---



ANNUAL INFORMATION FORM

of

Yukon-Nevada Gold Corp. #900,
688 West Hastings Street Vancouver, BC, V6B 1P1 Tel: (604) 688-9427

March 31, 2011

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TABLE OF CONTENTS

Page No.

|ITEM 1: | PRELIMINARY NOTES                                                                           | 3                                                                                      
|------- | ------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------
|        | 1.1                                                                                         | Incorporation of
      Financial Statements and Proxy Circular                         
|        | 1.2                                                                                         | Date of Information                                                                    
|        | 1.3                                                                                         | Glossary of
      Abbreviations and Terms                                              
|        | 1.4                                                                                         | Conversion Table                                                                       
|        | 1.5                                                                                         | Currency                                                                               
|        | 1.6                                                                                         | Share Capital                                                                          
|        |                                                                                             |                                                                                        
|ITEM 2: | CORPORATE STRUCTURE                                                                         | 6                                                                                      
|        | 2.1                                                                                         | Name, Address and
      Incorporation                                                  
|        | 2.2                                                                                         | Intercorporate Relationships                                                           
|        |                                                                                             |                                                                                        
|ITEM 3: | GENERAL DEVELOPMENT OF THE BUSINESS                                                         | 7                                                                                      
|        | 3.1                                                                                         | Three-Year History                                                                     
|        | 3.2                                                                                         | Significant Acquisitions                                                               
|        |                                                                                             |                                                                                        
|ITEM 4: | DESCRIPTION OF THE BUSINESS                                                                 | 15                                                                                     
|        | 4.1                                                                                         | General                                                                                
|        | 4.2                                                                                         | Risk Factors                                                                           
|        | 4.3                                                                                         | Companies with
      Asset-backed Securities Outstanding                               
|        | 4.4                                                                                         | Companies with Mineral Projects                                                        
|        |                                                                                             | (a)                                                                                    
|        |                                                                                             | (b)                                                                                    
|        |                                                                                             | (c)                                                                                    
|        |                                                                                             | (d)                                                                                    
|        |                                                                                             |                                                                                        
|ITEM 5: | DIVIDENDS AND DISTRIBUTIONS                                                                 | 95                                                                                     
|        | 5.1                                                                                         | Dividends and
      Distributions                                                      
|        |                                                                                             |                                                                                        
|ITEM 6: | DESCRIPTION OF
      CAPITAL STRUCTURE                                                      | 95                                                                                     
|        | 6.1                                                                                         | General Description of Capital Structure                                               
|        | 6.2                                                                                         | Constraints                                                                            
|        | 6.3                                                                                         | Ratings                                                                                
|        |                                                                                             |                                                                                        
|ITEM 7: | MARKET FOR SECURITIES                                                                       | 96                                                                                     
|        | 7.1                                                                                         | Trading Price and
      Volume                                                         
|        | 7.2                                                                                         | Prior Sales                                                                            
|        |                                                                                             |                                                                                        
|ITEM 8: | ESCROWED SECURITIES AND SECURITIES SUBJECT
      **TO CONTRACTUAL RESTRICTION ON TRANSFER** | **97**                                                                                 
|        | 8.1                                                                                         | Escrowed
      Securities and Securities Subject to Contractual Restriction on Transfer

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ii

|ITEM
      9:  | DIRECTORS
      AND OFFICERS                                     | 97                                                              
|-------------- | ---------------------------------------------------------------- | ----------------------------------------------------------------
|               | 9.1                                                              | Name, Occupation and
      Security Holding                     
|               | 9.2                                                              | Cease Trade
      Orders, Bankruptcies, Penalties or Sanctions  
|               | 9.3                                                              | Conflicts of Interest                                           
|               |                                                                  |                                                                 
|ITEM 10:       | PROMOTERS                                                        | 100                                                             
|               | 10.1                                                             | Promoters                                                       
|               |                                                                  |                                                                 
|ITEM
      11: | LEGAL
      PROCEEDINGS                                          | 100                                                             
|               | 11.1                                                             | Legal Proceedings                                               
|               | 11.2                                                             | Regulatory
      Actions                                        
|               |                                                                  |                                                                 
|ITEM
      12: | INTEREST
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 100                                                             
|               | 12.1                                                             | Interest of Management and
      Others in Material Transactions
|               |                                                                  |                                                                 
|ITEM 13:       | TRANSFER AGENTS AND
      REGISTRARS                             | 101                                                             
|               | 13.1                                                             | Transfer
      Agents and Registrars                            
|               |                                                                  |                                                                 
|ITEM
      14: | MATERIAL
      CONTRACTS                                         | 101                                                             
|               | 14.1                                                             | Material Contracts                                              
|               |                                                                  |                                                                 
|ITEM 15:       | INTERESTS OF EXPERTS                                             | 101                                                             
|               | 15.1                                                             | Names of
      Experts                                          
|               | 15.2                                                             | Interests of Experts                                            
|               |                                                                  |                                                                 
|ITEM 16:       | ADDITIONAL
      INFORMATION                                     | 102                                                             
|               | 16.1                                                             | Additional
      Information                                    

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3

ITEM 1: PRELIMINARY NOTES

1.1Incorporation of Financial Statements and
Proxy Circular

Specifically incorporated by reference and forming a part of
this annual information form (the AIF) are the audited consolidated financial
statements, including the accompanying notes and the auditor’s report, for the
Issuer for the period ended December 31, 2010, together with the auditors’
report thereon, and the Management Proxy Circular, dated April 24, 2010,
previously filed with the British Columbia, Alberta and Ontario Securities
Commissions.

All financial information in this AIF is prepared in accordance
with accounting principles generally accepted in Canada (Canadian GAAP).

This report contains forward-looking statements, including
all statements that are not historical facts, and forward looking information
within the meaning of the United States Private Securities Litigation Reform Act
of 1995 and applicable Canadian Securities legislation. Forward-looking
statements include, but are not limited to, statements with respect to the
future price of gold, the realization of mineral reserve estimates, the timing
and amount of estimated future production, costs of production, capital
expenditures, costs and timing of the development of deposits, success of
exploration activities, permitting time lines, currency exchange rate
fluctuations, requirements for additional capital, government regulation of
mining operations, environmental risks, unanticipated reclamation expenses,
title disputes or claims and limitations on insurance coverage. Generally, these
forward-looking statements can be identified by the use of forward-looking
terminology such as plans, expects or does not expect, is expected,
budget, scheduled, estimates, forecasts, intends, anticipates or
does not anticipate, or believes, or variations of such words and phrases or
state that certain actions, events or results may, could, would, might
or will be taken, occur or be achieved.

With respect to forward-looking statements and the information
included in this MD&A, we have made numerous assumptions, including, among
other things, assumptions about the price of gold, anticipated costs and
expenditures and our ability to achieve our goals, even though our management
believes that the assumptions made and the expectations represented by such
statements or information will prove to be accurate. By their nature,
forward-looking statements and information are based on assumptions and involve
known and unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements, or industry results, to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking information. Such risks, uncertainties and
other factors include among other things the following: gold price volatility;
discrepancies between actual and estimated production and mineral reserves and
resources; the speculative nature of gold exploration; mining operational and
development risk; and regulatory risks. See our Annual Information Form for
additional information on risks, uncertainties and other factors related.

Although the Company has attempted to identify important
factors that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements. The Company does not undertake to update any forward-looking
statements that are incorporated by reference herein, except in accordance with
applicable securities laws.

1.2Date of Information

All information in this AIF is as of March 28, 2011 unless
otherwise indicated.

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4

1.3Glossary of Abbreviations and Terms

Certain abbreviations and terms used throughout this Annual
Information Form are defined below:

|Abbreviation | Unit or Term          |  | Abbreviation | Unit or Term                               
|------------ | --------------------- |  | ------------ | -------------------------------------------
|A            | ampere                |  | m3           | cubic meter                                
|AA           | atomic absorption     |  | mg/l         | milligrams/liter                           
|Ag           | silver                |  | mm           | millimeter                                 
|Au           | gold                  |  | mm2          | square millimeter                          
|AuEq         | gold equivalent grade |  | mm3          | cubic millimeter                           
|°C           | degrees Centigrade    |  | NI 43-101    | Canadian National Instrument 43-101        
|cm           | centimeter            |  | OSC          | Ontario Securities Commission              
|cm2          | square centimeter     |  | oz           | troy ounce                                 
|cm3          | cubic centimeter      |  | %            | percent                                    
|cfm          | cubic feet per minute |  | ppb          | parts per billion                          
|°            | degree (degrees)      |  | ppm          | parts per million                          
|dia.         | diameter              |  | QA/QC        | Quality Assurance/Quality Control          
|ft           | foot (feet)           |  | RC           | rotary circulation drilling                
|g            | gram                  |  | RQD          | Rock Quality Description                   
|gal          | gallon                |  | SEC          | U.S. Securities & Exchange
      Commission
|gpm          | gallons per minute    |  | s            | second                                     
|g/t          | grams per tonne       |  | SG           | specific gravity                           
|ha           | hectares              |  | st           | short ton (2,000 pounds)                   
|hp           | horsepower            |  | t            | tonne (metric ton) (2,204.6
      pounds)  
|kg           | kilograms             |  | tph          | tonnes per hour                            
|km           | kilometer             |  | tpd          | tonnes per day                             
|km2          | square kilometer      |  | tpy          | tonnes per year                            
|koz          | thousand troy ounce   |  | TSF          | tailings storage facility                  
|kt           | thousand tonnes       |  | μ            | micron or microns                          
|l            | liter                 |  | V            | volts                                      
|lb           | pound                 |  | W            | watt                                       
|LoM          | Life-of-Mine          |  | yr           | year                                       
|lps          | liters per second     |  |              |                                            
|m            | meter                 |  |              |                                            
|m2           | square meter          |  |              |                                            

|Term                 | Meaning                                                                                                                                                                                                                   
|-------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Assay:               | The chemical analysis of
      mineral samples to determine the metal content                                                                                                                                             
|Capital Expenditure: | All other expenditures that are not classified
      as operating costs.                                                                                                                                                  
|Composite:           | Combining more than one sample
      result to give an average result over a larger distance or area.                                                                                                                     
|Concentrate:         | A metal-rich product resulting from a mineral
      enrichment process such as gravity concentration or flotation, in which
      most of the desired mineral has been separated from the waste material in
      the ore.
|Crushing:            | Initial process of reducing ore
      particle size to render it more amenable for further processing.                                                                                                                    
|Cutoff Grade (CoG):  | The grade of mineralized rock, which determines
      whether or not it is economic to recover its gold content by further
      concentration.                                                                           
|Dilution:            | Waste, which is unavoidably mined with ore.                                                                                                                                                                               

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5

|Term                  | Meaning                                                                                                                                                                                                                
|--------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dip:                  | Angle of inclination of a
    geological feature/rock from the horizontal.                                                                                                                                             
|Fault:                | The surface of a fracture along which movement
    has occurred.                                                                                                                                                       
|Footwall:             | The underlying side of an
    orebody or stope.                                                                                                                                                                        
|Gangue:               | Non-valuable components of the ore.                                                                                                                                                                                    
|Grade:                | The measure of concentration of
    gold within mineralized rock.                                                                                                                                                      
|Haulage:              | A horizontal underground excavation which is
    used to transport mined ore.                                                                                                                                          
|Igneous:              | Primary crystalline rock formed
    by the solidification of magma.                                                                                                                                                    
|Kriging:              | An interpolation method of assigning values
    from samples to blocks that minimizes the estimation error.                                                                                                            
|Level:                | Horizontal tunnel the primary
    purpose of which is the transportation of personnel and materials.                                                                                                                   
|Lithological:         | Geological description pertaining to different
    rock types.                                                                                                                                                         
|LoM Plans:            | Life-of-Mine plans.                                                                                                                                                                                                    
|Material Properties:  | Mine properties.                                                                                                                                                                                                       
|Milling:              | A general term used to describe
      the process in which the ore is crushed and ground and subjected to
      physical or chemical treatment to extract the valuable metals to a
    concentrate or finished product.
|Mineral/Mining Lease: | A lease area for which mineral rights are held.                                                                                                                                                                        
|Mining Assets:        | The Material Properties and
    Significant Exploration Properties.                                                                                                                                                    
|Ongoing Capital:      | Capital estimates of a routine nature, which is
    necessary for sustaining operations.                                                                                                                               
|Ore Reserve:          | That part of a mineral resource
      that is considered economic in terms of tonnage and grade following an
    appropriately detailed study at given commodities prices.                                             
|Pillar:               | Rock left behind to help support the
    excavations in an underground mine.                                                                                                                                           
|Sedimentary:          | Pertaining to rocks formed by
    the accumulation of sediments, formed by the erosion of other rocks.                                                                                                                 
|Sill:                 | A thin, tabular, horizontal to sub-horizontal
      body of igneous rock formed by the injection of magma into planar zones of
    weakness.                                                                           
|Stope:                | Underground void created by
    mining.                                                                                                                                                                                
|Stratigraphy:         | The study of stratified rocks in terms of time
    and space.                                                                                                                                                          
|Strike:               | Direction of line formed by the
      intersection of strata surfaces with the horizontal plane, always
    perpendicular to the dip direction.                                                                        
|Sulfide:              | A sulfur bearing mineral.                                                                                                                                                                                              
|Tailings:             | Finely ground waste rock from
    which valuable minerals or metals have been extracted.                                                                                                                               
|Thickening:           | The process of concentrating solid particles in
    suspension.                                                                                                                                                        
|Total Expenditure:    | All expenditures including
    those of an operating and capital nature.                                                                                                                                               
|Variogram:            | A
    statistical representation of the characteristics (usually grade).                                                                                                                                               

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6

1.4Conversion Table

In this AIF a combination of Imperial and metric measures are
used with respect to mineral properties located in North America. Conversion
rates from Imperial measure to metric and from metric to Imperial are provided
below:

|Imperial Measure              | = | Metric Unit        | Metric Measure          | = | Imperial Unit           
|----------------------------- | - | ------------------ | ----------------------- | - | ------------------------
|2.47 acres                    |   | 1 hectare          | 0.4047 hectares         |   | 1 acre                  
|3.28 feet                     |   | 1 metre            | 0.3048 metres           |   | 1 foot                  
|0.62 miles                    |   | 1 kilometre        | 1.609 kilometres        |   | 1 mile                  
|0.032 ounces (troy)           |   | 1 gram             | 31.1 grams              |   | 1 ounce (troy)          
|1.102 tons (short)            |   | 1 tonne            | 0.907 tonnes            |   | 1 ton                   
|0.029 ounces
      (troy)/ton |   | 1
      gram/tonne | 34.28
      grams/tonne |   | 1
      ounce (troy/ton)

1.5Currency

Unless otherwise indicated, all dollar amounts are in Canadian
dollars.

1.6Share Capital

On January 5, 2004 the Issuer consolidated its Common Share
capital on the basis of one post-consolidated share for five pre-consolidated
Shares. Unless otherwise expressed, all references in this Annual Information
Form are to post-consolidated Shares.

ITEM 2: CORPORATE STRUCTURE

2.1Name, Address and Incorporation

The full corporate name of the issuer is Yukon-Nevada Gold
Corp. (the Issuer).

|The address of the head office is:           | #900, 688 West Hastings Street 
|-------------------------------------------- | -------------------------------
|                                             | Vancouver, BC, V6B 1P1         
|                                             |                                
|and the address of the registered office is: | #1040, 999 West Hastings Street
|                                             | Vancouver, B.C. V6C 2W2        

The Issuer was incorporated under the laws of the Province of
British Columbia under the name YGC Resources Ltd. (YGC) on May 30, 1988. On
January 25, 2002, the Issuer was struck from the Register of Companies for
British Columbia and dissolved. The Issuer was restored to the Register on
August 1, 2003. On January 5, 2004 the Issuer consolidated its share capital on
a five (5) old for one (1) new basis and increased its authorized share capital
from 4,000,000 Shares without par value to 100,000,000 Shares without par value.
On June 23, 2005, the Issuer increased its authorized share capital from
100,000,000 Shares without par value to an unlimited number of Shares without
par value.

By Combination Agreement dated March 16, 2007 with Queenstake
Resources Ltd. (Queenstake), the Issuer entered into an Arrangement with
Queenstake, providing for, among other things, the acquisition by the Issuer of
all of the issued and outstanding shares of Queenstake. The Arrangement closed
on June 20, 2007, at which time the Issuer changed its name to its current name.

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7

2.2Intercorporate Relationships

Set forth below are the names of the Issuer’s subsidiaries:



ITEM 3: GENERAL DEVELOPMENT OF THE BUSINESS

The Shares of the Issuer were called for trading on the Toronto
Stock Exchange (the TSX) on April 13, 2005. The Issuer is active in the
evaluation, development and commercial production of mineral properties. The
Issuer’s principal assets are the Jerritt Canyon Gold Mine, Nevada and the
Ketza River Property, Yukon Territory. The favourable price for gold has enabled
the Issuer to raise equity financing, the proceeds of which are used to fund
improvements to the Jerritt Canyon concentrator facilities and exploration of
the Ketza River Property.

3.1Three-Year History

The principal business of the Issuer is the production of gold
in Nevada and the acquisition, exploration and development of mineral properties
of merit with a particular focus on gold, silver, zinc and copper properties in
the Yukon Territory and British Columbia in Canada and in Arizona and Nevada in
the United States.

The Issuer acquired the Jerritt Canyon gold mine upon
completion of its plan of arrangement with Queenstake on June 20, 2007. On May
30, 2003, Queenstake entered into a definitive asset purchase and sale agreement
with subsidiaries of AngloGold Limited and Meridian Gold Inc. (collectively, the
Sellers) pursuant to which Queenstake agreed to acquire the Sellers’
respective 70% and 30% interests in the assets comprising the operating Jerritt Canyon gold mine. The acquisition closed on June 30,
2003.

Jerritt Canyon is a gold property with two underground mines,
ore stockpiles and a 1.5 million ton per year capacity processing plant. In
addition, the approximately 119 square miles that comprise the Jerritt Canyon
property offer a significant number of advanced, early stage and district-scale
exploration targets and potential to expand the currently defined mineral
reserves and resources proximal to the producing mines.

The Issuer has owned the Ketza River Gold Property in the
Yukon, since 1994. This former producing mine was shut down in November 1990,
due to the depletion of known oxide ore reserves identified at that time. The
Ketza River Gold Property includes 593 mineral claims and leases, a gold mill
and all associated chattels, tools, equipment and licences. The Issuer’s Chief
Operating Officer, Mr. Dickson, who is also a chemist and a professional mining
consultant, identified areas which were under-explored and which could be mined
and processed by different methods than those employed in the past. In
particular, he identified the possibility of discovering significant quantities
of sulphide ore. The Issuer has completed diamond drilling that resulted in the
discovery of the Chimney and Fork zones and geologic mapping, prospecting,
sampling and diamond drilling on the Shamrock zone. The Issuer has also carried
out an aggressive diamond drill program in an effort to increase mineral resources, to prepare a feasibility study and, if the
results of the feasibility study are positive, to return the Ketza Property to
commercial production as a mine. An updated reserve report is expected in 2011
that will show the results of extensive metallurgical work and additional
exploration drilling. Currently the Issuer is focusing is on completing the
application to the Yukon Environmental and Socio-economic Assessment Board
(YESAB) to approve the Issuer’s development plan and allow for the commencement
of mining activity at the property.

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8

Year ending December 31, 2008

On February 1, 2008 the Issuer’s Board of Directors approved
the appointment of David Drips, B.Sc. Mining Engineering, as its new Vice President Mining. The Issuer also
promoted Sam Ash, B.Sc. Mining Engineering, to Manager of New Operations.

The Issuer’s Jerritt Canyon Mine operated continuously from
the date of acquisition on June 20, 2007 until February 22, 2008 when it shut
down to address infrastructure and safety concerns. In May 2008, Jerritt Canyon
recommenced commercial production at reduced levels. On August 8, 2008 mining at
Jerritt Canyon ceased again as a result of increasing costs and dilution
resulting from the mine plan as well as the ongoing required development and
infrastructure expenditures resulting from years of neglect. Subsequent to the
closure of the mines, as a result of a dirty air fan that was damaged in the
following week, the milling operation was also shutdown. Mining and milling
operations did not resume for the remainder of 2008 while management pursued
additional financing and continued work on addressing environmental concerns
raised by the Nevada Division of Environmental Protection (the NDEP) in their
stop order issued in March of 2008.

On May 12, 2008 the Issuer closed a non-brokered private
placement of 10,050,000 Flow-Through Shares (the FT Shares) at a price of
$2.00 per FT Share for gross proceeds of $20,100,000. No commission was paid.

At the Issuer’s 2008 Annual General Meeting held May 27, 2008,
Graham Dickson, Peter Holbek, John R.W. Fox, Neil J.F. Steenberg, E. Lynn Patterson, R.J. (Don) MacDonald,
Iain Harris and Robert Chafee were re-elected to the Issuer’s Board of
Directors. Peter Bojtos and Dorian Nicol ceased to be directors on May 27, 2008.

On July 2, 2008 Dorian L. Nicol resigned as the Issuer’s Vice
President of Exploration. On August 14, 2008 Christopher Oxner resigned as the
Issuer’s Chief Financial Officer and on August 15, 2008 David Dripps resigned
as the Issuer’s Vice President of Mining.

On July 27, 2008 the Issuer issued 250,000 Warrants which are
exercisable at a price of $3.00 per share on or before June 20, 2012.

On November 1, 2008 Shaun Heinrichs was appointed the Issuer’s
Chief Financial Officer.

On December 12, 2008 E. Lynn Patterson resigned as the Chairman
and a Director of the Issuer.

On December 18, 2008 the Issuer closed a non-brokered private
placement of 79,800,000 units (the Units) at a price of $0.05 per unit, each
Unit comprising one common share (a Share), one series A share purchase
warrant (the A Warrant), each A Warrant entitling the holder to purchase
one additional share at a price of $0.07 for a period of 12 months from the
closing and one series B share purchase warrant (the B Warrant), each
B Warrant entitling the holder to purchase one additional share
at a price of $0.09 for a period of 18 months from the closing for gross
proceeds of 3,990,000. A commission of 7,400,000 Units were issued.

Year Ending December 31, 2009

On February 24, 2009 the Issuer closed a non-brokered private
placement of 10,000,000 units (the Units) at a price of $0.05 per unit, each
Unit comprising one common share (a Share), one series A share purchase
warrant (A Warrant), each A Warrant entitling the holder to
purchase one additional share at a price of $0.07 for a period of 12 months from
the closing and one series B share purchase warrant (B Warrant), each B
Warrant entitling the holder to purchase one additional share at a price of
$0.09 for a period of 18 months from the closing for gross proceeds of
3,990,000. A commission of 1,000,000 Shares and 1,000,000 A Warrants were
issued.

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9

On February 25, 2009, the Issuer closed a non-brokered private
placement of 17,333,333 Units (the Units) at a price of $0.06 per Unit, each
Unit comprising one common share (a Share) and one share purchase warrant (the
Warrant), each Warrant entitling the holder to purchase one additional share
at a price of $0.08 for a period of 24 months from the closing. A commission of
400,000 Units were issued.

Milling operations at the Issuer’s Jerritt Canyon Mine resumed
March 25, 2009 when approvals were received from  NDEP on the progress and plans developed by the Issuer.

On April 12, 2009 Robert F. Baldock was appointed to the
Issuer’s Board of Directors.

On April 24, 2009 the Issuer closed a non-brokered private
placement of 12,000,000 Unit (the Units) at a price of $0.06 per Unit, each
Unit comprising one common share (a Share) and one share purchase warrant (the
Warrant), each Warrant entitling the holder to purchase one additional share
at a price of $0.08 for a period of 24 months from the closing. A commission of
400,000 Units were issued.

At an Annual General Meeting of the Issuer held on May 21,
2009, Graham Dickson, Robert F. Baldock, Peter Holbek, John R.W. Fox, Neil J.F.
Steenberg, R.J. (Don) MacDonald, Iain Harris and Robert Chafee were elected to
the Issuer’s Board of Directors. Mr. Dickson concurrently resigned as the
Issuer’s President and Chief Executive Officer and was appointed the Issuer’s
Chief Operating Officer and Robert F. Baldock was appointed the Issuer’s President and Chief Executive Officer. Mr. Iain Harris resigned
as a director on May 21, 2009.

On May 30, 2009, Jerritt Canyon shutdown roaster operations due
to a delay in the fabrication of certain fiberglass ductwork required in the
construction of the new mercury emission control system, resulting in the
failure to meet the deadline for this equipment to be installed as set by the
NDEP in their March restart order. The Issuer was able to complete the
installation of a calomel emission system and the system instrumentation on July
20, 2009.

On June 12, 2009 R.J. (Don) MacDonald resigned as a director of
the Issuer and on August 1, 2009 Neil J.F. Steenberg and Peter Holbek resigned
as directors of the Issuer and Terry Eisenman, Symeon Solomonidis and Jean-Edgar de Trentinian were appointed to the Issuer’s Board of
Directors.

On August 6 and 28, 2009 the Issuer closed two tranches of a
non-brokered private placement of an aggregate of 41,050,000 Units at a price of $0.10 per unit, each unit
comprising one common share (a Share) and one share purchase warrant (the
Warrant), each Warrant entitling the holder to purchase one additional share
at a price of $0.125 for a period of 30 months from the closing. No commission
was paid.

On December 1, 2009, the Issuer closed a non-brokered private
placement of 10,000,000 Units at a price of $0.10 per unit, each unit comprising
one common share (a Share) and one share purchase warrant (the Warrant),
each Warrant entitling the holder to purchase one additional share
at a price of $0.125 for a period of 18 months from the closing. No commission
was paid.

After coming to an agreement with the NDEP in the form of a
Consent Decree, the Issuer resumed operations on October 20, 2009. The Consent
Decree resolves all of the compliance concerns of the NDEP in relation to the
mill and surrounding land holdings of the Issuer, as well as related
environmental concerns and gives the Issuer the right to operate the milling
facility from the effective date.

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10

The Issuer incurred exploration expenditures of approximately
US $15 million on the Ketza River project and approximately US $1.2 million on
the Silver Valley property. Both of these properties are located in the Yukon.

Year Ending December 31, 2010

At the Issuer’s Special Meeting held January 12, 2010,
shareholders approved the issuance of Inducement Warrants to holders of existing
warrants who elected to exercise their warrants prior to their expiration date.
The Issuer issued 170,400,000 warrants exercisable at a price of $0.32 per
share, 10,250,000 warrants exercisable at a price of $0.26 per share and
10,000,000 warrants exercisable at a price of $0.128 per share. All of the
warrants expire January 12, 2012.

On April 1, 2010 the Issuer’s Board of Directors approved the
appointment of Todd W. Johnson as its Vice President of Exploration.

At the Issuer’s 2010 Annual General Meeting held May 13, 2010
Graham Dickson, Robert F. Baldock, Pierre Besuchet, Jay Schnyder, John
Greenslade, Symeon Solomonidis, Jean-Edgar de Trentinian and Gerald Ruth were
appointed to the Board of Directors. Robert Chafee, Terry Eisenman and John Fox
resigned as directors and John Greenslade was also appointed the Issuer’s Chairman.

On July 2, 2010 François Marland was appointed to the Issuer’s
Board of Directors and was appointed the Issuer’s Vice Chairman.

In March 26, 2010 the Issuer closed a non-brokered private
placement of 22,727,272 Shares (the Shares) at $0.22 per Share for gross
proceeds of $5,000,000. There was no commission paid.

On May 6 and 12, 2010, the Issuer closed two tranches of a
brokered private placement of 34,559,090 Flow-Through Shares (the FT Shares) at a price of $0.275 per FT
Share for gross proceeds of $9,503,750. A commission was paid on a portion of
the private placement of 7.5% cash and 700,000 warrants exercisable at a price
of $0.275 per share on or before May 12, 2012.

On August 13, 2010 the Issuer closed a Senior Secured Note
financing, issuing US$25,000,000 principal amount senior secured notes (the
Notes) and 25,000,000 common share purchase warrants (the Warrants), raising
gross proceeds of US$25,000,000. Each Warrant entitles the holder to purchase
one common share of the Issuer at a price of $0.40 per share for a period of
three years following closing. The Notes have a maturity date of December 31,
2012 and are secured by a charge over all the assets of the Issuer’s wholly
owned subsidiaries, Queenstake Resources Ltd. (QRL) and Queenstake Resources
U.S.A. Inc. (Queenstake US) as well as a share pledge over all shares in QRL
and Queenstake US. A commission of 4% of the gross proceeds raised was paid in
Shares of the Issuer.

By Agreement dated October 25, 2010, the Issuer entered into an
ore purchase agreement with Newmont USA Limited whereby the Issuer will accept
delivery of approximately 2,000 tons of gold bearing ore per day from several of
Newmont's mines in Nevada.

On October 27, 2010 KPMG LLP resigned as the Issuer’s auditor
and Deloitte & Touche LLP was appointed as the Issuer’s successor auditor.

Jerritt Canyon: For the first time since the second
quarter of 2008, the Issuer re-opened the Smith Mine using a contract mining
company, Small Mine Developers, in the first quarter of 2010. The Issuer began
processing the ore in late February 2010.

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11

In May 2010, the Issuer shutdown the mill at Jerritt Canyon in
order to carry out a significant overhaul of key mill components for compliance
with the Consent Decree and as well performed critical maintenance that had been
identified subsequent to restart in 2009. During the shutdown, the Issuer
replaced one quench tank completely, began upgrade work on the roaster control
system, drained and relined the thickener tank, and refurbished the north
tertiary cone crusher. After restarting operations it was determined that the
cone crusher needed to be replaced entirely, with a new crusher being installed
and put into operation in late July. This replacement subsequently resulted in
an improvement in the production rates and the Issuer achieved steady state of
operations during the third quarter.

In the fourth quarter of 2010 the Issuer successfully
negotiated a trial three month contract with Newmont for the delivery of 2,000
tons of gold bearing ore per day commencing October 30, 2010. During the quarter
the Issuer purchased 86,257 tons of ore from Newmont under this contract
containing 16,905 ounces, at an average cost of $198.53 per dry ton. Due to the
success of this initial contract, Newmont is continuing to deliver at a rate of
1,000 tons per day in 2011 while finalizing a longer term contract.

At the beginning of 2010 the Issuer prepared a capital budget
that included significant expenditures for the commencement of the construction
of a second tailings facility (construction to be completed in 2011), completion
of several Consent Decree requirements, and also the winterization of and
improvements to the mill facility. This winterization would be achieved by
installing heat tracing materials on all piping, housing key areas of the
crushing circuit (such as fine crushing), construction of an improved ore dryer
which would also be protected from the weather, and increasing the level of
materials and supplies on hand to reduce the down time caused by a lack of spare
parts. In the second quarter the Issuer made significant progress in completing
this capital budget but required additional funding to complete a large portion
of the required work. To finance this budget the Issuer negotiated with several
lenders during the year but was unable to obtain debt financing until late in
the third quarter of 2010. Due to the timing of closing this financing and also
the requirement to settle outstanding claims against the Issuer to clear title
to the property, a substantial portion of the winterization project was not
completed and the Issuer was forced to delay commencement of contruction of the
second tailings facility. As well, due to the early onset of severe weather
certain Consent Decree projects such as the reclamation of one of the off-take
ponds (referred to as the Duck Pond) and the construction of a water treatment
facility for acid rock clean up were not completed by their scheduled time.

The delay in these capital investments impacted the milling
operations of the Issuer and the corresponding financial results for most of
2010. As a result of being unable to complete the full winterization project and
restock materials and supplies to higher levels prior to the onset of severe
winter conditions, the operations at Jerritt Canyon experienced significant
downtime as sections of the mill, primarily fine crushing and the refinery
(where the heat tracing work was not completed prior to winter), were exposed to
severe cold and snow resulting in additional strain on equipment, breakdowns,
and clogged chutes (due to the freezing of wet ore). This problem was aggravated
by the need to freight in necessary parts to complete repair work due to the
lack of in house inventories. The delays in completing key environmental
projects required by the Consent Decree also resulted in the NDEP levying a
significant fine against the Issuer ($0.8 million) late in the fourth quarter.
As a result of these issues and resulting low throughput the Issuer continues to
experience higher than normal production costs that will need further investment
to correct in 2011.

Ketza River: During 2010, a total of 86 exploration
diamond drill holes were completed at the Ketza River Project in the Yukon
Territory, Canada. This Ketza River drill program tested 11 target areas and
consisted of both step-out drilling from existing resources and the testing of
new geochemical and geophysical targets. The drilling program contained a
Quality Assurance and Quality Control (QA/QC) program including the insertion of
certified gold standards and blanks as defined in the previously published
Year-end 2007 NI 43-101 report.

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|Target             | Drill Holes Completed | Total Meters | Total Footage
|------------------ | --------------------- | ------------ | -------------
|Bluff Zone         | 8                     | 782          | 2,566        
|QB Deep IP         | 3                     | 1,601        | 5,251        
|Vertical Vein      | 7                     | 1,181        | 3,876        
|Connector Zone     | 10                    | 1,755        | 5,758        
|Break Zone         | 11                    | 2,297        | 7,537        
|B-Mag Zone         | 14                    | 996          | 3,268        
|Peel Zone          | 7                     | 771          | 2,529        
|Hoodoo Zone        | 9                     | 1,456        | 4,778        
|Fred’s Vein        | 3                     | 500          | 1,642        
|Penguin            | 13                    | 2,101        | 6,892        
|Peel Creek Gravity | 1                     | 174          | 572          
|Total              | 86                    | 13,614       | 44,670       

Following up on the successful 2008 drill hole intercepts, a
series of 2010 step out drill holes were completed in the Bluff Zone which is
located in between the Peel and Lab resource zones. Strong gold mineralization
was encountered in some of the 2010 drill holes; however, this phase of drilling
defined the bottom of the mineralized zone. The QB Zone  Deep Induced
Polarization (IP) target was generated from a Titan-24 survey conducted in
August of 2009. The survey identified an extensive zone of anomalous
chargeability and conductivity located greater than 700 meters below the surface
and beneath the drilled QB Zone resource. The Issuer completed several drill
holes that successfully penetrated the geophysical anomaly and indicated strong
anomalous gold throughout much of its length.

A series of 11 drill holes were completed in the Break Zone in
the Peel resource that tested a magnetic anomaly caused by sulfide minerals
lying below the existing oxide resource. All but two of the drill holes
intersected significant gold mineralization but only from the oxide-rich
material.

A total of fourteen step-out drill holes were completed in the
southeastern margin of the B-Mag Zone located in the east side of the Peel
resource. These drill holes were successful in extending gold mineralization by
15 to 33 meters laterally to the southeast from the existing resource.

Nine exploration drill holes were targeted as infill holes and
local mineralization extensions in the planned high wall of the Lab-Hoodoo
open-pit near the top of the ridge. Three fans of three drill holes each tested
above, below and to either side of the 2008 drill holes which contained 9.14
meters averaging 32.98 g/t Au. All of the 2010 drill holes in this zone
contained strong oxide mineralization. Assay result highlights in this zone
include drill holes which intercepted 9.14 meters averaging 37.37 g/t Au, 1.43 m
averaging 15.64 g/t Au, and a third which intercepted 2.30 meters averaging
17.60 g/t Au. Cross sections suggest that these drill hole assay intersections
approximate true thickness.

A total of 13 drill holes were completed in 2010 at the Penguin
Zone. Six of the drill holes tested Very Low Frequency (VLF) geophysical and
soil anomalies that were coincident with a zone of massive pyrite and
arsenopyrite boulders on the surface. Some of these drill holes contained
significant gold mineralization. Seven of the other drill holes in this zone
tested three strong magnetic high anomalies. Some of these drill holes
encountered several significant gold intercepts containing massive pyrrhotite
and pyrite.

Other exploration targets such as Fred’s Vein and the Peel
gravity anomaly were also drill tested in 2010 with some indication of gold
mineralization but no significant assay intersections.

Several inlying claims located within the large Ketza River
property were purchased in the summer of 2010 and helped consolidate the
ownership into one contiguous block owned or leased by Ketza River Holdings. The
Issuer is pursuing other opportunities to extend the claim block at Ketza River.

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Geophysical and Geochemical Surveys

As noted in the table below (results shown in kilometers,
except for soil sampling which shows number of samples) four areas were targeted
in 2010 for geophysical and soil exploration: the Shamrock, South Hill target,
OK target, and lower tailings option site. The 2010 geophysical studies included
Induced Polarization (IP) and ground magnetics.

|Target           | South Hill | Shamrock | OK Target | Lower Tailings Site | Total
|---------------- | ---------- | -------- | --------- | ------------------- | -----
|Technique        |            |          |           |                     |      
|Ground Magnetics | 71         | 45.1     | 71        | 41.1                | 157.2
|IP               | 6.8        |          | 36.9      |                     | 41.3 
|Line Cutting     |            |          | 34.5      |                     | 34.5 
|Soil Sampling    | 814        |          |           |                     | 814  

The results of this work will be used to help target a good
portion of the 2011 Ketza River drill hole program. The north side of Shamrock,
the South Hill Target and the proposed tailings site were covered by a ground
magnetic survey which identified numerous strong anomalies and helped refine
targets north of the Shamrock Zone. Two Induced Polarization (IP) lines were
conducted across the South Hill Target to investigate the possible presence of
mineralized pyrite-bearing manto zones that do not have enough pyrrhotite to
generate a magnetic anomaly. The 2010 IP survey results were successful at
identifying a number of potential sulfide-bearing and mineralized zones.

Drill Hole Database and Resource Modeling

Significant work on the Ketza drill hole database was conducted
in 2010 to help support an updated resource estimate. Drill hole assay data were
reviewed, database software was upgraded, and assay importing routines were
optimized during 2010. An extensive update process was completed as well to
integrate all assays for historical drill holes (assays from 1985 to 1997 were
digitally compiled from the paper drill hole files). Primary lab assay data for
these early drill hole years were selected and methodically entered into the
drill hole database and used for the revised 2010 resource model calculation. An
updated resource calculation for the Ketza River project is currently in
progress and targeted for completion in 2011 which will incorporate all of the
previous years drilling information and will include a summary of the metallurgy
testing program conducted in 2008. This resource estimate will form the basis of
the mine design for the Project Proposal that has a targeted submission date to
the Yukon Environmental and Socio-economic Assessment Board (YESAB) of August
2011.

2010 YESAB Project Proposal Work Summary

A number of studies relating to YESAB Project Proposal were
continued in 2010. A third party engineering firm is handling the completion of
this application with a targeted submission date in the third quarter of 2011.

In support of the project proposal a total of 1,233 meters of
geotechnical and hydrogeology drilling (see table below) was conducted for the
pit-wall stability program. The results of this drilling was combined with the
geotechnical drilling information gathered in 2008 to help support pit-wall
slope recommendations for the proposed mine design. Two draft geotechnical
reports, one on the manto zone deposits and one on the Shamrock zone deposits,
were completed for in-house review in December 2010. A few of these 2010
geotechnical drill holes contained significant assay intervals (e.g. a drill
hole in Tarn intersected 6.21 m averaging 2.24 g/t Au).

|Area                           | Drill Holes Completed | Total Meters | Total Footage
|------------------------------ | --------------------- | ------------ | -------------
|Peel Zone Geotechnical         | 3                     | 524          | 1,721        
|Penguin Zone Geotechnical      | 1                     | 77           | 252          
|Tarn Zone Geotechnical         | 2                     | 145          | 476          
|Tarn Zone Hydrogeology         | 1                     | 72           | 236          
|3-M Zone Geotechnical          | 1                     | 103          | 337          
|Gully Vein
      Geotechnical  | 2                     | 312          | 1,024        
|Total Geotechnical - Open Pits | 10                    | 1,233        | 4,046        

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14

A total of 32 drill holes were also completed in and around the
footprint of the proposed lower tailings site to help support the YESAB project
proposal. Sixteen were diamond drill holes that targeted magnetic anomalies and
were designed for either exploration or condemnation purposes. All of these
drill holes were logged for geotechnical data and some were used to gather
hydrogeology information to help support engineering design studies. Fourteen of
the drill holes were completed with a Becker drill and diamond drill core at
depth to gather geotechnical information. Some of these drill holes were
completed as groundwater monitoring wells. Two additional monitoring wells were
installed at the toe berm of the existing tailings dam as requested by the Yukon
Water Board.

Various other YESAB work was completed during the year
including a site water quality control and assurance program, compilation of
hydrogeology data compilation and analysis, Socio-economic, wildlife, fish and
aquatic studies, tailings design and tradeoff studies, and conceptual
engineering and design studies. Several meetings with local communities (Ross
River and Faro) and local First Nations (Ross River Dena and Teslin) were held
in November and December to update everyone on the Issuer’s proposed Ketza
River Mine Project; additional meetings also took place in early 2011 at Teslin.
Numerous meetings were also held with the Water Board, YESAA, Water Resources,
and Energy, Mines and Resources to help advance the progress for the YESAB
Project Proposal and the water license application for the existing tailings
pond.

Silver Valley: A total of 7 diamond drill holes were
conducted at the Silver Valley project in 2010.

|Target       | Drill Holes Completed | Total Meters | Total Footage
|------------ | --------------------- | ------------ | -------------
|River’s Edge | 5                     | 817          | 2,680        
|K-18B South  | 2                     | 428          | 1,404        
|Total        | 7                     | 1,245        | 4,084        

The 2010 drill holes tested two horizontal-loop electromagnetic
(HLEM) geophysical anomalies identified during the 2007 field season. Five drill
holes were completed at the River’s Edge target which identified three
sub-parallel quartz-siderite-pyrite veins with minor amounts of galena and
tetrahedrite. Two other 2010 drill holes tested the north end of the K-18B South
target which is a possible fault offset of the K-18B Vein resource that was
drilled in 2007. The two 2010 drill holes intersected two pyrite-dominant veins
approximately 3 meters in width containing minor galena, sphalerite, stibnite,
and tetrahedrite.

YS Mining Company: During 2009, the Issuer, in
conjunction with the joint venture partner, Northwest Mining and Geology Group Co., Ltd. for Nonferrous Minerals (NWME)
performed geological and geophysical work at the Skukum property owned by Tagish
Lake Gold (Tagish) (see Related Party Transaction section) as part of the
ongoing due diligence for a possible merger. In September of 2009, the
Amalgamation Agreement was terminated and Yukon-Shaanxi Mining Company (YSM),
through negotiations with MacQuarie Bank Limited, acquired a credit agreement
from MacQuarie Bank with Tagish for total payment of C$1.5 million, secured by
the Skukum property. This was funded through an additional equity contribution
from NWME of C$1 million and cash from treasury. The Issuer did not participate
in this equity contribution and as a result diluted its economic interest from
50% to 37.5% at December 31, 2009. The Issuer continues to have the option to
purchase further shares in order to regain its 50% interest.

In April 2010, the joint venture received additional
contributions of C$2 million, C$1 million of which was on behalf of the Issuer,
and resulted in an increase in its ownership percentage from 37.5% to 41.67% .
These funds were used to invest in the shares of Tagish Lake and fund
exploration work on the Skukum property. Due to the poor working capital
conditions of Tagish Lake and actions taken by other creditors, Tagish Lake was
placed into Companies Creditors’ Arrangement Act (CCAA), utilizing the
proceeds provided from the investment by YSM. During the CCAA process a takeover
bid was received from New Pacific Metals Ltd. (NUX) for the shares of Tagish Lake which included full payout of any debts. Although
the joint venture provided a competing takeover offer and funds were transferred
from NWME to support the offer, insufficient shares were tendered to this
competing offer to reach the required level of ownership and the majority of the
shares were tendered to an improved offer made subsequently by NUX. Both joint venture
partners had set a specific fair market value for the Tagish Lake property and
the bid was based on these estimates, so an improved offer was not made.
Subsequent to the successful take over by NUX, in October 2010 Tagish Lake
completed a plan of arrangement under the CCAA with a loan from NUX and the
joint venture has recovered all funds that were loaned to Tagish Lake with
applicable interest. The joint venture will pursue other opportunities to
explore and develop resources in the Yukon.

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15

Events Subsequent to December 31, 2010

On March 2, 2011, the Issuer completed a $7.1 million
non-brokered flow-through private placement for 8,334,882 flow-through shares
(the FT Shares) at $0.85 per FT Share. The proceeds of this placement will be
for used for new resource exploration at Ketza River at new targets as well as
at the Silver Valley property.

At a Special Meeting of the Issuer held March 8, 2011,
shareholders approved the temporary reduction of the exercise price of eight
series of unlisted warrants issued between April 2009 and August 2010 by
approximately 18%. The holders of the warrants have 30 days from March 14, 2011
to exercise their warrants. After 30 days, the exercise prices of the warrants
will revert to their original respective exercise prices. The original prices
ranged from $0.08 to $0.40 per share and the reduced prices range from $0.07 to
$0.33 per share. There are an aggregate of 235,823,053 warrants eligible to be
exercised at the reduced rate.

3.2Significant Acquisitions

The Issuer did not complete a significant acquisition in 2010.

ITEM 4: DESCRIPTION OF THE BUSINESS

4.1General

The principal businesses of the Issuer are the continued mining
of the Jerritt Canyon gold mine in Nevada, as well as the acquisition,
exploration and development of natural resource properties with a particular
focus on the Ketza River and Silver Valley Properties in the Yukon Territory.

Jerritt Canyon is an operating gold complex with two producing
underground mines, ore stockpiles and a 1.5 million ton per year capacity
processing plant. In addition, the approximately 119 square miles that comprise
the Jerritt Canyon property offer a significant number of advanced, early stage
and district-scale exploration targets and potential to expand the currently
defined mineral reserves and resources proximal to the producing mines. The
Issuer intends to seek and acquire additional near production stage properties
worthy of development and within economic trucking distance of the Jerritt
Canyon mill.

Summary

The Issuer is engaged in the acquisition, exploration,
development and operation of precious metal properties. The Issuer continues to
investigate and negotiate the acquisition of additional precious metal mining
properties or interests in such properties in order to increase the reserve
life. There is no assurance that any such investigations or negotiations will
result in the completion of an acquisition.

Production and Services

The Issuer’s principal product is gold, with gold production
forming the primary source of revenues. There is a global gold market into which
the Issuer can sell gold and, as a result, the Issuer is not dependent on a
particular purchaser with regard to the sale of the gold that it produces.

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16

Specialized Skill and Knowledge

In order to carry on exploration, mining and milling activities
the Issuer draws on the expertise of various personnel including geologists,
engineers, and metallurgists.

Competitive Conditions

The precious metal mineral exploration and mining business is a
competitive business. The Issuer must compete with numerous other companies and
individuals in the search for and the acquisition of attractive precious metal
mineral properties, especially in the current market. The ability of the Issuer
to acquire precious metal mineral properties in the future will depend not only
on its ability to develop its present properties and provide necessary ore to
the current facilities, but also on its ability to select and acquire suitable
producing properties or prospects for precious metal development or mineral
exploration.

Economic Dependence

Not applicable to the Issuer.

Changes to Contracts

Not applicable to the Issuer.

Environmental Protection

The Jerritt Canyon facilities have been designed to mitigate
environmental impacts. The operations have processes, procedures or facilities
in place to manage substances that have the potential to be harmful to the
environment. In order to prevent and control spills and protect water quality,
the mine utilizes multiple levels of spill containment procedures and routine
inspection and monitoring of its facilities. The mine has installed air
pollution control devices on its facilities that exceeds the minimum
requirements significantly and, in the case of mercury emissions, has set the
new standard for the state of Nevada. The mine also has various programs to
reuse and conserve water at its operations.

In 2009 the Issuer reached an agreement with the Nevada
Division of Environmental Protection (NDEP) in the form of a Consent Decree
issued by the Attorney General of the State of Nevada, representing the NDEP.
The Consent Decree resolved all of the environmental compliance concerns of the
NDEP in relation to the Jerritt Canyon mill and surrounding land holdings, as
well as related environmental concerns, and gives the Issuer the right to
operate the Jerritt Canyon milling facility from the effective date. The Consent
Decree records and agrees both parties to the terms of an environmental work
program and includes penalties for not completing these work programs. The
Issuer is carrying out significant work programs under the Consent Decree,
including the following key projects to be completed in 2010:

For 2011 the Issuer has budgeted significant environmental
expenditures (approximately $63.4 million) in order to not only meet the
requirements of the Consent Decree but also to meet commitments made to the
state to improve the compliance of the operations. Although significant progress
has been made on the containment of mercury emissions at the facility, the
Issuer must make significant investments in the management of fluids in order to
ensure the long term viability of the project and increase the capacity of the
mill. One of the most significant projects in 2011 is the construction of a new
tailings facility as well as a second water storage facility to facilitate the
reclamation of the first tailings pond. The issuer is also planning to perform
approximately $3.9 million in restoration projects at the mine site, including
the reclamation of the first tailings facility.

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Employees

As of December 31, 2010, the Issuer had twelve (12) full-time
employees at the head office in Vancouver, fourteen (14) full-time employees at
the Ketza River location (this number is subject to some seasonality), and
approximately 188 employees at the Jerritt Canyon gold mine. The Issuer uses a
number of consultants and contractors for a variety of specialized tasks.

Foreign Operations

The Issuers principal operations are within North America.

Bankruptcy and Similar Procedures

As at the date hereof, neither the Issuer, nor its
subsidiaries, has been subjected to any bankruptcy, receivership or similar
proceedings.

Reorganization

Commencing in December 2003, Graham Dickson, the president of
the Issuer, took the initiative in reorganizing the Issuer by restoring it with
the Register of Companies and returning the Issuer to good standing as a
reporting issuer in the provinces of British Columbia and Alberta. On January 5,
2004, the Issuer’s share capital was consolidated on a five (5) old for one (1)
new basis and its authorized share capital was increased from 4,000,000 Shares
without par value to 100,000,000 Shares without par value; subsequently the
Issuer’s share capital was increased to an unlimited number if Shares without
par value. On April 13, 2005, the Issuer’s Shares commenced trading on the TSX.
In 2007 the Issuer amalgamated with Queenstake Resources Ltd. by way of a Plan
of Arrangement and renamed the Issuer from YGC Resources Ltd. to Yukon-Nevada
Gold Corp.

Social or Environmental Policies

The Issuer believes in hiring the majority of the workforce
from within the local community at both the Canadian and US properties to the
extent possible. The Issuer has a policy of working with environmental agencies
as closely as possible to ensure compliance with the ever-evolving environmental
regulations.

Jerritt Canyon Property

The Issuer conducts ongoing exploration, mine production,
closure, and restoration on the Jerritt Canyon Property. Precious metals
production has been conducted continuously on the Jerritt Canyon Property for
thirty years and the Issuer is now preparing for a new phase of productive life
for the Jerritt Canyon Property. Several major permits have been renewed in the
last two years and are being modified further to support ongoing operations
while establishing the base for future growth. The Issuer and the NDEP entered
into a Consent Decree in October of 2009 to address legacy issues and
environmental controls. Several, but not all, modifications to operations are
parts of that Consent Decree (CD). The Issuer has also responded to information
requests from the United States Environmental Protection Agency (USEPA) on two
issues described later in this section.

The Nevada mining permit which regulates water pollution
control was renewed in June of 2009 for five years. In December of 2010 the
Issuer submitted an application for a major modification to this permit to allow
the construction of a new tailings storage facility (TSF2) that included another
full update. This new TSF2 will replace the current tailings storage facility
(TSF1) first constructed in 1981 and last modified in 1998 which is nearing
capacity. The second tailings facility is anticipated to provide six years of
storage at planned production rates. All current and planned mining operations
have been incorporated into this permit.

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18

An application to renew the site wide Title V Air Quality
Permit was accepted by the State of Nevada in June 2008, also for five years.
The issuer is addressing new information requirements under that permit. New air
pollution control technologies have been developed under the CD to control
mercury emissions and the State of Nevada is modifying air pollution control
permits for these emissions controls. Construction of the new controls is
planned for 2011. These modifications will allow compliance with State and
Federal air pollution control regulations. The end result will be a fully
compliant and permitted Title V permit for the operations in latter 2012.

A large portion of the Jerritt Canyon mine is located on public
land administered by the U.S. Forest Service. The Jerritt Canyon staff maintains
a proactive relationship with the U.S. Forest Service personnel, which includes
frequent site inspections and up-dates. A majority of the Jerritt Canyon mining
district has undergone a formal National Environmental Policy Act (NEPA) review as part of
the 30 year mining and exploration history of the District. Environmental resources and issues are well defined
in this documentation and appropriate mitigation strategies are in place to
support and expand operations. Evolving regulatory programs may result in
additional review of environmental issues associated with ongoing or planned
future operations. Periodic NEPA review of these issues may be required for
future expansions and modifications in the operations.

The Issuer’s operations on public lands managed by the US
Bureau of Land Management (BLM) are limited to a very small area associated with
the Starvation Canyon Mine access road. The Issuer has the necessary approvals
from the BLM. Additional approvals may be required for expanded exploration
plans in the future.

In September, 2010, the site wide Reclamation Permit with the
State of Nevada was renewed and includes all current activities at the Jerritt
Canyon Property on public and private lands. A modification of this permit is
planned for early 2011 to allow construction of TSF2 and a water storage reserve
and to add Starvation Canyon Mine operations.

TSF1 is scheduled to enter closure during 2012 independent of
the obligations under the CD. The Issuer is completing closure of certain legacy
facilities at the Jerritt Canyon Property in accordance with the CD. The Issuer
will improve surface water controls for legacy waste rock disposal areas in 2011
under the CD. Reclamation projects are scheduled annually and are completed
concurrently with the completion of mining activities. To date over 1,500 acres
of mined lands have been reclaimed.

Reclamation and closure activities are defined and surety is
provided to the Federal Government and the State of Nevada for the associated
site restoration obligations in the total amount of US$54.88 million. These
surety bonds are collateralized by a reclamation and closure insurance policy
independently administered by Chartis Insurance Company (Chartis), formerly
American Insurance Group (AIG). As reclamation is completed, payment for
completing the insured activity is paid to the Issuer from a pre-funded
Commutation Account administered by Chartis. The capacity of this collateralized
bond was surpassed in 2010 and was supplemented with cash to make the collateral
sufficient. The surety requirements are anticipated to increase as new
facilities become necessary and older facilities have not yet been closed and
reclaimed. The Issuer will ensure additional surety capacity as new mines and
plant expansions develop in the future

The Issuer temporarily halted operations on the Jerritt Canyon
Property in 2009. The State of Nevada then issued a regulatory Stop Order for
the operations. The Issuer negotiated a Consent Decree with the State of Nevada
to lift the Stop Order and resume operations. The Consent Decree required
closure of certain legacy facilities, improvement of engineered controls for
water pollution and development of new air pollution controls for mercury as a
condition for lifting the Stop Order. At the time of writing this AIF, the
Issuer was preparing to negotiate an extension and new terms for the CD for
those actions not yet completed.

In 2009, the US Department of Justice (DOJ) signed a complaint
against the Issuer but offered not to file the case with a court if the Issuer
agreed to negotiate a settlement. The Issuer has maintained this agreement, the
filing of the case has been held in abeyance, and the agreement is renewed on a
6-month basis. The complaint was not provided to the Issuer by the DOJ but the Issuer was informed
that the complaint relates to mercury handling at the Jerritt Canyon Property.
The Issuer has been improving mercury controls under the CD with the State of
Nevada with operating and monitoring provided under the agreement with EPA.
Monitoring of the effectiveness of mercury controls will be performed after the
controls are constructed in 2011.

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19

In 2009, the Jerritt canyon Property was selected by the USEPA
for a desktop’ audit of annual reports submitted for its Toxic Release
Inventory program. The Issuer worked with the USEPA to satisfy information
requests in 2010. The Issuer has received no response from the USEPA regarding
the results of the audit on December 31, 2010.

The Issuer is committed to conducting its operations with high
environmental values, ethics as well as to social issues. The Issuer operates in
the following manner:

| |  | Complies with applicable laws,
      regulations, and permit conditions and, where practicable, exceed their
      minimum requirements;                        
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Establishes and maintains
      management systems to monitor all environmental aspects of its activities;                                                      
| |  | Reviews these management systems
      regularly to evaluate their effectiveness and modify them as appropriate
      to optimize their effectiveness;          
| |  | Proactively pursues and evaluates
      engineering alternatives to better address closure and reclamation
      obligations;                                   
| |  | Ensures that financial
      resources are available to meet environmental and reclamation obligations;                                                         
| |  | Ensures that the Issuer’s
      employees and contractors are aware of the Issuer’s environmental
  policies and understand their relevant responsibilities; and
| |  | Actively participates in the
      ongoing public and private sector debate on environmental and social
      matters that relate to the mining industry.       

The Issuer is continually striving to improve its environmental
performance. Planned environmental capital expenditures and restoration
expenditures for 2011 are US$67.3 million.

Ketza River Property

The Issuer currently manages the environmental compliance
program in the Yukon Territory through a contracted environmental engineering
firm and has onsite personnel to administer the monitoring requirements needed.
There are regular consultations with the Yukon Territorial Government to ensure
the Issuer is complying with regulatory requirements. During 2010 the Issuer
conducted a number of environmental and social impact studies relating to the
Yukon Environmental and Socio-economic Assessment Board project proposal to be
submitted in 2011. Approval of this project proposal will allow the Issuer to
commence construction of the tailings facility at the site to allow for mine
production in the future.

4.2Risk Factors

The Issuer operates in a dynamic and rapidly changing
environment that involves numerous risks and uncertainties. Shareholders should
carefully consider the risks described below before purchasing its Shares. The
occurrence of any of the following events could harm the Issuer. If these events
occur, the trading price of its Shares could decline, and shareholders may lose
part or even all of their investment.

Precious Metal Price Fluctuations

The Issuer's profitability from proposed operations will be
dependent in part on:

| |  | the market price of precious metals;
| |  | ------------------------------------

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| |  | the price of metals or interests
      related thereto has fluctuated widely and is affected by numerous factors
      beyond our control including:
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Although it cannot predict the exact effect of these factors,
the combination of these may result in the Issuer not receiving an adequate
return on invested capital or an investment retaining its value.

Operating Hazards and Risks

Mining operations involve a high degree of risk, such as
unusual or unexpected formations and other conditions, which even a combination
of experience, knowledge and careful evaluation may not be able to overcome.
Operations in which the Issuer has a direct or indirect interest are subject to
all the hazards and risks normally incidental to exploration, development and
production of precious metals, any of which could result in work stoppages,
damage to or destruction of mines and other producing facilities, damage to life
and property, environmental damage and possible legal liability for any or all
damage. The Issuer presently carries a limited amount of liability insurance,
and may become subject to liability for pollution, cave-ins or other hazards,
and the payment of such liabilities could have a material adverse effect on its
financial position.

Exploration and Development

Mineral exploration and development involves a high degree of
risk as few properties which are explored are developed into producing mines.
The Issuer cannot provide assurance that its continuing mineral exploration and
development activities will result in any discoveries of bodies of commercial
ore. The long-term profitability of the operations will be in part directly
related to the cost and success of its exploration and development programs,
which may be adversely affected by a number of factors.

The Issuer may require funding for the substantial expenditures
which are required to establish reserves through drilling, to evaluate
metallurgical processes to extract metal from ore and to develop the mining and
processing facilities and infrastructure at any site chosen for mining. Although
substantial benefits may be derived from the discovery of a major mineralized
deposit, no assurance can be given that minerals will be discovered in
sufficient quantities to justify commercial operations or that the funds
required for development can be obtained on a timely basis.

Numerous factors will affect the marketability of any minerals
acquired or discovered which are beyond the Issuer’s control and cannot be
accurately predicted, including market fluctuations, the proximity and capacity
of milling facilities, mineral markets and processing equipment, and such other
factors as government regulations, including regulations relating to royalties,
allowable production, importing and exporting minerals and environmental
protection.

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21

Calculation of Reserves, Resources and Metal Recoveries

There is a degree of uncertainty attributable to the
calculation of reserves and resources and corresponding grades being mined or
dedicated to future production. Until reserves or resources are actually mined
and processed, the quantity of mineralization and grades must be considered as
estimates only. In addition, the quantity of reserves and resources may vary
depending on metal prices. Any material change in quantity of reserves,
resources, grade, stripping ratio, or metallurgical recoveries may affect the
economic viability of our properties. In addition, the Issuer cannot provide
assurance that metallurgical recoveries in small scale laboratory tests will be
duplicated in larger scale tests under on-site conditions or during production.

Title to Mining Properties

Although the Issuer has taken steps to verify title to its
mineral properties in a manner consistent with industry practice for the current
stage of its evaluation of our properties, there is no guarantee that its title
to the properties will not be challenged or impugned. The Issuer has not
conducted surveys of some of the claims in which it holds a direct or indirect
interest, therefore the precise area and location of the claims may be in doubt.
There could be prior unregistered agreements or transfers or native land claims
and its title may be affected by undetected defects.

Issuance of Debt

The Issuer may enter into transactions to acquire assets or the
shares of other corporations which may be financed partially or wholly with
debt, which may increase its debt levels above industry standards. The Issuer’s
articles do not limit the amount of indebtedness that it can incur. The level of
the Issuer’s indebtedness could impair its ability to obtain additional
financing in the future to take advantage of business opportunities that may
arise.

Dilution

In order to finance its working capital requirements and to
raise equity for the development of its projects the Issuer may enter into
commitments which would require the issuance of additional Shares, options,
warrants and convertible debt. These commitments will comply with securities
laws and could require the approval of the securities regulatory bodies, and in
some cases, its shareholders.

Regulatory and environmental matters

The following discussion is necessarily brief and must not be
taken to constitute a complete discussion of the various statutes, rules and
governmental orders to which our operations may be subject. The Issuer’s
existing properties are located in Canada and the United States, and are subject
to extensive federal, state, provincial and local governmental regulations in
these countries. These regulations may be revised or expanded at any time. A
broad number of matters are subject to regulation. Generally, compliance with
these regulations requires it to obtain permits issued by federal, state,
provincial and local regulatory agencies. Certain permits require periodic
renewal or review of their conditions. It is impossible to predict whether it
will be possible to obtain or renew such permits or whether material changes in
permit conditions will be imposed. The inability to obtain or renew permits or
the imposition of additional conditions could have a material adverse effect on
its ability to develop and operate its properties.

Environmental laws and regulations to which the Issuer is
subject as it progresses from the development stage to the production stage give
rise to additional concerns and requirements. Failure to comply with applicable
laws, regulations and permits can result in injunctive actions, suits for
damages, and civil and criminal penalties. The laws and regulations applicable
to its activities change frequently and it is not possible to predict the
potential impact to the Issuer from any such future changes.

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22

Passive Foreign Investment Company (PFIC)

The Issuer has not determined whether it meets the definition
of PFIC, within the meaning of Sections 1291 through 1298 of the U.S. Internal
Revenue Code of 1986, as amended, for the current tax year and any prior tax
years. It may or may not qualify as a PFIC in subsequent years due to changes in
its assets and business operations. A U.S. shareholder who holds stock in a
foreign corporation during any year in which such corporation qualifies as a
PFIC is subject to numerous special U.S. federal income taxation rules and may
elect to be taxed under two alternative tax regimes. A U.S. shareholder should
consult their own U.S. tax advisor with respect to an investment in the
Issuer’s Shares and to ascertain which of the alternative tax regimes, if any,
might be beneficial to the U.S. shareholder’s own facts and circumstances.

Enforcement of Civil Liabilities

The Issuer was incorporated under the laws of British Columbia,
Canada. Some of its assets are located outside Canada and its directors and
officers are residents of countries other than Canada. It could be difficult for
its investors to effect service of process within Canada upon the Issuer and its
directors and officers, or to realize in Canada upon judgments of courts of
Canada predicated upon civil liability of it and its directors and officers
under Canadian federal securities laws.

Likewise, given that the Issuer is incorporated under the laws
of British Columbia and some of its assets are located in Canada, it may also be
difficult for U.S. investors to effect service of process within the United
States upon the Issuer or any of its directors and officers who are not
residents of the United States, or to realize in the United States upon
judgments of U.S. courts predicated upon civil liabilities under U.S. securities
laws. A judgment of a U.S. court predicated solely upon such civil liabilities
may be enforceable in Canada by a Canadian court if the U.S. court in which the
judgment was obtained had jurisdiction, as determined by the Canadian court, in
the matter.

4.3Companies with Asset-backed Securities
Outstanding

The Issuer has not historically held any asset-backed
securities and does not have any plans to hold this security in the future.

4.4Companies with Mineral Projects

(a) Jerritt Canyon Mine, Nevada

On June 20, 2007 the Issuer acquired Queenstake Resources Ltd.
(Queenstake) which owns the Jerritt Canyon mine located in Nevada. The Jerritt
Canyon mine is an operating gold property with two producing underground mines
and ore stock piles, currently feeding ore to a 1.5 million ton per year
capacity processing plant.

Within the description below are references to "NI 43-101" and
"SRK Report" which specifically refer to the December 31, 2007 period covered by
the NI 43-101 report prepared by SRK Consulting and filed by the Issuer on April
18, 2008. Data or information noted below subsequent December 31, 2007 has not
been reviewed or prepared by SRK Consulting but rather by management of the
Issuer from previously published results, and has not been incorporated to date
within any NI 43-101 report.

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23

Figure 1: General Location Map of the Jerritt Canyon Mine



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24

Figure 2: General Land Map of the Jerritt Canyon District



Accessibility, Climate, Local Resources,
Infrastructure and Physiography

The Jerritt Canyon Mine is located in Elko County, Nevada,
approximately 50 miles north of Elko. Access to the property is by State Road
225 to the mine access road. The roads are paved and in excellent condition all
the way to the main gate where the administrative offices, process plant,
warehouse, and tailings impoundment are located. The mines are accessed by haul
roads on Queenstake controlled land.

The climate is temperate with winter temperatures between 0oF
and 40oF and summer temperatures between 35oF and 90oF. Average annual
precipitation at the tailings impoundment is estimated at 14 inches per year
with an estimated annual average evaporation of 43 inches. A significant amount
of the total precipitation falls as snow and increases with elevation to the
mining areas. Mine operations are only rarely halted by weather conditions, although ore haulage from the mines may be slowed. The mill,
warehouse, shop, and administrative facilities are at a lower elevation and
therefore are less exposed to weather extremes.

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25

The vegetation is typical of the Basin and Range province with
sagebrush vegetation dominant at the lower elevations. Small stands of aspen and
isolated fir trees grow in canyons and drainages.

Jerritt Canyon mine is located in the Independence Mountain
Range in the Basin and Range province of northern Nevada. The topography ranges
from about 6,400 feet at the administrative facilities and mill site to about
8,000 feet at the highest point of the haul road to the mines.

Elko, Nevada with a population of about 36,000 is the closest
city to the mine. The city is on Interstate 80 and is serviced by daily
commercial flights to Salt Lake City, Utah. Elko is a center for the mining
operations in northern Nevada and services necessary for the mine are readily
available there.

History

The Jerritt Canyon mine is wholly owned by Queenstake Resources
USA, Inc. after the purchase by that company from the joint venture of Anglo
Gold and Meridian Gold in June 2003. The joint venture was formed in 1976
between Freeport Minerals Company, later Freeport McMoran Inc., and FMC, later
Meridian Gold. In 1990, Freeport sold its interest in Jerritt Canyon to Minorco
and their wholly owned subsidiary, Independence Mining Company, which became the
new joint venture partner and operator of the mine. In 1998, Minorco’s North
American gold assets, including a 70% interest in Jerritt Canyon were sold to
Anglo Gold.

Prospectors explored the district for antimony in the 1910’s.
Thirty to forty tons of stibnite as antimony ore were reportedly mined and
shipped from the Burns Basin mine in the Jerritt Canyon district between 1918
and 1945. In the early 1970’s there was a renewed interest in antimony
exploration when its price reached historic highs of $40 per pound. Around 1971,
FMC began exploring for antimony in the Independence Mountains. In 1972, FMC,
later known as Meridian, discovered a disseminated gold deposit in the Jerritt
Canyon area. In 1976, a joint venture was formed with Freeport Minerals Company
to explore and develop the area, and mining commenced at Jerritt Canyon in 1981.

Open pit mining was conducted at the site from startup in 1981
until 1999. The first underground operation at Jerritt Canyon started up in 1993
at West Generator. The mine during 2007 consisted of three underground mining
operations feeding ore to a process plant consisting of a roaster followed by
carbon-in-leach processing. The mines are mechanized operations using backfill
for ground control and to increase ore recovery. In the early years, the ores
mined at the operation were less refractory and were processed through a wet
mill. This wet mill continued to operate until 1997 and is still located on
site. With ores becoming more carbonaceous and refractory, as well as with the
introduction of higher-grade ore from underground operations, a dry mill with an
ore roasting circuit was added in 1989 and is currently in operation.

Since its inception, the Jerritt Canyon Mine has produced over
eight million ounces of gold. Annual production has historically averaged
between 125,000 and 350,000 ounces of gold. During 2010 only one mine, the Smith
mine, was operating and produced 71,173 tons of ore containing 14,919 ounces of
gold at Jerritt Canyon as the Issuer raises additional capital to purchase
mining equipment for the second mine (the SSX/Steer). During 2010 the Jerritt
Canyon mill processed a total of 578,089 tons of ore through the roasters
containing 73,876 ounces of gold.

Surface exploration drilling and underground core drilling
which is also used as an exploration tool, decreased from 2001 to 2002, when the
former owner, Anglo Gold shifted focus from exploration to reserve development.
In 2000, about 445,000 feet of exploration and development were completed, of
which 165,000 feet consisted of surface Reverse Circulation (RC) drilling and
the remainder was underground (UG) core and RC drilling. In 2001, a total of
about 500,450 feet were drilled, 65,450 of which were surface RC holes. In 2002,
435,000 feet were drilled, all of which were from underground. After the
acquisition of Jerritt Canyon at mid-2003, Queenstake started more aggressive exploration and mine development
programs and those programs continued after the merger of Queenstake Resources
Ltd. and YGC in June 2007. Due to the shutdown of the Jerritt Canyon operations
in 2008 exploration activity at Jerritt Canyon was not performed in 2009 and for
the first half of 2010 until adequate funding could be obtained. In July of 2008
the Issuer recommenced underground exploration and began updating the bonding
requirements to recommence surface drilling. This bonding was subsequently
placed in the first quarter of 2011.

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The measured and indicated mineral resources, including
reserves, at Jerritt Canyon during Queenstake’s ownership, as documented in NI
43-101 filings are given in Table 1.

Table 1: Historic Measured and Indicated Mineral
Resources during Queenstakes Ownership

|Year | Tons      | Grade | Ounces   
|---- | --------- | ----- | ---------
|2003 | 9,497,000 | 0.242 | 2,295,000
|2004 | 9,988,000 | 0.241 | 2,410,000
|2005 | 8,812,000 | 0.236 | 2,079,000
|2006 | 8,203,000 | 0.232 | 1,907,000

The proven and probable reserves at Jerritt Canyon during
Queenstake’s ownership, as documented in NI 43-101 filings are given in Table
2.

Table 2: Historic Proven and Probable Mineral
Reserves during Queenstakes Ownership

|Year | Tons      | Grade | Ounces 
|---- | --------- | ----- | -------
|2003 | 3,065,000 | 0.268 | 820,000
|2004 | 3,511,000 | 0.249 | 875,000
|2005 | 3,723,000 | 0.236 | 878,000
|2006 | 1,985,000 | 0.245 | 486,000

Geological Setting

The Jerritt Canyon mining district is located in the
Independence Mountain Range in northern Nevada. The range is part of the Basin
and Range province of Nevada and is a horst block consisting primarily of
Paleozoic sedimentary rocks with lesser Tertiary volcanics and intrusive dikes.
A district geologic map is shown in Figure 3 and a stratigraphic column is shown
in Figure 4.

There are four distinct assemblages in the district,
characterized by their position relative to the Roberts Mountains thrust, a
Devonian to Mississippian structure formed during the Antler orogeny:

- The western facies, or upper plate of the thrust, consists of the Cambrian
  to Ordovician Valmy Group and forms about 70% of the exposed rock in the area.
  In the Jerritt Canyon district, the Valmy Group consists of the Snow Canyon
  formation, a chert, argillite, greenstone, and carbonaceous siltstone
  sequence, and the McAfee Quartzite, a sequence of massive quartzite and shale;
- The eastern facies, or lower plate of the thrust, consists of a sequence
  of Ordovician to Devonian shallow water sedimentary rocks that are exposed in
  tectonic and erosional windows through the upper plate. The gold
  mineralization in the district is contained with the eastern facies rocks. The
  Pogonip Group rock is exposed in the west-central part of the district and is
  composed of fossiliferous limestone with calcareous shale and dolomite
  interbeds. The Eureka Quartzite is a massive quartzite with minor interbeds of
  siltstone. The Hansen Creek Formation is one of two principal ore hosts in the
  district. It is divided into five units, with the contacts between the units
  being the favorable sites of gold mineralization. The Hansen Creek consists of
  interbedded silty limestone, calcareous siltstone, dolomite, chert, and
  carbonaceous limestone. The Roberts Mountains Formation is the second ore host
  and consists of calcareous, carbonaceous siltstone and thinly bedded, silty
  limestone. The Waterpipe Canyon formation is thought to have been deposited in
  a synkinematic foreland basin that formed during the Antler orogeny; it
  consists of carbonaceous shale with interbedded greywacke, chert pebble
  conglomerate, bedded chert, sandstone, and siltstone;

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27

- The Schoonover sequence occurs north of the district and consists of
  basaltic and andesitic greenstone, chert, tuff, volcaniclastics, and
  siliciclastic and limestone turbidites of Devonian to Permian age; and
- The Antler overlap sequence is restricted to the north end of the range
  and consists of conglomerates, argillite, siltstone and limestone.

There are four sets of dikes: Pennsylvanian basalt dikes,
Eocene basalt and quartz monzonite dikes and a Miocene basalt dike. The
Pennsylvanian and Eocene basaltic dikes are altered and mineralized in most of
the mines.

The regional structural setting of the Jerritt Canyon district
is complex, with several regional deformation events being evident. The Devonian
to Mississippian Antler orogeny, resulting from west to east compression, is
represented in the upper plate Snow Canyon Formation with north-south folds in
both the hanging wall and footwall of the thrust. The Permian to Triassic Sonoma
orogeny emplaced the Golconda allochthon over parts of the Roberts Mountains
allochthon to the north of the district. The northwest to southeast compression
associated with this deformation is rarely seen in the district. The Jurassic to
Cretaceous Nevadan orogeny resulted in east-west folds that are often associated
with mineralization.

Within the Jerritt Canyon area, gold can locally occur within
all sedimentary formations, but is preferentially hosted by the Roberts
Mountains and Hansen Creek Formations of the eastern facies in the lower plate
of the Roberts Mountains thrust . The Roberts Mountains Formation consists of
calcareous to dolomitic siltstones and silty limestones. The Hansen Creek
Formation is divided into five members, numbered I through V from the top of the
formation to the bottom. Hansen Creek I is a thinly bedded sequence of gray,
medium-grained limestones and continuous blocky chert beds; it is typically
brecciated. Hansen Creek II is a dark to light gray, irregularly bedded to
massive, vuggy, dolomitic limestone. Hansen Creek III consists of intercalated
carbonaceous micrites and laminated argillaceous limestones. Hansen Creek IV is
a thickly bedded, medium to coarse-grained, carbonaceous limestone with
discontinuous black chert nodules. Hansen Creek V consists of laminated,
carbonaceous siltstone with chert lenses.

The contact between the Roberts Mountains Formation and the
overlying Snow Canyon Formation is a regional thrust fault which transported the
Snow Canyon eastward over the Roberts Mountains Formation. The contact between
the Roberts Mountain Formation and the underlying Hansen Creek Formation is a
discontinuity locally known as the Saval discontinuity. The discontinuity may be
an angular unconformity of local extent or a thrust fault. The base of the
Hansen Creek is gradational into the Eureka Quartzite. Locally, the
stratigraphic section has been repeated by thrust faulting as seen in the
cross-section through the SSX mine in Figure 5.

Alteration in the Jerritt Canyon district includes
silicification, dolomitization, remobilization, and reconstitution of organic
carbon, decalcification, and argillization. The rocks also exhibit hypogene and
supergene oxidation and bleaching. The most importation alteration types
relative to gold deposition are silicification, remobilization and redeposition
of organic carbon and decalcification.

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Figure 3: General Geology Map of the Jerritt Canyon District



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Figure 4: Stratigraphic Column of the Jerritt Canyon
District



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Figure 5: Typical Cross-Section through the Jerritt Canyon
District



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31

Exploration

The Jerritt Canyon district was explored by prospectors looking
for antimony in the early 1900’s. FMC Corporation, exploring for antimony in
the 1970’s, discovered gold occurrences similar to those in the nearby Carlin trend. In 1976, FMC, then known as Meridian Mining,
formed a joint venture with Freeport Minerals to explore and develop the
deposits. Mining commenced in 1981 with the North Generator open pit.

Since then, the operators of Jerritt Canyon have conducted
exploration programs for the identification and development of new mineralized
areas. Several open pit deposits were discovered, developed, and mined during
the 1980’s and 1990’s, including North Generator, Alchem, Marlboro Canyon,
Burns, Steer, Saval and Dash. Underground targets were also identified, and the first to be
exploited was the West Generator underground deposit in 1993. The Murray
deposit, originally discovered by condemnation drilling, has produced over 1
million ounces. The SSX deposit was discovered in the early 1990’s by
geologists following the structural trends between Burns Basin and California
Mountain open pits. The SSX mine has also produced over 1 million ounces. The
MCE, Smith, and Steer extension of SSX are more recent discoveries.

The Jerritt Canyon operation has had a history of exploration
and discovery since the 1970’s. In the last few years until Queenstake’s
acquisition of the property, most of the exploration efforts have been
concentrated at and around the existing underground mines. Exploration efforts
in the southern part of the range were directed to areas such as Water Pipe, Pie
Creek, and Starvation Canyon. Queenstake has increased the exploration effort
near the mine areas and also in the south. As a result, the known mineralization
at Starvation Canyon has increased in size and quality so that a portion of it
was included in the end of 2005 reserves and again in the 2008 reserves.
Additional drilling at Starvation Canyon in 2007 and early 2008 was targeted
toward further definition and expansion of the resource.

Queenstake has carried out an aggressive program of exploration
since its acquisition, with the following footages drilled in the past four
years of its ownership of the property:

| | 2003: | 280,151 feet of underground and surface RC and
      Core Drilling;
| | ----- | -------------------------------------------------------------------
| | 2004: | 710,896 feet of underground and surface RC and
      Core Drilling;
| | 2005: | 450,694 feet of underground and surface RC and
      Core Drilling;
| | 2006: | 396,063 feet of underground and surface RC and
      Core Drilling,
| | 2007: | 467,242 feet of underground and surface RC and
      Core Drilling,
| | 2008: | 237,517 feet of underground and surface RC and
      Core Drilling,
| | 2009: | No drilling activity in 2009, and                                  
| | 2010: | 79,691 feet of underground RC and Core
      Drilling.             

Queenstake continues to evaluate its landholdings with the
objective of focusing future exploration and drilling the most promising areas
both near and away from the existing mines.

Mineralization

SSX Mine

The drift connecting the SSX and Steer mines was completed in
the latter half of 2005 and the mines have been operated as a single unit
referred to as the SSX complex since then. In 2007 a drift was completed to the
Saval 3 portal allowing access to the resource extending in the pit wall.

The SSX deposit was discovered in the early 1990’s following
the northeast structural trends between the Burns Basin and California Mountain
deposits and the west-northwest trends from the Steer/Saval deposits. Mining
started in 1997, and SSX has been the main ore producer for the last few years.

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32

Mineralization at the SSX mine occurs mostly in the micritic
unit III of the Hansen Creek Formation. A smaller portion of the mineralization
occurs in calcareous siltstone at the base of the Roberts Mountains Formation or
in the upper two cherty and dolomitic members of the Hansen Creek Formation.
Mineralized zones are localized in and near west-northwest trending steeply
dipping dikes (e.g. South Boundary Dike); however, dike material is a minor
component of the ore at SSX. Mineralization is also localized along
cross-cutting northeast trending faults (the Purple Fault in Zones 4 and 6, and
the Crestline Fault in Zone 1). Folding of the mineralized horizons is apparent
along axes parallel to the west-northwest dike trend and, more prominently,
parallel to the northeast fault set. Gold occurs in decarbonitized rock,
commonly in association with variable amounts of orpiment and realgar.
Silicification with stibnite can also be associated with gold in portions of the
upper cherty member of the Hansen Creek Formation. The intersection of the
northeast and west-northwest structural trends remain a primary target for
resource expansion. The westward extension of the South Boundary Dike and the
West Mahala resource to the east represent exploration opportunities.

Gold mineralization in the Steer portion of the SSX complex has
been identified in an area stretching approximately 3,000 feet east from the old
Steer pit to halfway along the connection drift to SSX Zone 5. Most gold
mineralization at Steer is associated with gently dipping structures cutting
through the Hansen Creek III unit. These structures strike northeast and dip
southeast, offsetting individual strata. Typical ore zones follow the structures
and tend to be broad and relatively thin. The mineralized zones are usually at
the contact between the Hansen Creek units III and IV and occasionally follow
the structures up through the Hansen III. Both within the Steer portion and the
western side of SSX several low-angle features have been observed. These
features are at least partly responsible for the gold mineralization at the
contact of the Hansen Creek Units III and IV.

In the eastern portion of the Steer area, high-grade
mineralization is associated with the Husky fault, a major northeast trending
normal fault with at least 300 feet of normal dip-slip displacement to the
southeast. Major northwest trending dikes appear to have locally
compartmentalized high-grade mineralization. The intersection of these dikes
with the Hansen III unit and the Husky fault and its related structures offers
excellent exploration potential. One of these dikes is interpreted to be the
western extension of the South Boundary dike, which is an important
ore-controlling structure at the SSX mine to the east.

At Steer and SSX the structural intersections are the primary
targets for resource expansion, as well as the westward extension of the South
Boundary dike. In the eastern part of the SSX complex, the West Mahala mineral
resource remains an excellent exploration opportunity.

Smith Mine

The Smith Mine, accessed from the Dash open pit, was started in
1999 as the pit was being mined out. The Smith Mine complex consists of several
distinct areas that are accessed from the Smith portal, as well as an area to
the east, East Dash, that will be accessed from a separate portal in the Dash
pit. During 2006 the portal was developed to access mineralization in the east
highwall of the Dash pit.

Gold mineralization in the main Smith, Mahala, and West Dash
deposits is associated with the northeast trending Coulee Fault and
west-northwest trending faults and dikes. In Zone 1, high-grade gold
mineralization is hosted in the upper and middle portions of the Hansen Creek
Formation unit III within a northwest trending horst block between the South
Graben fault and the 170 fault. Mineralization in Zones 2 and 3 is directly
associated with west-northwest trending dikes. High-grade mineralization occurs
within the Hansen Creek units II and III along the steeply dipping dikes. Lesser
amounts of mineralization exist at higher levels where the dikes intersect
favorable beds in the Roberts Mountains Formation. An exception to the tight
elevation controls on mineralization is at the intersection of the
west-northwest trending dikes and Coulee fault. Here, high-grade mineralization
blows out into the Hansen Creek unit III along the west plunging intersection of
the dikes and the fault for a down-dip depth of 600 ft.

Gold mineralization in the Mahala area is spatially associated
with the west-northwest trending Mahala fault and associated dikes and favorable
ore-host stratigraphy including units II and III of the Hansen Creek Formation
and lower beds of the Roberts Mountains Formation. Mineralization
at East Mahala occurs primarily in broad, SE-dipping lenses in Roberts Mountains
Formation in the hanging wall of the Coulee Fault

The B-Pit deposit occurs as
  gently dipping, thin lenses of mineralized material north of the main Smith
  deposit. Three of the four lenses occur are stratigraphically bound within the
  Roberts Mountains Formation. The fourth lens occurs at the top of the Hansen
  unit III in the wall of a NW-trending horst block just to the south of the other
  three zones.

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33

The West and East Dash deposits occur at the extreme ends of
the west-northwest trending Dash Fault system which formed the mineralization
mined in the Dash pit. The West Dash deposit occurs at the intersection of the
Coulee fault and the west-northwest trending Dash fault. Most gold
mineralization at West Dash occurs in fault-bounded slices of Hansen Creek unit
III with minor amounts in the overlying Hansen Creek unit II and Roberts
Mountains Formation. West Dash is accessed through the Smith Portal. The East
Dash deposit lies to the east of the Dash pit. A portion of this deposit has
been accessed by a small portal in the pit. At East Dash, most gold occurs in
two lenses parallel to the Dash Fault and dipping to the northeast. The largest
lens is about 1,100 feet and is 15 feet to 25 feet thick. The north edge of the
lens seems to be bounded by a steep east-west trending fault that is locally
mineralized with high-grade material. The second lens is smaller at about 350
feet across, but much thicker, up to 120 feet.

In 2007, surface and underground drilling along the western
extension of the Coulee and Mahala Dike Trends, revealed additional
mineralization which was brought into the resource category during the year.

Murray Mine

The Murray Mine occurs within the Roberts Mountains Formation
and the top three units of the Hansen Creek Formation. A minor amount of
mineralization also occurs within the silicified unit IV of the Hansen Creek
Formation. It was originally discovered by condemnation drilling for a waste
dump for one of the early open pits. Mineralization in the main Murray deposit
occurs along the New Deep Fault which is a wrench fault striking west -northwest
and dipping 50o to 60o to the northeast. Mineralization in Zone 7 located about
750 feet north of the New Deep Fault occurred within calcareous siltstone beds
of the Roberts Mountains Formation. Zone 7 and the main Murray have been largely
mined out, with remnant pockets of mineralization remaining.

Zone 9 mineralization is located immediately west of the main
Murray deposit and is associated with a westward projection of the New Deep
Fault and several northeast trending faults. It was the focus of drilling
campaigns in 2002-2005. Although there was no additional drilling in this
resource it was removed from reserves in 2006 because of economics and possible
water issues. It consists of two separate areas, a relatively flat-lying zone at
the base of the Roberts Mountains Formation and a main zone which is associated
with the New Deep fault. Mineralization is hosted by the Hansen Creek III which
is locally overlain by the Snow Canyon Formation

Starvation Canyon

Mineralization at the Starvation Canyon project occurs at
the Hansen II-III contact and is localized along a west-northwest fault zone at
northeast structural intersections. The majority of the mineralization is within
the interbedded micrite and argillaceous limestone of the Hansen Creek III,
starting at or just beneath the contact. There are instances where
mineralization has formed within the massive limestone of the basal Hansen Creek
II, but these are rare. Drilling in 2007 has further defined the resource at
Starvation, along its outer edges as well as the internal grade distributions.
High angled structures have also been identified. In addition, core drilling has
improved sample recovery.

Additional exploration potential exists to increase the
resource of the presently known mineralized zones. The western extensions of the
western zone have expansion potential along approximately 600 feet of strike
length. The northwest structure that appears to be the primary control for the
Starvation Canyon resource has potential for additional clusters of
mineralization both to the northwest and southeast.

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34

Saval

Gold mineralization in the Saval Basin area to the west of the SSX mine is primarily hosted in favorable Hansen Creek Formation unit III where it has been structurally prepared by faulting and has locally been compartmentalized by northwest-trending
dike systems.  In this area, a series of west-northwest trending structures have been cut by northeast-trending faults.  Notable structural features include the west-northwest trending Saval horst and the northeast-trending Husky fault, which cuts
across the older Saval horst and down-drops it to the southeast.  Ore zones were mostly formed in Hansen III host in the vicinity of structural intersections, often forming relatively steep, narrow, plunging orebodies.  Dikes, such as the Saval 3
pit dike can be traced for thousands of feet.  High-grade gold mineralization has been concentrated along the Saval 3 dike in several locations, most prominently in the Saval 3 pit and in the north part of zone 5 at SSX.  Except at the Saval 4
deposit, most economic zones in the Saval basin area have been mined out leaving relatively small mineralized zones in difficult-to-access pit walls and bottoms.  During 2006 access to a small resource in the highwall of the Saval 2 pit was
completed with a small amount of production.  A small reserve is being carried in the highwall of the Saval 2.

At Saval 4, a significant gold zone has been identified that can be mined from underground with hillside access.  A small pit was excavated during 2006 to allow for a portal.  This excavation occurred in mineralized Roberts Mountains formation with
2,050 ounces stockpiled.  In this zone, relatively steep, confined, and vertically extensive high-grade ore-bodies have formed within the Saval horst beneath a splay fault of the large Sheep Tank fault.  It is interpreted that the intersection of
the west-northwest trending faults that bound the horst interact with northeast trending faults, forming structurally prepared ore hosts along their intersections.  Additional mineralized zones form on the flanks of the horst where it intersects the
NE-trending structures.  Most notable is a high-grade zone directly in the Sheep Tank fault just to the north of the main pod.  Thinner mineralization occurs near the top of the horst along its south bounding fault.  Excellent opportunity exists for
local resource expansion of the main pod and in the flanking fault-hosted zones with close-in underground drilling after mining has begun.

Other Reserve/Resource Areas

Wright Window Pit

The Wright Window is a small open pit reserve and resource area located on the west side of the Independence Mountains to the west of the Murray mine.  The deposit is hosted by the lower Roberts Mountains and Upper Hansen Creek Formations along the
Saval Discontinuity.  Mineralization occurs on two zones; the west zone mineralization outcrops at the surface and is about 50 feet thick.  The higher-grade east area is about 200 x 300 feet wide and 45 feet thick.

Pie Creek Resource

Potentially economic gold mineralization occurs in a series of near-surface zones in the head of the Pie Creek drainage on the east flank of Wheeler Mountain.  Indicated and Inferred resources have been modeled and are shallow enough, at a depth of
200 feet, for consideration of open-pit mining.  The main pod is about 800 feet long, dips moderately to the southeast at about 300, and is 20 feet to 45 feet in cross-sectional thickness.  Mineralization is hosted in the top of unit III
of the Hansen Creek Formation and is probably controlled by northeast trending faults.  Three other smaller pods near the main pod are similarly in the top of the Hansen III, but strike northwest, dip moderately to the north, and are probably
controlled by local faults of similar orientation.  The main pod mineralization occurs between two of the mineralized northwesterly cross structures.

Drilling

Numerous drill campaigns have been executed at Jerritt Canyon since its discovery in the 1970’s.  Exploration drilling programs typically consist of RC drilling at about 200 foot centers.  The spacing is then reduced to about 140 feet and finally,
to 100 foot centers or less.  Surface core drilling typically makes up about 5% to 10% of the total drilling.  At the underground mines, definition drilling consists of core drilling on 50 foot centers from underground stations, using NQ sized core
which is 1.875 inches in diameter.  Underground RC drilling (Cubex) is used for resource confirmation and is drilled on 20 to 40-
foot centers. RC holes are generally less than 150 feet in length, but can be as
long as 300 feet. Underground production sample drilling consists of Cubex and
rotary percussion drilling (Solo and Secoma). Holes are generally short, less
than 60 feet, and are drilled on center as close as 10 to 20 feet. The vast
majority of drillholes, except the production holes, are measured for downhole
deviation.

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35

Tens of thousands of holes have been drilled on the property
over the years. The Murray mine has over 22,000 holes with more than 2 million
feet drilled; the Smith mine has over 5,500 holes with more than 1.40 million
feet; the SSX mine has nearly 18,500 holes with 2.6 million feet of drilling.

Drilling at Jerritt Canyon from 2000 through 2010 is shown in
Table 3. Drilling in 2000 through 2002 was conducted by the former owner, and
drilling from 2003 to present was conducted by Queenstake.

Table 3: Jerritt Canyon Drilling (2000 through 2010)

|Year | Surface RC  | Surface Core | UG Core | UG RC   | Production
|---- | ----------- | ------------ | ------- | ------- | ----------
|     | No.         | Footage      | No.     | Footage | No.       
|2000 | 378         | 444,795      | 2       | *       | 292       
|2001 | 59          | 65,450       | 0       | 0       | 268       
|2002 | 27          | 18,905       | 0       | 0       | 186       
|2003 | 108         | 47,277       | 0       | 0       | 119       
|2004 | 377         | 300,226      | 34      | 21,212  | 297       
|2005 | 126         | 101,413      | 4       | 1,403   | 179       
|2006 | 155         | 135,940      | 0       | 0       | 125       
|2007 | 220         | 216,592      | 15      | 12,495  | 44        
|2008 | 101         | 104,182      | 7       | 8,939   | 94        
|2009 | No Activity |              |         |         |           
|2010 | 0           | 0            | 0       | 0       | 3         

*2000 surface core footage is included with surface RC

**2000 underground RC drilling is included with production
drilling

Sampling and Analysis

Surface Drilling - Reverse Circulation Drilling

Surface exploration drilling programs at Jerritt Canyon consist
predominantly of reverse circulation (RC) holes, with some surface core
drilling. The drilling is conducted by a contract company and downhole surveys
are taken by a contractor using a gyroscopic instrument. Collar locations are
surveyed by a contracted survey company and/or in-house surveyors.

The surface RC holes are 5.5 inches in diameter and are sampled
on 5 foot intervals, according to a protocol established by Queenstake.

Surface diamond drill core is HQ-sized (2.5 inches), unless it
is necessary to reduce to NQ for completion of the hole. Surface core is logged
for lithologic information and for geotechnical data according to the Jerritt
Canyon logging manual at the logging facility. Surface core is split or cut with
a diamond saw or hydraulic splitter and half of the sample is sent to the lab
for analysis.

Underground Drilling

Drill hole spacing is targeted at 30 to 50 foot centers
throughout the deposit. The attitude of the drill hole can be at any inclination
to the mineralized unit although it is preferred to be as close to normal to the
ore-controlling structures as possible. Collars of all drill holes are surveyed
and the orientation of the holes is determined. All of the holes are surveyed by
using a down-hole survey instrument (tropari or Flexit) or by a contract survey
crew to measure the hole deviation. All of the collar and downhole
surveys must pass quality assurance scrutiny by the site geologist prior to
loading the data into the database. Only the actual data taken from the
drillhole survey is used. Any projections of the survey beyond the length of the
hole when surveyed are discarded. On rare occasions the collars are lost prior
to collar or down hole surveys being completed; in this case the planned
coordinates and hole orientation are used. However, when geological
interpretation is done this factor is heavily considered in determining the
validity of using the data from these holes.

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36

Production Samples

| | Percussive drills (Solo, Airtrack, Secoma and others) are
      the dominant type used for collection of sludge samples over one rod
      length or six feet for final definition of the ore zones. It utilizes a
      rotary percussion drill with 3 inch diameter bits. Cuttings exit the hole
      via the annulus and are collected in a tray placed beneath the collar of
      the hole. These holes are drilled no longer than 60 feet in length due to
      hole deviation and downhole sample contamination issues. The hole and tray
      are cleaned prior to continuing the drill hole an additional six feet.
      Collar locations are surveyed but a downhole survey is not generally done.
      Some twinned data collected in 2001 suggests that there is a greater
      potential for these holes to have down-hole contamination beyond 36 feet
      depending largely on the orientation of the hole. For this reason the
      length of these holes has been decreased in the past few years. These
      drills are used for definition drilling at Murray and to a much lesser
      extent at SSX and Smith Mines;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Jumbo drill holes and jackleg holes are drilled for
      ore control only. This data, when collected, is used to help determine ore
      waste determinations but is not loaded into the database;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Selective rib and/or face samples are also used to
      help determine the ore boundaries and for grade control. They can be used
      to support the constrained ore boundary and in some cases at SSX are used
      to help estimate the block model grades; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Cubex drills are sometime used for production
      drilling.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Truck Samples

At all the underground mines each haul truck is sampled for
grade control purposes. The samples consist of grab samples taken over the
entire load by the truck driver. Samples are placed in bags with pre-attached
bar code numbered tags and transported to the Jerritt Canyon lab. Truck sample
assays are cut by 8% which is a factor that has been determined through mine to
mill reconciliation. The grades are used to state mine production.

Sample Preparation, Analyses and
Security

Jerritt Canyon Laboratory Procedures

The mine utilizes the Jerritt Canyon laboratory for analytical
work on the underground samples with check samples sent to ALS Chemex for
comparisons. The samples for most of the surface drilling in the West Dash
resource area in 2006 were also analyzed at the Jerritt Canyon facility. The
assay lab is located in a separate building close to the ore processing plant.
The laboratory has all the normal sample preparation equipment and facilities.
The laboratory operates continually with a crew of 16 and performs about 500
fire assays per day with a 24-hour turn around from receipt of sample to
reporting of assays.

Sample Preparation

All of the underground samples received at the Jerritt Canyon
assay laboratory arrive with bar coded labels. The labels match drill logs
maintained by samplers and drillers in the Jerritt Canyon Underground
Department. Sample bar codes are scanned into the LIMS and assay lots are
auto-created. The surface drillhole sample numbers are labeled on the sample
bags and then logged into the LIMS system by the lab technicians. All logged
samples dry for four to six hours at 325°F prior to prepping.

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37

A rotary (automatic) 1:4 split (50 rotary cuts minimum) follows
first stage crushing. Core samples first stage crush to 99% -1 inch prior to
split; all other types are typically 1/2 inch prior to first stage split.
Second stage crushing (99% - 3/8 inch) automatically passes through a rotary
splitter (50 cut minimum). The assay split is then pulverized in a plate mill to
95%-150 mesh (Tyler) and blends for five minutes on a rotary blending wheel. The
samples are placed in bar coded sample cups and transferred to fire assay.

Jerritt Canyon Lab Fire Assay Procedures:

A tray of 24 thirty-gram charge crucibles is prepared with a
standard litharge flux. Each sample is weighed at one assay ton. Of 24 samples
on each tray, one is a repeat sample, one is a standard, one is a blank, and one
is a blind standard inserted into the sample stream by the geology department.
The samples are fired by the method of fusion/cupellation, with a gravimetric
finish. The balance used for the final weighing is a Cahn C-30 microbalance that
is serviced and calibrated on a semi-annual basis by Microlab Services.

The laboratory in-house QA/QC procedure for checking the
accuracy of the Jerritt Canyon lab consists of submitting saved duplicate
samples of the mill feed and tail daily samples to outside labs for comparison.
These samples are submitted on a weekly basis to either Rocky Mountain
Geochemical or Chemex Laboratories. The data is compiled from the Jerritt Canyon
daily assay sheet and compared with the results from the two outside labs. The
results of the comparison are entered into a statistical program and a running
check is maintained on the data.

Commercial Laboratories

Surface RC and diamond drilling are sent to ALS Chemex and
American Assay. Samples above 0.100 opt gold are routinely fire assayed with a
gravimetric finish. Blanks, standards, and pulps are routinely inserted into the
sample stream for QA/QC, and check assays

The Geology Department at Jerritt Canyon has established
laboratory quality assurance/quality control procedures as follows:

Jerritt Canyon Laboratory

- One standard sample per 20 samples;
- One blank sample, consisting of silica sand, per drillhole;
- One pulp of a previously assayed interval is inserted into the sample
  stream at the geologist’s discretion; and
- Check assays consist of coarse rejects and pulps (one sample for every
  twenty over 0.01opt and one in ten over 0.07opt) sent to a commercial
  laboratory, generally ALS Chemex.

Commercial Laboratory

- One standard sample in each batch of samples. A batch
contains 40 samples in most commercial labs;
- One blank sample of silica sand
per hole, inserted at the beginning or end of hole, or after a mineralized zone;
- A duplicate sample consisting of a pulp of a previously assayed interval may
be used as a substitute for the regular standards; and
- 10% of the samples that
have a value greater than 0.07 opt gold, and 5% of samples between 0.01 opt and
0.07 opt gold are submitted to a second lab for check analysis.

The standards have been prepared from Jerritt Canyon
mineralized rock and have several different gold values. The standards used
throughout 2008 include:

- High 0.268opt;
- JCQ01 0.117opt;

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38

- JCQ02 0.256opt;
- JCQ03 0.051opt; and
- JCQ04 0.120opt.

Results from the standards or duplicates are reviewed by
geologists upon receipt from the laboratory. If there is significant deviation
from the expected value then the batch of samples is re-fired. If the lab is
unable to match the original results within reasonable limits then the sample is
re-fired until assay values match. The results from these analytical
determinations are available in the QA/QC section below.

SRK reviewed the Jerritt Canyon assay QA/QC data for 2007 and
finds the results within industry standards. Various graphs representing the
results of the QA/QC program are located in Appendix B.

Data Verification

The Jerritt Canyon mine has tens of thousands of drillholes
throughout the land package in the active mines, mined out areas, and
exploration targets. Over the years the property has been the subject of many
audits in which data verification procedures were carried out.

The geology department has largely completed the task of
storing drillhole logging information and assay data into the AcQuire database
package. Assay data is directly downloaded from the lab (both commercial and
Jerritt Canyon's) and goes through automatic and visual validations
before being recorded, thus eliminating data entry errors.

It is SRK's opinion that Jerritt Canyon is conducting
exploration and development sampling and analysis programs using standard
practices and that the data can be effectively used in the estimation of
resources and reserves.

Mineral Resource and Mineral Reserve
Estimates

At Jerritt Canyon, most gold mineralization occurs within
lenticular bodies with relatively sharp hang-wall and foot-wall boundaries. In
order to better model this type of mineralization, detailed wireframe solids
based on geologic and grade continuity (roughly 0.15 opt Au and above) are
created with MineSight software for individual zones. The wireframes are built
using assays of similar value that also show geologic continuity along known ore
controls. More accurate targeting of economic material for excavation with
reduced dilution has been the result. This method is employed at all of the
development projects and most new areas of the active underground mines. Mature,
mostly-depleted portions of the active mines do not use wireframes, but rely on
outlines drawn by the geologist in plan view to define a grade shell with
geologic constraints.

The drillhole database is divided into the separate resource
areas and composited separately. The underground areas are composited into the
predominant sample length, predominately 5 feet downhole starting at the top of
the drillhole. The areas that are more amenable to open pit mining are
composited into 20 foot lengths starting at the top of the drillhole.

The tonnage factor used for all Jerritt Canyon ore is 12.6
cubic feet per ton. The factor is based on testing done in 2000 at the
University of Nevada, Reno and Chemex lab on a total of 67 samples. The weighted
tonnage factor returned on the samples was 12.616. Since then 50 samples from
Smith Zone 4 (Mahala) and 5 from Steer were analyzed by Zonge Engineering and
Research of Tucson, Arizona. The average for Smith Zone 4 was 12.45 cubic feet
per ton, which is slightly heavier than the average used for all the mines and
the average for Steer was 13.0 cubic feet per ton, which is slightly lighter.
Additional tests were done in 2005 on 22 ore grade samples and 24 waste samples
from Starvation Canyon. The results were 11.8 cubic feet per ton for the ore
grade samples and 12.2 for the waste samples, both of which are heavier than the
12.6 average used at the mines.

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39

Three methods of resource estimation, including Probability
Assigned Constrained Kriging (PACK), Inverse-Distance Weighting (IDW), and
Block-Polygonal, are employed at Jerritt Canyon. Each resource area is initially
interpreted and grade estimated using Mintec MineSight software and subsequently
exported to Maptek Vulcan software for engineering design and reserve
tabulation.

Most of the areas with active underground mining utilize the
PACK method. Development projects and some zones near current mining with
wider-spaced drilling are modeled with the IDW method. A few projects with
limited drilling use the Block-Polygon method.

- Probability Assigned Constrained Kriging (PACK) is a
      geostatistical method applied to most reserve areas at Jerritt Canyon.
      Detailed indicator and gold grade variography is developed for each zone
      or structural domain interpolated with the PACK method. In areas modeled
      by PACK, blocks within constraining wireframe solids and interpreted
      geologic plan-oriented strings are modeled separately from exterior
      blocks, using composites within the wireframes. Exterior blocks are
      interpolated in a separate pass using exterior samples. The percentage of
      model cells that reside within the wireframes is recorded and used for
      resource tabulation;
- Inverse-Distance Weighting (IDW): This method is used in
      several resource and reserve areas where drilling is too widely spaced to
      derive variography necessary for interpolation with the PACK method. In
      areas where lenticular mineralized bodies have been identified, a
      wireframe is constructed based on geologic and grade continuity. Similar
      to the PACK method described above, model cells interior and exterior to
      the wireframes are interpolated separately using only interior or exterior
      drillhole samples respectively. The percentage of model cells that reside
      within the wireframes is used for resource tabulation; and
- Block-Polygon: A method utilized in some of the resource
      areas where drill hole spacing is insufficient to conduct mine planning
      and reserve estimation. It employs a nearest neighbor two-dimensional
      search without constraining interpretive envelopes.

The PACK method consists of dividing the deposit into low-grade
and high-grade probability zones and then estimating the gold grade within each
of the zones separately. The methodology is summarized below:

|1. | The deposit is divided into geological or structural
      zones within which the geostatistical parameters are expected to be the
      same.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | Low-grade and high-grade thresholds are chosen based on
      the cumulative frequency plots of the sample data The typical low grade
      threshold is 0.03opt and the high-grade threshold is typically
    0.15opt.                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | For each threshold, composites are assigned indicator
      values and indicator variograms are calculated from the composite
      indicators. The block indicator values are estimated by kriging. The block
      is designated as being within a low-grade envelope if the low-grade
      indicator is greater than 50% and the high-grade indicator is less than
      50%. The block is considered high-grade if the high-grade indicator is
      greater than 50%. The 50% rule was reduced to a lower percentage in some
      cases depending on the distribution of the blocks.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4. | The composites are back-coded from the model as being
      low-grade or high-grade, and variograms are calculated for both
      classes.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | Gold grades are estimated for the high-grade blocks using
      only composites within the high-grade envelope, and likewise, gold grades
      are estimated for the low-grade blocks using only composites within the
      low-grade envelope.                                                                                                                                                                                                                                                                                                                                          

Refer to the Table 5 below for a listing of resource estimation
methods by project.

Table 5: Jerritt Canyon Resource Estimation Methods by
Project

|Deposit/Area  | Interpolation Method
|------------- | --------------------
|Mine Areas    | PACK                
|Murray        | PACK                
|Murray Zone 9 | PACK - IDW          

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40

|Deposit/Area               | Interpolation Method                       
|-------------------------- | -------------------------------------------
|SSX                        | PACK  IDW in inferred shapes
      (Steer)
|Smith                      | PACK  IDW                                 
|Smith East                 | IDW  PACK                                 
|Saval                      | IDW - PACK                                 
|Starvation                 | IDW                                        
|Wright Window              | PACK  IDW                                 
|Resource Areas             |                                            
|Burns Basin Pit            | IDW                                        
|California Mtn. Pit (Next) | POLYGONAL                                  
|Coyote Zone 10 Pit         | IDW                                        
|Pie Creek Pit              | IDW                                        
|Road Canyon Pit            | IDW                                        
|Mill Creek                 | IDW                                        
|Burns Basin                | IDW                                        
|California Mtn.            | POLYGONAL                                  
|Coyote Zone 10             | IDW                                        
|MCE                        | PACK                                       
|Waterpipe II               | POLYGONAL                                  
|West Mahala                | IDW                                        
|Winters Creek              | IDW                                        

Most of the reserve and resource areas are built with 15 x 15 x
15 foot blocks, with the exception of the Murray mine where 5 x 5 x 15 foot
blocks are used. Starting in 2005, production models using a block size of 5 x 5
x 5 feet were utilized at the Steer mine and portions of the SSX and Smith mines
in order to better delineate ore boundaries, and thus reduce dilution. Although
these smaller blocks are used, the geologic/grade shapes are drawn to at least
the smallest practical mining units (SMU), usually at least 15 x 15 x 15 foot in
size. For resource reporting conformity at the resolution of the 15 x 15 x 15
foot SMU, the production models are re-blocked to the 15 foot matrix prior to
reporting. As expected, the result of the re-blocking of the 5 foot blocks into
15 foot blocks shows similar contained ounces for zones at lower grades while
there is increase in tonnage and decrease in grade at higher mining-grade
cutoffs.

Variography

There was no new variography run in 2007. All of the
geostatistics used in the resource calculations were compiled from
geostatistical analysis in previous years. Because of the mature nature of the
resource in the areas where geostatistical methods are used it is considered
that the new data would not have a significant impact on the variography.

In past years, SRK visually examined selected low-grade and
high-grade indicator variograms which show reasonable continuity over distances
often exceeding 100 feet. The gold grade variograms show shorter ranges, as
would be expected since the samples are limited to grades between 0.030opt and
0.150opt in the case of the low-grade samples and greater than 0.150opt in the
case of high-grade samples. Appendix C contains indicator and grade variograms
for Smith Zone 4 (Mahala and East Mahala) and Steer.

Definition of Resource Categories

For resource classification, blocks must lie within interpreted
wireframes or grade shells and have demonstrated continuity of ore-tenor
material (>0.15opt Au) over multiple drillhole intercepts to be considered as
Measured or Indicated resources. Measured classification requires a minimum of
three drillholes, the nearest composite within 20 feet, and mining history in
the immediate area. Indicated classification requires that the nearest composite
be within 2/3 of the variogram range. Blocks with a distance between drillholes
greater than 2/3 of the variogram range are classified as Inferred. All blocks
outside interpreted wireframe shapes or plan strings are considered to be
Inferred resources.

---

41

SRK finds that the resource and reserve models developed by
Jerritt Canyon conform to the definitions set forth in National Instrument NI
43-101 in Sections 1.3 and 1.4 which classify the resource into measured,
indicated, and inferred categories. The standards applied by Jerritt Canyon
conform to the definitions adopted by the Canadian Institute of Mining,
Metallurgy and Petroleum  Definitions Adopted by CIM Council August 20, 2000.

Mineral Resource Checks

SRK imported the Jerritt Canyon block models into Vulcan
software and conducted a series of checks to reconcile the stated resource tons
and grade with the actual block model grades and wireframes and grade shells.
SRK also visually compared the block model grades against drillhole assay data.

SRK considers that the Jerritt Canyon block models have been
constructed in compliance with accepted engineering practice and can be
considered reasonable global predictors of resources within the modeled areas.

Mineral Resource Statement

The Jerritt Canyon mine resources, including
  reserves, as of December 2007 are listed in Table 6. The resources are contained
  within areas where mining is currently taking place or where mining is
  reasonably expected to take place in the future. The metal ounces are on a
  contained basis without adjustment for process recoveries.

---

42

Table 6: Jerritt Canyon Mineral Resources, Including
Reserves - December 31, 2007

|                           | Measured | Indicated | Measured + Indicated | Inferred
|-------------------------- | -------- | --------- | -------------------- | --------
|Deposit/Area               | Tons     | opt       | Cont'd oz            | Tons    
|                           |          |           |                      |         
|MURRAY                     | 155.8    | 0.310     | 48.3                 | 26.6    
|MURRAY ZONE 9              | 0.0      | -         | 0.0                  | 210.9   
|SSX                        | 1,815.3  | 0.255     | 462.5                | 746.1   
|SMITH                      | 587.7    | 0.303     | 178.0                | 649.1   
|SMITH EAST                 | 19.0     | 0.441     | 8.4                  | 1,043.5 
|SAVAL                      | 12.3     | 0.227     | 2.8                  | 367.5   
|STARVATION                 | 0.0      | -         | 0.0                  | 697.3   
|WRIGHT WINDOW              | 0.0      | -         | 0.0                  | 97.8    
|                           |          |           |                      |         
|Subtotal                   | 2,590.2  | 0.270     | 699.9                | 3,838.8 
|Stockpiles                 | 33.9     | 0.173     | 6.2                  | 818.3   
|                           |          |           |                      |         
|Pit Resources              |          |           |                      |         
|Burns Basin Pit            | -        | -         | -                    | 29.7    
|California Mtn. Pit (NEXT) | -        | -         | -                    | 8.0     
|Coyote Zone 10 Pit         | -        | -         | -                    | 0.0     
|Pie Creek Pit              | -        | -         | -                    | 190.2   
|Road Canyon Pit            | -        | -         | -                    | 148.6   
|Mill Creek                 |          |           |                      | 78.4    
|                           |          |           |                      |         
|U/G Resources              |          |           |                      |         
|Burns Basin                | -        | -         | -                    | 30.7    
|California Mtn.            | -        | -         | -                    | 32.1    
|Coyote Zone 10             | -        | -         | -                    | 45.2    
|MCE                        | -        | -         | -                    | 4.4     
|Waterpipe II               | -        | -         | -                    | 0.0     
|West Mahala                | -        | -         | -                    | 197.5   
|Winters Creek              | -        | -         | -                    | 148.9   
|                           |          |           |                      |         
|Total                      | 2,626.0  | 0.269     | 706.1                | 5,570.9 

---

43

SRK is not aware of any possible adverse or unusual
restrictions on mining resulting from legal or title issues, taxation,
socio-economic, or other issues that would affect the Jerritt Canyon operation.
The mine has the permits necessary for operation.

Mineral Reserve Estimate

Essentially all of the current reserves at Jerritt Canyon are
contained in deposits being developed and/or mined by underground methods. The
exceptions include Wright Window which is planned as an open pit operation,
Starvation Canyon which is an undeveloped underground reserve area, and the
stockpiles reposing at the mine portals or remaining from earlier open pit
extraction.

The previous sections describe the approach in evaluating
mineralized boundaries and estimating gold grades within the overall resource
envelope. In order to determine the portion of the Measured and Indicated
resources that would qualify for Proven and Probable reserve status, it is
necessary to configure the Measured and Indicated resources into mineable shapes
for the selected mining method, and then apply economic tests for establishing
validity that the reserve blocks will, indeed, show positive economics.

The economic exercise is normally accomplished by calculating a
breakeven cutoff grade, stated in ounces of gold per ton (oz Au/ton), which
equates the total operating costs at the property with gold recovery from the
process plant, and the expected return from gold sales. Total costs include
mining, processing, assessed charges, and site administrative costs. Process
recovery has been relatively constant over several years of operations at around
87%, with some improvement over that last half of 2007 and again in 2010 when
the mill returned to operations. Recovery is projected at 89.0% going forward.
Revenues reflect an average gold price experienced during the previous three
years, after subtraction of refining charges and royalties.

The objective of this analysis is to derive a minimum gold
grade in the ground that will just recoup the costs of production. Material not
meeting this hurdle remains a resource, while blocks exceeding the minimum will
be in the mining plan and will be extracted over time. It can be appreciated
that the average grade of material mined and processed will be in excess of the
minimum grade; thus these blocks will cover all variable production costs and
will contribute toward fixed charges and profitability.

Incremental cutoff grades are sometimes employed where certain
costs have already been expended (sunk costs), and the block now must cover only
the remaining down-stream charges. An example is mineralized material which has
been taken from underground and placed in stockpiles at a mine portal for
assaying. Now that the drilling, blasting, loading and underground haulage have
been expended, it may be possible that the rock contains sufficient gold to pay
for surface hauling to the process plant, and the process costs as well, rather
than being carried to a waste dump for disposal. An incremental cutoff grade
calculation at this point will be lower than a breakeven grade, but this
material should provide a marginal contribution to the operation as a whole.

The accepted formula for calculating a breakeven cutoff grade
is given below:

Breakeven Cutoff
grade                      
 
=      TotalCosts of
Production                                                                   
      (Gold Price  Deducts) x Process Recovery

Breakeven cutoff grades were calculated for each mine or
material source and compared to those determined by Jerritt Canyon personnel.
The costs figures are averages obtained for the entire year of 2007, with a
modification for expected processing costs in the coming years.

The following parameters, shown in Table 7, have been used in
determining the various cutoff grades. Excluded from costs are the district-wide
exploration expenses and capitalized development charges.

---

44

Table 7: Jerritt Canyon Cutoff Grades Parameters (Based on
2007 Information)

|Gold Price                                          | $ | 580/oz  | 
|--------------------------------------------------- | - | ------- | 
|Plant Recovery                                      |   | 89%     | 
|Refining Charges                                    | $ | 0.78/oz | 
|Total Production Costs, Including Processing, $/ton |   |         | 
|SSX                                                 | $ | 112.21  | 
|E. Dash                                             | $ | 11159   | 
|Starvation                                          | $ | 108.44  | 
|Smith                                               | $ | 103.59  | 
|Wright Window                                       | $ | 47.68   | 
|Stockpiles                                          | $ | 34.39   | 

|Equating these parameters by the formula shown above,
      cutoff grades for the various sources of material can be calculated. These
      are presented in Table 8 below:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            
|Table 8: Jerritt Canyon Cutoff Grades (December
      2007)                                                                                                                 

|Material Source           | SRK Breakeven Cutoff, opt
      Au
|------------------------- | ----------------------------------
|Stockpile Direct          | 0.06                              
|Stockpile Screened        | 0.07                              
|Wright Window             | 0.09                              
|Starvation Canyon         | 0.21                              
|Smith                     | 0.20                              
|SSX Complex/E.
      Dash | 0.22                              

Production from the low-grade stockpiles can be either upgraded
by screening and collection of the fines, or may be delivered to the processing
plant in bulk. Because the mill will be operating at full capacity with the
combination of Jerritt Canyon ore and purchased material, the stockpiles most
likely will continue to be upgraded by screening.

In addition to the economic justification for the resource,
factors for mining dilution and recovery need to be considered before the final
mineral reserve statement is issued. At the Jerritt Canyon mines, where the ore
is present as irregular pods, and the mining methods are typically sublevel or
drift-and-fill stoping, any mining dilution occurs at the fringes of the ore
pods or lenses. Within the pods, slices or drifts are extracted and then
backfilled with cemented waste material. When the backfill has consolidated, the
ore between the primary stopes or drifts is then extracted. In the primary cuts,
the interior stope boundaries are surrounded by ore, so little dilution results.
Within the secondary cuts, the walls and/or back are cemented backfill, which is
stronger than the ore or enclosing rocks, and thus little dilution takes place.
It is primarily on the fringes of the individual ore bodies that dilution
occurs, with the amount also being dependent upon the mining method. Jerritt
Canyon engineers have developed a matrix for the different dilution factors
based on experience with the various mining methods, and these are applied in
calculating mineral reserves. All dilution material is applied at zero ounces
per ton.

Table 9 presents historical and projected dilution factors for
the underground operations. Wright Window will be a surface mine, and dilution
should be minimal because of the ability to selectively mine based on blast hole
analyses. Backfilled stopes can stand over substantial vertical heights. This
situation allows the operation to recover nearly all the identified ore-grade
material.

---

45

Table 9: Jerritt Canyon Dilution Factors

|                  | Mining
      Method
|----------------- | -------------------
|                  | Rock               
|Mine              | Drift-and-Fill     
|SSX Complex       | 10                 
|Starvation Canyon | 10                 
|Smith             | 10                 
|Saval             | 10                 

Mineral reserves are listed in Table 10, using the respective
cutoff grades for each individual mine. It should be noted that the gold price
of $580 per ounce is an approximate average of prices published from 2005
through 2007. During this time the price was on an upward trend and certainly
the cutoff grades shown in Table 15 are high (conservative) as compared to those
that would be calculated using more recent values. For example, the December
2007 price, was $220 per/ounce higher than the three-year average, and thus
operational decisions based on short-term prices will allow more material to be
recovered and sold at a profit than indicated in the reserve table. In 2010 the
cutoff grade would be significantly lower as the average gold price reached
$1,226.

Table 10: Jerritt Canyon ReservesDecember
31, 2007

|              | Proven | Probable | Total 
|------------- | ------ | -------- | ------
|              |        |          | Cont'd
|Mine          | kt     | opt      | koz   
|Smith         | 92.5   | 0.304    | 28.1  
|SSX           | 513.7  | 0.221    | 113.4 
|Saval         | 11.4   | 0.200    | 2.3   
|Starvation    | 0.0    | -        | 0.0   
|Wright Window | 0.0    | -        | 0.0   
|Subtotal      | 617.6  | 0.233    | 143.7 
|Stockpiles    | 35.9   | 0.173    | 6.2   
|Total         | 653.4  | 0.229    | 149.9 

Mining Operations

Jerritt Canyon is an operating property with over 20 years of
production experience, during which seven nearly eight million ounces of gold
have been produced. The Jerritt Canyon mine complex consists of two operating
underground mines located several miles west of the processing plant and
administration facilities which are 50 miles north of Elko, Nevada. A third
mine, Murray, was closed during 2006.

All mines feed the same processing plant, with output from the
underground operations and other sources (Murray ore pad reclamation, drill
cores, estc.) totaling nearly 0.62 million tons during 2007. The producing
properties, and their annual production rates, are given in Table 11:

Table 11: Jerritt Canyon 2007 Production (last full year of
activity)

|Property               | Annual Production (tons)
|---------------------- | ------------------------
|SSX Complex            | 312,208                 
|Smith Mine             | 117,394                 
|Stockpiles and Cleanup | 190,331                 
|Total                  | 619,933                 

The full processing plant has the capability of treating
approximately 4,200 tons/day. This rate was quite attainable when the feed
derived mainly from open pit operations, but has been a significant surplus when
accepting material from underground mines simply because the total mine
output cannot attain this daily rate. In mid-2007 Queenstake amended an
agreement with Newmont Mining Corporation to purchase material delivered to
Jerritt Canyon by Newmont, which would supplement mined ores feeding the
roasters and thereby reduce certain unit operating costs. During 2007,
Queenstake processed 348,198 tons of Newmont material. In 2010 a new short term
agreement was established with Newmont for the delivery of 2,000 tons per day
until January 31, 2011. A total of 86,257 tons of ore was purchased from Newmont
USA Limited (Newmont), containing 16,905 ounces, at an average cost per wet ton
of $198.53 per dry ton. A longer term agreement is being developed in 2011.

---

46

The plant processed an average of 2,700 tons per day, or just
under 0.97 million tons for the year 2007. Plant capacity is limited to some
extent by the fuel content of the ore (principally contained pyrite) which
tends to enhance temperatures in the roaster and so must be regulated carefully
when this type of rock serves as feedstock. Blending of various mined products
is practiced constantly to reduce deleterious impacts from rock types with high
fuel content, high arsenic content, and so forth. Also the capacity is somewhat
limited because of air permit requirements. Gold produced in 2007 was 175,646
ounces from 968,130 tons of processed ore and purchased material at a
metallurgical recovery that averaged 88.2% .

The underground mines reported production of 429,602 tons of
ore, along with 229,370 waste tons in 2007. The daily ore production rate
calculates at almost 1,193 tons for the complex at an average grade of 0.285opt.
This tonnage figure was less than the budgeted amount of nearly 503,400 ore tons
at a projected mined grade of 0.265 ounces/ton.

The mines are traditionally operated by trackless equipment.
Electric drill jumbos are used in preparation for blasting, and front loaders
excavate the broken material into diesel-driven Wagner or Tamrock underground
mine trucks for hauling to a pad area outside the portals. Segregation of mined
material is effected near the portals by placing the rock into several windrows;
after dumping in a windrow the mine-truck operator collects a sample from his
load for analysis. Assays from the laboratory then dictate whether that material
is high-grade, low-grade, or waste; the latter is excavated and placed in a
waste dump, whereas the two ore types may or may not be blended depending on
analytical results, and taken to the process facility. Because of the distances
from the several mine portals to the processing plant, large (150 ton) off-road
haulers are used for surface ore transport. These haul roads appear to be well
maintained, they are of adequate width for two-way traffic, and special effort
is expended during the winter months to keep the roadways open from drifting
snow. Much of this equipment will need to be replaced in 2011 as the Issuer
returns to mining activity in the SSX-Steer mine.

Access to the underground mines is through portals, with
internal ramps maintained at grades of 12% to 15%. Typical openings measure 15 x
15 feet in cross section, although consideration is now being given to reducing
some drifts to 10 x 12 feet in size to allow more selective mining and to reduce
development costs. Ventilation is accomplished through the portal openings
(intake air) and through a number of raise bores (exhaust air) six feet to eight
feet in diameter that connect the underground workings to the surface. Certain
of these raise bores also serve as emergency escapeways and are equipped with
personnel capsules and hoisting equipment located on the surface. Major mine
openings are supported with bolts and mesh which seem to hold the back and ribs
well. Ore is generally developed by drifting adjacent to the zone in more stable
rock and then cross-cutting through the deposit at specified intervals.
Drift-and-fill mining is practiced, with secondary openings either alongside a
backfilled stope or underneath a previously-filled excavation. In the latter
situation, cost savings are accomplished since the cemented fill does not
require artificial support. Extraction of ore-grade material is near 100%, and
mining dilution for the most part is confined to the stope fringes.

Each mine has its own batch plant located outside the mine
portal. The backfill plants receive screened rock which is stored in bins
adjacent to the fly-ash and cement tanks. These products are blended according
to the backfill mix design, water is added, and the mixture placed into the
underground ore haulage trucks for transport back into the mine stopes.

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47

In addition to the backfill plant, the mines’ surface
structures generally include a large, well-equipped maintenance shop, mine dry,
and mine office building. The most recent additions were the administration and
shop buildings located at the Steer portal (part of the SSX complex) which were
constructed in April, 2005.

Gold recovery in 2007 (and again in 2010 when the mill
operations recommenced) showed improvement throughout the year as compared to
2006 and averaged 88.2% of contained metal delivered to the process plant
(weighted by tonnage). Data were recorded by month for the year 2010, as shown
below in Table 12:

Table 12: Jerritt Canyon 2010 Gold Recovery by Month

|Month                         | % Au Recovery
|----------------------------- | -------------
|January                       | 87.3         
|February                      | 83.9         
|March                         | 89.6         
|April                         | 89.4         
|May                           | 87.5         
|June                          | 87.6         
|July                          | 89.9         
|August                        | 89.7         
|September                     | 87.7         
|October                       | 87.5         
|November                      | 86.6         
|December                      | 87.4         
|Average (weighted by tonnage) | 88.1         

The average for 2010 is in line with 2007 amounts (the last
full year of operations) however these recoveries were done with lower grade
ores and under tight restrictions imposed for emissions testing. The Issuer
expects these rates to improve as the grade of the ore improves and the
restrictions are lifted now that the new mercury technology has proven
effective.

Gold markets are mature, global markets with reputable smelters
and refiners located throughout the world. Demand continues to be very high with
prices for gold showing a sustained increase over the last several years during
the past year-London Final price averaged just under $1,226 /ounce for 2010.

Markets for doré are readily available. Jerritt Canyon ships
its doré to the Johnson Matthey refinery in Salt Lake City, Utah.

Jerritt Canyon has a few operational contracts in place at the
present time. The most significant contract is for the mining of the Smith Mine
which is currently being performed by Small Mine Developers under a three year
contract expiring January 2013. Other contracts are for maintenance or
engineering services to assist the current personnel at Jerritt Canyon.

In November 2010, a 3 month agreement was reached between
Queenstake and Newmont USA Ltd. whereby Newmont would undertake to deliver 2,000
tons of ore per day from Newmont operations which will be be purchased by
Queenstake and processed through the Jerritt Canyon processing plant. A new
agreement is underway in 2011 while Newmont continues to deliver under the terms
of the interim contract.

Environmental Issues

Environmental Issues are related to addressing the legacy of
thirty years of operations and building for the future. Environmental management
systems are in place and there is a qualified environmental staff on site,
assisted by external resources as required. Various mitigation programs are in
effect as required within the Consent Decree signed in October 2009, and related to additional issues. The
most significant program underway is the construction of a new tailings facility
to replace the one that has been in use since 1980, which will then be
reclaimed.

---

48

Environmental liabilities at the Mine related to closure and
reclamation include:

- Salinity in seepage from four waste rock disposal areas (RDAs).
- Seepage from the tailings impoundment, which will be mitigated by the
  construction of a second tailings facility; and
- Air emissions from the processing circuit, which has been substantially
  reduced to well below required limits with the construction of a new mercury
  emissions control system in 2009.

Waste Rock Seepage

There are several work programs underway required by the
Consent Decree to diminish the seepage in 2011 along with a long term solution
to remedy future waste. Staff has worked with the Nevada Division of
Environmental Protection  Bureau of Mining Regulation and Reclamation
(NDEP-BMRR) to develop mitigation and monitoring plans.

The Mine has been working with the NDEP-BMRR to treat seepage
with high concentrations of sulfate and TDS from the RDA’s using a sulfate
reduction trench in Marlboro Canyon. The trench reduced concentrations but not
to an acceptable level. The Issuer will improve reclamation of the RDAs to
diminish the seepage at its sources. The discharge ultimately flows into Jerritt
Creek which flows into Independence Valley through several ranch properties and
infiltrates into the sub-surface. Monitoring downstream from the trench show
acceptable sulfate and TDS levels

Three other RDA’s are also exhibiting elevated concentrations
of sulfate besides Marlboro Canyon. These are: Gracie; Snow Canyon; and, DASH East. The Issuer will improve
reclamation of these RDAs to diminish the seepage at its sources. The DASH East
RDA will be used for construction materials for underground mine backfill, may
be used for closure of TSF1 and may contribute construction material for TSF2.

Tailings Impoundment Seepage Control

During 2009 and under the requirements within the CD, the
Issuer prepared an optimization plan for the seepage recovery system. This
seepage recovery system optimization went into effect in 2010 and will be
functional during the remaining useful life of TSF and for the recovery of
residual seepage after the closure of TSF1.

Air Pollution Controls

On October 13, 2009, the NDEP entered into a Consent Decree
with Queenstake. The requirements of the CD relate to legacy facilities,
pollution controls and management systems. Several process component shave been
closed and the reclamation of the sites were completed in 2010 or will be
completed in 2011. New air pollution controls for mercury emissions from the
roaster were designed in 2009, tested in 2010, and will be installed in 2011.

Reclamation Bond Cost

Approved reclamation and closure plans are in place and have
been recently updated, and the Mine concurrently reclaims facilities and
disturbances. Reclamation consists of earthworks and reseeding; and closure
consists of characterization, disassembly and demolition, and chemical
stabilization. Mine staff and the USFS/NDEP update the reclamation bond on an
annual basis. As of September, 2010, the reclamation bond was estimated to be about US$54.8 million. The 2011 update is in preparation.
Bond increases are a result of more surface disturbance or facilities needing
restoration, and increased unit costs (labor, equipment, and fuel costs).

---

49

Operating permits for the mine are in place and are presented
in Table 13. Environmental management systems are in place and are managed by an
experienced and qualified onsite environmental staff. Operating and maintenance
staffs are informed of their responsibilities during annual MSHA refresher
classes. In addition to MSHA classes, the Mine holds leadership classes for the
supervisory staff. During these classes, supervisors are informed of their
environmental responsibilities.

Table 13: Operating Permits

|Permit/Approval                               | Granting Agency                                                                           | Comments                                                                                                                                                                                                                                                                                                                                                               
|--------------------------------------------- | ----------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Plan of Operations                            | USFS                                                                                      |                                                                                                                                                                                                                                                                                                                                                                        
|Work Plans                                    | USFS                                                                                      | Annual work plan submitted to
      USFS and NDEP                                                                                                                                                                                                                                                                                                                      
|Clean Water Act Section 404 Permit            | U.S. Army Corps of Engineers                                                              | Expired in 2007.
      There are no triggers requiring the update.                                                                                                                                                                                                                                                                                                     
|EPA ID Number                                 | U.S. Environmental Protection
      Agency                                                | The Mine, a
      large-quantity generator, has the typical hazardous wastes such as
      laboratory cupels and crucibles, and cleaners from maintenance operations.
      Wastes are accumulated and full drums are shipped once every calendar
      quarter fro disposal                                                                                           
|Air Quality Permit                            | Nevada Division of Environmental Protection
      (NDEP)/ Bureau of Air Pollution Control | The Mine has a current Title V
      air permit. Improved pollution controls for mercury emissions and expanded
      monitoring and management systems developed under the CD are being
      incorporated in the permit.                                                                                                                                             
|Reclamation Permit                            | USFS and NDEP/ Bureau of Mining
      Regulation and Reclamation (BMRR)                   | The bond estimate
      is updated annually with the USFS & NDEP. The bond as of September,
      2010, was US$54.8 million.                                                                                                                                                                                                                                           
|Water Pollution Control Permit                | NDEP-BMRR                                                                                 | One water pollution control
      permit covers the entire mine area. Tihe tailings seepage/chloride plume
      is managed by a recovery system and will be mitigated by closure of TSF1;
      and the high sulfate/total dissolved solids emanating from four rock
      disposal areas will be diminished by improved reclamation and surface
      water controls.
|Underground Injection Control                 | NDEP/ Bureau of Water Pollution
      Control                                             | Addresses
      dewatering water from the underground mines. There is currently no active
      underground injection.                                                                                                                                                                                                                                                 
|Solid Waste Class III Landfill Waiver         | NDEP/ Bureau of Solid Waste                                                               | The Mine has three authorized
      landfills at the lower mill area, Burns Basin, and Alchem. Employees
      are instructed during annual MSHA refreshers with regard to what is
      acceptable to dispose of in the landfill.                                                                                                                                     
|General Stormwater Discharge Permit NVR300000 | NDEP/Bureau of Water Pollution Control                                                    | Annual reports are submitted to
      NDEP. No concerns have been noted.                                                                                                                                                                                                                                                                                               
|Permit to Appropriate Waters                  | NV Division of Water Resources                                                            | No concerns were
      identified. The Mine has sufficient appropriations to cover processing and
      dewatering needs.                                                                                                                                                                                                                                              
|Permit to Construct Impoundments/Dam Safety   | NV Division of Water Resources                                                            | No concerns identified                                                                                                                                                                                                                                                                                                                                                 
|Industrial Artificial Pond Permits            | Nevada Department of Wildlife                                                             | No concerns
      identified                                                                                                                                                                                                                                                                                                                                           
|Liquefied Petroleum Gas License               | NV Board of the Regulation of Liquefied
      Petroleum Gas                               | No concerns identified                                                                                                                                                                                                                                                                                                                                                 
|Potable Water System                          | Nevada State Health Division                                                              | Potable water
      systems are located at the Murray, SSX, and millsite. Upgrades are
underway in 2011 for the SSX and millsite systems.                                                                                                                                                                                                                              

---

50

|Permit/Approval      | Granting Agency              | Comments                                                                                                                                                                                                                                             
|-------------------- | ---------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Septic System Permit | Nevada State Health Division | The Mine has general permits for five systems: SSX; Steer;
      Murray; USA; and Smith. The mill site has a package plant that discharges
      to the tailings impoundment. No concerns identified. The package plan will
      be updated in 2011.

The current closure cost estimate for Jerritt Canyon is
approximately $48.3 million, assuming the work is accomplished by an in-house
work force, which Queenstake has funded by placing US$25.7 million in a
commutation account with the Chartis, along with two further deposits in money
market accounts at Chartis totaling $2.6 million in 2010 related to increased
surety for additional bonding requirements. The net present value of this
obligation which reflects the new mine life extending to 2025 is $36.1 million.
The reclamation cost for the agency bond is somewhat higher at $54.8 million as
calculated under the U.S. Forest Service bonding guidelines; this figure
includes agency oversight and administration. Queenstake has a policy with
Chartis for a closure cost and cap insurance policy that has been accepted by
the regulatory agencies to serve both to fund the physical reclamation and
post-closure site management, and meet agency requirements for bonding.

Closure and reclamation will consist of the following actions:

- Open pits will be reclaimed by partially backfilling the pits with mine
  waste rock produced in the underground mining operations. Level areas in the
  pit bottom will be covered with fine-grained waste rock or growth medium and
  vegetated.
- Portals for the underground mines will be sealed by blasting, backfilling
  or bulk-heading. Raises extending to the surface will be backfilled. Regional
  groundwater levels are below the elevation of the mine portals or raises,
  therefore seepage from the mine openings is not expected.
- Waste rock disposal areas not generating seepage will be left in a
  condition meeting slope stability requirements. Portions of the older rock
  disposal areas will be left with angle of repose side slopes that are covered
  with durable non-acid generating rock. Other rock disposal areas will have
  final slopes of 2.5H to 1V. Tops of the rock disposal areas will be graded to
  route surface water runoff away from rock disposal area slopes. Level surfaces
  of the rock disposal areas and the 2.5H to 1V side slopes will be covered with
  growth media and vegetated.
- Waste rock disposal areas generating seepage will be contoured and growth
  medium applied to increase shedding of precipitation and to diminish the
  production of seepage.
- Haul roads and access roads not included in the final site access
  requirements will be graded to conform to the original ground contours and
  vegetated. Discussion are currently in progress with the USFS to identify
  roads that will remain as part of the USFS travel management plans. Haul roads
  that may be left open will likely require some level of reclamation to reduce
  overall road width.
- Sediment control structures will be reclaimed by breaching ponds and
  basins after sediment and erosion control issues are controlled through
  reclamation of the areas draining to the structures.
- The tailings impoundment will be reclaimed in phases. Beginning with the
  spent ore on the heap leach facility, rock and soil will be applied to beach
  areas in 2011 to provide a working surface on which evaporation of the surface
  waters and the residual seepage will be performed. Wells will be installed to
  monitor the progress of seepage recovery until forced evaporation will no
  longer be required. The tailings surface will then be graded to be
  free-draining from the facility. Then a synthetic liner and soil cover will be
  applied. The final topography of TSF1 will conform by first removing free
  water from the pond through evaporation.
- Solution ponds associated with the heap leach pad and the processing plant
  will be reclaimed by removing solution from the pond, and disposal of all
  contained sludge in the tailings impoundment. Pond liners will be folded into
  the ponds and backfilled. Growth medium will be placed over the backfilled
  ponds and vegetated.
- Buildings and structures will be dismantled to the level of foundations
  and either salvaged or disposed of in an approved landfill. Process piping
  will be rinsed and neutralized. Disposition of underground piping is not
  specifically addressed, however SRK would assume it will be necessary to
  remove all piping.

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51

Taxes

Queenstake controls more than 119 square miles of ground
encompassing the mine area proper and surrounding acreage. The bulk of this is
in the form of contiguous unpatented mining claims which are held in force by
production from the mining activities. No production royalties are paid for gold
deriving from these claims.

Some property is leased from landowners in the region, and a
royalty is paid on production from these lands. In the future this amount will
average approximately $60/recovered ounce as the royalty percentage increases
based on gold price and currently the maximum percentage has been reached due to
the current gold price (5% of recovered ounces sold).

Nevada does not apply a corporate income tax. Income tax is
levied on the federal level. There is a modest sliding scale tax rate generally
applicable to smaller operations, but given the size of the Jerritt Canyon
activities, the rate is 34.5% of net income after all deductions have been
taken. Queenstake has, in total, suffered a loss since acquiring Jerritt Canyon
in mid-2003 except for in 2007 when Queenstake was acquired by the Issuer,
however 2008 and 2009 were also loss years which were carried back to offset so
no federal income taxes have been assessed.

Property taxes are assessed annually by Elko County on real
estate and personal property controlled by Queenstake.

A sales tax rate of 6.5% is applied to all purchases within
Elko County, and the state levies a 0.63% tax on gross incomes paid, less
credits for certain health benefits for the workers.

Capital and Operating Cost Estimates

Jerritt Canyon is forecasting a capital expenditure of $115
million over 2011 for items related to the mill and mine facilities. These
include the categories of: equipment, construction of a new tailings facility,
underground development, and mine facilities. The largest expenditure outlays
will be for the construction of a new tailings facility at $39.1 million, mine
equipment and facilities required to recommence mining at the SSX of $20.3
million, mine development at $4.5 million, and $6.0 million for the construction
of a new ore dryer to meet the current requirements under the Consent Decree.
Sustaining capital costs for the ore processing plant is budgeted at $17.1
million for upgrades to existing facilities. Sustaining capital costs for
surface services and G&A is budgeted at $1.6 million. G&A sustaining
capital at Jerritt Canyon is typically for the replacement of light vehicles and
office equipment. A breakdown by property is given in Table 14.

The operating costs per ton of ore for processing have steadily
increased over the years from $15.67 in 2001 to $30.41 in 2007 (the last full
year of operations prior to 2010) and $120 in 2010, primarily as a function of
the production throughput and energy costs. In 2010 there were several issues
that the Issuer expects will not be present in the future as the Issuer
recapitalizes and invests in the infrastructure in 2011. These issues primarily
stemmed from low grades, strict controls over processing levels while operating
under the Consent Decree, and a number of mill stoppages due to a lack of spare
parts. Of this total, approximately 75% is for operations and 25% is for
maintenance.

The anticipated operating cost for the next five years is
$98.32 per ton of ore as shown in Table 15. The lowest per-ton costs are
associated with the direct and screened stockpiles, since these sources do not
bear future mining charges nor assigned royalty payments. Wright Window is a
small area that will be surface mined, and so the unit costs are significantly
less than for an underground operation. The remaining sources of feed material
derive from underground and have varying estimated costs depending largely on
ground conditions and the need to backfill for support. The highest-cost mining
occurs in the E. Dash, and Starvation Canyon mines.

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52

Economic Analysis

SRK has reviewed the internal life-of-mine (LoM) technical
and financial model prepared by Queenstake for

Jerritt Canyon Mine for the 2007 reserve.

The LoM plan, technical and economic projections in the LoM
model include forward looking statements that are not historical facts and are
required in accordance with the reporting requirements of the OSC. These forward
looking statements are estimates and involve risks and uncertainties that could
cause actual results to differ materially.

LoM Plan and Economics

The SRK LoM plan and economics are based on the following:

- Reserves of 3.55 million tons at an average grade of 0.227 oz-Au/ton,
  containing a total of 717 koz of gold;
- A mine life of 5 years from 7 mines and various stockpiles, at a total
  average rate of 623 kt per year;
- An overall average metallurgical recovery rate of 89%, producing 368 koz
  of gold over the LoM;
- A cash operating cost of $518/Au-oz, or $99.32/ore-ton on a constant
  dollar basis;
- Total capital costs of $55.5 million being comprised of $5.2 million for
  mine equipment, $22.4 million for capitalized development, and $2.3 million
  for facilities, and sustaining capital of $14.1 million for process, $1.6
  million for administration and surface services, and $9.9 million tailing
  impoundment; and
- Salvage value of $18.1 million

The base case economic analysis results as at 2007, shown
      in Table 16, indicate an undiscounted after-tax net present value of
      $9.853 million at a 0% discount rate.Table 16: LoM Economic Results (as at 2007)


|Description                             | LoM Value 
|--------------------------------------- | ----------
|Ore                                     |           
|Ore Milled-(Jerritt Canyon)             | 3,155 kt  
|Gold Grade                              | 0.227 opt 
|Contained Gold                          | 717 koz   
|Process Recovery
      (average)        | 89 %      
|Recovered Gold                          | 638 koz   
|Gross Income ($000s)                   |           
|Market Price $580/oz                    |           
|Gold Sales                              | $370,240  
|Net Income from
      Purchased Ores    | -         
|Gross
      Revenue                     | $370,240  
|Refining &
      Sales                  | ($520)    
|Net Smelter
      Return                | $369,720  
|Royalties                               | ($3,831)  
|Gross Income
      From Mining          | $365,889  
|Operating & Capital Cost
      ($000s) |           
|Mining                                  | ($118,190)
|Backfill                                | ($22,719) 
|Expensed Waste                          | ($28,818) 
|Surface Facilities                      | ($35,287) 
|Process                                 | ($87,179) 
|Site Administration                     | ($16,819) 
|Purchased Ore                           | (-)       
|Operating Costs                         | ($308,801)

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53

|Description                          |                                      | LoM Value
|------------------------------------ | ------------------------------------ | ---------
|                                     | Cash Cost ($/oz) $518/oz             |          
|                                     | Cash Cost ($/t-ore) $98.32 /t        |          
|                                     | Cash
      Operating Margin (EBITDA) | $58,024  
|Other Costs                          |                                      |          
|Reclamation Accrual                  | ($352)                              
|Other                                |                                      | $9,700   
|                                     | Net
      Income                     | $47,236  
|Capital Cost net of Salvage ($000s) |                                     
|Equipment                            |                                      | ($5,192) 
|Capitalized Development              | ($22,452)                           
|Facilities                           |                                      | ($2,294) 
|Process
      Capital (sustaining)   | ($14,115)                           
|Tailings Impoundment                 | ($9,870)                            
|Administration & Surface Services    | ($1,560)                            
|Salvage                              |                                      | $18,100  
|Capital Costs                        | ($37,382)                           
|                                     |                                      |          
|Cash Flow                            | (NPV @ 0%)                           | $9,853   
|Cash Flow                            | (NPV @ 5%)                           | $5,270   
|Cash Flow                            | (npv @ 8%)                           | $1,966   

The expected life of the Jerritt Canyon operation is five
years, based on the current processing rate and reported proven and probable
reserves as of December 31, 2007. The Issuer controls a large land position in
the immediate area and it is expected that future exploration will continue to
convert certain resources to a reserve category over time.

Exploration and Development

Queenstake has been conducting aggressive resource and reserve
development programs throughout its ownership of Jerritt Canyon.

The following recommendations for advancing the Jerritt Canyon
property are listed below:

- Continue to satisfy the requirements defined by the State of Nevada in the
  2009 Consent Decree document including mercury emissions controls at the
  processing plant;
- Continue exploration and resource conversion drilling with the target of
  locating new areas of resource and reserve both near mine and in underexplored
  areas;
- Re-evaluate the open-pit gold mining potential of the Jerritt Canyon
  District in the current high-price gold environment (open pit mining stopped
  in 1999 when the gold price was less than $326/ounce);
- Continue to update the drill hole acQuire database with new and historic
  geologic data as drilling programs progress;
- Continue remodeling the geology and resource areas using Vulcan software
  to produce new block models for updated resource estimations and mine design;
- Reopen the SSX-Steer Mine Complex using Queenstake staff and mining
  equipment targeting approximately 1,200 tons of ore production in the third
  quarter of 2011;
- Conduct pre-development geotechnical and metallurgy studies on the
  Starvation Canyon resource to help with mine design and advance this deposit
  towards production in 2012;
- Try to maximize stockpile haulage to the mill during the non-winter
  seasons;
- Continue to work on the mine to mill reconciliation in respect to tons and
  grade; and

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54

- Continue to develop ways to minimize the amount of moisture in the ore
  that enters the plant. The moisture typically comes from internal mine water,
  and seasonally from water that enters the stockpiles at the mines and mill.

(b) Ketza River Project, Yukon Territory

The Issuer's interest in the Ketza River Property is the
subject of a report prepared (the SRK Report), dated April 18, 2008, prepared
by SRK Consulting (US), Inc. (SRK), of #3000, 7175 West Jefferson Avenue,
Lakewood, Colorado, USA 80235. Included in this report is the most
up-to-date published Ketza River resource estimate dated December 31, 2007.

The following description of the Ketza River Property has been
summarized primarily from the 2008 SRK Report. Some updates have been added that
relate to the 2008 to 2010 project work. Data or information noted below
subsequent December 31, 2007 has not been reviewed or prepared by SRK Consulting
but rather by management of the Issuer from previously published results, and
has not been incorporated to date within any NI 43-101 report. The recent work
has continued to focus on exploration throughout the property, drilling near and
away from the existing resource areas, and conducting studies under the
direction of EBA Engineering Consultants Ltd. (now a Tetratech Company) to help
satisfy the YESAB Project Proposal that is being targeted for submission to
YESAB in Whitehorse in late July 2011. The Issuer intends to issue an updated NI
43-101 report in early to mid-2011.

Project Description and Location

The Property owned or leased by Ketza River Holdings is located
on the headwaters of Cache Creek, a tributary of the Ketza River, in the Watson
Lake Mining District of the Yukon Territory, and is centered at 61o
32' N and 132o 13' W on NTS map sheet 105 F/9 (Figure 6).

Both the Ketza River and Silver Valley Projects consist of a
total of 653 Yukon quartz claims and fractions of claims, 66 quartz leases
(owned by Ketza River Holdings Ltd.), and 6 leased quartz claims (not owned by
KRH) as shown in Figure 6.

The Ketza River Property consists of 533 quartz claims and
fractions of claims and 60 quartz leases. The 60 quartz leases cover
approximately 787.9ha.

The Silver Valley Property lies approximately 6km east of the
Ketza River Property and contains both Au and Ag-Pb ± Au targets. The Silver
Valley Property is not included in the current published Ketza River resource.
The Silver Valley Property consists of 118 quartz claims and fractions of
claims, six quartz leases owned by KRH, and six leased quartz leases not owned
by KRH. The six quartz leases owned by KRH cover approximately 81.8 ha.

Two quartz claims (Lynx 1 and Lynx 2) owned by KRH are located
near the intersection of the Ketza River Project access road and the Robert
Campbell Highway and are not shown in Figure 6.

An annual royalty is due to the Yukon government on every
producing mine according to the Yukon Quartz Mining Act (Canada). The royalty is
on any profits that exceed the sum of $10k during any calendar year. The royalty
is as follows:

- On annual profits in excess of $10k and up to $1M, 3%;
- On the excess above $1M up to $5M, 5%;
- On the excess above $5M up to $10M, 6%; and
- On the excess above $10M a proportional increase of 1% for each additional
  $5M.

Environmental permits are in place for exploration and related
activities, as well as the maintenance of the Ketza River camp. The Issuer has
an environmental staff based at the Ketza River camp to routinely monitor environmental parameters, and also maintains an environmental
office in the provincial capital of Whitehorse. Relevant permits are presented
in Table 17. All permits except the Water License are issued by the Department
of Energy, Mines and Resources or the Department of Environment. The Water
License is issued by the Yukon Water Board.

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55

Table 17: Permits for the Ketza River Project

|Permit/Approval                                                    | Issuing Agency                                                   | Comments                                                                                                                                                                                    
|------------------------------------------------------------------ | ---------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Quartz Mining Land Use Permit LQ00156                              | Mining Land Use, Department of
      Energy, Mines and Resources | Covers all exploration through
      June 14, 2014.                                                                                                                                         
|Government of Yukon Lease                                          | Lands Branch, Department of Energy, Mines and
      Resources    | For the occupation of land for the purpose of
      commercial mine, mill, campsite, tailings pond and other facilities.                                                                    
|Class A Land Permit                                                | Lands Branch, Department of
      Energy, Mines and Resources    | Permit to proceed with the land
      use operations for road maintenance.                                                                                                                  
|Water License QZ04-063 (expired December 31, 2009)                 | Yukon Water Board                                                | For the storage of water in, and the discharge
      of water from, an existing tailings impoundment.                                                                                       
|Environmental Health Approvals                                     | Department of Environment                                        | Public Health and Safety Act
      approvals needed for drinking water, food safety and private sewage
      disposal.                                                                      
|Storage Tank Registration                                          | Department of Environment                                        | For registered AST’s: one 45,000L, one 500L,
  one 10,000L, and four 90,000L_tanks.                                                                                                         
|Air Emissions Permit No. 4201-60-025
      (expires Dec. 31, 2012) | Department of Environment                                        | Permit to operate a solid waste
      incinerator capable of burning >5kg/day.                                                                                                              
|Special Waste
      Permit No. YG41-190                            | Department of Environment                                        | Allows
      for storage and handling of waste, oil, waste batteries, waste lead
      nitrate, unspecified substances classified as Corrosive Solids, NOS,
      Class 8, Packing Group 1.

The Quartz Mining Land Use Permit requires a lease-security
payment to be made each year for a limited time. Under the previous permit,
payments of C$26,500 were due April 1 of each year. The recently revised permit
will also require total payment of $564,300 which will be made through annual
funding payments of $94,050 commencing April 1, 2008, two of which have been
made so far as the operations were shut down for one year. In addition, the
Government of Yukon Lease requires a payment in the amount of C$7,000 to be made
on January 1 of each year. A total of C$3,087,600 has been paid for the Water
License. No further payments are due under the present permit. The Issuer has
all permits required for exploration and maintenance of the camp however
additional permits will be required for mine operations. There are currently no
environmental liabilities at the Ketza River property.

The Water License QZ04-063 expired on December 31, 2009 and the
reapplication process is currently in progress. Yukon-Nevada Gold Corp. and
Ketza River Holdings are still obeying the rules and regulations in the Water
License QZ04-063 until it is renewed. Other permits that have been attained in
the past but that have recently expired include: Solid Waste Permit (Commercial
Dump Permit No. 81-013) which expired December 31, 2009; and a Quarry Permit
which expired October 17, 2008.

The Issuer has all permits required for exploration and
maintenance of the camp; however, additional permits will be required for mine
operations. There are currently no environmental liabilities at the Ketza River
property.

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56

Figure 6Location Map



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57

Figure 7: Ketza River Project Land Position



Accessibility, Climate, Land Resources, Infrastructure
and Physiography

The Property is located in the Pelly Mountains in south central
Yukon. Terrain is mountainous with elevations ranging from 1,300m above mean sea
level (amsl) to 2,100m amsl. Land use in the area is limited to mining,
trapping, hunting and recreation.

Average daytime temperatures range from highs of
+25oC in summer to lows of -40oC in winter. Average annual
precipitation in Faro, the nearest location for which weather statistics are
available, is 31.6cm and includes annual averages of 21.4cm of rainfall and
111.6cm of snowfall (http://climate.weatheroffice.ec.gc.ca/climate_normals).

Daylight extends to nearly 24hr/day in the summer months, particularly June.
  There are only short periods of daylight during the winter. Exploration can be
  conducted year-round but heavy winter snow may limit access to some areas.
  Mining can be conducted year-round.

Vegetation consists of dwarf birch, spruce, alder and balsam
trees up to the tree line at approximately 1,600m amsl. The Property is
accessible by a 40km all-weather road from Km 323 on the Robert Campbell
Highway. The Property is approximately 80km by road from Ross River and 460km
from Whitehorse (Figures 6 and 8). The 40km access road is kept open year-round
and is passable for tractor-trailer-size supply trucks.

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58

The surface is owned by the Crown and leased to the Issuer
under the Government of Yukon Lease. Total annual lease payment for the
occupation of land for the purpose of a commercial mine, mill, campsite,
tailings pond and other mine-related facilities is C$7,000.

The community of Ross River is 90km from the Project and
supplies food, fuel and basic medical service. Personnel trained in first aid
are on site at the Ketza River camp at all times and a fully stocked Industrial
Ambulance is available. There is an airstrip in Ross River and contractors for
electrical, plumbing, mechanical and vehicle maintenance are available in Ross
River or Whitehorse.

Power to the camp and facilities is provided by 160kV and 210kV
diesel generators. One generator remains off while the other generator provides
power. The two are used alternately to allow for maintenance. A smaller 60kV
generator is available as backup. Power for any future mining activities will be
provided by additional generators.

Water for the camp and facilities is available from two
established wells. Ketza is currently receiving their drinking water by pumping
directly from Cache Creek into a storage tank where the water is chlorinated,
and processed using reverse osmosis equipment (for arsenic treatment). Pumps
that are in place can individually produce up to 30gal/min. An emergency source
for water is Cache Creek itself. Power and a pump are in place so that water can
be used from the creek if needed. Water required for future mining operations
will be assessed in feasibility studies and will presumably be provided by water
wells to be drilled on the property.

The buildings for the camp, kitchen and offices are Atco
trailer units. There are 48 rooms available for lodging. There is a kitchen unit
with dining area and an office complex for technical staff. Shop areas in the
old mill building are functional and are used for maintenance of camp vehicles
and equipment.

The old mill building is in good condition and its use for
future milling activities will be investigated in feasibility studies. West of
camp there is a core logging and core splitting building. All facilities have
available power and water. Core is stored outdoors on-site.

The camp site is permitted for 50 personnel. Technical staff
typically work four weeks on and two weeks off with schedules dependent on the
needs of the camp. A larger camp will be required for future mining operations.
A suitable tailings storage site is present on the property.

There is an existing tailings pond on the Ketza River site that
was utilized in previous milling operations. This pond was designed as a
sub-aqueous disposal sight for oxide mill tailings. The majority of the mining
that is proposed will be sulfide in nature making the current pond unsuitable
for tailings disposal under the current plan. A new tailings facility is
proposed in the current application being prepared.

Waste generated in camp and from activities associated with the
Project are burned in a trash incinerator or hauled to the Ross River land fill.
Trash awaiting incineration is stored in bear-proof metal storage containers.
There is a chemical treatment facility for sewage located down gradient from the
camp.

Currently there are no waste dumps of any significant size on
the surface. The majority of the waste material that was previously mined was
used as fill material for the underground workings.

Preliminary sites for waste rock disposal have been identified.
Geotechnical and environmental data is currently being collected and summarized
to use in the engineering design for future waste dumps. Although some of the
waste may be acid generating in nature, the abundance of high quality limestone
on the site should leave several options for mitigation of acid generation
potential.

Geologists, engineers, surveyors and other technical people are
hired on a contract basis or employed through the Issuer. An independent
engineering firm is assisting with the preparation of the current permit
application to change the use of the property from exploration to development
and mining. There is an expired Memorandum of Understanding (MOU) signed with
the Dena Band of the Kaska Nation stating that First Nation’s people will be
preferentially hired if they qualify for available jobs; Ketza River Holdings is
still honoring this expired MOU while negotiations are in progress to make a new
MOU. Personnel for mining operations will be hired and trained locally, where
possible. Additional personnel will be hired from other localities.

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59

Figure 8: Ketza River Project Access



History

The Ketza River Property has a history of exploration and
production dating back to the 1940’s. The property consists of several discrete
zones of mineralization as shown on Figure 9. The exploration camp, and core
shed are shown on the map along with the historic tailings pond and mill site.

The history of the ownership of the Kettza River Property is
summarized below:

- Conwest Exploration Company Limited (Conwest), 1954-1983;
- Pacific Trans Ocean Resources Ltd (Pacific Trans Ocean), 1983 to 1984,
  through an option with Conwest;
- Joint venture between Canamax Resources Inc. (Canamax) and Pacific Trans
  Ocean, 1984-1989;
- Canamax, following purchase of Pacific Trans Ocean’s interest, 1989-1992;
- Wheaton River Minerals Ltd (Wheaton), after acquisition of property from
  Canamax, 1992-1994;
- YGC Resources Inc. (YGC), after transferral from Wheaton in exchange for
  controlling interest in YGC, later divested, 1994-2007; and
- The Issuer, following merger between YGC and Queenstake Resources Ltd to
  create YNG, 2007 to present. Ketza River Holdings Ltd. is a 100% Canadian
  owned subsidiary company of Yukon-Nevada Gold Corp. that owns and operates the
  Ketza River and Silver Valley Projects in the Yukon.

Lead-silver veins were discovered in the Ketza River area by
prospectors of the Hudson Bay Mining and Smelting Company Limited in 1947. Later
explorers conducted trenching, road building and diamond drilling. Exploration
adits were subsequently developed on the lead-silver veins but little economic
production was achieved.

Gold mineralization on the property was first discovered in
1954 by Conwest. Between 1955 and 1960, Conwest explored several mineralized
occurrences with trenching and 75 AX diamond drill and packsack drillholes. A
non-NI 43-101-compliant historic geological reserve of 68kt grading 12g/t-Au
was reported for the Peel 3 and Peel 3C deposits (now known as the Peel and Ridge zones). The
claims were surveyed and taken to lease during this time.

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60

Figure 9: Mineralized Zones and Facilities



In 1983, Pacific Trans Ocean optioned the property from Conwest
and carried out limited geochemical and geological surveys before entering into
a joint venture with Canamax in 1984.

In February 1987, a feasibility study was completed by Canamax
(Canamax Resources Inc. 1987) and reviewed by Wright Engineers Ltd (Wright). The
study recommended construction of a 320t/d mill and mine complex producing
approximately 50koz-Au/year from a mineable base of 460kt averaging 15.3g/t -Au.
The feasibility preceded NI 43-101 requirements and is not compliant with CIM
guidelines. Mine life was to be five years and the average cost per ounce of
gold produced was to be in the range of US$220 to US$250. The estimated cost to
build the mine and mill was estimated at US$21M. A production decision was made
in March 1987, and financing was obtained in October 1987. The mill achieved
commercial production in July 1988.

After several months of operation, the oxide inventory was
significantly reduced from the Wright feasibility study estimates due to an
error in estimation of the bulk density of the oxide ore. The feed grade to the
mill was also lower than expected, due to a number of factors including
over-weighting of high-grade samples in the data and dilution from the lower
than expected grade from the footwall mineralization (Strathcona Mineral
Services Limited, 1988). Canamax purchased Pacific Trans-Ocean's interest in the
Project in January 1989.

From July 1988 to November 1990, production from the property
was 100,033oz-Au from 342,395t at an average mill head grade of 11.6g/t -Au.
Average mill throughput over the life of the mine was 364t/d with an average
gold recovery of 88.65% . A summary of total production by zone is
presented in Table 4.4.1 (Hodgson, 1991). It should be noted that mine
production figures were not reconciled with total mill production of
100,033oz-Au.

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61

Table 18: Summary of Total Gold Production July 1988November 1990

|Zone                 | Tonnes  | g/t-Au
|-------------------- | ------- | ------
|Ridge                | 95,790  | 13    
|Peel                 | 148,844 | 13    
|Break-Nu             | 54,700  | 10    
|Tarn                 | 18,169  | 8     
|QB                   | 1,987   | 13    
|Knoll                | 2,936   | 6     
|Gully                | 8,136   | 10    
|1430 East            | 600     | 5     
|Peel/Ridge Mine Dump | 11,233  | 6     
|Total                | 342,395 | 11.6  

With the oxide zones nearing depletion, attention was given to
the economic viability of the sulfide mineralization and in November 1990 the
mine and mill ceased treating oxide material. Metallurgical studies were
conducted on sulfide mineralization from several of the deposits. Gold recovery
of 78.3% from the sulfides was forecast with limited capital additions required
to the existing mill. The mill was permitted to treat oxide ore only and
additional permits were required for the treatment of sulfide ore. In June 1991
an amended water license was received but Canamax did not pursue the application
due to corporate conditions, low gold prices and adverse market conditions.

Wheaton acquired the property from Canamax in 1992 and in 1994
transferred it to YGC in exchange for a controlling interest, later divested, in
YGC. The claims outside the mine area were optioned to Hemlo Gold Mines Inc.
(Hemlo) from 1993 to 1995.

Hemlo carried out soil sampling, magnetic surveys, bulldozer
trenching and completed three diamond drillholes totaling 499m in the Shamrock
zone area. YGC also conducted diamond drilling in 1994 and 1995 that consisted
of 72 HQ-diameter diamond drillholes totaling 5,622m. The program resulted in
the discovery of the Chimney and Fork zones.

In 1996, YGC completed 14 HQ-diameter holes totaling 1,954m in
the mine area and 21 HQ-diameter holes totaling 3,613m in the Shamrock zone. The
1996 program also consisted of geologic mapping, prospecting and sampling a
number of other anomalous zones. During 1997, 11 holes, totaling 1,217m, were
drilled along the Fork  Nu- trend.

From 1955 through 1997, a total of 914 diamond, RC and
percussion drillholes totaling 53,134m of drilling have been completed on the
property. A summary of this is presented in Table 19.

University graduate students (Cathro, 1990 and Stavely, 1992)
completed studies on the property investigating the geology and mineral deposits
of the Ketza district and the mineralogy and geochemistry of the Ketza Mine
deposits. A post-graduate investigation was completed on the structural geology,
stratigraphy, alteration systems, and possible age relationships of
mineralization and postulated intrusive activity (Fonseca, 1997).

Table 19: Summary of Drilling from 1955 to 1997

|Year    | Operator                | No. Holes | Type of Drilling | Length Drilled (m)
|------- | ----------------------- | --------- | ---------------- | ------------------
|1955-60 | Conwest Exploration Co. | 75        | Diamond          | Unknown           
|1984    | Canamax Resources Inc.  | 59        | Diamond          | 2,424             
|1985    | Canamax Resources Inc.  | 60        | Diamond          | 6,158             
|1986    | Canamax Resources Inc.  | 158       | Diamond          | 8,609             
|1987    | Canamax Resources Inc.  | 61        | Diamond          | 4,990             
|1987    | Canamax Resources Inc.  | 95        | RC               | 5,029             

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62

|Year  | Operator                                       | No. Holes | Type of Drilling | Length Drilled (m)
|----- | ---------------------------------------------- | --------- | ---------------- | ------------------
|1988  | Canamax Resources Inc.                         | 70        | Diamond          | 5,549             
|1989  | Canamax Resources Inc.                         | 127       | Diamond          | 5,590             
|1989  | Canamax Resources Inc.                         | 79        | Percussion       | 1,215             
|1990  | Canamax Resources Inc.                         | 9         | Diamond          | 1,101             
|1994  | Hemlo Gold Mines Inc./YGC
      Resources Ltd. | 25        | Diamond          | 2,180             
|1995  | Hemlo Gold Mines Inc./YGC Resources Ltd.       | 50        | Diamond          | 3,630             
|1996  | YGC Resources Ltd.                             | 35        | Diamond          | 5,442             
|1997  | YGC
      Resources Ltd.                       | 11        | Diamond          | 1,217             
|Total |                                                | 914       |                  | 53,134            

Canamax, the previous operator of the mine, expended $11.6M on
exploration and feasibility studies beginning in 1984. Exploration summary
reports were prepared annually by Canamax describing geophysical ground and
airborne surveys, geochemical soil sampling, prospecting, trenching, percussion
drilling, RC drilling, diamond drilling and underground developments.

After YGC acquired the property in 1994, it spent $0.52M in
1994, $0.76M in 1995 and $0.90M in 1996 on exploration. Drilling on the
extensions of mineralized trends, on the peripheries of developed zones and in
other unexplored anomalous areas totaled 11,090m in 110 HQ holes. The
exploration was successful, leading to the discovery of new gold-bearing oxide
and sulfide mineralization on the property. A summary report on the 1994 and
1995 drilling programs was prepared at the end of the 1995 season.

Historic Mineral Resource and Reserve
Estimates

Pre-production Resource Estimates

Canamax calculated resource and reserve estimates prior to
production using cross sectional methods in which blocks were drawn halfway to
the nearest adjacent drillhole and halfway to the adjacent cross-section except
where geology dictated a reduction in block size due to structural
discontinuity. These estimates used a variety of cutoffs and included or
excluded different satellite deposits, so it is difficult to make meaningful
comparisons between the estimates from year to year. These estimates were done
before the NI 43-101 standards were required, and the similarity to today’s
definitions regarding measured, indicated and inferred resources are uncertain.
Specific Gravity (SG) values applied to sulfide and oxide are not
mentioned in the 1984 resource, but in 1985 2.8 was used for oxide, and 3.3 was
used for sulfide. In 1986 the oxide SG was 3.1, and sulfide is not mentioned.
These preproduction estimates are summarized in Table 20, and Figure 10. The
estimates date from before institution of NI 43-101 reporting guidelines and
should not be relied upon.

Table 20: Historic Resource Estimates

|     |                                                                 |                                          | Oxide   | Sulfide    
|---- | --------------------------------------------------------------- | ---------------------------------------- | ------- | -----------
|Year | Description                                                     | Cut-off                                  | Tonnes  | Grade (g/t)
|1984 | Peel Pit & UG + Tarn Pit                                        | 4g/2.5m (Peel) 
      2g/2.5m
    (Tarn) | 473,397 | 8.52       
|1985 | Peel Oxide + Misc. Sulfides                                     | 4g over 2.5m                             | 439,077 | 14.62      
|1986 | PP&P Oxide, Possible
      
    Sulfide                         | 4g/t                                     | 535,000 | 15.02      
|1987 | Same as above + new zones 
      (Gully, QB, Break
    & Knoll) | 4g/t                                     | 651,188 | 14.46      

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63

Figure 10: Preproduction Resource Estimates

Ketza River - CanamaxPreproduction Historic Resource Estimates



Geological Setting

The Property is located in the Pelly Mountains of central
Yukon. The mountains are made up of a shallow marine miogeoclinal sequence of
rocks forming a carbonate platform bounded by the Omenica Tectonic Belt to the
southwest and a faulted lobe of the Yukon Tanana Terrain to the northeast across
the Tintina Fault. This carbonate platform is known as the Cassiar Terrain or
Pelly-Cassiar Platform (Pelly-Cassiar).

The Pelly-Cassiar is a displaced continental margin of the
ancient North American continent. Rocks of the Pelly-Cassiar consist of a
continental margin sedimentary sequence of the Rocky Mountain Assemblage
composed of interbedded carbonate and clastic units of Paleozoic age. Several
major deformation events have affected the region including a Mesozoic-age
arc-continent collision, doming and uplift during the intrusion of
mid-Cretaceous stocks and an estimated 450km of dextral strike-slip displacement
on the Tintina Fault from the Cretaceous to Tertiary periods.

Four significant thrust faults, the McConnell,
Porcupine-Seagull, Cloutier, and St. Cyr thrusts, parallel the Tintina Fault and
dip generally southwest (Abbott, 1986). Thrusting is believed to have occurred
during the Late Jurassic and Early Cretaceous.

Rocks in the Watson Lake District belong to the Cloutier Thrust
Sheet, which is exposed within an erosional window in the overlying
Porcupine-Seagull Thrust Sheet. The window, known as the Ketza-Seagull arch,
forms an elongated northwest-trending structure probably related to buried
Cretaceous intrusions. The intrusions are apparently centered in two areas known
as the Ketza Uplift and the Seagull Uplift. Structures in the window are
characterized by steeply dipping normal faults.

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64

The Ketza Uplift is thought to be caused by a buried intrusion
(Parry and others, 1984 and Parry and others, 1985). The following supporting
evidence has been cited for the presence of a buried intrusive:

- The presence of a magnetic anomaly;
- Development of hornfels in sedimentary rocks; and
- Hydrothermal alteration immediately north of the Ketza River gold mantos.

The hornfels has been dated by whole rock K-Ar at 101+/-4Ma, in
the Mid-Cretaceous (Cathro, 1988). The uplift exposes the oldest rocks of the
Clouthier Thrust Sheet, which are Lower Cambrian carbonates and older clastic
rocks. The rocks surrounding the uplift are Upper Cambrian and younger clastic
and carbonate rocks.

Geology of the Ketza River Property

The Property is underlain by Lower Cambrian carbonate and
clastic sedimentary rock units. The Lower Cambrian units (Map Units 1a, 1b, 1c,
1d, and 1e) form a conformable series (Figure 11) which is unconformably
overlain by Late Cambrian black shale (Fonseca, 1998). The lithostratigraphic
succession described below was adopted by previous workers (Read 1980). The
general surface geology is outlined in Figure 12.

Local Lithology

The oldest rocks are Unit 1a which is composed of interbedded
brown to rusty weathering argillite, phyllite, variably bedded impure siltstone,
sandstone, quartzite, limestone and calcareous units. The unit outcrops in the
center of the Ketza Uplift north of the Peel fault that encompasses the Shamrock
target.

Unit 1b is a narrow bed (25 to 60m) of fossiliferous,
well-laminated silty limestone that appears to be transitional from the
underlying argillite to the overlying phyllitic limestone. The unit is not found
at the surface on the property but has been intersected in drillholes.

Unit 1c is a recessive weathering unit of 75 to 105m thickness
composed of brown to gray-green phyllitic limestone, calcareous mudstone and
argillaceous limestone. The upper contact of the unit is gradational with the
overlying massive to thick bedded blue gray limestone. This unit crops out in
exposures along Cache Creek above the mill site.

Unit 1d is host to all replacement-type manto mineralization on
the property. The lower contact is gradational and arbitrarily defined when the
well-bedded limestone becomes the major component. The unit is from 120 to 180m
thick. The limestone is a gray, uniformly bedded, clean limestone with
distinctive Archeocyathid fossils occurring near the top of the unit. An
internal stratigraphy has been recognized in the mine site area. The internal
beds are separated on the basis of textures. Beds of massive fine-grained
light-gray limestone, blue fine-grained crystalline limestone, thin and wispy
silty banded limestone, and silty black limestone are recognizable in drill core
and outcrop. The unit is locally dolomitized, recrystallized and weathered near
the mineralization. The limestone is resistant and forms prominent cliffs and
ridges throughout the region.

Unit 1e is composed of a thin (0 to 50m) green mudstone bed
which forms a distinctive marker horizon. The unit is locally to pervasively
clay- or talc-altered in the vicinity of mineralization. The mudstone is
generally recessive, poorly exposed and often required additional ground support
in the underground workings where it formed the hanging wall of the Peel zone.

Unit 2a is composed of carbonaceous to graphitic black shale
with a well-developed slaty cleavage. The thickness of the unit is unknown as
the top of the unit is not exposed on the property. The unit crops out in the
fault-bounded panels at the Peel Oxide zone and in the Sue Creek area north of
Cache Creek. A discontinuous unit of dull orange-weathering dolomite, Unit 2b, outcrops in the
western portion of the property. This is a regional unit mapped by Read (1980)
and was not recognized on the property by Canamax.

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65

Alteration

Dolomitization or iron carbonate replacement alteration
envelopes the manto mineralization and is especially well developed in areas
lateral to the mantos where the host limestones are brecciated. The carbonate
replacement deposits result in the migration and precipitation of calcite in the
rocks surrounding the mineralization. Sheeted white calcite veins are exposed in
the footwall rocks in the Break open pit and amorphous white calcite banding
occurs in the fine grained limestone unit in proximity to the Peel/Ridge zones
and in the upper plate rocks in the Hoodoo area. The calcite-rich limestone beds
are referred to as zebra rock.

Silicification, sulfidization, and bleaching are closely
associated with quartz-sulfide veins in sedimentary rocks in the
argillite-hosted targets. Skarn mineralization at the Project is rare, and
usually does not yield significant gold values. Epidote, biotite and diopside
hornfels are wide-spread in Unit 1a, with quartz-sericite enclosing a core of
quartz and silicification.

Structure

The Property lies on the southern flank of a westward plunging
anticline which is cored by the Unit 1a argillite exposed along Peel Creek. The
strata are strongly folded with limbs ranging from steep to flat-lying. A later
deformation has overprinted these structures with broad, open folds and drag
folds that occur adjacent to thrust faults.

A synclinal closure has been mapped in the Peel Ridge mine site
area where mineralized bodies occur on both limbs of the fold. A major synclinal
fold with parasitic anticlinal folds has been mapped northwest of the mine site
area in the upper plate rocks overlying the Peel thrust fault. Limestone beds of
Unit 1d host gold-bearing oxides and sulfides at the Hoodoo and Comet zones in
the core and on the western limb of a tight anticline.

Regionally, the thrust faults are northeast-directed with
displacements of up to 450m. The Peel fault is thought to be a reactivated
thrust fault that pre-dates the block faulting. It is cross cut and offset in
the Peel - Ridge fault by northwest-trending faults. The Peel fault intersects
the Ridge zone ore deposit and juxtaposes Lower Cambrian argillite Unit 1a over
the Lower Cambrian limestone Unit 1d. The fault has two different orientations,
steeply dipping east of the Ridge zone to shallow dipping over the Ridge zone
and to the west. The fault has been traced westward to the area of the Lab
deposit.

The stratigraphy, thrust faults and folds have been disrupted
by numerous reverse, normal and strike-slip faults. High angle block faults
related to uplift and doming are prominent. Detailed mapping in the underground
workings indicates that the Peel and Ridge oxide deposits occur within a 200m
wide zone of structural deformation bounded by two northwest trending block
faults.

The Ketza Uplift is composed of uplifted and altered Lower
Cambrian Unit 1a strata. Structures within the uplift include thrust faults,
upright folds, and high-angle normal faults all of which have strong spatial
association with plutonic related type deposits. An apophysis of a
mid-Cretaceous stock is postulated to lie beneath the core of the uplift and the
Peel Creek anticline. Possible hornfels in the Unit 1a argillite along Peel
Creek and a coincident aeromagnetic anomaly are cited as supporting this
hypothesis. Block faulting predates, or was contemporaneous with, the
mineralizing event and the faults acted as conduits for the metal-bearing
solutions.

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66

Figure 11: Stratigraphic Column



---

67

Figure 12: Generalized Geology Map



Exploration

In May of 2005, YGC commenced drilling at the Ketza River
Project, and has been drilling continuously since then, with the exception of
holiday shutdowns. In 2006, the main Project area was flown for new
one-meter-contour topographic map coverage. In the spring of 2007 the Ketza
claim block was expanded on the south and west. A limited amount of
reconnaissance work was conducted in 2006, followed by a major effort in 2007,
yielding several new target areas. Ground magnetic and gravity surveys were
carried out over known mineralization. A soil sampling program was completed in
the area of Peel Ridge north to the top of Shamrock Mountain. A petrographic
study was completed for manto-style mineralization.

Samples from three 1996 drillholes were analyzed for
multi-element geochemistry in an attempt to determine the presence of a zonation
pattern that might point to the location of a postulated buried intrusive as
postulated by Fonseca (1998). The holes were located at the QB Zone, the 3M Zone
and one in between. The ratios of gold-arsenic and gold-bismuth indicated that
the QB Zone hole was closest to the intrusive (Stroshein, 2006).

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68

Rock Sampling

Tarn Pit

The wall of the Tarn Pit was channel sampled in the fall of
2006. A total of 40 samples were collected, each one 5.0m in length. The samples
averaged 2g/t-Au, with a high of 9.7g/t -Au.

Creek Zone

Outcrops just above the pad for holes KR-06-920 through 922
contain massive pyrite with black coatings on the crystal surfaces. The black
coating is assumed to be chalcocite since the samples ran approximately 0.2% Cu.
Other dark grains in the rock were identified as tetrahedrite. All four samples
contained gold values.

Gully Pit

The Gully Zone is part of the Shamrock target, and was mined by
Canamax in the late 1980’s, yielding approximately 8,000t of oxide grading
10.0g/t -Au (Hodgson, 1991). Mining stopped when sulfide mineralization was
encountered, leaving a prominent massive sulfide rib protruding from the pit
floor, and a highly oxidized shear zone along its side.

In mid-August of 2006, a series of chip and channel samples
were collected across the massive sulfide rib and the adjacent shear zone. The
assays of the samples contained significant amounts of gold.

Geophysical Surveys

Aurora Geosciences conducted several geophysical surveys within
the Ketza River Project area in both 2007 and 2010. In 2007, a ground magnetic
survey was performed on a 50m grid from the Peel Zone across to Peel Canyon to
the northeast which included to the top of Shamrock Mountain. Also in 2007,
Aurora Geosciences completed a gravity survey on a 50m grid from the Lab Zone to
the top of Shamrock Mountain. In 2010, Aurora Geosciences conducted: (1) ground
IP surveys at the South Hill and the OK targets (Shamrock), and (2) ground
magnetic surveys over the Shamrock, OK, South Hill, and lower tailings site
targets or areas. The 2010 IP survey used an expanding pole-dipole array with a
25m dipole spacing. The ground magnetic lines were spaced 100 meters apart with
readings taken on stations spaced every 10 meters. Results from these
geophysical surveys are in the company files.

Soil Sampling

Aurora Geosciences was contracted to conduct a soil sampling
program large portions of Peel Ridge and Shamrock Mountain in 2007. The sampling
was done on a 50m grid, and targeted areas where 200m spaced soil lines had
identified anomalous gold. Results are being analyzed at the time of this
report.

A more recent soil sampling program done in the summer of 2010
on an even 100 m grid was targeted over the South Hill Target located just south
of the existing camp. Results of this work, in conjunction with the recent 2010
geophysical results, will be used to help target additional exploration programs
in the area.

Topographic Surveys

In August 2006 Aero Geometrics of Vancouver flew the Project,
including the existing claim block in 100km2 of new coverage. Two
sets of digital topographic maps, with 10m and 1m contour intervals were
produced.

In early September 2007, Aero Geometrics of Vancouver flew
portions of the Project in which mining claims had been staked since the survey
the previous year. Topographic maps generated by this survey have a 5m contour
interval.

Mineralization

Mineralization on the property is generally of two types: manto
and chimney, carbonate-hosted replacement deposits that occur south of the Peel
fault and quartz-sulfide fissure veins and quartz-breccia zones in siliciclastic
rocks that occur north of the Peel fault. Over 30 targets and
prospects have been identified on the property. For purposes of resource
estimation the area has been divided into four model areas with most of the
targets falling into one of the following areas (Figure 13):

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69

| | Tarn Area:        | Tarn                               
| | ----------------- | -----------------------------------
| | Penguin-Lab Area: | Penguin, Flint, Lab and
    Hoodoo;
| | Peel Area:        | Ridge, Peel, Nu-Break              
| | Shamrock Area:    | Gully, QB, 3M.                     

All areas except Shamrock occur south of the Peel fault and
contain manto and chimney, carbonate-hosted replacement deposits while Shamrock
occurs north of the Peel fault and contains quartz-sulfide fissure vein and
quartz breccia zones in siliciclastic rocks. The Knoll and Freds Vein deposits
were not modeled for the resource.

Mineralized Zones

Peel, Penguin-Lab and Tarn areas are generally of the gold-rich
carbonate-hosted chimney- and manto-style sulfide mineralization and its
oxidized equivalent. The lone exception to this is Fred’s Vein East, which is a
quartz-sulfide vein hosted by siliciclastic rocks immediately north of the Peel
fault. While Fred’s Vein East is geologically similar to the mineralization in
the Shamrock area, it falls within the Peel area because of its location on Peel
Ridge.

The mantos and steeply-plunging chimneys are preferentially
hosted by three limestone facies of Unit 1d: BXLT, MSLT and WBN, which are
confined to the south side of the Peel fault. The location of mineralization is
controlled by high-angle planar and listric normal faults, fold hinges and by
the location of the three favorable carbonate facies. In general, the mantos
have an elongate geometry.

Principal sulfide mineralogy consists of pyrrhotite, pyrite,
arsenopyrite, marcasite and minor chalcopyrite. Galena and sphalerite are rare.
Oxidized mineralogy primarily consists of hematite and goethite. Scorodite,
after arsenopyrite, is common. A distinctive lustrous hydrous iron silicate
mineral named hisingerite is present, and is often associated with high-grade
gold values.

Sulfide mantos include Peel Sulfides, Peal East Sulfides,
Penguin, Tarn, Lab and Flint. Oxide mantos include Peel Oxides, Break-Nu, Ridge
and Hoodoo.

Tarn Zone

The Tarn zone is located approximately 2km west of the Ketza
River Camp in the headwaters of Cache Creek. Mineralization consists of two
mixed oxide-sulfide bodies ranging from 85m to 115m in length, 35m to 60m in
width and 5m to 8m in thickness. Mineralization is exposed in the Tarn pit and
extends to 75m in depth and is approximately horizontal. Strike is about
015o.

Approximately 18kt of oxidized Manto-style mineralization was
mined from the Tarn zone in the late 1980’s. Current exploration focuses mainly on the sulfide Manto beneath
the oxide.

Penguin Zone

The Penguin zone is manto-style sulfide mineralization located
approximately 1.25km west of the Ketza River Camp, also in the Cache Creek
drainage. Two mineralized bodies occur within a presently defined area of
approximately 425m in length, 100m in width and 15m in thickness. The first
zone, formerly known as the Flint zone, is sub-vertical with a plunge of
25o to the southwest. It is approximately 150m in length, 60m in
height and 10m in width. This zone occurs 90m below the surface with an azimuth
of 050o.

The second zone is more flat-lying with approximate dimensions
of 150m in length, 115m in width and 4m in thickness. It occurs approximately
120m below the surface with a plunge of 4o to the southwest and an
azimuth of 020o.

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70

Lab Zone

The Lab Zone is manto-style sulfide mineralization located
approximately 1.25km northwest of the Ketza River Camp on the southern slope of
Peel Ridge. The Lab zone consists of four distinct zones that occur over an area
measuring 320m x 400m and average 5m in thickness. The four bodies occur in two
pairs at right angles to one another with the arms striking northeast and
southeast. The former Calcite zone is now included in this zone.

Hoodoo
  Zone

The Hoodoo zone is manto-style oxide/sulfide mineralization located
  approximately 1.5km northeast of the Ketza River Camp on the southern slope of
  Peel Ridge. Early drilling stopped once sulfide mineralization was reached but
  recent drilling has been targeting the sulfide mineralization underlying the
  oxide mineralization exposed at surface. Recent exploration has also been
  successful in extending the oxide mineralization. Geometrically the Hoodoo zone
  is a flattened cylinder with a presently defined diameter of 70m and a thickness
  of 15m.

Peel Model Area Occurrences

Peel Zone

The Peel zone is located about 0.75km north of the Ketza River
Camp on the south flank of Peel Ridge. Mineralization consists of irregular
interconnected lenses and pods in area approximately 400m long x 400m wide zone.
The Peel zone consists of the Peel West, Ridge, Main Peel, or Peel oxide, zones.
The Nu-Break and

Fred’s Vein East zones are also on Peel Ridge but are somewhat
to the east of the main grouping of mineralized bodies that comprise the Peel
zone.

Peel West Zone

The Peel West zone consists of four mineralized bodies with a
generally circular footprint. The four bodies occur over an area measuring 320m
x 260m and range in thickness from one to 10m. The mineralized bodies are
exposed at the surface and extend to a depth of 60m. The overall azimuth of the
zones is 325o.

Ridge Oxide Zone

The Ridge oxide manto zone as presently defined consists of
three separate mineralized bodies occurring over an area approximately 500m in
length, 85m in width and 50m in thickness. Individual mantos vary from 5 to 10m
in thickness. The zone is exposed at the surface and extends to a depth of 120m.
Mantos dip from fairly flat-lying to 55o to the north. Azimuths range
from 070o to 350o.

Production from the oxide mineralization in the Peel and Ridge
deposits was approximately 148,844t at an average grade of 13g/t-Au. Oxide
mineralization is cut off by the bounding northwest-trending East Side fault.

Nu-Break Zone

The Nu-Break zone consists of oxide/manto mineralization
located approximately 1.0km north-northeast of the Ketza River Camp on the nose
of Peel Ridge. The overall dimensions of the mineralized body as presently
defined are approximately 175m in length, 75m in width and 30m in thickness.
The zone is exposed at the surface and extends to a depth of
95 m below the surface. The azimuth of the zone is approximately
300owith a dip
of 75oto the
south.

Freds Vein East

Fred’s Vein East is a quartz-sulfide vein-like occurrence in siliciclastic rocks on the north
side of the Peel fault. The vein is located on the north side of Peel Ridge in
the Peel Creek drainage approximately 1.0km north of the Ketza River Camp. The
exposed strike of the structure is approximately 100m. The width is difficult to
characterize and the down dip extension has not yet been defined. The zone is
exposed at the surface. The strike varies from 065oto 080oand dip varies from
80oto
85osouth.

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71

Shamrock Model Area Occurrences

All of the mineralization in the Shamrock area occurs in
siliciclastic rocks north of the Peel Fault. Mineralization occurs as fissure
veins, breccia zones and disseminations rather than chimneys and replacement
mantos.

Gully Zone

The Gully Vein is a quartz-sulfide vein occurring in
siliciclastic rocks north of the Peel fault. The vein is located approximately
1.75km north of the Ketza River Camp on the south flank of Shamrock Mountain in
the Peel Creek drainage. Samples from drilling range up to 37.6g/t -Au. The
overall dimensions of the mineralized body as presently defined are
approximately 300m in length, 100m in depth and 4m in thickness. The zone
extends from the surface to 125m with an azimuth of 165o, a dip of
45o west and a plunge of 9o.

QB Zone

The QB zone consists of multiple irregular lenses of
quartz-breccia occurring in siliciclastic rocks north of the Peel fault. The
vein is located approximately 1.75km northeast of the Ketza River Camp on the
south flank of Shamrock Mountain in the Peel Creek drainage. The overall
dimensions of the mineralized body as presently defined are approximately 525m
in length, 220m in width and 2m to 70m in thickness. The zone extends from the
surface to a depth of 270m with an azimuth of 140o and a plunge of
040o to the south.

3M Zone

The 3M zone is located about 2.5km northeast of the Ketza River
Camp on the ridge between Peel and Misery Creeks. Mineralization consists of
quartz breccia and disseminations in siliciclastic rocks. The mineralized body
is approximately 525m in length, ranges from 2m to 12m in width and extends to
230m in depth. The upper part contact of mineralization ranges from 40m to 90m
below the surface. The azimuth of the mineralized body is 150o and
the dip is 010o to the west.

Knoll Zone

The Knoll zone is located about 3.0km northeast of the Ketza
River Camp on the north slope of Shamrock Mountain. It is just outside of the
Northwest edge of the Shamrock model area. It is comprised of a body of oxide
mineralization measuring 45m x 35m with a thickness ranging from 4m to 10m. It
is exposed at the surface and has been mined on a limited scale in the past.

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72

Figure 13: Drillhole Locations and Modeled Areas with
Deposit Names



Drilling

From May of 2005 through December of 2010, the Issuer drilled a
total of 1,029 drill holes for a total of 136,656m (Table 23). The principal
objective of the drilling programs was the continued definition of known
mineralized areas and the testing of newly discovered areas. Only a minor amount
of the drilling has been dedicated towards predevelopment or YESAB project
proposal studies. All diamond drill holes completed in the resource area from
2005 to December 31, 2007 are shown in Figure 13.

Table 23. Summary of Diamond Drilling 2005 Through 2010
Conducted at the Ketza River Project

|Year  | Operator                   | No. of Holes | Type Drilling | No. of m Drilled
|----- | -------------------------- | ------------ | ------------- | ----------------
|2005  | YGC Resources Ltd.         | 99           | Diamond       | 12,734          
|2006  | YGC Resources Ltd.         | 270          | Diamond       | 33,874          
|2007  | YGC Resources Ltd./KRH     | 305          | Diamond       | 41,587          
|2008  | Ketza River Holdings       | 225          | Diamond       | 30,436          
|2009  | Ketza River Holdings       | 2            | Diamond       | 483             
|2010  | Ketza
      River Holdings | 128          | Diamond       | 17,542          
|Total |                            | 1,029        |               | 136,656         

Notes:

|(1) | the total drilling done in 2008 includes 26 geotechnical
      and hydrogeology diamond drill holes totaling 2,562m, and 14 condemnation
      diamond drill holes totaling 1926.79m completed at the upper tailings
      site.                                                                                                                                                                                                                                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | the total amount of drilling (in meters) done in 2010 and
      listed in Table 23 above includes 10 geotechnical and hydrogeology diamond
      drill holes totaling 1232.7m, and 16 tailings dam condemnation and
      exploration drill holes totaling 2,695.3m. The total amount of 2010
      drilling listed in Table 23 does not include the 14 geotechnical drill
      holes totaling 275 m that used Becker and diamond drilling methods, or the
      2 piezometer drill holes totaling 21m completed at the existing tailings
      pond area.

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73

|(3) | KRH = Ketza River Holdings, a 100% Canadian subsidiary
      company owned by Yukon-Nevada Gold Corp.
|--- | -----------------------------------------------------------------------------------------------------
|(4) | Total drilling excludes drill holes completed at the
      adjacent Silver Valley Project.           

All of the drilling from 2005 through 2010 was diamond drilling
with the exception of: (1) the 14 Becker drill holes (finished with diamond
drilling to the total depth) completed in the lower tailings option site in late
2010; and two piezometer drill holes completed in late 2010 near the existing
tailings pond dam. The diamond drill holes completed from 2005 to 2010 were
started with NQ-sized core (47.6mm in diameter) or HQ-sized core (63.5mm in
diameter) and reduced to NQ-sized core as required. A total of thirty drill
holes (numbers KR-08-1269 to KR-08-1300) were drilled for metallurgical purposes
in 2008 and are HQ-sized (63.5mm) . Oriented diamond drill holes completed for
geotechnical purposes in 2008 (drill hole numbers GT-08-01 to GT-08-12, and
HYD-08-01 to HYD-08-12, HYD-08-16 and HYD-08-17) and 2010 (drill hole number
GT-10-01 to GT-10-10, and HYD-10-01) are HQ3-sized (61.1mm) and utilized triple
tubes and the EZY-Mark core orientation system.

Collar locations are obtained by using a combination of a Leica
total station and a Trimble R8 differential GPS. Downhole surveys are done using
Reflex Maxibor II downhole survey tool. Prior to 2007 acid tests were used to
measure dip changes down hole.

Drill core is currently stored on site. Drill logs are entered
directly into a laptop in the core shack using DrillKing software. Recovery and
Rock Quality Designation (RQD) are recorded for each hole.

Drilling Targets and Results:

Drilling was successful in extending and/or defining limits of
mineralization on the Peel, Tarn, Gully, QB, Hoodoo, and Lab zones. Parts of
these remain open. Drilling on the Penguin and Calcite extension of Lab Zone was
successful in defining mineralization at the location of magnetic highs.

A lack of significant mineralization was found by the drilling
of the Peg-Fury (south of QB zone), Creek, Megawatt (south of Peel area), Nose
zone, as well as the previously untested ground between Lab and Peel. The Thrust
vein, near Tarn was found to be cut off by a low angle fault at shallow depth.

The results were inconclusive at the Crest, and Freds Vein East
Zones; more drilling will be required to either define or disprove significant
mineralization at these zones.

Sampling Method and Approach

The sampling procedures associated with the drilling programs
utilized by YGC after acquiring the Ketza River property are described in this
section. Little is known of the sampling methods employed by earlier operators.
Sampling procedures, collection and security for the Issuer were completed under
the direction of Qualified Person Ed Gates.

During the diamond drilling programs, geological personnel
attended the drill at regular intervals as well as during drilling of
mineralized intersections of predicted zone drillholes. Geologic personnel are
on hand to determine the completion depth of each hole and to shut down the
drillhole. The core is delivered to the core shack at the end of each working
shift or when the drillhole is completed.

The core is laid out in sequence at the core shack. The core is
logged directly into laptop computers by geologists and sample intervals are
marked on the core and recorded on the drill logs. The core is then stored
within the core shack and samples are split in sequence. Personnel conducting
the sampling are supervised by the geologist who logs the core.

All drill core is logged and photographed before sampling. The
descriptions are entered onto prepared log forms on laptop computers using coded
entries for lithology, texture, structure and mineralogy.

Oxide and sulfide mineralization are sampled on the basis of
geologic features. Maximum sample interval for HQ core is 1.5m and 3.05m for NQ
core. The minimum sample interval is 0.2m. Once samples are identified and
marked, sample tickets are stapled into the sample locations. Sample intervals
and geology are then logged into Drill King software. Once all of the drill hole
data is logged and entered into Drill King, the data is imported into an Access
drill hole database at the project site and ultimately imported into an acQuire
drill hole database.

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74

Core is then taken into the splitting room where sampled
intervals are split or cut (massive sulfide intervals are cut with a diamond
saw. Core from oxide zones often occurs as iron oxide rubble. In these
instances, the rubble is sampled with a spoon rather that split or cut.

Half of the sample is placed in the sample bag and half is
retained in the core box for future reference. The detachable half of the sample
ticket is remove from the core box and placed inside the sample bag. The
remaining half of the sample ticket remains in the core box with the
corresponding sample number. Core boxes are then remove to a designated core
storage yard where they are placed on core racks.

Sealed sample bags are then place in large white rice bags, the
rice bags are labeled with the hole number, the contained sample numbers and the
rice bag are numbered for transport (i.e. Bag 1 of 6). Rice bags are then placed
in an outside storage bin where they await shipping.

Samples are transported by company personnel at least once per
week to Canadian Freightways in Whitehorse, Yukon. A sample shipment form is
filled out and kept on file, indicating the date, truck being driven, person
transporting the samples, hole numbers and number of bags. Upon arrival in
Whitehorse, samples are directly loaded upon pallets at Canadian Freightways and
shipped to ALS Chemex.

As a rule, core recovery is very good in limestone and sulfide
mantos, very good in the Gully vein and the argillite wallrock, moderate in the
QB zone stockwork and fault intersections and moderate to poor in the oxide
mantos.

Sample Preparation, Analysis and Security of
Samples

In the 1980’s Canamax used Northern Analytical Laboratory in
Whitehorse, YT and Rossbacher Labs in Burnaby,

BC. For sample preparation and analysis. In 2006-2007, YGC used
Eco-Tech labs in Kamloops, BC. In 2006-2007 all sample preparation was done by
ALS Chemex in their Elko, Nevada or Terrance British Columbia sample preparation
facilities. No sample preparation was done on site.

ALS-Chemex (2006-2010):

Samples are dried at 110-120 C and then crushed with either an
oscillating jaw crusher or a roll crusher. The ALS Chemex QC specification for
crushed material is that >70% of the sample must pass a 2mm (10 mesh) screen.
A whole or split portion derived from the crushing process is pulverized using a
ring mill. The ALS Chemex QC specification for final pulverizing is that >85%
of the sample be less than 75 microns (200 mesh) A 30g split is fire assayed and
the resultant bead is parted and digested with aqua regia, and the final result
is measured using Atomic Absorption. Assays above 1.0ppm were re-assayed using a
gravimetric finish.

Eco-Tech Labs followed essentially the same process.

Quality
  Controls and Quality Assurance

2005-2007 (YGC-YNGC)

The YNG laboratory Quality Assurance/Quality Control (QA/QC)
program consists of inserting a blank sample into the sample stream at the top
of every hole and then inserting either a standard sample or blank sample at
every 15th sample. If a hole has less than 15 samples, a standard and
blank are inserted at the end of the hole.

The blanks are non-commercial material, composed of locally
derived barren limestone, and have not been certified to be of zero grade.

Prior to mid-year 2006, a non-commercial moderate grade
pseudo-standard was used, which had been collected from a mineralized outcrop
in the Ridge pit and blended by hand. When this first standard was depleted, a
second supply of higher grade material was collected and blended from a local
high grade stockpile. These standards were inserted simply to ensure that the
lab would catch high grade assays, and not necessarily to assess the precision
of the lab. The shortfalls of these non-commercial standards was realized, and
commercial standards from CDN Resource Laboratories Ltd were used starting in
2006.

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75

After mid-year 2006, for manto-styled mineralization Gold Ore
Reference Standard CDN-GS-10A (9.78+/ - 0.53g/t) or CDN-GS-10B (8.6 +/- 0.49g/t)
was used. For stockwork-style mineralization Gold Ore Reference Standard:
CDN-GS-2B (2.03 +/- 0.12g/t) was used.

Due to communication issues, the standard insertion protocol
was not strictly adhered to once a particular standard supply was depleted.
There were minor labeling issues where blanks and standards had labels swapped,
or the wrong standard label was recorded. These issues were identified and
corrected as confirmed by comparing the geochemistry of the multi-element assay
results to those of the standards. The problems reflected an issue with check
sample handling and not with lab results.

Occasionally, higher-grade gravimetric assays were re-assayed
as a check; all of these refires were within acceptable ranges of the original

Interpretation

Graphs were plotted for each set of standards, and blanks.
  These are shown in Figures 14 to 17. With the exception of a few anomalies which
  may represent mislabeled samples, most of the commercial standards behave as
  well can be expected. Only a few assays are outside of the 2 standard deviations
  range, and most are within one standard deviation. The non-commercial standards
  assayed with a much wider variation, but consistently showed elevated grades as
  would be expected, although not at precise grades as one would expect from the
  commercial standards. The blank samples show several anomalous results which may
  be due to mislabeled samples, sample preparation contamination, or anomalous
  gold present within the blank.

Figure 14: Laboratory QA/QC Blank Samples



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76

Figure 15: Laboratory QA/QC 1-2g Commercial Standards



Figure 16: Laboratory QA/QC 10g Commercial Standards



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77

Figure 17: Laboratory QA/QC,Non-Commercial
Standards



.Mineral Resource and Mineral Reserve
Estimates

A series of standard cyanide leach tests was run under various
conditions of grind, pre-aeration and leach time, with and without CIL
(carbon-in-leach). The precise conditions of the individual tests are reported,
along with the results, in Lakefield Research (1986a, 1986b, 1987).

The initial results reported by Lakefield (Lakefield Research
(1986a, 1986b) indicated that excellent gold recoveries (over 94%) could be
achieved at a relatively course grind (69% minus 200 mesh) and 48hr retention
time, without pre-aeration. Residues contained significantly less than 1g/t-Au.
These tests were carried out on a single composite sample.

A series of nine additional samples from the oxide zone was
subjected to confirmatory tests (Lakefield Research, 1987). The recoveries on
these tests were significantly lower, with only two samples yielding residues
below 1g/tAu. Average recoveries were 87%. Further tests at finer grinds (80%
minus 200 mesh) were carried out on these nine samples, and although recoveries
fell short of those anticipated from Lakefield Research (1986a and 1986b), they
were consistently over 90%.

The Issuer in 2008 conducted a diamond drilling sampling and
testing program to determine metallurgical characteristics of the ore types that
comprise the current resource. The 2008 test work was conducted by PRA Labs (now
called Inspectorate Labs) and a summary report is in progress and will be
included in the upcoming NI 43-101 report due in early 2011. The updated NI
43-101 report will include a revised resource estimate based on the 2008
drilling and a new geologic model generated by Todd Johnson, Vice President of
Exploration for Yukon-Nevada Gold Corp., and Karl Swanson, Mining Consultant,
using Vulcan software. The updated Ketza River mine resource will be done by
Mark Odell, Mining Consultant.

In 2007, the Issuer undertook a complete update of the Ketza
River resource estimate. Compared to previous estimates, the 2007 update
included 637 additional drillholes in the resource database and reflected a
significantly enhanced understanding of geologic controls on mineralization in
both the manto and Shamrock zones. The 2007 resource estimate was also undertaken with a view to transition
the Project from an exploration project to a feasibility/development project.

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78

Accordingly, the focus of the 2007 resource estimate was to
identify measured and indicated resource shapes with grades and continuity that
could serve as the starting points for definition of mineable shapes and
reserves as part of the ongoing pre-feasibility study that the Issuer has
commenced on the property. Unlike previous resource estimates, a hard geologic
boundary was used to tightly constrain resource shapes in three dimensions.

The resource estimation was done by Russ White (SRK) with
assistance in wireframe modeling and input from Larry Snider (the Issuer). Larry
Snider also performed the pit optimizations used for distinguishing Open Pit
from Underground resources.

The drill hole database is currently maintained at the Ketza
Minesite in acQuire software, and was transferred from a Drill King database in
late 2007. As of this reporting date (March 14, 2011), the Ketza acQuire drill
hole database contains information for 1,691 drill holes, including 1,029 core
holes from the 2005 to 2010 programs (5 diamond drill holes drilled in late 2010
still need to be assayed and imported into the database), 591 core holes from
pre-2005 programs (1984-1996), and 95 RC holes from 1987.

The December 31, 2007 NI 43-101 resource estimate was conducted
using information from 1,360 drill holes, including 674 core holes from the 2005
to 2007 programs, 591 core holes from pre-2005 programs (1984-1996), and 95 RC
holes from 1987.

Data for the December 31, 2007 NI 43-101 was extracted from
acQuire and imported to Vulcan in 4 separate tables.

- Collar Location Surveys Hole ID, Northing, Easting, Elevation and
  Hole Depth;
- Downhole Orientation Surveys - Downhole depth, Azimuth and plunge of hole
  at various downhole depths;
- Geologic Logs  Table 24 lists the fields recorded in drillholes from 2005
  to 2007. Only the LCODE field was entered in the database for previously
  drilled holes. Table 25 lists the common lithologies logged at Ketza River;
  and
- Assays -From, to, and gold assay

Table 24 Geology Database Fields

|Field       | Description            | Entry         
|----------- | ---------------------- | --------------
|LCODE       | Lithology Code         | Alpha Code    
|STR1        | Structure 1            | Alpha Code    
|STR2        | Structure 2            | Alpha Code    
|TXTR1       | Texture 1              | Alpha Code    
|TXTR2       | Texture 2              | Alpha Code    
|PO          | Pyrrhotite             | Percentage    
|PY          | Pyrite                 | Percentage    
|APY         | Arsenopyrite           | Percentage    
|CPY         | Chalcopyrite           | Percentage    
|OXMIN       | Primary Oxide Mineral  | Alpha Code    
|OXINT       | Intensity of oxidation | Alpha Code    
|Description | Geologic Description   | Freeform Alpha

Table 25 Most Common Lithology Codes

|LCODE | Description               | LCODE | Description                  
|----- | ------------------------- | ----- | -----------------------------
|MSLT  | Massive-oolitic limestone | BSLT  | Black siltstone              
|WBN   | Wispy banded limestone    | SQA   | Siltstone/Quartzite/Argillite
|ARG   | Argillite                 | VEIN  | Vein                         

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79

|LCODE | Description                   | LCODE | Description                  
|----- | ----------------------------- | ----- | -----------------------------
|LST   | Limestone                     | CAS   | Casing                       
|FSLT  | Fossiliferous limestone       | QTE   | Quartzite                    
|ARS   | Argillite/Siltstone           | FZ    | Fault zone                   
|OXIDE | Oxide Mineralization          | QAS   | Quartzite/Argillite/Siltstone
|SULF  | Massive sulfide(>50%)         | BA    | Black argillite              
|QSA   | Quartzite/Siltstone/Argillite | OVB   | Overburden                   
|MUD   | Mudstone                      | HFLS  | Hornfels                     
|SAQ   | SLT/ARG/QTE                   | AQS   | Argillite/Quartzite/Siltstone
|BXLT  | Blue crystalline limestone    | PHIL  | Phyllite                     
|SLT   | Siltstone                     | QTZ   | Quartz                       
|ASQ   | Argillite/Siltstone/Quartzite | GO    | Gouge                        

The gold value was recorded in the database using the following
priority: average of fire assays, if available, single fire assay if available,
or AA assay. Unsampled intervals are omitted from the database and treated as
zero values in the compositing routine, and lost-core intervals recorded as -9.
Previous databases had recorded below-detection-limit (BDL) assays as values
ranging from 0.015 to 0.000 depending on the detection limit and the person
doing data entry. The lowest detection limit from any program was 0.005g/t, so a
standard BDL value of 0.001g/t was chosen as a flag that the sample was actually
assayed, but had negligible gold. Raw assays were capped at 100g/t for all
deposits, which affected 8 assays out of 29,650 assays. Further reduction of
risk due to anomalous assays was accomplished with high-grade distance
restrictions during estimation.

Of the 1,360 drillholes in the Ketza database, 82 Drillholes
were rejected from the database due primarily to irreconcilable location issues.
A few were rejected due to the hole orientation which drilled directly down the
vein making any given intercept biased or unable to be extrapolated accurately
to any given volume. Three RC holes were also rejected due to likely downhole
contamination. Figure 18 is a drillhole location map showing the drilling that
was used for resource estimation. Another 34 non-resource holes contained no
significant mineralization and were drilled outside of any deposit of interest.
Although they were not specifically excluded they had no influence on this
resource estimate. Another 35 were drilled in the Knoll Zone which is
essentially mined out and therefore was not estimated. Table 26 is a summary of
drillholes used and rejected by model area.

Table 26: Summary of Drillholes used and Rejected by Model
Area

|      | Used for
      Resource | Rejected | Non-Resource | Total         
|----- | ----------------------- | -------- | ------------ | --------------
|Model | Number                  | Length   | Length       | Number        
|Area  | of
      Holes          | Drilled  | Sampled      | of
      Holes
|PEEL  | 583                     | 51,502   | 14,111       | 38            
|PENG  | 335                     | 38,575   | 12,312       | 20            
|SHAM  | 216                     | 27,133   | 18,702       | 10            
|TARN  | 75                      | 6,452    | 1,901        | 12            
|KNOLL |                         |          |              | 2             
|Total | 1209                    | 123,662  | 47,028       | 82            

Mineralized envelopes were defined based upon lithology codes
and gold assays, and modeled as wireframes in either Minesite or Vulcan
software. In most areas these represent limestone hosted manto and chimney
zones. In the Shamrock model area, these are siliciclastic hosted
veins and stockworks. Fifty-two separate wireframes were created, 23 in the Peel
Area, 13 in the Penguin-Lab area, 12 in the Shamrock area, and 4 in the Tarn
area. The locations of these shapes are shown in Figure 19. Cross-sections are
shown in figures 19 through 21.

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Figure 18: Drillhole Locations and Modeled Areas with
Deposit Names



Figure 19: Cross-Section, Peel Deposit



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Figure 20: Cross-Section, Gulley Deposit



Figure 21: Cross-Section, Lab Deposit



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82

The geologic database was used to determine the intensity of
mineralization, and the oxidation state of the mineralization. A temporary field
called TotSu was derived by adding the percentages of all of the logged
sulfides (PO+PY+APY+CPY).

An oxidation code was calculated based upon the geologic logs,
with influence from the LCODE, the total sulfides and the OXINT fields:

The
  resulting codes (valued 1 through 5) can be described as follows:

| | 1. | Massive Oxide.            
| | -- | --------------------------
| | 2. | Moderate Oxide.           
| | 3. | Moderate or Unmineralized.
| | 4. | Moderate Sulfide.         
| | 5. | Massive Sulfide.          

The highly variable specific gravity of the ore
      mineralization has been a significant issue at Ketza in the past. The
      oxide mineralization is very light, and the sulfide material is extremely
      heavy. Estimates made prior to mining did not adequately account for this.
      Very high-grade oxide material was extrapolated into sulfide areas and
      ounces were over-estimated. Due to this issue, exhaustive studies were
      undertaken by Canamax in the late 1980’s to get a more accurate density
factor for the oxide material which was their primary mill feed.

In 2006
      numerous density measurements were made on sulfide ore, yielding an
      average density of 4.2 for sulfide ore in the Flint, Gulley, Fred’s Vein
and Tarn areas.

In late 2007, specific gravity measurements were collected
      for 101 samples from across the entire deposit area. Due to the relatively
      few samples measured and the apparent irrelevance of area on the
      measurements, samples were analyzed primarily by lithology/ore type. Only
      a few samples of pure oxide and sulfide material were collected for this
      program because exhaustive studies had been made of these previously by
      Canamax in the late 1980’s and YGC in 2005-2006. The samples taken in
      2007 confirmed these previous studies and that the average SG of the
      unmineralized material is 2.75. Based upon the results form all of the
      studies, the following scheme was used for assigning specific gravity
values to each drillhole composite:

| |  | Default: SG = 2.75;                                        
| |  | -----------------------------------------------------------
| |  | High-grade default, Au greater than 5.0g/t: SG
      = 3.1;
| |  | Oxide: SG = 2.2;                                           
| |  | Moderate oxide: SG = 2.5;                                  
| |  | Moderate Sulfide: SG = 3.7; and                            
| |  | Sulfide: SG = 4.2.                                         

Table 27 lists the average and minimum and maximum SG values
for the various rock types at each of the areas.

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83

Table 27: Statistics for SG Data

|Material-> | ASQ + Min (Qtz
      Vn) | Dilution | Host Rock | LS + Min | Oxide | Sulf
|---------- | ------------------------ | -------- | --------- | -------- | ----- | ----
|Area       | #                        | Avg      | Min       | Max      | #     | Avg 
|Flint      |                          |          |           |          | 2     | 2.84
|FV         | 3                        | 2.76     | 2.68      | 2.84     | 2     | 2.77
|Gully      | 5                        | 2.83     | 2.7       | 3.24     | 3     | 2.76
|HD         |                          |          |           |          | 3     | 2.51
|Lab        |                          |          |           |          | 2     | 2.77
|Peel       |                          |          |           |          | 5     | 2.90
|Peng.      |                          |          |           |          | 2     | 3.04
|QB         | 9                        | 2.76     | 2.6       | 3.06     | 9     | 2.92
|Tarn       |                          |          |           |          | 3     | 2.73
|Total      | 17                       | 2.78     | 2.6       | 3.24     | 31    | 2.83

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84

After the Specific Gravity value was assigned, another database
field (SGAU) was calculated by multiplying SG by the Gold Assay.
This was used in the compositing process to weight the composites by SG.

Drillhole assay data was composited at downhole lengths of
1.5m, broken at mineralized envelope boundaries. Unsampled intervals were
carried at a zero grade. A very few intervals of lost core, usually resulting
from highly oxidized mineralized zones, were omitted from the composites. The
majority LCODE field was recorded in composites, while SGAU, REDOX, and SG were
length-weight averaged as numeric values. After the composites were created, the
gold value was back calculated with the formula: AU = SGAU / SG.

Variograms were generated from 1.5m composites for each main
group of ore zones (Figures 22 and 23). Each group had at least one orientation
which yielded a recognizable variogram structure, but rarely more than one. This
is not uncommon for such discontinuous zones with limited spatial extent and
moderate drill spacing. The relative similarity of the recognizable variogram
ranges, influenced the choice of Major and Semi-Major axis of the search radius
in the grade estimation. Variogram model attributes are listed in Table 28.

Table 28: Variogram Model Parameters

|Deposit Area | Nugget | Sill_Dif | Range
|------------ | ------ | -------- | -----
|Peel         | 1.20   | 2.2      | 54   
|Ridge        | 0.28   | 1.6      | 51   
|Fork/Break   | 1.50   | 1.1      | 50   
|Lab          | 1.00   | 2.7      | 51   
|Hoodoo       | 1.00   | 4.6      | 60   
|Peng/Tarn    | 1.00   | 1.6      | 45   
|Gully        | 1.00   | 0.7      | 50   
|QB           | 2.00   | 2.0      | 60   
|3M           | 0.50   | 1.7      | 47   

Univariate statistics were used to determine high-grade
restriction levels for each individual area. The Gully deposit was treated
separately from the rest of Shamrock, as it has more consistent high-grade than
the QB and 3m zones. Probability plots and grade histograms were reviewed and
are summarized below in Table 29. Inside the mineralized envelopes, the Peel
area has the most consistent high-grade material, while Shamrock has the least.
The high-grade outside of the mineralized envelopes is relatively insignificant,
and in some cases high-grade restrictions were not required.

Table 29: Composite Summary Statistics by Model Area

|                | Count   | g/t-Au  | Quartile
      g/t-Au | HG Limit
|--------------- | ------- | ------- | --------------------- | --------
|Model Area      | #Assays | Average | Min                   | Q1      
|Peel Inside     | 2,366   | 5.07    | 0.00                  | 0.14    
|Penguin Inside  | 1,038   | 2.74    | 0.00                  | 0.02    
|Shamrock Inside | 830     | 1.83    | 0.00                  | 0.10    
|Tarn Inside     | 228     | 4.14    | 0.00                  | 0.50    
|Gully Inside    | 246     | 3.29    | 0.00                  | 1.21    
|Peel Outside    | 8,739   | 0.157   | 0.001                 | 0.003   
|Penguin Outside | 7,401   | 0.102   | 0.001                 | 0.001   
|Sham. Outside   | 7,779   | 0.147   | 0.001                 | 0.005   
|Tarn Outside    | 997     | 0.066   | 0.001                 | 0.001   
|Gully Outside   | 4,107   | 0.068   | 0.001                 | 0.001   

Four block models were defined for the model areas as shown in
Figure 18. Each block model consists of a framework with 5m cube blocks.
Wireframes of the 52 mineralized envelopes were used to assign a percentage inside the envelope, and estimations were made separately for
the inside and outside block fractions. Any block which had more than 0.5%
inside a mineralized envelope was assigned a code corresponding to the
wireframe.

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85

Grade estimations were made using the inverse distance squared
estimation method. A minimum of 3 samples were required with a maximum of 12
composites used for each block. Based on the relative similarity of the
recognizable variograms, a standardized search radius of 50m x 50m was used. The
minor axis was generally kept down to between 7 and 12m depending on the zone’s
thickness and geometry. Zones which did not conform to a plane required wider
minor searches to ensure continuous estimation of blocks.

Estimation of block grades for the blocks and fractions outside
  the mineralized envelope used a consistently narrow search to avoid smearing
  grades over a spherical region. The orientation of the search radii for the
  outside blocks varied from region to region depending upon the apparent
  alignment of ore grades.

AUSG and SG values were estimated in the block models. This was
done as a means of weighting the estimation by the specific gravity of the
samples. Other variables include number of composites, distance to the closest
composite and average distance to composites used in the estimation. Gold values
were back calculated with the following formulas by dividing AUSG by SG.

An extra gold variable was estimated simply as a means of
applying the high-grade gold restriction. This restriction prevents a composite
above a specific threshold from influencing any block beyond a distance which is
shorter than the search radius. In this case the restricted search radii used
for samples above the threshold was 35m x 35m x 5m inside the mineralized
envelopes, and 20m x 20m x 5m for samples outside the mineralized envelopes.

Resources were classified by distance to nearest sample within
most ore shapes. Any block which was within 35m of the nearest sample was
designated as indicated, except in a few ore shapes which were forced to the
designation of inferred. In a few shallow, well-drilled mineral envelopes,
measured resources were allowed where the distance to the nearest composite was
less than 15m, and at least 12 composites were used to estimate the block. This
was allowed in 2 shapes in Peel, 2 in Lab and in the Gully zone in Shamrock.
Blocks which were more than 35m from the nearest sample were designated as
inferred in all ore shapes. Since these alignments used for outside blocks are approximate and subject to revision, all
outside block grades are considered inferred.

This mineral inventory of all estimated (unmined) material
above a 1.0g cut-off is supplied for comparison to previous resources which were
listed in this fashion (Table 30). This is only considered an inventory, as much
of the material will likely never be recoverable with an open pit, and should
therefore be listed at a higher cut-off.

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Figure 22: Peel Model Variograms



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87

Figure 23: Penguin-Lab Shamrock Variograms



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88

Table 30 Mineral Inventory at a 1.0g/t CoG



|            | Measured +
      Indicated | Inferred
|----------- | -------------------------- | --------
|Area        | kt                         | koz     
|Peel        | 2,444                      | 409     
|Penguin-Lab | 965                        | 138     
|Shamrock    | 1,630                      | 149     
|Tarn        | 86                         | 10      
|Total       | 5,125                      | 706     

Resource Definition

In order to distinguish between potential Open Pit Resources
and Underground Resources, pit optimizations were performed using Minesights
Lerchs-Grossmann implementation. The parameters used for these optimizations
were fairly liberal, as this exercise was done simply to determine which blocks
could reasonably be expected to be mined at open pit cut-offs. A 1.0g/t resource
cut-off was applied to any block that could optimistically be mined by an open
pit, and a 3.0g/t cut-off was applied to blocks outside of the optimistic pit,
to account for higher underground mining costs for those blocks. This was not
done as definition of reserves, simply as a way of eliminating the portion of
the Mineral Inventory which could not reasonably be expected to be recovered
economically.

Pit Optimization Net Value Calculation

A net value was calculated for every block in the model. The
net value considers mining cost, ore (process) cost, and recoverable gold value
as outlined below. The block model tracks the fractions of blocks within
mineralized envelope wireframes separately from the portion outside of the
wireframes. The portion inside the wireframe typically is higher-grade and
represents the potential ore portion of the block. Ore costs and recoverable
values can be applied to the inside and outside block fractions separately.
Calculation of the values outlined below results in the net value for each
block.

- Mining Cost: The calculation for mining cost is fairly simple
  and involves multiplying the volume of the block by a tonnage factor to come
  up with a block tonnage. If blocks intersect topography, the block tonnage is
  reduced by the percent portion of the block above topo. A $2.82/t value is
  multiplied by the block tonnage to come up with a per block mining cost. For
  the purposes of the cost to mine a block of material, a blanket tonnage factor
  of 2.75t/m3was applied on the premise that changes in density will
  not markedly change the cost to blast, mine, and haul a given volume of rock
  as factors such as haul distance and equipment size are usually more
  important;
- Ore Cost:The total process cost and any
  additional ore tonnage costs are calculated for the potential ore fraction of
  each block. The per tonnage costs are multiplied only by the tonnage of the
  potential ore fraction of each block;
- Recoverable Value:Likewise, the
      recoverable value is calculated only for the potential ore fraction of each
      block. The gold grade is multiplied by price per gram, ore tonnage and the
      metallurgical recovery;
- Ore Revenue:Ore costs per block are then subtracted from the
  recoverable value, and if the result is positive, this is the ore revenue for
  the block. If the ore costs exceed the recoverable value, then it is not worth
  processing the block, and the ore revenue is set to zero; and
- Net Value:The net value of the block is simply the ore revenue
  minus the mining cost. Analysis of net values within the blocks can be used to
  determine waste, sub-ore, and ore based on mine-cut-off versus
  mill-cut-off. A waste block will have a negative net value equal to the
  cost to mine the block. An ore block will have a net value of more than
  zero, and is worth mining by itself. A sub-ore block will have a negative
  net value greater than the mining cost, and is worth processing, but only if
  it needs to be mined in order to get to an ore block.

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89

Optimization Parameters

| | Gold Price:                          | $1,000 US$/troy oz                     
| | ------------------------------------ | ---------------------------------------
| | Metallurgical recovery               | 85%                                    
| | Specific Gravity                     | SG variable as modelled per
      block
| | (for gold content and process costs)
| | Specific Gravity                     | 2.75                                   
| | (for mining costs)                   |                                        
| | Mining cost/t                        | US$2.82                                
| | Process cost/t-ore                   | US$12.00                               

These parameters are based on a cost profile assuming an
operation of 1,500t-ore/d and an overall 8:1 stripping.

Lerchs-Grossmann Pit Optimization

Once the net values have been calculated, the Lerchs-Grossmann
process operates solely on these, using the specified pit slope. In the pit
optimization analysis, blocks must contain enough revenue in the VAL fields to
not only pay for their own mining, but also help pay for waste blocks above
them. Very low-grade blocks (with only minor revenue after process to partially
offset their own mining) can have their mining paid for by higher-grade blocks
below them, thus they can be treated as a form of incremental ore. Note that the
cut-off grade for each block will differ slightly as there are a variety of
modelled SG’s which influence the net value in conjunction with the gold grade.
The output of the process is a surface file, which can be used in tabulating
resources from the block model. The mineral resource for Ketza River is
presented in Table 31. Figure 25 is a map showing the extent of the pits
resulting from this exercise.

Resource Statement

Table 31: Ketza River Resource Statement

|                      | Open Pit
      Resource | Underground
      Resource | Combined
      (OP+UG)
|--------------------- | ----------------------- | -------------------------- | ----------------------
|Area                  | kt                      | g/t-Au                     | koz                   
|Measured              |                         |                            |                       
|Peel                  | 303.2                   | 7.17                       | 69.8                  
|Penguin-Lab           | 205.2                   | 7.70                       | 50.8                  
|Shamrock              | 182.5                   | 3.65                       | 21.4                  
|Tarn                  | 0.0                     |                            | 0.00                  
|Total Measured        | 690.9                   | 6.39                       | 142.0                 
|                      |                         |                            |                       
|Indicated             |                         |                            |                       
|Peel                  | 1,878.6                 | 5.14                       | 310.6                 
|Penguin-Lab           | 567.7                   | 3.56                       | 65.0                  
|Shamrock              | 519.6                   | 3.58                       | 59.8                  
|Tarn                  | 54.6                    | 4.26                       | 7.5                   
|Total
      Indicated | 3,020.5                 | 4.56                       | 442.9                 

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90

|                             | Open Pit
      Resource | Underground
      Resource | Combined
      (OP+UG)
|---------------------------- | ----------------------- | -------------------------- | ----------------------
|Area                         | kt                      | g/t-Au                     | koz                   
|Measured and
      Indicated |                         |                            |                       
|Peel                         | 2,181.80                | 5.42                       | 380.4                 
|Penguin-Lab                  | 772.9                   | 4.66                       | 115.8                 
|Shamrock                     | 702.1                   | 3.60                       | 81.2                  
|Tarn                         | 54.6                    | 4.26                       | 7.5                   
|Total M&I                    | 3,711.4                 | 4.90                       | 584.9                 
|                             |                         |                            |                       
|Inferred                     |                         |                            |                       
|Peel                         | 298.1                   | 2.79                       | 26.7                  
|Penguin-Lab                  | 188.1                   | 2.33                       | 14.1                  
|Shamrock                     | 229.7                   | 2.83                       | 20.9                  
|Tarn                         | 46.3                    | 2.20                       | 3.3                   
|Total
      Inferred         | 762.2                   | 2.65                       | 65.0                  

Grade tonnage curves were calculated at 0.5g/t cutoff
intervals. Figure 26 shows grade tonnage curves for the entire mineral envelope
and the grade tonnage curve only within the $1000 gold optimized pit shapes.

---

91

Figure 25: Optimized Pits, $1,000 Gold



---

92

Figure 26: Grade Tonnage Curves



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93

YESAB Project Proposal Work Summary

A number of studies relating to the YESAB Project Proposal were
continued in 2010. EBA Engineering in the Vancouver, Whitehorse, and Edmonton
offices are managing this work for Ketza River Holdings Ltd.. The Ketza River
Project proposal is being targeted for submission to YESAB in late July 2011.

GeotechnicalHydrogeologyCondemnationMonitoring Well Drilling

In support of the project proposal that will be submitted to
the Yukon Environmental and Socio-economic Assessment Board (YESAB), a total of
1,233 meters of geotechnical and hydrogeology drilling was conducted for the
pit-wall stability program (see Table 32). The results of this drilling was
combined with the geotechnical drilling information gathered in 2008 to help
support pit-wall slope recommendations for the proposed mine design. Two draft
geotechnical reports, one on the manto zone deposits and one on the Shamrock
zone deposits, were completed for in-house review in December 2010. A few of
these 2010 geotechnical drill holes contained significant assay intervals (e.g.
drill hole GT-10-05B in Tarn that intersected 6.21 m averaging 2.24 g/t Au).

Table 32. 2010 Open-Pit Stability Geotechnical and
Hydrogeology Drill Hole Summary.

|Area                           | Drill Holes Completed | Total Meters | Total Footage
|------------------------------ | --------------------- | ------------ | -------------
|Peel Zone Geotechnical         | 3                     | 524          | 1,721        
|Penguin Zone Geotechnical      | 1                     | 77           | 252          
|Tarn Zone Geotechnical         | 2                     | 145          | 476          
|Tarn Zone Hydrogeology         | 1                     | 72           | 236          
|3-M Zone Geotechnical          | 1                     | 103          | 337          
|Gully Vein Geotechnical        | 2                     | 312          | 1,024        
|Total Geotechnical - Open Pits | 10                    | 1,233        | 4,046        

A total of 32 drill holes were also completed in and around the
footprint of the proposed lower tailings site to both help support the YESAB
project proposal (collect geotechnical soil and rock characteristics) and to
condemn the underlying bedrock for potential gold mineralization (see Table 33).
Sixteen were diamond drill holes that targeted magnetic anomalies and were
designed for either exploration or condemnation purposes. All of these drill
holes were logged for geotechnical data and some were used to gather
hydrogeology information to help support engineering design studies. Fourteen of
the drill holes were completed with a Becker drill and diamond drill core at
depth to gather geotechnical information. A few of these drill holes were
completed as groundwater monitoring wells. Two monitoring wells were installed
at the toe berm of the existing tailings dam as requested by the Yukon Water
Board.

Table 33. 2010 Drill Hole Summary in or near the Lower
Tailings Option Site to help support the YESAB project proposal.

|                                                                                | Drill Holes   |              |              
|------------------------------------------------------------------------------- | ------------- | ------------ | -------------
|Area                                                                            | **Completed** | Total Meters | Total Footage
|Lower Tailings Site
      Geotechnical, Hydrogeology & Condemnation Core Holes  | 16            | 2,695        | 8,843        
|Lower Tailings Site Geotechnical Becker Holes
      (diamond drilling at depth) | 14            | 275          | 905          
|Sub-total Proposed
      Tailings Site                                          | 30            | 2,970        | 9,748        
|Tailings Dam Monitoring                                                         | 2             | 21           | 70           
|Total                                                                           | 32            | 2,991        | 9,788        

Other 2010 YESAB-Related Project Work

Additional YESAB Project Proposal work completed in 2010 on the
Ketza River Project included:

- Site water quality and QA/QC program;
- Hydrogeology data compilation and analysis;
- Hydrotechnical and water balance work;

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94

- Socio-economic studies;
- Fish and aquatic studies;
- Tailings design and tradeoff studies;
- Compiling all As-overlimit geochemical data to help support project-wide
  geochemical and water chemistry studies;
- Wildlife studies conducted by biologists;
- Conceptual engineering studies and project description;
- The Ketza River process flowsheet was designed by John Fox (contract
  metallurgist);
- Nine representative waste rock samples based on various sulfide mineral
  and oxide mineral contents were collected and sent to ALS for humidity cell
  test work at the end of December 2010; ongoing humidity cell testwork is in
  progress for the three samples started in 2008 (sulfide tailings, oxide
  tailings, and vein ores);
- Additional ARD/ABA samples (~300) of representative waste rock were also
  targeted for collection and will be submitted to ALS Lab for testing in
  January 2011;
- Several meetings with local communities (Ross River and Faro) and local
  First Nations (Ross River Dena and Teslin) were held in November and December
  2010 to update everyone on YNG’s proposed KetzaRiver Mine Project;
  additional meetings are being planned in January 2011 at Teslin; and
- Numerous meetings were also held with the Water Board, YESAB, Water
  Resources, and Energy, Mines and Resources to help advance: the progress for
  the YESAB Project Proposal; the water license application for the existing
  tailings pond; and to help address a potential access road maintenance
  application through the YESAA process.

(c) Silver Valley Property, Yukon

The Issuer was granted an option to acquire a 100% interest in
six (6) claims located in the Yukon Territory. The primary focus of exploration
for this property will be silver, with a secondary focus on gold, lead and zinc.
The Issuer has staked 114 claims around the six claims, and these are registered
in the name of the Issuer.

Exploration Drilling

Diamond drilling was conducted at the Silver Valley project
during January of 2010. The Silver Valley Property consists mostly of
Ag-Pb-Au±Cu±Zn veins and is located approximately 6 kilometres east of the main
Ketza River gold project. The K18B mine is a past producer of Ag and Pb and
minor Au that operated from 1965 to 1969 (including exploration work) by Stump
Mines Ltd. and later again for a brief time in 1980 and 1981 by Iona Silver
Mines Ltd. Development work at the K18B vein was reportedly stopped in 1981 when
a fire destroyed the compressor shack.

A total of seven drill holes were completed in 2010 which
tested two horizontal-loop E-M geophysical anomalies that were identified during
the 2007 field season.

Table 5. 2010 Silver Valley Exploration Drilling Summary.

|Target       | Drill Holes Completed | Total Meters | Total Footage
|------------ | --------------------- | ------------ | -------------
|River’s Edge | 5                     | 817          | 2680         
|K-18B South  | 2                     | 428          | 1404         
|Total        | 7                     | 1245         | 4084         

Drilling

Drilling at the Silver Valley Project in 2010 focused on the
River’s Edge and K18B South targets. Five drill holes were completed at the
River’s Edge target which identified three sub-parallel quartz-siderite-pyrite
veins with minor amounts of galena and tetrahedrite. The highlight was SV-10-70
which intercepted 0.9 meters grading 5.25 g/t Au, 27.7 g/t Ag and 0.16% Cu.

---

95

Two drill holes were also completed on the north end of the
K-18B South target. This target may be a fault-offset of the K-18B Vein which
was the focus of drilling in 2007. The two drill holes intersected two
pyrite-dominant veins approximately 3 meters in width. Galena, sphalerite,
tetrahedrite and stibnite were also present in these vein zones. The best
intercept came from drill hole SV-10-75 which intersected 1.39 meters that
assayed 103 g/t Ag, 0.4% Pb, 0.28 g/t Au, and 0.2% Cu.

Reclamation

During the 2008 field season, a total of 557 meters of trenches
were excavated for exploration purposes using a track-mounted excavator. These
trenches were re-contoured late in the 2010 field season.

(d) Other Properties

Bay Property, Yukon  The Issuer has staked 36 claims
near Watson Lake, Yukon. The primary focus of exploration for this property will
be silver.

Silver Bar, Arizona -The Issuer has a 100% interest in
55 claims in Pinal County, Arizona. The focus of exploration of this property
will be gold and copper. In 2010 the Issuer reduced the carrying value to a
nominal amount as management has no current plans to conduct exploration t this
property.

Greenwood properties -The Issuer owns a 75% interest in
31 claims in the Greenwood Mining District in southeast British Columbia. These
claims are subject to a 2% net smelter returns royalty. The remaining 25%
interest in this gold property is owned by Intrepid Minerals Corporation. This
property was written down to a nominal amount in the 2007.

ITEM 5: DIVIDENDS AND DISTRIBUTIONS

5.1Dividends and Distributions

To date, the Issuer has not paid any cash dividends or
distributions on its securities. The Issuer does not have any restriction that
could prevent it from paying dividends or distributions and has no dividend or
distribution policy.

ITEM 6: DESCRIPTION OF CAPITAL STRUCTURE

6.1General Description of Capital
Structure

The Issuer is authorized to issue an unlimited number of shares
without par value (the Shares). 699,117,596 Shares are issued and outstanding
as at March 31, 2011. The Issuer also has 21,175,932 Share Purchase Warrants
(the Warrants) issued and outstanding. Each warrant, when exercised, will
entitle the holder to purchase one common share of the Issuer at a price of
$3.00 per share on or before June 20, 2012.

Holders of the Shares of the Issuer shall be entitled to notice
of, to attend and vote at any meeting of the shareholders of the Issuer and to
one vote per share on a ballot. Shareholders will be entitled to receive
dividends as and when declared by the Board of Directors of the Issuer as a
class, subject to prior satisfaction of all preferential rights to dividends
attached to all shares of other classes of shares ranking in priority to the
Issuer’s Shares in respect of dividends. Shareholders shall be entitled
in the event of any liquidation, dissolution or winding-up of the Issuer,
whether voluntary or involuntary, or any other distribution of the assets among
its shareholder for the purpose of winding-up its affairs, and subject to prior
satisfaction of all preferential rights to return of capital upon dissolution
attached to all shares of other classes of shares ranking in priority to Shares
in respect of return of capital on dissolution, to share rateably, together with
the holders of shares of any class of shares ranking equally in respect of
return of capital, in such assets of the Issuer as are available for
distribution.

---

96

6.2Constraints

There are no constraints imposed on ownership of securities of
the Issuer to ensure that the Issuer has a required level of Canadian ownership.

6.3Ratings

The Issuer has not received a security rating with respect to
its Shares.

ITEM 7: MARKET FOR SECURITIES

7.1Trading Price and Volume

The following table sets out the market price range and trading
volume of the Shares on the Exchange under the symbol YNGfor the periods
indicated:

|     | Period                     | High ($) | Low ($) | Close ($) | Volume    
|---- | -------------------------- | -------- | ------- | --------- | ----------
|2010 | January                    | $0.30    | $0.21   | $0.22     | 1,909,600 
|     | February                   | $0.24    | $0.20   | $0.21     | 563,700   
|     | March                      | $0.28    | $0.21   | $0.24     | 2,097,300 
|     | April                      | $0.28    | $0.19   | $0.24     | 1,147,300 
|     | May                        | $0.24    | $0.18   | $0.20     | 997,100   
|     | June                       | $0.28    | $0.18   | $0.24     | 2,939,900 
|     | July                       | $0.33    | $0.23   | $0.29     | 4,411,500 
|     | August                     | $0.62    | $0.29   | $0.47     | 13,002,500
|     | September                  | $0.76    | $0.39   | $0.67     | 5,350,200 
|     | October                    | $0.75    | $0.65   | $0.73     | 6,455,400 
|     | November                   | $0.90    | $0.51   | $0.85     | 6,255,200 
|     | December                   | $0.90    | $0.77   | $0.87     | 2,177,000 
|2011 | January                    | $0.87    | $0.57   | $0.68     | 3,696,800 
|     | February                   | $0.83    | $0.64   | $0.79     | 13,583,700
|     | Week ending March 4        | $0.80    | $0.75   | $0.79     | 1,564,600 
|     | Week ending March 11       | $0.78    | $0.71   | $0.76     | 2,103,100 
|     | Week ending March 18       | $0.74    | $0.65   | $0.72     | 2,848,300 
|     | Week
      ending March 25 | $0.73    | $0.68   | $0.71     | 1,746,900 

The Issuer also has 21,175,932 warrants issued and outstanding
which, commencing November 7, 2007, traded on the Exchange under the symbol
YNG.WT. The Warrants expire on June 20, 2012.

|     | Period    | High ($) | Low ($) | Close ($) | Volume 
|---- | --------- | -------- | ------- | --------- | -------
|2010 | January   | $0.11    | $0.07   | $0.11     | 184,000
|     | February  | $0.06    | $0.02   | $0.03     | 458,500
|     | March     | $0.07    | $0.02   | $0.04     | 260,770
|     | April     | $0.05    | $0.04   | $0.04     | 30,000 
|     | May       | N/A      | N/A     | N/A       | 0      
|     | June      | $0.05    | $0.05   | $0.05     | 2,000  
|     | July      | $0.07    | $0.05   | $0.05     | 56,000 
|     | August    | $0.095   | $0.05   | $0.10     | 209,100
|     | September | $0.145   | $0.035  | $0.11     | 438,925
|     | October   | $0.145   | $0.065  | $0.11     | 94,800 
|     | November  | $0.15    | $0.075  | $0.075    | 397,700
|     | December  | $0.15    | $0.13   | $0.145    | 159,700
|2011 | January   | $0.145   | $0.13   | $0.145    | 3,000  
|     | February  | $0.145   | $0.08   | $0.10     | 112,100

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97

| | Period                     | High ($) | Low ($) | Close ($) | Volume
| | -------------------------- | -------- | ------- | --------- | ------
| | Week ending March 4        | N/A      | N/A     | N/A       | 0     
| | Week ending March 11       | $0.10    | $0.10   | $0.10     | 5,500 
| | Week ending March 18       | $0.14    | $0.12   | $0.14     | 69,300
| | Week ending March
      25 | N/A      | N/A     | N/A       | 0     

7.2Prior Sales

The Issuer does not have any class of securities which are
outstanding but not listed or quoted on a marketplace.

ITEM 8: ESCROWED SECURITIES AND SECURITIES SUBJECT TO
CONTRACTUAL RESTRICTION ON TRANSFER

8.1Escrowed Securities and Securities Subject to
Contractual Restriction on Transfer

As at December 31, 2010 no Shares of the Issuer were subject to
escrow restrictions.

ITEM 9: DIRECTORS AND OFFICERS

9.1Name, Occupation and Security
Holding

|Name of Director/Executive                                      |  |                                                                                                                                                                                                                                                               |  |                                                                                      
|--------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------
|Officer, Province or State and                                  |  | Principal Occupation during the past five                                                                                                                                                                                                                     |  | Current Position and Date of                                                         
|Country of
      Residence                                      |  | years                                                                                                                                                                                                                                                         |  | Appointment                                                                          
|Robert F. Baldock(1)(3) (4) (5) (6) (7)British Columbia, Canada |  | President and Chief Executive Officer of the Issuer;
      President and Chief Executive Officer of Monument Mining Limited; June
      2005 to date.                                                                                                         |  | President and CEO since May 21, 2009 and director since
      April 12, 2009         
|Graham Dickson(5)(6)British Columbia, Canada                    |  | President of Celec Inc., June 1993 to date.                                                                                                                                                                                                                   |  | Chief Operating Officer since May 21, 2009 and a director
      since April 17, 1997.
|Francois Marland(6)Switzerland                                  |  | Lawyer until 2010.                                                                                                                                                                                                                                            |  | Director and Vice Chairman since July 2, 2010                                        
|Symeon Solomonidis(5)Switzerland                                |  | Independent Consultant since 2008; Director of Software
      for Hewlett Packard from 1976 to 2008.                                                                                                                                                          |  | Director since August 1, 2009                                                        
|Jean-Edgar de TrentinianSwitzerland                             |  | President and CEO of Orifer SA.; Director of Carrefour SA
      from 1993 to 2008.                                                                                                                                                                            |  | Director since August 1, 2009                                                        
|Jay W. Schnyder(1)(2)Switzerland                                |  | A member of the management committee (Head of Refining)
      of MKS Finance SA,                                                                                                                                                                              |  | Director since May 13, 2010                                                          
|Pierre
      Besuchet(3)Switzerland                             |  | Director the Faisal Private Bank (Switzerland) and the
      Indufina Industrielle et Finance Holding (Switzerland) and is a director
      of the following North American Companies: W2 Energy Inc., FNDS3000 Corp
      and Solar Energy Initiatives, Inc. |  | Director since May 13, 2010                                                          
|Gerald B. Ruth(1)(2) (3) (4) (5)
      (7)Ontario, Canada       |  | CEO of Gersan Capital Corp. and a Director of Eagle Hill
      Exploration Corp.; an independent corporate finance consultant since 2003                                                                                                                      |  | Director since May 13, 2010                                                          

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98

|Name of Director/Executive                        |  |                                                                                                                                                                                                                                                                                  |  |                                                                                                                     
|------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------
|Officer, Province or State and                    |  | Principal Occupation during the past five                                                                                                                                                                                                                                        |  | Current Position and Date of                                                                                        
|Country of
      Residence                        |  | years                                                                                                                                                                                                                                                                            |  | Appointment                                                                                                         
|John Greenslade(2)(4) (5)British Columbia, Canada |  | President of Baja Mining Corp. since April 20, 2004,
      President of Catalyst Copper Corp. (a mineral exploration company).                                                                                                                                                   |  | Director and Chairman since May
      13, 2010                                                                      
|Shaun Heinrichs(7)British Columbia,
      Canada  |  | CFO of the Issuer since November 2008, controller of the
      Issuer since January 2008; Senior Manager, Finance at BC Hydro & Power
      Authority from February 2007 to February 2008; International Accounting
      Manager at PMC Sierra from July 2006 to February 2007. |  | Chief Financial Officer from November 21, 2008
      to date, Controller since January 31, 2008 to November 20, 2008
|Graham ScottBritish Columbia, Canada              |  | Lawyer; Principal, Vector Corporate Finance Lawyers from
      July 1, 2001 to date.                                                                                                                                                                                             |  | Secretary since May
      19, 2005                                                                                  
|**Todd Johnson**Nevada, USA                       |  | Vice President of the Issuer since April 2010; independent
      consultant from December 2006 to March 2010; Project Manager at AMEC Earth
      and Environmental from September 2004 to November 2006                                                                         |  | Vice President of Exploration since April 1,
      2010                                                             

|(1) | Member of the Audit Committee                                         
|--- | ----------------------------------------------------------------------
|(2) | Member of the Compensation Committee                                  
|(3) | Member of the Corporate Governance Committee                          
|(4) | Member of the Special Committee                                       
|(5) | Member of the Disclosure Committee (Corporate Disclosure
      Policy)
|(6) | Member of the Strategic Committee                                     
|(7) | Member of the Audit Sub-Committee (Financial
      Disclosure)        

The directors are elected at the Annual General Meeting for a
period of one year. The Issuer’s next Annual General Meeting is scheduled to be held on June 2, 2011 and it
is anticipated that all of the above directors will be nominated for
re-election. Officers of the Issuer are appointed by the Board of Directors.

As of March 30, 2011, 244,313,500 Shares of the Issuer are
beneficially owned, or controlled or directed, directly or indirectly by the
directors and executive officers, as a group, representing 34.95% of the issued
and outstanding voting securities (699,117,569 Shares).

9.2Cease Trade Orders, Bankruptcies, Penalties or
Sanctions

Other than as set out below, during the 10 years prior to the
date of this AIF, none of the directors or executive officers of the Issuer or a
shareholder holding a sufficient number of securities of the Issuer to affect
materially the control of the Issuer, has been a director or officer of any
other issuer that, while that person was acting in that capacity:

|(a) | was the subject of an order that was issued while the
      director or executive officer was acting in the capacity as director,
      chief executive officer or chief financial officer, or                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                  
|(b) | was subject to an event that was issued after the
      director or executive officer ceased to be a director, chief executive
      officer or chief financial officer and which resulted from an event that
      occurred while that person was acting in the capacity as director, chief
      executive officer or chief financial officer .

Mr. Greenslade is a director of Minterra Resource Corp.
(Minterra). On April 30, 2009, Minterra received notice from the TSX Venture
Exchange (TSX-V) that it was being halted from trading as it had less than
three directors.

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99

All directors and officers, other than John Greenslade,
resigned prior to April 30, 2009. John Greenslade remained as a director and
officer to attempt to re-structure Minterra for the benefit of its shareholders.
On May 11, 2009, Minterra was cease traded by the BC Securities Commission for
failure to file financial statements, associated Certificates of Disclosure, and
fees. The cease trade order remains in effect. Minterra is currently without
financial resources. It recently held a shareholders’ meeting and received
approval to consolidate its issued capital as a first step in re-organization to
reactivate. Its ability to reactivate will be subject to making satisfactory
arrangements with existing creditors and completing share for debt settlements
and an equity issue. Further to the cease trade on May 11, 2009, Minterra also
received a notice to de-list from the TSX-V on July 3, 2009 and Minterra’s
TSX-V listing was transferred to NEX on August 11, 2009. Mr. Greenslade was and
currently remains a director of Trigon Uranium Corp. (Trigon) (now called IC
Potash Corp.), and was advised by the President of Trigon that on August 28. 2007, a document was received by
Trigon from the Pennsylvania Securities Commission in regard to a purported cold
call to at least one Pennsylvania resident and the offer for sale of units of
Trigon by a representative of Coal Harbor Communications (CHC) in Vancouver,
Canada. In the document from the Pennsylvania Securities Commission, it was
stated that: It is ordered that the Respondents Trigon and CHC, and every
successor, affiliate, control person, agent, servant and employee of each of
them, and every entity owned, operated, or indirectly or directly controlled or
hereinafter organized by or on behalf of them, shall immediately cease and
desist from offering and selling the units in the Commonwealth of Pennsylvania,
in violation of the 1972 Act, and in particular Section 201 thereof.
Subsequently, discussions were carried out between Trigon and the Pennsylvania
Securities Commission with the assistance of the US attorneys of Trigon. Dale
Paruk, provided a declaration before the Commonwealth of Pennsylvania where he
stated that he was the owner and principal of CHC, that CHC had never been
designated or acted as an agent of Trigon, that CHC had been specifically told
that no contacts could be made to investors in the United States regarding
Trigon’s equity issue by him or any of his associates, that Trigon could only
consider offers to purchase its securities from US investors if there were
substantial prior relationships or if the potential investors were qualified
under US Securities Laws, that he was expressly told not to make cold calls to
US residents about Trigon, and the he understood that a rogue employee of CHC
had made such a call and that as a result that employee had been terminated. On
June 24, 2008, the allegations of the Pennsylvania Securities Commission were
settled as follows: 1) There was no admission of guilt or denial of the
allegations; 2) the Summary Order to Cease and Desist issued on August 28, 2007
was rescinded; 3) Trigon paid investigative and legal costs; and 4) Trigon paid
an administrative assessment.

During the 10 years prior to the date hereof, no director or
executive officer of the Issuer, or a shareholder holding sufficient securities
of the Issuer to affect materially the control of the Issuer has become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or been subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold the assets of the director, executive officer or shareholder.

The foregoing information, not being within the knowledge of
the Issuer, has been furnished by the respective directors, officers and
shareholders holding a sufficient number of securities of the Issuer to
materially control the Issuer.

Subsequent to January 1, 2011, no director or executive officer
of the Issuer or a shareholder holding a sufficient number of securities of the
Issuer to affect materially the control of the Issuer, is or has been subject
to:

|(a) | any penalties or sanctions imposed by a court relating to
      securities legislation or by a securities regulatory authority or has
      entered into a settlement agreement with a securities regulatory
      authority; or
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                 
|(b) | any other penalties or sanctions imposed by a court or
      regulatory body that would be likely to be considered important to a
      reasonable investor making an investment
decision.                                      

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100

9.3Conflicts of Interest

The Issuer has adopted, in accordance with Appendix M of the
Issuer’s Corporate Governance Manual, a code of conduct and conflict of
interest guidelines for directors and officers including disclosure
requirements.

ITEM 10: PROMOTERS

10.1Promoters

Under the definition of promoter contained in Section 1 of
the Securities Act (British Columbia), Graham Dickson, a director and
Chief Operating Officer of the Issuer, is a promoter of the Issuer, since he
took the initiative of substantially reorganizing the business of the Issuer.
Mr. Dickson beneficially owns or controls or directs, directly or indirectly,
2,396,000 Shares (0.34% of the issued and outstanding) of the Issuer.

ITEM 11: LEGAL PROCEEDINGS

11.1Legal Proceedings

There are no legal proceeding involving the Issuer.

11.2Regulatory Actions

There are no regulatory actions involving the Issuer.

ITEM 12: INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS

12.1Interest of Management and Others in Material
Transactions

Each of the following directors and senior officers has an
interest in the Issuer’s Stock Option Plan which was approved by the Issuer’s
shareholders on May 13, 2010:

|                       | Position of Optionee |                     | No. of    | Exercise |                    
|---------------------- | -------------------- | ------------------- | --------- | -------- | -------------------
|Name of
      Optionee | (Director/Officer)   | Date of Grant       | Shares    | Price    | Expiry Date        
|Graham Dickson         | Director             | January. 5, 2007    | 600,000   | $2.77    | Jan. 5, 2012       
|Graham Scott           | Officer              | January 5, 2007     | 50,000    | $2.77    | Jan. 5, 2012       
|Graham Dickson         | Director             | August. 10, 2007    | 1,000,000 | $1.74    | Aug. 10, 2012      
|Graham Scott           | Officer              | August 10, 2007     | 200,000   | $1.74    | Aug. 10, 2012      
|Shaun Heinrichs        | Officer              | March 28, 2008      | 200,000   | $1.60    | March 27, 2013     
|JE de Trentinian       | Director             | July 26,2009        | 1,000,000 | $0.15    | July 26/2014       
|Robert Baldock         | Director             | July 26,2009        | 4,000,000 | $0.15    | July 26/2014       
|Graham Dickson         | Director             | July 26,2009        | 4,000,000 | $0.15    | July 26/2014       
|Simon Solomonidis      | Director             | July 26,2009        | 500,000   | $0.15    | July 26/2014       
|Graham Scott           | Officer              | July 26,2009        | 500,000   | $0.15    | July 26/2014       
|Shaun Heinrichs        | Officer              | July 26,2009        | 2,000,000 | $0.15    | July 26/2014       
|Robert Baldock         | Director             | March 23, 2010      | 8,000,000 | $0.32    | March 23, 2015     
|Graham Dickson         | Director             | March 23, 2010      | 8,000,000 | $0.32    | March 23, 2015     
|Todd Johnson           | Officer              | March 23, 2010      | 775,000   | $0.32    | March 23,2015      
|Francois Marland       | Director             | July 12, 2010       | 9,000,000 | $0.32    | July 12, 2015      
|Pierre Besuchet        | Director             | July 15, 2010       | 1,000,000 | $0.26    | July 15, 2015      
|Jay Schnyder           | Director             | July 15, 2010       | 1,000,000 | $0.26    | July 15, 2015      
|John Greenslade        | Director             | July 15, 2010       | 1,000,000 | $0.26    | July 15, 2015      
|Gerald Ruth            | Director             | July 15, 2010       | 1,000,000 | $0.26    | July 15, 2015      
|Simon Solomonidis      | Director             | July
      15, 2010 | 500,000   | $0.26    | July
      15, 2015

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101

ITEM 13: TRANSFER AGENTS AND REGISTRARS

13.1Transfer Agents and Registrars

The Registrar and Transfer Agent for the Issuer is:

Computershare Trust Company of Canada
    ComputerShare Investor Services2nd Floor, 510 Burrard Street
    100 University Ave, 9thFloorVancouver, B.C., V6C 3B9
    Toronto, ON M5J 2Y1


|ITEM 14: MATERIAL CONTRACTS                                                                                                                                                                                                                                                                                                           
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                      
|14.1 Material Contracts                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                      
|Set forth below are details of every contract, other than
      a contract entered into in the ordinary course of business, that is
      material to the Issuer and that was entered into within the most recently
      completed financial year, or before the most recently completed financial
      year but is still in effect:

|1. | Incentive Stock Option Plan (the Plan) authorizing the
      reservation of no more than 10% of the Issuer’s outstanding Shares for
  issuance under the Plan.                                                                                          
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                           
|2. | Pursuant to Stock Option Certificates dated January 5,
      2007, August 10, 2007, March 28, 2008, July 26, 2009, March 23, 2010 and
      July 12, 2010 the Issuer granted options to Directors and Senior Officers
      as set out in Item 12.1 above.

ITEM 15: INTERESTS OF EXPERTS

15.1Names of Experts

Landy A. Stinnett, of SRK Consulting (US), Inc. of Denver,
Colorado, USA is the author of the SRK Report referred to in Section 5.4(a)
hereof. Mr. Stinnett is a Professional Engineer in Wyoming (#4502).

Russell White and Leah Mach, of SRK Consulting (US), Inc. of
Denver, Colorado, USA are the authors of the SRK Report referred to in Section
5.4(b) hereof. Mr. White is a Registered Geologist with the State of Washington
(#2293) and Ms. Mach is a Certified Professional Geologist with the American
Institute of Professional Geologists (#10940).

Mr. Gates of Spokane, Washington, is a licensed geologist in
the state of Washington - #2253. Mr. Gates is also a Certified Professional
Geologist with the American Institute of Professional Geologists - CPG#10902.

15.2Interests of Experts

Messrs. Stinnett, White and Gates and Ms. Mach have no
registered or beneficial, direct or indirect, interest in the securities of the
Issuer.

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102

ITEM 16: ADDITIONAL INFORMATION

16.1Additional Information

Additional information relating to the Issuer may be found on
SEDAR at www.sedar.com. Additional
information, including directors’ and officers’ remuneration and indebtedness,
principal holders of the Issuer’s securities, and securities authorized for
issuance under equity compensation plans, if applicable, is also contained in
the Issuer’s Information Circular pertaining to its most recent Annual
General Meeting that involved the election of directors and in the Issuer’s
comparative financial statements and MD&A for its most recently completed
financial year.

Set forth below is the additional information required pursuant
to Form 52-110F1, Audit Committee Information Required in an AIF:

1.The Audit Committees Charter

The Issuer’s audit committee (the Audit Committee) is
governed by an audit committee charter, the text of which is attached as
Schedule A to this AIF.

The Audit Committee has also adopted a Whistleblower Policy,
the text of which is attached as Schedule B to this AIF.

The purpose of the Audit Committee is to act as the
representative of the Board of Directors in carrying out its oversight
responsibilities relating to:

- The audit process;
- The financial accounting and reporting process to shareholders and
  regulatory bodies; and
- The system of internal financial controls.

2.Composition of the Audit Committee

The Issuer’s audit committee is comprised of three directors,
as set forth below:

|Jay Schnyder | Gerald Ruth | Robert F. Baldock
|------------ | ----------- | -----------------

As defined in NI 52-110, the Board of Directors of the Issuer
has determined that Messrs. Ruth and Schnyder are independent and all members
of the Audit Committee are financially literate, meaning that they must be able
to read and understand financial statements.

The Chair of the Audit Committee, Mr. Ruth, has accounting and
financial expertise, meaning that he possesses financial or accounting
credentials or has experience in finance or accounting.

3.Reliance on Certain Exemptions

At no time since the commencement of the Issuer’s most
recently completed financial year, has the Issuer relied on the following
exemptions:

| | (a) | the exemption in section 2.4, De Minimis Non-audit
      Services;                                
| | --- | --------------------------------------------------------------------------------------------------
| | (b) | the exemption in section 3.2, Initial Public
      Offerings;                                     
| | (c) | the exemption in section 3.4, Events Outside Control
      of Member;                             
| | (d) | the exemption in section 3.5, Death, Disability or
      Resignation of Audit Committee Member; or

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103

| | (e) | an exemption from National Instrument 52-110, Audit
      Committees, in whole or part granted under Section 8,
      Exemptions.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

4.Reliance on the Exemption in Subsection 3.3(2)
or Section 3.6

At no time since the commencement of the Issuer’s most
recently completed financial year, has the Issuer relied on the exemption in
subsection 3.3(2), Controlled Companies, or section 3.6, Temporary
Exemption for Limited and Exceptional Circumstances.

5.Reliance on Section 3.8

At no time since the commencement of the Issuer’s most
recently completed financial year, has the Issuer relied on the exemption in
section 3.8, Acquisition of Financial Literacy.

6.Audit Committee Oversight

At no time since the commencement of the Issuer’s most
recently completed financial year, has a recommendation of the Committee to
nominate or compensate an external auditor not been adopted by the Board of
Directors.

7. Pre-Approval Policies and Procedures

The Committee has adopted specific policies regarding the
engagement of the external auditors appointed by the shareholders of the Issuer
(the Auditors) consistent with the Committee’s charter with a view to
ensuring the Auditors’ independence. These pre-approval policies relate to
the engagement of audit services, audit-related services and non-audit-related
services.

8.External Auditor Service Fees (By
Category)

Set forth below are details of fees billed by the Issuer’s
external auditor in each of the last two fiscal years for audit services:

|Fiscal Year End   | Audit Fees | Audit-Related
      Fees(1) | Tax
      Fees(2) | All Other
      Fees(3)
|----------------- | ---------- | --------------------------- | ----------------- | -----------------------
|December 31, 2009 | $ 314,850  | $ 30,937                    |                  |                       
|December 31, 2010 | 210,000    |                            |                  |                       

|(1) | The aggregate fees billed in each of the last two fiscal
      years for assurance and related services by the Issuer’s external auditor
      that are reasonably related to the performance of the audit or review of
      the Issuer's financial statements and are not reported under Audit
  Fees.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The aggregate fees billed in each of the last two fiscal
      years for professional services rendered by the Issuer’s external auditor
  for tax compliance, tax advice and tax planning.                                                                                                               
|(3) | The aggregate fees billed in each of the last two fiscal
      years for products and services provided by the Issuer’s external
      auditor, other than the services reported under clauses 1, 2 and 3
above.                                                                                          

---

104

|Schedule A to the Annual Information Form of
|----------------------------------------------
|Yukon-Nevada Gold Corp. (the "Issuer")        
|                                              
|                                              
|CHARTER OF THE AUDIT COMMITTEE                
|                                              

This charter (the Charter) sets forth the purpose,
composition, responsibilities, duties, powers and authority of the Audit
Committee (the Committee) of the Board of Directors (the Board) of the
Issuer.

1.0 Purpose

The purpose of the audit committee (the Committee) is to: (a)
assist the Board in fulfilling its oversight responsibilities with respect to
financial reporting and disclosure requirements; (b) ensure that an effective
risk management and financial control framework has been implemented by
management of the Issuer; and (c) be responsible for external and internal audit
processes.

2.0 Composition and Membership

The Board will appoint the members (Members) of the Committee
after the annual general meeting of shareholders of the Issuer. The Members will
be appointed to hold office until the next annual general meeting of
shareholders of the Issuer or until their successors are appointed. The Board
may remove a Member at any time and may fill any vacancy occurring on the
Committee. A Member may resign at any time and a Member will cease to be a
Member upon ceasing to be a director.

The Committee will consist of three directors that meet the
criteria for independence and financial literacy established by applicable laws
and the rules of the stock exchange upon which the Issuer’s securities are
listed, including National Instrument 52-110  Audit Committees. In addition,
each director will be free of any relationship which could, in the view of the
Board, reasonably interfere with the exercise of a member’s independent
judgment.

The Board will appoint one of the Members to act as the
Chairman of the Committee. The secretary of the Issuer (the Secretary) will be the secretary of all meetings and
will maintain minutes of all meetings and deliberations of the Committee. In the
absence of the Secretary at any meeting, the Committee will appoint another
person who may, but need not, be a Member to be the secretary of that meeting.

3.0 Meetings

Meetings of the Committee will be held at such times and places
as the Chairman may determine, but in any event not less than four times per
year. Twenty-four (24) hours advance notice of each meeting will be given to
each Member orally, by telephone, by facsimile or email, unless all Members are
present and waive notice, or if those absent waive notice before or after a
meeting. Members may attend all meetings either in person or by conference call.

At the request of the external auditors of the Issuer, the
Chief Executive Officer or the Chief Financial Officer of the Issuer or any
member of the Committee, the Chairman will convene a meeting of the Committee.
Any such request will set out in reasonable detail the business proposed to be
conducted at the meeting so requested.

The Chairman, if present, will act as the Chairman of meetings
of the Committee. If the Chairman is not present at a meeting of the Committee,
then the Members present may select one their number to act as Chairman of the
meeting.

---

105

A majority of Members will constitute a quorum for a meeting of
the Committee. Each Member will have one vote and decisions of the Committee
will be made by an affirmative vote of the majority. The Chairman will not have
a deciding or casting vote in the case of an equality of votes. Powers of the
Committee may also be exercised by written resolution signed by all Members.

The Committee may invite from time to time such persons as it
sees fit to attend its meetings and to take part in the discussion and
consideration of the affairs of the Committee.

In advance of every regular meeting of the Committee, the
Chairman, with the assistance of the Secretary, will prepare and distribute to
the Members and others as deemed appropriate by the Chairman, an agenda of
matters to be addressed at the meeting together with appropriate briefing
materials. The Committee may require officers and employees of the Issuer to
produce such information and reports as the Committee may deem appropriate in
order to fulfil its duties.

4.0 Duties and Responsibilities

Subject to the powers and duties of the Board of Directors, the
duties and responsibilities of the Committee are as follows:

|A. | The Audit Committee shall review and recommend updates to
      its terms of reference to the Corporate Governance Committee of the Board
      of Directors annually.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                       
|B. | The Audit Committee shall meet not less often than four
      times per year.                                                                                         
|   |                                                                                                                                                                       
|C. | The Audit Committee shall have responsibility
  for:                                                                                                                  

| | i.   | reviewing the financial statements of the Issuer and if
      appropriate recommending the approval of such financial statements by the
      Board of Directors;                                                                              
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                
| | ii.  | reviewing the internal financial and accounting, audit
      and reporting systems controls of the Issuer;                                                                                                                                     
| |      |                                                                                                                                                                                                                                                
| | iii. | reviewing the independence, qualifications and
      objectivity of the Issuer's auditors, and making recommendations to the
      board of directors in the ease of vacancy of an auditor, as to the
      selection of the Issuer's auditors;
| |      |                                                                                                                                                                                                                                                
| | iv.  | reviewing and recommending auditors'
  remuneration;                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                
| | v.   | reviewing the scope, results and findings of the Issuer's
      auditors, audit and non-audit services; and                                                                                                                                    
| |      |                                                                                                                                                                                                                                                
| | vi.  | reviewing annually the status of significant current and
      potential legal matters.                                                                                                                                                        

|D. | The Audit Committee shall ensure that effective lines of
      communication are maintained with the external auditor, internal auditors,
      financial management and the board of directors.                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                  
|E. | The Audit Committee shall review with the auditors of the
      Issuer the relationships existing between them and the management of the
      Issuer to ensure an effective liaison in the coordination of audit effort
      regarding completeness of coverage, avoidance of redundant efforts and the
      effective use of audit resources.
|   |                                                                                                                                                                                                                                                                                                                                                  
|F. | The Audit Committee shall review, discuss and consider
      with the auditors their approach to risk assessment, scope and plan of
      their audits. The review may include:                                                                                                                                                                  

| | i. | an annual assessment of areas of greatest risk to the
      Issuer and steps taken to address those risks;
| | -- | ----------------------------------------------------------------------------------------------------------

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106

| | ii.  | the annual assessment of the Issuer's insurance coverage,
      including the adequacy and cost thereof;                                                                                       
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                
| | iii. | the annual audit plan and overall audit
  universe;                                                                                                                                            
| |      |                                                                                                                                                                                                
| | iv.  | changes made from time to time in the audit universe and
      reasons therefor;                                                                                                               
| |      |                                                                                                                                                                                                
| | v.   | methods employed by management of the Issuer to assess
      risk and to prioritize the various audit proposals identified in the
      annual plan as well as unscheduled audit proposals: and
| |      |                                                                                                                                                                                                
| | vi.  | any unusual occurrence affecting the management which may
      preclude the completion of the audit plan.                                                                                     

|G. | The Audit Committee shall consider and review with the
      auditors and management of the Issuer:
|-- | ---------------------------------------------------------------------------------------------------

i.      the
adequacy of the Issuer's internal financial controls;

ii.    
recommendations for the improvement of the Issuer's accounting procedures and
internal financial controls; and

iii.    any related
significant findings and recommendations together with management's
responses thereto.

|H. | The Audit Committee shall review the annual consolidated
      financial statements which are to he submitted to the board of directors
      including management's discussion and analysis, if any,
      contained therein, or in any other relevant documentation. The review, may
      include:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i.   | reports from the auditors as to the results of their
      examination to date and advise them of any problems regarding financial
      reporting in the annual report of the Issuer, including any disagreements
      that may have arisen between the auditors and management in any
    area:
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                   
| | ii.  | meeting(s) with management of the Issuer who shall
      outline any problems as to financial policies, financial reporting or
      matters relating to internal control and any matters in contention with or
      under consideration by the auditors or management of the Issuer;            
| |      |                                                                                                                                                                                                                                                                                                   
| | iii. | the appropriateness of existing accounting principles
      being employed and any change in accounting policy or practice which the
      auditors may refer to in their audit report;                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                   
| | iv.  | any proposed changes in financial statement presentation
      or footnote the auditors may recommend: and                                                                                                                                                                                        
| |      |                                                                                                                                                                                                                                                                                                   
| | v.   | other matters related to the conduct of the audit which
      are to be communicated to the Audit Committee under generally accepted
      auditing standards.                                                                                                                                    

|I. | The Audit Committee shall review with management of the
      Issuer and the auditors quarterly interim financial statements and if
      appropriate recommend approval of such quarterly statements to the board
      of directors.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                       
|J. | The Audit Committee shall consider and review with
      management:                                                                                                                                                                  

| | i.  | any difficulties encountered in the course of the audits
      conducted by the auditors, including any changes to or restrictions on the
      scope of their work or access to required information;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                       
| | ii. | the internal auditing department budget and staffing
      and                                                                                                                                        

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107

| | iii. | the internal auditing department charter including the
      internal audit plan.
| | ---- | ---------------------------------------------------------------------------------

|K. | The Audit Committee shall review legal, regulatory and
      social matters that may have a material impact on the financial
      statements, related the Issuer compliance policies and programs and
      reports prepared to manage and monitor the Issuer compliance policies. The
      Audit Committee shall receive reports concerning the Issuer's
      environmental management program on a quarterly basis, and review ongoing
      environmental compliance Issues.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|L. | The Audit Committee shall confirm and assure the
      independence of the auditors, including a review of management consulting
      services and related fees provided by the auditors.                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|M. | The Audit Committee shall meet with management and the
      auditors in separate executive sessions to discuss any matters that the
      Audit Committee or these groups believe should be discussed privately with
      the Audit Committee.                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|N. | The Audit Committee shall have the power to conduct or
      authorize investigations into any matters within the Audit Committee's
      scope of responsibilities. The Audit Committee shall be empowered to
      retain independent counsel, accountants, or others to assist it in the
      conduct of any investigation.                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|O. | The Audit Committee shall perform such other functions as
      assigned by law or the board of directors, and may review other items of
      an internal control or risk management nature which may from time to time
      he brought before the Audit Committee.                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|P. | The Audit Committee shall conduct a self-assessment at
      least annually, and discuss the results with the board of
  directors.                                                                                                                                                                                                                                                                                                                                               

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108

|Schedule B to the Annual Information Form of
|----------------------------------------------
|Yukon-Nevada Gold Corp. (the "Issuer")        
|                                              
|                                              
|WHISTLEBLOWER POLICY                          
|                                              

The Issuer’s whistleblowing policy is posted on its website at
https://www.openboard.info/yng/index.cfm.

---