is no assurance that we will
be able to complete construction and start-up activities; that necessary
personnel and equipment will be available in a timely manner or on reasonable
terms to successfully complete construction of a mine; and that the construction
costs, the start-up costs and the ongoing operating costs associated with the
development of a mine at the Escobal Project will not be significantly higher
than predicted. Any of the foregoing factors could adversely impact our
operations and financial condition.

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      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Operating History

We have a very limited history of operations and are considered
a start-up company. As such, we are subject to many risks common to such
enterprises, including under-capitalization, cash shortages, limitations with
respect to personnel, financial and other resources and lack of revenues. There
is no assurance that we will be successful in achieving a return on
shareholders investment and the likelihood of our success must be considered in
light of our early stage of operations.

Negative Operating Cash Flow

We currently have a negative operating cash flow and may
continue to have that for the foreseeable future. Our failure to achieve
profitability and positive operating cash flows could have a material adverse
effect on our financial condition and results of operations.

Metal Price Fluctuations

If the Escobal Project is developed to production, the majority
of our revenue will be derived from the sale of silver and, to a lesser degree,
lead, zinc and gold. Therefore, fluctuations in the prices of these commodities
represent one of the most significant factors that we expect will affect our
future operations and potential profitability. The price of silver and other
metals are affected by numerous factors beyond our control, including levels of
supply and demand, global or regional consumptive patterns, sales by government
holders, metal stock levels maintained by producers and others, increased
production due to new mine developments and improved mining and production
methods, speculative activities related to the sale of metals, availability and
costs of metal substitutes, international economic and political conditions,
interest rates, currency values and inflation. Declining market prices for these
metals could materially adversely affect our future operations and
profitability.

Financing Requirements

Although the Escobal Project is currently fully financed, based
on our current projections, any change in these projections or any new
development activities, whether at the Escobal Project or elsewhere, may require
substantial additional capital. When such additional capital is required, we
will need to pursue various financing transactions or arrangements, including
joint venturing of projects, debt financing, equity financing or other means.
Additional financing may not be available when needed or, if available, the
terms of such financing might not be favourable to us and might involve
substantial dilution to existing shareholders. We may not be successful in
locating suitable financing transactions in the time period required or at all,
may not obtain the capital required by other means. A failure to raise capital
when needed would have a material adverse effect on our business, financial
condition and results of operations. Any future issuance of Shares to raise
required capital will likely be dilutive to shareholders. In addition, debt and
other mezzanine financing may involve a pledge of assets and may be senior to
interests of equity holders. We may incur substantial costs in pursuing future
capital requirements, including investment banking fees, legal fees, accounting
fees, securities law compliance fees, printing and distribution expenses and
other costs. The ability to obtain needed financing may be impaired by such
factors as the capital markets (both generally and in the silver industry in
particular), our status as a new enterprise with a limited history, the location
of the Escobal Project in Guatemala and the price of silver, gold, lead and zinc
on the commodities markets (which will impact the amount of asset-based
financing available) and/or the loss of key management personnel. Further, if
the price of silver and other metals on the commodities markets decreases, then
potential revenues from the Escobal Project will likely decrease and such decreased revenues may increase the
requirements for capital. Failure to obtain sufficient financing will result in
a delay or indefinite postponement of development or production at the Escobal
Project.

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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Title to Assets

The validity of the licenses related to the Escobal Project can
be uncertain and may be contested. There is no assurance that applicable
governmental bodies will not revoke or significantly alter the conditions of
applicable licenses that are included in the Escobal Project. Guatemala has a
growing body of mining laws and changes in such laws could materially and
adversely impact our rights to exploration and exploitation licenses necessary
for the Escobal Project. See Description of Our Business  Doing Business in
Guatemala and   Risk Factors Risks Relating to Our Business  Operations in
Guatemala.

There is no guarantee that title to the Escobal Project will
not be challenged or impugned. Our properties may be subject to prior
unregistered liens, agreements or transfers, indigenous land claims or
undetected title defects.

In Guatemala, legal rights applicable to exploration and
exploitation licenses are different and separate from legal rights applicable to
surface lands. Accordingly, title holders of licenses must reach agreement with
surface land owners on adequate remuneration to compensate for mining activities
on their land. Not all surface rights are registered interests such that there
may be doubt concerning the ownership of surface rights and the validity of
agreements related to surface rights.

Governmental Regulation

Our operations, exploration and development activities are
subject to the laws and regulations of Guatemala governing various matters
including environmental protection, management and use of toxic substances and
explosives, management of natural resources, exploration, development,
production, and post-closure reclamation of mines, imports and exports, price
controls, taxation, mining royalties, labour standards and occupational health
and safety, including mine safety and historic and cultural preservation.

The costs associated with legal compliance are substantial. In
addition, possible future laws and regulations, changes to existing laws and
regulations (including the imposition of higher taxes and mining royalties which
have been, or may be, implemented or threatened) or more stringent enforcement
of current laws and regulations by governmental authorities, could cause
additional expense, capital expenditures, restrictions on or suspension of our
operations and planned operations and delays in the development of the Escobal
Project. Moreover, these laws and regulations may allow governmental authorities
and private parties to bring lawsuits based upon damages to property and injury
to persons resulting from the environmental, health and safety impacts of our
operations, or possibly even those actions of parties from whom we acquired our
mines or properties. Such legal actions could lead to the imposition of
substantial fines, penalties or other civil or criminal sanctions. It is
difficult to strictly comply with all regulations that will be imposed on us. We
have competent and well-trained individuals and consultants to assist us with
compliance with such laws and regulations, however, even with the application of
considerable skill we may inadvertently fail to comply with certain laws.
Failure to comply with laws and regulations could lead to financial
restatements, fines, penalties, loss, reduction or expropriation of
entitlements, the imposition of additional local or foreign parties as joint
venture partners with carried or other interests and other material negative
impacts on us.

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      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Operating Hazards, Risks and Insurance

The ownership, operation and development of a mine or mineral
property involves many risks which even a combination of experience, knowledge
and careful evaluation may not be able to overcome. These risks include
environmental hazards, industrial accidents, explosions and third-party
accidents, the encountering of unusual or unexpected geological formations,
ground falls and cave-ins, mechanical failure, unforeseen metallurgical
difficulties, power interruptions, flooding, earthquakes and periodic
interruptions due to inclement or hazardous weather conditions. These
occurrences could result in environmental damage and liabilities, work
stoppages, delayed production and resultant losses, increased production costs,
damage to, or destruction of, mineral properties or production facilities and
resultant losses, personal injury or death and resultant losses, asset write
downs, monetary losses, claims for compensation of loss of life and/or damages
by third parties in connection with accidents (for loss of life and/or damages
and related pain and suffering) that occur on company property, and punitive
awards in connection with those claims and other liabilities.

It is not always possible to fully insure against such risks,
and we may decide not to take out insurance against such risks as a result of
high premiums or other reasons. Should such liabilities arise they could reduce
or eliminate any future profitability and result in an increase in costs and a
decline in value of our securities. Liabilities that we incur may exceed the
policy limits of insurance coverage or may not be covered by insurance, in which
event we could incur significant costs that could adversely impact our business,
operations, potential profitability or value. Despite efforts to attract and
retain qualified personnel, as well as the retention of qualified consultants,
to manage our interests, even when those efforts are successful, people are
fallible and human error could result in significant uninsured losses to us.
These could include loss or forfeiture of mineral interests or other assets for
non-payment of fees or taxes, significant tax liabilities in connection with any
tax planning effort we might undertake and legal claims for errors or mistakes
by our personnel.

Environmental Hazards

All phases of our operations with respect to the Escobal
Project are, and will continue to be, subject to environmental regulation in
Guatemala. Environmental legislation in Guatemala involves strict standards and
may entail increased scrutiny, fines and penalties for non-compliance, stringent
environmental assessments of proposed projects and a high degree of
responsibility for companies and their officers, directors and employees.
Changes in environmental regulation, if any, may adversely impact our operations
and future potential profitability. In addition, environmental hazards may exist
on the Escobal Project which are currently unknown. We may be liable for losses
associated with such hazards, or may be forced to undertake extensive remedial
clean-up action or to pay for governmental remedial clean-up actions, even in
cases where such hazards have been caused by previous or existing owners or
operators of the property, or by the past or present owners of adjacent
properties or by natural conditions. The costs of such clean-up actions may have
a material adverse impact on our operations and future potential
profitability.

Reclamation Obligations

Reclamation requirements are designed to minimize long-term
effects of mining exploitation and exploration disturbance by requiring the
operating company to control possible deleterious effluents and to re-establish
to some degree pre-disturbance land forms and vegetation. We are, and will
continue to be subject to such requirements for our activities on the Escobal
Project. Any significant environmental issues that may arise, however, could
lead to increased reclamation expenditures and could have a material adverse
impact on our financial resources.

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      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Mineral Reserve and Resource Calculations are Only
Estimates

Any figures presented by us for Mineral Resources in this
Annual Information Form or any figures for Mineral Reserves that may be
presented by us in the future are and will only be estimates. There is a degree
of uncertainty attributable to the calculation of Mineral Reserves and Mineral
Resources. Until Mineral Reserves or Mineral Resources are actually mined and
processed, the quantity of metal and grades must be considered as estimates only
and no assurances can be given that the indicated levels of metals will be
produced. The estimating of Mineral Reserves and Mineral Resources is a
subjective process that relies on the judgment of the persons preparing the
estimates. The process relies on the quantity and quality of available data and
is based on knowledge, mining experience, analysis of drilling results and
industry practices. Valid estimates made at a given time may significantly
change when new information becomes available. While we believe that the
resource estimates included in this AIF for the Escobal Project are well
established and reflect managements best estimates, by their nature resource
estimates are imprecise and depend, to a certain extent, upon analysis of
drilling results and statistical inferences that may ultimately prove to be
inaccurate.

Estimated Mineral Reserves or Mineral Resources may have to be
recalculated based on changes in mineral prices, further exploration or
development activity or actual production experience. This could materially and
adversely affect estimates of the volume or grade of mineralization, estimated
recovery rates or other important factors that influence reserve or resource
estimates. The extent to which resources may ultimately be reclassified as
Proven or Probable Mineral Reserves depends upon the demonstration of their
profitable recovery. Any Proven and Probable Mineral Reserves which are
estimated in the future ultimately may not be profitable due to market price
fluctuations, increased production costs, reduced recovery rates, or other
factors.

A reduction in any reserves that may be estimated by us in the
future could have an adverse impact on our future cash flows, earnings, results
of operations and financial condition. No assurances can be given that any
resource estimates for the Escobal Project will ultimately be reclassified as
Proven or Probable Mineral Reserves.

Infrastructure

Mining, processing, development and exploration activities
depend, to one degree or another, on adequate infrastructure. Reliable roads,
bridges, power sources and water supply are important elements of
infrastructure, which affect capital and operating costs. The lack of
availability on acceptable terms or the delay in the availability of any one or
more of these items could prevent or delay exploration or development of the
Escobal Project. If adequate infrastructure is not available in a timely manner,
there can be no assurance that the exploration or development of the Escobal
Project will be commenced or completed on a timely basis, if at all; that the
resulting operations will achieve the anticipated production volume; or that the
anticipated construction costs and ongoing operating costs associated with the
exploration and/or development of the Escobal Project will not be higher than
anticipated. In addition, inadequate infrastructure may result in lower than
anticipated production volume or higher construction or operating costs.
Furthermore, unusual or infrequent weather phenomena, sabotage, government or
other interference in the maintenance or provision of necessary infrastructure
could adversely affect our operations and profitability.

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      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Employee Recruitment and Retention

Recruiting and retaining qualified personnel is critical to our
success. We are dependent on the services of key executives including our
President and Chief Executive Officer and other highly skilled and experienced
executives and personnel focused on managing our interests. The number of
persons skilled in acquisition, exploration and development of mining properties
is limited and competition for such persons is intense. As our business activity
grows, we will require additional key financial, administrative, geologic and
mining personnel as well as additional operations staff. There is no assurance
that we will be successful in attracting, training and retaining qualified
personnel as competition for persons with these skill sets increases. If we are
not successful in attracting, training and retaining qualified personnel, the
efficiency of our operations could be impaired, which could have an adverse
impact on our future cash flows, earnings, results of operations and financial
condition.

Adverse General Economic Conditions

The unprecedented events in global financial markets in the
past several years have had a profound impact on the global economy. Many
industries, including the silver and gold mining industry, are impacted by these
market conditions. Some of the key impacts of the current financial market
turmoil include contraction in credit markets resulting in a widening of credit
risk, devaluations, high volatility in global equity, commodity, foreign
exchange and precious metal markets and a lack of market liquidity. A continued
or worsened slowdown in the financial markets or other economic conditions,
including but not limited to, consumer spending, employment rates, business
conditions, inflation, fuel and energy costs, consumer debt levels, lack of
available credit, the state of the financial markets, interest rates and tax
rates, may adversely affect our growth and profitability. Specifically, the
global credit/liquidity crisis could impact the cost and availability of
financing and our overall liquidity, the volatility of silver and gold prices
would impact our revenues, profits, losses and cash flow, continued recessionary
pressures could adversely impact demand for our production, volatile energy,
commodity and consumables prices and currency exchange rates would impact our
production costs and the devaluation and volatility of global stock markets
would impact the valuation of our equity and other securities. These factors
could have a material adverse effect on our financial condition and results of
operations.

Competition for New Properties

An element of our business strategy is to make selected
acquisitions. We expect to continue to evaluate acquisition opportunities on a
regular basis and intend to pursue those opportunities that we believe are in
our long-term best interests. There is a limited supply of desirable mineral
lands available in areas where we would consider conducting exploration or
development activities. Because we face strong competition for new properties
from other mining companies, some of which have greater financial resources than
we do, we may be unable to acquire attractive new mining properties on terms
that we consider acceptable. In addition, competition in the mining business for
limited sources of capital could adversely impact our ability to acquire and
develop suitable silver mines, silver developmental projects, silver producing
companies or properties having significant exploration potential. As a result,
there is no assurance that we will be able to acquire additional mining
properties.

The success of any acquisition that we make will depend upon
our ability to effectively manage the operations of entities we acquire and to
realize other anticipated benefits. The process of managing acquired businesses
may involve unforeseen difficulties and may require a disproportionate amount of
management resources. There can be no assurance that we will be able to
successfully manage the operations of businesses we acquire or that we achieve
the anticipated benefits of our acquisitions.

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      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Shortages of Critical Parts, Equipment and Skilled
Labour

Our ability to acquire critical resources such as input
commodities, drilling equipment, tires and skilled labour due to increased
worldwide demand, may cause unanticipated cost increases and delays in delivery
times, thereby impacting operating costs, capital expenditures and development
schedules.

Foreign Exchange Rate Fluctuations

Fluctuations in currency exchange rates, particularly the
weakening or strengthening of the U.S. dollar against the Canadian dollar (the
currency used to pay corporate head office costs), and the Guatemalan quetzal
could have a significant effect on our results of operations. We may from time
to time engage in foreign currency trading activities in order to minimize these
effects on our operating results.

Counterparty and Market Risks in Concentrate
Sales

If our exploration, development, construction and mine
operation activities at the Escobal Project are successful, we may enter into
long-term supply arrangements to sell some of the lead and zinc concentrates to
be produced at the Escobal Project to metal traders or integrated mining and
smelting companies. Any balance of these concentrates would be sold in the spot
market. There is no assurance that we will be successful in entering into such
arrangements on acceptable terms, or at all. The quality of the concentrates may
not be adequate to meet standards required by smelters. We may encounter higher
than acceptable contaminants in our concentrates such as arsenic, antimony,
mercury, copper, iron, selenium or other contaminants that, when present in high
concentrations, can result in penalties or outright rejection of the metals
concentrates by the smelters or metals traders. If we are not successful in
entering into such arrangements, we may be forced to sell all of our
concentrates, or greater volumes of them in the spot market, than we desire or
in the worst case have no market for our concentrates at all. In addition, with
respect to supply arrangements to which we are party, should any counterparty
not honour such an arrangement due to insolvency or other reason, we may incur
losses for products already shipped and be forced to sell greater volumes of our
concentrates in the spot market than we initially planned or there may be no
market for our concentrates, and our future operating results may be materially
adversely impacted as a result. Moreover, there can be no assurance that we will
be able to renew any agreements to sell concentrates when such agreements
expire, or that our concentrates will meet the qualitative requirements under
future concentrate agreements or the requirements of buyers.

Developments Regarding Indigenous Peoples

To the best of our knowledge, although indigenous people may
have inhabited the site at one time, there are no indigenous populations
currently living in the immediate area of the Escobal Project site. According to
Guatemalas most recent census--National Institute of Statistics (Census
2002)--San Rafael Las Flores population is 99.6% Ladino, i.e., of Hispanic
origin and non-indigenous. Nevertheless, laws and movements respecting the
acquisition of lands and other rights of indigenous communities may alter
decades-old arrangements made by prior owners of the lands where the Escobal
Project is located. We will use commercially reasonable efforts in our dealings
to ensure all agreements are entered into in accordance with applicable laws,
but there is no guarantee that future laws and actions will not have a material
adverse effect on our operations at the Escobal Project or on our financial
position, cash flow and results of operations.

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Community Action

In recent years communities and non-governmental organizations
(NGOs) have become more vocal and active with respect to mining activities at
or near their communities throughout Guatemala. These communities and NGOs have
taken such actions as road closures, destruction of property, work stoppages,
and law suits for damages. These actions relate not only to current activities
but often in respect to decades old mining activities by prior owners of mining
properties. Such actions by communities and NGOs may have a material adverse
effect on our operations at the Escobal Project and on its financial position,
cash flow and results of operations. See Description of Our Business  Doing
Business in Guatemala  Communities and Non-Governmental Organizations

Claims and Legal Proceedings

We may be subject to claims or legal proceedings covering a
wide range of matters that arise in the ordinary course of business activities,
including claims relating to ex-employees. These matters may give rise to legal
uncertainties or have unfavourable results. We will carry liability insurance
coverage and mitigate risks that can be reasonably estimated. In addition, we
may be involved in disputes with other parties in the future that may result in
litigation or unfavourable resolution which could materially adversely impact
our financial position, cash flow and results of operations.

Conflicts of Interest

Certain of our directors and officers also serve as directors
and/or officers of other companies involved in natural resource exploration and
development. Consequently, there is a possibility that a conflict could arise
for such directors and officers. Any Company-related decision made by any of
these directors and officers should be made in accordance with their duties and
obligations to deal fairly and in good faith and to act in the best interests of
the Company and its shareholders. In addition, each of the directors is required
to declare and refrain from voting on any matter in which such director may have
a conflict of interest in accordance with the procedures set forth in the
Companys Code of Business Conduct and in the BCA and other applicable laws.

Production Decision

The Company has not based its production decision on a
feasibility study of mineral reserves, demonstrating economic and technical
viability, and, as a result, there may be an increased uncertainty of achieving
any particular level of recovery of minerals or the cost of such recovery,
including increased risks associated with developing a commercially mineable
deposit. Historically, such projects have a much higher risk of economic and
technical failure. There is no guarantee that production will begin as
anticipated or at all or that anticipated production costs will be achieved.
Failure to commence production would have a material adverse impact on the
Companys ability to generate revenue and cash flow to fund operations. Failure
to achieve the anticipated production costs would have a material adverse impact
on the Companys cash flow and future profitability.

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RISKSRELATING
TOOURSHARES

Market Price of Shares and Volatility

Securities of mining companies have experienced substantial
volatility in the past, often based on factors unrelated to the companies
financial performance or prospects. These factors include macroeconomic
developments in North America and globally and market perceptions of the
attractiveness of particular industries. The price of our Shares is also likely
to be significantly affected by short-term changes in silver or other mineral
prices or in our financial condition or results of operations. Other factors
unrelated to our performance that may affect the price of the Shares include the
following: the extent of analytical coverage available to investors concerning
our business may be limited if investment banks with research capabilities do
not follow the Company; lessening in trading volume and general market interest
in the Shares may affect an investors ability to trade significant numbers of
Shares; the size of our public float may limit the ability of some institutions
to invest in Shares; and a substantial decline in the price of the Shares that
persists for a significant period of time could cause the Shares, if listed on
an exchange, to be delisted from such exchange, further reducing market
liquidity. As a result of any of these factors, the market price of the Shares
at any given point in time may not accurately reflect our long-term value.
Securities class action litigation often has been brought against companies
following periods of volatility in the market price of their securities. We 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.

The market price of the Shares is affected by many other
variables which are not directly related to our success and are, therefore, not
within our control. These include other developments that affect the market for
all resource sector securities, the breadth of the public market for our Shares
and the attractiveness of alternative investments. The effect of these and other
factors on the market price of the Shares is expected to make the Share price
volatile in the future, which may result in losses to investors.

Dilution

Future sales or issuances of equity securities could decrease
the value of the Shares, dilute shareholders voting power and reduce future
potential earnings per Share.

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

In addition, in connection with any equity financing by the
Company, the dilution to the relative proportion of the equity of the existing
shareholders of the Company may be accelerated in the event Goldcorp exercises
its anti-dilution rights under the Shareholders Agreement. Such rights are
exercisable by Goldcorp as long as Goldcorp and its affiliates beneficially own
at least 20% of the number of the issued and outstanding Shares. See General
Development of the Business  The Transaction Agreement and Shareholders
Agreement.

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Significant Shareholder

Goldcorp currently owns 58,051,692 Shares, representing
approximately 40% of the current issued and outstanding Shares. Subject to
applicable law and to contractual protections negotiated by us, Goldcorp may, as
a practical matter, be able to cause the Company to effect corporate
transactions without the consent of other shareholders and cause or prevent a
change in control of the Company. See General Development of the Business  The
Transaction Agreement and Shareholders Agreement.

No Dividends Expected for the Foreseeable
Future

We intend to retain earnings, if any, to finance the growth and
development of our business and do not have a policy to pay cash dividends on
the Shares in the foreseeable future. The payment of future cash dividends, if
any, will be reviewed periodically by our Board and will depend upon, among
other things, conditions then existing including earnings, financial condition
and capital requirements, restrictions in financing agreements, business
opportunities and conditions and other factors. See Dividends and
Distributions.

|THE ESCOBAL
      PROJECT
|-------------------------

RECENTACTIVITIES AT THEESCOBALPROJECT

Throughout 2012, the Company focused on obtaining our social
license to operate, underground development and Engineering, Procurement,
Construction and Management (EPCM) work at the Escobal Project. At year end,
EPCM was 69% complete and surface construction was 70% complete.

The Company employed approximately 560 people to work in
Guatemala in 2012. In addition, approximately 1,000 contract employees were
employed in the construction and development work. Extensive safety and training
programs were implemented in areas of surface development, process plant and
infrastructure construction and underground mine development.

Since the time of the acquisition of the Escobal Project, we
have carried out baseline studies and environmental monitoring at the site. In
late 2010, the Company submitted an environmental impact statement (EIS) that
considered the environmental impacts associated with the Companys underground
exploration at the Escobal Project. MARN approved the underground exploration
EIS on February 15, 2011.

Subsequent to MARNs approval, MEM authorized the Companys
work plan and we commenced mine development activities. East and west portals
were established and underground tunnelling activities commenced. To support the
underground excavation work, temporary shop, warehousing and equipment storage
facilities were constructed.

In the second quarter of 2011, the Company completed additional
baseline studies and environmental analyses and submitted an EIS (Exploitation
EIS) to MARN for the Escobal Project exploitation license. On October 21, 2011,
MARN notified the Company that it had approved the Exploitation EIS. Once full
EIS clearance was received, construction of the process plant and support
facilities required for full production began. By year end, earthwork at the
main plant site and tailings areas, warehouse, access road and office facilities
were well underway. In addition, construction of the electrical substation and
power line on the Escobal Project site commenced.

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In the third quarter of 2011, the Company submitted an
exploitation concession application and supporting documentation to MEM. MEM had
completed all of the review possible without EIS approval by October 8, 2011. A
final legal review commenced on October 24, 2011 when the Exploitation EIS was
officially received at MEM. The technical and legal aspects of MEMs review are
completed and the Company has been notified that all requirements have been
satisfied. The Company awaits MEMs final approval of the exploitation
license.

All of the surface rights that we require for our operations at
the Escobal Project were acquired in 2010. A few additional parcels were
acquired in early 2011 and 2012 to add flexibility and account for potential
future growth in mineral resources. In Guatemala, the surface rights are
independent of mining rights and must be negotiated separately. There is no
allowance for expropriation in Guatemala.

PROJECTSETTING,
LOCATION, ACCESS ANDINFRASTRUCTURE

The Escobal Project is located in southeast Guatemala,
approximately 40 kilometres east-southeast of Guatemala City and two kilometres
east of the town of San Rafael Las Flores in the Department of Santa Rosa. San
Rafael Las Flores has a population of over 3,000 people and is 70 km from
Guatemala City by paved road. Access to the area is also possible from the
northeast on a paved highway via the town of Mataquescuintla. The majority of
the workforce is derived from communities within Santa Rosa department and
elsewhere in Guatemala, with a small expatriate contingency.

The local climate consists of two major seasons; a rainy
season between May and November and a dry season between November and May.
Annual precipitation averages 1,689 mm. Average temperatures vary between 14°C
and 33.1°C. Mining activities are expected to be able to be conducted
year-round.

The project area lies within mountainous terrain interspersed
with rolling hills and valleys. Elevations range from 1,300 metres in the valley
on the west end of the Escobal Vein to 1,800 metres in the drilled east
extension. The high mountain range of Montana Soledad Grande north and east of
the Escobal Project rises to an elevation of 2,600 metres. Vegetation is
characterized by natural mountain forest species that consist of oak, pine and
cypress tree varieties and lower strata scrub-brush species.

There is a high voltage electrical line that extends to the
town of San Rafael Las Flores, which will be upgraded to handle the anticipated
load requirements for the Escobal Project. Electrical power is expected to be
provided to the project from Guatemalas existing national grid by means of
connecting to the existing San Rafael Las Flores substation at a voltage level
of 69 kilovolts, and constructing a new 7 km 69kv line to site. . Power line
installation along the highway right-of-way commenced in September 2012, but was
interrupted by protestors. The Company anticipates it will recommence work on
the power line in the near future. Given the civil unrest, the Company developed
a contingency plan to provide temporary generator power for the mine start up in
order to prevent delay to the production schedule.

In 2011, the Company established communication facilities at
the mine site including telephone and internet services. Water wells within the
Escobal Project area are capable of providing sufficient water for the Escobal
Project without impacting local residents or communities. Sufficient land has
been purchased to host the required tailings, waste rock, process plant
facilities, and underground access for the mining operation. Water wells have
been developed within the Escobal Project area to provide water for mining and
process needs. Potable water is brought to the project from outside sources.

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HISTORY

The Escobal Project dates back to 1996 when Entre Mares
prospected in the area and identified high-grade gold values associated with
surface quartz veins in the western portion of the Escobal Vein. In 2006, Entre
Mares initiated regional exploration in the area, partially based on verifying
geochemical anomalies in the companys database. In late 2006, significant
silver and gold grades were detected from surface sampling along an extensive
alteration zone developed over the Escobal Vein. An exploration license was
applied for in October 2006 and was granted in March 2007. Exploration drilling
commenced in May 2007 and is ongoing.

In early 2010, Goldcorp, predecessor owner of the Escobal
Project, reported a Measured and Indicated Mineral Resource estimate for the
Escobal Project of 6.97 million tonnes at 0.63 g/t gold and 580.3 g/t silver and
an Inferred Mineral Resource of 13.15 million tonnes at 0.53 g/t gold and 443.4
g/t silver. Goldcorp did not release a technical report to support the Mineral
Resource declaration at that time.

Three NI 43-101 Technical Reports have been completed on the
Escobal Project by (1) AMEC Americas Ltd. in April 2010, (2) M3 Engineering
& Technology Corporation (M3) in November 2010, and (3) M3 in May 2012. It
is the May 2012 technical report, NI 43-101 Preliminary Economic Assessment 
Escobal Guatemala Project that forms the basis of Tahoes development plans for
the Escobal Project as discussed herein.

2012 ESCOBALPRELIMINARYECONOMICASSESSMENT

We engaged M3, an independent mining consulting firm, of
Tucson, Arizona to prepare the Escobal Preliminary Economic Assessment (PEA)
report dated May 7, 2012, which is available for viewing on SEDAR under our
profile and on our website at tahoeresourcesinc.com. The Escobal PEA contains an
economic analysis of the potential viability of Mineral Resources at the Escobal
Project and an updated Mineral Resource estimate for the Escobal Project. The
effective date of the Escobal PEA is May 7, 2012 and the effective date of the
Mineral Resource estimate contained in the report is January 23, 2012. See
Mineral Resources below.

The Qualified Person and Principal author for the Escobal PEA
is Conrad Huss, P.E., of M3. All M3 personnel who worked on the report were
supervised by Conrad Huss. The Qualified Person responsible for the review of
the civil and environmental controls for the Escobal Project is Daniel Roth,
P.E., of M3. The Qualified Person responsible for the review of the
metallurgical testing and flow sheets for the Escobal Project is Thomas L.
Drielick, P.E., of M3. The Qualified Person responsible for the review of the
drilling, sampling method, sample preparation and analysis and data
verification, and for preparing the Mineral Resource estimate for the Escobal
Project is Paul Tietz, C.P.G., of Mine Development Associates, an independent
mining consulting firm.

MINERALTENURE, SURFACERIGHTS,ANDROYALTIES

The Escobal Project is 100% owned by the Company through its
wholly-owned subsidiary Minera San Rafael S.A and comprises four exploration
licenses covering approximately 190 km2 called the Oasis, Lucero, Andres and
Juan Bosco licenses. The Oasis, Lucero and Andres licences were granted to Entre
Mares on March 26, 2007, August 21, 2007 and December 17, 2007 respectively and
were transferred to San Rafael as part of the Acquisition. The Juan Bosco
license was granted subsequent to the Acquisition on April 26, 2012. The Oasis
License covers the entire Escobal Vein. In addition, there are a number of
applications for reconnaissance and exploration licenses associated with the
Escobal Project. The granting of these license applications is still
pending.

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Exploration licenses in Guatemala are granted for an initial
period of three years which can be extended for two additional periods for two
years each, for a total holding period of seven years. The first three-year term
of the Oasis License expired in March 2010, at which time a renewal application
was filed to extend the exploration license for two additional years. This
renewal application was approved by the MEM on April 28, 2010. As a requirement
of the renewal process, the Oasis License was reduced in area from 50 km2 to 40
km2 and three new exploration licenses were applied for to fill the 20% gap
created by the area reduction. These applications for the Melisa, Cipreses and
Puente Quebrado licenses cover a total area of 9 km2 in the northeast and south
areas of the original Oasis License.

In June 2010, an application was filed to extend the term of
the Lucero license for two years from its July 2010 expiration date. The renewal
application provides for a reduction in the area of the license from 52.8 km2 to
40 km2. One new license application (Valencia) was filed to fill the approximate
12.8 km2 gap created by the reduction of the original Lucero license. Similarly,
an application was made in October 2010 to extend the Andres license for two
years from the original license expiration in December 2010. In this case the
Granada license was applied for to fill the gap left through reduction of the
Andres license. The renewal periods for the Lucero and Andres licenses were
granted in March 2012.

According to Guatemala law, after 2014, no additional
extensions will be permitted and an exploitation license application must be
made. Prior to the application for an exploitation license, a pre-feasibility
study, mine plan and environmental impact assessment must be completed.

In addition to the three granted exploration licenses,
applications for the Soledad reconnaissance license and the El Olivo exploration
license were submitted to MEM by Entre Mares in 2006 and 2007, respectively. San
Rafael acquired the right to these applications as part of the Escobal
Acquisition. San Rafael later filed an application for the Cristina exploration
license (October 2010) and the El Silencio reconnaissance license (November
2010). In 2011, five exploration concessions  Nacimiento, Pajarita, El Durazno,
Teresa and Pajal  were applied for over newly identified prospective areas
within the El Soledad and El Silencio reconnaissance concessions. The Company
was subsequently notified by MEM that these applications could not be registered
until the reconnaissance concessions were granted and requested exploration
areas were formally excluded. All of these licenses will cover land within the
Escobal Project area when and if they are issued.

On July 8, 2011, an application was submitted to MEM for the
Escobal Exploitation concession, covering 20.0 km2 of area designated for mine
development in the original Oasis exploration concession. Upon filing of the
exploitation concession application, three new exploration concessions (Oasis I,
II, III) were requested to occupy the area liberated through elimination of the
original Oasis concession.

According to Guatemalan requirements, licenses are coordinate
staked (filed only referenced to UTM coordinates) and no monuments are located
on the ground. No physical survey of exploration license boundaries is
required.

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The following table shows concession type, size and
application/grant dates for all San Rafael concessions:

Concession
    Type
    Size
      (km2)
    Application
      Date
    Grant Date
    1st Extension
      Filed
    1st Extension
      ApprovedSOLEDAD
    Recon
    802.5
    12/6/2006
    NAOASIS
    Exploration
    40.0
    10/25/2006
    3/26/2007
    10/9/2009
    4/27/2010LUCERO
    Exploration
    45.8
    10/25/2006
    8/21/2007
    6/21/2010
    3/29/2012ANDRES
    Exploration
    44.0
    5/18/2007
    12/17/2007
    10/6/2010
    3/29/2012EL OLIVO
    Exploration
    36.0
    5/18/2007
    NAJUAN BOSCO
    Exploration
    59.9
    11/12/2008
    4/26/2012PUENTE QUEBRADO
    Exploration
    3.0
    10/9/2009
    NAMELISA
    Exploration
    3.0
    10/9/2009
    NACIPRESES
    Exploration
    3.0
    10/9/2009
    NAVALENCIA
    Exploration
    7.0
    8/23/2010
    NAGRANADA
    Exploration
    5.0
    10/6/2010
    NACRISTINA
    Exploration
    52.2
    10/6/2010
    NAEL SILENCIO
    Recon
    1098.1
    11/4/2010
    NANACIMIENTO
    Exploration
    7.6
    2/19/2011
    NAPAJAL
    Exploration
    66.0
    5/4/2011
    NAESCOBAL
    Exploitation
    20.0
    7/8/2011
    NAEL DURAZNO
    Exploration
    48.9
    7/29/2011
    NAPAJARITA
    Exploration
    57.0
    7/29/2011
    NATERESA
    Exploration
    68.5
    8/17/2011
    NAOASIS I
    Exploration
    12.8
    8/31/2011
    NAOASIS II
    Exploration
    7.0
    8/31/2011
    NAOASIS III
    Exploration
    0.2
    8/31/2011
    NA


Prior to 2012, yearly payments made to MEM for each 50 km2 of
an exploration license included an approximate US$3,750 license holding fee and
an approximate US$90 exploration report filing fee. In 2012 the license holding
fee paid to MEM was increased to approximately US$58,000 for each 50 km2
license. All required payments for all granted licenses are current. Similar
payments will be required for subsequent extension periods.

There are no defined work requirements to keep an exploration
license valid, although exploration activity (sampling, mapping, etc.) must to
be conducted and results filed with MEM on an annual basis. Exploration activity
reports have been filed with MEM for all exploration licenses as required.

Land in the area of the Escobal Project is privately owned by
local farmers and used for growing coffee in the higher elevations and
vegetables and other crops in the flatter low lying areas. Approximately 250
hectares of surface rights have been acquired or are under contract by the
Company. These surface rights are sufficient to provide for our operations at
the Escobal Project, including areas for tailings disposal, waste rock disposal,
processing plant, and ancillary surface facilities.

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A profit sharing program in the form of an NSR royalty of 0.5%
will be paid to a local association of land owners. The current mining law
mandates that a royalty of 1% is payable at the exploitation stage and shared
equally between the State and the municipality where the project is situated.
Congress may act to amend the mining law. Until then, the Company and the
federal government have entered into a voluntary Escobal Royalty Agreement
discussed above. See Description of Our Business  Doing Business in Guatemala
 Mining.

PERMITS

The Escobal Project is currently in the exploration and
development phase with activities permitted by both MEM and MARN. All required
permits to continue surface and underground activities are in place.

The environmental requirements for the Escobal Project from
MARN are specified in Resolution 4590-2008/ELER/CG, dated December 23, 2008.
This resolution applies to exploration activities. These requirements were
transferred from Entre Mares to San Rafael as specified in Resolution
1918-2010/ECM/GB, dated September 3, 2010.

Development of an underground exploration program, including
the construction of two declines to gain access for additional drilling of the
Escobal deposit, is a permitted activity under the terms of the existing
exploration license. An EIS addressing the additional activities associated with
underground exploration was required prior to commencement of these activities
and was filed with MARN in November 2010. We received MARNs approval of the
Environmental Impact Assessment on February 15, 2011. Minor amendments to our
other permits required for our underground exploration are expected to be
approved in the near future.

In the second quarter of 2011 the Company submitted an
Exploitation EIS to MARN which it approved on October 21, 2011. MARNs approval
gave rise to MEMs final legal review of the Companys application for an
Exploitation permit which is completed. The Company expects MEMs final approval
of the license in the first half of 2012. See Description of Our Business  The
Escobal Project  Recent Activities at the Escobal Project.

As the Escobal Project is our primary project, the failure to
obtain the necessary exploitation license and permits required for us to proceed
with construction of the proposed mine or future expansions will have a material
adverse effect on our business. There can be no assurance as to when or if the
necessary exploitation licenses or permits will be granted.

ENVIRONMENT

Based on our due diligence in respect of the Acquisition of the
Escobal Project, our completed and approved Exploitation EIS and our activities
at the Escobal Project since that time, we believe that there are no potential
material environmental liabilities associated with the Escobal Project.

Our environmental management mandate is to meet or exceed North
American standards, practices and regulations. No impacted materials will be
directly discharged from the site. Impacted water will be treated to meet or
exceed industry standards prior to being released to the environment. Our
environmental management program for the Escobal project commenced in 2011 and
includes the following:

- Filtered and dry stacked tailings
- Lined storm water and waste water facilities

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- A concurrent reclamation program
- Process water recovery and recycling
- Process/contact water treatment systems
- Surface and groundwater monitoring programs
- Underground paste backfill

We have implemented a comprehensive Environmental Impact
Management Program developed specifically for the conditions at Escobal. Areas
of the program that address production operations will be implemented when mine
production and plant operations commence in the second half of 2013. The Company
has estimated the present value of asset retirement obligations at $3.9 million
to reclaim the Escobal Project at the end of the mine life. As at December 31,
2012 we have recorded the full amount of this reclamation liability based on
progress of the construction of the mine and plant. No liability has been
recorded for environmental disturbance associated with our exploration drill
pads and drill roads since they are concurrently reclaimed as part of the
drilling process as soon as drilling is finished.

GEOLOGY ANDMINERALIZATION

The geological setting of Guatemala is comprised of two
tectonic terrains juxtaposed across a major tectonic plate boundary. The
northern half of Guatemala is on the North American plate, and the southern half
is on the Caribbean plate with three major east-west trending faults forming the
collision boundary. The Escobal Project is on the Caribbean plate, south of the
faults. The area is characterized by a series of volcanic units derived from
multiple eruptive events.The Escobal deposit is an intermediate-sulfidation
fault-related vein formed within Tertiary sedimentary and volcanic rocks within
the Caribbean plate. The Escobal Vein system hosts silver, gold, lead and zinc,
with an associated epithermal suite of elements, within quartz and
quartz-carbonate veins. Quartz veins and stockwork up to 50 metres wide, with up
to 10% sulfides, form at the core of the Escobal deposit and grade outward
through silicification, quartz-sericite, argillic and propylitic alteration
zones.

Drilling to date has identified continuous precious and base
metal mineralization over a 3,000 metre lateral distance and 2,000 metre
vertical range in three zones; the East, West and Central zones. The vein system
is oriented generally east-west, with variable dips. The East zone dips to the
south from 60° to 75° and steepens to near-vertical at depth. The majority of
the mineralized structure(s) in the West zone dips from 60° to 70° to the north,
steepens to near-vertical and then again dips towards the north at depth. The
upper eastern portion of the Central zone dips 60° to 70° to the south as in the
East Zone, and changes to vertical or north dip at depth.

Drilling at the Escobal Project was conducted by Entre Mares
(Goldcorp) from 2007 up to the time of our acquisition of the Escobal Project
and we have continued the drilling since that time. Drilling has been carried
out using a combination of contracted and company-owned drills. As of December
31, 2012, a total of 391 surface exploration drill holes (152,993 metres) have
targeted the Escobal Vein system. All vein intercepts at the Escobal Project
were drilled by diamond drill (core) methods, with the majority of mineralized
intercepts drilled using NTW-size drill core. Core recovery averages 96%.

In 2012 exploration drilling at the Escobal Project explored
extensions of the deposit where it was open laterally and to depth and to
improve confidence in the mineral resource through in-fill drilling. A total of
between one and six drills operated from the surface at the Escobal Project
throughout the year.

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Far West Extension Area- Our
first program of step-out drilling in the Far West extension area intersected
mineralization 600 metres west and 700 metres below the westernmost limit of the
current resource.

West Zone deep drilling
identified mineralization on the Margarito vein downdip along a newly-recognized
change in the vein dip. This north-dipping section of the vein remains open to
depth.

East Zone drilling continued
to demonstrate the extension of mineralization at depth below the limits of the
current resource. The East zone remains open at depth.

Far East Zone widely-spaced
drilling confirmed the lateral continuation of Escobal vein mineralization over
400 metres east of the current resource. The Far East zone is untested at depth
and remains open to the east where offset by post-mineral faulting.

The Escobal Vein is one of numerous vein showings recognized in
the district. Using the geologic model developed for the Escobal Project,
prospective areas were evaluated throughout the region to identify drill viable
targets that occur within our currently held license areas.

In 2012, drilling was also carried out at the Varejones project
20 kilometres east of Escobal with two drills. Drilling identified vein
mineralization that was not deemed economically viable and the drilling was
suspended in June.

Exploration

Drilling at the Escobal Project was conducted by Entre Mares
(Goldcorp) from 2007 up to the time of our acquisition of the Escobal Project
and we have continued the drilling since that time. Drilling has been carried
out using a combination of contracted and company-owned drills. As of December
31, 2012, a total of 391 surface exploration drill holes (152,993 metres) have
targeted the Escobal Vein system. All vein intercepts at the Escobal Project
were drilled by diamond drill (core) methods, with the majority of mineralized
intercepts drilled using NTW-size drill core. Core recovery averages 96%.

In 2012 exploration drilling at the Escobal Project explored
extensions of the deposit where it was open laterally and to depth and to
improve confidence in the mineral resource through in-fill drilling. A total of
between one and six drills operated from the surface at the Escobal Project
throughout the year.

Far West Extension Area- Our
first program of step-out drilling in the Far West extension area intersected
mineralization 600 metres west and 700 metres below the westernmost limit of the
current resource.

West Zone deep drilling
identified mineralization on the Margarito vein downdip along a newly-recognized
change in the vein dip. This north-dipping section of the vein remains open to
depth.

East Zone drilling continued
to demonstrate the extension of mineralization at depth below the limits of the
current resource. The East zone remains open at depth.

Far East Zone widely-spaced
drilling confirmed the lateral continuation of Escobal vein mineralization over
400 metres east of the current resource. The Far East zone is untested at depth
and remains open to the east where offset by post-mineral faulting.

|March 7, 2013 | 39
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

The Escobal Vein is one of numerous vein showings recognized in
the district. Using the geologic model developed for the Escobal Project,
prospective areas were evaluated throughout the region to identify drill viable
targets that occur within our currently held license areas.

In 2012, drilling was also carried out at the Varejones project
20 kilometres east of Escobal with two drills. Drilling identified vein
mineralization that was not deemed economically viable and the drilling was
suspended in June.

SAMPLEPREPARATION, ANALYSIS
ANDSECURITY

The drill core for the Escobal Project is logged and sampled at
the project site for geologic and geotechnical properties. Geologists then
determine sample intervals based on geologic and/or mineralogic changes. A one
and one half meter nominal sample length is applied though sample intervals can
be defined from less than one meter in zones of discreet mineralization to over
three meters in weakly mineralized or altered areas. Once the sample intervals
are determined, the core is marked and tagged in wood core boxes.

Core samples selected for analysis are cut lengthwise using
mechanized diamond saws. One-half of the core is placed in a plastic sample bag
with a sample tag for analysis while the remaining half core is replaced in the
core box for future reference. The analytical samples are then taken to San
Rafael Las Flores where they are stored in San Rafaels secured office/warehouse
facility until they are picked up by Inspectorate, an independent commercial
laboratory. Inspectorate holds sample pulps in secured storage in Guatemala
City.

Inspectorate has been the primary analytical laboratory for all
of the Escobal Project drill sample preparation and analysis, with only minor
exceptions. All samples have been prepared and analyzed using industry-standard
practices suitable for the mineralization at the Escobal Project. Gold is
analyzed by fire assay with atomic absorption (AA) finish; silver is analyzed by
digestion/AA, with higher grade samples repeated using metallic screen fire
assay methods. Lead and zinc are analyzed by induced coupled polarization or by
digestion/AA, with high grade samples repeated using titration methods. Both
Entre Mares and Tahoe have conducted quality assurance and quality control
(QA/QC) programs throughout all of the drill campaigns at the Escobal Project,
which include check assaying and duplicate sample assaying at other
laboratories, and the use of blind assay standards and assay blanks.

MINERALPROCESSING ANDMETALLURGICALTESTING

McClelland Laboratories, Sparks, Nevada, USA conducted the
initial metallurgical tests for the Escobal Project in 2009 on three drill core
samples from the Escobal deposit. It was concluded from the results of the tests
that a differential lead/zinc flotation system, producing a high value lead
concentrate containing most of the silver and gold in the Mineral Resource and a
saleable lower value zinc concentrate, was the optimum processing route.

In June 2010, we contracted FLSmidth Dawson Metallurgical
Laboratories to conduct metallurgical testing on drill cores representative of
the mineralization from the Escobal Project Vein. The primary objective of the
test program was to determine process design criteria for crushing, grinding and
flotation for the sulfide deposit at the Escobal Project. The first two phases
of the metallurgical test program were completed in 2010 and a process flow
sheet and reagent scheme was selected based on these results. Results of the
differential flotation tests indicate that the sulfide mineralization will
respond to widely used and proven mineral processing techniques. The test
programs conducted to date show that good recoveries of gold, silver, lead and
zinc and acceptable reagent consumptions can be obtained by using conventional
lead/zinc differential flotation process. Flotation test work
for both the lead and zinc circuits have been shown to be rapid and expected
recoveries were confirmed at 86.8% for silver, 75.1% for gold, 82.5% for lead
and 82.6% for zinc. Metallurgical test work to optimize plant operational
parameters evaluate variations in mill feed continued into 2012. Variablitiy
testing conducted in 2011 and 2012 further defined reagent schemes and operating
strategies and confirmed the flow sheet and equipment selections. Pilot plant
testing in early 2013 confirmed expected recoveries and concentrate quality.
Additional test work will continue to be conducted on newly-discovered
resources.

|March 7, 2013 | 40
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

The basic flow sheet will include three stage crushing with the
first two stages in an open arrangement and the third stage in closed circuit
with a screen, a ball mill operating in closed circuit with hydro-cyclones, lead
and zinc rougher flotation, lead and zinc rougher concentrate regrind, three
stages of closed circuit lead and zinc concentrate cleaner flotation,
concentrate thickening, concentrate filtration using pressure filters, tailings
thickening, tailings filtered using pressure filters and delivered to a paste
backfill plant and used underground for ground support or delivered to a dry
stack storage facility on the surface, and process water recycle infrastructure
to minimize the need for make-up water. During 2011, detailed engineering of the
flow sheet and plant was started under the direction of M3. Plant construction
began in November of 2011. Detailed design for construction continued in 2012.
Approximately 83% of the overall design and construction drawings were complete
at year end 2012.

MINERALRESOURCES

The Mineral Resource estimate for the Escobal Project as
published in the May 2012 Escobal PEA contains 367.5 million ounces of silver
classified as Indicated resources and 36.7 million ounces of silver classified
as Inferred resources, with significant amounts gold, lead, and zinc reported in
both resource categories. The effective date of the Escobal Project Mineral
Resource is January 23, 2012. A summary of the Indicated and Inferred resources,
using a cutoff grade of 150 grams per tonne silver-equivalent, is provided in
the following table:

MAY 2012
      ESCOBAL PEA TABLE 1-1: SUMMARY OF INDICATED AND INFERRED MINERALRESOURCESResourceClassification
    Tonnes(M)
    Silver(g/t)
    Gold(g/t)
    Lead(%)
    Zinc(%)
    Silver(Moz)
    Gold(koz)
    Lead(kt)
    Zin(kt)Indicated
    27.1
    422
    0.43
    0.71
    1.28
    367.5
    373
    192
    347Inferred
    4.6
    254
    0.59
    0.34
    0.66
    36.7
    85
    15
    30


Mineral Resources at the Escobal Project were estimated using
approximately 22,900 samples obtained from 355 diamond drill core holes,
totaling 122,665 meters. Data verification for the Mineral Resources as reported
in the May 2012 Escobal PEA was supervised by Paul Tietz, CPG, of MDA. Data
verification included verification of drill locations in the field, review of
sample handling and data collection procedures, and independent verification
sampling/assaying of drill core. MDA also completed a full audit of the Escobal
database, analysis of the QA/QC data and a study of core recovery and its
relationship to metal grades.

MDA modeled and estimated the Escobal Project resources by
refining the geologic model, evaluating the drill data statistically,
interpreting mineral domains on cross sections and level plans, analyzing the
modeled mineralization statistically to establish estimation parameters, and
estimating silver, lead, gold, and zinc grades into a three-dimensional block
model using inverse distance cubed (ID3).

|March 7, 2013 | 41
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Silver-equivalent Indicated Mineral Resources total 429.7
million ounces at an average grade of 493 g/t and silver-equivalent Inferred
Mineral resources total 44.7 million ounces at an average grade of 309 g/t.
Silver-equivalent values for the resources were calculated using metal prices of
$25.00/oz Ag, $1300/oz Au, $0.95/lb Pb, and $0.90/lb Zn, with no metal recovery
factors applied. There are no mineral reserves reported for the Escobal
project.

MINING

Exploration successes in 2011 and 2012 prompted us to update
our initial November 2010 preliminary assessment. Analyses of the impact of
increases to the Escobal Mineral Resources on project infrastructure, costs, and
economics are summarized in the May 2012 Escobal PEA, which forms the basis of
our development and operating plans for the Escobal Project.

To take advantage of the increase in resources, the May 2012
Escobal PEA examined modifications to the mining method and process plant
facilities to increase production and throughput rates. Transverse long-hole
stoping will replace longitudinal long-hole stoping in areas where the
horizontal dimensions across the dip of the vein are greater than 15 metres.
This will allow an increase in the number of active producing workplaces in the
mine at any given time. Primary development has been accelerated compared to the
previous plan in order to access the new resources and allow for increased
production. Development will be accelerated through the addition of development
crews and equipment rather than an increase in productivity. Footwall laterals
in waste will be used to access stoping areas in lieu of the individual spiral
ramps that were utilized in the earlier study for stope development. Two cases
were analyzed; (1) ramping up mine production from 3500 to 4500 mtpd and capping
it at that rate throughout the mine life, or (2) increasing mine production to
4500 mtpd, making major modifications to the process plant and then further
increasing mine production to 5500 mtpd for the remainder of the mine life. The
mine plan for the two cases only differ in the timing of development and a
slightly smaller equipment fleet for the 4500 mtpd scenario.

The Escobal deposit is accessed through two main portals. Two
primary ramps access the Central zone and a third internal primary ramp will be
driven to the East zone from the East Central ramp. The three primary ramps
connect to a system of secondary footwall laterals spaced 25 metres vertically
in the Central zone and to spiral access ramps in the East zone. Stopes will be
accessed from the secondary development openings. The primary and secondary
development is being excavated at a maximum grade of -15%. The main access ramps
are located nominally 75 metres from the vein and are being driven 5 metres wide
by 6 metres high. As of December 31, 2012 a total of 4,817 metres of primary and
secondary development has been completed. Excavation of internal ventilation
raises to connect the various ramps, footwall laterals, and accesses began in
December 2012. Work continues on the infrastructure to dewater the mine; supply
electrical power, compressed air, and communications; and to provide fresh water
for operations and dust control.

Filtered tails from the process plant will be combined with
cement and water to make a structural fill (paste backfill) for underground use.
A paste backfill plant located near the East portal will produce backfill for
delivery via a system of steel and HDPE pipe into the mine for placement in the
mined-out stopes to provide stability to the excavated openings. Underground
excavations are also the preferred location to store tailings. Stope production
will be hauled directly from the stopes to the process plant by truck and
development waste will be placed in mined stopes or trucked to a surface waste
dump facility.

The mine is expected to deliver a total of 29.8 million tonnes
at average grades of 383 g/t silver, 0.38 g/t gold, 0.62% lead, and 1.10% zinc
to the mill for processing. A mine wide cut-off value of 150 g/t equivalent
silver has been determined as optimal for the operation.

|March 7, 2013 | 42
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

NI 43-101 Required Disclosure:The Escobal Preliminary
Economic Assessment is preliminary in nature and includes Inferred Mineral
Resources that are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as
Mineral Reserves, and there is no certainty that the preliminary economic
assessment will be realized. The basis for the Escobal Preliminary Economic
Assessment is the Indicated Mineral Resources and Inferred Mineral Resources,
the effective date of which is January 23, 2012. There is no prefeasibility or
feasibility study with respect to the Escobal Project.

PROCESSFLOWSHEET

Mineralized rock will be transported from the underground mine
to a run of mine stockpile from where it will be transported via front end
loader or trucks to the processing facility. Mineral concentrates of gold,
silver, lead and zinc will be produced by mineral flotation technology. The
sulfide concentrator will consist of a three stage crushing circuit followed by
one ball mill. This will be followed by a conventional lead zinc differential
flotation circuit consisting of tank cells with separate circuits for lead and
zinc. Lead and zinc concentrates produced at the concentrator facility will be
packaged and loaded onto trucks for shipment to concentrate smelters and metal
refineries.

The design basis for the processing facility is 4500 dry mtpd
or 1,642,500 dry tonnes per year. Sulfide and mixed oxide-sulfide resources
(diluted) are available for approximately 19 years at an average silver grade of
383 g/t, gold grade of 0.38 g/t, lead grade of 0.62% and zinc grade of 1.1.1% .

TAILINGS ANDWASTEROCKFACILITY

The above ground disposal of tailings will be dry stacked.
Tailings that are thickened and filtered to 10% to 15% moisture content are
commonly termed dry tailings. Benefits include a reduced footprint and the water
removed from the tailing is returned to process stream providing a direct effect
to make-up water. Approximately 45% of the tailings will be dry stacked and
compacted, with the majority of tailings returned underground as paste fill.
Reclamation of the dry stack facility will be concurrent with placement of the
tailings. In addition, dewatering for reclamation and closure will be completed
concurrent with operations, which will greatly simplify the closure of the
facility in an environmentally sound manner.

The engineering and design report for the dry stack tailings
was submitted to MARN in the fourth quarter of 2012. Submission of the report
was a prerequisite to the initiation of construction of the dry stack facility;
construction began in December 2012.

TRANSPORTATION ANDLOGISTICS

The major mining and process equipment has been procured
overseas and shipped to Guatemala. No special handling requirements have been
required, and normal shipping routes and ships can be utilized.

Guatemala has ports on both the Pacific and the Caribbean
coasts. Access to the mine site from both ports is on paved highway.

Filtered concentrate will be placed in 1,000 to 2,000 pound
super-sacks, placed in sea-going containers, and carried on highway tractor
trailer units along paved highway to either port for shipment to international
smelters.

|March 7, 2013 | 43
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

RECLAMATION

The entire facility for the Escobal Project has been designed
and constructed with closure in mind, to the greatest extent practicable. The
facilities are designed and operated to minimize the footprint and areas of
disturbance and to utilize the most advanced planning and reclamation techniques
available including dry stack tailings, concurrent reclamation and geomorphic
landform grading.

Surface disturbance resulting from the mine will be small as
all mining activity will be underground. Reclamation will commence as soon as is
practical during the development and operations by placing salvaged topsoil on
outslopes and encouraging vegetation. Concurrent reclamation began in some
construction areas in 2012. Final reclamation of the top surface will occur at
final closure at the end of mine life.

OPERATINGCOSTESTIMATE

The operating costs for the 4500 mtpd were calculated for each
year during the life of the mine using the annual production tonnage as a basis.
Table 1-2 below reflects the approximate production of zinc and lead
concentrates and metal contained in each concentrate. Table 1-3 shows the unit
cost per tonne.

MAY 2012
      ESCOBAL PEA TABLE 1-2: APPROXIMATE CONCENTRATE PRODUCTION AND CONTENT4500 mtpd Case
    Tonnes (000's)
    Zinc (klbs.)
    Silver (kozs.)
    Gold (kozs.)Zinc Concentrate Lead Concentrate
    515 299
    596,372 336,480
    15,807 303,275
    15 258


Table 1-3 shows the unit cost per tonne for the life of the
mine for both cases.

MAY 2012 ESCOBAL PEA
      TABLE 1-3: OPERATING COSTS BY AREALife of Mine
    4500 mtpd $/tonneTonnes
    29,826,845Mining OperationsMill
      Operations   Crushing & Conveying   
      Grinding & Classification    Flotation and
      Regrind    Concentrate Dewatering, Filtration
      & Dewatering    Tailing Disposal   
      Laboratory    Ancillary Services
    $29.03 $1.95
      $5.06 $4.20 $1.05 $5.26 $0.52 $1.50Subtotal Processing
    $19.54Supporting Facilities     General and Administrative
    $6.67Total Operating Cost
    $55.24


|March 7, 2013 | 44
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

CAPITALCOSTESTIMATE

The following tables show a summary of the initial capital
expenses estimated for the 3500 mtpd mine plan and for the 4500 tonne per day
expansion case contemplated in the May 2012 Escobal PEA. Table 1-4 shows a
summary of the estimated initial capital expenses for the original plant.

|MAY 2012
      ESCOBAL PEA TABLE 1-4: INITIAL CAPITAL COST CONTROL BUDGET (3,500
      MTPD)      |  
|------------------------------------------------------------------------------------------------- | -
|Description                                                                                       |  
|Direct Costs                                                                                      |  
|General Site                                                                                      | $
|Mine, West Portal  By Owner                                                                      | $
|Mine, East Portal  By Owner                                                                      | $
|Primary Crushing                                                                                  | $
|Secondary & Tertiary Crushing                                                                     | $
|Fine Ore Storage & Reclaim                                                                        | $
|Grinding                                                                                          | $
|Flotation & Regrind                                                                               | $
|Reagents                                                                                          | $
|Concentrate                                                                                       | $
|Tailing Dewatering                                                                                | $
|Paste Backfill Plant                                                                              | $
|Tailing Dry Stack                                                                                 | $
|Water Systems and Well Field                                                                      | $
|Sewage Treatment                                                                                  | $
|Main Substation                                                                                   | $
|Overhead Power Line                                                                               | $
|Ancillaries                                                                                       | $
|Insurance/Capital Spares                                                                          | $
|Freight                                                                                           | $
|Duties                                                                                            | $
|Subtotal DIRECT COST                                                                              | $
|                                                                                                  |  
|Indirect Costs                                                                                    |  
|CONTINGENCY                                                                                       | $
|                                                                                                  |  
|Other indirect costs including EPCM, Contractor
      Power, Vendor Supervision and Commissioning | $
|                                                                                                  |  
|VAT @ 12% (eventually refundable)                                                                 | $
|                                                                                                  |  
|TOTAL EPCM CAPITAL COST                                                                           | $
|                                                                                                  |  
|TOTAL MINE CAPITAL COST                                                                           | $
|                                                                                                  |  
|OWNERS COST                                                                                      | $
|                                                                                                  |  
|TOTAL                                                                                             | $

As of December 31, 2012, the 3500 mtpd project is under
construction. Project expenditures through December 31, 2012 total $250.7
million. This amount does not include the 4500 mtpd plant expansion costs which
are described in Table 1-5. Commissioning of the 3500 mtpd plant is expected to
begin in the second half of 2013, with commercial production expected in early
2014.

|March 7, 2013 | 45
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

The capital costs for the option to increase production to 4500
mtpd are as follows:

|MAY 2012
      ESCOBAL PEA TABLE 1-5: CAPITAL COST ESTIMATE FOR THE 4500 MTPD EXPANSION |  
|--------------------------------------------------------------------------------------- | -
|Total Costs for the
      3500 mtpd Project                                             | $
|                                                                                        |  
|Additional Costs for the Expansion to 4500 mtpd from 3500 mtpd                          | $
|Direct Costs                                                                            | $
|Indirect Costs                                                                          | $
|Total                                                                                   | $
|Grand Total                                                                             | $

The 4500 mtpd expansion is expected to cost $18,034,499 in
plant expansion and $28,101,501 in mine development and equipment in addition to
the costs for the 3500 mtpd project, for a total of $372,785,000. As of December
31, 2012, a total of $253.2 million has been spent on the base case 3500 mtpd
project and the expansion to 4500 mtpd.

FINANCIALANALYSIS

The assessment given in the May 2012 Escobal PEA and
summarized below is preliminary in nature and includes Inferred Mineral
Resources that are considered too speculative geologically to have economic
considerations applied to them that would enable them to be categorized as
Mineral Reserves, and there is no certainty that the preliminary assessment will
be realized. Additionally, Mineral Resources that are not Mineral Reserves do
not have demonstrated economic viability.

The financial evaluation below presents the determination of
the estimated Net Present Value (NPV), payback period (time in years to
recapture the initial capital investment), and the Internal Rate of Return
(IRR) for the Escobal Project. Annual cash flow projections in the Escobal
Preliminary Assessment Report were estimated over the life of the mine based on
the estimates of capital expenditures, operating costs and sales revenue. The
sales revenue estimates are based on the production of lead and zinc
concentrates also containing gold and silver. The estimates of capital
expenditures and site operating costs have been developed specifically for the
Escobal Project.

The 4500 mtpd economic analysis developed in the May 2012
Escobal PEA indicates that the project has a NPV of $2.94 billion (using a 5%
discount rate) and an Internal Rate of Return (IRR) of 68.3% with a payback
period of 1.5 years using base case metal prices of $25.00/oz silver,
$1,300.00/oz gold, $0.95/lb lead, and $0.90/lb zinc.

Table 1-8 compares the 4500 mtpd base case project financial
indicators with the financial indicators for other cases when the sales price,
the amount of capital expenditure, and operating cost are varied from the base
case values by 10% and 20% while metal recoveries are varied by 1% and 2%.

|March 7, 2013 | 46
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

|MAY 2012
      ESCOBAL PEA TABLE 1-8: 4500 MTPD CASE  SENSITIVITY ANALYSIS (AFTER TAXES)
|-----------------------------------------------------------------------------------------
|Change in Metal Prices                                                                   
|4500 mtpd Base Case                                                                      
|20%                                                                                      
|10%                                                                                      
|0%                                                                                       
|-10%                                                                                     
|-20%                                                                                     
|Change in Operating Cost                                                                 
|4500 mtpd Base Case                                                                      
|20%                                                                                      
|10%                                                                                      
|0%                                                                                       
|-10%                                                                                     
|-20%                                                                                     
|Change in Initial Capital                                                                
|4500 mtpd Base Case                                                                      
|20%                                                                                      
|10%                                                                                      
|0%                                                                                       
|-10%                                                                                     
|-20%                                                                                     
|Change in Recovery                                                                       
|4500 mtpd Base Case                                                                      
|2.00%                                                                                    
|1.00%                                                                                    
|0.00%                                                                                    
|-1.00%                                                                                   
|-2.00%                                                                                   

CONCLUSIONS ANDRECOMMENDATIONS

The Escobal Preliminary Economic Assessment states that an
economically robust and environmentally suitable underground mining operation
can be designed and constructed at the Escobal Project. Mine development began
in May 2011 and plant construction began in October 2011. Based on its analysis,
M3 recommended that the Company complete the detailed engineering and
development of the Escobal Project and begin taking steps to increase the mine
and mill capacity to 4500 mtpd.

DIVIDENDS AND DISTRIBUTIONS

We have not paid any dividends on our Shares. We currently
intend to retain future earnings, if any, to finance the expansion of our
business and do not anticipate paying dividends in the foreseeable future. Any
decision to pay dividends on the Shares in the future will be made by the Board
on the basis of the earnings and financial requirements of the Company as well
as other conditions existing at such time.

|March 7, 2013 | 47
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

DESCRIPTION OF CAPITAL STRUCTURE

The Company is authorized to issue an unlimited number of
Shares. As at the date hereof, 143,565,204 Shares were issued and outstanding as
fully paid and non-assessable.

The holders of Shares are entitled to one vote per Share at
meetings of the shareholders of the Company. Holders of Shares are entitled to
dividends, if, as and when declared by the Board and, upon liquidation, to
participate equally in such assets of the Company as are distributed to the
holders of Shares.

MARKET FOR SECURITIES

The Shares are listed on the NYSE under the symbol TAHO and
on the TSX under the symbol THO. The following table sets forth information
relating to the trading of the Shares on both the NYSE and TSX for the months
indicated.

|TRADING HISTORY
      ON THE NYSE
|---------------------------------

TRADING
      PRICE (US$)2012
    High
    Low
    VolumeJanuary
    22.30
    17.92
    133,900February
    21.23
    19.66
    175,400March
    24.01
    20.65
    117.00April
    22.83
    17.10
    95,900May
    19.79
    15.51
    389,000June
    19.41
    8.55
    15,432,900July
    15.44
    12.33
    3,212,600August
    19.07
    14.38
    2,037,500September
    22.04
    18.23
    2,818,600October
    22.33
    19.48
    1,989,500November
    20.71
    16.80
    1,659,900December
    18.38
    16.80
    1,129,800


TRADING
      PRICE (US$)2013
    High
    Low
    VolumeJanuary
    19.46
    15.24
    1,578,300February
    17.27
    13.85
    1,901,800


|March 7, 2013 | 48
|------------- | --

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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

|TRADING HISTORY
      ON THE TSX
|--------------------------------

TRADING
      PRICE (CDN$)2012
    High
    Low
    VolumeJanuary
    22.39
    17.79
    4,572,902February
    21.25
    19.52
    5,236,635March
    23.89
    20.60
    9,614,046April
    22.84
    16.90
    6,224,280May
    19.52
    15.98
    10,666,036June
    19.73
    9.74
    13,492,171July
    15.47
    12.55
    7,262,497August
    18.91
    14.39
    4,787,112September
    21.55
    18.02
    5,822,328October
    21.81
    19.2
    4,188,672November
    20.73
    16.75
    4,448,490December
    18.23
    16.59
    5,660,509


TRADING
      PRICE (CDN$)2013
    High
    Low
    VolumeJanuary
    19.19
    15.37
    4,116,309February
    17.22
    14.11
    4,174,700


Source: www.tmxmoney.com

The price of Shares as reported by the NYSE at the close of
business on December 31, 2012, the last business day of the year in the U.S.,
was $18.32 and on March 7, 2013 was $16.00 per share. The price of the Shares as
reported by the TSX at the close of business on December 30, 2012, the last
business day of the year in Canada, was Cdn$18.20 per share and on March 7, 2013
was Cdn$16.46 per share.

PRIOR SALES

In the twelve month period ended December 31, 2012, the Company
granted 135,000 options and 259,000 share awards (consisting of 224,000 Deferred
Share Awards and 35,000 Restricted Share Awards) under its Share Option and
Incentive Share Plan adopted on April 20, 2010.

SHARES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER

Our directors, key management, executives, senior employees and
our largest shareholder, Goldcorp, had agreed to refrain from selling Shares
until June 8, 2012. See General Development of Our Business  The Transaction
Agreement and the Shareholders Agreement. As of June 8, 2012, all such
restrictions on transfer ceased to have effect.

|March 7, 2013 | 49
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

DIRECTORS AND EXECUTIVE OFFICERS

|DIRECTORS AND
      EXECUTIVE OFFICERS
|--------------------------------------

The following table sets forth information regarding our
directors and executive officers. The term of office for the Directors expires
as of the Companys Annual General Meeting which will be held on May 10,
2012.

DIRECTORSName and Municipality ofResidence
    Position(s) withthe Company
    Date ofAppointment
    Principal OccupationC. KEVIN MCARTHUR(4)Reno, Nevada, United States
    President, Chief Executive
      Officer and Director
    10-Nov-09
    President and Chief
      Executive Officer of the Company.A. DAN ROVIG Reno, Nevada, United
      States
    Director and Chair
    8-Jun-10
    Independent consultant.LORNE B. ANDERSON(1)(2) (3)Surrey, British Columbia,
      Canada
    Director
    14-Apr-10
    Independent financial
      consultant.PAUL B. SWEENEY(1)(3)Surrey, British Columbia, Canada
    Director
    14-Apr-10
    Independent business
      consultant.JAMES S. VOORHEES(2)(4)Reno, Nevada, United States
    Director
    14-Apr-10
    Independent director.JOHN P. BELL(2)(4)Vancouver, British Columbia,
      Canada
    Director
    8-Jun-10
    Independent director.KENNETH F. WILLIAMSON(1)(3)Dwight, Ontario, Canada
    Director
    8-Jun-10
    Independent director.TANYA JAKUSCONEK(3)(4)Toronto, Ontario, Canada
    Director
    2-May-11
    Senior Gold Research
      Analyst for Scotia Bank.


EXECUTIVE OFFICERSName and Municipality ofResidence
    Position(s) withthe Company
    Date ofAppointment
    Principal OccupationRONALD W. CLAYTON Reno, Nevada, United
      States
    Executive Vice President and
      Chief Operating Officer
    1-Apr-10
    Executive Vice President
      and Chief Operating Officer of the Company.JAIME MONDRAGÓN Reno, Nevada, United
      States
    Vice President and Chief
      Financial Officer
    1-Mar-10
    Vice President and Chief
      Financial Officer of the Company.BRIAN BRODSKY Reno, Nevada, United
      States
    Vice President, Exploration
    1-Jun-10
    Vice President, Exploration
      of the Company.EDIE HOFMEISTER Reno, Nevada, United
      States
    Vice President, General
      Counsel and Corporate Secretary
    1-Feb-10
    Corporate Secretary and
      General Counsel of the Company.


|Member of:
|----------
|(1)       
|(2)       
|(3)       
|(4)       

|March 7, 2013 | 50
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

The principal occupations of each of the Companys directors
and executive officers within the past five years are disclosed in the brief
biographies set forth below.

C. Kevin McArthur, President, Chief Executive Officer and
Director.Mr. McArthur was appointed President and Chief Executive Officer
on November 10, 2009. He is currently a Director of Pembrook Mining Company
(private company). He was President, Chief Executive Officer and a director of
Goldcorp from November 15, 2006 until his retirement on December 31, 2008. He
was President and Chief Executive Officer of Glamis Gold Ltd. from January 1,
1998 and served in a variety of management positions with Glamis since 1988.
Prior to working with Glamis, Mr. McArthur held various operating and
engineering positions with BP Minerals and Homestake Mining Company. He holds a
B.S. in Mining Engineering from the University of Nevada.

A. Dan Rovig, Director and Chair of the Board.Mr. Rovig
has been a director of Goldcorp since November 2006. He was a director and
Chairman of the Board of Glamis Gold Ltd. from November 1998 to November 2006.
Prior to November 1998, Mr. Rovig served first as President of Glamis from
September 1988 until his appointment as a director, and the President and Chief
Executive Officer of Glamis and its subsidiaries from November 1989 to August
1997 when he retired. Prior to 1988, Mr. Rovig was an executive officer of
British Petroleum Ltd., including its subsidiaries Amselco Minerals Inc. and BP
Minerals America for five years. He holds a B.S. degree in Mining Engineering
and a M.S. degree in Mineral Dressing Engineering from Montana College of
Mineral Science and Technology. He is also a registered member of the Society
for Mining, Metallurgy and Exploration, and the Geological Society of Nevada.

Lorne B. Anderson, Director.Mr. Anderson is a Chartered
Accountant. He was the Chief Financial Officer of Tyhee Gold Corporation from
May of 2005 until January 16, 2012. He is a director and the Audit Committee
Chairman for Selwyn Resources Ltd. He has been an Independent Financial
Consultant to the minerals industry since 1998. Since 1998 he has served on the
Boards of several mineral companies listed on the TSX Venture Exchange. From
1988 to 1998 Mr. Anderson was the Chief Financial Officer and Treasurer of
Glamis Gold Ltd. He has over twenty years of experience in the mining industry,
during which time he has been involved with administration, both equity and bank
financings, and investor relations programs.

Paul B. Sweeney, Director.Mr. Sweeney has been an
independent business consultant since May 2011. From May 2010 to May 2011, he
was a part-time commercial advisor to Plutonic Power Corporation and
subsequently Alterra Power Corp. From August 2009 to April 2010, he served as
Plutonic Power Corporations President. He was Executive Vice President,
Corporate Development of Plutonic Power Corporation from October 2008 to August
2009 and was Executive Vice President, Business Development of Plutonic Power
Corporation from January 2007 to October 2008. He was an independent business
and financial consultant from 2005 to 2007 and was Vice President and Chief
Financial Officer of Canico Resource Corp. from 2002 to 2005. Mr. Sweeney has
over 35 years experience in financial management of mining and renewable energy
companies.

James S. Voorhees, Director. Mr. Voorhees has been an
independent consultant since 2007. Currently Mr. Voorhees is a director of Cloud
Peak Energy. From 2005 to 2006 Mr. Voorhees was Executive Vice President and
Chief Operating Officer of Glamis Gold Ltd. and from 1999 to 2005 he was Vice
President Operations and Chief Operating Officer of Glamis Gold Ltd. Mr.
Voorhees holds a B.S. degree in Mining Engineering from the University of Nevada
and is a registered professional engineer.

|March 7, 2013 | 51
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

John P. Bell, Director. John P. Bell is a former
Canadian diplomat when he served as Ambassador to Cote dIvoire, Brazil, and
High Commissioner to Malaysia. He also served as Canadas Chief Negotiator to
the Rio Earth Summit ( the United Nations Conference on Environment and
Development) . He was a Chief Federal Negotiator for Canadian Department of
Indian and Northern Affairs from 1998-2006 .He is currently a director of
Goldcorp, and of the Canadian Network for International Surgery (CNIS). He holds
a Bachelor of Commerce degree and an Honorary Doctorate of Laws degree from the
University of British Columbia.

Kenneth F. Williamson, Director.Mr. Williamson has been
a director of Goldcorp since November 2006. He was Vice Chairman Investment
Banking of Midland Walwyn/Merrill Lynch Canada Inc. from 1993 until his
retirement in 1998. He was a director of Glamis Gold Ltd. from April 1999 to
November 2006. He has worked in the securities industry for more than 25 years,
concentrating on financial services and the natural resource industries in the
United States and Europe. He was chairman of the board of BlackRock Ventures
until it was acquired by Shell Canada in 2006. Currently he is a director of
Uranium One Inc. As an active board member he has chaired various committees
including audit, governance, and compensation. Mr. Williamson is a registered
Professional Engineer and holds a Bachelor of Applied Science degree from the
University of Toronto and a M.B.A. degree from the University of Western
Ontario.

Tanya Jakusconek, Director. Ms. Jakusconek is a Senior
Gold Research Analyst who has covered large and mid-tier North American
producers since 1991. She began her investment career at RBC Dominion
Securities, and then worked at BBN James Capel and National Bank Financial
before moving to Scotiabank in 2011. She earned a B. Sc (Honours) in Geology and
an M.Sc Applied (MINEX Program), both from McGill University in Montreal.

Ronald W. Clayton, Executive Vice President, Chief Operating
Officer. Mr. Clayton was appointed Vice President and Chief Operating
Officer of the Company on April 1, 2010. Mr. Clayton has extensive experience in
development and operation of underground silver mines as well as operations in
Latin America. Prior to joining the Company, Mr. Clayton was Senior Vice
President of Operations and General Manager of several underground precious
metal mines over a twenty year career with Hecla Mining Company. Mr. Clayton was
also Vice President Operations for Stillwater Mining Company from 2000 to 2002
and held various production, engineering and management positions with the
Climax Molybdenum Company and Homestake Mining Company from 1976 to 1987. Mr.
Clayton holds a B.S. in Mining Engineering from Colorado School of Mines.

Jaime Mondragón, Vice President and Chief Financial Officer.Mr. Mondragón was appointed Vice President and Chief Financial Officer of
the Company on March 1, 2010. Previously, Mr. Mondragón served as Director of
Finance at Minefinders Corporation from August 2007 to March 2010. Prior to
that, he was Controller at Goldcorps Peñasquito project located in Mexico and
served as Controller for Glamis at various operations in Mexico, Guatemala and
Honduras. He has also been Controller for Hecla Mining Company mines in
Venezuela and Mexico. Before going into mining, Mr. Mondragón worked in public
accounting with KPMG LLP as a senior manager in both Audit and Tax. He graduated
from the University of Baja California as a certified Contador Publico and has
certificates in advanced studies in tax from Universidad Panamericana in Mexico
City and the Universidad de Sonora in Hermosillo, Mexico.

Brian Brodsky, Vice President, Exploration. Brian
Brodsky, Vice President, Exploration. Mr. Brodsky was appointed Vice President
of Exploration of the Company and began work for us on June 1, 2010. Mr. Brodsky
is an economic geologist with over 35 years of precious metals exploration
experience. He worked for Goldcorp and its predecessor Glamis Gold from 2003 to
2010 as Exploration Manager, overseeing regional studies and detailed property
assessments throughout Guatemala. His team was instrumental in the exploration and
development of the Marlin Mine and Cerro Blanco gold-silver deposit as well as
the grass-roots discovery and definition of the Escobal Vein. In early 2010 Mr.
Brodsky was appointed to the position of Director of Exploration for the U.S.
and Latin America for Goldcorp. Prior to joining Glamis/Goldcorp, Mr. Brodsky
explored gold-silver, base metals and uranium deposits in various geologic
environments throughout the United States, Peru and West Africa for Rio Algom
Ltd., Cordex, Cruson & Pansze. He holds a B.S. in Geology from the
University of Nevada.

|March 7, 2013 | 52
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

Edie Hofmeister, Vice President, Corporate Secretary and
General Counsel. Ms. Hofmeister was appointed Corporate Secretary and
General Counsel of the Company on February 1, 2010 and Vice President, General
Counsel on March 2, 2011. Prior to that, she served as corporate counsel, and
then General Counsel to a $2-billion bankruptcy Trust from 2004-2006 in Reno,
Nevada. From 1994 to 2001 she worked as an attorney at Brobeck, Phleger and
Harrison LLP where she acted as senior litigation counsel to Exxon/Mobil, Shell
and Imperial Oil Canada in complex environmental coverage cases. Since 2007 she
has worked with indigenous groups in developing nations to promote reforestation
and sustainable community programs. Ms. Hofmeister holds a B.A. from the
University of California Los Angeles, an M.A. in International Studies from the
University of Notre Dame, and a J.D. from the University of San Francisco School
of Law.

As of the date hereof, our directors, executive officers and
employees, as a group, beneficially owned, directly or indirectly, or exercised
control or direction over 5,681,558 vested Shares, representing approximately
3.90% of the issued Shares before giving effect to the exercise of share
purchase options and the receipt of Shares issuable pursuant to Deferred or
Restricted Share Awards. The directors, executive officers and employees, as a
group, held 333,000 Deferred Share Awards and 3,119,793 Options.

|CEASE TRADE
      ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS
|--------------------------------------------------------------

No director or executive officer of the Company is, or within
ten years prior to the date hereof has been, a director, chief executive officer
or chief financial officer of any company (including the Company) that, (i) was
subject to a cease trade order, an order similar to a cease trade order or an
order that denied the relevant company access to any exemption under securities
legislation, that was in effect for a period of more than 30 consecutive days,
that was issued while the director or executive officer was acting in the
capacity as director, chief executive officer or chief financial officer; or
(ii) was subject to a cease trade order, an order similar to a cease trade order
or an order that denied the relevant company access to any exemption under
securities legislation, that was in effect for a period of more than 30
consecutive days, that was issued after the director or executive officer ceased
to be a director, chief executive officer or chief financial officer and which
resulted from an event that occurred while that person was acting in the
capacity as director, chief executive officer or chief financial officer.

No director or executive officer of the Company, or a
shareholder holding a sufficient number of securities of the Company that would
affect material control of the Company, (i) is, or within ten years prior to the
date hereof has been, a director or executive officer of any company (including
the Company) that, while that person was acting in that capacity, or within a
year of that person ceasing to act in that capacity, became bankrupt, made a
proposal under any legislation relating to bankruptcy or insolvency or was
subject to or instituted any proceedings, arrangement or compromise with
creditors or had a receiver, receiver manager or trustee appointed to hold its
assets, other than John P. Bell who ceased to be a director of JER Envirotech
International Corp. (JER) within one year of the date JER ceased to do
business, or (ii) has, within ten years prior to the date hereof, become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold the assets of the director, executive officer or
shareholder.

|March 7, 2013 | 53
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

No director or executive officer of the Company, or a
shareholder holding a sufficient number of securities of the Company to affect
materially the control of the Company, has been subject to (i) any penalties or
sanctions imposed by a court relating to securities legislation or by a
securities regulatory authority or has entered into a settlement agreement with
a securities regulatory authority; or (ii) any other penalties or sanctions
imposed by a court or regulatory body that would likely be considered important
to a reasonable investor in making an investment decision.

|CONFLICTS OF
      INTEREST
|---------------------------

To the best of the Companys knowledge there are no known
existing or potential material conflicts of interest among the Company and the
Companys directors, officers or other members of management, as a result of
their outside business interests except that certain of our directors and
officers serve as directors and officers of other companies, and therefore it is
possible that a conflict may arise between their duties to us and their duties
as a director or officer of such companies. In the event of such a conflict of
interest, the Company will follow the requirements and procedures of applicable
corporate and securities legislation and applicable exchange policies, including
the relevant provisions of the BCA. See Description of Our Business  Risk
Factors  Risks Relating to Our Business Conflicts of Interest.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS

None of our directors, executive officers or any shareholder
who beneficially owns or controls or directs, directly or indirectly, more than
10% of the issued Shares, or any of their respective associates or affiliates,
had any material interest, directly or indirectly, in any transaction within the
three most recently completed financial years or during the current financial
year that has materially affected or is reasonably expected to affect the
Company, except for the acquisition by us of the Escobal Project Assets from the
Vendors (Goldcorp) (see General Development of Our Business) and the purchase
by Goldcorp of 10,285,692 shares sold under our public offering of Shares on
December 23, 2010 for gross proceeds of Cdn$145,028,257.

TRANSFER AGENTS AND REGISTRAR

The transfer agent and registrar for the Shares is
Computershare Investor Services Inc. at its principal offices in Vancouver,
British Columbia.

MATERIAL CONTRACTS

There are no material contracts which we have entered into
within the financial year ended December 31, 2012.

|March 7, 2013 | 54
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

INTERESTS OF EXPERTS

The Qualified Person and Principal author for the Escobal
Preliminary Economic Assessment is Conrad Huss, P.E., of M3. The Qualified
Person for such report responsible for the review of the civil and environmental
controls for the Escobal Project was Daniel Roth, P.E., of M3. The Qualified
Person for such report responsible for the review of the metallurgical testing
and flow sheets for the Escobal Project was Thomas L. Drielick, P.E., of M3. All
M3 personnel who worked on the report were supervised by Conrad Huss. The
Qualified Person for the Escobal Economic Preliminary Assessment responsible for
the review of the drilling, sampling method, sample preparation and analysis and
data verification, and for the preparation of the Mineral Resource estimate
described in the Escobal Economic Preliminary Assessment was Paul Tietz, C.P.G.,
of Mine Development Associates, an independent mining consulting firm.

The Company believes that at the date hereof, each of the
authors of the Escobal Preliminary Economic Assessment and the employees and
partners, as applicable, of M3 and Mine Development Associates, beneficially
own, directly or indirectly, less than 1% of the outstanding securities of the
Company.

The independent auditors of the Company are Deloitte LLP.
Deloitte LLP is independent with respect to the Company within the meaning of
the Rules of Professional Conduct of the Institute of Chartered Accountants of
British Columbia.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Selected audited consolidated financial information for the
year ended December 31, 2012 is as follows:

2012
    
    
    2011
    
    
    2010Revenues
    $
    -
    
    $
    -
    
    $
    -Net (Loss)
    $
    (93,453
    )
    $
    (69,166
    )
    $
    (8,010
    )Net Earnings (Loss) Per ShareBasic
    $
    (0.65
    )
    $
    (0.48
    )
    $
    (0.12
    )Diluted
    $
    (0.65
    )
    $
    (0.48
    )
    $
    (0.12
    )Cash and Short-Term Investments
    $
    164,561
    
    $
    349,837
    
    $
    436,463Total Assets
    $
    852,943
    
    $
    922,005
    
    $
    958,120Total Liabilities
    $
    21,646
    
    $
    10,351
    
    $
    3,061Total Shareholders Equity
    $
    831,297
    
    $
    911,654
    
    $
    955,059(1) In thousands, except per share amounts.


Further discussion of the Companys financial results is
contained in Managements Discussion and Analysis of Financial Condition and
Results of Operations for the year ended December 31, 2012.

ADDITIONAL CORPORATE AND FINANCIAL INFORMATION

Additional information relating to the Company, including
additional financial information contained in the audited financial statements
and the Management Discussion and Analysis for the year ended December 31, 2012,
and directors and officers remuneration and indebtedness, principal holders of
the Companys securities and securities authorized for issuance under equity
compensation plans contained in the Companys Management Information Circular
dated March 7, 2013, can be found on SEDAR at www.sedar.com or on the Companys
website at www.tahoeresourcesinc.com.

|March 7, 2013 | 55
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

INFORMATION CONCERNING THE COMPANYS AUDIT COMMITTEE AND
EXTERNAL AUDITOR

|THE AUDIT
      COMMITTEES DUTIES AND CHARTER
|----------------------------------------------

The Audit Committee reviews all financial statements of the
Company prior to their publication, reviews audits, considers the adequacy of
the audit procedures, recommends the appointment of independent auditors,
reviews and approves professional services to be rendered by them and reviews
fees for audit services. The Audit Committee meets with the Companys auditors
without management being present to discuss the various aspects of the Companys
financial statements and the independent audit.

On April 20, 2010, the Board adopted a charter for the Audit
Committee to follow in carrying out its audit and financial review functions.
This charter is appended hereto as Appendix A.

|COMPOSITION OF
      THE AUDIT COMMITTEE
|----------------------------------------

The Audit Committee is currently composed of three directors:
Paul Sweeney (Chairman), Lorne Anderson and Kenneth Williamson. Each of these
individuals is independent and financially literate within the meaning of
National Instrument 52-110 of the Canadian Securities Administrators.

|RELEVANT
      EDUCATION AND EXPERIENCE
|---------------------------------------

All Audit Committee members have significant management
experience in the mining, securities or investment banking industry as well as
extensive continuing financial education. Details regarding the education and
experience of each member of the Audit Committee that is relevant to the
performance of his responsibilities as an Audit Committee member is as
follows:

Mr. Sweeney has been an independent business consultant since
May 2011. From May 2010 to May 2011, he was a part-time commercial advisor to
Plutonic Power Corporation and subsequently Alterra Power Corp. From August 2009
to April 2010, he served as Plutonic Power Corporations President. He was
Executive Vice President, Corporate Development of Plutonic Power Corporation
from October 2008 to August 2009 and was Executive Vice President, Business
Development of Plutonic Power Corporation from January 2007 to October 2008. He
was an independent business and financial consultant from 2005 to 2007 and was
Vice President and Chief Financial Officer of Canico Resource Corp. from 2002 to
2005. Mr. Sweeney has over 35 years experience in financial management of
mining and renewable energy companies.

Mr. Anderson is a Chartered Accountant. He was the Chief
Financial Officer of Tyhee Gold Corporation from May of 2005 until January 16,
2012. He is a director and the Audit Committee Chairman for Selwyn Resources
Ltd. He has been an Independent Financial Consultant to the minerals industry
since 1998. From 1988 to 1998 Mr. Anderson was the Chief Financial Officer and
Treasurer of Glamis Gold Ltd. He has over twenty years of experience in the
mining industry, during which time he has been involved with administration,
both equity and bank financings, and investor relations programs.

Mr. Williamson has been a director of Goldcorp since November
2006. He was Vice Chairman Investment Banking of Midland Walwyn/Merrill Lynch
Canada Inc. from 1993 until his retirement in 1998. He was a director of Glamis
Gold Ltd. from April 1999 to November 2006. He has worked in the securities industry for more than 25 years,
concentrating on financial services and the natural resource industries in the
United States and Europe. He was chairman of the board of BlackRock Ventures
until it was acquired by Shell Canada in 2006. Currently he is a director of
Uranium One Inc. As an active board member he has chaired various committees
including audit, governance, and compensation. Mr. Williamson is a registered
Professional Engineer and holds a Bachelor of Applied Science degree from the
University of Toronto and a M.B.A. degree from the University of Western
Ontario.

|March 7, 2013 | 56
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

|PRE-APPROVAL
      POLICIES AND PROCEDURES
|------------------------------------------

We have not adopted specific policies and procedures for the
engagement of non-audit services, however, the Audit Committee has considered
whether the provision of services other than audit services is compatible with
maintaining the auditors independence and has adopted a general policy
governing the provision of these services. This policy requires the pre-approval
by the Audit Committee of all audit and non-audit services provided by the
external auditor, other than any de minimus non-audit services allowed by
applicable law or regulation.

Pre-approval from the Audit Committee can be sought for planned
engagements based on budgeted or committed fees. No further approval is required
to pay pre-approved fees. Additional pre-approval is required for any increase
in scope or in final fees.

|EXTERNAL
      AUDITOR SERVICE FEES
|-----------------------------------

The Audit Committee has reviewed the nature and amount of the
audit and non-audit services provided by Deloitte LLP and KPMG LLP to ensure
auditor independence. The following table sets out the aggregate fees billed for
services performed during the year ended December 31, 2012 for the category of
fees described:

Financial Period
    Audit
      Fees(1) (Cdn$)
    Audit Related
      Fees(2)
    Tax
      Fees(3) (Cdn$)
    All Other
      Fees(4) (Cdn$)Jan. 1  Dec. 31, 2012
    $190,000
    $ -
    $130,438
    $106,057Jan. 1 - Dec. 31, 2011
    $117,534
    $ -
    $87,230
    $40,950


|(1) | Audit Fees include fees necessary to perform the annual
      audit and quarterly reviews of the Companys financial statements. Audit
      Fees include fees for accounting consultations on matters reflected in the
      financial statements. Audit Fees also include audit or other attest
      services required by legislation or regulation, such as comfort letters,
      consents, reviews of securities filings and statutory audits.                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(2) | Audit related fees represent the aggregate fees billed in
      each of the last two fiscal years for assurance and related services by
      the principal accountant that are reasonably related to the performance of
      the audit or review of the Companys financial statements and are not
      reported under Audit Fees above. These audit-related services include
      accounting consultations on proposed and completed transactions, services
      performed in connection with the Companys listing on the NYSE.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(3) | Tax Fees includes fees for tax compliance, tax planning
      and tax advice. Tax planning and tax advice includes assistance with tax
      audits and appeals, transfer price management, tax advice related to
      mergers and acquisitions, and requests for rulings or technical advice
      from tax authorities. All tax services are provided by KPMG                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(4) | All Other Fees include services related to Canadian
      indirect tax issues, Directors, stock based compensation, company
      reorganization, and the implementation of Sarbanes-Oxley compliance
      programs made necessary by the Companys listing on the
  NYSE.                                                                                                                                                                                                                                                           

|March 7, 2013 | 57
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| | Annual Information Form for the
      Year Ended December 31, 2012
| | ------------------------------------------------------------------

APPENDIX A  TAHOE RESOURCES

|SECOND AMENDED
      AUDIT COMMITTEE CHARTER
|--------------------------------------------

PURPOSE

The Audit Committee (the Committee) is a committee
appointed by the Board of Directors (the Board) of Tahoe Resources Inc.
(the Corporation). The Committee is established to fulfill applicable
reporting issuer obligations respecting audit committees and to assist the Board
in fulfilling its oversight responsibilities with respect to financial reporting
including responsibility to:

- oversee the integrity of the Corporations financial statements and
  financial reporting process, including the audit process and the Corporations
  internal accounting controls and procedures and compliance with related legal
  and regulatory requirements;
- oversee the qualifications, independence, appointment and compensation of
  the external auditor;
- oversee the work of the Corporation's financial management and external
  auditor in these areas; and
- provide an open avenue of communication between the external auditor, the
  Board and senior officers (Management).

In addition, the Committee shall prepare, if required, an audit
committee report for inclusion in the Corporations annual management proxy
circular, in accordance with applicable rules and regulations.

The function of the Committee is oversight. It is not the duty
or responsibility of the Committee or its members (i) to plan or conduct audits,
(ii) to determine that the Corporations financial statements are complete and
accurate and are in accordance with generally accepted accounting principles or
(iii) to conduct other types of auditing or accounting reviews or similar
procedures or investigations. The Committee and its Chair are members of the
Board of the Corporation, appointed to the Committee to provide broad oversight
of the financial, risk and control related activities of the Corporation, and
are specifically not accountable or responsible for the day-to-day operations or
performance of such activities.

Management is responsible for the preparation, presentation and
integrity of the Corporations financial statements. Management is also
responsible for maintaining appropriate accounting and financial reporting
principles and policies and systems of risk assessment and internal controls and
procedures designed to provide reasonable assurance that assets are safeguarded
and transactions are properly authorized, recorded and reported and to assure
the effectiveness and efficiency of operations, the reliability of financial
reporting and compliance with accounting standards and applicable laws and
regulations.

The external auditor are responsible for planning and carrying
out an audit of the Corporations annual financial statements in accordance with
generally accepted auditing standards to provide reasonable assurance that,
among other things, such financial statements are in accordance with generally
accepted accounting principles.

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| | Annual Information Form for the
      Year Ended December 31, 2012
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COMPOSITION ANDPROCEDURES

Composition The Committee shall be comprised of
at least three members. None of the members of the Committee shall be an officer
or employee of the Corporation or any of its subsidiaries and each member of the
Committee shall be an independent director (as such term is defined from time
to time under the requirements or guidelines for audit committee service under
applicable securities laws and the rules of any stock exchange on which the
Corporations securities are listed for trading) and none of the members shall
have participated in the preparation of the financial statements of the
Corporation or any current subsidiaries of the Corporation at any time over the
past three years.

All members of the Committee must be financially literate (as
that term is defined from time to time under the requirements or guidelines for
audit committee service under securities laws and the rules of any stock
exchange on which the Corporation's securities are listed for trading or if it
is not so defined as that term is interpreted by the Board in its business
judgment) or must become financially literate within a reasonable period of time
after their appointment to the Committee.

Service on Multiple Audit Committees If a
Committee member serves on the audit committees of more than four reporting
issuers or public corporations, including the Corporation, the Board must
determine that such service would not impair the ability of the member to
effectively serve on the Committee and disclose such determination in the annual
proxy circular.

Meetings The Committee shall meet regularly at
times necessary to perform the duties described herein in a timely manner, but
not less than four times a year and at any time the Corporation proposes to
issue a press release with its quarterly or annual earnings information.
Meetings may be held in person or by telephone and at any time deemed
appropriate by the Committee.

Separate Executive Meetings The Committee shall
meet periodically in separate executive sessions with Management (including the
Chief Financial Officer), and the external auditor, and have such other direct
and independent interaction with such persons from time to time as the members
of the Committee deem appropriate. The Committee may request any officer or
employee of the Corporation or the Corporations outside counsel or external
auditor to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee. The external auditor will have direct access to
the Committee at their own initiative.

Professional Assistance The Committee may
require the external auditor to perform such supplemental reviews or audits as
the Committee may deem desirable. In addition, the Committee may retain such
special legal, accounting, financial or other consultants as the Committee may
determine to be necessary to carry out the Committees duties at the
Corporations expense. Without limiting the foregoing, the Corporation shall
provide appropriate funding, as determined by the Committee, for payment of such
ordinary administrative expenses of the Committee as are necessary or
appropriate in carrying out its duties.

Reliance Absent actual knowledge to the
contrary (which shall be promptly reported to the Board), each member of the
Committee shall be entitled to rely on (i) the integrity of those persons or
organizations within and outside the Corporation from which it receives
information, (ii) the accuracy of the financial and other information provided
to the Committee by such persons or organizations and (iii) representations made
by Management and the external auditor as to any information technology, internal audit and
other non-audit services provided by the external auditor to the Corporation and
its subsidiaries.

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      Year Ended December 31, 2012
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Reporting to the Board The Committee will
report through the Committee Chair to the Board following meetings of the
Committee on matters considered by the Committee, its activities and compliance
with this Charter.

RESPONSIBILITIES OF THECOMMITTEE

Approval of Terms of Engagement of the External Auditor The Committee shall make recommendations to the holders of the common
shares of the Corporation (the shareholders) on the appointment or
reappointment of the external auditor of the Corporation at each meeting of
shareholders where such action is being taken (with such recommendation to be
reflected in the proxy circular to be furnished to the shareholders in
connection with each such meeting of shareholders), and shall have authority to
terminate the appointment of the external auditor. The Committee shall approve
in advance the terms of engagement and the compensation to be paid by the
Corporation to the external auditor. The Committee shall approve in advance all
non-audit services to be provided to the Corporation and its affiliates by the
external auditor.

Review of Independence The Committee shall
review the independence of the external auditor and shall make recommendations
to the Board on appropriate actions to be taken which the Committee deems
necessary to protect and enhance the independence of the external auditor.

Auditor Reports The Committee shall require the
external auditor to provide to the Committee, and the Committee shall review and
discuss with the external auditor, all reports which the external auditor are
required to provide to the Committee or the Board under rules, policies or
practices of professional or regulatory bodies applicable to the auditor, and
any other reports which the Committee may require.

Hiring Former Employees of the Auditor The
Committee must review and approve the Companys hiring policies regarding
partners, employees and former partners and employees of the present and former
external auditor.

Oversight and Monitoring of Audits As required
by section 2.2 of National Instrument 52110, Audit Committees, as adopted by the
Canadian Securities Administrators, the Corporation shall require the external
auditor to report directly to the Committee. The Committee shall review with the
external auditor the audit function generally, the audit procedures to be used
and the timing and estimated budgets of the audits. The Committee shall discuss
with the external auditor any difficulties or disputes that arose with
Management during the course of the audit and the adequacy of Managements
responses in correcting audit related deficiencies and the Committee shall take
such other reasonable steps as it may deem necessary to satisfy itself that the
audit was conducted in a manner consistent with all applicable legal
requirements and auditing standards of applicable professional or regulatory
bodies.

Oversight and Review of Accounting Principles and
Practices The Committee shall, as it deems necessary, oversee, review
and discuss with Management and the external auditor:

- the quality, appropriateness and acceptability of the Corporations
  accounting principles and practices used in its financial reporting, changes
  in the Corporations

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| | Annual Information Form for the
      Year Ended December 31, 2012
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- all significant financial reporting issues and judgments made in connection
  with the preparation of the financial statements, including the effects of
  alternative methods within generally accepted accounting principles on the
  financial statements and any second opinions sought by Management from an
  independent auditor with respect to the accounting treatment of a particular
  item;
- any material change to the Corporations auditing and accounting principles
  and practices as recommended by Management, the external auditor or the
  internal auditor or which may result from proposed changes to applicable
  generally accepted accounting principles;
- the effect of regulatory and accounting initiatives on the Corporations
  financial statements and other financial disclosures;
- any reserves, accruals, provisions, estimates or Management programs and
  policies, including factors that affect asset and liability carrying values
  and the timing of revenue and expense recognition, that may have a material
  effect upon the financial statements of the Corporation;
- the use of special purpose entities and the business purpose and economic
  effect of off- balance sheet transactions, arrangements, obligations,
  guarantees and other relationships of the Corporation and their impact on the
  reported financial results of the Corporation;
- any legal matter, claim or contingency that could have a significant impact
  on the financial statements, the Corporations compliance policies and any
  material reports, inquiries or other correspondence received from regulators
  or governmental agencies and the manner in which any such legal matter, claim
  or contingency has been disclosed in the Corporations financial statements;
- the treatment for financial reporting purposes of any significant
  transactions which are not a normal part of the Corporations operations;
- the use of any pro forma or adjusted information not in accordance with
  generally accepted accounting principles; and
- Managements determination of asset impairment, if any, as required by
  applicable accounting standards.

Disagreement Between Management and the External Auditor
The Committee shall review and resolve disagreements between
Management and the external and internal auditor regarding financial reporting
or the application of any accounting principles or practices.

Oversight and Monitoring of Internal Controls The Committee shall, as it deems necessary, exercise oversight of,
review and discuss with Management and the external auditor:

- the adequacy and effectiveness of the Corporations internal accounting
  and financial controls and their recommendations for the improvement of
  accounting practices and internal controls;

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      Year Ended December 31, 2012
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- any material weaknesses in the internal control environment, including with
  respect to computerized information system controls and security; and
- Managements compliance with the Corporations processes, procedures and
  internal controls.

Dealing With Accounting Complaints The
Committee shall establish and monitor procedures for the receipt and treatment
of complaints received by the Corporation regarding accounting, internal
accounting controls or audit matters and the submission, anonymously or
otherwise, by employees of concerns regarding questionable accounting or
auditing matters and shall review periodically with Management these procedures
and any significant complaints received.

Oversight and Monitoring of the Corporations Financial
Disclosures The Committee shall:

- review with the auditor and Management, and recommend to the Board for
  approval, the audited financial statements and the notes and Managements
  Discussion and Analysis accompanying such financial statements, the
  Corporations annual report and any financial information of the Corporation
  contained in any prospectus or information circular of the Corporation;
- review with the auditor and Management, and recommend to the Board for
  approval, each set of interim financial statements and the notes and
  Managements Discussion and Analysis accompanying such financial statements
  and any other disclosure documents or regulatory filings of the Corporation
  containing or accompanying financial information of the Corporation;
- prior to their distribution, discuss earnings press releases with
  Management on a quarterly basis, and discuss financial information from time
  to time provided to analysts and ratings agencies, it being understood that
  such discussions may be done generally (by discussing the types of information
  to be disclosed and the type of presentation to be made) and that the
  Committee need not discuss in advance each instance in which the Corporation
  gives financial information; and
- The Committee shall review the disclosure with respect to its pre-approval
  of audit and non-audit services provided by the external auditor.

Oversight of Risks The Committee shall meet
periodically with Management to review:

- the Corporations major financial risk exposures and the policy steps
  Management has taken to monitor and control such exposures, including the use
  of financial derivatives and hedging activities; and
- the process and systems in place for ensuring the reliability of public
  disclosure documents that contain audited and unaudited financial information
  and their effectiveness.

REVIEW OF THISCHARTER ANDPERFORMANCE
OF THECOMMITTEE

The Committee shall review and reassess the adequacy of this
Charter at least annually and otherwise as it deems appropriate and recommend
changes to the Board.

The performance of the Committee shall be evaluated with
reference to this Charter annually.

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