---



Consolidated Financial Statements (Expressed in Thousands
of United States Dollars)

TAHOE RESOURCES INC.

Years Ended December 31, 2013 and 2012



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Board of Directors and Shareholders of 
  Tahoe
  Resources Inc.

We have audited the accompanying consolidated financial
  statements of Tahoe Resources Inc. and subsidiaries (the Company), which
  comprise the consolidated balance sheets as at December 31, 2013 and December
  31, 2012, and the consolidated statements of operations and comprehensive loss,
  cash flows and changes in equity for the years then ended, and a summary of
  significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial
  Statements

Management is responsible for the preparation and fair
  presentation of these consolidated financial statements in accordance with
  International Financial Reporting Standards as issued by the International
  Accounting Standards Board, and for such internal control as management
  determines is necessary to enable the preparation of consolidated financial
  statements that are free from material misstatement, whether due to fraud or
  error.

Auditor's Responsibility

Our responsibility is to express an opinion on these
  consolidated financial statements based on our audits. We conducted our audits
  in accordance with Canadian generally accepted auditing standards and the
  standards of the Public Company Accounting Oversight Board (United States).
  Those standards require that we comply with ethical requirements and plan and
  perform the audit to obtain reasonable assurance about whether the consolidated
  financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit
  evidence about the amounts and disclosures in the consolidated financial
  statements. The procedures selected depend on the auditor's judgment, including
  the assessment of the risks of material misstatement of the consolidated
  financial statements, whether due to fraud or error. In making those risk
  assessments, the auditor considers internal control relevant to the entity's
  preparation and fair presentation of the consolidated financial statements in
  order to design audit procedures that are appropriate in the circumstances. An
  audit also includes evaluating the appropriateness of accounting policies used
  and the reasonableness of accounting estimates made by management, as well as
  evaluating the overall presentation of the consolidated financial
  statements.

We believe that the audit evidence we have obtained in our
  audits is sufficient and appropriate to provide a basis for our audit
  opinion.

Opinion

In our opinion, the consolidated financial statements present
  fairly, in all material respects, the financial position of Tahoe Resources Inc.
  and subsidiaries as at as at December 31, 2013 and December 31, 2012, and their
  financial performance and their cash flows for the years then ended in
  accordance with International Financial Reporting Standards as issued by the
  International Accounting Standards Board.

Other Matter

We have also audited, in accordance with the standards of the
  Public Company Accounting Oversight Board (United States), the Companys
  internal control over financial reporting as of December 31, 2013, based on the
  criteria established in Internal Control Integrated Framework (1992)issued by the Committee of Sponsoring Organizations of the Treadway
  Commission and our report dated March 12, 2014 expressed an unqualified opinion
  on the Companys internal control over financial reporting.

/s/ Deloitte LLP 
  Chartered Accountants 
  March 12, 2014 
Vancouver, Canada

---

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING

Management of Tahoe Resources Inc. (the Company) is
responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is a process
designed by, or caused to be designed under the supervision of, the President
and Chief Executive Officer and the Vice President and Chief Financial Officer
and effected by the Board of Directors, management and other personnel to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of consolidated financial statements for external purposes
in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board. It includes those policies and
procedures that:

|I.   | pertain to the maintenance of records that accurately and
      fairly reflect, in reasonable detail, the transactions and dispositions of
      assets of the Company;                                                                                                                                                                                                                                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|II.  | provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of consolidated financial
      statements in accordance with International Financial Reporting Standards
      as issued by the International Accounting Standards Board, and that the
      Companys receipts and expenditures are made only in accordance with
      authorizations of management and the Companys directors; and
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|III. | provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use, or disposition of the
      Companys assets that could have a material effect on the Companys
      consolidated financial statements.                                                                                                                                                                                     

Due to its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements on a timely basis.
Also, projections of any evaluation of the effectiveness of internal control
over financial reporting to future periods are subject to the risk that the
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Companys internal
control over financial reporting as of December 31, 2013, based on the criteria
set forth in Internal Control Integrated Framework (1992)issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on this assessment, management concludes that, as of December 31, 2013, the
Companys internal control over financial reporting was effective.

The effectiveness of the Companys internal control over
financial reporting, as of December 31, 2013, has been audited by Deloitte LLP,
Independent Registered Public Accounting Firm, who also audited the Companys
consolidated financial statements as of and for the year ended December 31,
2013, as stated in their report which appears on the following page.

|/s/Kevin McArthur                     | /s/Mark Sadler                                  
|------------------------------------- | ------------------------------------------------
|Kevin McArthur                        | Mark Sadler                                     
|President and Chief Executive Officer | Vice President and Chief Financial
      Officer
|                                      |                                                 
|                                      |                                                 
|Reno, Nevada                          |                                                 
|March 12, 2014                        |                                                 

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Board of Directors and Shareholders of 
  Tahoe
  Resources Inc.

We have audited the internal control over financial reporting
  of Tahoe Resources Inc. and subsidiaries (the Company) as of December 31,
  2013, based on the criteria established in Internal Control-Integrated
    Framework (1992)issued by the Committee of Sponsoring Organizations of the
  Treadway Commission. The Company's management is responsible for maintaining
  effective internal control over financial reporting and for its assessment of
  the effectiveness of internal control over financial reporting, included in the
  accompanying Managements Report on Internal Control over Financial Reporting.
  Our responsibility is to express an opinion on the Company's internal control
  over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material
  respects, effective internal control over financial reporting as of December 31,
  2013, based on the criteria established in Internal Control Integrated Framework (1992)issued by the Committee of Sponsoring
  Organizations of the Treadway Commission.

We have also audited, in accordance with Canadian generally
  accepted auditing standards and the standards of the Public Company Accounting
  Oversight Board (United States), the consolidated financial statements as of and
  for the year ended December 31, 2013 of the Company and our report dated March
  12, 2014 expressed an unqualified opinion on those financial statements.

/s/ Deloitte LLP 
  Chartered Accountants 
  March 12, 2014 
  Vancouver, Canada

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CONSOLIDATED BALANCE SHEETS (Expressed in Thousands
of United States Dollars)

|                                                  |  |       |  |   | December 31, |   |   | December 31, |  
|------------------------------------------------- |  | ----- |  | - | ------------ | - | - | ------------ | -
|                                                  |  | Notes |  |   | 2013         |   |   | 2012         |  
|Assets                                            |  |       |  |   |              |   |   |              |  
|Current assets:                                   |  |       |  |   |              |   |   |              |  
|Cash and cash equivalents                         |  | (14)  |  | $ | 8,838        |   | $ | 164,561      |  
|Accounts
      receivable                         |  |       |  |   | 2,506        |   |   | -            |  
|Inventories                                       |  | (7)   |  |   | 22,965       |   |   | 842          |  
|Other current assets                              |  |       |  |   | 1,502        |   |   | 867          |  
|                                                  |  |       |  |   | 35,811       |   |   | 166,270      |  
|Non-current assets:                               |  |       |  |   |              |   |   |              |  
|Mineral
      property, land, plant and equipment |  | (4)   |  |   | 844,583      |   |   | 679,326      |  
|Deposits                                          |  |       |  |   | 2,939        |   |   | 7,347        |  
|                                                  |  |       |  |   | 847,522      |   |   | 686,673      |  
|                                                  |  |       |  |   |              |   |   |              |  
|Total Assets                                      |  |       |  | $ | 883,333      |   | $ | 852,943      |  
|Liabilities and Shareholders' Equity              |  |       |  |   |              |   |   |              |  
|Current liabilities:                              |  |       |  |   |              |   |   |              |  
|Accounts
      payable and accrued liabilities    |  | (8)   |  | $ | 54,678       |   | $ | 16,925       |  
|Current debt                                      |  | (9)   |  |   | 49,479       |   |   | -            |  
|Income tax payable                                |  |       |  |   | 808          |   |   | -            |  
|                                                  |  |       |  |   | 104,965      |   |   | 16,925       |  
|                                                  |  |       |  |   |              |   |   |              |  
|Non-current liabilities:                          |  |       |  |   |              |   |   |              |  
|Share appreciation
      rights liability         |  | (6)   |  |   | 80           |   |   | 481          |  
|Other non-current liabilities                     |  |       |  |   | 1,113        |   |   | 549          |  
|Reclamation provision                             |  | (5)   |  |   | 3,021        |   |   | 3,691        |  
|Total Liabilities                                 |  |       |  |   | 109,179      |   |   | 21,646       |  
|                                                  |  |       |  |   |              |   |   |              |  
|Shareholders equity:                             |  |       |  |   |              |   |   |              |  
|Share
      capital                               |  | (6)   |  |   | 996,076      |   |   | 988,081      |  
|Reserve                                           |  | (6)   |  |   | 14,304       |   |   | 13,845       |  
|Deficit                                           |  |       |  |   | (236,226     | ) |   | (170,629     | )
|Total Shareholders' Equity                        |  |       |  |   | 774,154      |   |   | 831,297      |  
|Total Liabilities and Shareholders' Equity        |  |       |  | $ | 883,333      |   | $ | 852,943      |  

See accompanying notes to consolidated financial statements.



APPROVED BY THE DIRECTORS

|/s/ Dan Rovig | /s/ Kevin McArthur                    
|------------- | --------------------------------------
|Dan Rovig     | Kevin McArthur                        
|Board Chair   | Vice Chair and Chief Executive Officer

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

CONSOLIDATED STATEMENTS OF OPERATIONS
AND
COMPREHENSIVE LOSS(Expressed in Thousands of United States Dollars,
Except Share and per Share Information)

|                                                                        |  |       |  |   | Year Ended   |   |   | Year Ended   |  
|----------------------------------------------------------------------- |  | ----- |  | - | ------------ | - | - | ------------ | -
|                                                                        |  |       |  |   | December 31, |   |   | December 31, |  
|                                                                        |  | Notes |  |   | 2013         |   |   | 2012         |  
|Operating expenses:                                                     |  |       |  |   |              |   |   |              |  
|Escobal project expenses                                                |  |       |  | $ | 36,404       |   | $ | 70,945       |  
|Exploration                                                             |  |       |  |   | 5,268        |   |   | 10,613       |  
|General and administrative expenses                                     |  |       |  |   | 19,509       |   |   | 19,021       |  
|Operating loss                                                          |  |       |  |   | (61,181      | ) |   | (100,579     | )
|Other Income and expenses:                                              |  |       |  |   |              |   |   |              |  
|Gain (loss) on foreign
      exchange                                   |  |       |  |   | -            |   |   | 5,423        |  
|Interest income and other income                                        |  |       |  |   | 120          |   |   | 1,407        |  
|Financing fees                                                          |  |       |  |   | (2,793       | ) |   | -            |  
|Other expenses                                                          |  |       |  |   | (122         | ) |   | (14          | )
|Loss before income tax                                                  |  |       |  |   | (63,976      | ) |   | (93,763      | )
|Income tax (expense) benefit                                            |  | (15)  |  |   | (1,621       | ) |   | 310          |  
|Loss for the year                                                       |  |       |  |   | (65,597      | ) |   | (93,453      | )
|Other comprehensive loss                                                |  |       |  |   | -            |   |   | -            |  
|Total comprehensive loss                                                |  |       |  | $ | (65,597      | ) | $ | (93,453      | )
|                                                                        |  |       |  |   |              |   |   |              |  
|Loss per share:                                                         |  |       |  |   |              |   |   |              |  
|Basic and diluted loss per share                                        |  |       |  | $ | (0.45        | ) | $ | (0.65        | )
|Weighted average number of shares outstanding - basic and
      diluted |  |       |  |   | 145,842,795  |   |   | 144,634,768  |  

See accompanying notes to consolidated financial statements.

|Tahoe Resources Inc.
|--------------------

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CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in
Thousands of United States Dollars)

|                                                                                                          |  |       |  |   | Year Ended   |   |   | Year Ended   |  
|--------------------------------------------------------------------------------------------------------- |  | ----- |  | - | ------------ | - | - | ------------ | -
|                                                                                                          |  |       |  |   | December 31, |   |   | December 31, |  
|                                                                                                          |  | Notes |  |   | 2013         |   |   | 2012         |  
|Cash provided by (used in):                                                                               |  |       |  |   |              |   |   |              |  
|Operations:                                                                                               |  |       |  |   |              |   |   |              |  
|Loss for the
      year                                                                                   |  |       |  | $ | (65,597      | ) | $ | (93,453      | )
|Adjustment for:                                                                                           |  |       |  |   |              |   |   |              |  
|Loan expenses                                                                                             |  | (9)   |  |   | 854          |   |   | -            |  
|Amortization of facilities fees                                                                           |  | (9)   |  |   | 557          |   |   | -            |  
|Income tax
      expense (benefit)                                                                        |  |       |  |   | 1,915        |   |   | (310         | )
|Items not involving cash:                                                                                 |  |       |  |   |              |   |   |              |  
|Depreciation                                                                                              |  |       |  |   | 3,630        |   |   | 6,869        |  
|Loss on disposition of
      mineral property, land, plant and equipment                                  |  |       |  |   | 37           |   |   | 15           |  
|Share based
      payments                                                                                |  | (6)   |  |   | 5,684        |   |   | 8,829        |  
|Deferred income taxes                                                                                     |  |       |  |   | (294         | ) |   | -            |  
|Foreign exchange
      (gain) loss                                                                        |  |       |  |   | -            |   |   | (5,423       | )
|Other, net                                                                                                |  |       |  |   | 71           |   |   | 22           |  
|Changes in
      non-cash working capital and other:                                                      |  |       |  |   |              |   |   |              |  
|Accounts receivable and other current assets                                                              |  |       |  |   | (2,847       | ) |   | (591         | )
|Inventories                                                                                               |  |       |  |   | (21,134      | ) |   | (842         | )
|Accounts
      payable, accrued and other non-current liabilties                                          |  |       |  |   | 12,707       |   |   | (1,190       | )
|Operating cash
      flow before interest and taxes                                                       |  |       |  |   | (64,417      | ) |   | (86,074      | )
|Interest income                                                                                           |  |       |  |   | (120         | ) |   | (1,407       | )
|Income taxes
      paid (recovered)                                                                       |  |       |  |   | (1,107       | ) |   | (292         | )
|Interest expense paid                                                                                     |  |       |  |   | 112          |   |   | -            |  
|Operating cash
      flow                                                                                 |  |       |  |   | (65,532      | ) |   | (87,773      | )
|Investing:                                                                                                |  |       |  |   |              |   |   |              |  
|Interest
      received                                                                                   |  |       |  |   | 120          |   |   | 1,407        |  
|Land acquisitions                                                                                         |  |       |  |   | -            |   |   | (320         | )
|Plant and
      equipment additions                                                                       |  |       |  |   | (145,115     | ) |   | (110,365     | )
|Decrease (Increase) in deposits                                                                           |  |       |  |   | 4,408        |   |   | 1,330        |  
|Investing cash
      flow                                                                                 |  |       |  |   | (140,587     | ) |   | (107,948     | )
|Financing:                                                                                                |  |       |  |   |              |   |   |              |  
|Proceeds
      from issuance of common shares on exercise of underwriter warrants and
      stock options |  |       |  |   | 2,501        |   |   | 5,022        |  
|Loan facility fees and expenses                                                                           |  | (9)   |  |   | (2,105       | ) |   | -            |  
|Borrowing on debt                                                                                         |  | (9)   |  |   | 50,000       |   |   | -            |  
|Financing cash flow                                                                                       |  |       |  |   | 50,396       |   |   | 5,022        |  
|Effect of exchange rates on cash and
      cash equivalents                                               |  |       |  |   | -            |   |   | 5,423        |  
|Decrease in cash and cash equivalents                                                                     |  |       |  |   | (155,723     | ) |   | (185,276     | )
|Cash and cash equivalents, beginning of the year                                                          |  |       |  |   | 164,561      |   |   | 349,837      |  
|Cash and cash equivalents, end of the year                                                                |  | (14)  |  | $ | 8,838        |   | $ | 164,561      |  

See accompanying notes to consolidated financial statements.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in Thousands of United States Dollars, Except Share
Information Years Ended December 31, 2013 and 2012

|                                                                           |  |       |  |  | Number      |  |   | Share   |  |   |          |   |   |          |   |   |         |  
|-------------------------------------------------------------------------- |  | ----- |  |  | ----------- |  | - | ------- |  | - | -------- | - | - | -------- | - | - | ------- | -
|                                                                           |  | Notes |  |  | of Shares   |  |   | Capital |  |   | Reserves |   |   | Deficit  |   |   | Total   |  
|                                                                           |  |       |  |  |             |  |   |         |  |   |          |   |   |          |   |   |         |  
|Balance December 31, 2011                                                  |  |       |  |  | 143,427,057 |  | $ | 972,569 |  | $ | 16,261   |   | $ | (77,176  | ) | $ | 911,654 |  
|Shares issued for cash:                                                    |  |       |  |  |             |  |   |         |  |   |          |   |   |          |   |   |         |  
|Underwriters
      Warrants exercised at CAN$6.00 per share                |  | (6)   |  |  | 561,440     |  |   | 4,391   |  |   | (1,133   | ) |   | -        |   |   | 3,258   |  
|Exercise of stock
      options                                            |  | (6)   |  |  | 267,707     |  |   | 2,497   |  |   | (733     | ) |   | -        |   |   | 1,764   |  
|Shares issued under RSA
      compensation plan                            |  | (6)   |  |  | 35,000      |  |   | 635     |  |   | -        |   |   | -        |   |   | 635     |  
|Shares issued under DSA compensation plan                                  |  | (6)   |  |  | 1,274,000   |  |   | 7,989   |  |   | (7,989   | ) |   | -        |   |   | -       |  
|Share based payments                                                       |  |       |  |  | -           |  |   | -       |  |   | 7,439    |   |   |          |   |   | 7,439   |  
|Net
      Loss                                                             |  |       |  |  | -           |  |   | -       |  |   | -        |   |   | (93,453  | ) |   | (93,453 | )
|Balance December 31, 2012                                                  |  |       |  |  | 145,565,204 |  |   | 988,081 |  |   | 13,845   |   |   | (170,629 | ) |   | 831,297 |  
|Shares issued for cash:                                                    |  |       |  |  |             |  |   |         |  |   |          |   |   |          |   |   |         |  
|Shares issued
      under Deferred Share Award (DSAs) compensation plan:   |  | (6)   |  |  | 212,666     |  |   | 3,684   |  |   | (3,684   | ) |   | -        |   |   | -       |  
|Shares issued under
      Restricted Share Award (RSAs) compensation plan: |  | (6)   |  |  | 35,000      |  |   | 596     |  |   | -        |   |   | -        |   |   | 596     |  
|Exercise of stock options                                                  |  | (6)   |  |  | 281,537     |  |   | 3,715   |  |   | (1,214   | ) |   | -        |   |   | 2,501   |  
|Share based payments                                                       |  | (6)   |  |  | -           |  |   | -       |  |   | 5,357    |   |   | -        |   |   | 5,357   |  
|Net Loss                                                                   |  |       |  |  | -           |  |   | -       |  |   | -        |   |   | (65,597  | ) |   | (65,597 | )
|Balance December 31, 2013                                                  |  |       |  |  | 146,094,407 |  | $ | 996,076 |  | $ | 14,304   |   | $ | (236,226 | ) | $ | 774,154 |  

See accompanying notes to consolidated financial statements.

|Tahoe Resources Inc.
|--------------------

---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Expressed
in Thousands of United States Dollars, Except per Share Information) Years
Ended December 31, 2013 and 2012

|1. | OPERATIONS
|-- | ----------

Tahoe Resources Inc. was incorporated
under the Business Corporations Act (British Columbia) on November 10, 2009.
These consolidated financial statements include the accounts of Tahoe Resource
Inc. and its subsidiaries (together referred to as the Company). Its principal
business activity is the acquisition, exploration, development and operation of
mineral properties in the Americas for the mining of precious metals.

The Companys registered office is at
1500 Royal Centre, 1055 West Georgia Street, P.O. Box 11117, Vancouver, BC V6E
4N7, Canada.

|2. | SIGNIFICANT ACCOUNTING
POLICIES
|-- | -------------------------------

| | a) | Basis of presentation and statement of
  compliance:                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The consolidated financial statements have been prepared
      in accordance with International Financial Reporting Standards (IFRS) as
      issued by the International Accounting Standards Board (IASB) effective
      as of December 31, 2013.                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | These consolidated financial statements have been
      prepared on a historical cost basis, except for certain financial
      instruments, which are measured at fair value, as explained in the
      accounting policies set out below. The consolidated financial statements
      are presented in United States dollars (US$), which is the Companys and
      all of its subsidiaries functional currency. Certain values are presented
      in Canadian dollars and described as CAN$.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The Board of Directors authorized issuance of the consolidated financial statements on March 12, 2014.                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | b) | Basis of consolidation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The financial statements of the subsidiaries controlled
      by the Company are included in the consolidated financial statements from
      the date that control commences until the date that control ceases.
      Control is achieved where the Company has the power to govern the
      financial and operating policies of an entity so as to obtain benefits
      from its activities. (See Note 10 Subsidiaries)                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Intra-Company balances, transactions, income and expenses
      arising from intra-Company transactions, are eliminated in full on
      consolidation.                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | c) | Foreign currency:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Transactions in currencies other than the functional
      currency are recorded at the rates of exchange prevailing on the dates of
      the transactions. At the end of each reporting period, monetary assets and
      liabilities that are denominated in foreign currencies are translated at
      the rates prevailing at that date. Non- monetary items that are measured
      in terms of historical cost in the foreign currency are not
      re-translated.                        

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

| | d) | Non-derivative financial assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company has only one classification of non-derivative
      financial assets comprising cash and cash equivalents and accounts
      receivable. Cash and cash equivalents comprise cash balances and deposits
      with maturities of 90 days or less.                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company Initially recognizes loans and receivables
      and deposits on the date that they originated.                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company no longer recognizes the financial assets
      when the contractual rights to the cash flows from the asset expire, or it
      transfers the rights to receive the contractual cash flows on the
      financial asset in a transaction in which substantially all the risks and
      rewards of ownership of the financial asset are transferred. Any interest
      in transferred financial assets that is created or retained by the Company
      is recognized as a separate asset or liability.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Financial assets with fixed or determinable payments in
      an active market are classified as loans and receivables. Such assets are
      recognized initially at fair value plus any directly attributable
      transaction costs. Subsequent to initial recognition loans and receivables
      are measured at amortized cost using the effective interest method, less
      any impairment losses.                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | e) | Share capital:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Common shares are classified as equity. Incremental costs
      directly attributable to the issue of common shares are recognized as a
      deduction from equity, net of any tax effects.                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | f) | Share based payments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Share based compensation arrangements in which the
      Company receives goods or services as consideration for its own equity
      instruments are accounted for as equity settled share based payment
      transactions. If the fair value of the goods or services received cannot
      be estimated reliably, the share based payment transaction is measured at
      the fair value of the equity instruments granted at the date the Company
      receives the goods or the services.                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The fair value of share options on the date of the grant
      to key management personnel, senior employees, and consultants is
      recognized as an expense, with a corresponding increase in equity, over
      the period that the optionee becomes unconditionally entitled to the
      options. The amount recognized as an expense is adjusted to reflect the
      actual number of share options for which the related service and vesting
      conditions are met.                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The amount payable in respect of share appreciation
      rights (SARs), which are settled in cash, is recognized as an expense
      with a corresponding increase in liabilities over the period that the
      rights are exercisable. The liability is measured at each reporting date
      and at settlement date using the Black-Scholes option pricing model. Any
      changes in the fair value of the liability are recognized in profit or
      loss for the period.                                  

|Tahoe Resources Inc.
|--------------------

---

| | g) | Exploration and evaluation assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The cost of exploration and evaluation assets acquired
      through a business combination or an asset acquisition are capitalized, as
      are expenditures incurred for the acquisition of land and surface rights.
      All other exploration and evaluation expenditures are expensed as
      incurred, including those incurred before the Company has obtained the
      legal rights to explore an area of interest.                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Capitalization of evaluation expenditures commences when
      there is a high degree of confidence in the projects viability and hence
      it is probable that future economic benefits will flow to the
    Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Capitalized exploration and evaluation costs are
      classified as mineral property within mineral property, land, plant and
      equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Corporate general and administrative costs are expensed
      as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | h) | Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Finished goods (including work-in-process) and stockpiled
      ore are measured at the lower of average cost or net realizable value. Net
      realizable value is calculated as the estimated price at the time of sale
      based on prevailing metal prices less estimated future costs to convert
      the inventories into saleable form and estimated costs to sell.                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Ore extracted from the mine is stockpiled and
      subsequently processed into finished goods (metal concentrate). The costs
      of finished goods represent the costs of work-in-process inventories
      incurred prior to the sale of concentrate. Costs are included in inventory
      based on current costs incurred to produce concentrate, including
      applicable depreciation and depletion of mining interests, and removed at
      the cost per tonne of concentrate produced.                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Supplies are measured at average cost. In the event that
      the net realizable value of the finished product is lower than the
      expected cost of the finished product, the supplies are written down to
      net realizable value. Replacement costs of supplies are generally used as
      the best estimate of net realizable value.                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | i) | Mineral property, land, plant and equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Mineral property, land, plant and equipment are carried
      at cost, less accumulated depreciation and accumulated impairment
      losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | On initial acquisition, mineral property, plant and
      equipment are valued at cost, being the purchase price and the directly
      attributable costs of acquisition or construction required to bring the
      asset to the location and condition necessary for the asset to be capable
      of operating in the manner intended by management. When provisions for
      closure and decommissioning are recognized, the corresponding cost is
      capitalized as part of the cost of the related assets, representing part
      of the cost of acquiring the future economic benefits of the operation.
      The capitalized cost of closure and decommissioning activities is
      recognized in mineral property, plant and equipment and depreciated
      accordingly.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

| |  | In subsequent periods, buildings, plant and equipment are
      stated at cost less accumulated depreciation and any impairment in value,
      whilst land is stated at cost less any impairment in value and is not
      depreciated.                                                                                                                                                                                          
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Each asset or part's estimated useful life has due regard
      to both its own physical life limitations and the present assessment of
      economic viability of the mine property at which the item is located, and
      to possible future variations in those assessments. Estimates of remaining
      useful lives and residual values are reviewed annually. Changes in
      estimates are accounted for prospectively.

Borrowing costs directly relating to
the financing of a project are added to the capitalized cost of those projects
until such time as the assets are substantially ready for their intended use or
sale which, in the case of mining properties, is when commercial production is
achieved.

Expenditure on major maintenance or
repairs includes the cost of the replacement of parts of assets and overhaul
costs. Where an asset or part of an asset is replaced and it is probable that
future economic benefits associated with the item will be available to the
Company, the expenditure is capitalized and the carrying amount of the item
replaced derecognized. Similarly, overhaul costs associated with major
maintenance are capitalized and depreciated over their useful lives where it is
probable that future economic benefits will be available and any remaining
carrying amounts of the cost of previous overhauls are derecognized. All other
costs are expensed as incurred.

Operational Mining Properties and
Mine Development

When it has been determined that a
mineral property can be economically developed, the costs incurred to develop
such property are capitalized.

Major development expenditures on
producing properties incurred to increase production or extend the life of the
mine are capitalized while ongoing mining expenditures on producing properties
are charged against earnings as incurred.

Costs associated with commissioning
activities are capitalized until the date the Company is ready to commence
commercial production. Any revenues earned during this period are recorded as a
reduction in commissioning costs. These costs are amortized using the
units-of-production method (UOP) over the life of the mine, commencing on the
date of commercial production.

Costs related to the acquisition of
land and mineral rights are capitalized as incurred.

Assets under construction are capitalized as construction-in-progress. The cost of construction-in-progress comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use.  Construction in-progress is not depreciated. Once the asset is complete and available for use it is transferred to mineral property, land, plant and equipment and depreciation commences.

|Tahoe Resources Inc.
|--------------------

---

Depreciation of Mineral Property,
Plant and Equipment

The carrying amounts of mineral
property, plant and equipment are depreciated to their estimated residual value
over the estimated useful lives of the specific assets concerned, or the
estimated life of the associated mine, if shorter. Estimates of residual values
and useful lives are reviewed annually and any change in estimate is taken into
account in the determination of remaining depreciation charges, and adjusted if
appropriate, at each reporting period. Changes to the estimated residual values
or useful lives are accounted for prospectively. Depreciation commences on the
date when the asset is available for use as intended by management.

Units of production basis

For mining properties and certain
mining equipment, the economic benefits from the asset are consumed in a pattern
which is linked to the production level. Except as noted below, such assets are
depreciated on a UOP basis. In applying the UOP method, depreciation is normally
calculated using the quantity of material extracted from the mine in the period
as a percentage of the total quantity of material to be extracted in current and
future periods based on life-of-mine resources.

Straight line basis

For all other assets depreciation is
recognized in profit or loss on a straight line basis over the estimated useful
lives of each part of an item (component), since this most closely reflects the
expected pattern of consumption of economic benefits embodied in the asset. The
estimated useful lives for assets and components that are depreciated on a
straight line basis range from 2 to 12 years.

Depreciated Items
    Useful LifeComputer equipment &
      software
    2 yearsVehicles
    3-5 yearsMining equipment
    2-12 yearsAncillary Facilities
    20 YearsMineral property, land and plant
    UOP


Impairment and Disposal

At the end of each reporting period
the Company reviews whether there is any indication that the assets are
impaired. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment, if any. The
recoverable amount is the higher of fair value less costs to sell and value in
use. Fair value is determined as the amount that would be obtained from the sale
of the asset in an arms length transaction between knowledgeable and willing
parties. In assessing value in use, the estimated future cash flows are
discounted to their present value using a discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset. If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is reduced to its recoverable
amount and the impairment loss is recognized in the profit or loss for the
period. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash generating unit to which the
asset belongs.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

| |    | Where an impairment loss subsequently
reverses, the carrying amount of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount, but to an amount
that does not exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset (or cash-generating unit) in prior
years. A reversal of an impairment loss is recognized immediately in profit or
loss.                                                                                                                                                                                                                                                                                                                                                                           
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Where an item of mineral property, plant and equipment is disposed of, it is derecognized and the difference between its carrying value and net sales proceeds is disclosed as earnings or loss on disposal in the income statement. Any items of mineral property, plant or equipment that cease to have future economic benefits are derecognized with any gain or loss included in the financial year in which the item is derecognized.                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | j) | Provision for site reclamation and asset
      decommissioning:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The Company recognizes a liability for site closure and
      reclamation costs in the period in which it is incurred if a reasonable
      estimate of costs can be made. The Company records the present value of
      estimated future cash flows associated with site closure and reclamation
      as a liability when the liability is incurred and increases the carrying
      value of the related assets for that amount. Subsequently, these
      capitalized costs are amortized over the life of the related assets. At
      the end of each reporting period, the estimated net present value of
      reclamation and closure cost obligations is assessed to reflect the
      passage of time (accretion expense) and changes in the estimated future
      cash flows underlying any initial estimates.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | k) | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Income tax on the profit or loss for the period presented
      comprises current and deferred tax. Income tax is recognized in profit or
      loss in the statements of operations except to the extent that it relates
      to items recognized directly in equity, in which case it is recognized in
      equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Current tax expense is the expected tax payable on the
      taxable income for the period, using tax rates enacted or substantively
      enacted at period end, adjusted for amendments to tax payable with regards
      to previous years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Deferred tax is provided using the balance sheet
      liability method, providing for temporary differences between the carrying
      amounts of assets and liabilities for financial reporting purposes and the
      amounts used for taxation purposes. Deferred tax is not recognized for
      temporary differences which arise on the initial recognition of assets or
      liabilities in a transaction that is not a business combination and that
      affects neither accounting, nor taxable profit or loss. The amount of
      deferred tax provided is based on the expected manner of realization or
      settlement of the carrying amount of assets and liabilities, using tax
      rates enacted or substantively enacted at the balance sheet reporting
      date.                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | A deferred tax asset is recognized only to the extent
      that it is probable that future taxable profits will be available against
      which the asset can be utilized. Deferred tax assets are reviewed at each
      reporting date and are reduced to the extent it is no longer probable that
      the related tax benefit will be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|Tahoe Resources Inc.
|--------------------

---

| | l) | Non-derivative financial liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company has the following non-derivative financial
      liabilities: accounts payable, accrued liabilities, current debt, and
      non-current SARs liability. Such financial liabilities are recognized
      initially at fair value net of any directly attributable transaction
      costs. Subsequent to initial recognition, current debt is measured at
      amortized cost using the effective interest method.                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | m) | Loss per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company presents basic and diluted loss per share
      (LPS) data for its common shares. Basic LPS is calculated by dividing
      loss attributable to common shareholders of the Company by the weighted
      average number of common shares outstanding during the year.                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Diluted LPS is determined by adjusting the profit or loss
      attributable to ordinary shareholders and the weighted average number of
      common shares outstanding for the effects of all dilutive potential common
      shares, which comprise share options and warrants to purchase shares.
      Diluted LPS equals basic LPS for the years presented as all potential
      shares are anti-dilutive.                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | n) | Revenue recognition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Revenue from the sale of metals is recognized when the
      significant risks and rewards of ownership have passed to the buyer; it is
      probable that economic benefits associated with the transaction will flow
      to the Company; the sale price can be measured reliably; the Company has
      no significant continuing involvement; and the costs incurred or to be
      incurred in respect of the transaction can be measured reliably. In
      circumstances where title is retained to protect the financial security
      interests of the Company, revenue is recognized when the significant risks
      and rewards of ownership have passed to the buyer.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Revenues from metal concentrate sales are subject to
      adjustment upon final settlement of metal prices, weights, and assays as
      of a date that is typically a few months after the shipment date. The
      Company records adjustments to revenues monthly based on quoted forward
      prices for the expected settlement period. Adjustments for weights and
      assays are recorded when results are determinable or on final settlement.
      Accounts receivable for metal concentrate sales are therefore measured at
      fair value. Treatment and refining charges are netted against revenues
      from metal concentrate sales.                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Until the Escobal mine is operating at the level intended
      by management proceeds from the sale of concentrate will be offset against
      mineral property, land, plant and equipment costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | A mine is capable of operating at levels intended
      by management when:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | 3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

| |    | 4.                              | Other factors include one or more of the
  following:
| | -- | ------------------------------- | -----------------------------------------------------
| |    |                                 |                                                      
| |    |                                 | a.                                                   
| |    |                                 |                                                      
| |    |                                 | b.                                                   
| |    |                                 |                                                      
| |    |                                 | c.                                                   
| |    |                                 |                                                      
| |    |                                 | d.                                                   
| |    |                                 |                                                      
| |    | (See note 16 Subsequent Events)
| |    |                                 |                                                      
| | o) | Use of estimates and
judgments:

The preparation of financial
statements in conformity with IFRS requires management to make estimates and
judgments that affect the application of accounting policies and the reported
amounts of assets, liabilities, contingent liabilities, income and expenses.
Actual results could differ from these estimates.

Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and in future
periods affected.

Information about critical judgments
and estimates in applying accounting policies that have the most significant
effect on the amounts recognized in the consolidated financial statements are as
follows:

Judgments:

| | (i)  | Commercial Production                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      | In order to declare commercial production a mine must be
      able to operate at levels intended by management. Prior to commercial
      production costs incurred are capitalized as part of the cost of placing
      the asset into service and proceeds from the sale of concentrates are
      offset against the costs capitalized. Subsequent to the declaration of
      commercial production depletion of the costs incurred begins. Management
      considers several criteria in determining when a mine is operating at
      levels intended, and is therefore in commercial production.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (ii) | Functional Currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      | The functional currency for each of the Companys
      subsidiaries is the currency of the primary economic environment in which
      the entity operates. The Company has determined that for each subsidiary
      the functional currency is the US dollar. When determining the functional
      currency certain judgments may be involved to assess the primary economic
      environment in which the subsidiary operates.                                                                                                                                                                     

Estimates:

| | (iii) | Economic recoverability and probability of future
      economic benefits of exploration, evaluation and development
      costs.                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       | The Company has determined that development and related
      costs incurred which have been capitalized are economically recoverable.
      Management uses several criteria in its assessments of economic recoverability
      and probability of future economic benefits including geological and
      metallurgical information, economic assessments and existing permits for the
      life of mine plan. The estimates contained within these criteria could change
      over time which could affect the economic recoverability of capitalized
      costs.

|Tahoe Resources Inc.
|--------------------

---

During 2012 and the first quarter of
  2013, the Company expensed underground development expenses associated with the
  Escobal mine as the Company had not received the exploitation permit necessary
  for commercial mining operations. The Company received the exploitation permit
  in April 2013 and has capitalized these underground development expenses during
  the second, third and fourth quarters of 2014. The surface assets associated
  with the Escobal mine were capitalized both during 2012 and 2013.

| | (iv)  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | As is customary in the industry, revenue on provisionally
      priced sales is recognized based on relevant forward market prices. At
      each reporting period, provisionally priced sales are marked to market
      based on the estimated forward price for the quotational period stipulated
      in the contract. The adjustment to provisionally priced metal sold is
      recorded as an adjustment to sales revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (v)   | Estimated tonnes in the mineral resource                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | The carrying amounts of the Companys mining properties
      are all depletable upon commencement of commercial production based on UOP
      method over the life of the mine based on tonnes in the estimated
      resource. Changes to estimates of tonnage and depletable costs including
      changes resulting from revisions to the Companys mine plans can result in
      a change to future depletion rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (vi)  | Determination of Useful Lives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | Determination of useful lives of property, plant and
      equipment for assets other than mining interests are depreciated using the
      straight-line method. Should the actual useful life of the property, plant
      or equipment vary, future depreciation charges may change. Assets with
      similar useful lives are grouped and treated as a single asset for the
      purposes of depreciation. Should the grouping of these like assets change,
      depreciation charges may vary materially in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (vii) | Impairment charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | At the end of each reporting period, the Company assesses
      whether any indication of impairment exists. Where an indicator of
      impairment exists, an impairment analysis is performed. The impairment
      analysis requires the use of estimates and assumptions including amongst
      others, long-term commodity prices, discount rates, length of mine life,
      future production levels, future operating costs, future capital
      expenditures and tax positions taken. The estimates and assumptions are
      subject to risk and uncertainty; hence, there is the possibility that
      changes in circumstances will alter these projections, which may impact
      the recoverable amount of the assets. In such circumstances, some or all
      of the carrying value of the assets may be further impaired or the
      impairment charge reduced with the impact recorded in the consolidated
      statements of operations.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

| | (viii) | Decommissioning
      liability
| | ------ | -------------------------------

The Companys accounting policy for
  the recognition of accrued site closure costs requires significant estimates and
  assumptions such as the requirements of the relevant legal and regulatory
  framework, the magnitude of possible disturbance and the timing, extent and
  costs of required closure and rehabilitation activity. Changes to these
  estimates and assumptions may result in future actual expenditures differing
  from the amounts currently provided for. The decommissioning liability is
  periodically reviewed and updated based on the available facts and
  circumstances.

| | (ix)  | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       | The Company is periodically required to estimate the tax
      basis of assets and liabilities. Where applicable tax laws and regulations
      are either unclear or subject to varying interpretations, it is possible
      that changes in these estimates could occur that materially affect the
      amounts of deferred income tax assets and liabilities recorded in the
      financial statements. Changes in deferred tax assets and liabilities
      generally have a direct impact on earnings in the period of changes. Each
      period, the Company evaluates the likelihood of whether some portion or
      all of each deferred tax asset will not be realized. This evaluation is
      based on historic and future expected levels of taxable income, the
      pattern and timing of reversals of taxable temporary timing differences
      that give rise to deferred tax liabilities, and tax planning initiatives.
      Levels of future taxable income are affected by, among other things, the
      market price for saleable metals, production costs, interest rates and
      foreign currency exchange rates.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (x)   | Valuation of inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       | All inventory is valued at the lower of average cost or
      net realizable value. Management is required to make various estimates and
      assumptions to determine the value of stockpiled ore and concentrate
      inventories. The estimates and assumptions include surveyed quantities of
      stockpiled ore, in- process volumes, metal contents, costs to recover
      saleable metals, payable metal values once processed and the corresponding
      metals prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (xi)  | Share-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       | The Company makes certain estimates and assumptions when
      calculating the fair values of share-based compensation granted. The
      significant estimations and assumptions include expected volatility,
      expected life, expected dividend rate and expected risk-free rate of
      return. Changes in these assumptions may result in a material change to
      the expense recorded for the issuance of
      share-based compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (xii) | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       | Due to the size, complexity and nature of the Companys
      operations, various legal and tax matters arise in the ordinary course of
      business. The Company accrues for such items when a liability is both
      probable and the amount can be reasonably estimated. There are no matters
      at December 31, 2013 that will have a material effect on the consolidated
      financial statements of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|Tahoe Resources Inc.
|--------------------

---

| | p) | New standards and interpretations:                                                                                                                          
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                             
| |    | The following standards were applied for periods
      beginning on or after January 1, 2013 and have no material effect on our
      financial performance:

- IAS 1, Presentation of Financial Statements (amended 2011)
- IFRS 7, Financial Instruments: Disclosures (amended 2011)
- IFRS 10, Consolidated Financial Statements
- IFRS 11, Joint Arrangements
- IFRS 12, Disclosure of Interests in Other Entities
- IFRS 13, Fair Value Measurement
- IAS 19, Employee Benefits (amended 2011)
- IAS 27, Separate Financial Statements (amended 2011)
- IAS 28, Investments in Associates (amended 2011)
- IFRIC 20, Stripping Costs in the Production Phase of a Mine (amended 2011)

Accounting standards effective
on or after January 1, 2014

A number of new IFRS standards, and
amendments to standards and interpretations, are not yet effective for the year
ended December 31, 2013, and have not been applied in preparing these
consolidated financial statements. The Company is currently evaluating the
impact these standards are expected to have on its consolidated financial
statements. Details related to these standards and interpretations are discussed
below.

- IFRIC 21, Levies (effective January 1, 2014) provides guidance on when to
  recognize a liability for a levy imposed by a government, other than those
  levies within the scope of other standards. This interpretation will not have
  a material impact on the financial statements or the Company.
- IFRS 9, Financial Instruments introduces new requirements for the
  classification and measurement of financial assets and liabilities. The IASB
  has not finalized a mandatory adoption date for this standard.

|3. | CAPITAL MANAGEMENT
|-- | ------------------

The Companys policy is to maintain a
strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. The Company seeks to maintain
a balance between the higher returns that might be possible with higher levels
of borrowings and the advantages and security afforded by a sound capital
position. The capital structure of the Company consists of common equity,
comprising share capital and reserves, net of accumulated deficit and current
debt.

On June 4, 2013, the Company, entered
into $50 million secured credit facility with an international financial
institution. On December 20, 2013, the Company reached an agreement with the
lender to expand its credit facility by an additional $25 million (see note 9).
The intent of the credit facility is to provide working capital and support
general corporate purposes during mine and mill commissioning.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

|4. | MINERAL PROPERTY, LAND, PLANT AND
  EQUIPMENT
|-- | ---------------------------------------------

| |                                            |   | Plant and |   |   | Mineral  |   |   |        |  |   | Construction |   |   |         |  
| | ------------------------------------------ | - | --------- | - | - | -------- | - | - | ------ |  | - | ------------ | - | - | ------- | -
| |                                            |   | equipment |   |   | Property |   |   | Land   |  |   | in Progress  |   |   | Total   |  
| | Cost                                       |   |           |   |   |          |   |   |        |  |   |              |   |   |         |  
| | Balance at December 31, 2011               | $ | 17,123    |   | $ | 500,194  |   | $ | 26,991 |  | $ | 20,124       |   | $ | 564,432 |  
| | Additions, adjustments and
      transfers |   | 23,183    |   |   | 3,668    |   |   | 320    |  |   | 95,823       |   |   | 122,994 |  
| | Disposal                                   |   | (20       | ) |   | -        |   |   | -      |  |   | -            |   |   | (20     | )
| | Balance at December 31, 2012               | $ | 40,286    |   | $ | 503,862  |   | $ | 27,311 |  | $ | 115,947      |   | $ | 687,406 |  
| | Additions, adjustments and transfers       |   | 230,651   |   |   | (740     | ) |   | 8      |  |   | (51,596      | ) |   | 178,323 |  
| | Disposal                                   |   | (66       | ) |   | -        |   |   | -      |  |   | -            |   |   | (66     | )
| | Balance at December 31, 2013               | $ | 270,871   |   | $ | 503,122  |   | $ | 27,319 |  | $ | 64,351       |   | $ | 865,663 |  
| |                                            |   |           |   |   |          |   |   |        |  |   |              |   |   |         |  
| | Accumulated Depreciation                   |   |           |   |   |          |   |   |        |  |   |              |   |   |         |  
| | Balance at December 31, 2011               | $ | (1,216    | ) | $ | -        |   | $ | -      |  | $ | -            |   | $ | (1,216  | )
| | Additions, adjustments and transfers       |   | (6,869    | ) |   | -        |   |   | -      |  |   | -            |   |   | (6,869  | )
| | Disposal                                   |   | 5         |   |   | -        |   |   | -      |  |   | -            |   |   | 5       |  
| | Balance at December 31, 2012               | $ | (8,080    | ) | $ | -        |   | $ | -      |  | $ | -            |   | $ | (8,080  | )
| | Additions, adjustments and
      transfers |   | (13,029   | ) |   | -        |   |   | -      |  |   | -            |   |   | (13,029 | )
| | Disposal                                   |   | 29        |   |   | -        |   |   | -      |  |   | -            |   |   | 29      |  
| | Balance at December 31, 2013               | $ | (21,080   | ) | $ | -        |   | $ | -      |  | $ | -            |   | $ | (21,080 | )
| |                                            |   |           |   |   |          |   |   |        |  |   |              |   |   |         |  
| | Carrying Amounts                           |   |           |   |   |          |   |   |        |  |   |              |   |   |         |  
| | Balance at December 31, 2012               | $ | 32,206    |   | $ | 503,862  |   | $ | 27,311 |  | $ | 115,947      |   | $ | 679,326 |  
| | Balance at December 31, 2013               | $ | 249,791   |   | $ | 503,122  |   | $ | 27,319 |  | $ | 64,351       |   | $ | 844,583 |  

|   | Revenue generated from the concentrate sales of $28.0 million was offset by $18.7 million from production costs (including royalties), the net ($9.3 million) was offset against mineral property, land, plant and equipment for the year ended December 31, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5. | RECLAMATION PROVISION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Companys environmental permit requires that it
      reclaim any land it disturbs during mine development, construction and
      operations. Although the timing and the amount of the actual expenditures
      are uncertain, the Company has estimated, with third-party assistance, the
      present value of the future reclamation obligation arising from its
      activities to December 31, 2013 to be $3,021. The present value of the
      future reclamation obligation assumes a discount rate of 5.69%, an
      inflation rate of 4.34%, an undiscounted amount to settle the obligation
      of $8,457, and the commencement of reclamation activities in 18 years. The
      present value of the future obligation has decreased $0.7 million during
      2013 as a result of the impact of discount and inflation
  rates.

| |                                                 |   | Year Ended   |   |   | Year Ended   | 
| | ----------------------------------------------- | - | ------------ | - | - | ------------ | 
| |                                                 |   | December 31, |   |   | December 31, | 
| |                                                 |   | 2013         |   |   | 2012         | 
| | Balance, beginning of the
      year            | $ | 3,691        |   | $ | -            | 
| | Reclamation expense                             |   | -            |   |   | 3,668        | 
| | Accretion expense                               |   | 70           |   |   | 23           | 
| | Revisions in estimates and obligations occurred |   | (740         | ) |   | -            | 
| | Balance, end of the year                        | $ | 3,021        |   | $ | 3,691        | 

|Tahoe Resources Inc.
|--------------------

---

|6. | SHARE BASED PAYMENTS                                          
|-- | --------------------------------------------------------------
|   |                                                               
|   | Description of the share-based compensation
      arrangements

The Companys equity compensation plans
are designed to attract and retain individuals and to reward them for current
and expected future performance. At December 31, 2013, the Company has the
following share-based payment arrangements:

Share Plan Options (equity
settled options)The Company has established a Share
Plan program that entitles key management personnel, senior employees, and
consultants to purchase shares in the Company. Under the terms of this program,
options are exercisable at the market close price of the shares on the day prior
to the date of grant. The options vest based on service-related vesting terms
set by the Compensation Committee of the Board of Directors.

The number and weighted average
exercise price of share options at December 31, 2013 and December 31, 2012 is as
follows:

| |                                        |  | Weighted         |  |  |            |  
| | -------------------------------------- |  | ---------------- |  |  | ---------- | -
| |                                        |  | average exercise |  |  | Number     |  
| |                                        |  | price CAN$       |  |  | of options |  
| | Outstanding at December 31,
      2011 |  | 8.84             |  |  | 2,689,500  |  
| | Granted                                |  | 20.34            |  |  | 135,000    |  
| | Exercised                              |  | 6.85             |  |  | (267,707   | )
| | Forfeited                              |  | 14.65            |  |  | (22,000    | )
| | Outstanding at December 31,
      2012 |  | 9.61             |  |  | 2,534,793  |  
| | Granted                                |  | 16.51            |  |  | 612,000    |  
| | Exercised                              |  | 9.20             |  |  | (281,537   | )
| | Outstanding at December 31, 2013       |  | 11.13            |  |  | 2,865,256  |  

The following table summarizes
information about share options outstanding and exercisable at December 31,
2013:

| |         |  |         |  |  | Outstanding at |  |  |            |  |  |           |  |  | Exercisable at         |  |  |            |  |  |           | 
| | ------- |  | ------- |  |  | -------------- |  |  | ---------- |  |  | --------- |  |  | ---------------------- |  |  | ---------- |  |  | --------- | 
| | Grant   |  | Expiry  |  |  | December 31,   |  |  | Exercise   |  |  | Remaining |  |  | **December
      31,** |  |  | Exercise   |  |  | Remaining | 
| | Date    |  | Date    |  |  | 2013           |  |  | Price CAN$ |  |  | Life      |  |  | 2013                   |  |  | Price CAN$ |  |  | Life      | 
| | Jun-10  |  | Jun-15  |  |  | 1,533,256      |  |  | 6.40       |  |  | 1.44      |  |  | 1,533,256              |  |  | 6.40       |  |  | 1.44      | 
| | Nov -10 |  | Nov -15 |  |  | 195,000        |  |  | 11.15      |  |  | 1.86      |  |  | 195,000                |  |  | 11.15      |  |  | 1.86      | 
| | Dec-10  |  | Dec-15  |  |  | -              |  |  | 14.80      |  |  | 1.94      |  |  | -                      |  |  | 14.80      |  |  | 1.94      | 
| | Mar-11  |  | Mar-16  |  |  | 303,000        |  |  | 17.56      |  |  | 2.18      |  |  | 218,000                |  |  | 17.56      |  |  | 2.18      | 
| | May-11  |  | May-16  |  |  | 87,000         |  |  | 19.74      |  |  | 2.34      |  |  | 58,000                 |  |  | 19.74      |  |  | 2.34      | 
| | Jan-12  |  | Jan-17  |  |  | 12,000         |  |  | 18.77      |  |  | 3.03      |  |  | 4,000                  |  |  | 18.77      |  |  | 3.03      | 
| | Mar-12  |  | Mar-17  |  |  | 69,000         |  |  | 21.68      |  |  | 3.19      |  |  | 23,000                 |  |  | 21.68      |  |  | 3.19      | 
| | May-12  |  | May-17  |  |  | 12,000         |  |  | 17.04      |  |  | 3.41      |  |  | 4,000                  |  |  | 17.04      |  |  | 3.41      | 
| | Nov -12 |  | Nov -17 |  |  | 30,000         |  |  | 20.10      |  |  | 3.87      |  |  | 10,000                 |  |  | 20.10      |  |  | 3.87      | 
| | Nov -12 |  | Nov -17 |  |  | 12,000         |  |  | 18.14      |  |  | 3.89      |  |  | 4,000                  |  |  | 18.14      |  |  | 3.89      | 
| | Mar-13  |  | Mar-18  |  |  | 573,000        |  |  | 16.34      |  |  | 4.19      |  |  | 12,000                 |  |  | 16.34      |  |  | 4.19      | 
| | May-13  |  | May-18  |  |  | 12,000         |  |  | 17.08      |  |  | 4.36      |  |  | -                      |  |  | -          |  |  | -         | 
| | Nov -13 |  | Nov -18 |  |  | 27,000         |  |  | 19.91      |  |  | 4.87      |  |  | -                      |  |  | -          |  |  | -         | 
| |         |  |         |  |  | 2,865,256      |  |  | 11.13      |  |  | 2.26      |  |  | 2,061,256              |  |  | 8.77       |  |  | 1.65      | 

The following table outlines share
options granted to key management personnel, senior employees, and consultants,
during the year ended December 31, 2013. Share options vest in three equal
tranches with the first tranche vesting on the first anniversary, the second on
the second anniversary, and the third on the third anniversary. Share options
expire five years after the grant date.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

| | Grant Date        |  | Options
    
    Granted |  |   | CAN$  |  |  | First Vest Date     |  |  | Expiry Date         | 
| | ----------------- |  | ------------------------ |  | - | ----- |  |  | ------------------- |  |  | ------------------- | 
| | March 7, 2013     |  | 573,000                  |  | $ | 16.34 |  |  | March 7,
      2014 |  |  | March 7,
      2018 | 
| | May 9, 2013       |  | 12,000                   |  | $ | 17.08 |  |  | May 9, 2014         |  |  | May 9, 2018         | 
| | November 12, 2013 |  | 27,000                   |  | $ | 19.91 |  |  | November 12, 2014   |  |  | November 12, 2018   | 

During the year ended December 31,
2013, 281,537 stock options were exercised and the cash proceeds received were
$2,501 (2012: 267,707 options for $1,764 proceeds).

For the year ended December 31, 2013,
the Company has recorded $2,957 of compensation expense relating to the Share
Plan Options (2012: $2,455).

Share Plan Awards
(equity-settled awards)The Share Plan permits Deferred Share
Awards (DSAs) and Restricted Share Awards (RSAs) to be issued to key
management personnel, senior employees and directors. Under the Share Plan, key
management personnel, senior employees and directors are issued shares in the
Company at no exercise price. The DSAs vest based on service-related vesting
terms set by the Compensation Committee of the Board of Directors. Under the
Share Plan, DSAs entitle the holder upon vesting to a common share at no
exercise price. Compensation cost for DSAs and RSAs is measured based on the
closing price of the stock one day prior to the grant date.

The DSAs vesting conditions are in
three equal tranches beginning on the first anniversary year of the grant date.
The RSAs vest immediately on the grant date.

The number of share awards as at
December 31, 2013 and December 31, 2012 is as follows:

| |                                        |  | Number of share awards |  
| | -------------------------------------- |  | ---------------------- | -
| | Outstanding at December 31,
      2011 |  | 1,420,000              |  
| | Granted                                |  | 259,000                |  
| | Shares issued                          |  | (1,309,000             | )
| | Outstanding at December 31, 2012       |  | 370,000                |  
| | Granted                                |  | 59,000                 |  
| | Shares issued                          |  | (247,666               | )
| | Outstanding at December 31, 2013       |  | 181,334                |  

The following table outlines DSAs and
RSAs granted to key management personnel, senior employees, and consultants,
during the year ended December 31, 2013. The first tranche of the DSAs granted
on March 7, 2013 vested immediately on the grant date and the respective shares
were issued on the same date. The remaining tranches will vest on the first and
second anniversary year of the grant date, respectively.

| | Grant Date        |  | Shares Granted |  |  | DSAs/RSAs |  |   | CAN$  |  |  | First Vest Date     | 
| | ----------------- |  | -------------- |  |  | --------- |  | - | ----- |  |  | ------------------- | 
| | March 7, 2013     |  | 15,000         |  |  | DSAs      |  | $ | 16.34 |  |  | March 7,
      2013 | 
| | May 9, 2013       |  | 35,000         |  |  | RSAs      |  | $ | 17.08 |  |  | May 9, 2013         | 
| | November 12, 2013 |  | 9,000          |  |  | DSA's     |  | $ | 19.91 |  |  | November 12, 2014   | 

During the year ended December 31,
2013, 212,666 DSAs vested and the shares were issued to the recipients under the
provisions of the Share Plan and $3,684 was transferred to share capital from
share based payments reserve (2012: 1,274,000 DSAs and $7,989 transferred to
share capital).

|Tahoe Resources Inc.
|--------------------

---

During the years ended December 31,
2013 and 2012, the Company granted 35,000 RSAs to directors for each period. The
RSAs vested immediately on the grant date and the respective shares were issued
on the same date.

During the year ended December 31,
2013, the Company has recorded $2,997 of compensation expense relating to DSAs
and RSAs (2012: $5,619).

SARs
(cash-settled)The Company grants SARs to employees
that entitle the employees to a cash payment. The amount of the cash payment is
determined based on the difference between the strike price and the closing
share price of the Company on the exercise date.

During the years ended December 31,
2013 and 2012, the Company awarded 10,000 and 60,000 SARs, respectively, to
employees. The SARs have a term of five years from the award date and vest in
five equal tranches with the first tranche vesting immediately, the second on
the first anniversary, the third on the second anniversary, the fourth on the
third anniversary, and the fifth on the fourth anniversary of the grant date.
Prior to settlement, unvested and vested SARs are valued using the Black-Scholes
Model.

| |                                        |  | Number of SARs |  
| | -------------------------------------- |  | -------------- | -
| | Outstanding at December 31,
      2011 |  | 301,200        |  
| | Issued                                 |  | 60,000         |  
| | Exercised                              |  | (19,275        | )
| | Cancelled                              |  | (15,000        | )
| | Outstanding at December 31,
      2012 |  | 326,925        |  
| | Issued                                 |  | 10,000         |  
| | Exercised                              |  | (84,200        | )
| | Cancelled                              |  | (47,000        | )
| | Outstanding at December 31, 2013       |  | 205,725        |  
| |                                        |  |                |  
| | Exercisable on December 31, 2012       |  | 147,425        |  
| | Exercisable on December 31, 2013       |  | 100,725        |  

At December 31, 2013 and 2012, vested
SARs had a weighted averaged intrinsic value of CAN$6.79 and CAN$8.84 per share,
respectively.

At December 31, 2013 and December 31,
2012, the Company recognized SARs short-term liability of $1,506 and $2,322 and
long-term liability of $80 and $481, respectively.

During the year ended December 31,
2013, the Company has recorded ($270), (2012: $786) in compensation expense.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

Additional SARs information is as
follows:

| |                              |  | Grant Price |  |  | Number  |  |  | Exercised/ |   |  |           |  |  |         |  |  |             | 
| | ---------------------------- |  | ----------- |  |  | ------- |  |  | ---------- | - |  | --------- |  |  | ------- |  |  | ----------- | 
| | Grant Date                   |  | CAN$        |  |  | Issued  |  |  | Cancelled  |   |  | Remaining |  |  | Vested  |  |  | Exercisable | 
| | 2010                         |  | 6.40        |  |  | 257,000 |  |  | (140,275   | ) |  | 116,725   |  |  | 80,725  |  |  | 80,725      | 
| | January 17, 2011             |  | 13.74       |  |  | 15,000  |  |  | (15,000    | ) |  | -         |  |  | -       |  |  | -           | 
| | February 1, 2011             |  | 13.54       |  |  | 20,000  |  |  | -          |   |  | 20,000    |  |  | 12,000  |  |  | 12,000      | 
| | July 1, 2011                 |  | 18.00       |  |  | 27,500  |  |  | (7,500     | ) |  | 20,000    |  |  | 12,000  |  |  | -           | 
| | October 3, 2011              |  | 15.10       |  |  | 10,000  |  |  | -          |   |  | 10,000    |  |  | 6,000   |  |  | 6,000       | 
| | January 19, 2012             |  | 19.85       |  |  | 20,000  |  |  | (10,000    | ) |  | 10,000    |  |  | 4,000   |  |  | -           | 
| | April 5, 2012                |  | 20.55       |  |  | 10,000  |  |  | -          |   |  | 10,000    |  |  | 4,000   |  |  | -           | 
| | May 21, 2012                 |  | 16.57       |  |  | 10,000  |  |  | (10,000    | ) |  | -         |  |  | -       |  |  | -           | 
| | July 16, 2012                |  | 12.87       |  |  | 5,000   |  |  | (1,000     | ) |  | 4,000     |  |  | 1,000   |  |  | 1,000       | 
| | October 16, 2012             |  | 20.45       |  |  | 10,000  |  |  | (10,000    | ) |  | -         |  |  | -       |  |  | -           | 
| | November 12, 2012            |  | 19.93       |  |  | 5,000   |  |  | -          |   |  | 5,000     |  |  | 2,000   |  |  | -           | 
| | June 24, 2013                |  | 13.35       |  |  | 5,000   |  |  | -          |   |  | 5,000     |  |  | 1,000   |  |  | 1,000       | 
| | August 31, 2013              |  | 18.80       |  |  | 5,000   |  |  | -          |   |  | 5,000     |  |  | 1,000   |  |  | -           | 
| | Balance at December 31, 2013 |  |             |  |  | 399,500 |  |  | (193,775   | ) |  | 205,725   |  |  | 123,725 |  |  | 100,725     | 

Inputs for measurement of
grant date fair valuesThe grant date fair values of share
options were measured based on the Black-Scholes Model. Due to the lack of
historic information, the expected volatility was estimated by considering the
historic average share price volatility from another mining company with similar
assets.

The fair value of SARs (cash settled)
has been re-measured at December 31, 2013. Expected volatility, interest rate
and share price have been updated; changes in the fair value are recognized in
profit or loss during the period.

The inputs used in the measurement of
the fair values (CAN) at the grant date of the share-based payment plan are the
following:

|     | Fair value of share options
      and assumptions (Weighted Average) | Share Option
      Program (Equity-Settled) | SARs
      (Cash-Settled)
|---- | -------------------------------------------------------------------- | ------------------------------------------- | -------------------------
|2013 | 2012                                                                 | 2013                                        | 2012                     
|     | Share price at grant date                                            | $16.51                                      | $20.50                   
|     | Exercise price                                                       | $16.62                                      | $20.34                   
|     | Expected volatility                                                  | 49%                                         | 54%                      
|     | Expected life of options                                             | 3.60                                        | 5                        
|     | Expected dividend yield                                              | -                                           | -                        
|     | Risk-free interest rate                                              | 1.21%                                       | 1.44%                    
|     | Fair value at grant date                                             | $6.18                                       | $9.83                    

The inputs used in the re-measurement
of the fair value (CAN) of the SARs at December 31, 2013 and 2012 are the
following:

|     | Fair value of SARs and
      assumptions (Weighted Average) | SARs
      (Cash-Settled)
|---- | ----------------------------------------------------------- | -------------------------
|2013 | 2012                                                       
|     | Share price                                                 | $17.67                   
|     | Exercise price                                              | $11.28                   
|     | Expected volatility                                         | 51%                      
|     | Expected life of options                                    | 2.18                     
|     | Expected dividend yield                                     | -                        
|     | Risk-free interest rate                                     | 1.65%                    
|     | Fair value                                                  | $9.10                    

|Tahoe Resources Inc.
|--------------------

---

|7. | INVENTORIES
|-- | -----------

Inventories consist of:

| |                |   | December 31, |  |   | December 31, | 
| | -------------- | - | ------------ |  | - | ------------ | 
| |                |   | 2013         |  |   | 2012         | 
| | Supplies       | $ | 14,575       |  | $ | 842          | 
| | Stockpile      |   | 3,440        |  |   | -            | 
| | Finished Goods |   | 4,950        |  |   | -            | 
| |                | $ | 22,965       |  | $ | 842          | 

|8. | ACCOUNTS PAYABLE AND ACCRUED
  LIABILITIES
|-- | ------------------------------------------

Accounts payable and accrued
liabilities consist of:

| |                                                |   | December 31, |  |   | December 31, | 
| | ---------------------------------------------- | - | ------------ |  | - | ------------ | 
| |                                                |   | 2013         |  |   | 2012         | 
| | Accounts payable and accrued
      liabilities | $ | 50,917       |  | $ | 12,734       | 
| | Accrued payroll and related benefits           |   | 2,255        |  |   | 1,869        | 
| | Share appreciation rights, current portion     |   | 1,506        |  |   | 2,322        | 
| |                                                | $ | 54,678       |  | $ | 16,925       | 

|9. | CURRENT DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On June 4, 2013, the Company, entered into $50 million
      secured credit facility with an international financial institution. The
      initial term of the credit facility was 12 months which may be extended
      for up to an additional 12 months, subject to lender approval with 90
      days notice prior to the initial maturity date. On December 20, 2013 the
      Company and lender agreed to extend the maturity by three months to
      September 3, 2014. All other terms remain per the original agreement.
      Interest is calculated at the US$ London Interbank Offered Rate (LIBOR)
      plus 6%. The Company has paid commitment fees of $1.25 million related to
      the transaction. The commitment fees are being amortized over the life of
      the credit facility, $0.7 million was amortized during the year ended
      December 31, 2013. In addition to the commitment fees, the Company has
      paid other fees related to the credit facility totaling $0.8 million for
      the year ended December 31, 2013.

| |                   |   | December 31, |   |   | December 31, | 
| | ----------------- | - | ------------ | - | - | ------------ | 
| |                   |   | 2013         |   |   | 2012         | 
| | Credit Facilitity | $ | 50,000       |   | $ | -            | 
| | Commitment Fee    |   | (1,250       | ) |   | -            | 
| | Accretion         |   | 729          |   |   | -            | 
| | Net               | $ | 49,479       |   | $ | -            | 

The Credit Facility is secured by
substantially all of the assets of the Company and its subsidiaries: Tahoe Swiss
AG, Escobal Resources Holding Limited and Minera San Rafael, S.A.

Additionally the credit facility
contains covenants that, among other things, restrict the ability of the Company
and its subsidiaries to incur additional debt, merge, consolidate, transfer,
lease or otherwise dispose of all or substantially all of its assets.

On December 20, 2013, the company
reached an agreement with the lender to expand its credit facility by an
additional $25 million. The $25 million bears interest at a rate per annum of
the US$ LIBOR plus a margin of 7.25% . The additional funds, when drawn, will
have maturity date of September 3, 2014. As at December 31, 2013 the Company had
not drawn on the expanded facility.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

(see note 16 Subsequent Events)

|10. | SUBSIDIARIES
|--- | ------------

| |                                         |  | Incorporated |  |  | Place of      |  |  | Ownership  |  |  | Principal  | 
| | --------------------------------------- |  | ------------ |  |  | ------------- |  |  | ---------- |  |  | ---------- | 
| | Name
      of Subsidiary                |  | /Acquired    |  |  | Incorporation |  |  | Percentage |  |  | Activity   | 
| | Tahoe Resources USA Inc.                |  | 2-Feb-10     |  |  | Nevada, USA   |  |  | 100%       |  |  | Services   | 
| | Tahoe Swiss AG                          |  | 20-May-10    |  |  | Switzerland   |  |  | 100%       |  |  | Services   | 
| | Escobal Resources Holding
      Limited |  | 8-Jun-10     |  |  | Barbados      |  |  | 100%       |  |  | Services   | 
| | Minera San Rafael, S.A.                 |  | 8-Jun-10     |  |  | Guatemala     |  |  | 100%       |  |  | Operations | 

|11. | SEGMENT INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company conducts its business as a single operating
      segment, the principal business activity being the acquisition,
      exploration, development and operation of mineral properties in the
      Americas for the mining of precious metals. All mineral properties, land,
      plant and equipment are situated in Guatemala. Substantially all of the
      cash and cash equivalents are denominated in United States dollars and are
      held in Canada. The Corporate office, in Reno, provides support to the
      mining and exploration activities with respect to financial, human
      resources and technical support.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company has two customers which account for 100% of
      the concentrate revenue. These two customers account for 58% and 42% of
      total sales in 2013. The loss of these customers or curtailment of
      purchases by such customers could have a material adverse effect on the
      Companys results of operations, financial condition and cash
  flows.                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|12. | RELATED PARTIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|Tahoe Resources Inc.
|--------------------

---

| | (b) | Key management personnel compensation:                                                                                                                                                                                                               
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                      
| |     | In addition to their salaries, key management personnel,
      including the board of directors, the chief executive officer, vice
      presidents and certain department managers, also participate in the
      Companys Share Plan (see note 6).

| | Key management personnel compensation comprised: |  
| | ------------------------------------------------ | -
| |                                                  |  
| |                                                  |  
| |                                                  |  
| | Short-term employee benefits                     | $
| | Share-based payments                             |  
| |                                                  | $

|13. | FAIR VALUE OF FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Fair value (FV) estimates are made at a specific point in
      time, based on relevant market information and information about the
      financial instrument. These estimates are subjective in nature and involve
      uncertainties and matters of significant judgment and, therefore, cannot
      be determined with precision. Changes in assumptions could significantly
      affect the estimates.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The analysis of financial instruments that are measured
      subsequent to initial recognition at fair value can be categorized into
      Levels 1 through 3 based upon the degree to which the inputs used in the
      fair value measurement are observable.                                                                                                                                              

- Level 1  inputs to the valuation methodology are quoted (adjusted) for
  identical assets or liabilities in active markets.
- Level 2  inputs to valuation methodology include quoted market prices for
  similar assets and liabilities in active markets, and inputs that are
  observable for the asset or liability, either directly or indirectly, for
  substantially the full term of the financial instrument.
- Level 3  inputs to the valuation methodology are unobservable and
  significant to the fair value measurement.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

At December 31, 2013, the levels in the FV
hierarchy into which the Companys financial assets and liabilities are measured
and recognized on the balance sheet at fair value are categorized as follows:

| | Financial assets (liabilities) at
      fair value as at December 31, 2013 |  
| | -------------------------------------------------------------------------- | -
| |                                                                            |  
| | Cash & Cash Equivalents                                                    | $
| | Accounts Receivable                                                        |  
| | Current Portion of SARs                                                    |  
| | Non-current Portion of SARs                                                |  
| |                                                                            | $

| | Financial assets (liabilities) at
      fair value as at December 31, 2012 |  
| | -------------------------------------------------------------------------- | -
| |                                                                            |  
| | Cash & Cash Equivalents                                                    | $
| | Accounts Receivable                                                        |  
| | Current Portion of SARs                                                    |  
| | Non-current Portion of SARs                                                |  
| |                                                                            | $

At December 31, 2013, there were no
financial assets or liabilities measured and recognized on the balance sheet at
FV that would be classified as level 3 on the table above.

There were no transfers between Level 1
and Level 2 during the year ended December 31, 2013.

Valuation Methodologies for Level 2
Financial Assets and Liabilities

Accounts
ReceivableThe Companys concentrate sales
contracts are subject to provisional pricing the pricing is finalized at the end
of the quotational period. At the end of each period these accounts receivable
are marked to market based on forward prices quoted in active markets.

SARsThe Companys unrealized gains and
losses on SARs are valued using observables inputs and as such are classified as
level 2 of the fair market value hierarchy. SARs are classified and accounted
for as a financial liability at FV with changes in fair value included in net
losses. The FV of SARs is determined using the Black-Scholes Model as described
in note 6.

At December 31, 2013 the carrying
amounts of other financial assets and liabilities are considered to approximate
their FV due to the short term nature of the instruments.

|Tahoe Resources Inc.
|--------------------

---

|14. | FINANCIAL RISK MANAGEMENT
|--- | -------------------------

Overview

The Company has exposure to the
following risks from its use of financial instruments:

- credit risk
- liquidity risk
- market risk

This note presents information about
the Companys exposure to each of the above risks, the Companys objectives,
policies and processes for measuring and managing risk, and the Companys
management of capital. Further quantitative disclosures are included throughout
these consolidated financial statements.

Credit RiskCredit risk is the risk that the
counterparty to a financial instrument will cause a loss for the company by
failing to meet its obligations. Credit risk for the Company is primarily
related to accounts receivable and cash and cash equivalents. The Company
manages this risk by selling to organizations with strong credit ratings and
requiring substantial provisional pricing at the date of shipping its products.
The history of defaults by these organizations to other entities has been
negligible and the Company considers our risk to be negligible as well. The
Company manages the credit risk associated with our cash and cash equivalents by
investing these funds with highly rated financial institutions, as such, the
Company deems our credit risk on cash and cash equivalents to be low.

Liquidity RiskLiquidity risk is the risk that the
Company will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial
asset. The Companys approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Companys reputation.

The Companys financial liabilities at
December 31, 2013 and 2012 include accounts payable and accrued liabilities all
of which are due within 6 months or less. The other long-term liabilities
consist of the SARs long-term portion, severance and reclamation provisions.

| |                                                                          |   |         |  |   |           |  |   | Ov er   |  |   | December 31, |  |   | December 31, | 
| | ------------------------------------------------------------------------ | - | ------- |  | - | --------- |  | - | ------- |  | - | ------------ |  | - | ------------ | 
| |                                                                          |   | 1 year  |  |   | 2-5 years |  |   | 5 years |  |   | 2013         |  |   | 2012         | 
| | Accounts payable, accrued
      liabilities and income tax payable       | $ | 55,486  |  | $ | -         |  | $ | -       |  | $ | 55,486       |  | $ | 16,925       | 
| | Curent debt                                                              |   | 49,479  |  |   | -         |  |   | -       |  |   | 49,479       |  |   |              | 
| | Lease agreements for rental
      of office facilities                   |   | 1,533   |  |   | 2,269     |  |   | 66      |  |   | 3,868        |  |   | 891          | 
| | Commitment to purchase equipment, services,
      materials and supplies |   | 27,021  |  |   | -         |  |   | -       |  |   | 27,021       |  |   | 65,366       | 
| | Other long-term liabilities                                              |   | -       |  |   | 1,193     |  |   | -       |  |   | 1,193        |  |   | 1,030        | 
| | Reclamation provision                                                    |   | -       |  |   | -         |  |   | 3,021   |  |   | 3,021        |  |   | 3,691        | 
| | Total                                                                    | $ | 133,519 |  | $ | 3,462     |  | $ | 3,087   |  | $ | 140,068      |  | $ | 87,903       | 

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

Market RiskThe Market risk of the Company is
composed of three main risks: foreign exchange risk, interest rate risk, and
price risk.

| | (a) | Foreign Exchange Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company is exposed to currency risk on cash and cash
      equivalents and accounts payable that are denominated in a currency other
      than the respective functional currency of Company entities which is the
      US$. To minimize risk, the Companys funds are kept in highly liquid
      instruments such as commercial paper and time deposits. The Company also
      contracts for goods and services mainly in US$ currency. At December 31,
      2013, the Company has converted substantially all CAN$ to US$ to minimize
      exchange rate risk.

| |                                        |   | December 31, |  |   | December 31, | 
| | -------------------------------------- | - | ------------ |  | - | ------------ | 
| |                                        |   | 2013         |  |   | 2012         | 
| | Cash and cash equivalents in
      US$ | $ | 7,145        |  | $ | 163,518      | 
| | Cash in CAN$                           |   | 1,050        |  |   | 458          | 
| | Cash in other currencies               |   | 643          |  |   | 585          | 
| | Total Cash and Cash Equivalents        | $ | 8,838        |  | $ | 164,561      | 

Cash and cash equivalents comprise
cash balances and deposits with maturities of 90 days or less.

| |                                 |   | December 31, |  |   | December 31, | 
| | ------------------------------- | - | ------------ |  | - | ------------ | 
| | Cash
      and Cash Equivalents |   | 2013         |  |   | 2012         | 
| | Cash in US$                     | $ | 8,812        |  | $ | 146,586      | 
| | Cash
      equivalents          |   | 26           |  |   | 17,975       | 
| | Total Cash and Cash Equivalents | $ | 8,838        |  | $ | 164,561      | 

| |     | While most of the Companys goods and services are
      contracted in US$ there is a portion that are contracted in other
      currencies (Canadian dollars and Guatemalan Quetzals). The appreciation of
      these currencies against the US$ can increase the costs the Company incurs
      in terms of the US dollar. At December 31, 2013 the Company has determines
      this risk to be low.                                                                                                                                                                                                                                
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (b) | Interest Rate Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Interest rate risk is the risk that the Companys future
      cash flows and fair values will fluctuate as a result of changes in market
      interest rates. At the reporting date, the Companys interest-bearing
      financial instruments are related to cash and cash equivalents and current
      debt. At period end the current debt was subject to a floating interest
      rate (see note 9). The weighted average interest rate paid by the Company
      during 2013 related to the current debt was 6.27% (2012: nil%). At
      December 31, 2013 the Company has determined the interest rate risk to be
      low.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (c) | Price Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Price risk is the risk that the company fair value of the
      Companys financial instruments will fluctuate due to changes in market
      prices. At the reporting date the Company has determined that risk to the
      Company due to metals prices is at an acceptable level and have entered
      into no hedging contracts.                                                                                                                                                                                                                                                                                                  

|Tahoe Resources Inc.
|--------------------

---

The costs associated with construction
and operating activities of the Company are subject to price risk as it relates
to certain consumables including diesel fuel and power. The Company has
determines these risks to be negligible at December 31, 2013.

|15. | INCOME TAX
|--- | ----------

Income Tax Expense

| |                                                         |   | Year Ended        |   |   | Year Ended        |  
| | ------------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
| | Income tax expense
      (benefit)                      |   | December 31, 2013 |   |   | December 31, 2012 |  
| |                                                         |   |                   |   |   |                   |  
| | Current tax expense (benefit)                           |   |                   |   |   |                   |  
| | Current period                                          | $ | 1,915             |   | $ | -                 |  
| | Adjustment for
      prior periods                      |   | -                 |   |   | (310              | )
| |                                                         |   | 1,915             |   |   | (310              | )
| | Deferred tax expense (benefit)                          |   |                   |   |   |                   |  
| | Origination and reversal of temporary
      differences |   | (294              | ) |   | -                 |  
| |                                                         |   | (294              | ) |   | -                 |  
| | Income tax
      expense (benefit)                      | $ | 1,621             |   | $ | (310              | )

The reconciliation of income taxes at
statutory rates with the reported taxes is as follows:

| |                                                    |   | Year
      Ended  |   |   | Year
      Ended  |  
| | -------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
| |                                                    |   | December 31, 2013 |   |   | December 31, 2012 |  
| | Income (loss) before income taxes                  | $ | (63,976           | ) | $ | (93,763           | )
| | Statutory tax rate                                 |   | 25.75%            |   |   | 25.00%            |  
| | Income tax expense (benefit)                       |   | (16,474           | ) |   | (23,441           | )
| | Reconciling items:                                 |   |                   |   |   |                   |  
| | Difference between statutory and foreign tax rates |   | 12,002            |   |   | 14,628            |  
| | Deductible share
      based payments              |   | 994               |   |   | (880              | )
| | Non-taxable portion of capital loss (gain)         |   | -                 |   |   | (609              | )
| | Non-deductible
      expenses                      |   | 2,391             |   |   | 10,314            |  
| | Change in unrecognized deferred tax assets         |   | 2,696             |   |   | 173               |  
| | Other                                              |   | 12                |   |   | (495              | )
| | Income tax expense (benefit)                       | $ | 1,621             |   | $ | (310              | )

Deferred Tax Assets and Liabilities

The significant components of deferred
income tax assets and liabilities are as follows:

| |                                 |  | Year Ended        |  |  | Year Ended        | 
| | ------------------------------- |  | ----------------- |  |  | ----------------- | 
| |                                 |  | December 31, 2013 |  |  | December 31, 2012 | 
| | Deferred income tax assets      |  |                   |  |  |                   | 
| | Inventories                     |  | 294               |  |  | -                 | 
| |                                 |  | 294               |  |  | -                 | 
| | Deferred income tax liabilities |  | -                 |  |  | -                 | 
| | Deferred income tax assets, net |  | 294               |  |  | -                 | 

The Company believes that it is
probable that the results of future operations will generate sufficient revenue
to realize the above noted deferred income tax assets.

|Consolidated Financial Statements for the
      Years Ended December 31, 2013 and 2012
|--------------------------------------------------------------------------------------

---

Deductible temporary differences for
which no deferred tax assets are recognized:

| |                                  |   | Year Ended        |  |   | Year Ended        | 
| | -------------------------------- | - | ----------------- |  | - | ----------------- | 
| |                                  |   | December 31, 2013 |  |   | December 31, 2012 | 
| | Tax losses and tax credits       | $ | 46,729            |  | $ | 27,382            | 
| | Deductible temporary differences |   |                   |  |   |                   | 
| | Cumulative eligible capital      |   | 816               |  |   | 1,209             | 
| | Financing costs                  |   | 7,900             |  |   | 13,641            | 
| | Total                            | $ | 55,445            |  | $ | 42,232            | 

Tax losses and tax credits 
As at December 31, 2013, the Company
had $46,729 of tax losses (2012: $27,382) for which $nil (2012: $nil) have been
recognized as deferred tax assets. The Company recognizes the benefit of tax
losses only to the extent of anticipated future taxable income in relevant
jurisdictions. The gross amount of tax losses carried forward will begin to
expire in 2030.

|16. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                   
|    | Expansion of credit facility                                                                                                                                                                                                                                                                      
|    | On January 2, 2014, the Company drew an additional $25
      million dollars. The debt facility was expanded and drawn to ensure
      adequate working capital and support general corporate purposes until
      operations advance and to support all operating and corporate
      activities.
|    |                                                                                                                                                                                                                                                                                                   
|    | Commercial production                                                                                                                                                                                                                                                                             
|    | On January 14, 2014 the Company declared commercial
      production at its Escobal mine in Guatemala.                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                   
|    | The January 1 through 13 activity will be immaterial to the 2014 financial statements.  As a result, effective January 1, 2014, the Company ceased capitalizing operating costs, began recognizing revenue and reporting results of operations.                                                   

|Tahoe Resources Inc.
|--------------------

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