---



ANNUAL INFORMATION FORM

of



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



March 29, 2012

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TABLE OF CONTENTS

**Page No.****ITEM** 1:
      PRELIMINARY NOTES
      31.1
      Financial Statements and Forward-Looking
        Statements
      31.2
      Date of Information
      31.3
      Glossary of Abbreviations
        and Terms
      31.4
      Conversion
        Table
      61.5
      Currency
      61.6
      Share Capital
      6**ITEM** 2:
      CORPORATE
        STRUCTURE
      62.1
      Name, Address and Incorporation
      62.2
      Intercorporate Relationships
      7**ITEM** 3:
      GENERAL
        DEVELOPMENT OF THE BUSINESS
      73.1
      Three-Year History
      7**ITEM** 4:
      DESCRIPTION OF THE BUSINESS
      204.1
      General
      204.2
      Risk Factors
      254.3
      Companies
        with Asset-backed Securities Outstanding
      274.4
      Companies with Mineral Projects
      27(a)
      Jerritt Canyon Mine, Nevada
      27(b)
      Ketza River Project, Yukon Territory
      91(c)
      Silver Valley Property,
        Yukon
      130(d)
      Other Properties
      132**ITEM** 5:
      DIVIDENDS AND DISTRIBUTIONS
      133**ITEM** 6:
      DESCRIPTION OF CAPITAL
        STRUCTURE
      133**ITEM** 7:
      MARKET FOR SECURITIES
      1337.1
      Trading
        Price and Volume
      133**ITEM** 8:
      ESCROWED
        SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL **RESTRICTION
        ON TRANSFER**
      134**ITEM** 9:
      DIRECTORS AND OFFICERS
      1349.1
      Name, Occupation and Security
        Holding
      1349.2
      Cease Trade
        Orders, Bankruptcies, Penalties or Sanctions
      1369.3
      Conflicts of Interest
      137**ITEM** 10:
      PROMOTERS
      137**ITEM** 11:
      LEGAL PROCEEDINGS
      137**ITEM** 12:
      INTEREST OF MANAGEMENT
        AND OTHERS IN MATERIAL TRANSACTIONS
      137**ITEM** 13:
      TRANSFER AGENTS AND REGISTRARS
      138


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|ITEM 14: | MATERIAL CONTRACTS     | 138                 
|-------- | ---------------------- | --------------------
|         |                        |                     
|ITEM 15: | INTERESTS OF EXPERTS   | 139                 
|         | 15.1                   | Names of Experts    
|         | 15.2                   | Interests of Experts
|         |                        |                     
|ITEM 16: | ADDITIONAL INFORMATION | 139                 

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3

ITEM
1:           PRELIMINARY NOTES

1.1Financial Statements and Forward-Looking Statements

All financial information in this AIF is prepared in accordance
with International Financial Reporting Standards (IFRS)as issued by the
International Accounting Standards Board.

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 29, 2012 unless
otherwise indicated.

1.3Glossary of Abbreviations and Terms

Certain abbreviations and terms used throughout this AIF are
defined below:

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4

Term
      DefinitionAssay:
      The chemical analysis of mineral
          samples to determine the metal content.Capital Expenditure:
      All other expenditures not
          classified as operating costs.Composite:
      Combining more than one sample
          result to give an average result over a larger distance.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 as to whether or not it is economic to recover its
          gold content by further concentration.Dilution:
      Waste, which is unavoidably
          mined with ore.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.Hanging wall:
      The overlying side of an orebody
          or slope.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 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.Mineral Inventory:
      A tabulation of tonnes, grade,
          and contained metal of all estimated material remaining in the ground
          that has no economic, mining, or metallurgical parameters applied, and
          not dependent upon the current fair-market metal price; tables can include
          data above a specific cutoff grade to help assess potential gross metal
          quantities and average metal grades.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:
      See Mineral Reserve.Oxide:
      An oxide-bearing mineral;
          an anion of oxygen in the oxidation state of -2 or a chemical compound
          formerly containing an oxygen in this state; result when elements are
          oxidized by oxygen in air.Pillar:
      Rock left behind to help support
          the excavations in an underground mine.RoM:
      Run-of-Mine.Sedimentary:
      Pertaining to rocks formed
          by the accumulation of sediments, formed by the erosion of other rocks.Shaft:
      An opening cut downwards from
          the surface for transporting personnel, equipment, supplies, ore and
          waste.Sill:
      A thin, tabular, horizontal
          to sub-horizontal body of igneous rock formed by the injection of magma
          into planar zones of weakness.Smelting:
      A high temperature pyrometallurgical
          operation conducted in a furnace, in which the valuable metal is collected
          to a molten matte or doré phase and separated from the gangue components
          that accumulate in a less dense molten slag phase.Stope:
      Underground void created by
          mining.Stratigraphy:
      The study of stratified rocks
          in terms of time and space.


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Term
      DefinitionStrike:
    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).


Abbreviations

The imperial system has been used throughout the Jerritt Canyon
and Ketza River Reports unless otherwise stated. All currency is in U.S.
dollars. Market prices are reported in US$ per troy oz of gold. Tons are
imperial containing 2,000 pounds. The following abbreviations are used herein.

Term
      Abbreviation
      
      Term
      AbbreviationA
      ampere
      
      ICP
      induced couple plasmaAA
      atomic absorption
      
      ID2
      inverse-distance squaredA/m2
      amperes per square meter
      
      ID3
      inverse-distance cubedANFO
      ammonium nitrate fuel oil
      
      IFC
      International Finance CorporationAg
      silver
      
      ILS
      Intermediate Leach SolutionAu
      gold
      
      kA
      kiloamperesAuEq
      gold equivalent grade
      
      kg
      kilograms°C
      degrees Centigrade
      
      km
      kilometerCCD
      counter-current decantation
      
      km2
      square kilometerCIL
      carbon-in-leach
      
      koz
      thousand troy ouncesCoG
      Cut-off-Grade
      
      kt
      thousand tonnescm
      centimeter
      
      kt/d
      thousand tonnes per daycm2
      square centimeter
      
      kt/y
      thousand tonnes per yearcm3
      cubic centimeter
      
      kV
      kilovoltcfm
      cubic feet per minute
      
      kW
      kilowattConfC
      confidence code
      
      kWh
      kilowatt-hourCRec
      core recovery
      
      kWh/t
      kilowatt-hour per metric tonneCSS
      closed-side setting
      
      l
      literCTW
      estimated true width
      
      lps
      liters per second°
      degree (degrees)
      
      lb
      pounddia.
      diameter
      
      LHD
      Long-Haul Dump truckEIS
      Environmental Impact Statement
      
      LLDDP
      Linear Low Density Polyethylene PlasticEMP
      Environmental Management Plan
      
      LOI
      Loss On IgnitionFA
      fire assay
      
      LoM
      Life-of-Mineft
      foot (feet)
      
      lps
      liters per secondft2
      square foot (feet)
      
      m
      meterft**3**
      cubic foot (feet)
      
      m2
      square meterg
      gram
      
      m 3
      cubic metergal
      gallon
      
      masl
      meters above sea levelg-mol
      gram-mole
      
      MARN
      Ministry of the Environment and Natural
        Resourcesgpm
      gallons per minuteg/t
      grams per tonne
      
      MDA
      Mine Development Associatesha
      hectares
      
      mg/l
      milligrams/literHDPE
      Height Density Polyethylene
      
      mm
      millimeterhp
      horsepower
      
      mm2
      square millimeterHTW
      horizontal true width
      
      mm 3
      cubic millimeter


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6

Term
      Abbreviation
    
      Term
      AbbreviationMME
    Mine & Mill Engineering
    
    RQD
    Rock Quality DescriptionMoz
    million troy ounces
    
    SEC
    U.S. Securities & Exchange CommissionMt
    million tonnes
    
    s
    secondMTW
    measured true width
    
    SG
    specific gravityMW
    million watts
    
    SPT
    standard penetration testingm.y.
    million years
    
    st
    short ton (2,000 pounds)NGO
    non-governmental organization
    
    t
    tonne (metric ton) (2,204.6 pounds)NI 43-101
    Canadian National Instrument 43-101
    
    t/h
    tonnes per hourOSC
    Ontario Securities Commission
    
    t/d
    tonnes per dayoz
    troy ounce
    
    t/y
    tonnes per year% or pct
    Percent
    
    TSF
    total suspended particulatesPLC
    Programmable Logic Controller
    
    TSP
    tailings storage facilityPLS
    Pregnant Leach Solution
    
    μ
    micron or micronsPMF
    probable maximum flood
    
    V
    voltsppb
    parts per billion
    
    VFD
    variable frequency driveppm
    parts per million
    
    W
    wattQA/QC
    Quality Assurance/Quality Control
    
    XRD
    x-ray diffractionRC
    rotary circulation drilling
    
    yr
    yearRoM
    Run-of-Mine


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 Unit2.47 acres
    1 hectare
    0.4047 hectares
    1 acre3.28 feet
    1 metre
    0.3048 metres
    1 foot0.62 miles
    1 kilometre
    1.609 kilometres
    1 mile0.032 ounces (troy)
    1 gram
    31.1 grams
    1 ounce (troy)1.102 tons (short)
    1 tonne
    0.907 tonnes
    1 ton0.029 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 Company 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 Company is Yukon-Nevada Gold
Corp. (the Company).

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7

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

The Company 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 Company was struck from the Register of Companies
for British Columbia and dissolved. The Company was restored to the Register on
August 1, 2003. On January 5, 2004 the Company 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 Company 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 Company entered into an Arrangement
with Queenstake, providing for, among other things, the acquisition by the
Company of all of the issued and outstanding shares of Queenstake. The
Arrangement closed on June 20, 2007, at which time the Company changed its name
to its current name.

2.2Intercorporate Relationships

Set forth below are the names of the Companys subsidiaries:



ITEM
3:           GENERAL
DEVELOPMENT OF THE BUSINESS

The Shares of the Company were called for trading on the
Toronto Stock Exchange (the TSX) on April 13, 2005. The Company is
active in the evaluation, development and commercial production of mineral
properties. The Company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 Company 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 Company 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.

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8

The Company acquired the Jerritt Canyon gold mine upon
completion of its plan of arrangement with Queenstake on June 20, 2007. Jerritt
Canyon is a gold property with two active underground mines (Smith and SSX-Steer
Complex), ore stockpiles and a 1.5 million ton per year capacity processing
plant (grinding, roasting and carbon-in-leach circuits). The approximately 119
square miles that comprise the Jerritt Canyon property is host to a number of
defined mineral resources and reserves in addition to a significant number of
advanced, early stage and district-scale exploration targets with potential to
expand the currently defined mineral reserves and resources proximal to the
producing mines.

Total underground mine production from Smith Mine and SSX-Steer
Complex totals 1,300 tons per day at year end 2011 (1,000 tpd from Smith by
contract miner Small Mines Development, LLC and 300 tpd from SSX-Steer being
mined by Queenstake Resources staff. Queenstake is targeting to ramp up to 1,200
tons per day production from the SSX-Steer mine in 2012 as more equipment
becomes available. The Company has also obtained permitting to develop the
Starvation Canyon underground mine which is scheduled to be ready in the second
half of 2012 as infrastructure is put in place and equipment delivered.
Starvation Canyon will be capable of delivering up to 600 tons of ore per day.
This will complete the underground mine development program producing a targeted
2,800 tons per day of ore to the mill.

The Company completed 134,277 feet (220 drill holes) of surface
reverse circulation and diamond drilling from several projects throughout the
property; 23,942 feet (7,299.3m) of underground diamond drilling (37 drill
holes) at the Smith Mine; and 93,753 feet (28,583m) of cubex production drilling
(809 drill holes) in 2011 from the Smith and SSX-Steer underground mines.
Drilling in 2011 focused on: those areas proximal to existing underground
developments to convert inferred resources to measured and indicated resources,
and in open pit areas with high potential for quick development (Burns Basin,
Steer and Saval Canyon, and Pie Creek). In addition, a Titan 24 geophysical
ground survey was conducted at Starvation Canyon that has identified several
anomalies that are scheduled for drill testing in 2012.

The January 1, 2011 Mineral Resources and Reserveswere
updated in a new NI 43-101 Technical Report dated June 28, 2011 as amended on
January 6, 2012. Resources have moderately increased from the previous year-end
2007 Technical Report and include: a measured resource of 4,549.9 ktons
averaging 0.236 opt Au containing 1,073.1 koz; an indicated resource of 6,459.5
ktons averaging 0.204 opt Au containing 1,316.8 koz Au; and an inferred resource
of 3,872.6 ktons averaging 0.194 opt Au containing 751.3 koz Au. Proven and
Probable Reservesfrom a total contained ounce perspective remain basically
unchanged from the previous year-end 2007 Technical Report and include a proven
reserve of 1,406 ktons averaging 0.193 opt Au containing 270.9 koz, and a
probable reserve of 2,959.7 ktons averaging 0.151 opt Au containing 446.0 koz.

The Company has owned the Ketza River property in the Yukon
since 1994 under a 100% owned subsidiary company called Ketza River Holdings Ltd
(KRHL). This former producing mine was shut down in November 1990 by
the previous owner and operator (Canamax) due to the depletion of known oxide
ore reserves identified at that time. The Ketza River property includes 712
mineral claims and leases, a gold mill, a 49-person camp and office facility,
and necessary licences and permits to conduct exploration. The Companys Senior
Vice President  Acquisitions and Corporate Development, Graham Dickson, who is
also a chemist, identified areas which were under-explored and which could be
mined and processed by different methods than those employed in the past
including some possibly significant quantities of sulphide ore. To date, the
Company has completed the following work at Ketza River: diamond drilling from
1994 to 2011, an updated NI 43-101 Technical Report dated June 28, 2011 that
includes the current open pit and underground resources, and pre-feasibility
work and permitting work to support the Yukon Environmental and Socio-economic
Assessment Board (YESAB) application that was submitted in September
2011 for potential Mine development.

Recent activities in 2011 have focused on installation of a 49-person
  replacement camp, upgrading of the camp infrastructure (new water well and sewer
  system), YESAB application work, drilling on the margins of the previously identified
  resource areas and in new exploration targets away from the known resources;
  and the completion of a NI 43-101 Technical Report on June 28, 2011 that updates
  the Mineral Resources as of January 25, 2010 with drilling results from 2008.

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9

The 2011 exploration program consisted of a drilling program
  (26 drill holes totalling 14,441 ft. or 4,402m) that focused on the South Hill
  Target, the NW target, and the Penguin and Hoodoo Zones; 343 surface soil geochemical
  sampling in the OK target (located northeast of the QB Zone); 176 panel samples
  taken across the Canamax mill stockpile; sampling the last 13 geotechnical drill
  holes drilled in late 2010 at the lower tailings site; and the collection of
  290 drill hole pulps (completed originally from 2007 to 2010) for duplicate
  Quality Assurance and Quality Control (QA/QC) analysis at ALS and Inspectorate.
  Current exploration work at the site is focusing on compiling the assays from
  the 2011 drilling program to help plan the 2012 drilling program.

Year Ending December 31, 2009

On February 24, 2009 the Company 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.

On February 25, 2009, the Company 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 Companys Jerritt Canyon Mine resumed
March 25, 2009 when approvals were received from NDEP on the progress and plans
developed by the Company.

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

On April 24, 2009 the Company 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 Company held on May 21,
2009, Graham Dickson, Robert Baldock, Peter Holbek, John Fox, Neil Steenberg,
Don MacDonald, Iain Harris and Robert Chafee were elected to the Companys Board
of Directors. Mr. Dickson concurrently resigned as the Companys President and
Chief Executive Officer and was appointed the Companys Chief Operating Officer
and Robert Baldock was appointed the Companys President and Chief Executive
Officer. 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 Company was able to complete the
installation of a calomel emission system and the system instrumentation on July
20, 2009.

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

On August 6 and 28, 2009 the Company 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.

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10

On December 1, 2009, the Company 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 Company 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 Company, as well as related
environmental concerns and gives the Company the right to operate the milling
facility from the effective date.

The Company 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 Company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 Company 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 Companys Board of Directors approved the
appointment of Todd W. Johnson as its Vice President of Exploration.

At the Companys 2010 Annual General Meeting held May 13, 2010
Graham Dickson, Robert 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 Companys Chairman.

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

In March 26, 2010 the Company 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 Company 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 Company 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 Company 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 Company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 Company.

---

11

By Agreement dated October 25, 2010, the Company entered into
an ore purchase agreement with Newmont USA Limited whereby the Company 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 Companys auditor
and Deloitte & Touche LLP was appointed as the Companys successor auditor.

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

In May 2010, the Company 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 Company
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 Company achieved steady state of
operations during the third quarter.

In the fourth quarter of 2010 the Company 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 Company 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 Company 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 Company 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 Company 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 Company to clear title
to the property, a substantial portion of the winterization project was not
completed and the Company 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 Company 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 Company ($0.8 million) late in the fourth quarter. As a result of these
  issues and resulting low throughput the Company continues to experience higher
  than normal production costs that will need further investment to correct in
  2011.

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12

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.

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

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13

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 KRHL. A total of 146
quartz claims were added to the Ketza River claim block in early 2011 to acquire
prospective ground in the district for additional Au deposits.

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
      TotalTechniqueGround Magnetics
    71
    45.1
    71
    41.1
    157.2IP
    6.8
    
    36.9
    
    41.3Line Cutting
    
    
    34.5
    
    34.5Soil 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.

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14

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 FootagePeel Zone Geotechnical
    3
    524
    1,721Penguin Zone Geotechnical
    1
    77
    252Tarn Zone Geotechnical
    2
    145
    476Tarn Zone Hydrogeology
    1
    72
    2363-M Zone Geotechnical
    1
    103
    337Gully Vein Geotechnical
    2
    312
    1,024Total 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 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 Companys proposed Ketza
River 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 FootageRivers Edge
    5
    817
    2,680K-18B South
    2
    428
    1,404Total
    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 Company, 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

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15

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 Company 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
Company 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 Company,
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.

Year ending December 31, 2011

On January 28, 2011 the Company entered into a forward gold
sale agreement with Monument Mining Ltd. (Monument) a public company the
shares of which trade on the TSX Venture Exchange, the President of Monument is
Robert Baldock, President of the Company. Graham Dickson and Jean-Edgar de
Trentinian, directors of the Company are also directors of Monument. Under the
agreement, Monument prepaid US$5,000,800 for the gold and will receive, in lieu
of physical gold, an amount of $US$6,000,960 on or before June 30, 2011.

On March 2, 2011, the Company 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 were 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 Company 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 had 30 days from March 14, 2011
to exercise their warrants, after which the exercise prices of the warrants
reverted 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. An aggregate of 59,813,333 warrants were exercised for gross
proceeds of $12,637,880.

During the period May 10, 2011 to May 24, 2011, 140,400,000
warrants exercisable at a price of $0.32 per share held by an insider of the
Company were purchased and exercised by various entities, raising an aggregate
of $44,928,000 for the Company. Concurrent with the exercise of the warrants,
the Company completed a private placement of 33,488,372 shares of the Company at
a price of $0.43 per share, raising an aggregate of $14,400,000.

On June 27, 2011, Graham Dickson, resigned as the Companys COO
and was appointed the Senior Vice President of Acquisitions and Corporate
Development. Randy Reichert was appointed the Companys COO.

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16

Shareholders of the Company approved a Forward Gold Sale
Agreement dated August 12, 2011 whereby Deutsche Bank prepaid US$120,000,000 for
the purchase of a maximum of 173,880 ounces of gold produced from the Companys
Jerritt Canyon Mine. The gold is being delivered over a four year period at an
average rate of 3,623 ounces per month.

Jerritt Canyon: In 2011, the Company continued
underground mining at Smith using a contract mining company, Small Mine
Development, LLC (SMD), and, with the delivery of the majority of the mining
equipment in the the third quarter of 2011, recommenced underground mining at
the SSX-Steer mine in October. Total underground mine production from Smith Mine
and SSX-Steer Complex totals 1,300 tons per day at year end 2011 (1,000 tpd from
Smith by contract miner SMD and 300 tpd from SSX-Steer being mined by Queenstake
Resources personnel). Queenstake is targeting to ramp up to 1,200 tons per day
production from the SSX-Steer mine in 2012 as more equipment becomes available
and additional resources are recruited. The Company has also obtained permitting
to develop the Starvation Canyon underground mine which is scheduled to be ready
in the second half of 2012 as infrastructure is put in place and equipment
delivered. Starvation Canyon will be capable of delivering up to 600 tons of ore
per day. This will complete the underground mine development program producing a
targeted 2,800 tons per day of ore to the mill.

The Company commenced a significant capital plan in 2011 to
increase the efficiency of operations at the mill including commencement of the
installation of a new ore dryer along with an additional scrubber and bag house
to reduce emissions, rebuilding the crushing circuit, fine-crushing circuit
conveyor reconfiguration, change-out of the Merrill-Crowe precipitation circuit
with an electrowinning circuit, replacement of a quench tank, and improvements
to the oxygen plant. These projects were all substantially complete by the end
of 2011 however much of the commissioning and final installation occurred in the
first quarter of 2012 during the shutdown or shortly thereafter. In addition,
construction of a new tailings storage facility (TSF) was started in July 2011
that uses two double lined impoundments: one for tailings solids and one into
which tailings water will be decanted. This separation during operations is
intended to provide greater stability to the tailings and reduce the time and
costs for the ultimate closure and reclamation of the facilities. The TSF is
also expandable and will be able to serve Jerritt Canyon for many years into the
future.

The January 1, 2011 Mineral Resources and Reserves were updated
in a new NI 43-101 Technical Report dated June 28, 2011 as amended on January 6,
2012. Resources have moderately increased from the previous Year-end 2007
Technical Report and include: a measured resource of 4,549.9 ktons averaging
0.236 opt Au containing 1,073.1 koz; an indicated resource of 6,459.5 ktons
averaging 0.204 opt Au containing 1,316.8 koz Au; and an inferred resource of
3,872.6 ktons averaging 0.194 opt Au containing 751.3 koz Au. Proven and
Probable Reserves remain basically unchanged from the previous Year-End 2007
Technical Report and include a proven reserve of 1,406 ktons averaging 0.193 opt
Au containing 270.9 koz, and a probable reserve of 2,959.7 ktons averaging 0.151
opt Au containing 446.0 koz.

2011 Drilling

In 2011, the Company completed 134,277 feet (40,938m) of
surface reverse circulation and diamond drilling (220 drill holes shown below),
23,942 feet (7,299.4m) of underground diamond drilling (37 drill holes) focused
at the Smith Mine, and 93,753 feet 28,583m) of production drilling (809 drill
holes) in 2011 from the Smith and SSX-Steer underground mines. The 2011 surface
drilling focused on: those areas proximal to existing underground developments
to convert inferred resources to measured and indicated resources, and in open
pit areas with high potential for quick development (Burns Basin, Steer and
Saval Canyon, and Pie Creek). The underground diamond drilling program focused
at the Smith mine in Zones 2/5, 9, 1, 3, and 4. 2011 Production cubex drilling
at Smith was focused in Zones 3, 5, 7, 8, and 9 and at the SSX-Steer Complex in
Zones 1A, 2, and 7. The 2011 drilling programs contained a QA/QC program
including the insertion of certified gold standards and blanks, which was
similar to the one defined in the current NI 43-101 report dated June 28, 2011
as amended on January 6, 2012.

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17

Summary of 2011 Surface Drilling Program

Zone
      Total number of Drill Holes
      Total amount of Drilling (feet)Surface reverse Circulation
    208
    120,130Surface diamond Drilling
    12 (15 core tails done too)
    14,147Total
    220
    134,277


2011 Surface RC and Diamond Drilling Summary by Area

Area
      Number of RC Drill holes
      Number of Feet RC
      Drilled
      Number of Core Drill
      Holes
      Number of Feet Core
      Drilled
      Total No. Drill
      Holes
      Total Feet DrilledBurns Basin open pit
    61
    23,740
    0
    0
    61
    23,740East Mahala/Mahala
    18
    19,370
    0 (5 core tails)
    2,608
    18
    21,978MCE
    3
    1,020
    0
    0
    3
    1,020Pie Creek open pit
    17
    5,600
    0
    0
    17
    5,600Starvation Canyon
    13
    7,490
    12
    5,251
    25
    12,741Steer Canyon open pit
    23
    12,520
    0
    0
    23
    12,520West Generator open pit
    37
    8,200
    0
    0
    37
    8,200West Mahala
    36
    42,190
    0 (10 core tails)
    6,288
    36
    48,478Total
    208
    120,130
    12
    14,147
    220
    134,277


Geophysics

A Titan 24 Geophysical ground survey was completed at the
Starvation Canyon area in 2011 by Quantec Geoscience. The survey was conducted
over a 9,836 foot by 4,918 foot (3,000 meter by 1,500 meter) grid. The long axis
of the survey grid was oriented along the projected (290/110 degree) structural
trend and centered over the Starvation Canyon deposit in order to characterize
the signature of the undisturbed deposit. The grid was extended for a distance
of 655 ft. (200m) southeasterly and 7,213 ft. northwesterly of the (currently
identified) limits of the deposit resource inventory and covered the West
Starvation target on the northwestern end of the grid.

The 2011 Titan 24 geophysical ground survey has identified
several anomalies that are scheduled for drill testing in 2012.

Ketza River: Recent activities in 2011 have focused on:
installation of a 49-person replacement camp; upgrading of the camp
infrastructure (new water well and sewer system); YESAB Application work
including submission of the final document to the YESAB for review; drilling on
the margins of the previously identified resource areas and in new exploration
targets away from the known resources; and the completion of a NI 43-101
Technical Report for on June 28, 2011 that updates the Mineral Resources as of
January 25, 2010 that incorporates all drilling results from 2008.

2011 Drilling

During 2011, a total of 26 diamond drill holes totaling 14,441
feet (4,402m) were completed at the Ketza River Project in the Yukon Territory,
Canada. This Ketza River drill program tested 4 target areas and consisted of
both step-out drilling from existing resources at the Hoodoo and Penguin Zones)
and the testing of new geochemical and geophysical targets (at South Hill and
NW). The 2011 drilling program contained a Quality Assurance and QA/QC program
including the insertion of certified gold standards and blanks, which was
similar to the one defined in the current NI 43-101 report dated June 28, 2011
as amended on January 6, 2012. Much of the assays were still in progress as of
December 31, 2011. Sampling of the last 13 geotechnical drill holes drilled in
late 2010 at the lower tailings site was also completed in early 2011.

---

18

Current exploration work at the site is focusing on compiling
the assays from the 2011 drilling program to help plan the 2012 drilling
program.

Target
      Drill Holes Completed
      Total Meters
      Total FootageSouth Hill
    11
    2,428
    7,965NW
    4
    425
    1,393Hoodoo Zone
    2
    53
    174Penguin
    9
    1,496
    4,909Total
    26
    4,402
    14,441


As of January 25, 2010, the measured resource consists of 167.8
ktonnes averaging 5.38 g/t Au containing 29 koz Au; the indicated resource
estimate consists of 3,369.5 ktonnes averaging 4.61 g/t Au containing 499.9 koz;
and the inferred resource consists of 453.7 ktonnes averaging 4.62 g/t Au
containing 67.3 koz Au. This resource includes all of the 2008 drilling results
but excludes 2010 and 2011 drilling results.

The decrease in measured, indicated, and inferred resources for
the resource statement with an effective date of January 25, 2011 relative to
that calculated from the previous Technical Report (SRK, 2008) reflects new
drilling, more realistic constraints placed on the construction of the 0.5 g/t
Au grade shells used to constrain the estimation process, a higher quality drill
hole database, better specific gravity assignments to the various ore types, and
more realistic and updated mining and milling parameters and costs.

A total of 146 additional quartz claims in the Ketza River
Project area were staked in May 2011. This brings the total amount of quartz
claims at Ketza River to 679. There are an additional 60 quartz leases at Ketza
River totaling 1,947 acres (787.9 hectares). There are also a total of 71
additional claims that are located along the main access road from the Silver
Valley Project (located approximately 1 km east of the Ketza River Project and
owned 100% by Ketza River Resources) to the Robert Campbell Highway.

Geophysical and Geochemical Surveys

Several geochemical investigations were completed at the Ketza
River project in 2011. A total of 343 soil samples were collected over the OK
target located in the Shamrock Zone northeast of the QB Zone near Misery Creek.
These surface soils were collected on the same grid as the 2010 IP survey to
help confirm drill targets. A total of 176 panel samples were taken across the
Canamax mill stockpile on a 10m by 10m grid to help characterize the grade of
the stockpile. These stockpile samples were collected over a 2m radius from the
central grid point. A total of 290 drill hole pulps (completed originally from
2007 to 2010) were collected and submitted for duplicate (QA/QC) analysis at ALS
and Inspectorate.

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 in the most recent NI
43-101 Technical Report that has an effective date of January 25, 2011. To help
support this NI 43-101 technical report, 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. The
updated resource calculation for the Ketza River project incorporates all of the
2008 drilling information andincludes a summary of the metallurgy testing
program conducted in 2008. This resource estimate forms the basis of the mine
design that was included in the Application that was submitted to the Yukon
Environmental and Socio-economic Assessment Board (YESAB) in late September
2011.

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19

2011 YESAB Application Work Summary

Various YESAB related work was completed during 2010 and 2011
which was primarily managed by Tetratech (EBA) that culminated in submitting the
YESAB Application in late September 2011. YESAB work continued throughout 2011
to help support the YESAB Application including: a site water quality control
and assurance program, compilation of hydrogeology data compilation and
analysis, waste rock analyses (ABA/ARD studies), open-pit wall stability
analysis based on collecting geotechnical data from several oriented diamond
drill holes completed in the proposed pit areas, underground rock quality
assessment, a Socio-economic study, wildlife, fish and aquatic studies, tailings
design and tradeoff studies, and conceptual engineering and design studies.
Several meetings with local communities (Ross River, Faro, and Teslin) and local
First Nations (Ross River Dena and Teslin) were held throughout the yearto
update everyone on the Companys proposed Ketza River Mine Project. A
Traditional Knowledge agreement was signed with the Ross River Dena in 2011.
Work also progressed with the Ross River Dena to finalize a new Memorandum of
Understanding. 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 Application, and the water license
application for the existing tailings pond.

Humidity cell results from tailings and various waste rocks
continued to be collected and analyzed by ALS Environmental throughout 2011 and
are being analyzed by Tetratech. The preliminary analysis of the results were
included in the YESAB Application submitted in September 2011.

Silver Valley: No diamond drill holes were conducted at
the Silver Valley project in 2011. Two ground gravity survey grids were
conducted at the Silver Valley project in the summer of 2011 by Aurora
Geosciences. The grids covered the K18-B Vein, Silver Rain, and Silver Belle
targets. The total area of the geophysical grid encompassed approximately 4.6
square kilometres consisting of approximately 500 survey points. The survey
points were taken on 100 metre spaced lines and stations with local 50m station
infills.

A total of 19 additional quartz claims in the Silver Valley
project area were staked in May 2011. This brings the total amount of quartz
claims at Silver Valley to 143. There are an additional 6 quartz leases at
Silver Valley totaling 202 acres. There are also a total of 69 additional claims
that are located along the main access road from the Silver Valley project
(located approximately 1 km east of the Ketza River project and owned 100% by
KRHL) to the Robert Campbell Highway.

The 6 leased claims (Tiny 1-4 and Grey 1-2 claims) from George
Fairclough were officially purchased pursuant to the option agreement and
transferred to KRHL in the third quarter of 2011.

YS Mining Company Inc.: During 2011 there was minimal
activity in the YS Mining Company Inc. (YSM) joint venture, or its wholly
owned subsidiary Yukon-Shaanxi Mining Company.

During the fourth quarter of 2011 the joint venture
shareholders of YSM agreed to dissolve YSM. This was done by way of a Corporate
Dissolution Agreement (the Agreement); and, the shareholders of YSM executing
a consent resolution authorizing the dissolution of YSM (the Resolution).

The Resolution and the Agreement were both dated and executed
on October 18, 2011 and all remaining assets, primarily cash, were distributed
to the joint venture shareholders. The Company received a CAD $2.2 million from
the distribution of assets on October 25, 2011. As at December 31, 2011 an
application of dissolution had yet to be filed and YSM had yet to be dissolved.
Remaining costs to dissolve YSM will be nominal and will be funded by each joint
venture party as they arise.Events Subsequent to December 31, 2011

On January 12, 2012 the Company entered into a forward gold sale
  agreement with Monument Mining Ltd. (Monument) a public company
  the shares of which trade on the TSX Venture Exchange, the President of Monument
  is Robert Baldock, President of the Company. Graham Dickson and Jean-Edgar de
  Trentinian, directors of the Company are also directors of Monument. Under the
  agreement, Monument prepaid US$5,000,000 for the gold and will receive, in lieu
  of physical gold, an amount of US$6,000,000 on or before June 12, 2012.

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20

On February 7, 2012 the Company entered into a Forward Gold Purchase
  Agreement (the Agreement) with Deutsche Bank AG (Deutsche
  Bank) whereby Deutsche Bank funded a US$20 million prepaid gold forward
  facility. The Company is using the funds for working capital and to further
  invest in the expansion of the SSX-Steer mine in Nevada. In connection with
  the transaction, the Company issued to Deutsche Bank a share purchase warrant
  which can be exercised to purchase 40,000,000 common shares at a price of $0.44
  per share on or before February 7, 2015. Under the terms of the Agreement, in
  the event that the actual monthly quantity of gold delivered by the Company
  is less than the scheduled monthly amount, the shortfall can be made up, at
  the option of Deutsche Bank, by the issuance of common shares of the Company
  (the Shares). The conversion price per Share will be the
  five day volume weighted average price (VWAP) of the Company's
  shares as traded on the Toronto Stock Exchange ("TSX") immediately prior
  to the monthly delivery date for the scheduled delivery month in which such
  gold shortfall payment obligation arises, less the discount as permitted by
  the TSX.

ITEM
4:           DESCRIPTION OF
THE BUSINESS

4.1General

The principal businesses of the Company 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
Company 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 Company is engaged in the acquisition, exploration,
development and operation of precious metal properties. The Company 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 Companys principal product is gold, with gold production
forming the primary source of revenues. There is a global gold market into which
the Company can sell gold and, as a result, the Company is not dependent on a
particular purchaser with regard to the sale of the gold that it produces.

Specialized Skill and Knowledge

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

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21

Competitive Conditions

The precious metal mineral exploration and mining business is a
competitive business. The Company 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 Company
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 Company.

Changes to Contracts

Not applicable to the Company.

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 Company 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 Company 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
company has completed all but the following work under the Consent Decree:

For 2012 the Company has budgeted significant environmental
expenditures (approximately $__.__ 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. One of the most significant
projects in 2012 is completion of the new tailings facility (TSF-2) as well as a
second water storage facility to facilitate the reclamation of the first
tailings pond (TSF-1).

Beginning in 2012, TSF-2 will transition as a replacement
repository for mill tailings. The company anticipates TSF-1 will cease receiving
tailings no later than January 2013. TSF-1 will then enter closure and
reclamation. The Company is also planning to perform approximately $10.3 million
in restoration projects at the mine site, including the initial actions for
closure and reclamation of TSF1 and improvements to the reclamation of waste
rock disposal areas to diminish the seepage from them.

In 2012, the Company will test on a pilot scale an active
method to treat the DASH East Rock Disposal Area (RDA) seepage. If the efforts
to diminish the flow rates and the applicable requirements cannot be met, then
treatment may be required for the RDA seepages.

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22

Queenstake has financed the Jerritt Canyon Operations
reclamation and closure costs by funding a commutation account within an
insurance policy with Chartis Insurance (Chartis). This insurance policy and
additional cash placed by Queenstake in a money market account also with
Chartis, collateralizes the surety provided to government agencies for closure
and reclamation. As of early September 2011, the surety provided to Government
agencies was US$81,590,537, including the closure and reclamation of the TSF-2,
WSR, expanded mining activities, and additional costs mandated by the State for
closure of TSF-1. Approximately 45% of the bond costs are related to control and
remedy of the seepage from TSF-1. The Mine Reclamation Plan and Reclamation Cost
Estimate dated June 2010 and later revised in September 2010 was submitted to
the Bureau of Mining Reclamation (BMRR) Branch. The required surety to
government agencies for reclamation of the private land facilities was
$70,015,433. Queenstake estimates the net present value to its closure and
reclamation obligations for the Jerritt Canyon Operations at the end of the mine
life to be US$44,081,377 (using a 2.6% discount rate). Bond increases are a
result of more surface disturbance, increased unit costs (labor, equipment, and
fuel costs), and increased remedial actions mandated by government agencies.

Employees

As of December 31, 2011, the Company had 13 full-time employees
at the head office in Vancouver, 23 full-time employees at the Ketza River
location (this number is subject to some seasonality), and approximately 268
employees at the Jerritt Canyon gold mine. The Company uses a number of
consultants and contractors for a variety of specialized tasks.

Foreign Operations

The Companys principal operations are within North America.

Bankruptcy and Similar Procedures

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

Reorganization

Commencing in December 2003, Graham Dickson, the president of
the Company, took the initiative in reorganizing the Company by restoring it
with the Register of Companies and returning the Company to good standing as a
reporting Company in the provinces of British Columbia and Alberta. On January
5, 2004, the Company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 Companys share capital was increased to an unlimited number if Shares
without par value. On April 13, 2005, the Companys Shares commenced trading on
the TSX. In 2007 the Company amalgamated with Queenstake Resources Ltd. by way
of a Plan of Arrangement and renamed the Company from YGC Resources Ltd. to
Yukon-Nevada Gold Corp.

Social or Environmental Policies

The Company 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 Company 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 Company 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

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23

years and the Company 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 Company 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 Company 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
Company 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

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 Company 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 Company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 Company 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 Company is completing closure of certain
legacy facilities at the Jerritt Canyon Property in accordance with the CD. The
Company 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 Company 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 Company will
  ensure additional surety capacity as new mines and plant expansions develop
  in the future

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24

The Company temporarily halted operations on the Jerritt Canyon
  Property in 2009. The State of Nevada then issued a regulatory Stop Order for
  the operations. The Company 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 Company 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 Company but offered not to file the case with a court if the Company
agreed to negotiate a settlement. The Company 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 Company by the DOJ but the
Company was informed that the complaint relates to mercury handling at the
Jerritt Canyon Property. The Company 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.

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 Company worked with the USEPA to satisfy information
requests in 2010. The Company has received no response from the USEPA regarding
the results of the audit on December 31, 2010.

The Company is committed to conducting its operations with high
environmental values, ethics as well as to social issues. The Company 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 Companys employees and contractors are aware of the
  Company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 Company is continually striving to improve its
environmental performance. Planned environmental capital expenditures and
restoration expenditures for 2011 are US$14.6 million.

Ketza River Property

The Company 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
  Company is complying with regulatory requirements. The Company conducted a number
  of environmental and social impact studies relating to the Yukon Environmental
  and Socio-economic Assessment Board (YESAB) project proposal and application
  that was submitted in late September 2011. The Company is now working through
  questions from YESAB and providing detailed responses. Approval of this project
  proposal will allow the Company to commence construction of the tailings facility
  at the site and allow for mine production.

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25

4.2Risk Factors

The Company 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 Company. 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 Companys profitability from proposed operations will be
dependent in part on:

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

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26

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 Company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.

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 Company 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 Company 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 Company 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 Company 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 Companys
articles do not limit the amount of indebtedness that it can incur. The level of
the Company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 Company 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 Company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

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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 Company 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 Company from any such future changes.

Passive Foreign Investment Company (PFIC)

The Company 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
Company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 Company 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
Company 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 Company 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 Company 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 Company 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 Company 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.

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The following description and summary of the Jerritt Canyon
Property is based on the Technical Report (the Jerritt Canyon Report) of Mark
Odell, Mine Engineer Consultant, P.E., Todd W. Johnson, P.E., VP Exploration of
the Company and Karl Swanson, Mining Consultant, SME, MAusIMM with an original
filing date of June 28, 2011 and an amended issue date of January 6, 2012. The
Jerritt Canyon Report is available at www.sedar.com.

Property Description and Location

Jerritt Canyon Mine is located in Elko County, Nevada,
approximately 50 miles north of Elko in the Independence Mountains at Latitude
41o 23 North, Longitude 116o West. The property is accessed by paved State
Highway 225 about 45 miles to the paved mine access road. The property lies in
ten townships within T39N to T41N and R52E to R54E relative to the Mount Diablo
Base Line and Meridian (MDB&M). Figure 1 is a property location map. The
property boundaries are located in the field with wooden stakes and were likely
originally measured by tape and compass either from Section corners or adjacent
claims. All property boundaries have since been located with modern surveying
equipment and/or GPS (Trimble 5800 RTK GPS Rover utilizing aTrimble base
receiver for reference corrections) with an accuracy of ±0.5 cm horizontal
accuracy and a vertical accuracy of ±1 cm.

All of the drill hole data stored in the acQuire drill hole
database are projected in Jerritt Grid. All plan map figures and cross-sections
presented in the Jerritt Canyon Report are also presented in Jerritt Grid.
Jerritt Grid is projected in foot units and equivalent to the NAD1927 State
Plane, Nevada East, FIPS_2701 system with the only difference being that
2,000,000 feet is subtracted from the northing grid values.

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Figure 1: General Location Map of the Jerritt Canyon Mine



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Figure 2: General Land Map of the Jerritt Canyon District



Mineral Titles

The property is 100% owned and operated by Queenstake which
acquired the mine from the previous owner, a joint venture between Anglo Gold
(70%) and Meridian Gold (30%), at the end of June 2003. Queenstake is a wholly
owned subsidiary of YNG. The following claim details were discussed with Mr.
Joel Casburn, the current Queenstake Land Manager, on May 3 and June 20, 2011
via email correspondence.

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The operations are located on a combination of public and
private lands, with the mines and mining related surface facilities being
primarily located on mining claims in United States Forest Service (USFS) land
within the Humboldt-Toiyabe National Forest. The process facilities, office,
shop, and tailings are located on private land owned by Queenstake. Additional
claims in the southern part of the land package are mostly located on private
land with some located on land administered by the United States Bureau of Land
Management (BLM). Claim-related fees are annually paid to the BLM and Elko
County.

Queenstake owns 2,860 claims, 1,011 acres of patented claims,
and 12,433 acres of fee land; in addition, Queenstake leases 278 claims and
11,271 acres of fee land with mineral rights (Table 1). The claim notices,
affidavits, title to property and lease agreements were reviewed by the primary
author. A map depicting the 2010 general land package is shown in Figure 2. All
Jerritt Canyon property claims expire on September 1, 2011 but are always
renewed every year by filing the necessary paperwork and claim fees with the BLM
and the County. Estimated costs to maintain the 2,860 Queenstake-owned claims
are $400,400 ($140 per claim) whereas the 278 leased claims are $38,920 (also at
$140 per claim).

Table 1: Land and Claim Summary for Jerritt Canyon Project

Land Status
      No. Claims
      AcresOwned Claims
    2,860Leased Claims
    278Total Claims
    3,138Fee Land Owned
    
    12,433Patented Claims Owned
    
    1,011Fee Land Leased
    
    11,271Total Acres
    
    24,715


Queenstake controls more than 119 square miles of ground
encompassing the mine area 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. The royalty for mined material
in 2010 was generally equal to a 5 percent net smelter return (NSR), the total
cost of which is dependent upon the gold sale price and the refining results.

Environmental Liabilities

Environmental liabilities at the mine include:

- High sulfate and Total Dissolved Solids (TDS) in seepage from waste rock
  from four rock disposal areas (RDAs); and
- Site closure and restoration including management of seepage from the
  tailings impoundment.

Mineralized Zones, Mineral Resources Mineral Reserves and
Mine Workings

The resource and reserve areas and mine facilities are located
within Queenstake owned or leased claims and fee land. Figure 3 is a map showing
the location of the resource and reserve areas.

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Figure 3: General Land Map of the Jerritt Canyon Property
with Resources and Reserves



Permits

Operating permits for the mine are in place and are presented
in Table 2. The mine is currently operating under a Consent Decree agreement
(2009) between Queenstake and the State of Nevada. 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.

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Permitting activities with the USFS and/or the State of Nevada
occur throughout the year but is most active in the early spring when the Annual
Work Plan is submitted to them for review of the years planned exploration
drilling, disturbance, and development activities which includes a summary of
the previous years reclamation activities and a bonding review.

Permitting activities with the State of Nevada are ongoing to
help advance the Starvation Canyon project to an underground mine project.
Queenstake has secured the Water Pollution Control Permit for this project and
the Reclamation permit, including the bonding. Groundwater monitoring is in
progress. In order to advance the Starvation Canyon portal, groundwater
monitoring needs to be documented for two calendar quarters. The Nevada Highway
Department may also need to be notified if any Starvation Canyon ores planned to
be hauled on State Highways to the Jerritt Canyon Processing Facility.

Table 2: Operating Permits

Permit/Approval
      Granting Agency
      CommentsPlan of Operations
    USFS
      Still active.Work Plans
    USFS
      Annual work plan submitted to USFS and NDEPClean 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 found at a mine such as laboratory cupels and crucibles,
      and cleaners from maintenance operations. Wastes are accumulated and full
      drums are shipped once every calendar quarter for 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 Consent Decree 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 and
      the NDEP. The bonding includes the construction of the new tailings
      storage facility (TSF), water storage reservoir, expanded mining
      activities, and additional costs for the closure of the existing TSF.Water Pollution Control Permit
    NDEP-BMRR
      One water pollution control permit covers the entire mine
      area. The tailings seepage/chloride plume is managed by a recovery system
      and will be mitigated by closure of the existing TSF; 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 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. A general permit is in place. No concerns were 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.


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Permit/Approval
      Granting Agency
      CommentsSeptic 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.


Accessibility, Climate, Local Resources,
Infrastructure and Physiography

Access to Property

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.

Climate

The climate is temperate with winter temperatures between 0o
and 40o Fahrenheit and summer temperatures between 35o and 90o. 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. Snowfall is generally common from the months of
December to May.

Vegetation

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.

Physiography

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.

Local Resources and Infrastructure

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. The local population, along with the proximity of the other
nearby cities (e.g. Salt Lake City in Utah and Battle Mountain, Winnemucca,
Fernley, Fallon, Reno in Nevada) is large enough to supply most of the workers
and supplies for all of the mines in the area.

Power to the minesite is purchased from Nevada Energy through a
125kV, 3-phase transmission line. Power consumption over the period from January
to March 2011 has varied from 7.3 to 8.2 MWh. Cost of electrical power is
approximately US$0.066/kWh.

A new natural gas pipeline has recently been installed to the
south of the property by another company. Queenstake is examining opportunities
to use natural gas to help power some of the mine facilities.

There are sufficient supplies of water at the site to allow the
processing facility and other mine facilities to efficiently operate.
Approximately 700 gallons per minute (gpm) of water is required to operate the
mill with two

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primary water sources: (1) a dirty water source consisting of
the tailings storage facility 1 (TSF-1) seepage collection system that has
contributions from 90 small diameter water wells around the TSF-1, four seepage
collection trenches, and three embankment blanket drains that collectively
produce 1,000 gpm; and (2) a cleaner water source from two deep water wells that
are both capable of producing 500 gpm. A third deep water well exists at the
property but is currently not operating. Once the TSF-1 is decommissioned and
reclaimed, the additional necessary water sources for the mine facilities will
come from the deep well sources and/or underground mine dewatering. All waters
used at the Jerritt Canyon mine are from permitted and certificated water rights
held by Queenstake and regulated by the Nevada Division of Water Resources.

There is sufficient room to place additional wastes on the
property from future mining operations based on the existing claims owned by
Queenstake. In addition, there is sufficient space to place the planned tailings
storage facility 2 (TSF-2) and water storage reservoir (WSR) to the south of the
existing tailings storage facility and existing evaporation pond.

History

The Jerritt Canyon mine is wholly owned by Queenstake Resources
USA, Inc. (Queenstake) after its purchase 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 70% interest in Jerritt Canyon were sold to Anglo Gold.

Queenstake is now a wholly owned subsidiary of Yukon-Nevada
Gold Corp. which formed as a result of a merger between Queenstake Resources
Ltd. and YGC Resources Ltd. on June 20, 2007.

Prospectors explored 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 Gold, 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.

Historic Jerritt Canyon open pit and underground mining
production is shown in Table 3. 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 2008 up until August 8
consisted of two active underground mining operations (Smith and SSX-Steer
complex) feeding ore to a process plant consisting of two roasters followed by
carbon-in-leach processing. The Jerritt Canyon processing plant is currently
under a production restriction of 180tph through its two roasters.

Table 3: Historic Open Pit and Underground Mine Production
at the Jerritt Canyon Property before Recovery Losses

Open Pit Deposit Name
      Years in Operation
      Mined Tons (short)
      Gold Grade (oz/st)
      Ounces (1) (contained)Marlboro Canyon
    1980-1990
    5,798,600
    0.241
    1,400,045Alchem
    1991-1994
    1,657,600
    0.098
    162,621L. North Gen. Hill
    1980-1993
    1,226,000
    0.192
    235,461U. North Gen. Hill
    1980-1993
    7,636,300
    0.170
    1,298,308West Generator
    1986-1993
    3,979,000
    0.155
    616,647Burns Basin
    1988-1998
    2,441,800
    0.169
    412,328


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Open Pit Deposit Name
      Years in Operation
      Mined Tons (short)
      Gold Grade (oz/st)
      Ounces (1) (contained)Mill Creek
    1992-1994
    895,700
    0.121
    108,270Pattani Springs
    1988-1990
    387,000
    0.108
    41,896California Mtn.
    1993-1994
    410,300
    0.162
    66,341Dash
    1996-1999
    1,906,100
    0.221
    420,789Winters Creek
    1992-1995
    1,243,700
    0.126
    156,317Steer Canyon
    1994-1997
    477,300
    0.132
    63,004Saval Canyon
    1994-1997
    1,741,900
    0.126
    218,682Subtotal
    1980-1999
    29,801,300
    0.175
    5,200,709


Underground Mine Production
      Years in Operation
      Mined Tons (short)
      Gold Grade (oz/st)
      Ounces (1) (contained)SSX
    1997-2008
    4,425,500
    0.289
    1,280,946Steer
    2004-2006
    68,174
    0.233
    15,879MCE (formerly Papillion)
    1997-2004
    258,295
    0.369
    95,359Murray
    1997-2006
    3,780,795
    0.330
    1,248,777Smith
    1999-2008; Jan. 2010- YE2010
    1,379,900
    0.280
    385,943West Generator
    1993-1997
    460,100
    0.235
    108,108Saval
    2004-2006
    3,500
    0.495
    1,730Subtotal
    1993-YE2010
    10,376,264
    0.302
    3,136,742Grand Total
    1980-YE2010
    40,177,564
    0.208
    8,337,451


|Notes: | (1)  | Contained ounces does not include metallurgical recovery;                                                                                       
|------ | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2)  | Gold production from open pit mining at Jerritt Canyon
      started in July of 1981 at the Marlboro Canyon and North Generator Hill
      pits;
|       | (3)  | The last major open pit mine production was from Dash
      which was mined from 1996 to 1999;                                                  
|       | (4)  | st = short ton; L. = Lower; U = Upper; Mtn. = Mountain;
      YE = Year-End;                                                                    
|       | (5)  | Steer is included in with SSX starting in 2006;                                                                                                 
|       | (6)  | Steer and Saval underground mining time period not
      discriminated;                                                                         
|       | (7)  | Underground test mining began in September 1991 at the
      Phase 1 Test Project in the highwall of the West Generator open pit;               
|       | (8)  | the wet mill closed down in February 1997; the fluid-bed
      roaster started in 3rdquarter of 1989;                                           
|       | (9)  | Production records above do not show later mining of
      various low grade stockpile ores;                                                    
|       | (10) | Data compiled from internal Mine records and Jones (2005)
      and verified by Todd Johnson                                                    

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.

Geological Setting

Regional

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 4 and a stratigraphic column is shown
in Figure 5. Much of this data was previously presented in the previous Year-End
2007 NI 43-101 Technical Report (SRK, 2008) and is still considered to be
relevant.

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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
  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 Hanson 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 Hanson 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;
- 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 4 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.

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Figure 4: General Geology Map of the Jerritt Canyon District



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Figure 5: General Stratigraphic Section of the Jerritt
Canyon District



Local Geological Setting

Within the Jerritt Canyon area, gold can locally occur within
all sedimentary formations, but is preferentially hosted by the Roberts
Mountains and Hanson 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 Hanson Creek
Formation is divided into five members, numbered I through V from the top of the
formation to the bottom. Hanson Creek I is a thinly bedded sequence of gray,
medium-grained limestones and continuous blocky chert beds; it is typically
brecciated. Hanson Creek II is a dark to light gray, irregularly bedded to
massive, vuggy, dolomitic limestone. Hanson Creek III consists of intercalated
carbonaceous micrites and laminated argillaceous limestones. Hanson Creek IV is
a thickly bedded, medium to coarse-grained, carbonaceous limestone with
discontinuous black chert nodules. Hanson 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 Hanson 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. Gold mineralization
is typically enriched along this discontinuity. The base of the Hanson Creek is
gradational into the Eureka Quartzite. Locally, the stratigraphic section has
been repeated by thrust faulting as seen in the interpretive cross-section
through the SSX mine in Figure 6.

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Figure 6: Cross-Section Through the SSX Deposit Showing
General Geology



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. The Dash open-pit was the last significant open
pit to be mined on the property in 1999.

Underground targets were also identified, and the first to be
exploited was the West Generator underground deposit in 1993. Underground mining
has dominated at Jerritt Canyon since 1999 and has focused at Murray, Smith, and
SSX.

The Murray deposit, originally discovered by condemnation
drilling, 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 (Figure 3). Queenstake has increased the exploration effort
  near the mine areas and also in the south.

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41

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. Additional drilling at Starvation Canyon in 2007 and 2008
  was targeted toward further definition and expansion of the resource.

Queenstake has carried out an aggressive program of exploration
since it acquired the property in mid-2003. Since mid-2003, a number of
different contract drilling companies, too numerous to identify here, have
completed both underground and surface drilling at the property. The drilling
companies responsible for drilling each drill hole are listed on the drill logs
kept in the digital drill hole databases (in acQuire software) and/or in the
paper drill hole log files stored at the mine. Drilling companies that have
worked at Jerritt Canyon since 2008 are identified under the heading Drilling
of this Section. In addition, since mid 2003 Queenstake owned its own
underground production drills (e.g. Solo, Secoma and Cubex) before the August
2008 mine shutdown which also completed some of the underground drilling. The
total amount of underground and surface drilling completed since 2003 at the
property is summarized below:

- 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: ****237,250 feet of underground and surface RC and Core Drilling;
- 2009: ****no drilling was completed in 2009;
- 2010: ****79,691 feet of underground RC and Core Drilling; and
- 2011: ****158,219 feet of underground and surface RC and Core Drilling;

Queenstake sold all of its underground production drills in
mid-August 2008, and later purchased a used cubex drill that is currently being
used at the SSX-Steer mine.

There has been considerable geophysical work completed
throughout the Jerritt Canyon property since the early 1970s by numerous
contract geophysical companies. A good portion of the property has airborne
magnetic data, ground gravity, and ground I.P.-Resistivity. Certain dike sets
are identified in the magnetic surveys. Clay alteration is typified with low
resistivity response and gravity low whereas silicification typically show up as
resistivity highs and associated gravity highs. In addition, deep IP
magnetotelluric (MT) surveys and Controlled Source Audio Frequency
Magnetotellurics (CSAMT) surveys have been tried locally at the property and
have been able to identify main structures that cross the property.

There has also been considerable soil surveys, rock chip
sampling, and trench and roadcut sampling performed in the district by employees
of the Jerritt Canyon mine. The soils have been typically collected on a
predefined north-south oriented grid and analyzed for multi-element
geochemistry. Soils overlying shallow orebodies at Jerritt Canyon are generally
enriched in As and Au. The surface geochemistry is stored in a separate acQuire
database.

Exploration expenditures (in millions) by Queenstake in recent
years are listed below:

- 2007:    $7.23 million;
- 2008:    $6.48 million;
- 2009:    $0; and
- 2010:    0.8 million.

Exploration and development drilling planned for 2011 has
targeted either: (1) locating new areas of resource and reserve away from
existing underground development; (2) converting existing resources to reserve
(near-mine); or (3) drilling in previously disturbed areas including historic
open pits. In addition, some monies will be devoted to geophysics (I.P.) in the
south part of the district, and drilling for metallurgy and geotechnical testing
in the

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42

Starvation Canyon deposit. The proposed 2011 Jerritt Canyon
geological program, consisting mostly of exploration and development drilling,
totals $18.0 million dollars (Hofer, 2011). A summary of the geological drilling
program is provided in the section entitled 2011 Geological Program (Table 27)
herein.

A significant portion of the future exploration programs at
Jerritt Canyon will be devoted to drilling in or around the historic open pits.
Most of the historical open pit resources have not been reassessed since 2006 or
older when the gold price was at a much lower price per ounce than it is today.

Mineralization

The resource and reserve areas at Jerritt Canyon are shown on
Figure 3. Drill hole maps and the modeled Au grade shells used to determine the
existing resources as of January 1, 2011 in the main work areas are presented
under the heading Drilling of this section. Mineralization characteristics in
the main work areas are described below and shown in the figures under the
heading Mineral Resource and Mineral Reserve Estimates. Zone numbers in the
following descriptions refer to mining areas that are presented in the SRK
Year-End 2007 Technical Report.

SSX-Steer 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 or SSX-Steer complex since then. In 2007 a drift
was completed to the Saval 3 portal allowing access to resource extending into
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 at
SSX started in 1997.

Figures 11 and 15 show mineralization at the SSX-Steer, Saval,
and West Mahala model and mining areas. The modeled mineralized bodies show a
distinct northwest trend in the SSX area but are generally more east-west in the
other areas. The mineralized zones are more continuous in the SSX area ranging
from 200 to 2000 feet in length along the northwest strike and 50 to 200 feet in
width. The thickness of the mineralization at SSX ranges from 10 to 100 feet.
The mineralization at Steer is less continuous ranging in strike length from 50
to 500 feet and 50 to 300 feet in width. The ore thickness at Steer ranges from
20 feet to rarely 100 feet. The depth to mineralization ranges from near surface
at the west end of Steer to a depth of about 800 feet below the surface for most
of SSX. Most of the mineralization is between 600 to 1000 feet below the
surface.

Mineralization at the SSX mine occurs mostly in the micritic
unit III of the Hanson 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 Hanson 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 Hanson Creek Formation.

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 Hanson 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 Hanson Creek units III and IV and occasionally follow
  the structures up through the Hanson 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 Hanson Creek Units III and IV.

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43

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 Hanson 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.

Saval Mine

Gold mineralization in the Saval Basin area to the west of the
SSX mine is primarily hosted in favorable Hanson 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. Mineralization is mostly hosted in the Hanson
III unit in the vicinity of structural intersections, often forming relatively
steep, narrow, plunging bodies. 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.

Mineralization at Saval generally trends east-west from 200 to
1,000 feet. The width ranges from 50 to 200 feet and the thickness from 10 to 50
feet. The depth is from the surface to about 400 feet below the surface.

Smith Mine

The Smith Mine, accessed from near the bottom of 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 a separate portal was developed to access
mineralization in the east highwall of the Dash pit. Figure 14 shows the
underground mine workings, the Dash Pit, and the two existing portals.

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 Hanson 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 Hanson 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 Hanson 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 Hanson 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

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44

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 Hanson unit III in the wall of a NW-trending horst
  block just to the south of the other three zones.

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 Hanson Creek unit
III with minor amounts in the overlying Hanson Creek unit II and Roberts
Mountains Formation. West Dash is accessed through the Smith Portal.

The East Dash deposit lies approximately 1,800 feet southeast
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. This mineralization is fairly flat lying and is hosted
mostly at the contact between the Hanson Creek II and III units. 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.

The mineralization at Smith generally trends northwest with
minor northeast trends along minor structures. The mineralization is continuous
along the northwest trend ranging from 200 to 2,500 feet. The width of the
mineralization ranges from 20 to 400 feet and the thickness ranges from 10 to
100 feet. The depth of the mineralization ranges from near surface at the Dash
Pit to 1,200 feet below the surface to the south and east.

Murray Mine and Zone 9

The Murray Mine occurs within the Roberts Mountains Formation
and the top three units of the Hanson Creek Formation. A minor amount of
mineralization also occurs within the silicified unit IV of the Hanson 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 Hanson Creek III which
is locally overlain by the Snow Canyon Formation.

Mineralization at Murray generally trends southwest but the
southern body trends west-northwest. One strong north-south mineralized trend
connects to the southern body on the west side. The main trends are continuous
ranging from 500 to 2,500 feet. The width is generally 50 to 400 feet and the
thickness from 20 to 200 feet. The depth ranges from the surface to 750 feet
deep. The groundwater table at this former mine currently lies at approximately
6,100 feet in elevation; no dewatering wells are active at Murray today. All
remaining mineralization at Murray and Murray Zone 9 is only stated as a
resource (no reserves) due to the high groundwater table.

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45

Starvation Canyon

Starvation Canyon occurs in the southern half of the Jerritt
Canyon property. Gold mineralization at Starvation Canyon occurs at the Hanson
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 unit III of the Hanson Creek
Formation, starting at or just beneath the contact. There are instances where
mineralization has formed within the massive limestone of the basal Hanson Creek
II, but these are rare. Drilling in 2007 and 2008 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.

Mineralization trends northwest 1,500 feet with a width ranging
from 150 to 400 feet. The mineralization thickness is 5 to 100 feet and the
depth ranges from 300 to 600 feet below the surface. The reserves and resources
at Starvation Canyon lie above the groundwater table.

West Mahala

The West Mahala mineralized zone lies between the Smith Mine to
the east and the SSX Mine to the west and is hosted at the contact between the
Roberts Mountain and Hanson Creek Formations. The mineralization trends
east-west with continuity ranging from 400 to 1,000 feet. The width ranges from
150 to 600 feet and the thickness ranges from 10 to 60 feet. The West Mahala
mineralization is generally 1,000 to 1,200 feet below the surface. It is
believed that additional infill drilling at West Mahala (targeted for the 2011
drill program) will partially convert the identified mineralized resources to
reserve and at some point and become part of the SSX underground Mine. The
majority of the resources at West Mahala lie below the groundwater table.

Wright Window

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 Hanson
Creek Formations along the Saval Discontinuity. Mineralization in the resource
occurs in four zones (Figures 16 and 18); the west zone mineralization outcrops
at the surface and is about 50 feet thick. The higher-grade east area is about
200 by 300 feet long and wide, 45 feet thick, and lies about 400 feet below the
surface.

Pie Creek

Potentially economic gold mineralization occurs in a series of
near-surface zones in the head of Pie Creek drainage on the east flank of
Wheeler Mountain in the southern half of the Jerritt Canyon property. Indicated
and inferred resources have been included in the block model and are shallow
enough (<200 feet in depth below the surface) for consideration of open pit
mining. The main pod of mineralization is about 800 feet long, dips moderately
to the southeast at about 30°, and is 20 to 45 feet in cross-sectional
thickness. Mineralization is hosted in the top of unit 3 of the
Silurian-Ordovician aged Hanson Creek Formation (SOhc3) and is probably
controlled by northeast-trending faults. Three other smaller mineralized pods
are also hosted in the same rock unit but strike northwest and dip moderately to
the north. The main mineralized pod occurs between two mineralized northwesterly
cross structures.

Mill Creek

Potentially economic gold mineralization at Mill Creek occurs
  in a small, near-surface zone located just down the hill from a mineralized
  zone previously mined by a series of small open-pits. The modeled remaining
  intact mineralized zone is about 400 ft across, dips moderately to the north
  at about 400, and varies from 20 to 70 ft in cross-sectional thickness.
  Mineralization is hosted in unit three of the Silurian-Ordovician aged Hanson
  Creek Formation (SOhc) and is localized in a structural wedge between intersecting
  east-west and northeast trending faults that down-drop Hanson Creek unit three
  against unit four. These faults splay off of the nearby major northeast-trending
  Mill Creek fault. The Mill Creek fault is of high displacement and cuts diagonally
  across the district, forming the western boundary of three major lower plate
  carbonate rock windows.

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46

Road Canyon

Potentially economic mineralization at Road Canyon occurs in a
thin, near- or at-surface body 10 to 25 feet thick hosted in colluvial material.
This mineralization occurs over several hundred feet in length on a moderately
sloped hillside. The modeled mineralization is interpreted as the weathered
remains of a bedrock gold zone with some amount of downslope movement.

This mineralization was modeled by previous Jerritt Geology
teams, and confirmed by the present authors in Vulcan, using a single ore zone
wireframe that connected ore-tenor intercepts and allowed up to 100 feet of
projection beyond them. Material outside of the wireframe was not modeled. A
much lighter tonnage factor of 17.5 ft3/ton was used instead of the
standard 12.6 ft3/ton in order to better represent swelling and pore
space in the unconsolidated material. Recognition that the mostly unconsolidated
material could be potentially scraped or bulldozed in mining, it was decided
that a typical bench-based pit optimization would be inappropriate as it ends up
unnecessarily doubling the dilution.

MCE

Potentially economic mineralization at MCE is located at the
base of the Marlboro Canyon pit and to the northeast of the Murray Mine. The MCE
underground mine was previously mined from 1997 to 2004. The mineralization
remaining in the resource is small and is confined to the contact zone between
the Hanson Creek III and IV units, which dip 20 degrees to the south. The
remaining mineralization occurs along a N70°E trending zone about 1,500 feet
long with a plunge of 15° to the east.

Coyote Zone 10

Potentially economic mineralization at the Coyote Zone is
located west of the Murray Mine. Most mineralization is hosted in the Roberts
Mountain Formation near the lower contact with the Hanson Creek Formation
approximately 170 to 1,000 feet below the existing surface. A lesser amount of
mineralization is hosted in unit I of the Hanson Creek Formation. The
mineralized body is approximately 200 feet in length and 18 to 110 feet in
cross-sectional thickness.

Burns Basin

The Burns Basin area was previously open pit mined from 1988 to
1998. Potentially economic mineralization that makes up the remaining intact
open pit (using a US$450 LG shell) and underground resources is mostly hosted at
the contact zone between the Hanson Creek III and IV units. The underground
resource is located outside of the US$450 pit shell in the northeast area
approximately 600 to 800 feet from one of the pit resources. A significant
amount of fill has been placed in portions of the Burns Basin pits, some of
which is classified as municipal solid waste and debris from crates, cartons,
and perhaps demolition of equipment. Modeled underground inferred resources at
Burns Basin was lower based on the present authors review of the old 2004 block
models and pit shells.

California Mountain (NEXT)

Potentially economic mineralization in the California Mountain
open pit and underground resources are located north and west of the existing
California open pit that was mined from 1993 to 1994. This remaining
mineralization is hosted both in the Roberts Mountain Formation near the upper
contact with the Hanson Creek Formation, and within unit III of the Hanson Creek
Formation. The remaining resource mineralization lies on a northeastern
mineralized trend.

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47

Drilling

Numerous drill campaigns have been executed at Jerritt Canyon
since its discovery in the 1970s. Exploration drilling programs typically
consist of vertically oriented 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. During the early drilling years in the 1970s and 1980s when shallow
open-pit targets were being pursued, most of the surface drill holes were
drilled to a maximum depth of 600 feet below the surface and stopped regardless
of the geological rock unit or alteration that was encountered.

At the underground mines up to August 2008, definition drilling
included core drilling on 50 foot centers from underground stations, using NQ
sized core which is 1.875 inches in diameter. In 2010, underground diamond
drilling was used for exploration and resource conversion. Underground RC
drilling (Cubex) is used for resource confirmation and is generally drilled on
20 to 40- foot centers. Underground RC drill holes are generally less than 150
feet in length, but can be as long as 300 feet. Up to August 2008, underground
production sample drilling consisted of Cubex and rotary percussion drilling
(Solo and Secoma). In 2010 a 5200 DRC Cubex (RC) drill, owned and operated by
SMD, was used primarily for underground production sample drilling at the Smith
Mine. These production drill holes were generally short, less than 60 feet, and
were drilled on center as close as 10 to 20 feet. The vast majority of drill
holes, except the production holes, have been measured for downhole deviation.

Tens of thousands of holes have been drilled on the property
over the years. As of December 31, 2010, there are a total of 14,873 surface
drill holes totaling 8,449,071 feet and 36,817 underground drill holes totaling
3,068,494 feet in the acQuire digital drill hole databases. The Murray mine has
over 22,000 holes with more than 2 million feet drilled; the Smith mine has over
6,800 underground drill holes with more than 1.53 million feet; the SSX mine has
nearly 21,560 underground drill holes with 2.73 million feet of drilling.
Figures 7, 8, and 9 show the drill hole plan maps in the Smith mine, SSX-Steer
complex (including Saval and West Mahala), and the Starvation Canyon area,
respectively.

Drilling at Jerritt Canyon for the last twelve years is shown
in Table 4. Drilling in 2000 through 2002 for AngloGold and Meridian was
conducted either by contract drilling companies and underground drill rigs owned
by Anglo Gold and Meridian Gold. Drilling from 2003 to the present for
Queenstake was conducted by underground drill rigs owned by Queenstake or
contract drilling companies not owned by Queenstake. The name of the drilling
company is listed on each drill hole log stored either in the acQuire digital
drill hole database or listed on the paper drill hole log files stored at the
mine.

Drilling in 2008 was conducted underground at the SSX and Smith
  Mines, and throughout the property on the surface. Underground drilling was
  conducted underground at Smith in 2010 and at both Smith and SSX-Steer in 2011.

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48

Figure 7. Smith Mine Drill Hole Plan Map



Figure 8. SSX-Steer Mine Complex Drill Hole Plan Map



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49

Figure 9. Starvation Canyon Drill Hole Plan Map



No underground drilling was conducted in 2009. No surface drilling
  was conducted on the surface in 2009 and 2010. All of the surface and underground
  drilling methodologies used in 2008, 2010, and 2011 were similar to that done
  in 2007 as described in the year-end December 31, 2007 NI 43-101 report (SRK,
  2008).

Table 4: Jerritt Canyon Drilling (2000 through 2010)

Year
      Surface RC
      Surface Core
      UG Core
      UG RC
      ProductionNo.
      Footage
      No.
      Footage
      No.
      Footage
      No.
      Footage
      No.
      Footage2000
      378
      444,795
      2
      *
      292
      75,799
      **
      **
      4,982
      204,1822001
      59
      65,450
      0
      0
      268
      86,134
      914
      112,129
      5,086
      349,1572002
      27
      18,905
      0
      0
      186
      53,940
      2,939
      245,536
      3,593
      135,8242003
      108
      47,277
      0
      0
      119
      41,458
      2,057
      191,416
      3,643
      141,2182004
      377
      300,226
      34
      21,212
      297
      126,091
      2,643
      263,367
      2,739
      108,7802005
      126
      101,413
      4
      1,403
      179
      80,251
      2,618
      267,627
      2,414
      94,7932006
      155
      135,940
      0
      0
      125
      53,985
      2,160
      206,138
      724
      28,2512007
      220
      216,592
      15
      12,495
      44
      20,580
      1,808
      178,625
      1,035
      38,9502008
      100
      103,300
      8
      9,830
      94
      41,521
      230
      371,169
      595
      45,4302009
      -
      -
      -
      -
      -
      -
      -
      -
      -
      -2010
      0
      0
      0
      0
      8
      8,126
      3
      630
      1,140
      70,9352011
      208
      120,130
      12***
      14,147
      37
      23,942
      **
      **
      809
      93,753


Notes: *2000 surface core footage is included with surface RC
            
**2000 and 2011 underground RC drilling is included with production drilling for
that year

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50

***15 surface core holes were core
tails drilled after a RC precollar; the 12 drill holes listed were entirely
core drilled at Starvation Canyon; No drilling was conducted in 2009
Queenstake owned the Jerritt Canyon property since mid-2003; The Company
has owned Queenstake since mid-2007; Contract drilling companies have
completed almost all of the surface drill holes in Table 4; Both contract
drill companies and company-owned drill rigs completed the underground drilling
from 2000 to 2011; A single contract drilling company conducted the
underground drilling in 2010.

Sampling and Analysis

Drill hole samples in 2008, 2010 and 2011 were analyzed at both
the Jerritt Canyon assay lab and two commercial laboratories: ALS and American
Assay Laboratory (AAL). The discussion below details the procedures and
protocols used to collect and store the data for the Jerritt Canyon property.
The Quality Assurance and Quality Control (QA/QC) programs are also detailed
below.

Jerritt Canyon Laboratory Procedures (2008-2010)

In 2008, the mine utilized the noncertified Jerritt Canyon
assay laboratory (JC lab) for analytical work on the underground samples with
check samples sent to the certified (ISO/IEC 17025:2005) ALS Laboratory Group
(or ALS Chemex lab or ALS) for comparisons. In 2010, the JC lab was utilized for
analytical work on the underground production Cubex drill hole samples with
check samples sent on a quarterly basis 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 JC lab is located in a
separate building close to the ore processing plant. The laboratory has all the
normal sample preparation equipment and facilities. In 2008, the laboratory
operated continually with a crew of 16 and performed about 500 fire assays per
day with a 24-hour turnaround from receipt of sample to reporting of assays. In
2010, the Jerritt Canyon assay lab was operated using one 12-hour work shift
with a crew of 15 and performed approximately 360 assays per day.

Sample Preparation

All of the underground samples received at the JC lab in
2008-2010 arrived with bar coded labels and were transported to the front
laydown area in front of the garage door by the drillers, Queenstake staff
geologists or drilling support staff, or mine staff working with contract miner
SMD. The labels match drill logs maintained by samplers and drillers in the
Jerritt Canyon Underground Department. Sample bar codes in 2008 were scanned
into the LIMS (an automated sample tracking system that utilizes bar-code
scanning devices) and assay lots were auto-created. During the process of bar
code acquisition in 2009 and the first half of 2010, some labels were manually
entered into the database by hand since the LIMS system software was not fully
operational. The surface drill hole sample numbers were labeled on the sample
bags and then logged into the LIMS system by the lab technicians. All logged
samples in 2008 and 2009 dried for four to six hours at 325°F prior to prepping.
All logged samples in 2010 dried for four to eighteen hours at 205°F in ovens at
the lab prior to any further sample preparation described below.

From 2008 and 2010, 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.

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51

Jerrritt 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. In 2008 and
2009, of 24 samples on each tray, one was a repeat sample, one was a standard,
one was a blank, and one was a blind standard inserted into the sample stream by
the Geology department. The samples in 2008-2010 were fired by the method of
fusion/cupellation, with a gravimetric finish. The balance used for the final
weighing from 2008-2010 is a Cahn C-30 microbalance that was serviced and
calibrated on a semi-annual basis by Microlab Services.

In 2010, similar fire assay methods were used as in 2008. In
2010, of 24 samples on each tray, one was a triplicate sample (in the eleventh
position of the sample sequence and available to collect and send to ALS
Commercial Lab for an assay check), one was a blank (second in the sequence),
and one was a blind standard inserted into the 24th position of the sample
sequence by the JC lab department. The standards used were the same used by the
Geology Department (Rocklabs and in-house standards JCQ06 and JCQ07 described
under the heading Quality Controls and Quality Assurance and presented to the
JC lab by the Jerritt Geology staff as prelabeled blind pulp bags. A few
non-certified standards were used by the JC lab in the first half of 2010 while
certified standards were being purchased or made.

For 2008 to 2010, the JC lab in-house quality assurance/quality
control (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 in 2008 were submitted on
a weekly basis to either Rocky Mountain Geochemical or Chemex Laboratories. The
data was compiled from the JC daily assay sheet and compared with the results
from the two outside labs. The results of the comparison were entered into a
statistical program and a running check was maintained on the data.

For 2010, the production drill hole samples were submitted on a
quarterly basis to ALS-Chemex Lab by the Jerritt Geology staff. The JC lab staff
compiles the results of each 24 sample assay batch and forwards the final
results to the Geology Department as individual .csv spreadsheet files. The
Geology Department compiles the Production drill hole assays and QA/QC samples
from the JC daily assay sheet and imports the data to acQuire database software.
The results of the assay lab comparison are monitored using QA/QC protocols set
up in acQuire and described under the heading Quality Controls and Quality
Assurance.

Commercial Laboratories

Surface RC and diamond drilling completed in 2008 were sent to
the primary lab ALS Minerals Laboratory Group (also referred to as ALS Chemex or
ALS in this document) and the secondary lab American Assay Laboratories (AAL) in
Reno and Sparks, respectively, Nevada. For 2008 and 2009, samples above 0.100
opt gold were routinely fire assayed with a gravimetric finish. For 2010, the
ALS Chemex lab in Reno, Nevada was used for all of the underground diamond drill
hole analyses. Samples above 0.070 opt Au were routinely fire assayed with a
gravimetric finish. For all years 2008-2010, blanks, standards, and pulps were
routinely inserted into the sample stream for QA/QC, and check assay.

ALS Chemex typically picked up the cut samples (bagged and
labeled with bar codes) at the Jerritt Canyon core logging facility and brought
them to their lab in Elko for sample preparation. The 2010 sample preparation
procedures for ALS Chemex include:

- the PREP-31 ALS method code that consists of logging the sample, weighing
  the sample, fine crushing the sample to better than 70 percent passing a 2mm
  (Tyler 9 mesh, US Std. No 10) screen, splitting off up to 250 g and
  pulverizing the split to better than 85% passing a 75 micron (Tyler 200 mesh,
  US std. No. 200) screen;
- Dry-21 ALS method code; and

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52

- CRU-21 ALS method code that consists of a primary crush to approximately
  -6mm.

Once the samples were prepared by Jerritt Canyon geologists
(geologically logged and sample intervals defined) and geotechnical staff (split
or sawed core into two equal pieces and placing one half of the core into a
labeled and sealed sample bags for assay analysis), they were picked up at the
Jerritt Canyon mine site by ALS representatives who transported the samples to
their sample preparation lab in Elko, Nevada and eventually to their assay lab
in Reno, Nevada for analysis. The 2010 assay procedures for ALS Chemex
included:

- The Au-AA23 ALS method code that consists of a 30g fire assay for gold
  that uses an aqua regia digest and analysis by atomic absorption spectroscopy
  (AAS) finish. A prepared sample is fused with a mixture of lead oxide, sodium
  carbonate, borax, silica, and other reagents as required, in quarted with 6 mg
  of gold- free silver and cupelled to yield a precious metal bead. The bead is
  digested in 0.5 mL dilute nitric acid in the microwave oven; 0.5 mL
  concentrated hydrochloric acid is then added and the bead is further digested
  in the microwave at a lower power setting. The digested solution is cooled,
  diluted to a total volume of 4 mL with de-mineralized water, and analyzed by
  atomic absorption spectroscopy against matrix-matched standards. The assay
  range for this analysis is from 0.005 to 10 ppm; all results >1 ppm were
  automatically re-analyzed by method Au-GRA21;
- The Au-GRA21 ALS method code that consists of a 30g Au fire assay with a
  gravimetric finish. The sample is fused with a mixture of lead oxide, sodium
  carbonate, borax, silica, and other reagents in order to produce a lead
  button; the lead button containing the precious metals is cupelled to remove
  the lead; the remaining gold (and silver) bead is parted in dilute nitric
  acid, annealed and weighed as gold. The assay range for this analysis is from
  0.05 to 1,000 ppm Au. This assay method is used automatically for overlimit
  results from the Au-AA23 assay method.

American Assay Lab (AAL) uses similar sample preparation and
assay analysis procedures as ALS Chemex. American Assay Laboratory has a sample
preparation facility in Elko, Nevada and an assay laboratory in Sparks, Nevada.

Diamond drill core was transported from the underground drill
stations to the Jerritt Canyon core logging facility by the contract drillers
and/or Queenstake geological staff and the diamond drill core was stored and
logged in a secure (lockable) facility until it was processed for shipment to an
assay lab.

Quality Controls and Quality Assurance

2008 Jerritt Canyon and Commercial
Laboratory QA/QC Procedures

The Geology Department at Jerritt Canyon had established
laboratory QA/QC procedures that were identified in the 2008 NI 43-101 report
(SRK, 2008) as follows:

Jerritt Canyon Laboratory

- One standard sample per 20 samples;
- One blank sample, consisting of silica sand, per drill hole;
- 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;

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53

- 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 0.07opt gold, and 5% of
  samples between 0.01opt and 0.07opt gold are submitted to a second lab for
  check analysis.

The standards used in 2008 and 2009 were prepared from Jerritt
Canyon mineralized rock and have several different gold values. The standards
used throughout 2008 and 2009 include:

- High  0.268opt;
- JCQ01  0.117opt;
- 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
found the results within industry standards. Various graphs representing the
results of the 2007 QA/QC program are presented in the Year-End 2007 NI 43-101
report (SRK, 2008).

The primary author of the report was not at the site during the
making of the QA/QC standards used in the 2008 drilling program. However, the
standards that were used in 2008 and 2009 and inherited from the previous
Jerritt Canyon Mine Geology group (pre-August 2008) were located by the primary
author at the secured Jerritt Canyon core logging facility and were in clearly
marked and sealed five-gallon buckets and containers.

2010 and 2011 Jerritt Canyon and
Commercial Laboratory QA/QC Procedures

In 2010, the Geology Department at Jerritt Canyon established
new laboratory QA/QC procedures as follows:

Jerritt Canyon Laboratory

- One standard sample per 24 samples;
- One blank sample, consisting of silica sand, per 24 samples;
- One triplicate sample per 24 samples;
- Check assays consist of in-house QA/QC procedures identified above, and
  submitting saved triplicates of the production drill hole samples to an
  outside certified lab for comparison. The production drill hole samples are
  submitted on a quarterly basis to ALS Chemex Laboratories.

Commercial Laboratory

A commercial laboratory was used to assay underground
exploration and resource conversion diamond drill holes. The QA/QC protocol for
2010 and 2011 is summarized below:

- One standard sample (listed below) was inserted into the assay sample
  stream every 20th sample;
- A minimum of one blank sample of silica sand per hole, inserted at the
  beginning or end of hole, or after a mineralized zone;

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54

- Send replicate samples consisting of both pulps and rejects originally
  assayed at ALS Chemex lab to ALS Chemex with different sample numbers on a
  quarterly basis; 1 percent of the exploration and resource conversion drill
  holes were targeted (estimated 37 pulps and coarse rejects per quarter);
- Send pulps originally assayed at ALS lab to AAL lab using the same sample
  numbers as the original assay; 2.5% of the underground diamond drill holes
  were targeted (estimated 40 pulps per quarter); 10% of the samples that have a
  value greater than 0.07opt gold (using gravimetric finish), and 5% of samples
  between 0.01opt and 0.07opt gold are submitted to the second lab (AAL) for
  check analysis each quarter.

The 4 standards used in 2010 were either prepared from Jerritt
Canyon mineralized rock or purchased from Rocklabs Ltd. (a commercial lab that
makes certified reference materials) and have several different gold values. The
recommended gold concentration for each standard used throughout 2010 includes:

- JCQ06  0.159opt (Jerritt Canyon mineralized rock source);
- JCQ07  0.241opt (Jerritt Canyon mineralized rock source);
- Si54  0.0519opt (Rocklabs certified standard); and
- SK52  0.1198opt (Rocklabs certified standard).

The Jerritt Canyon sourced standards JCQ06 and JCQ07 consist of
low-sulfide bearing carbonaceous limestone material that were collected from the
Jerritt Canyon ore-dryer baghouse in early spring 2010 and approximate the size
fraction of a pulp generated from a certified commercial lab. A large amount of
each sample was submitted to American Assay Laboratory (AAL) Lab in Sparks,
Nevada where they used a large blending machine to help homogenize the
standards. After homogenization was attained, the standards were submitted to 3
different assay laboratories as random blind pulp samples with labeled
identification numbers. The assay results of the standards from all of the labs
were reviewed together. The recommended ideal Au values were calculated and
based on the mean value. The upper and lower acceptable limits for each standard
were calculated based on adding and subtracting two standard deviations to the
mean value from all three labs.

The RockLab standards were analyzed by over 40 different assay
labs around the world, have a 95% confidence level, and lower standard
deviations and therefore lower acceptable limits for passing the Jerritt Canyon
QA/QC protocol.

In order for an assay batch to pass the QA/QC review, the
standard assay results must be within two standard deviations of the recommended
standard value listed above. Various graphs and a discussion of the 2010 QA/QC
program are presented in the Appendix and in Section 12 of the Jerritt Canyon
Report. 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 or a valid reason for the standard assay discrepancy is
determined (e.g. a mislabeled standard or a standard that was inserted out of
sequence).

Mineral Resource and Mineral Reserve
Estimates

On June 28, 2011, and as amended on January 6, 2012, YNG
updated the Jerritt Canyon resource estimate incorporating additional drilling
from the 2008 to 2010 drill campaigns. An additional 2,178 drill holes were
added since the last NI 43-101 report (SRK, 2008). The resource estimate as of
January 1, 2011 was done by Karl Swanson, independent consultant, SME, MAusIMM
and Todd Johnson, VP Exploration Yukon Nevada Gold Corp., P.E. using the Vulcan
Software version 7.5 service pack one. This new NI 43-101 resource estimate
reinterpreted the 0.10 opt grade shells and created a geologic model within
specific areas of the Jerritt Canyon claim boundary.

Three new block models were created in Vulcan Software for the
January 1, 2011 Jerritt Canyon NI 43-101; Smith, SSX, and Starvation. The SSX
block model includes the SSX, Steer, Saval, and West Mahala deposits.

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55

The deposits at Jerritt Canyon which were re-estimated and new
resources and/or reserves calculated since the last NI 43-101 report (SRK, 2008)
are:

Smith SSX-Steer Saval
Starvation West Mahala Wright Window (the SRK 2008 Wright Window
block model and the January 1, 2011 classification system was used for this
study)

The open pit and underground models and deposits below were
reviewed in MineSight and verified by the primary authors in Vulcan and have the
same resources as stated in the 2008 NI 43-101:

Burns Basin (Indicated open pit)
California Mtn. MCE Mill Creek Murray Zone 9 Pie Creek

  Road Canyon

The following open pit and underground resources were viewed in
Vulcan by the present authors and revised from earlier resource statements
included in SRK (2008):

Burns Basin (Indicated and Inferred
underground resources); Coyote Zone 10 (Inferred open pit and Indicated and
Inferred underground); 
  Murray (Measured and Indicated underground resources).

The December 31, 2007 underground resources that could not be
viewed in Vulcan or verified by the present authors of this study include those
for: Murray (Inferred resources), Waterpipe II (Inferred resources), and Winters
Creek (Indicated and Inferred resources). The data for these underground
resources were therefore excluded from the present resource tables. Future NI
43-101 reports will examine these areas based on new modeling work.

Therefore all supporting documentation for the unchanged
resources is in SRKs December 31, 2007 NI 43-101 technical report (SRK, 2008)
and will be summarized in this document where necessary.

The stockpiles reposing at the mine portals or remaining from
earlier open pit extraction are included in the resource table.

Three resource estimation methods were run on the gold grade in
the block models used for the January 1, 2011 NI 43-101 report at Jerritt
Canyon. These estimation methods are ordinary kriging (au_ok), inverse distance
cubed (au_id3), and nearest neighbor (au_nn). The Smith and SSX models used the
ordinary kriging estimate for the calculation of resource and reserves whereas
Starvation used the inverse distance cubed estimate due to the wider spaced
drill data and no production data. Table 5 shows the estimation method used in
reporting by deposit or area for all of the deposits modeled in 2007 and 2011.

For the Jerritt Canyon block model estimations, each of the
grade shell solids had individual estimation orientations and the blocks within
the grade shells were estimated using these individual search orientations with
multiple passes.

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56

For Smith and SSX, three passes were done. The first pass has
conservative parameters that classify the estimated blocks as measured with a
search distance of 40x40x20 feet. The second pass uses a larger search,
100x100x50 feet, and requires less samples which classifies the estimated blocks
as indicated. The third and last pass at 500x500x250 feet is the least
restrictive and classifies the blocks as inferred.

For Starvation, two passes were used. The first pass is
basically measured and indicated at 75x75x25 feet and the second at 150x150x50
feet is inferred. A script was run after the estimations to determine the final
classification.

The low grade blocks were also estimated in the Smith and SSX
block models with the same three passes but restricts samples greater than 0.10
opt grade to a search radius of 10x10x10 feet from the center of the block. The
low grade estimations were divided into two domains that define the general
limbs of an anticline and have different estimation orientations for each side.
The estimated low grade blocks outside of the 0.1 opt grade shells are not
included in either the resource or reserve. The sole purpose of the low grade
estimation is to guide exploration.

The low grade blocks are also estimated with the same three
passes but restricts samples greater than 0.10 opt grade to a search radius of
10x10x10 feet from the center of the block. The low grade estimations were
divided into two domains that define the general limbs of an anticline and have
different estimation orientations for each side.

During the estimations, only the composites flagged as inside
the grade shells were used to estimate the blocks inside the grade shells.
Likewise, only the composites flagged as outside the grade shells (low) were
used to estimate the blocks outside of the grade shells.

Table 6 shows the estimation parameters for each deposit and
pass. Appendix F shows the estimation ellipse orientations and ranges for each
grade shell and pass including the low-grade estimation.

Table 5: Jerritt Canyon Resource Estimation Methods by
Deposit

Deposit or Area
      Estimation MethodResource and ReserveSmith
    Ordinary KrigingSSX-Steer
    Ordinary KrigingSaval
    Ordinary KrigingStarvation
    Inverse Distance CubedWest Mahala
    Ordinary KrigingWright Window
    PACK  IDWResource OnlyBurns Basin
    IDWCalifornia Mtn.
    POLYGONALCoyote Zone 10
    IDWMCE
    PACKMill Creek
    IDWMurray Zone 9
    PACK - IDWPie Creek
    IDWRoad Canyon
    IDW


Table 6: Estimation Parameters by Block Model

Area
      Shell
      Pass
      Parent
      Min
      Max
      Cap
      Major
      Semi
      Minor
      Max/X
      Y
      Z
      Samp
      Samp
      Grade
      Radius
      Radius
      Radius
      DHSmith
      low
      meas
      20
      20
      20
      8
      12
      0.1
      10
      10
      10
      3


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57

Area
      Shell
      Pass
      Parent
      Min
      Max
      Cap
      Major
      Semi
      Minor
      Max/X
      Y
      Z
      Samp
      Samp
      Grade
      Radius
      Radius
      Radius
      DHSmith
      low
      ind
      20
      20
      20
      5
      12
      0.1
      10
      10
      10
      3Smith
      low
      inf
      20
      20
      20
      2
      12
      0.1
      10
      10
      10
      3Smith
      shell
      meas
      10
      10
      10
      8
      12
      3.5
      10
      10
      10
      3Smith
      shell
      ind
      10
      10
      10
      5
      12
      3.5
      10
      10
      10
      3Smith
      shell
      inf
      10
      10
      10
      2
      12
      3.5
      10
      10
      10
      3SSX
      low
      meas
      20
      20
      20
      8
      12
      0.1
      10
      10
      10
      3SSX
      low
      ind
      20
      20
      20
      5
      12
      0.1
      10
      10
      10
      3SSX
      low
      inf
      20
      20
      20
      2
      12
      0.1
      10
      10
      10
      3SSX
      shell
      meas
      10
      10
      10
      8
      12
      3.5
      10
      10
      10
      3SSX
      shell
      ind
      10
      10
      10
      5
      12
      3.5
      10
      10
      10
      3SSX
      shell
      inf
      10
      10
      10
      2
      12
      3.5
      10
      10
      10
      3Starv
      shell
      pass1
      10
      10
      10
      3
      10
      0.8
      20
      20
      10
      2Starv
      shell
      pass2
      10
      10
      10
      2
      10
      0.8
      20
      20
      10
      2


A parent block size was used during the estimations of the
block models at Jerritt Canyon. This means that the estimation is run at the
centroid of the parent block and all real blocks that exist in the estimation
parent block are assigned that single estimated grade. The estimation parent
block size for the low grade blocks at Smith and SSX are 20x20x20 feet. The
estimation parent block size for the grade shell blocks for Smith, SSX, and
Starvation is 10x10x10 feet.

The cap grade determined for each deposit is used in the
estimations by restricting the range that the composites with values greater
than the cap can influence. The range used at Smith and SSX is 10 feet in the
major orientation, 10 feet in the semi-major orientation, and 10 feet in the
minor orientation for gold composites higher than 3.5 opt. This means that a
block centroid must be within 10 feet of the high-grade composite in order for
it to be used as one of the composites used in that estimate. The cap ranges at
Starvation are 20x20x10 for gold composites greater than 0.8 opt.

A different number of composites (samples) were used for the
different estimation passes for each block model. For Smith and SSX, the minimum
number of samples for the measured pass is 8, for the indicated pass is 5, and
for the inferred pass is 2. The maximum number of samples is 12 for all three
passes. For Starvation, the minimum is 3 for the first pass and 2 for the second
pass. The maximum samples at Starvation is 10 for both estimation passes.

In addition, a maximum number of composites per drill hole is
used during the estimations. At Smith and SSX, the maximum per drill hole for
all estimations is 3. At Starvation it is 2 for both passes.

After the estimations are run, block calculations are run with
scripts to assign or calculate values to additional fields in the block models.
Text names are assigned to the ZONE, CLASSNAME, and MINED variables in the block
models. A density of 0.0794 tons per cubic foot is applied to all intact rock
blocks.

A north-south cross section of the estimated gold grades
(au_ok) for the Smith model at 400,150E is in Figure 12. The 0.10 opt grade
shells are the polygon outlines. The colour scheme is shown in Figure 10.

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58

Figure 10: Jerritt Canyon Colour Legends

Figure 11: Plan View of 0.10 opt Grade Shells at SSX-Steer

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59

Figure 12 Section View of Smith Estimated Blocks (au_ok) at
400150E



Mined Depletion

Both Smith and SSX have mined out areas within the block
models. These mined out areas have been depleted by either deleting or renaming
the blocks. At Smith, the Dash Pit (Figure 14) was included in the deepest
topography and all blocks above this topo and the original topo surface were
named either dump or air in the FM variable. The SSX pits were included in the
current topography and all blocks above this surface are called air in the FM
variable. No open pits exist within the Starvation model area.

Smith and SSX have underground mining which are tracked as
surveyed and triangulated as-built solids. These solids are used to flag blocks
as "mined" in the MINED variable at Smith if the block centroid is within the
as-built solid. Block centroids that are outside of the as-built solids are
named "intact" in the FM variable. At SSX, the blocks within the as-builts are
named "asb" in the SHELL and ZONE variables.

A north-south cross section showing the outlines of the 0.10
opt grade shells and the depleted blocks for the Smith model at 400,150E is in
Figure 13. This is the same section coordinates as Figure 12. The colour scheme
is shown in Figure 10 where orange is "mined" and green is "intact".

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60

Figure 13: Section View of Smith Depleted Blocks at 400150E



In addition to the as-built solids, polygons (shown in green on
Figure 14) were drawn in plan view around densely mined areas at Smith and SSX
in order to exclude possible remnants of previously mined grade shells in the
resource. These polygons were projected 180° above and below in elevation from
the digitized shape and depleted where the shapes intersected the 0.10 opt Au
grade shells adding some conservatism to the total resource presented in Table
7. Triangulation solids were built from the polygons and all of the blocks that
were not depleted with the as-builts and that are within the polygon solids were
flagged as "asb" or "mined". Figure 14 shows the depletion polygons (green) in
plan view for Smith. Figure 15 shows the depletion polygons (green) in plan view
for SSX.

None of the "asb" or "mined" blocks are used when calculating
the mineral resource.

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61

Figure 14: Plan View of Smith As-built Solids and Depletion
Polygons



Figure 15: Plan View of SSX As-built Solids and Depletion
Polygons



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62

Mineral Reserve Estimate

The Jerritt Canyon mineral resources, including reserves, as of
January 1, 2011 are listed in Tables 7 to 15. These Mineral Resource tables are
separated by open pit (Tables 9 to 12) and underground resources (Tables 7 to 8;
and 13 to 14), and by those that were recalculated by this study (Tables 7 to
10). For those underground and open pit resources that were not remodeled for
this study and originally included in the SRK 2008 Technical Report, the present
authors took the pre-existing block models and analyzed them in Vulcan to either
verify or modify the SRK (2008) resource values (Tables 11 to 14). The total
Mineral Resources at Jerritt Canyon, as confirmed by the present authors of the
Jerritt Canyon Report, are listed in Table 15. 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 Au ounces are on a
contained basis without adjustment for process recovery.

Only blocks within the 0.10 opt grade shells that have a gold
grade greater than the 0.125 opt cutoff grade are used in calculating the
January 1, 2011 underground resources. Therefore any blocks within the grade
shells that have an estimated gold grade less than 0.125 opt are not used in the
resource. In addition, only grade shells that have more than 1,000 tons and are
within 750 feet of current underground workings or within 750 feet of designed
workings used to define the reserve are used to calculate the resource.

The Smith, SSX-Steer, Saval, West Mahala, and Starvation
deposits used a 0.125 opt cutoff to calculate the mineral resource. This is
based on the current economic cutoff for underground mining at Jerritt. All of
the other deposits included in the mineral resource (Tables 9 to 14) used the
same cutoffs used in the 2008 NI 43-101. These cutoffs used in the 2008 NI
43-101 ranged from 0.068 opt to 0.086 opt for the open pit resource, and a
combination of 0.150 and 0.125 opt for the underground resource for mature and
undeveloped resources, respectively, depending upon proximity to mine
infrastructure. The reason for the cutoff ranges for the open pits is that the
resources were calculated in 2003 to 2006 and have been carried over the years
unchanged to later NI 43-101 Technical Reports.

The open pit block models listed in the below resource tables
were originally generated in MineSight software and were reviewed in Vulcan as
part of this study for verification and possible use in the Jerritt Canyon
Report. During our resource review, a few of the 2008 SRK Jerritt Canyon
resources could not be viewed and/or verified and include Waterpipe II and
Winters Creek. In addition, a few of the open pit resources, including Burns
Basin and Coyote 10, and related underground resources were slightly lower than
originally stated in the SRK 2008 Technical Report. The authors of the Jerritt
Canyon Report believe that the methodology used to calculate the December 31,
2007 open pit and underground resources are sound, and that the stated unchanged
verified resources are at best conservative since the current gold price is much
higher than when they were originally made. Some of the open pit resources were
examined using much lower gold prices than current gold prices ($550 per oz
price and in some cases a $450 per oz Au price was used). Many of these open pit
models will be rerun for the upcoming revised 2012 NI 43-101 Technical Report
targeted for a late April completion date, some of which will contain new
results from the 2011 drilling program.

Table 7: Jerritt Canyon Underground Measured and Indicated
Mineral Resources, Including Reserves  January 1, 2011

Mine/Area
      Au Cutoff Grade (opt)
      Measured
      Indicated
      Measured + Indicatedkt
      opt
      koz Au
      kt
      opt
      koz Au
      kt
      opt
      koz AuSMITH
      0.125
      1,979.7
      0.237
      469.2
      2,062.4
      0.233
      480.8
      4,042.1
      0.235
      950.0SSX-STEER
      0.125
      2,352.5
      0.227
      532.9
      1,569.8
      0.221
      347.2
      3,922.3
      0.224
      880.1SAVAL
      0.125
      86.2
      0.250
      21.5
      344.9
      0.223
      76.9
      431.1
      0.228
      98.4STARV
      0.125
      5.5
      0.365
      2.0
      496.9
      0.284
      141.1
      502.4
      0.285
      143.1W. MAHALA
      0.125
      0.4
      0.199
      0.1
      212.1
      0.188
      39.9
      212.5
      0.188
      40.0Total
      0.125
      4,424.3
      0.232
      1,025.7
      4,686.1
      0.232
      1,085.9
      9,110.4
      0.232
      2,111.6


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63

Notes: The January 1, 2011 Mineral Resources were calculated
using only blocks within the 0.10 opt grade shells that have a gold grade
greater than the 0.125 opt cutoff grade. In addition, only grade shells that
have more than 1,000 tons and are within 750 feet of current underground
workings or within 750 feet of designed workings used to define the reserve are
used to calculate the resource.

Table 8 Jerritt Canyon Inferred Underground Mineral
Resources  January 1, 2011

Mine
      Au Cutoff Grade
        (opt)
      Inferredkt
      opt
      koz AuSMITH
      0.125
      971.8
      0.197
      191.8SSX-STEER
      0.125
      344.7
      0.191
      65.9SAVAL
      0.125
      78.5
      0.185
      14.5STARV
      0.125
      256.3
      0.276
      70.7W. MAHALA
      0.125
      1,932.4
      0.190
      367.1Total
      0.125
      3,583.7
      0.198
      710.0


Notes: The January 1, 2011 Mineral Resources were calculated
using only blocks within the 0.10 opt grade shells that have a gold grade
greater than the 0.125 opt cutoff grade. In addition, only grade shells that
have more than 1,000 tons and are within 750 feet of current underground
workings or within 750 feet of designed workings used to define the reserve are
used to calculate the resource.

The January 1, 2011 open pit and stockpile resources are listed
in Table 9 and 10. The December 31, 2007 block model for the Wright Window was
reviewed using the January 2011 classification scheme to arrive at the restated
resources in the tables. The Wright Window resource was calculated using
Lerches-Grossman (LG) pit designs that examined measured, indicated, and
inferred blocks at a US$1,150 per oz gold price and a 0.042 opt Au cutoff grade.
The Wright Window resource includes indicated and inferred blocks from 4
different areas (Figure 16).

Once LG $1,100 reserve pits are designed (including ramps),
only one of the pits makes it into the reserve (probable) category. Although the
Wright Window Indicated resource totals 100.4 kt at an average Au grade of
0.131, the Wright Window reserve only contains 84.5kt averaging 0.127 opt Au.
The main reason for not including more of the Wright Window resource in the
reserve is because most of these open pit resources are driven on inferred
material. The Wright Window resource represents areas to focus more exploration
and drilling in order to try to convert to reserve (measured and indicated
classification).

Figures 16 and 18 show the Wright Window resource pits designed
at a 0.042 opt gold cutoff. The blocks shown for the resource pits are only
those with a grade greater than 0.042 opt. Only the blocks and the proportion of
blocks within the pit solid and above the 0.042 opt cutoff grade are used to
calculate the resource. Figures 17 and 19 show a plan view and cross-section at
419250N of the Wright Window reserve, respectively, designed at a 0.044 opt Au
cutoff.

Table 9: Jerritt Canyon 2011 Measured and Indicated Open-Pit
  and Stockpile Mineral Resources, Including Reserves  January 1, 2011

Mine
      Au Cutoff
        Grade (opt)
      Measured
      Indicated
      Measured + Indicatedkt
      opt
      koz Au
      kt
      opt
      koz Au
      kt
      opt
      koz AuWright Window
      0.042
      -
      -
      -
      100.4
      0.131
      13.1
      100.4
      0.131
      13.1Stockpiles
      0.044
      -
      -
      -
      902.2
      0.073
      65.9
      902.2
      0.073
      65.9Total
      
      -
      -
      -
      1,002.6
      0.079
      79.0
      1,002.6
      0.079
      79.0


|Notes: | (1) | The Wright Window resource was revised using the December
      31, 2007 block model and the January 1, 2011 classification system;                  
|------ | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | The January 1, 2011 stockpile resource is classified as
      indicated and reconciled to that published in the Year-End 2007 NI 43-101
      report.

---

64

A detailed description of the Jerritt Canyon January 1, 2011
stockpile resources and reserves are discussed under the heading Mining
Operations  Stockpiles herein.

Figure 16: Plan Map of the Resources in the Wright Window
area



Figure 17: Plan Map of the Reserve pit at Wright Window area



---

65

Figure 18: Section 419250N of Wright Window with $1,150
Resource Pit Outlines and Blocks with Grade Above 0.042 opt



Figure 19: Section 419250N of Wright Window with $1,100
Reserve Pit Outline and Blocks with Grade Above 0.044 opt



Table 10: Jerritt Canyon 2011 Inferred Open-Pit and Stockpile
  Mineral Resources  January 1, 2011

Mine
      Au Cutoff Grade (opt)
      Inferredkt
      opt
      koz AuWRIGHT WINDOW PIT
      0.042
      84.6
      0.083
      7.0Stockpiles
      0.044
      -
      -
      -Total
      
      84.6
      0.083
      7.0


|Notes: | (1) | The Wright Window resource was revised using the Year-End
      2008 block model and the January 1, 2011 classification system;                      
|------ | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | The January 1, 2011 stockpile resource is classified as
      indicated and reconciled to that published in the Year-End 2007 NI 43-101
      report.

---

66

Table 11: Jerritt Canyon Measured and Indicated Open-Pit
Mineral Resources, Including Reserves  January 1, 2011 Reassessment

Mine
      Au Cutoff
        Grade (opt)
      Measured
      Indicated
      Measured + Indicatedkt
      opt
      koz Au
      kt
      opt
      koz Au
      kt
      opt
      koz AuBurns Basin Pit (2)
      0.069
      -
      -
      -
      29.7
      0.134
      4.0
      29.7
      0.134
      4.0Calif. Mtn. (NEXT)
      0.068
      -
      -
      -
      8.0
      0.115
      0.9
      8.0
      0.115
      0.9Coyote Zone 10 Pit (2)
      0.075
      -
      -
      -
      -
      -
      -
      -
      -
      -Pie Creek
      0.086
      -
      -
      -
      190.2
      0.157
      29.9
      190.2
      0.157
      29.9Road Canyon Pit
      0.086
      -
      -
      -
      148.6
      0.143
      21.2
      148.6
      0.143
      21.2Mill Creek Pit
      0.075
      -
      -
      -
      78.4
      0.124
      9.7
      78.4
      0.124
      9.7Total
      
      -
      -
      -
      454.9
      0.144
      65.7
      454.9
      0.144
      65.7


|Notes: | (1) | Data from SRK (2008) and verified
      by the present authors for this study;                                                                                                                                                                                                                                                                                                                
|------ | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | Data from the present authors based on review of the old
      SRK (2008) models in Vulcan using the available LG pits and cutoff Au
      grades listed in the table; some of the Coyote and Burns Basin resources
      were decreased as a result of the present study;                                                                                                                    
|       | (2) | The Pie Creek Resource last done in December 31, 2006
      with the Indicated material calculated from a pit driven only on Indicated
      material); the Inferred material was calculated based on the increment
      between a $550 raw pit optimization shell driven on Indicated material,
      and a $550 raw pit optimization shell driven on Indicated and Inferred
      material;
|       | (3) | The Road Canyon Resource was last done in December 31,
      2005 only used data within an ore zone wireframe at a $550 gold price; a
      17.5 ft3/ton tonnage factor was used to reflect the
      unconsolidated colluvial host; a 100 ft. range was used for Indicated to
      the closest intercept in the wireframe, whereas a 101-150 ft range was
      used for Inferred;          
|       | (4) | The Mill Creek Resource was run on a $550 optimized pit
      shell driven on Indicated blocks only;                                                                                                                                                                                                                                                                                          
|       | (5) | The Burns Basin Pit was run at $450 optimized pit shell
      in December 2004 and reanalyzed for the December 31, 2005 Technical
      Report; our review of the block model decreased the 2008 SRK resource as
      part of this study;                                                                                                                                                    
|       | (6) | The California Mountain resource was run using a US$450
      LG pit ; and                                                                                                                                                                                                                                                                                                                    
|       | (7) | The Coyote Zone 10 resource was run using a US$425 LG pit
      and a cutoff grade of 0.075 opt Au; our review of this block model and
      resource decreased the 2008 SRK resource as part of this study.                                                                                                                                                                                  

Table 12: Jerritt Canyon Inferred Open-Pit Mineral Resources
   January 1, 2011 Reassessment

Mine
      Au Cutoff Grade (opt)
      Inferredkt
      Opt
      koz AuBurns Basin Pit
      0.069
      -
      -
      -Calif. Mtn. Pit (NEXT)
      0.068
      -
      -
      -Coyote Zone 10 Pit (3)
      0.075
      14.4
      0.109
      1.6Pie Creek Pit
      0.086
      28.3
      0.142
      4.0Road Canyon Pit
      0.086
      74.3
      0.131
      9.7Mill Creek Pit
      0.075
      -
      -
      -Total
      
      117.0
      0.131
      15.3


|Notes: | (1) | Data from SRK (2008) and verified
      by the present authors;                            
|------ | --- | -------------------------------------------------------------------------------------------
|       | (2) | Data from the present authors
      based on review of the old SRK (2008) models in Vulcan;
|       | (3) | Data revised from the SRK 2008
      Technical Report based on the present study.          

Figures 20 through 25 are plan maps of the SRK 2008 open pit
resources at Burns Basin, California Mountain, Coyote Zone 10, Pie Creek, Road
Canyon, and Mill Creek that were brought into Vulcan and either verified or
revised based on a critical review by the present authors. The Burns Basin and
Coyote Zone 10 open pit resources were slightly decreased as a result of our
critical review and are listed in Tables 11 and 12. All figures below are in
Jerritt Grid. Sections have elevation (in feet) on the left hand margin.

---

67

Figure 20: Plan View of Burns Basin $450 Resource Pit and
Blocks with Grade Above 0.069 opt



Figure 21: Plan View of California Mountain $450 Resource
Pit and Blocks with Grade Above 0.068 opt



---

68

Figure 22: Plan View of Coyote Zone 10 $425 Resource Pit and
Blocks with Grade > 0.075 opt



Figure 23: Plan View of Pie Creek $550 Resource Pit and
Blocks with Grade Above 0.086 opt



---

69

Figure 24: Plan View of Road Canyon $550 Resource Pit and
Blocks with Grade > 0.086 opt



Figure 25: Plan View of Mill Creek $550 Resource Pit and
Blocks with Grade Above 0.075 opt



---

70

Table 13: Jerritt Canyon Measured and Indicated Underground
  Mineral Resources, Including Reserves  January 1, 2011 Reassessment

Mine
      Au Cutoff
        Grade (opt)
      Measured
      Indicated
      Measured + Indicatedkt
      opt
      koz Au
      kt
      opt
      koz Au
      kt
      opt
      koz AuBurns Basin (2)
      0.150
      -
      -
      -
      25.1
      0.194
      4.8
      25.1
      0.194
      4.8Calif. Mtn. (1)
      0.150
      -
      -
      -
      32.1
      0.377
      12.1
      32.1
      0.377
      12.1Coyote Zone 10 (2)
      0.150
      -
      -
      -
      33.3
      0.208
      6.9
      33.3
      0.208
      6.9MCE (1)
      0.150
      -
      -
      -
      4.4
      0.201
      0.9
      4.4
      0.201
      0.9Murray (2)
      0.150
      125.6
      0.377
      47.4
      10.1
      0.302
      3.0
      135.7
      0.372
      50.4Murray Zone 9 (1)
      0.125
      -
      -
      -
      210.9
      0.277
      58.5
      210.9
      0.277
      58.5Total
      
      125.6
      0.377
      47.4
      315.9
      0.273
      86.2
      441.5
      0.303
      133.6


|Notes: | (1) | Data from SRK (2008) and verified
      by the present authors;                                                     
|------ | --- | --------------------------------------------------------------------------------------------------------------------
|       | (2) | Data from the present authors
      based on review of the old SRK (2008) models in Vulcan; The Burns Basin,        
|       |     | Murray (Mine), and Coyote Zone 10
      underground resources were modified based on the current review;            
|       | (3) | The Waterpipe II and Winters
      Creek underground resources included in the SRK 2008 Technical Report
      could
|       |     | not be verified for this study
      and were therefore deleted from theses underground resources.                  

Table 14: Jerritt Canyon Inferred Underground Mineral
Resources  January 1, 2011 Reassessment

Mine
      Au Cutoff Grade
        (opt)
      Inferredkt
      opt
      koz
        AuBurns Basin (2)
      0.150
      6.9
      0.176
      1.2Calif. Mtn. (1)
      0.150
      9.4
      0.330
      3.1Coyote Zone 10 (2)
      0.150
      1.6
      0.171
      0.3MCE (1)
      0.150
      7.8
      0.189
      1.5Murray (2)
      0.150
      0
      0
      0Murray Zone 9 (1)
      0.125
      61.6
      0.209
      12.9Total
      
      87.3
      0.218
      19.0


|Notes: | (1) | Data from SRK (2008) and verified by the present authors;                                                                                                                                                                          
|------ | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | Data from the present authors based on review of the old
      SRK (2008) models in Vulcan; The Burns Basin, Murray (Mine), and Coyote
      Zone 10 underground resources were modified based on the current review;              
|       | (3) | The Waterpipe II, Winters Creek, and Murray (inferred)
      underground resources from the SRK 2008 Technical Report could not be
      verified for this study and were therefore deleted from these underground
      resources.

Figures 26 through 34 are plan maps or cross-sections of the
SRK 2008 underground resources at Burns Basin, California Mountain, Coyote Zone
10, MCE, Murray (Mine), and Murray Zone 9 that were brought into Vulcan and
either verified or revised based on a critical review by the present authors.
The Burns Basin, Coyote Zone 10, and Murray (Mine) underground resources were
slightly decreased as a result of our critical review and are listed in Tables
13 and 14. The 2007 Murray resource was revised based on the current authors
review of the 2007 block model and tabulating measured + indicated blocks
>0.15 opt Au outside of the asbuilts but inside the restricted gradeshell
domains. All blocks >0.15 opt located below the 6,100 foot elevation
groundwater table were excluded from the resource. No inferred blocks were
included in the revised Murray resource based on the authors review of previous
work.

---

71

Figure 26: Plan View of Burns Basin UG Resource Blocks with
Grade Above 0.15 opt



Figure 27: Plan View of California Mountain UG Resource
Blocks with Grade Above 0.15 opt



---

72

Figure 28: Plan View of Coyote Zone UG Resource Blocks with
Grade Above 0.15 opt



Figure 29: Plan View of MCE UG Resource Blocks with Grade
Above 0.15 opt



---

73

Figure 30: Section Looking North at MCE UG Resource: Blocks
with Grade Above 0.15 opt



Figure 31: Murray UG Mine Plan Map (6182.5 Elev.) with
Resource Blocks > 0.15 opt



---

74

Figure 32: Section 420750N of Murray UG Mine with Resource
Blocks > 0.15 opt



|Notes: | Only Measured + Indicated blocks above 0.15 opt Au above
      the 6,100 ft. elevation are included in the stated Murray Resource (see
      text)
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------

Figure 33: Plan View of Murray Zone 9 UG Resource Blocks
with Grade Above 0.15 opt



---

75

Figure 34: Section Looking North at Murray Zone 9 UG
Resource Blocks with Grade > 0.15 opt



Total Mineral resources for the January 1, 2011 and open pit
and underground are listed in Table 15. The Measured resources total 4,549.9
ktons averaging 0.236 opt Au containing 1,073.1 koz. The total Indicated
resources are 6,459.5 ktons averaging 0.203 opt Au containing 1,316.8 koz. The
total Measured and Indicated resources are 11,009.4 ktons averaging 0.217 opt Au
containing 2,389.9 koz. The total Inferred underground resources are 3,872.6
ktons averaging 0.194 opt Au containing 751.3 koz.

Table 15: Jerritt Canyon Mineral Resources, Including
Reserves  January 1, 2011

Mine
      Measured
      Indicated
      Measured + Indicated
      Inferredkt
      opt
      koz Au
      kt
      opt
      koz Au
      kt
      opt
      koz Au
      kt
      opt
      kozAuUndergroundSMITH
      1,979.7
      0.237
      469.2
      2,062.4
      0.233
      480.8
      4,042.1
      0.235
      950.0
      971.8
      0.197
      191.8SSX-STEER
      2,352.5
      0.227
      532.9
      1,569.8
      0.221
      347.2
      3,922.3
      0.224
      880.1
      344.7
      0.191
      65.9SAVAL
      86.2
      0.250
      21.5
      344.9
      0.223
      76.9
      431.1
      0.228
      98.4
      78.5
      0.185
      14.5STARV
      5.5
      0.365
      2.0
      496.9
      0.284
      141.1
      502.4
      0.285
      143.1
      256.3
      0.276
      70.7Subtotal
      4,423.9
      0.232
      1,025.6
      4,474.0
      0.234
      1,046.0
      8,897.9
      0.233
      2,071.6
      1,651.3
      0.208
      342.9Open PitWRIGHT WINDOW PIT
      -
      -
      -
      100.4
      0.131
      13.1
      100.4
      0.131
      13.1
      84.6
      0.083
      7.0Subtotal
      -
      -
      -
      100.4
      0.131
      13.1
      100.4
      0.131
      13.1
      84.6
      0.083
      7.0Open Pit ResourcesBurns Basin Pit
      -
      -
      -
      29.7
      0.134
      4.0
      29.7
      0.134
      4.0
      -
      -
      -Calif. Mtn. Pit
      -
      -
      -
      8.0
      0.115
      0.9
      8.0
      0.115
      0.9
      -
      -
      -Coyote Zone 10
      -
      -
      -
      -
      -
      -
      -
      -
      -
      14.4
      0.109
      1.6Mill Creek Pit
      -
      -
      -
      78.4
      0.124
      9.7
      78.4
      0.124
      9.7
      -
      -
      -Pie Creek Pit
      -
      -
      -
      190.2
      0.157
      29.9
      190.2
      0.157
      29.9
      28.3
      0.142
      4.0Road Cyn OP
      -
      -
      -
      148.6
      0.143
      21.2
      148.6
      0.143
      21.2
      74.3
      0.131
      9.7Subtotal
      -
      -
      -
      454.9
      0.144
      65.7
      454.9
      0.144
      65.7
      117.0
      0.131
      15.3


---

76

Mine
      Measured
      Indicated
      Measured + Indicated
      Inferredkt
      opt
      koz Au
      kt
      opt
      koz Au
      kt
      opt
      koz Au
      kt
      opt
      koz AuUnderground ResourcesBurns Basin
      -
      -
      -
      25.1
      0.194
      4.8
      25.1
      0.194
      4.8
      6.9
      0.176
      1.2Calif. Mtn.
      -
      -
      -
      32.1
      0.377
      12.1
      32.1
      0.377
      12.1
      9.4
      0.330
      3.1Coyote Zone 10
      -
      -
      -
      33.3
      0.208
      6.9
      33.3
      0.208
      6.9
      1.6
      0.171
      0.3MCE
      -
      -
      -
      4.4
      0.201
      0.9
      4.4
      0.201
      0.9
      7.8
      0.189
      1.5Murray
      125.6
      0.377
      47.4
      10.1
      0.302
      3.0
      135.7
      0.372
      50.4
      -
      -
      -Murray Zone 9
      -
      -
      -
      210.9
      0.277
      58.5
      210.9
      0.277
      58.5
      61.6
      0.209
      12.9West Mahala
      0.4
      0.199
      0.1
      212.1
      0.188
      39.9
      212.5
      0.188
      40.0
      1,932.4
      0.190
      367.1Subtotal
      126.0
      0.377
      47.5
      528.0
      0.239
      126.1
      654.0
      0.265
      173.6
      2,019.7
      0.191
      386.1Stockpiles
      -
      -
      -
      902.2
      0.073
      65.9
      902.2
      0.073
      65.9
      -
      -
      -Total
      4,549.9
      0.236
      1,073.1
      6,459.5
      0.204
      1,316.8
      11,009.4
      0.217
      2,389.9
      3,872.6
      0.194
      751.3


|Notes: | (1) | The January 1, 2011 underground mineral resources (in
      bold) are presented using a 0.125 opt Au cutoff grade and the Wright
      Window open pit resource used a 0.042 opt Au cutoff grade; a US$1,150/oz
      gold price was used for all revised resources; the January 1, 2011
      underground resources revised for this study were only tabulated if they
      were within 750 feet of existing or designed workings and contained more
      than 1000 tons; the reviewed December 31, 2007 mineral resources used a
      0.150 opt Au cutoff grade for undeveloped resources and a 0.125 opt Au
      cutoff grade for a more mature underground resource as calculated by SRK
      (2008); the SRK 2008 open pit resources were calculated using a gold price
      of US$450 or $550 and variable cutoff grades from 0.068 opt to 0.086 opt
      Au (see text);
|------ | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | The Wright Window resource was revised using the Year-End
      2008 block model and the January 1, 2011 classification system;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | (3) | Coyote Zone 10 OP and UG, Burns Basin UG, and Murray UG
      resources were revised for this study by the authors of the Jerritt Canyon
      Report using the old block models and related project data;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | (4) | The January 1, 2011 stockpile resource is classified as
      indicated and reconciled to that published in the Year-End 2007 NI 43-101
      report;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       | (5) | Mineral resources that are not mineral reserves do not
      have demonstrated economic viability;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | (6) | UG = underground; OP = open pit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

A comparison of the January 1, 2011 Resources compared to the
previous December 31, 2007 Resource Statement by SRK (2008) shows the following:

|1. | The Measured resources have increased by 73% (on a
      tonnage basis) or by 1,923.9 kt and 367.0 koz;                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                    
|2. | The Indicated resources have increased by 16% (on a
      tonnage basis) or by 888.6 kt and 61.8 koz;                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                    
|3. | The Inferred resources have increased by 67% (on a
      tonnage basis) or by 1,552.9 kt and 230.9 koz;                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                    
|4. | The indicated Jerritt stockpile resource (remote + mill)
      has increased by 10.3% (on a tonnage basis) or by 83.9 kt and 17.8 koz
      based on additional stockpile materials being discovered and/or mined in
      2010 (including 2010 mining depletion), and also due to a lower economic
      cutoff grade when calculated using a $1,150 per ounce gold price;
    and
|   |                                                                                                                                                                                                                                                                                                                                                                                    
|5. | The measured Jerritt stockpile (remote + mill) has
      decreased 100% to 0 kt as a result of reclassification of the stockpile
      ores as all indicated, and because of mining from 2008 to
  2010.                                                                                                                                                                           

---

77

The authors of the report were not aware of any possible
adverse or unusual restrictions on mining resulting from legal or title issues,
taxation, socio-economic, environmental, political, or others that would affect
the Jerritt Canyon operation. The mine has the permits necessary for operation.

Mining Operations

Jerritt Canyon is an operating property with over 20 years of
production experience, during which approximately 7.8 million ounces of gold
have been produced up to year-end 2010. The Jerritt Canyon mine complex
currently consists of one operating underground mine (Smith) located several
miles southwest of the processing plant and administration facilities which are
50 miles north of Elko, Nevada (Figures 1 and 3). A second mine, the SSX-Steer
complex, is planned to recommence mining in the third quarter of 2011. A third
mine, Murray, was closed during 2006.

Recent operating results, including production costs, of the
Jerritt Canyon mines are presented in this section. In addition, geotechnical
parameters, mining fleets, ore control are presented in this section. Stockpile
resources and reserves and reconciliation are also presented in this section.

All mines feed the same processing plant, with output from the
underground operations and other sources (e.g. remote and mill Jerritt
stockpiles) totaling nearly 0.22 million tons during 2008 and 0.41 million tons
in 2010. The producing properties at Jerritt Canyon excluding third party
purchased ores (e.g. Newmont), and their annual production rates for years 2008
to 2010, are given in Table 16 and represent ore materials processed through the
mill.

Table 16: Jerritt Canyon 2008-2010 Production with 2011
Forecast Production

Property
      Annual Production (tons)Year
      2008
      2009
      2010
      2011 ForecastSSX Complex
      97,239 (1)
      0
      0
      113,975Smith
      38,670 (1)
      0
      176,409 (2)
      405,539Stockpiles (4)
      88,709 (5)
      UNK
      233,731 (3)
      295,000Total
      224,618
      UNK
      410,140
      814,514


|Notes: | (1) | Tonnages based on internal mine records;                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | Dry tonnage processed through the mill; based on 5%
      moisture content of wet ton delivery published by YNG in the March 31,
      2011 MD&A (2011);                                                                                                                                                                                                                                                                                                     
|       | (3) | Remote stockpile tonnage processed through the mill based
      on internal mine records;                                                                                                                                                                                                                                                                                                                                                                    
|       | (4) | Stockpile data only includes those from Jerritt Canyon
      (mill and remote combined) and excludes Newmont and other third party
      purchased ores;                                                                                                                                                                                                                                                                                                     
|       | (5) | A total of 32,793 tons of remote stockpile and 55,916
      tons of mill stockpile were processed in 2008; it is assumed that all of
      the mine=d Smith and SSX Complex ores mined in 2008 were processed in the
      same year; and                                                                                                                                                                                                                    
|       | (6) | No underground mining occurred at Jerritt in 2009; in
      addition, no remote stockpile material was delivered to the mill; however,
      mill production records were not well documented by the contract mill
      operator at the time so the amount of Jerritt Stockpile ore material fed
      to the mill in 2009 is unknown (UNK); however a total of 9,770 ounces of
      Au were produced in 2009 according to YNG (March 31, 2011 MD&A (2011).
|       | (7) | Budgeted 2011 production includes actual data from
      January to May 2011                                                                                                                                                                                                                                                                                                                                                                                 

The full processing plant has the capability of treating
approximately 6,000 tons/day (125 tph for each roaster). The historical
processing capacity rate of 4,320 tpd (90tph for each roaster) was quite
attainable when the feed derived mainly from open pit operations, but has been a
significant surplus when accepting material from the 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.

---

78

Newmont ores continued to be purchased by Queenstake in 2008.
Additional ore purchasing contracts with Newmont were made in 2010 (all
contracts expired at the end of 2011); a total of 86,257 wet tons of ore
containing 16,905 ounces of Au were purchased from Newmont (all in Quarter 4)
and delivered to the mill in 2010. During 2008 and 2010, Queenstake processed
113,732 and 189,415 tons, respectively, of Newmont material. The Newmont
stockpile ores processed in 2010 included material delivered to the mine prior
to 2010. The amount of Newmont ores processed in 2009 is unknown due to poor
record keeping by the contract mill operator.

The plant processed a total of 338,350 tons in 2008 and only
operated for 159 days that year due to the significant amount of down time. The
plant therefore processed an average of 2,128 tons/day in 2008. 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 was somewhat limited because of air permit requirements at that
time. Gold produced in 2008 from all sources was 44,732 ounces from 338,350 tons
of processed ore and purchased material at a metallurgical recovery that
averaged 87.3% .

The Smith and SSX-Steer underground mines reported production
of 135,909 tons of ore, along with 136,070 waste tons in 2008. This tonnage
figure was significantly less than the 2008 budgeted amount of nearly 336,641
ore tons at a projected mined grade of 0.284 ounces/ton which can be mostly
attributed to the August 2008 mine shutdown and other mill shutdowns in early
2008. In 2008 a total of 88,709 tons of Jerritt Canyon stockpile (remote + mill)
was processed through the mill. Of this total, 32,793 tons of remote stockpile
material containing an average grade of 0.170 opt Au was delivered to the mill
and processed. In addition, a total of 55,916 tons of mill stockpile at a grade
of 0.141 opt Au was processed in 2008.

Due to poor record keeping in 2009 by the contract mill
operator, Golden Eagle, the total amount of ore tons processed in 2009 was not
recorded by YNG but they reportedly produced 9,770 ounces of Au for the year.
All ore materials processed in 2009 were not separated by source and were a
mixture of Newmont, Hollister, and Jerritt stockpile materials located at the
mill. It is assumed that no remote Jerritt Canyon stockpile materials were
hauled to the mill in 2009. The mill only operated for 130 days in 2009 as a
result of several stop orders received from the NDEP.

The plant processed a total of 599,555 tons in 2010 and
operated for 322 total days to achieve an average processing rate of 1,862
tons/day for the year. Gold produced in 2010 from all sources was 65,104 ounces
(recovered) from 599,555 tons of processed ore and purchased material at a
metallurgical recovery that averaged 88.2% . The Smith underground mine reported
production of 207,535 wet tons of ore containing 45,302 ounces of Au
(Yukon-Nevada Gold Corp, 2011), along with 186,650 waste tons in 2010. The daily
ore production rate from the Smith Mine in the third quarter of 2010 reached the
target of 1,000 ore tons. A total of 233,731 tons of Jerritt stockpile material
containing 14,122 oz of Au was processed through the mill in 2010.

Underground Mining Methods

Current underground mining methods at Smith and SSX are
typically sublevel or drift-and-fill stoping above the ground water table which
is approximately at 6,600 feet above mean sea level. No open pit mining, other
than for stockpiled low-grade ores from previous mine operations, is currently
being conducted at Jerritt Canyon.

Any underground 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 has less jointing 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.
  Historically dilution at Jerritt Canyon has averaged 10% or less for all mines
  and mining methods. All dilution material is applied at zero ounces per ton.

---

79

Table 17 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.

Table 17: Jerritt Canyon Dilution Factors

Mine
      Mining MethodRock
        Drift-and-Fill
      Secondary
        Stope Drift-and-Fill
      Sublevel
        StopingSSX Complex
      10
      10
      10Starvation Canyon
      10
      10
      10Smith
      10
      10
      10Saval
      10
      10
      10


Processing Facilities, Operating Parameters, and Process
Flow Sheet

The unit operations at the Jerritt Canyon processing plant are
comprised of the following circuits:

- Primary crushing;
- Secondary crushing;
- Fine ore drying;
- Tertiary crushing;
- Dry grinding;
- Roasting;
- Carbon-in-leach (CIL) with cyanidation and carbon adsorption;
- Carbon stripping;
- Carbon reactivation;
- Merrill-Crowe process using zinc cementation of gold and silver;
- Precipitate refining;
- Oxygen plant;
- Water evaporation pond; and
- Tailing impoundment.

A simplified flow sheet of the mineral processing operation is
shown in Figure 35. Table 18 summarizes the operating parameters for the
processing plant.

Table 18: Operating Parameters for the Jerritt Canyon
Processing Plant

Operating Parameter
      Units
      ValueProcessing Capacity Rate
    tons/Year (1)
    1,576,800Processing Capacity Rate
    tons/Day
    4,320Ore Grade (2)
    oz Au/ton
    0.167Gold Recovery
    %
    89.0Operating Cost (3)
    $/ton Processed
    32.00


|(1) | Tons/year reflect ore from Jerritt Canyon and purchased
      ore.     
|--- | -----------------------------------------------------------------------
|(2) | Ore grade is the forecasted grade of Jerritt Canyon ore
      for 2011.
|(3) | $32.00 for 2011                                                        

---

80

Figure 35: Simplified Ore Processing Flowsheet for the
Jerritt Canyon Mine



As part of the Consent Decree Agreement noted in under the
heading History, the Jerritt Canyon processing plant is currently under a
production restriction of 180tph through its two roasters. Stack tests are being
done on a periodic basis to make sure that Queenstake adheres to the emissions
thresholds listed in the Consent Decree or agreed to with the NDEP.

Recoverability

Gold recovery in 2008 to 2010 is shown below in Table 19 and
was recorded by month. For 2010 the gold recovery averaged 88.2% of contained
metal delivered to the process plant.

Table 19: Jerritt Canyon 2008-2010 Gold Recovery by Month

MonthYear
      Gold Recovery2008
      2009
      2010January
      83.3
      n/a
      87.3February
      85.8
      n/a
      83.9March
      n/a
      n/a
      89.6April
      75.2
      82.5
      89.4May
      83.7
      89.9
      87.5June
      87.6
      n/a
      87.6July
      87.9
      n/a
      89.9August
      86.8
      n/a
      89.7September
      n/a
      n/a
      87.7


---

81

MonthYear
      Gold Recovery2008
      2009
      2010October
      n/a
      n/a
      87.5November
      n/a
      85.2
      86.6December
      n/a
      87.7
      87.4Average
      87.3
      86.3
      88.2*


Note:The average gold recovery value for 2009 is
arithmetic whereas the 2008 and 2010 averages are weighted averages

The Au recovery for 2010 and 2007 was the same at 88.2 percent.
The lower Au recoveries attained in 2008 and 2009 are likely a result of the
significant down time for the mill and not being able to maintain steady state
production. The Au recovery forecast for 2011 is at 89.0 percent because data
suggest better recovery when processing Newmont rock. The authors of the Jerritt
Canyon Report consider these figures acceptable, given the deposit
characteristics and the method of extraction.

Historic Processing Plan Production and Cost Data

Table 20 contains historic production and cost data for the
Jerritt Canyon processing plant as well as the budgeted figures for 2011. The
Jerritt Canyon process plant operated at only 64% of its design capacity in 2007
due to bull gear problems with the grinding mill. The bull gear was replaced in
second quarter 2006. The mine shutdown in August 2008 significantly impacted
total mill production figures for 2008 and 2009. In addition unaccounted and
lost ounces in 2009 and 2010, respectively, along with unexpected NDEP charges
increased the processing costs and total costs for these years.

In March 2006, an agreement was reached between Queenstake and
Newmont USA Limited (Newmont) whereby a minimum of 500,000 tons of ore per year
from Newmont operations would be purchased by Queenstake and processed through
the Jerritt Canyon processing plant. This agreement was in effect for two years
(2006 and 2007) with an option for three additional years (2008-2010). New
agreements were made with Newmont on October 25, 2010 that called for the
delivery of 2,000 ore tons/day until December 31, 2010. A subsequent agreement
with Newmont signed in April 2011, allows deliveries of Newmont ore to continue
until December 31, 2011 with no specified quantities dictated in this agreement.
Queenstake understands that Newmont has abundant ore available to purchase and
process through the Jerritt Canyon mill facility; representatives from both
companies are in communications with each other with respect to this issue.
These additional tons from Newmont, in combination with ore materials from
Jerritt and other possible sources, will bring the processing plant to full
capacity and will have a significant impact in reducing the process operating
costs per ton of ore which is reflected in Table 20.

Table 20: Jerritt Canyon Historic and Budgeted Process
Production and Cost Data

Operating Data
      Units
      Actual
      Actual
      Actual
      Actual
      Actual
      Budget2006
      2007
      2008
      2009
      2010
      2011Production DataTons Processed:Annual (1)
    000s tons
    974
    900
    338
    UNK
    600
    979Daily Average
    Tons
    2,667
    2,466
    2,128 (1)
    UNK
    1,862 (1)
    2,500 (2)(6)Ore Grade
    oz Au/ton
    0.211
    0.217
    0.160
    UNK
    0.123
    0.157Recovery
    %
    86.2
    87.0
    87.3
    86.3
    88.2
    89.0Gold Production (3)
    000s oz
    170
    170
    45
    10
    65
    140Cost DataAnnual Total Cost (4)
    $000s
    29,602
    29,217
    17,508
    10,437
    22,150
    38,888(8)


---

82

Operating Data
      Units
      Actual
      Actual
      Actual
      Actual
      Actual
      Budget2006
      2007
      2008
      2009
      2010
      2011Unit Processing Costs:Ore
      $/ton Milled
      30.41
      27.78
      51.75
      UNK
      36.94(5)
      39.72(6)/32.00Gold
      $/oz Au
      157.25
      146.98
      391.68
      1,068.30 (7)
      340.23(5)
      277.77


|Notes: | (1) | Includes actual tonnage (dry) for purchased ores in 2008
      and 2010; the plant only operated for 159 days in 2008;                                                                                                                                                                                                                                                                                                                                                             
|------ | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | 2011 budget assumes two week down time in September for
      maintenance and mill upgrades; 2011 data includes actual tons, grade, and
      Au production from January to April;                                                                                                                                                                                                                                                                                                 
|       | (3) | Includes purchased ores for actual 2006, 2007, 2008,
      2010, and the first 4 months in 2011;                                                                                                                                                                                                                                                                                                                                                                                   
|       | (4) | Annual total cost excludes Newmont inventory cost;                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | (5) | Processing cost for 2010 is high due to the loss of
      approximately 2,700 oz Au in the process circuit and some large NDEP
      charges;                                                                                                                                                                                                                                                                                                                                    
|       | (6) | Delays in implementing the new mine plan for 2011 have
      resulted in reduced mill throughput for 2011 and therefore has resulted in
      increased unit processing costs; $32.00/ton Milled was the processing cost
      used for reserve determinations and was based on earlier years (with
      slight upward adjustments) when the mill was operating near steady state
      conditions; Mill production is expected to reach 4,000 tons per day by
      October 2011;
|       | (7) | The unit processing cost is high due to poor record
      keeping of tons processed through the mill by the contract mill operator,
      because of low Au production for the year, and because the plant only
      operated for 139 days in 2009;                                                                                                                                                                                                                               
|       | (8) | The 2011 budgeted milling cost includes variable and
      fixed costs for the year                                                                                                                                                                                                                                                                                                                                                                                                

The authors of the Jerritt Canyon Report consider the projected
production and cost estimates achievable, especially with the expected startup
of the SSX-Steer mine complex in the third quarter of 2011. The agreement with
Newmont to purchase additional ore will help provide additional ore feed for the
Jerritt Canyon mill on an as-needed basis.

Stockpiles

Stockpile materials are mined with 50- or 150-ton haul trucks
and a front-end loader. Muck material to be mined has previously been assayed
for grade control and is typically flagged in the field as ore or waste.
Stockpile ore is delivered to the Rom whereas waste is delivered to a local
waste dump.

The Jerritt Canyon mill (Rom) stockpile resources are
physically surveyed on a monthly basis by the mine Engineering Department as
part of the mine/mill reconciliation process. The remote stockpile resources
were physically surveyed during the end of the fourth quarter of 2009 to
establish a baseline for the purpose of reconciling to historic data. Since poor
records of stockpile depletion were kept in 2008 and 2009, the Year-End 2009
remote stockpile surveyed inventory (900,530 tons averaging 0.069 opt Au
containing 62,161 oz) was reconciled to balance to the Year-End 2007 stockpile
resource (854.1 ktons averaging 0.064 opt Au) less the Year-End 2008 recorded
depletion (see Tables 21 and 22 below). The primary reason for selecting the
Year-End 2007 stockpile resource estimate for reconciliation purposes is that it
represents the most recent data that had undergone some manner of independent
audit (e.g. the NI 43-101 report by SRK Consulting published in 2008). The gold
grade was calculated on a concurrent back-calculation on a weighted average
basis. The Year-End 2010 depletions assumed the grade for each individual
stockpile was delivered to the mill. The detailed reconciliation work (Hofer,
2011) is stored on the main computer server at the mine. Yearly depletion from
remote stockpiles are done arithmetically.

A significant amount of Jerritt stockpile materials from the
SC2 and SAL stockpiles, and all of the Murray SML stockpile that were mined in
2010 were not included in the resources or reserves identified in the December
31, 2007 NI 43-101 report or the physical year-end 2009 stockpile survey. It is
believed that poor record keeping is to blame for not identifying these (low
grade) ore stockpiles in prior in-house mine and published resource and reserve
documents. The methodology used to characterize the quantity and gold grade of
the added Murray SML stockpile

---

83

to the January 1, 2011 stockpile resource and reserve will be
detailed below; the same methodology was used for the SC2 and SAL stockpiles.
One existing Jerritt Canyon staff member remembers hauling ore to the SML
stockpile in previous years and he indicates that the muck ore was from some
portion of the Murray underground development.

The Murray SML stockpile was physically surveyed by Jerritt
Canyon staff with the following dimensions: 510 ft. in length by 210 ft. in
width by 40 ft. in height. Four trenches at approximately 100 to 150 ft. in
length were excavated across the width of the SML stockpile on approximately 100
ft. spacings. Each trench was approximately 8 to 10 ft. in depth. Muck or
stockpile sampling was conducted along the length of the trenches along 10 ft.
intervals (data at the Jerritt Canyon site). Approximately 50 samples comprised
the SML stockpile trenching and characterization program. Assaying of samples
was done at the Jerritt Canyon mine lab. Trenching and sampling on the SML
stockpile were conducted in September, 2010. From the physical stockpile survey
a volume for the stockpile was established. A density factor (0.0568
tons/ft3) was applied to establish the tonnage estimate. The tonnage
estimate was cut 50 percent due to potential engineering constraints on removing
the entire stockpile. The gold grade for this tonnage was established as a
straight arithmetic average of all of the samples. During October and November,
2010 approximately 8,730 tons of the Murray SML remote stockpile were
transported to the ROM and processed. This material may be thought of as a bulk
sample. Periodic dig face muck sampling was done during the excavation and
loading of haul trucks as a check to ensure grade (i.e. grade control).
Transport was done utilizing 50-ton haul trucks. Each truck was muck sampled
upon delivery to the ROM pad by the mill. The ROM muck samples were used to
establish the mine head grade being fed to the mill and the subsequent mine/mill
reconciliation. Validation of the reconciled grade was based on the correlation
of the Smith Mine block model and the reconciled Smith Mine head grade for ores
processed at that time. Since the Smith Mine block model is performing well to
predict estimated mined tons and grade based on asbuilt shape survey drawings,
all reconciled grades are considered valid. The reconciled Murray SML stockpile
grade agrees well with the resource grade assigned to the stockpile from the
trench sampling (0.077 opt Au).

For the SC2 and SAL stockpiles, three initial trenches
approximately 50 to 70 ft. in length were excavated, sampled, and assayed at the
Jerrritt Canyon lab. Dig face sampling was conducted for each 10 ft. of advance
on the dig faces. Haulage of the stockpile materials was conducted with 50-ton
haul trucks. Each truck was muck sampled upon delivery to the ROM. Grade
reconciliation and confirmation for these stockpiles were by the same process as
described above.

As a result of the exploration and mining gains achieved in
2010 (Table 21) the net change to the remote stockpile inventory (Year-End 2009
to Year-End 2010) was -68,720 tons.

Table 21: Jerritt Canyon 2008-2010 Remote Stockpile
Depletions and/or Additions

Annual ProductionYear
      Year-End 2008
      Year-End 2010
      Year-End 2010Depletion (1)
      Depletion (1)
      Addition (2)Tons
      -32,793
      -226,370
      +157,650Grade (opt)
      0.149
      0.052
      0.068Ounces Au
      4,900
      11,804
      10,678


|Notes: | (1) | Tonnages based on internal mine
      records;                                                                                                                                                                                               
|------ | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | Addition of stockpile resource and/or reserves in 2010
      was the result of an exploration gain at the SML stockpile based on
      trenching, sampling, and surveying; and mining gains derived from the
      S2C and SAL stockpiles

---

84

Table 22: Jerritt Canyon 2008-2010 Remote Stockpile Resource
Reconciliations

Annual InventoryYear
      Year-End 2007
      Year-End 2008(3)
      Year-End 2010Tons
      854,100 (1)
      821,307
      758,312Grade (opt)
      0.064
      0.060
      0.063Ounces Au
      54,300
      49,400
      47,807


|Notes | (1) | Measured + Indicated stockpile
      data from the SRK NI 43-101 report (2008);                                      
|----- | --- | ---------------------------------------------------------------------------------------------------------------------
|      | (2) | Tonnages based on internal mine
      records                                                                        
|      | (3) | Year End 2008 data based on reconciliation to the
      Year-end 2007 remote stockpile resources minus 2008 depletion

The year-end 2010 surveyed mill stockpile resource of 143,855
tons averaging 0.125 opt Au containing 18,021 oz was added to the Year-End 2010
remote stockpile resource to arrive at the total January 1, 2011 remote + mill
stockpile resource of 902,167 tons averaging 0.073 opt Au containing 65,888 oz
Au. William Hofer, Jerritt Canyon Chief Geologist, performed this stockpile
reconciliation (2011b) with the assistance of Queenstake Engineering and Geology
staff personnel.

As of June 1, 2011, the defined Jerritt Canyon ore stockpiles
currently represent enough material for approximately 800 days of production at
a 1,100 t/day mining and mill feed rate. All Jerritt stockpile material contains
a gold grade above the cutoff grade off 0.44 opt Au and therefore has been
included in the current reserve.

A significant mining gain of 19.3 koz for the January 1, 2011
Jerritt Canyon stockpile (65.9koz) relative to the December 31, 2007 stockpile
reserve (46.6koz) is based primarily on a lower breakeven cutoff grade, a higher
Au price ($1,100 US per oz), different mining parameters used in the current
reserve work, and discovery of additional stockpile ores based on recent surface
and trench sampling.

Contracts

Jerritt Canyon has a few operational contracts in place at the
present time. Certain exploration drilling activities are under contract. In
addition, as of November, 2009, Small Mine Development (SMD) is under contract
to perform the mine development at the Smith Mine. The term of the contract is
either until 250,000 troy ounces of Au are produced or until September 30, 2012,
whichever comes first.

In March 2006, an agreement was reached between Queenstake and
Newmont whereby a minimum of 500,000 tons of ore per year from Newmont
operations will be purchased by Queenstake and processed through the Jerritt
Canyon processing plant. This agreement was in effect for two years (2006 and
2007) with an option for three additional years (2008-2010).

New agreements were made with Newmont on October 25, 2010 that
called for the delivery of 2,000 ore tons/day until December 31, 2010. A
subsequent agreement with Newmont signed in April 2011, allows additional ore
deliveries (at no specified quantities) of Newmont ore until December 31, 2011.
Quantities of ore to be shipped are communicated between Queenstake and Newmont
representatives on a daily basis and are variable. These additional tons will
bring the processing plant to near full capacity and will have a significant
impact in reducing the process operating costs per ton of ore which is reflected
in Table 20.

An agreement was made with Rodeo Creek Gold Inc. in June 2007
and again in October 2009 for the delivery of Hollister mine ore (located in
Elko County, Nevada) to the Jerritt Canyon processing facility. A disagreement
occurred between the two parties regarding the validity of the contract and a
settlement agreement was later signed in May 2010 that stipulated that
Queenstake would process all of the remaining Hollister ore present at the
Jerritt Canyon site no later than August 20, 2010 and payments would proceed
according to the contract.

---

85

Financial Summary

Selected statistics from the reserves only life of mine plan
economic analysis are listed in Table 23. All calculations use the 3 year
trailing average market gold price of $1,100/ ounce. The payback period is also
listed in Table 23 below.

Table 23: Key Financial Statistics

Description
      ValueMine Life (years)
    3.6Cash Cost ($/oz)
    $ 785Total Cost ($/oz.)
    $ 990Gold Sales Price ($/oz.)
    $ 1,100Payback Period (years)
    3.0Capital Cost ($ Millions)
    $140.6Cash Flow ($ Millions)
    $70.110% Discounted Cash Flow ($ Millions)
    $42.2Internal Rate of Return
    36%


Mine Life

The expected life of the Jerritt Canyon operation is 3.6 years
to August 2014, based on exploration to date, the current processing rate, and
reported proven and probable reserves as of January 1, 2011. The Company
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 in order to extend the mine life beyond the LoM plan.

Taxation

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. The royalty for mined material
in 2010 was generally equal to a 5 percent net smelter return (NSR) which is
dependent upon the Au sale price and the refining results.

Property taxes are assessed annually by Elko County on real
estate and personal property controlled by Queenstake. Property taxes for the
patented claims is expected to cost approximately $1,257. Additional property
taxes paid in 2010 were for improvements, the roasters, the mill, and other
property other than the patented claims and was approximately $400,000.

Nevada does not apply a corporate income tax Taxable income on
the federal level is taxed at 38% after all deductions have been taken.
Queenstake has tax losses carried forward in excess of expected future tax
liabilities and no federal income tax is expected.

A sales tax rate of 6.85% is currently applied to all purchases
within Elko County. The State Unemployment tax is 0.855% of wages and Federal
unemployment tax is 0.8% of wages

Capital and Operating Cost Estimates

Jerritt Canyon is forecasting an expenditure of $140.6 million
  over the coming three-year period for mine-related capital items for the LoM
  plan. These include the categories of: equipment, underground development, and
  mine facilities.

---

86

The largest expenditure outlays will be for tailings impoundment
  at $39.1 million with an additional $29.7 million for mine development and $22.7
  million for equipment. Sustaining capital costs for the ore processing plant
  is budgeted at $30.2 million for upgrades to existing facilities. Sustaining
  capital costs for General and Administrative (G&A) including environmental
  is budegeted at $6.5 million. A breakdown by property is given in Table 24.

Table 24: Jerritt Canyon Capital Expenditures for LoM
($000s)

Cost Center
      SSX Complex
      Saval 4
      Smith
      Starvation Canyon
      Wright Window
      TotalUG Mine Equip.
    13,459
    0
    0
    9,250
    0
    22,709Mine Development
    17,003
    4,723
    0
    8,004
    0
    29,730Mine Facilities
    0
    300
    1,500
    3,460
    300
    5,560Process
    
    
    
    
    
    30,187Surface Haulage Equipment
    
    
    
    
    
    6,785Administration and Environmental
    
    
    
    
    
    6,573Tailings Impoundment
    
    
    
    
    
    39,078Total
    $30,462
    $5,023
    $1,500
    $20,714
    $300
    $140,623


The operating costs per ton of ore for processing have steadily
increased over the last 6 years from $15.67 in 2001 to $30.41 in 2007, primarily
as a function of the production throughput and energy costs. Of this total,
approximately 75% is for operations and 25% is for maintenance. With the planned
increase in ore availability and process improvements it is estimated that the
processing costs over the remaining mine life will be $32.00 ton.

The anticipated operating cost for the next 3.6 years is
$111.13 per ton of ore as shown in Table 25. The lowest per-ton costs are
associated with the 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, the
need to backfill for support, and quantities of expensed waste mining. The
highest-cost mining occurs in the Smith Mine. However, Smith mine does not incur
any additional charges for capital development. Due to its remote location and
high surface ore haulage costs the next highest cost mine is Starvation Canyon.

Table 25: Jerritt Canyon Operating Costs for LoM per Ton of
  Ore

Description
      Smith
      SSX
      Saval
      Starvation Canyon
      Wright Window
      Surface Stockpiles
      LoM AverageMining
    $ 99.19
    $ 41.17
    $ 49.69
    $ 41.39
    $ 2.75
    $ -
    $53.93Backfill
    -
    29.66
    26.76
    31.67
    -
    -
    11.93Expensed Waste
    -
    8.05
    13.76
    15.18
    2.26
    -
    4.08Surface Hauling
    -
    4.62
    4.62
    8.40
    4.62
    4.62
    3.20Processing
    32.00
    32.00
    32.00
    32.00
    32.00
    32.00
    32.00Site Administration
    6.00
    6.00
    6.00
    6.00
    6.00
    6.00
    6.00Total
    $ 137.19
    $ 121.39
    $ 132.84
    $ 134.64
    $ 47.33
    $ 42.62
    $111.13


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87

LoM Plan and Economics

The LoM plan (Table 26), annual mine production schedule (Table
27), and annual cash-flow forecast and economics (Table 28) are based on the
following assumptions and/or facts discussed in the previous sections of the
Jerritt Canyon Report:

- Reserves of 4.366 million tons at an average grade of 0.164 oz-Au/ton,
  containing a total of 717 koz of gold;
- A mine life of 3.6 years from 4 underground and one open pit mines and
  various stockpiles, at a total average rate of 1,210 kt per year;
- An overall average metallurgical recovery rate of 89%, producing 660 koz
  of gold over the LoM;
- A cash operating cost of $785 Au-oz, or $115/ore-ton; and
- Total capital costs of $140.6 million being comprised of $29.5 million for
  mine equipment, $29.7 million for capitalized development, and $5.6 million
  for facilities, and sustaining capital of $36.8 million for process and
  administration, and $39.1 million tailing impoundment. These last items are
  estimations from Mark Odell, the Mining Engineer responsible for preparing the
  LoM Plan and Economical Analysis, and Shaun Heinrichs, the CFO for
  Yukon-Nevada Gold Corp.

The base case economic analysis results, shown in Table 26
indicate an after-tax net present value of $70.1 million at a 0% discount
rate.

Table 26: Life of Mine Plan

Description
      LoM ValueOreOre Milled-(Jerritt Canyon)
      4,365ktGold Grade
      0.164optContained Gold
      717kozProcess Recovery (average)
      89%Recovered Gold
      638kozGross Income ($000s)*Market Price*
      $1,100/ozGold Sales
      $701,962Net Income from Purchased Ores
      -Gross Revenue
      $701,962Refining & Sales
      ($638)Net Smelter Return
      $701,324Royalties
      ($5,337)Gross Income From Mining
      $695.987Operating & Capital Cost ($000s)Mining
      ($235,427)Backfill
      ($52,064)Expensed Waste
      ($17,809)Surface Ore Haulage
      (13,978)Process
      ($139,706)Site Administration
      ($26,195)


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88

Description
      LoM ValuePurchased
      Ore
      ($-)**Operating
      Costs**
      ($458,179)Cash Cost ($/oz)
      *$785oz*Cash Cost ($/t-ore)
      *$115/t*Cash Operating Margin (EBITDA)
      $201,133Other CostsReclamation Accrual
      ($9,575)Other
      $0Net Income
      $191,558Capital Cost net of Salvage ($000s)Equipment
      ($29,494)Capitalized
      Development
      ($29,730)Facilities
      ($5,560)Process
      Capital (sustaining)
      ($30,187)Tailings
      Impoundment
      ($39,078)Administration
      & surface Services
      ($6,573)Salvage
      $ 0Capital
        Costs
      ($140,623)Cash Flow (NPV @ 0%)
      $70,085Cash Flow (NPV @ 5%)
      $54,966Cash Flow (NPV @ 10%)
      $42,201


Table 27: Annual Mine Production Schedule from 2010 to 2014

Year
      Smith Mined
      Ore kTons
      SSX Mined Ore
      kTons
      Saval Mined
      Ore ktons
      Starv Mined
      Ore kTons
      East Dash Mined
      Ore kTons
      Wright Window
      Mined Ore kTons
      Surface Stockpile
      Mined kTons
      Total Ore
      kTons Mined
      Average Mined Gold
      Grade (opt)2011
    438.0
    67.5
    -
    -
    -
    -
    704.5
    1,210.0
    0.1132012
    439.2
    457.5
    78.2
    114.4
    66.0
    -
    54.8
    1,210.0
    0.1852013
    438.0
    456.3
    65.4
    131.5
    182.5
    84.5
    -148.1
    1,210.0
    0.2012014
    5.0
    234.1
    25.5
    117.1
    63.0
    -
    291.0
    735.8
    0.154Total
    1,320.2
    1,215.4
    169.1
    363.0
    311.5
    84.5
    902.2
    4,365.8
    0.164Average Gold Grade (opt)
    0.166
    0.189
    0.210
    0.264
    0.196
    0.127
    0.073
    -
    0.164


|Notes: | (1) | Year 2013 the mine added 148.1 ktons to the ore stockpile
      due to mining in that year;                                                                                
|------ | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | Wright Window is an open pit; the other mines are
      underground operations except for of course the stockpile materials;                                               
|       | (3) | Starv = Starvation Canyon                                                                                                                                                  
|       | (4) | The mine reserves and the production schedule were
      conducted by Independent Mining Consultant Mark Odell (PE; QP) and have an
      effective date of January 1, 2011

Table 28: Annual Cash-Flow Forecast from 2010 to 2014

Year
      Rec Au (oz)
      Gold Price
      (US$)
      Cash Cost/oz
      (US$)
      Total Cost/oz
      (US$)
      Total Revenue (US$
      x 1000)
      Net Income (US$ x
      1000)
      Net Cash Flow (US$
      x 1000)
      Cumulative Cash Flow
      (US$ x 1000)
      Op Cash Flow (US$
      x 1000)2011
    121.8
    $1,100
    $825
    $1,007
    $133,935.2
    $11,264.8
    $-74,394.1
    $-74,394.1
    $30,916.5


---

89

Year
      Rec Au (oz)
      Gold Price
      (US$)
      Cash Cost/oz
      (US$)
      Total Cost/oz
      (US$)
      Total Revenue (US$
      x 1000)
      Net Income (US$ x
      1000)
      Net Cash Flow (US$
      x 1000)
      Cumulative Cash Flow
      (US$ x 1000)
      Op Cash Flow (US$
      x 1000)2012
    199.3
    $1,100
    $790
    $987
    $219,249.2
    $22,622.3
    $25,975.5
    $-48,418.6
    $55,643.72013
    216.1
    $1,100
    $789
    $989
    $237,683.7
    $23,932.6
    $60,125.4
    $11,706.8
    $65,769.02014
    101.0
    $1,100
    $717
    $979
    $111,093.7
    $12,265.8
    $50,025.0
    $61,731.7
    $50,025.02015
    -
    -
    -
    -
    -
    -
    $8,353.7
    $70,085.4
    $8,353.7Total
    638.1
    $1,100
    $785
    $990
    $701,961.7
    $70,085.4
    $70,085.4
    $70,085.4
    $210,707.9


|Notes: | (1) | Rec = Recovered; Op = Operating;
      oz = ounce; Au = gold                                                                                                               
|------ | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | The mine reserves and the production schedule were
      conducted by Independent Mining Consultant Mark Odell (PE; QP) and have an
      effective date of January 1, 2011

Exploration and Development

The operation now has a mine life of approximately 3.6 years
with only Jerritt-sourced ore and identified Jerritt stockpiles. The authors of
the Jerritt Canyon Report believe that the currently identified resources and
reserves, and mine plan outlined in the Jerritt Canyon Report are reasonable and
with additional financing the necessary people and equipment are available at
the site and by Queenstake to successfully complete the project as planned.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability.

The LoM mill production is targeting 3,600tpd starting in
October 2011 with the following primary ore sources: Smith mine (1,250tpd),
Jerritt Canyon stockpile (1,100tpd), and SSX-Steer complex (1,250tpd). In order
to keep the mill operating at 3,600 tons per day beyond August 2014 which is
when all of the Jerritt stockpile is predicted to be exhausted based on the LoM
plan, additional ore feed will need to be secured. The additional ore could come
from either Newmont, resources that have been converted to reserves at the
Jerritt Canyon property, and/or from other mines or sources in the nearby
region. If Newmont ores are pursued, the Newmont ore purchase agreement would
obviously need to be extended beyond 2011.

The following recommendations are made:

- Continue exploration and development drilling with the goal of locating
  new areas of resource and reserve away from existing underground development,
  converting existing resources to reserve (near-mine), and targeting the
  historic open pits that have not been mined since 1999. The proposed 2011
  Jerritt Canyon geological program to pursue the aforementioned targets at the
  property, consisting mostly of exploration and development drilling, totals
  $18.0 million dollars and is summarized below under the heading 2011
  Geological Program;
- Remodel the resources that have been included in the previous NI 43-101
  report (SRK, 2008) that have not been updated in the Jerritt Canyon Report;
- Drill and model potential additional resources in the historic open pits
  using present day modeling techniques, economic and mining parameters, and the
  current gold price; the primary author believes that there is excellent
  potential to add additional resources in or near the historically mined open
  pits;
- Pursue other suitable ore sources in the region outside of the Jerritt
  Canyon property to help feed the mill;
- 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
- 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.

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90

2011 Geological Program

The proposed 2011 Jerritt Canyon geological program totals
$18.0 million dollars and consists mostly of surface and underground drilling at
both near-mine resources and stand alone targets throughout the property. A
total of 237,250 feet of surface drilling is proposed for 2011 in the following
areas listed in Table 29. In addition a total of 33,000 feet of underground
drilling is planned at SSX-Steer and Smith mines.

Table 29: Proposed 2011 Jerritt Canyon Drilling and Geology
Program ($000s)

Description
      Drill Footage
      Drilling Budget ($)
      Other Budget ($)
      Total Budget ($)Surface DrillingMahala
    81,000
    3.5
    -
    3.5Open Pit Layback
    42,200
    1.9
    -
    1.9Starvation Canyon
    6,000
    0.3
    -
    0.3New Deep Fault
    18,800
    0.9
    -
    0.9Pie Creek
    22,000
    1.0
    -
    1.0Warm Creek
    9,000
    0.4
    -
    0.4Road Canyon
    14,350
    0.7
    -
    0.7Warm Creek
    9,000
    0.4
    -
    0.4GeoTechnical and Met Drilling (Starv)
    10,400
    1.1
    0.3
    1.4Core Tails
    24,500
    2.7
    
    2.7Underground Drilling (SSX & Smith)
    33,000
    1.9
    -
    1.9Geophysical Survey (Starv)
    -
    -
    0.5
    0.5Operating Expenses
    -
    -
    1.0
    1.0Trucks, computers, materials, GPS
    -
    -
    0.8
    0.8Other
    -
    -
    0.6
    0.6Total
    277,350 ft
    $ 14.8
    3.2
    $18.0


|Notes: | (1) | Mahala (81,000 feet) targeting West Mahala, East Dash,
      and ore trend extensions at the Smith Mine;                 
|------ | --- | -------------------------------------------------------------------------------------------------------------------------
|       | (2) | Open-Pit Layback (42,200 feet) targeting existing pits at
      West Generator, Steer and Saval, and California Mountain;
|       | (3) | The New Deep fault target lies along the East-West fault
      trend extending east from the Murray Mine.                

The 2011 drill program plan is to utilize 4 surface drills and
is expected to start in early July and last 5 months until mid-December. Total
cost for the proposed surface drilling is $12.3 million dollars. The total
surface RC drilling cost on a per foot basis has been budgeted at $43.00 per
foot. The direct and indirect cost for surface diamond (core) drilling has been
budgeted at $107.50; all other costs related to the surface core drilling has
been accounted for in the RC drilling costs noted above.

A significant amount of time in 2011 will be spent modeling and
drilling for additional open pit resources at the property. Open pit mining
ceased in 1999 and many of the open pits have not been assessed since 2006 or
before this time.

In addition, a substantial amount of underground exploration
and resource conversion drilling is planned at the SSX-Steer and Smith mines
(likely totaling over 33,000 feet). At least one underground drill is secured
for this work. Projected total cost for the underground drilling, including
assays, labor, survey, and material is approximately $60.25 per foot.

In addition to the planned drill program for 2011, an
Resistivity- Induced Polarization (IP) and magnetotelluric (MT) survey
geophysical survey is planned for the Starvation Canyon area which was already
initiated in early June 2011.

---

91

*(b)*          *Ketza River Project, Yukon Territory*

The Company's interest in the Ketza River Property is the
subject of the Technical Report (the Ketza River Report) of Mark Odell, Mine
Engineer Consultant, P.E., Todd W. Johnson, P.E., VP Exploration of the Company,
John Fox, Consulting Metallurgical Engineer,P.Eng. and Karl Swanson, Mining
Consultant, SME, MAusIMM with an effective date of January 25, 2010 and an issue
date of June 28, 2011 and is summarized below. The Ketza River Report is
available at www.sedar.com.

Project Description and Location

The Ketza River Property 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 36).

The Ketza River property consists of 679 quartz claims and
fractions of claims, and 60 quartz leases as summarized in Table 30 and shown in
Figure 37. The 60 quartz leases cover approximately 1947 acres (787.9ha) . The
quartz leases currently owned by Ketza River Holdings Ltd. (KRH) were
originally converted from quartz claims. The number of Ketza River claims
identified above exclude claims associated with another nearby KRH project to
the east (totaling 149 claims) and those along the Ketza River access road from
the Roger Campbell Highway (totaling 71 claims).

As of late May 2011, 146 quartz claims (claim numbers KON 604
to 733 and GF 119 to 134) were staked at the southern portion of the Ketza River
claim block and recorded and are currently under the control of KRH. These 146
newly acquired claims are part of the total described above and are included in
Figure 37. All Ketza River project claims lie in NTS Map sheet numbers 105 F/9
and 105 F/8. All of the aforementioned Ketza River claims are controlled 100
percent by Ketza River Holding Ltd.

Table 30: Claim and Lease Summary for the Ketza River
Project, Yukon

Property
      No. Quartz Claims
      No. Quartz Leases
      No. Quartz Claims Not Owned by
      KRHKetza River
    679
    60 (787.9 ha)
    0


---

92

Figure 36: Ketza River Project Location Map



---

93

Figure 37: Ketza River Project Land Position



An annual royalty is due to the Yukon government on every producing
  mine according to the Yukon Quartz Mining Act (Canada) and is described in the
  Information Sheet 2010-02 Explanation of Quartz Mining Act and Royalty
  Regulation Amendments that can be downloaded from the internet from the
  Yukon Government website (Yukon Energy, Mines, and Resources, 2010). The royalty
  is on any profits that exceed the sum of $10k during any any calendar year.

---

94

The royalty is as follows:

- On annual profits in excess of $10k and up to $1M, 3 percent;
- On the excess above $1M up to $5M, 5 percent;
- On the excess above $5M up to $10M, 6 percent; and
- On the excess above $10M a proportional increase of 1 percent for each
  additional $5M with a cap on the annual royalty rate at 12 percent for any
  profit in excess of $35 million.

Environmental permits are in place for exploration and related
activities, as well as the maintenance of the Ketza River camp. The Company has
a staff based at the Ketza River camp to routinely monitor environmental
parameters, and also maintains an office in the provincial capital of
Whitehorse. Relevant permits are presented in Table 31. 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.

The Quartz Mining Land Use Permit requires a lease-security
payment to be made each year for a limited time. Under the existing permit,
payments of C$94,050 are due every April 1 up until 2014 to the Department of
Energy, Mines and Resources. In addition, Ketza River Holdings Ltd. holds lease
number 105F09-001 for 15 years starting July 1, 2003. The total rent due on this
lease per year is C$7,350 + GST (C$7,717.50 total) and due on July 1.

As of mid-March 2011, the total security amount held by the
Yukon Government is C$3,508,821 (http://www.emr.gov.yk.ca/mining/security_held_mining_projects.html)
of which C$3,087,600 is being held pursuant to the Waters Act is and C$421,221
is being held pursuant to the Quartz Mining Act. This money being held by the
Yukon Government may be thought of as a reclamation bond.

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 this water
license until it is renewed.

Table 31: Permits for the Ketza River Project

Permit/Approval
      Issuing Agency
      CommentsQuartz 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 (lease number 105F09-001)
    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 but
      Reapplication process in progress)
    Yukon Water Board
    For the storage of water in, and the discharge of water
      from, an existing tailings impoundment.Building (Occupancy) Permit Nos. 20111008765B and
      #20111008763B
    Yukon Community Services; Yukon Building
      Inspector
    49-person trailer dormitory, and 7 unit diner complexWater Well Building Permit Nos. 20111008769B and
      #20111008767B (portable water well bldg. sea-can
    Yukon Community Services Yukon Building
      Inspector
    2 Sea-Can Water Treatment and Distribution Bldg., and
      potable water well Bldg. Sea -CanEnvironmental Health Approvals: Permit No. 3981 (sewage
      disposal)
    Department of Yukon Environmental Health
    Public Health and Safety Act approvals needed for
      drinking water, food safety and private sewage disposal.


---

95

Permit/Approval
      Issuing Agency
      CommentsWaste Management Consolidated Permit No. 81-013
      (Environmental Act Permit)
    Yukon Department of Environment
    Allows operation of a dump for solid waste, incinerator
      for burning solid waste, and allows generation and storage of waste oil
      and fuels; Includes an Air Emissions permit, a special waste permit, and a
      commercial dump permit; Storage Tank registration includes: one 45,000L,
      one 500L, one 10,000L, and four 90,000L tanks. Document contains a
      Pollution Prevention Plan and Pollution Prevention PolicyStorage Tank Permit No. 02011-41
    Yukon Community Services; Protective Services
      C-20
    Storage Tank permits for: one 45,000L, one 500L, one
      10,000L, and four 90,000L tanks.Work Within Right-of-Way Permit
    Yukon Highway and Public Works
    Allows KRH to conduct work along the main access road
      (needed prior to receiving approval for the quarry permits)Quarry permits Nos. 11/393; 11,394; 11/395; and 11/396
    Yukon Energy, Mines, and Resources
    Allows excavation of sand and gravel materials from
      existing quarries


A replacement camp was installed at the Ketza River project
site in the summer of 2011. Most of the permits for operating this replacement
camp have been acquired As of year-end 2011, only a few outstanding items (fire
suppression system) remain to be finalized to bring the replacement camp into
full compliance for a 49-person camp. The occupancy permit was granted on a
temporary basis (allowing 30 occupants in the camp) from the Yukon Building
Inspector until the fire suppression system is complete. The Yukon Workers
Compensation Health and Safety Board (WCB) granted permission to open the
replacement camp for exploration purposes in early September 2011. Additional
permits will be required for mine operations.

Environmental Liabilities

The only environmental liability at the Ketza River project
includes the existing Ketza River tailings impoundment (pond and dam) that was
originally established by the historic mine operators (Canamax Resources Inc.)
in 1987 and used for their mining operation from 1988 to 1990. The Ketza River
tailings pond is classified as Type II site that is regulated by the Government
of the Yukon. The existing tailings pond is currently under owner-operator care
and maintenance by Yukon-Nevada Gold Corp. (YNG). YNG is planning to start
decommissioning the existing tailings dam prior to the startup of the next
mining operation.

Environmental management systems are in place and there is a
qualified environmental staff associated with YNG and KRH. Numerous monitoring
wells exist at the Ketza River property that have been monitored by either
on-site staff or contract engineering companies. EBA Engineering, now a
Tetratech Company, has also been involved at the Ketza River property conducting
environmental programs and water sampling over the recent years. Various
mitigation programs are in effect as required under the various licenses and
agreements that have been filed and/or approved for the project. No unusual
costs associated with any of these programs were identified.

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.

---

96

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 36 and 38). The 40km access
road is kept open year-round and is passable for tractor-trailer-size supply
trucks.

The surface is owned by the Crown and leased to the Company
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$7,350 + GST (C$7,717.50
total).

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.

A new water well was installed at the Ketza River camp area in
July 2011. This water well supplies drinking water to the camp. All water
sampling and testing of the water well along with the well completion report was
done by the end of November 2011. In the recent past, the Ketza camp has
received its drinking water by pumping directly from Cache Creek into a storage
tank where the water was chlorinated and processed using reverse osmosis
equipment (for arsenic treatment). Pumps that were in place could individually
produce up to 30gal/min.

Water required for future mining operations will be assessed in
future studies and will presumably be provided by water wells to be drilled on
the property.

The buildings for the existing camp, kitchen and offices are
modular Atco trailer units. The camp and kitchen facilities were installed in
the summer of 2011. There are 49 rooms available for lodging. There is a
separate kitchen unit with dining area and a separate office complex for
technical staff. In addition there are laundry facilities and a dry room. The
replacement camp will help support the exploration programs and also be used to
support construction of the new mine facilities.

Shop areas in the old mill building are functional and are used
for maintenance of camp vehicles and equipment. The old mill building that
houses some of the old process equipment is in poor to moderate condition and
its use for future milling activities will be investigated in future studies.
West of camp there is an operational core logging and core splitting building.
All facilities have available power and water. Core is stored outdoors on-site.

The camp site will be permitted for 49 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.
Approximately 150 people will be needed for mining operations while 200 people
will be needed for construction.

There is an existing unlined tailings pond on the Ketza River
site that was utilized in previous milling operations. This pond was constructed
by October 1987 as a sub-aqueous disposal sight for oxide mill tailings with a
storage volume capacity of 610,000m3 after allowing for 1.1m water
cover on top of the tailings (Canamax, 1990; Golder, 1986). The amount of
tailings in the existing pond is estimated by others at 342,395 tonnes (Canamax,
1991a).

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97

The majority of the future mining that is proposed will contain
sulfide minerals making the current pond unsuitable for tailings disposal.

YNG is investigating implementing a thickened tailings method
for tailings disposal for future operations which would be located directly
below the existing tailing pond. An alternative upper site located just north of
the Penguin and Tarn resources has been proposed to be used for dry stacked
tailings. For dry stacked tailings, the process slurry would be dewatered to a
moisture content of around 20 percent. This material would then be stacked on a
lined containment pad. The water that has been scalped out of the tailings
stream would be re-used as makeup water where applicable.

Waste generated in camp and from activities associated with the
Project are burned in a trash incinerator or hauled to the Ross River landfill.
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
and are shown in the submitted YESAB Application. 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 YNG or KRH. Even though there is
an expired signed Memorandum of Understanding (MOU) with the Dena Band of the
Kaska Nation, KRH is still honoring this document which states that First
Nations people will be preferentially hired if they qualify for available jobs.
KRH is currently negotiating with the Dena Band to make a new MOU, expected to
be signed in the first quarter of 2012. Personnel for mining operations will be
hired and trained locally where possible. Additional personnel will be hired
from other localities.

---

98

Figure 38: 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 gold mineralization as shown on Figure 39. The exploration camp, and
core shed are shown on the map along with the historic tailings pond and old
mill site.

The history of the ownership of the Ketza 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
- Yukon-Nevada Gold Corp. (YNG) or its 100 percent Canadian subsidiary
  company called Ketza River Holdings Ltd. (KRH), following merger between YGC
  and Queenstake Resources Ltd to create YNG, 2007 to present.

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99

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 drill holes. 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.

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 1984, Canamax, as operator of the joint venture, completed
geological mapping, a 3,500 sample soil geochemical survey for gold and arsenic,
a 102 line-km airborne EM-Magnetic survey, rock sampling and 2,424m of diamond
drilling in 59 drill holes. Drilling focused on the Peel, Flint, Penguin and
Tarn sulfide zones and Ridge oxide manto zone. Initial oxide reserves at the
Peel and Ridge zones were calculated at this time. The locations of the
exploration targets and existing resources at the property are shown in Figure
39.

Figure 39: Gold Mineralized Zones and Exustung
Facilities



---

100

In 1985, Canamax carried out geologic mapping, 6,158m of
diamond drilling in 60 holes, 409m of underground drifting on the 1510 Level and
collection of a metallurgical bulk sample from the Peel and Ridge oxide zones.
Preliminary geotechnical and environmental studies were also completed. The
exploration led to the discovery of the QB vein. The Iona Silver property
adjoining the east boundary of the property was optioned by Canamax and the
Slide Lake claims immediately north of the property were staked at this time.

The 1986 field program consisted of prospecting and trenching
and led to the discovery of the Break, Gully, 3M and Knoll zones. In 1986,
Canamax undertook 6,278m of surface diamond drilling in 90 drill holes to define
the Peel zone and to test the Break, QB and 3M showings. Underground exploration
included 1,200m of development work on the 1550 and 1510 levels followed by 68
underground diamond drill holes totaling 2,331m. An option was obtained on the
adjoining High River/Quillo property.

Exploration during 1987 included diamond and
reverse-circulation (RC) drilling, ground geophysics and soil sampling. In
addition, low-altitude aerial photography was completed over the property.
Drilling during this time consisted of 61 diamond drill holes totaling 4,990m
and 95 RC drill holes totaling 5,029m. Drilling focused on definition drilling
on the Peel zone and exploration drilling on the Peel fault, Fred's Vein East,
and 3M zones. Ground geophysical surveys included 50 line-km of magnetic and 30
line-km of HLEM surveys. Soil sampling on 25m spacing resulted in 2,298 samples
for gold analysis only. The Hoodoo and Eileen oxide zones and the Lab and Raven
sulfide zones were also discovered at this time.

In 1988, work consisted of diamond drilling, ground geophysics,
soil sampling and underground development and exploration. Diamond drilling
consisted of 70 holes, 12 of which were underground holes, totaling 5,549m on
the Lab, Hoodoo, Comet, Knoll, 3M, NW fault, Megawatt, Sue Creek, Penguin, Peel,
Break and Nu zones. Ground geophysical surveys included 90 line-km of magnetics
and 26 line-km of VLF. A total of 2,310 soil samples were collected and analyzed
for gold. One hundred sixty m of underground drifting on the Nu and Break zones
was completed followed by 582m of underground diamond drilling. Sulfide mineral
process investigations were initiated. Options on the Iona Silver and High
River/Quillo properties were terminated in 1988.

Exploration during 1989 consisted of percussion and diamond
drilling, surface geophysics, geologic mapping and soil sampling. Drilling
consisted of 127 diamond drill holes (including seven underground holes)
totaling 5,590m and 79 percussion holes for a total of 1,215m. Definition
diamond drilling was carried out on the Knoll, Tarn, and 1430 East oxide zones
and on the Peel East open pit, Peel East underground and Peel West underground
and Lab sulfide zones. Preliminary percussion and diamond drilling was also
carried out on the Break, B-Mag, Peg-Fury, and Nose zones. Ground geophysics
consisted of 36 line-km of ground magnetics. Geological mapping and collection
of 500 soil samples led to the discovery of the 1430 East, Tarn and B-Mag oxide
zones. New oxide mineralization was also identified at the Knoll and QB zones.

During 1990, trenching was completed on the Penguin and Sauna
zones. Drilling in 1990 focused on the Lab and Calcite Zones and consisted of 35
diamond drill holes totaling 2,620m.

In February 1987, a feasibility study (Canamax Resources Inc,
1987) was completed by Canamax 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 of oxide ore averaging
15.3g/t -Au. The feasibility preceded NI 43-101 requirements and is not
compliant with CIM (2000) 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 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.

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101

Reported Canamax mill production is shown in Table 32. Gold
produced in the preproduction milling period between March to June 1988 was used
to help finance the construction of the mine which was officially opened in July
1988. Based on the two available data sources listing total gold production from
March 1988 to November 1990, 337,343 tonnes were milled and 97,992 oz of Au were
produced.

Table 32: Total Canamax Mill Production Data for the Ketza
River Mine

Study (Reference)
      Production Period
      Tonnes Milled
      Average Au Grade(g/t)
      Average Mill Recovery
      Au Oz Prod.Canamax Project Review; Mill Statistics (A)
      July1988-Nov. 1990
      307,397
      10.68
      88.31%
      93,312Canamax Preproduction Mill Records (B)
      March-June 1988
      29,946
      7.78
      85.33%
      4,680Total Canamax Mill Production
      March 1988  Nov. 1990
      337,343
      9.03
      86.69%
      97,992


|Notes: | (1) | March-June 1998 data is from Canamax pre-production mine
      records found at the site;                                                                                    
|------ | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | References: (A) Canamax (1991) based on monthly and
      annual mill production statistics; (B) Canamax (1988) preproduction mill
      statistics data (from mill records);
|       | (3) | Total mill production includes preproduction mill data;
      average Au grade and mill recovery is calculated using both preproduction
      and production mill data       

Average mill throughput over the life of the mine was 364t/d
(Canamax, 1991). Historical Canamax mill records indicate that the dore Au bars
poured at the Ketza River mine typically contained 5 to 10 percent Ag by weight
as a result of processing oxide ore. Underground mining was primarily done using
the square set method.

A summary of total mine production by zone is presented in
Table 33 (Hodgson, 1991). It should be noted that mine production figures are
not reconciled with total mill production. The mining statistics shown in Table
33 have poor reconciliation with the mill statistics shown in Table 32. The
variance between the mill and mine statistics is moderate (8 to 12% difference)
and could be related to: (1) higher reported Au grade in the mine production
data (up to 8% higher than the mill Au grade); and (2) higher reported tonnes in
the mine production data.

Table 33: Total Canamax Mine Production Data by Area: July
1988  November 1990*

Zone
      Tonnes
      g/t-AuRidge
    95,790
    13Peel
    148,844
    13Break-Nu
    54,700
    10Tarn
    18,169
    8QB
    1,987
    13Knoll
    2,936
    6Gully
    8,136
    101430 East
    600
    5Peel/Ridge Mine Dump
    11,233
    6Total
    342,395
    11.6


|Notes: | (1) | *Hodgson (1991) mine production
      statistics by resource area;                                                                                                         
|------ | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | Mine production figures in this table have not been
      reconciled with total mill production so the stated tonnage values may be
      high by approximately 12 percent.

Table 34 below shows the total underground ore production from
historical records (Steffen, Robertson, and Kirsten, 1994). Approximately 66
percent of the ore tonnes were mined from underground sources while the
remaining 34 percent were mined from open pit sources.

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102

Table 34: Summary of Total Ketza River Underground Mine
Production by Area

Underground Zone
      Ore Tonnes MinedRidge
    74,653Peel
    148,843Break
    813Nu
    1,578Total
    225,887


Note:Data from Steffen,
Robertson, and Kirsten (1994)

A presumed ore stockpile exists at the Ketza River site just
north of the existing mill. This stockpile was likely mined by Canamax but not
processed. No reports have been found for the actual gold grade or tonnage data
associated with this stockpile. Judging from the dark red-brown colour of the
stockpile, the material in the stockpile is likely dominated by oxide material
but must be confirmed with additional work. Surface sampling of the stockpile
was conducted in 2011 to help characterize the Au grade distribution.

Tonnage calculation estimations of the stockpile material by
YNG staff have recently been done in 2010 by two methods, both of which use the
current topographic contour lines on 1 m contour intervals to help determine the
stockpile volume: (1) cross sectional method, and (2) using shapes determined in
Vulcan. Both methods have to estimate the bottom of the stockpile near an
elevation that approximates the ground elevation present just outside of the
stockpile area. Neither estimation method has used actual survey control of the
stockpile on the ground.

The sectional method used cross-sections spaced every 10m to
determine an area and an associated volume for each section. Using this
methodology determined a total volume of 45,400 m3. Using Vulcan
software and shapes digitized within this software (and a 13% grade to the base
of the stockpile from one end to the other), a volume of 50,398 m3
was determined for the stockpile.

No specific gravity or density data has been determined for
this stockpile material. So if we assume a specific gravity of 2.0 which is used
for rock fill material at Jerritt Canyon mine in Nevada, a total of 90,800
tonnes and 100,796 tonnes is determined for the stockpile present near the
existing Ketza River mill using the sectional and Vulcan methods, respectively.
Obtaining actual survey data and Au grade assays for this stockpile are
recommended for future work in order to possibly include in a resource estimate.
The redox type of this stockpile may be assumed to be oxide until confirmed with
further field studies.

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. An internal
feasibility study on the sulfide ores (Canamax, 1990) indicated an additional
C$3.4 million dollars in capital expenditures to help fund plant modifications,
ore body development, and extra decommissioning. The 1990 Canamax feasibility
study estimated gold recovery for the sulfide ores at 78 percent. The mill at
the time 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. Wheaton later
divested out of 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 in 1995 completed three diamond drill holes totaling 499m in the
Shamrock zone area. YGC also conducted diamond drilling in 1994 and 1995 that
consisted of 72 HQ-diameter diamond drill holes totaling 5,630m. The program
resulted in the discovery of the Chimney and Fork zones.

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103

In 1996, YGC completed 14 HQ-diameter holes totaling 1,954m in
the mine area and 21 HQ-diameter holes totaling 3,612m 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 940 diamond, RC and
percussion drill holes totaling 55,096m of drilling have been completed on the
property. A summary of this is presented in Table 35.

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, 1998).

Canamax, the previous operator of the mine, expended $11.6M on
exploration and feasibility studies from 1984 to 1990. 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.

Table 35: Summary of Drilling from 1955 to 1997

Year
      Operator
      No. Holes
      Type of Drilling
      Length Drilled (m)1955-60
    Conwest Exploration Co.
    75*
    Diamond
    Unknown1984
    Canamax Resources Inc.
    59
    Diamond
    2,4241985
    Canamax Resources Inc.
    60
    Diamond
    6,1581986
    Canamax Resources Inc.
    158(A)
    Diamond
    8,6091987
    Canamax Resources Inc.
    61
    Diamond
    4,9901987
    Canamax Resources Inc.
    95
    RC
    5,0291988
    Canamax Resources Inc.
    70
    Diamond
    5,5491989
    Canamax Resources Inc.
    127(B)
    Diamond
    5,5901989
    Canamax Resources Inc.
    79
    Percussion
    1,2151990
    Canamax Resources Inc.
    35
    Diamond
    2,6201994
    Hemlo Gold Mines Inc./YGC Resources Ltd.
    25
    Diamond
    2,1801995
    Hemlo Gold Mines Inc./YGC Resources Ltd.
    50(C)
    Diamond
    3,9491996
    YGC Resources Ltd.
    35
    Diamond
    5,5661997
    YGC Resources Ltd.
    11
    Diamond
    1,217Total
    
    940
    
    55,096


|Notes: | (1) | *not included in the current Ketza River drill
      hole database;                                                                                                               
|------ | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | (A)= only 87 drill holes out of the
      158 drill holes are in the current Ketza River drill hole database;                                                                     
|       | (3) | (B)= only 101 drill holes out of
      the 127 are in the current Ketza River drill hole database;                                                                                
|       | (3) | (C)= Three drill holes out of the 50 total
      still need to be added to the Ketza River drill hole database and include
      hole numbers KR-95-502, KR-95-503, and KR-95-504.

After YGC acquired the property in 1994, it spent $0.52M in
1994, $0.76M in 1995, $0.90M in 1996, and approximately $0.2M in 1997 on
exploration. Drilling on the extensions of mineralized trends, on the
peripheries of developed zones and in other unexplored anomalous areas totaled
12,912m in 121 diamond drill holes. The exploration was successful, leading to
the discovery of new gold-bearing oxide and sulfide mineralization on the
property. Summary reports on the 1994, 1995, 1996, and 1997 drilling programs
are located in the project files at the Ketza camp.

---

104

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.

An apophysis of a mid-Cretaceous stock is postulated to lie
beneath the core of the Ketza Uplift and the Peel Creek anticline (Fonseca,
1998; Cathro, 1988; Parry et al., 1986 and 1984); however, no major intrusive
rock bodies, and only rare narrow dikelets have been identified on the property
to date. The uplift exposed 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. The following supporting evidence has been cited for the presence of a
buried intrusive body:

- The presence of an aeromagnetic anomaly;
- Mapped biotite-rich hornfels in sedimentary rocks (unit 1a) centered near
  Shamrock Mountain and Peel Creek;

Hornfelsed metasedimentary rock from rock unit 1a was dated at
101+/-4Ma (Mid-Cretaceous) using the whole rock K-Ar method (Cathro, 1988). One
40Ar/39Ar analysis of white mica from quartz+sulfide
veined rock from the Shamrock zone gave a mid-Cretaceous age (108 ± 0.3Ma) for
mineralization which coincides with the emplacement of the Cassiar Plutonic
suite (Fonseca, 1998).

Geology of the Ketza River Property

The geology of the Ketza River property has been described by
numerous investigators including Canamax (1984-1991), Abercrombie (1990),
Fonseca (1998; 1998a), Stroshein (1996), and Cathro (1988; 1986). 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 40) 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 41.

---

105

Figure 40: Stratigraphic Column



---

106

Figure 41: Surface Geology Map



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 drill holes.

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 the bulk of the manto-type replacement 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.

---

107

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.

Alteration

Dolomitization or iron carbonate (siderite and ankerite)
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 veinlets and 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 zone. The calcite-rich limestone beds are referred to as zebra
rock. Skarn mineralization dominated by garnet, pyroxene, or amphibole at the
property is rare and usually does not yield significant gold values.
Magnetite-rich replacement and/or skarn that contains greater than 40 percent
magnetite by volume has been documented in the B-Mag zone but is rare. Chlorite
and talc have also been identified in diamond drill holes but are not abundant.

Silicification, sulfidization, biotite hornfels, and bleaching
are closely associated with quartz-sulfide veins in sedimentary rocks in the
argillite-hosted resources at Shamrock Mountain. Biotite hornfels has been
mapped at the surface in unit 1a over an area approximately 2.5 square km in
diameter that is centered over the QB zone and the northeast Peel area (Parry et
al., 1984). Epidote and diopside hornfels have been reported but do not appear
to be common. Quartz-sericite alteration has been mapped on the surface around a
core of quartz and silicification in the QB zone.

Structure

The property is located in the Ketza Uplift that 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. Block
faulting likely either predates, or was contemporaneous with, the mineralizing
event. The faults acted as conduits for the metal-bearing solutionshe structure
of the Ketza River area has been described by Fonseca (1998; 1998a) and
Abercrombie (1990).

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.

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108

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 and 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.

Exploration

In May of 2005, YGC recommenced drilling and exploration work
at the Ketza River Project after a long hiatus from 1997. 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.

More recent exploration work from 2008 to 2011 has included
additional surface geophysical studies, soil sampling, rock-chip sampling,
mapping, and significant amounts of diamond drilling.

Samples from three 1996 drill holes 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 drill 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 an inferred intrusive body at
depth (Stroshein, 2006).

Since 2005, YGC and YNG have spent $4.4M in 2005, $7.5M in
2006, $15.2M in 2007, $12.9M in 2008, $3.2M in 2009, and $8.1M in 2010 on
exploration at the Ketza River property based on published company information
(Yukon-Nevada Gold Corp, 2011).

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

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

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109

Soil Sampling

Aurora Geosciences conducted a soil sampling program over 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.

A more recent soil sampling program was done in the summer of
2010 on an even 100m grid and targeted the South Hill target located just south
of the existing camp. An additional soil survey was conducted in 2011 over the
OK target near Misery Creek. Results of this work, in conjunction with the
recent geophysical results will be used to help target drill holes in the area.

Geophysics

Aurora Geosciences completed two geophysical surveys in 2007:
(1) a gravity survey on a 50m grid from the Lab Zone to the top of Shamrock
Mountain; and (2) a ground magnetic survey on a 50m grid from the Peel zone
across to Peel Canyon to the northeast which included to the top of Shamrock
Mountain.

Quantec Geosciences completed a Titan-24 IP ground survey in
2009 that covered 3 lines from the top of Shamrock Mountain to the top of Peel
Ridge. This survey found numerous conductor anomalies some of which were at
significant depths.

Aurora Geosciences completed several additional geophysical
surveys in 2010: (1) a ground magnetic survey over the Shamrock, OK, South Hill
and lower tailings site targets; and (2) a ground IP survey at the South Hill
and OK targets. The 2010 IP survey used an expanding pole-dipole array with a
25m dipole spacing. The ground magnetic survey lines were spaced 100m apart with
readings taken on stations spaced every 10m.

Topographic Surveys

In August 2006, Aero Geometrics of Vancouver flew the Project,
including the existing claim block in 100km2 of new topographic
survey 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.

Petrography

Gold in sulfide ore occurs as the native metal or less commonly
as electrum in finely disseminated grains up to 25 microns in size (Giroux,
2005). The gold is very often associated with chalcopyrite and native bismuth
and occurs mainly in fractures in the arsenopyrite and pyrite or along sulfide
grain boundaries. Less commonly gold grains occur as inclusions in
pyrrhotite.

Two distinct textures of Au bearing oxide materials have been
documented. The first is massive to boxwork textured brown oxide typically
located in the footwall of the mineralized zones and generally containing a low
Au grade. The second is a highly colourful red-orange fine-grained variety that
locally contains a colloform texture, typically occurs near the hanging wall,
contains hisingerite, and is associated with higher grade Au content

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

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110

rocks that occur north of the Peel fault. Over 30 targets and
prospects have been identified on the property (see Figure 39). For purposes of
resource estimation, the area has been divided into seven model areas with most
of the targets falling into one of the following areas (Figure 42):

Tarn Area: Tarn North Penguin Area:
Lab, Calcite, and Hoodoo South Penguin Area: Penguin and Flint Peel
Area: Ridge, Peel, Nu-Break, ForkQB Area: QB and 3M Gully Area: Gully

  Knoll Area: Knoll

The Tarn, North Penguin, South Penguin, and Peel areas occur
south of the Peel fault and contain manto and chimney, carbonate-hosted
replacement deposits while Gully, QB, 3M, and Knoll occur north of the Peel
fault and contain quartz-sulfide fissure vein and quartz breccia zones in
siliciclastic rocks. The Shamrock area includes Gully, QB, and 3M. The 3M zone
was included in the QB model. The Knoll zone locally has some manto-type
replacements.

Mineralized Zones

Peel, Penguin North, Penguin South, and Tarn areas generally
consist of gold-rich carbonate-hosted chimney- and manto-style sulfide
mineralization and its oxidized equivalents. Sulfide mantos include Peel
Sulfides, Peal East Sulfides, Penguin, Tarn, Lab and Flint. Oxide mantos include
Peel Oxides, Break-Nu, Ridge and Hoodoo.

The mantos and steeply plunging chimneys are preferentially
hosted by three limestone facies of Unit 1d - massive limestone, fine-grained
crystalline limestone, and wispy banded limestone - 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 minerals in the mantos and chimneys 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.

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,
extends to 75m in depth, and is flat lying with a strike of 015o.

Approximately 18.2kt of oxidized manto-style mineralization was
mined from the Tarn zone in the late 1980s. Current exploration at Tarn focuses
mainly on the sulfide manto beneath some remaining oxide material.

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 located on the south end of Lab and is included in
  this zone.

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111

The Calcite resource consists of a narrow vein less than 7.2
  m wide (averaging 1 to 3m wide) that has been traced over 225m of strike length,
  strikes 140o, and dips 39 to 50o to the west.

Hoodoo and Comet Zones

The Hoodoo zone contains both vein-type and manto-type
oxide/sulfide mineralization located approximately 1.5km northeast of the Ketza
River Camp on the southern slope of Peel Ridge. Early drilling in this zone was
halted once sulfide mineralization was reached. Recent drilling has been
targeting sulfide mineralization underlying the oxide mineralization exposed at
surface. Exploration has also been successful in extending the oxide
mineralization. The southern Hoodoo resource dips 38 to 70o to the south and is
typically less than 5m thick. Several flat-lying mantos up to 11m thick are
located on the northern end in the Comet Zone.

Penguin Zone

The Penguin Zone is manto-style sulfide mineralization located
  approximately 1.25km west of the Ketza River Camp. Four main mineralized bodies
  occur within a presently defined area approximately 360m in length, 155m in
  width, and up to 10m in thickness. The Penguin mineralization strikes 226o
  and dips moderately to the northwest at 60o.

Flint Zone

The Flint Zone consists of two manto-style sulfide zones
located approximately 1.25km west of the Ketza River Camp, also in the Cache
Creek drainage. The Flint Zone is sub-horizontal and is approximately 100m in
length, 130m in width, and up to 5m in width. This zone occurs less than 85m
below the surface and has a strike azimuth of 050o.

Peel Zone

The Peel zone is located about 0.75km north of the Ketza River
Camp on the south flank of Peel Ridge. Manto-style mineralization at the Peel
zone consists of irregular interconnected lenses and pods of both sulfide ore
and some remaining pods of oxide ore in area approximately 400m long x 400m
wide. The Peel zone consists of the Peel West, Ridge, Main Peel, Peel East, and
Peel oxide zones. Oxide and sulfide-rich chimneys up to 30 to 115m in height are
locally present on the northern end of the main Peel zone along a
northeast-trending fault zone. Other faults that cut this area are high-angled
and northwest-trending. 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 and Peel East Zones

The Peel West and East zones consist dominantly of one large
400mm long by 400m wide narrow flatlying to gently dipping manto with a
generally circular footprint that ranges from 0.9 to 12m in thickness. An
additional five smaller mineralized mantos occur below or above the large manto
in a stacked configuration. The mineralized mantos are locally exposed at the
surface and extend to a depth of 100m below the surface. The overall strike of
these zones is 320 to 355o.

Ridge Oxide Zone

The Ridge oxide zone consists of three separate mineralized
chimney bodies occurring over an area approximately 100m in length, 100m in
width, and up to 10m 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.
The mantos and chimneys dip from fairly flat-lying to 50-70o to the
north. Strikes range from 068o to 83oto 255o.

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112

Production from the oxide mineralization in the Peel and Ridge
deposits was approximately 244,634t at an average grade of 13g/t-Au (Hodgson,
1991). 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 up to 20m in
thickness. The zone is exposed at the surface and extends to a depth of 95m
below the surface. The zone strikes approximately 38o with a gentle
dip of up to 30o to the southeast.

Freds Vein East

This vein is located approximately 1.0km north of the Ketza
River Camp and is exposed at the surface. Freds Vein East is a quartz+sulfide
mineral vein-like occurrence in siliciclastic rocks on the north side 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
the north side of Peel Ridge in the Peel Creek drainage.

The exposed strike length of the structure is approximately
100m. The width is difficult to characterize and the down dip extension has not
yet been totally defined. The strike varies from 065o to
080o and dip varies from 80o to 85o to the
south.

QB Zone

The QB zone consists of multiple irregular lenses or veins of
quartz-breccia occurring in siliciclastic rocks north of the Peel fault. The
main QB vein swarm 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 530m in length, 230m in width and 2m to 70m in thickness. The zone
extends from the surface to a depth of 175m, strikes 5-355o and
plunges 17-46o to the southeast.

A generalized Au grade shell was digitized around low grade
gold mineralization at depth below the QB zone. The resulting Au mineralization
in a mineral inventory table from this work was very small.

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
multiple thin quartz breccias and vein-like bodies and sulfide mineral
disseminations in siliciclastic rocks. The mineralized bodies have variable
strike and dip orientations: 330o/70oNE; 235o/5oSW; and 227o/84oNW. The 0.5g/t
Au grade shells are approximately 40-100m in length, range from 2m to 15m in
width, and extend to approximately 100m in depth below the surface.

Grade shells greater than 0.5g/t opt Au were modeled in the 3M
zone as part of this study and included in the QB zone resource. Only minor
open-pit mining has occurred at 3M. The boundary of Canamaxs 3M open pit
partially covers some of the 3M 0.5 g/t Au grade shells which suggests that 3M
was partially mined. However, we were unable to apply any mining depletion to
the 3M zone (open-pit mining done by Canamax) since the existing compiled
topographic information is not detailed enough to confirm mining has occurred.

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113

Gully Model Area Occurrences

The Gully zone was previously mined by Canamax in the late
1980s and yielded approximately 8,100t of oxide ore averaging 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.

Gully is a quartz+sulfide mineral 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. Assays from drill samples range up to 37.6g/t -Au.
Overall dimensions of the mineralized vein as presently defined are
approximately 350m in length, 100m in depth and 4 to 8m (4m average) in
thickness. The zone extends from the surface to 150m with a strike of
165o, a dip of 45-60o west, and a plunge of 9o.
The northern end of the Gully Vein has a shallower dip of 17o to the west as
compared to the southern half of the vein.

Knoll Model Area Occurrences

The Knoll zone is located about 3.0km northeast of the Ketza
River Camp on the north slope of Shamrock Mountain. It is comprised of multiple
stacked subhorizontal (manto-like) 0.5g/t Au bodies of oxide and sulfide
mineralization hosted in a dolostone bed measuring 50m x 35m with a thickness
ranging from 4m to 10m. In addition, some vein-style mineralization hosted in
argillite and phyllite rock has been documented at Knoll. Mineralization is
exposed at the surface and has been open-pit mined on a limited scale in the
past.

Drilling

From May of 2005 through December of 2010, YGC and YNG drilled
a total of 1,029 drill holes for a total of 136,656m (Table 36). 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 areas up to
December 31, 2010 are shown in Figure 42.

Table 36: Summary of Diamond Drilling 2005 Through 2011

Year
      Operator
      No. of Holes
      Type Drilling
      No. of m Drilled2005
    YGC Resources Ltd.
    99
    Diamond
    12,7342006
    YGC Resources Ltd.
    270
    Diamond
    33,8742007
    YGC Resources Ltd./KRH
    305
    Diamond
    41,5872008
    Ketza River Holdings Ltd.
    225
    Diamond
    30,4362009
    Ketza River Holdings Ltd.
    2
    Diamond
    4832010
    Ketza River Holdings Ltd.
    128
    Diamond
    17,5422011
    Ketza River Holdings Ltd.
    26
    Diamond
    4,402Total
    
    1,055
    
    141,058


|Notes: | (1) | the total drilling done in 2008 listed above includes 26
      geotechnical and hydrogeology diamond drill holes totaling 2,562m for
      predevelopment studies, and 14 condemnation diamond drill holes totaling
      1926.79m completed at the alternative dry-stack upper tailings site.                                                                                                                                                                                                                                                                
|------ | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | the total amount of drilling (in meters) done in 2010 and
      listed above includes 10 geotechnical and hydrogeology diamond drill holes
      totaling 1232.7m, and 16 tailings dam (lower site) condemnation and
      exploration drill holes totaling 2,695.3m. The total amount of 2010
      drilling listed in this table 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.
|       | (3) | KRH = Ketza River Holdings, a 100% Canadian subsidiary
      company owned by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | (4) | YGC Resources Ltd., the predecessor company to KRH,
      merged with Queenstake Resources in mid-2007 to form the Company (YNG);                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | (5) | Total drilling excludes drill holes completed at the
      adjacent Silver Valley Project;                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | (6) | The resource stated in this Technical Report does not
      include drill holes drilled in 2009 and thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                               

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114

All of the drilling from 2005 through 2011 listed in Table 36
is diamond drilling. The diamond drill holes completed from 2005 to 2011 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) . Hydrogeology drill holes completed in 2008
(HYD-08-01 to HYD-08-12, HYD-08-16 and HYD-08-17) and 2010 (drill hole number
HYD-10-01) 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 2010
(drill hole numbers GT-10-01 to GT-10-10) are HQ3-sized (61.1mm) and utilized
triple tubes. These geotechnical drill holes utilized the EZY-Mark core
orientation system and were carefully logged and sampled for geotechnical data.

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 computer in the core shack using Drill King software.
Core recovery and Rock Quality Designation (RQD) are recorded for each drill
hole.

The primary author, Todd Johnson, has reviewed the recent
drilling procedures and results from 2005 to the present and has deemed them to
be relevant and meet industry standards, and are acceptable to use in the
current resource determination. Some of the in-house standards and blanks that
were used in the 2005 to 2008 drilling programs were not certified and created
local problems for quality assurance and quality control for drill hole assay
results (see Sampling and Analysis). However, the use of in-house standards
and blanks has been discontinued in the 2009-2011 drilling programs.

Drilling in 2008 was successful in extending and/or defining
limits of mineralization on the Peel, Tarn, Gully, QB, Hoodoo, Bluff, 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), and
Nose zones, 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 Freds Vein
East; more drilling will be required to either define or disprove significant
mineralization at these zones. Significant mineralization was drilled at Hoodoo
and Bluff, but definition of the nature and orientation of the mineralization
will require more drilling.

Sampling and Analysis

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 YGC/YNG from 2006 to May 2011
has been completed mostly under the direction of YNGs Qualified Person, Ed
Gates. Erika Shepard, P.Geo., was the Qualified Person at the site for a brief
period from April to December 2008. Kyle Dziama (BSc. Geology; GIT) has been the
Yukon Project Manager and Geologist in charge since May 2011.

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

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115

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. The 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 in the core boxes.
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. Once the data
is verified by on site geologists is ultimately imported into the master acQuire
drill hole database. The drill hole data was imported into acQuire at the Ketza
site by an experienced geologist up until January 2010. From February 2010 to
March 2011 the drill hole data was imported into acQuire by the same experienced
geologist at the Vancouver YNG corporate office. An experienced geologist is
currently storing the recent drill hole data in Access at the project site.

Core is then taken into the splitting room where sampled
intervals are split or 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 removed 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 removed to a designated core storage
yard where they are placed on core racks.

Sealed sample bags are placed in large, consecutively numbered,
white rice bags (e.g. Bag 1 of 6). The rice bags are labeled with the drill hole
number and the contained sample numbers. Rice bags are placed in an outside
storage bin near the core shack where they await shipping to the lab.

Prior to 2010, drill hole samples were transported by company
personnel at least once per week to Byers Transport or 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 the transportation company and shipped to ALS Chemex. In
2010 and 2011, samples were dropped off by company personnel at the ALS prep lab
in Whitehorse.

Sample Quality

Core recovery at the Ketza River property is generally 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. Core recovery data and RQD values were
captured for the historic Ketza River drilling done from 1984 to 1997 but still
need to be compiled and analyzed.

Sample Preparation, Analysis and Security of Samples

Various Labs (Pre-2006):

In the 1980s, Canamax used Bondar-Clegg in Vancouver, BC;
  Northern Analytical Laboratory (noncertified) in Whitehorse, Yukon; Rossbacher
  Labs (noncertified) in Burnaby, BC; and the Ketza River assay lab (noncertified),
  Yukon for drill hole sample preparation and Au analysis. The preparation and
  Au analysis methods for these historical drill holes are compiled in the old
  Canamax project file reports at the site and digitally in the Ketza Project
  computer server. Most of the sample preparation at the commercial labs mentioned
  above was completed by people not affiliated with the mining and exploration
  companies with the exception of those samples analyzed at the Ketza River assay
  mine lab.

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116

The Ketza River assay lab located at the mine site was the primary
  assay lab for those drill holes completed in 1987, and from 1989 to 1990. Employees
  of Canamax were responsible for sample preparation and assay of these drill
  holes analyzed at the Ketza River assay lab which is approximately 397 drill
  holes.

In 2005, YGC used Eco-Tech labs in Kamloops, BC. Samples were
sorted and dried (if necessary), and then crushed through a jaw crusher and cone
or rolls crusher to 10 mesh. The sample was then split through a Jones riffle
until a 250 gram sub sample was achieved. The sub sample was then pulverized in
a ring and puck pulverizer to 95 percent passing -140 mesh. The sample was next
rolled to homogenize. A 30g sample size was fire assayed using appropriate
fluxes. The resultant dore bead was parted and then digested with aqua regia and
then analyzed on a Perkin Elmer AA instrument. Appropriate standards and repeat
sample (Quality Control Components) accompany the sample results on the data
sheet.

ALS-Chemex (2006-2008):

From 2006 to 2008, most sample preparation was done by ALS
Chemex (ISO 9001:2008 registration and ISO 17025 accredited methods in North
America) in their Terrace, British Columbia sample preparation facilities with
the exception of some samples drilled for metallurgy testing purposes (see
sample preparation discussion below). No sample preparation was done on site.

Samples are dried at 120°C (maximum) and then crushed with
either an oscillating jaw crusher or a roll crusher. The ALS Chemex QC
specification for crushed material is that greater than 70 percent 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 greater than 85 percent of the
sample be less than 75μm (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 (AA) using the Au-AA23 analytical procedure
(reported in ppm units). All assays above 1.0ppm were re-assayed by ALS Chemex
using a gravimetric finish (Au-GRA21 analytical procedure) and reported in ppm
units.

Since early 2006, ALS Chemex has also been analyzing every
submitted sample interval for 35 element Inductively Coupled Plasma (ICP)
geochemistry using the ME-ICP41 analytical method that utilizes nitric aqua
regia digestion and atomic emission spectroscopy (AES). The 35 analyzed elements
include Ag, Al, As, B, Ba, Be, Bi, Ca, Cd, Co, Cr, Cu, Fe, Ga, Hg, K, La, Mg,
Mn, Mo, Na, Ni, P, Pb, S, Sb, Sc, Sr, Th, Ti, Tl, U, V, W, and Zn. Since spring
of 2008, all submitted drill samples that contain greater than 10,000 ppm As,
which is the upper limit using the ME-ICP41 analytical method, have been
reanalyzed for overlimit As using aqua regia and the ME-OG46 analytical method.

A total of 30 diamond drill holes (totaling 3,388 m and
including drill hole numbers KR-08-1269 to KR-08-1300) were completed in early
2008 for metallurgical testwork and prepared at the Jerritt Canyon Mine
laboratory (noncertified lab), located about 51 kilometers north of Elko,
Nevada. This mine lab is operated by Queenstake Resources USA, Inc. which is a
100% subsidiary company owned by YNG. The metallurgy samples were shipped to the
Queenstake lab for faster processing and prep work; Queenstake employees
prepared the Ketza River metallurgy samples by making pulps and performing
initial Au assays. The leftover pulps were shipped to ALS for analysis for
inclusion into the acQuire drill hole assay database.

These metallurgy core samples were dried at less than 93°C
  (maximum) and then crushed with a Rock Labs swing jaw crusher that took the
  sample material to 99 percent passing 25.4 mm (1 inch). Each sample was then
  processed through a Rock Labs Boyd crusher that took the sample to 99 percent
  passing 9.5 mm (3/8 inches). A whole or split portion derived from the crushing
  process (using a rotary splitter) was pulverized using a Bico pulverizer; the
  QC specification for final pulverizing was 95 percent passing 0.106 mm (150
  mesh). A total of 300 grams of pulp material for each drill sample interval
  was made for fire assay and was initially analyzed by the Jerritt Canyon Laboratory
  to determine ore from waste (the Jerritt Canyon Lab assay results were not entered
  into the Ketza acQuire drill hole database or used for resource estimation).

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117

The remaining pulp materials for each metallurgy drill sample
(ore and waste) were later shipped to the ALS Chemex Reno laboratory for final
assay as per the ALS Chemex assay specifications described above; these final
assays from ALS Chemex were imported into the Ketza River acQuire drill hole
database and used for resource modeling and estimation. The coarse reject
material from the metallurgy drill hole sample were purged with nitrogen, placed
in individual 2-gallon sealed plastic buckets soon after the split to minimize
oxidation, and shipped to PRA Laboratory (now called Inspectorate) in Richmond,
BC for metallurgy testwork. Inspectorate Lab is an International Organization
for Standardization (ISO) 17025 certified lab.

Quality Controls and Quality Assurance

QA/QC Protocol 2005-2008 (YGC-YNG)

The YGC-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 drill hole has less than 15
samples, a standard and blank are inserted at the end of the hole.

The blanks used in the 2005 to 2008 drill programs were
non-commercial material, composed of locally derived barren limestone and have
not been certified to be of zero grade. The barren limestone source is located
just southeast of the core shack (between the south projection of the
Lab-Calcite resource and the West Peel resource). Since May 15, 2010, blank
material being inserted into the sample sequence consists of crushed marble
material that is being commercially sold in large bags in Whitehorse. This
crushed marble material has not yet been certified to be of zero grade, but
initial results indicate that the material contains very little Au.

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
mid 2006.

After mid-year 2006, Gold Ore Reference Standards CDN-GS-10A
(9.78+/ - 0.53g/t) or CDN-GS-10B (8.6 +/- 0.49g/t) have been used for drill
holes completed in manto-type mineralization. Gold Ore Reference Standards
CDN-GS-1C (0.99 +/- 0.08g/t), CDN-GS-2B (2.03 +/- 0.12g/t) or CDN-GS-2C (2.06
+/- 0.15g/t) have been used for drill holes completed in stockwork- or
fissure-vein-type mineralization.

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 (Gravimetric Au using ALS analysis method Au-GRA 21 vs.
  return date) were plotted for each set of standards and blanks for the 2008
  drill hole program and reviewed prior to conducting this current resource estimate.
  It must be emphasized that assay results for the 2008 drill holes were not all
  completed and finalized until January 25, 2010 due to funding issues which is
  the reason why some of the 2008 drill hole assay return dates extend into the
  2010 year.

---

118

A total of 132 valid Au analyses using the CDN-GS-10B standard
were completed in the 2008 drill program and stored in the drill hole database.
A total of 119 valid Au analyses using the CDN-GS-2B standard were completed in
the 2008 drill program and stored in the drill hole database. A total of 150
valid Au analyses using the CDN-GS-2C standard were completed in the 2008 drill
program and stored in the drill hole database. A total of 636 valid blank
standards were analyzed as part of the 2008 drill hole program.

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 blank samples show several anomalous
results which may be due to mislabeled samples, sample preparation
contamination, or anomalous gold present within the blank.

The QA/QC program should be improved to meet industry
guidelines of inserting 1 standard for every 20 samples, 1 duplicate sample for
every 20 samples, and 1 blank for every 20 to 50 samples. The QA/QC data should
be monitored on a regular basis to monitor the laboratory performance. In
addition, a different blank material that is preferably certified by a
commercial lab should be used for future drill programs.

A total of 22 pulps generated from the 2006 and 2007 drilling
programs that were originally assayed at ALS Chemex, were relabeled with
different sample ID numbers and reanalyzed at ALS-Chemex again in early 2008.
These duplicate samples were not reviewed in the 2008 SRK NI 43-101 report. A
scatter plot of these duplicate Au values are shown in Figure I-2 in Appendix I
of the Ketza River Report and compare well with one another. No drill hole pulps
or coarse rejects have been completed by a secondary certified assay lab for the
2008 drill program.. Several hundred pulps from the 2007 to 2010 drill programs
have recently been submitted to ALS-Chemex and Inspectorate Labs for check
analyses (as of December 2011).

.Mineral Resource and Mineral Reserve Estimates

In 2010, YNG updated the Ketza resource estimate with
additional drilling up to August 2008 including up to drill hole KR-08-1466. An
additional 191 drill holes were added since the last NI 43-101 report (SRK,
2008). The 2010 resource estimate was done by Karl Swanson and Todd Johnson
using the Vulcan Software version 7.5 service pack one. This new NI 43-101
resource estimate reinterpreted the 0.5 g/t grade shells and created a geologic
model within the Ketza River claim area.

The geologic model separated the main limestone unit (1d) from
the argillite and siltstone units which lie both above and below the main
limestone unit. An additional thin and mostly unmineralized limestone bed within
the upper argillite was also modeled where possible. The individually logged
limestone subunits within the unit 1d limestone are described under the heading
Geological Setting, but were not modeled for this resource estimate.

The gold grade shells were modeled at a rigorous 0.5 g/t cutoff
following geologic contact orientation where appropriate. Dilution was kept at a
minimum, usually only allowing grades below the cutoff to be included internally
to the grade shell or sometimes laterally to maintain ore shape continuity. This
kept the grade shells tightly constrained so that the volume of both the manto
mineralized bodies and the higher-angle vein style bodies were realistic based
on the drilling intercepts.

Drill Hole Database

The drill hole database is currently maintained at the Ketza
River camp in acQuire software, and was transferred from a Drill King (Access)
database in late 2007. As of January 25, 2010 the database contained information
for 1,582 drill holes, including 896 core holes from 2005 to 2008, 591 core
holes from 1984 to 1997, and 95 RC drill holes from 1987.

---

119

In order to conduct the current resource estimate, data was
extracted from acQuire, appended as required with the 1984-1997 audited drill
hole data, and imported to Vulcan in 4 separate tables:

- Collar - HoleID, Northing, Easting, Elevation and Total Depth;
- Survey - Downhole depth, Azimuth, and Dip of drill hole at downhole depth;
- Assay - From, To, Sample ID, and gold assay for all drill holes, and Wt.
  percent iron for drill holes from 2005 to 2008 as well as other ICP elements.
  Specific gravity (SG) was calculated from the Wt. percent iron data from ALS
  Chemex for drill holes completed from early 2006 to 2008 and stored in the
  Vulcan Assay table in the SG_ASY field.
- Geology  From, To, Lithology Codes, percent sulfide minerals, and percent
  oxide minerals. Table 37 lists the fields recorded in Vulcan database. Table
  38 lists the common lithologies logged at Ketza River. Where no Wt. percent
  iron data was available to calculate an SG value, the SG was assigned based on
  information logged by the geologists and stored in the Vulcan Geology table in
  the SG_GEO field (see Section 15.3.4 of the Ketza River Report for details).

Table 37: Geology Database Fields

Field
      Description
      EntryLCODE1
    Previous Lith Code
    Alpha CodeLCODE2
    Edited Lith Code
    Alpha CodePO
    Pyrrhotite
    PercentagePY
    Pyrite
    PercentageAPY
    Arsenopyrite
    PercentageCPY
    Chalcopyrite
    PercentageTOTSUL
    Total Sulfide
    PercentageLIM
    Limonite
    PercentageHEM
    Hematite
    PercentageSCORO
    Scorodite
    PercentageOXIDE1
    Primary Oxide Mineral
    Alpha CodeOX1INT
    Intensity of oxidation
    PercentageOXIDE2
    Secondary Oxide Mineral
    Alpha CodeOX2INT
    Intensity of oxidation
    PercentageTOTOX
    Total Oxide
    PercentageOXDESC
    Oxide Description
    Alpha CodeRKMOD
    Modeled Rock Name
    Alpha CodeREDOX
    Oxide State
    Alpha CodeSG_GEO
    Specific Gravity
    NumericZONE
    Model Zone
    Alpha CodeDOMAIN
    Model Domain
    Alpha CodeFLAG
    Model Grade Shell
    Alpha Code


Table 38: Most Common Lithology Codes

LCODE
      Description
      LCODE
      DescriptionMSLT
    Massive-oolitic limestone
    BSLT
    Black siltstoneWBN
    Wispy banded limestone
    SQA
    Siltstone/Quartzite/ArgilliteARG
    Argillite
    VEIN
    VeinLST
    Limestone
    CASE
    CasingFSLT
    Fossiliferous limestone
    QTE
    Quartzite


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120

LCODE
      Description
      LCODE
      DescriptionARS
    Argillite/Siltstone
    FZ
    Fault zoneOXIDE
    Oxide Mineralization (≥50% by volume)
    QAS
    Quartzite/Argillite/SiltstoneSULF
    Massive sulfide (≥50% by volume)
    BA
    Black argilliteQSA
    Quartzite/Siltstone/Argillite
    OVB
    OverburdenMUD
    Mudstone
    HFLS
    HornfelsSAQ
    SLT/ARG/QTE
    AQS
    Argillite/Quartzite/SiltstoneBXLT
    Blue crystalline limestone
    PHIL
    PhylliteSLT
    Siltstone
    QTZ
    QuartzASQ
    Argillite/Siltstone/Quartzite
    GO
    Gouge


The geologic database was used to determine the percent oxide
minerals and/or percent sulfide minerals (by volume) which was then used to
determine the specific gravity. The methodology is described in Section 15.3
Specific Gravity Determinations and Redox Classification, of the Ketza River
Report.

A total of 12,038 Au assay values are present in the Vulcan
database that have a value > 0.069 g/t Au (greater than the highest detection
limit). A total of 10,306 Ag values are present in the Vulcan database that have
a value greater than 0.1 g/t which is the maximum detection limit rounded to the
nearest tenths decimal place for 2005 geochemical analyses and younger.

For this current Ketza model, only three RC holes were removed
from the database prior to variography and grade estimation (See Table 39).
These three RC holes had core twins which showed downhole contamination of the
RC holes. The RC holes are KR-87-RC3, KR-87-RC6, and KR-87-RC21. The core twins
are KR-96-566, KR-05-676, and KR-07-1071. Drill hole KR-87-RC6 is shown in
Figure 46 and shows the contamination in relation to surrounding holes and the
modeled 0.5 g/t grade shells.

In addition to the three rejected RC holes, three "trench"
holes located in the Tarn Zone were removed from the database leaving a total of
1,582 actual drill holes of the 1,585 collar names. These "trench" holes were
named KR-06-TR2, KR-06-TR3, and KR-06-TR4. In the previous model by SRK (2008),
additional holes were removed due to incorrect collar locations or orientation
in relation to their modeled grade shells. As part of this study, Canamax maps
were investigated and each of the other previously rejected holes were corrected
and used. See Appendix C for list of moved drill holes. In remodeling the grade
shells, no drill holes were rejected due to orientation. Therefore only the
three contaminated RC holes were rejected from the total 1,582 drill holes.

Table 39: Summary of Drill Holes by Area

Used for Modeling
      Rejected
      TotalArea
      No. of Holes
      Length Drilled
      Length Sampled
      No. of **Holes**
      Length Drilled
      Length Sampled
      No. of Holes
      Length Drilled
      Length SampledPEEL
      684
      63,583
      19,439
      
      
      
      684
      63,583
      19,439PENG
      408
      48,027
      15,847
      
      
      
      408
      48,027
      15,847SHAM
      324
      42,470
      28,051
      3
      363
      244
      327
      42,833
      28,295TARN
      121
      10,943
      2,812
      
      
      
      121
      10,943
      2,812KNOLL
      42
      2,628
      694
      
      
      
      42
      2,628
      694Total
      1,579
      167,651
      66,843
      3
      363
      244
      1,582
      168,014
      67,087


|Notes: | (1) | Penguin, Flint, Lab-Hoodoo and Calcite zones
      are included in the PENG model area;
|------ | --- | -----------------------------------------------------------------------------------------
|       | (2) | Gully, 3M, and QB are included in the SHAM
      model area;                           
|       | (3) | Break, Ridge, B-Mag, Fury, Fork and Peel are
      included in the PEEL model area;    

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121

Geology and Grade Shell Modeling

Geology was modeled at Ketza by digitizing the major faults and
geologic contacts on 10m east-west cross sections. The contacts modeled were
between limestone and argillite units. No internal limestone units were modeled.
The geologic units were triangulated in Vulcan as individual solids within fault
blocks. The shape and orientation of these geologic units were used as a guide
for the grade shell models.

Grade shells at a 0.5 g/t cutoff were digitized on 10m cross
sections based upon lithology codes and gold assays, and modeled as wireframes
in the Vulcan software. The cross sections were generally east-west but
north-south sections were necessary in north Peel around the Break and Ridge
zones. The grade shells in the Tarn, Penguin, Peel, and Knoll zones represent
limestone hosted manto mineralized zones and lesser structurally-controlled
chimney zones. The grade shells in the Gully and QB zones within the Shamrock
area represent veins, stockworks, and disseminated styles of mineralization
hosted in siliciclastic rocks.

A total of 110 individual grade shells were created: nine in
the Tarn area, 28 in the Penguin area, 42 in the Peel area, and 31 in the
Shamrock area. The areas are defined in Table 39 and in Figure 42. Six of the
grade shells were not used in the block models as they are small and isolated
and outside of the block model limits. Four of these shells are outside of Peel,
one is west of Tarn and the last is east of QB. The locations of all of the
shells and block models are shown in Figure 42. Representative cross-sections of
chosen areas are shown in Figures 43 through 46.

---

122

Figure 42: Plan Map of Grade Shells and Block Models by Area



---

123

Figure 43: Cross Section of Peel Grade Shells and Drill
Holes



Figure 44: Cross Section of Peel Geology and Drill Holes



---

124

Figure 45: Cross Section of Gully Grade Shells and Drill
Holes



Figure 46: Cross Section of QB Grade Shells and Drill Holes



---

125

Mineral Resource Statement

The Ketza River open pit and underground resources are
summarized in Table 40, and separated by oxide and sulfide REDOX ore types (as
defined in Section 15.7 of the Ketza River Report) in Tables 41 and 42. The
cutoff grade for open pit resources is 0.78 g/t Au for oxide ore and 1.00 g/t Au
for sulfide ores for blocks contained inside the optimized pit, and 3.44 g/t Au
for oxide and 4.43 g/t Au for sulfide ores for underground resources outside the
optimized pit. The mineral resources tabulated below include Measured, Indicated
and Inferred classifications as described in below.

A total of 41% of the measured and indicated recoverable
resource ounces are hosted in oxide ores which have a gold recovery of 90%;
whereas the other 59% of the measured and indicated recoverable, resource ounces
are hosted in sulfide or mixed sulfide+oxide ores that generally have Au
recoveries of 70 percent. The previous Year-End 2007 NI 43-101 report (SRK,
2008) did not quantify the amounts of oxide vs. sulfide ores.

Table 40: Ketza River Mineral Resource Statement (Oxide and
Sulfide Combined)

Area
      Open Pit Resource
      Underground Resource
      Combined (OP+UG)kt
      g/t-Au
      koz
      kt
      g/t-Au
      koz
      kt
      g/t-Au
      kozMeasuredPeel
      85.2
      5.76
      15.8
      3.7
      8.41
      1.0
      88.9
      5.87
      16.8Penguin
      14.0
      1.88
      0.8
      0.0
      0.00
      0.0
      14.0
      1.88
      0.8Lab-Hoodoo
      9.4
      6.92
      2.1
      0.0
      0.00
      0.0
      9.4
      6.92
      2.1Tarn
      11.4
      4.73
      1.7
      0.0
      0.00
      0.0
      11.4
      4.73
      1.7Gully
      7.0
      5.60
      1.3
      2.1
      7.41
      0.5
      9.1
      6.01
      1.8QB
      23.4
      4.55
      3.4
      0.4
      3.81
      0.0
      23.8
      4.47
      3.4Knoll
      11.1
      6.66
      2.4
      0.0
      0.00
      0.0
      11.1
      6.66
      2.4Total Measured
      161.5
      5.30
      27.5
      6.3
      7.39
      1.5
      167.8
      5.38
      29.0IndicatedPeel
      1,053.4
      6.22
      210.6
      204.6
      8.83
      58.1
      1,258.0
      6.64
      268.7Penguin
      233.6
      2.89
      21.7
      0.0
      0.00
      0.0
      233.6
      2.89
      21.7Lab-Hoodoo
      243.2
      5.20
      40.6
      22.1
      6.90
      4.9
      265.3
      5.34
      45.5Tarn
      79.3
      3.88
      9.9
      0.0
      0.00
      0.0
      79.3
      3.88
      9.9Gully
      45.1
      3.57
      5.2
      14.7
      8.04
      3.8
      59.8
      4.67
      9.0QB
      298.0
      3.21
      30.8
      15.5
      5.22
      2.6
      313.5
      3.31
      33.4Knoll
      2.9
      4.54
      0.4
      0.0
      0.00
      0.0
      2.9
      4.54
      0.4Total Indicated
      1,955.4
      5.08
      319.3
      256.9
      8.40
      69.4
      2,212.3
      5.46
      388.7Measured and IndicatedPeel
      1,138.6
      6.19
      226.4
      208.3
      8.82
      59.1
      1,346.9
      6.59
      285.5Penguin
      247.6
      2.84
      22.6
      0.0
      0.00
      0.0
      247.6
      2.84
      22.6Lab-Hoodoo
      252.6
      5.26
      42.7
      22.1
      6.90
      4.9
      274.7
      5.39
      47.6Tarn
      90.7
      3.99
      11.6
      0.0
      0.00
      0.0
      90.7
      3.99
      11.6Gully
      52.1
      3.85
      6.4
      16.9
      7.91
      4.3
      69.0
      4.84
      10.7QB
      321.4
      3.31
      34.2
      15.9
      5.09
      2.6
      337.3
      3.39
      36.8Knoll
      14.0
      6.22
      2.8
      0.0
      0.00
      0.0
      14.0
      6.22
      2.8Total M&I
      2,116.9
      5.09
      346.8
      263.2
      8.38
      70.9
      2,380.1
      5.46
      417.7InferredPeel
      195.2
      5.30
      33.2
      24.2
      6.55
      5.1
      219.4
      5.43
      38.3Penguin
      44.0
      2.49
      3.5
      0.0
      0.00
      0.0
      44.0
      2.49
      3.5Lab-Hoodoo
      37.5
      4.38
      5.3
      10.1
      5.54
      1.8
      47.6
      4.62
      7.1Tarn
      3.2
      3.50
      0.4
      0.0
      0.00
      0.0
      3.2
      3.50
      0.4Gully
      15.9
      3.46
      1.8
      5.6
      8.89
      1.6
      21.5
      4.87
      3.4QB
      113.5
      3.80
      13.9
      4.4
      5.66
      0.8
      117.9
      3.87
      14.7


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126

Area
      Open Pit Resource
      Underground Resource
      Combined (OP+UG)kt
      g/t-Au
      koz
      kt
      g/t-Au
      koz
      kt
      g/t-Au
      kozKnoll
      0.0
      0.00
      0.0
      0.0
      0.00
      0.0
      0.0
      0.00
      0.0Total Inferred
      409.4
      4.41
      58.0
      44.3
      6.56
      9.3
      453.7
      4.62
      67.3


|Notes: | (1) | The cutoff Au grade for oxide and sulfide ore inside the
      optimized open pit is 0.78 g/t and 1.00 g/t, respectively; whereas the
      cutoff Au grade for oxide and sulfide ore for material mineable by
      underground methods outside of the optimized open pit are 3.44 g/t and
      4.43 g/t, respectively;                                                                                                                                                                            
|------ | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | Au price used for this resource estimate is US$1,150/troy
      oz;                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | (3) | Assigned sulfide and oxide ore Au recoveries are 70 and
      90 percent, respectively;                                                                                                                                                                                                                                                                                                                                                                                                              
|       | (4) | All materials in this table include all REDOX types
      (oxide, sulfide, and mixed oxide+sulfide) as defined in Section 15.3 of
      the Ketz a River Report;                                                                                                                                                                                                                                                                                                                                   
|       | (5) | Mining cost/t = $3.00 open pit and $80.00 underground;
      processing cost/t ore = $26.00; specific gravity variable as modeled per
      block; 18.4:1 (waste:ore) average strip ratio for all resources; 1,500 t
      ore/day mill feed; A Lerchs- Grossman pit optimization has been used to
      differentiate potential open pit resources from potential underground
      resources using mining costs, Au cutoff grades, and other parameters
      documented in the Ketza River Report;
|       | (6) | This resource includes all drill holes completed in 2008
      and does not include any drill holes completed in 2009 or 2010; This
      resource statement has an effective date of January 25, 2010.                                                                                                                                                                                                                                                                                              

Table 41: Ketza River Mineral Resource Statement (Oxide
Material Only)

Area
      Open Pit Resource
      Underground Resource
      Combined (OP+UG)kt
      g/t-Au
      koz
      kt
      g/t-Au
      koz
      kt
      g/t-Au
      kozMeasuredPeel
      43.4
      5.52
      7.7
      3.3
      7.16
      0.8
      46.7
      5.67
      8.52Penguin
      0.0
      0.00
      0.0
      0.0
      0.00
      0.0
      0.0
      0.00
      0.0Lab-Hoodoo
      0.9
      4.55
      0.1
      0.0
      0.00
      0.0
      0.9
      4.55
      0.1Tarn
      8.5
      5.64
      1.5
      0.0
      0.00
      0.0
      8.5
      5,64
      1.5Gully
      0.7
      5.33
      0.1
      0.0
      4.65
      0.0
      0.7
      5.33
      0.1QB
      18.0
      2.70
      1.6
      0.3
      3.63
      0
      18.3
      2.65
      1.6Knoll
      9.7
      6.65
      2.1
      0.0
      0.00
      0.0
      9.7
      6.65
      2.1Total Measured
      81.2
      5.03
      13.1
      3.6
      6.91
      0.8
      84.8
      5.11
      13.9IndicatedPeel
      357.3
      6.41
      73.6
      168.1
      8.85
      47.8
      525.4
      7.19
      121.4Penguin
      4.4
      2.95
      0.4
      0.0
      0.00
      0.0
      4.4
      2.95
      0.4Lab-Hoodoo
      48.0
      3.15
      4.9
      6.8
      5.99
      1.3
      54.8
      3.50
      6.2Tarn
      47.6
      4.07
      6.2
      0.0
      0.00
      0.0
      47.6
      4.07
      6.2Gully
      11.4
      3.50
      1.3
      3.3
      4.38
      0.5
      14.7
      3.77
      1,8QB
      209.5
      2.81
      19.0
      8.8
      4.82
      1.4
      218.3
      2.90
      20.4Knoll
      2.2
      4.51
      0.3
      0.0
      0.00
      0.0
      2.2
      4.51
      0.3Total Indicated
      680.5
      4.83
      105.7
      186.9
      8.47
      50.9
      867.4
      5.62
      156.6Measured and IndicatedPeel
      400.8
      6.31
      81.4
      171.4
      8.81
      48.6
      572.2
      7.06
      130.0Penguin
      4.4
      2.95
      0.4
      0.0
      0.00
      0.0
      4.4
      2.95
      0.4Lab-Hoodoo
      48.9
      3.18
      5.0
      6.8
      5.99
      1.3
      55.7
      3.52
      6.3Tarn
      56.1
      4.31
      7.8
      0.0
      0.00
      0.0
      56.1
      4.31
      7.8Gully
      12.1
      3.60
      1.4
      3.3
      4.38
      0.5
      15.4
      3.84
      1.9QB
      227.5
      2.80
      20.5
      9.1
      4.79
      1.4
      236.6
      2.88
      21.9Knoll
      12.0
      6.25
      2.4
      0.0
      0.00
      0.0
      12.0
      6.25
      2.4Total M&I
      761.7
      4.85
      118.9
      190.5
      8.45
      51.7
      952.2
      5.57
      170.6InferredPeel
      51.4
      5.88
      9.7
      14.7
      6.16
      2.9
      66.1
      5.94
      12.6Penguin
      2.4
      2.09
      0.2
      0.0
      0.00
      0.0
      2.4
      2.09
      0.2Lab-Hoodoo
      31.1
      4.57
      4.6
      8.5
      4.89
      1.3
      39.6
      4.61
      5.9Tarn
      3.0
      3.58
      0.4
      0.0
      0.00
      0.0
      3.0
      3.58
      0.4


---

127

Area
      Open Pit Resource
      Underground Resource
      Combined (OP+UG)kt
      g/t-Au
      koz
      kt
      g/t-Au
      koz
      kt
      g/t-Au
      kozGully
      2.2
      2.18
      0.2
      0.3
      5.39
      0.0
      2.5
      1.91
      0.2QB
      83.1
      3.32
      8.9
      2.5
      5.11
      0.4
      85.6
      3.37
      9.3Knoll
      0.0
      0.00
      0.0
      0.0
      0.00
      0.0
      0.0
      0.00
      0.0Total Inferred
      173.1
      4.28
      23.8
      25.9
      5.64
      4.7
      199.0
      4.46
      28.5


|Notes: | (1) | the Au cutoff grade for oxide ore within the optimized
      pit is 0.78 g/t; whereas the Au cutoff grade for underground oxide ore
      outside of the optimized open pit is 3.44 g/t;
|------ | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | (2) | Material included in this table consists of oxide and
      unaltered REDOX types as defined in Section 15.3 of the Ketza River
      Report.                                           
|       | (3) | These resources have an effective date of January 25,
      2010.                                                                                                                       

Table 42: Ketza River Mineral Resource Statement (Sulfide
and Mixed Materials Only)

Area
      Open Pit Resource
      Underground Resource
      Combined (OP+UG)kt
      g/t-Au
      koz
      kt
      g/t-Au
      koz
      kt
      g/t-Au
      kozMeasuredPeel
      41.8
      6.00
      8.1
      0.4
      13.01
      0.2
      42.2
      6.09
      8.3Penguin
      14.0
      1.88
      0.8
      0.0
      0.00
      0.0
      14.0
      1.88
      0.8Lab-Hoodoo
      8.5
      7.18
      2.0
      0.0
      0.00
      0.0
      8.5
      7.18
      2.0Tarn
      2.9
      2.09
      0.2
      0.0
      0.00
      0.0
      2.9
      2.09
      0.2Gully
      6.3
      5.63
      1.2
      2.1
      7.45
      0.5
      8.4
      6.07
      1.7QB
      5.4
      10.71
      1.9
      0.1
      4.33
      0.0
      5.5
      10.51
      1.9Knoll
      1.3
      6.75
      0.3
      0.0
      0.00
      0.0
      1.3
      6.75
      0.3Total Measured
      80.2
      5.57
      14.36
      2.7
      8.04
      0.7
      82.9
      5.65
      15.1IndicatedPeel
      696.0
      6.12
      137.0
      36.5
      8.78
      10.3
      732.5
      6.25
      147.3Penguin
      229.2
      2.89
      21.3
      0.0
      0.00
      0.0
      229.2
      2.89
      21.3Lab-Hoodoo
      195.2
      5.70
      35.8
      15.3
      7.39
      3.6
      210.5
      5.82
      39.4Tarn
      31.7
      3.59
      3.7
      0.0
      0.00
      0.0
      31.7
      3.59
      3.7Gully
      33.7
      3.60
      3.9
      11.4
      8.95
      3.3
      45.1
      4.97
      7.2QB
      88.4
      4.15
      11.8
      6.7
      5.64
      1.2
      95.1
      4.25
      13.0Knoll
      0.7
      4.63
      0.10
      0.0
      0.00
      0.0
      0.7
      4.63
      0.1Total Indicated
      1,275.0
      5.21
      213.6
      70.0
      8.20
      18.5
      1,345.0
      5.37
      232.1Measured and IndicatedPeel
      737.8
      6.12
      145.1
      36.9
      8.82
      10.5
      774.7
      6.25
      155.6Penguin
      243.2
      2.83
      22.2
      0.0
      0.00
      0.0
      243.2
      2.83
      22.2Lab-Hoodoo
      203.7
      5.76
      37.7
      15.3
      7.39
      3.6
      219.0
      5.87
      41.3Tarn
      34.6
      3.47
      3.9
      0.0
      0.00
      0.0
      34.6
      3.47
      3.9Gully
      40.1
      3.92
      5.1
      13.6
      8.71
      3.8
      53.7
      5.13
      8.9QB
      93.9
      4.53
      13.7
      6.8
      5.62
      1.2
      100.7
      4.60
      14.9Knoll
      2.0
      6.02
      0.4
      0.0
      0.00
      0.0
      2.0
      6.02
      0.4Total M&I
      1,355.2
      5.23
      227.9
      72.7
      8.2
      19.2
      1,427.9
      5.38
      247.1InferredPeel
      143.9
      5.09
      23.5
      9.5
      7.06
      2.2
      153.4
      5.22
      25.7Penguin
      41.6
      2.52
      3.4
      0.0
      0.00
      0.0
      41.6
      2.52
      3.4Lab-Hoodoo
      6.4
      3.42
      0.7
      1.6
      9.99
      0.5
      8.0
      4.67
      1.2Tarn
      0.2
      2.01
      0.0
      0.0
      0.00
      0.0
      0.2
      2.01
      0.0Gully
      13.8
      3.66
      1.6
      5.3
      9.36
      1.6
      19.1
      5.25
      3.2QB
      30.4
      5.12
      5.0
      1.9
      5.83
      0.4
      32.3
      5.20
      5.4Knoll
      0.0
      0.00
      0.0
      0.0
      0.00
      0.0
      0.0
      0.00
      0.0Total Inferred
      236.2
      4.51
      34.2
      18.4
      7.86
      4.6
      254.6
      4.74
      38.8


|Notes: | (1) | the Au cutoff grade for sulfide ore within the optimized
      pit is 1.00 g/t; whereas the Au cutoff grade for underground oxide ore
      outside of the optimized open pit is 4.43 g/t;
|------ | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

128

| | (2) | Material included in this table consists of transulfide
      (mixed oxide + sulfide), sulfide, and hisulfide REDOX types as defined in
      Section 15.3 of the Ketza River Report;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3) | These resources have an effective date of January 25,
      2010.                                                                                                                    

Mineral Resource Sensitivity

A grade tonnage curve (Figure 47) was calculated at 0.5 g/t
cutoff increments for the Measured and Indicated mineral inventory after
depletion.

Figure 47: Grade Tonnage Curve



As an upside sensitivity case, a US$1,300 per troy oz Au price
was determined for the open pit resource to support the YESAB Project Proposal
and in order to define the maximum environmental impact to the project. The
total open pit resource at the $1,300 Au price includes:

- A measured resource of 166.1ktonnes averaging 5.17g/t Au totaling 27.6koz;
- An indicated resource of 2,018.2ktonnes averaging 4.95 g/t Au totaling
  321.4 koz; and
- An Inferred resource of 414.8ktonnes averaging 4.37 g/t Au totaling
  58.2koz.

The Au cutoff grades for oxide and sulfide ores inside the
optimized open pit for this case are 0.735 g/t and 0.833 g/t, respectively.

Mining Operations

There are no mining operations conducted on the Ketza River
Property.

---

129

Exploration and Development

Issues relating to QA/QC data including standards, blanks,
possible sample preparation problems, and assay performance have been addressed
in the preceding sections. All historic drill hole data from 1984 to 1997 have
been audited and corrected in the master acQuire drill hole database as part of
this study.

Although older drill holes previous to 1998 were not surveyed
and do not have well-documented QA/QC protocols, the newer drilling from 2005 to
the present contain drill holes that have been surveyed and have well documented
QA/QC protocols. These newer drill holes have been completed throughout the
existing resource areas in order to verify the older data. Some additional
drilling may be warranted in a few of the resource areas as part of a
feasibility level study again to help validate the older drill hole data.

Additional drilling may be warranted at the QB zone, the upper
Hoodoo zone, and the Flint zone. Some of the shallower well drilled zones have
enough reliable information to qualify for measured status; however, for the
purposes if this resource estimate, the bulk of the estimated mineralized
material has been classified within the indicated category.

Exploration Conclusions

Results in the Hoodoo Zone are promising and further drilling
will help to define additional indicated resources and the final boundaries to
the 0.5 g/t Au mineralization. Several other deposits need additional drilling
to convert inferred resources to indicated (e.g. Peel, QB, and Lab-Hoodoo). A
couple deposits remain open down dip or along strike, and further step out
drilling is likely to add resources (e.g. Gully and Hoodoo Zones). Exploration
drilling in the Gully Zone area at depth should only proceed if underground
mining on these potentially deep vein ores can be proven to be economical.

Drilling of magnetic highs has been successful in Penguin and
Lab and other resource areas and should be continued on other targets throughout
the claim block. There are a number of undrilled gold targets remaining on the
property that should be pursued with geophysics, soil and/or rock-chip sampling,
and drilling in order to help increase the resource base and add value to the
proposed mining project.

Resource Estimation

The current Ketza River resource estimation uses additional
drilling completed in 2008 (225 more drill holes than the previous NI 43-101
report published by SRK in 2008), additional total oxide and total sulfide
logged mineral data from early drill holes, audited historical drill hole assay
data from 1984 to 1997, additional specific gravity data, a new geologic model,
and new block models. In addition, this current resource estimate used a higher
Au price, a higher processing cost, a higher open-pit mining cost, and a higher
overall stripping ratio relative to the previous model.

A total of 41% of the measured and indicated recoverable
resource ounces are hosted in oxide ores which have a gold recovery of 90%;
whereas the other 59% of the measured and indicated recoverable, resource ounces
are hosted in sulfide or mixed sulfide+oxide ores that generally have Au
recoveries of 70 percent. The previous Year-End 2007 NI 43-101 report (SRK,
2008) did not quantify the amounts of oxide vs. sulfide ores.

As a result of this new work, the current resource estimate is
lower in contained tonnages and contained ounces relative to the previous NI
43-101 resource estimation (SRK, 2008).

Compared to the last reported resource estimate for Ketza River
(SRK, 2008):

- the current measured resource estimate represents: a decrease of 544.4
  ktonnes from a previously estimated 712.2 ktonnes;

---

130

- the current indicated resource estimate represents: a decrease of 1,157,2
  ktonnes from a previously estimated 3,369.5 ktonnes;
- the current measured resource estimate represents a decrease of 117.5 koz
  of recoverable gold from a previously estimated 146.5 koz;
- the current indicated resource estimate represents a decrease of 111.2 koz
  of recoverable gold from a previously estimated 499.9 koz;
- The current measured resource estimate contains an average Au grade of
  5.38 g/t which is lower than the previously estimated Au grade of 6.40 g/t Au;
- The current indicated resource estimate contains an estimated average Au
  grade of 5.46 g/t which is higher than the previously estimated Au grade of
  4.61 g/t Au;

Based on cross-section review of grade shells in the current
model vs. the last model, it is clear that the current model incorporates
smaller grade shell shapes relative to the previous SRK 2008 model that more
accurately honors a 0.5 g/t Au cutoff, which explains the decreased tonnage
difference between the two resource estimations. Because of not allowing
external waste dilution into our grade shell shapes, and limiting internal waste
dilution in our grade shells to the best of our ability, the overall average
indicated Au grade in the current model generally increased.

The current resource model utilizes more detailed and more
complete specific gravity data within the database relative to the previous
model. In addition, the specific gravity values in this current resource were
calculated, assigned, and ultimately estimated into the blocks using a different
methodology than the previous NI 43-101 resource estimate. Since there were so
many significant changes to the modeling parameters and drill hole data in the
current model (i.e. different grade shell shapes and sizes; historical drill
hole data capture; different ore classification scripts; additional SG data;
additional 2008 drill hole data; different estimation methodology; and different
mining parameters, mining costs, and economics), the specific impact of the new
specific gravity derivations to the total tonnage of the current resource is
unknown.

The current resource model is more realistic and defendable in
comparison to all previous resource estimates. The current model, which used
additional 2008 drill hole data and tighter grade shells modeled at a rigid 0.5
g/t Au grade cutoff, has resulted in a better local resource estimate for the Au
grade and specific gravity, but globally did not increase the overall contained
ounces. The current model compares better than all previous models with the
oxide mining done by Canamax with regards to depletion of the predicted oxide
blocks, and with regards to the overall total mined tonnes and total produced
ounces. The inferred classification of potential ore material in the current
resource estimate was included in order to maximize the footprint of the
Lerchs-Grossman pit shells for permitting purposes.

Other Relevant Information

YNG submitted the Yukon Environmental and Socio-Economic
Assessment Board (YESAB) Application in late September 2011.

Exploration is continuing at the property in 2011. Additional
exploration at the property is warranted based on review of the existing drill
hole results and because of the large property size that includes additional
favorable areas for manto and vein-stockwork mineralization.

(c)         
 Silver Valley Property, Yukon

The Company was granted an option to acquire a 100% interest
  in six 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 Company has staked or acquired 143 additional quartz claims and leases around
  the original six claims, and these are registered in the name of the Company.
  As of year-end 2011, there are a total of 149 quartz claims and quartz leases
  (Figure 48) that comprise the Silver Valley Project all of which are owned 100%
  by KRH. There are a total of 4 quartz leases in the Silver Valley property that
  comprise 202 acres.

---

131

Figure 48. Silver Valley Claim Map



Exploration Drilling

Diamond drilling totalling 75 holes in 11,163 m has been conducted
  at the Silver Valley project in 2006, 2007, 2009 and during January of 2010
  by KRH. The Silver Valley Property consists mostly of Ag-Pb-Au±Cu±Zn
  veins and is located approximately 1 kilometre 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.

---

132

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. No drilling was performed at Silver Valley in 2011.

Table 43. 2006-2011 Silver Valley Drilling Summary.

Year
      Drill Holes Completed
      Total Meters
      Total FootageK-18B South2006
    4
    1.014.7
    3,328.22007
    58
    8,903.5
    29,203.32008
    0
    0
    02010
    7
    1,244.8
    4,082.92011
    0
    0
    0Total
    75
    11,163.0
    36,614.4


Drilling

Drilling at the Silver Valley Project in 2010 focused on the
Rivers Edge and K18B South targets. The QA/QC procedures used for the Silver
Valley Project were similar to those used for the 2008 Ketza River drilling
program described previously; a couple different certified standards containing
Pb, Zn, and Ag were used for the Silver Valley assay programs. The same Ketza
River geological staff and camp support have been used to conduct the
exploration and drilling work at the Silver Valley Project.

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.

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.

Trenching and 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 sampled and later re-contoured late in the 2010 field season.

(d)          
Other Properties

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

Silver Bar, Arizona -The Company 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 Company reduced the carrying value to a
nominal amount as management has no current plans to conduct exploration t this
property.

Greenwood properties -The Company owns a 75% interest
  in 31 claims in the Greenwood Mining District in south-east 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.

---

133

ITEM
5:           DIVIDENDS AND
DISTRIBUTIONS

To date, the Company has not paid any cash dividends or
distributions on its securities. The Company 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

The Company is authorized to issue an unlimited number of
shares without par value (the Shares). 931,479,031 Shares are issued and
outstanding as at March 29, 2012. The Company also has 94,914,372 Share Purchase
Warrants (the Warrants) issued and outstanding. Each warrant, when exercised,
will entitle the holder to purchase one common share of the Company at a price
of between $0.43 and $3.00 per share (the latter of which expire on or before
June 20, 2012.

Holders of Shares of the Company shall be entitled to notice
of, to attend and vote at any meeting of the shareholders of the Company 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 Company 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
Companys Shares in respect of dividends. Shareholders shall be entitled in the
event of any liquidation, dissolution or winding-up of the Company, 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 Company as are available for
distribution.

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 ($)
      Low ($)
      Volume2011 January
    0.86
    0.58
    21,336,954February
    0.83
    0.64
    13,807,288****March
    0.79
    0.65
    12,067,047****April
    0.70
    0.54
    15,729,695****May
    0.58
    0.36
    15,893,539****June
    0.495
    0.35
    6,243,810****July
    0.52
    0.415
    9,768,282****August
    0.56
    0.415
    12,074,324****September
    0.50
    0.285
    25,554,818****October
    0.42
    0.28
    8,173,482****November
    0.38
    0.28
    9,068,878****December
    0.36
    0.24
    15,892,805


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134

Period
      High ($)
      Low ($)
      Volume2012January
    0.315
    0.23
    28,471,073****February
    0.475
    0.28
    25,019,487****Week ending March 2
    0.40
    0.35
    1,401,433****Week ending March 9
    0.385
    0.325
    2,542,917****Week ending March 16
    0.385
    0.32
    2,167,733****Week ending March 23
    0.345
      0.305
    1,852,533


The Company 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 ($)
      Low ($)
      Volume2011January
    0.145
    0.13
    3,000****February
    0.145
    0.08
    112,100****March
    0.14
    0.10
    74,800****April
    0.05
    0.01
    6,192,200****May
    0.02
    0.005
    7,605,750****June
    0.02
    0.01
    28,000****July
    0.02
    0.015
    28,400****August
    0.02
    0.01
    508,500****September
    0.02
    0.01
    598,000****October
    0.02
    0.005
    100,000****November
    0.015
    0.01
    224,900****December
    0.01
    0.01
    140,0002012January
    0.01
    0.005
    55,000****February
    0.01
    0.005
    1,461,000****Week ending March 2
    N/A
    N/A
    N/A****Week ending March 9
    0.01
    0.01
    100,000****Week ending March 16
    0.01
    0.01
    5,500****Week ending March 23
    N/A
    N/A
    N/A


ITEM 8:
    ESCROWED SECURITIES ANDSECURITIESSUBJECTTOCONTRACTUALRESTRICTION ON TRANSFER


As at December 31, 2011 no Shares of the Company were subject
to escrow restrictions.

ITEM
9:           DIRECTORS AND
OFFICERS

9.1Name, Occupation and Security Holding

Name of Director/ExecutiveOfficer, Province
      or State andCountry of Residence
      Principal Occupation during the past
      fiveyears
      Current Position and Date ofAppointmentRobert F. Baldock(1)(3) (4) (5) (6)
      (7)British Columbia, Canada
    President and CEO of the Company; President and
      CEO of Monument Mining Limited; June 2005 to date.
    President and Chief Executive Officer since May
      21, 2009 and Director since April 12, 2009


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135

Name of Director/ExecutiveOfficer, Province
        or State andCountry of Residence
      Principal Occupation during the past
        fiveyears
      Current Position and Date ofAppointmentGraham Dickson(5) (6)British Columbia, Canada
      President of Celec Inc.,
          June 1993 to date.
      Senior Vice President of Acquisitions and Corporate
        Development since June 27, 2011; Director since April 17, 1997.Francois Marland(6)Switzerland
      Lawyer until 2010.
      Director and Vice Chairman since July 2, 2010Symeon Solomonidis(5)Switzerland
      Independent Consultant since
          2008; Director of Software for Hewlett Packard from 1976 to 2008.
      Director since August 1, 2009Jean-Edgar de TrentinianSwitzerland
      President and CEO of Orifer
          SA.; Director of Carrefour SA from 1993 to 2008.
      Director since August 1, 2009Jay W. Schnyder(1)(2)Switzerland
      A member of the management
          committee (Head of Refining) of MKS Finance SA,
      Director since May 13, 2010Pierre 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. and Solar Energy Initiatives, Inc.
      Director since May 13, 2010Gerald 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, 2010John 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, 2010Shaun Heinrichs(7)
        British Columbia, Canada
      CFO of the Company since
          November 2008, controller of the Company 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 dateGraham Scott
        British Columbia, Canada
      Lawyer; Principal, Vector
          Corporate Finance Lawyers from July 1, 2001 to date.
      Secretary since May 19, 2005Todd Johnson
        British Columbia, Canada
      Vice President of the Company
          since April 2010; independent consultant from December 2006 to March
          2010.
      Vice President of Exploration since April 1,
        2010Randy ReichertBritish Columbia, Canada
      Chief Operating Officer
          of the Company since June 27, 2011; President and COO for Colossus Minerals
          Inc. from 2009 to June 2011; COO of Oriel Resources plc (2008 to 2009)
          and Orsu Metals Corp. (2007 to 2008); General Manager of Kinross Gold
          Corporation (2006 to 2007).
      Chief Operating Officer since June 27, 2011


|(1) | Member of the Audit Committee       
|--- | ------------------------------------
|(2) | Member of the Compensation
Committee

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136

|(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 Companys next Annual General Meeting is scheduled to be
held on May 22, 2012 and it is anticipated that all of the above directors will
be nominated for re-election. Officers of the Company are appointed by the Board
of Directors.

As of March 29, 2012, 281,923,500 Shares of the Company are
beneficially owned, or controlled or directed, directly or indirectly by the
directors and executive officers, as a group, representing 30.27% of the issued
and outstanding voting securities (931,479,031 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 Company or
a shareholder holding a sufficient number of securities of the Company to affect
materially the control of the Company, has been a director or officer of any
other Company 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. 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

---

137

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 Company, or a shareholder holding sufficient securities
of the Company to affect materially the control of the Company 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 Company, has been furnished by the respective directors, officers and
shareholders holding a sufficient number of securities of the Company to
materially control the Company.

Subsequent to January 1, 2012, no director or executive officer
of the Company or a shareholder holding a sufficient number of securities of the
Company to affect materially the control of the Company, 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.                                      

9.3Conflicts of Interest

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

ITEM
10:           PROMOTERS

Under the definition of promoter contained in Section 1 of
the Securities Act (British Columbia), other than the directors and
officers of the Company, management is not aware of any person or company who
could be characterized as a promoter of the Company or a subsidiary of the
Company within the two most recently completed financial years or during the
current financial year.

ITEM
11:           LEGAL
PROCEEDINGS

The Company is not aware of any legal proceeding or regulatory
actions to which the Company is or is likely to be a party other than as
disclosued in the Companys annual audited financial statements.

ITEM
12:           INTEREST OF
MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

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

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138

Name of Optionee
      Position of Optionee (Director/Officer)
      Date of Grant
      No. of Shares
      Exercise Price
      Expiry DateGraham Dickson
    Director
    August. 10, 2007
    1,000,000
    $1.74
    Aug. 10, 2012Graham Scott
    Officer
    August 10, 2007
    200,000
    $1.74
    Aug. 10, 2012Shaun Heinrichs
    Officer
    March 28, 2008
    200,000
    $1.60
    March 27, 2013JE de Trentinian
    Director
    July 26,2009
    1,000,000
    $0.15
    July 26, 2014Robert Baldock
    Director
    July 26,2009
    4,000,000
    $0.15
    July 26, 2014Graham Dickson
    Director
    July 26,2009
    4,000,000
    $0.15
    July 26, 2014Simon Solomonidis
    Director
    July 26,2009
    500,000
    $0.15
    July 26, 2014Graham Scott
    Officer
    July 26,2009
    500,000
    $0.15
    July 26, 2014Shaun Heinrichs
    Officer
    July 26,2009
    1,500,000
    $0.15
    July 26, 2014Todd Johnson
    Officer
    July 26, 2009
    225,000
    $0.15
    July 26, 2014Robert Baldock
    Director
    March 23, 2010
    8,000,000
    $0.32
    March 23, 2015Graham Dickson
    Director
    March 23, 2010
    8,000,000
    $0.32
    March 23, 2015Todd Johnson
    Officer
    March 23, 2010
    775,000
    $0.32
    March 23,2015Francois Marland
    Director
    July 12, 2010
    9,000,000
    $0.32
    July 12, 2015Pierre Besuchet
    Director
    July 15, 2010
    1,000,000
    $0.26
    July 15, 2015Jay Schnyder
    Director
    July 15, 2010
    1,000,000
    $0.26
    July 15, 2015John Greenslade
    Director
    July 15, 2010
    1,000,000
    $0.26
    July 15, 2015Gerald Ruth
    Director
    July 15, 2010
    1,000,000
    $0.26
    July 15, 2015Simon Solomonidis
    Director
    July 15, 2010
    500,000
    $0.26
    July 15, 2015Todd Johnson
    Officer
    September 9, 2011
    250,000
    $0.45
    September 9, 2016Shaun Heinrichs
    Officer
    May 31, 2011
    750,000
    $0.50
    May 31, 2016Randy Reichert
    Officer
    May 31, 2011
    1,500,000
    $0.50
    May 31, 2016Randy Reichert
    Officer
    January 11, 2012
    2,000,000
    $0.26
    January 11, 2017


ITEM
13:           TRANSFER AGENTS
AND REGISTRARS

The Registrar and Transfer Agent for the Company 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

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 Company 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 Companys outstanding Shares for
      issuance under the Plan.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                      
|2. | Pursuant to Stock Option Certificates the Company granted
      options to Directors and Senior Officers as set out in Item 12
    above.                            

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139

ITEM
15:           INTERESTS OF
EXPERTS

15.1Names of Experts

Todd Johnson, Vice President of Exploration of the Company, of
Vancouver, British Columbia (#16748, Nevada), Karl Swanson, Mining Consultant,
of Larkspur, Colorado (AusIMM #304871 and SME #4043076) and Mark Odell, Mine
Engineer Consultant, of Elko, Nevada (#13708, Nevada) are the authors of the
technical report referred to in Section 4.4(a) hereof.

Messrs. Johnson, Swanson and Odell, as well as John Fox,
Metallurgical Engineer of Vancouver, British Columbia (#12578, British Columbia)
are the authors of the Technical Report referred to in Section 4.4(b) hereof.

15.2Interests of Experts

Mr. Johnson is an officer of the Company and Mr. Fox was
director of the Company (2005 to 2010). Both of Messrs. Fox and Johnson hold
stock options to purchase securities of the Company. Messrs. Swanson and Odell
have no registered or beneficial, direct or indirect, interest in the securities
of the Company.

Deloitte & Touche LLP is the Companys auditor and is
independent within the meaning of the Rules of Professional Conductof the
Institute of Chartered Accountants of British Columbia.

ITEM
16:           ADDITIONAL
INFORMATION

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

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140

*2.******Composition of the Audit Committee*

The Companys audit committee is comprised of three directors,
Jay Schnyder, Gerald Ruth (Chair) and Robert F. Baldock. As defined in NI
52-110, the Board of Directors of the Company has determined that Messrs. Ruth
and Schnyder are independent and all members of the Audit Committee are
financially literate, meaning that they are able to read and understand
financial statements.

*3.******Relevant Education and Experience*

NI 52-110 provides that an individual is financially literate
if he or she has the ability to read and understand a set of financial
statements that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of the issues that
can reasonably be expected to be raised by the Companys financial statements.
All members of the Audit Committee are financially literate as that term is
defined.

Gerald Ruth graduated from Wilfrid Laurier University
with a Bachelor of Business Administration (Hons.) in 1981 and earned his
designation as a Chartered Accountant in 1983. He has been an independent
corporate finance consultant since 2003, a Director and audit committee member
of various private and public companies.

Jay Schnyder graduated with a Master in Business
Administration in 1987 from the University of Lausanne, Switzerland and
developped his education on precious metals and currency trading at MKS FINANCE
before taking over the groups business development with various public and
private familly owned mining groups which amongst the individual financial
evaluations of such groups for compliance and credit purposes included
structuring hedging and bridge financing programs.

Robert F. Baldock is an experienced mining executive as
well as being a qualified and experienced accountant with over 30 years of
hands-on management of public and private corporations across a wide range of
industries, focused on the mining industry.

*4.******Reliance on Certain Exemptions*

At no time since the commencement of the Companys most
recently completed financial year, has the Company 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                               
| | (e) | an exemption from National Instrument 52-110, Audit
      Committees, in whole or part granted under Section 8,
      Exemptions.

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

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

*6.******Reliance on Section 3.8*

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

---

141

*7.******Audit Committee Oversight*

At no time since the commencement of the Company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.

*8.*****
Pre-Approval Policies and Procedures

The Committee has adopted specific policies regarding the
engagement of the external auditors appointed by the shareholders of the Company
(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.

*9.******External Auditor Service Fees (By Category)*

Set forth below are details of fees billed by the Company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, 2010
    210,000
    
    
    December 31, 2011
    337,000
    40,000
    53,000
    


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

---

142

Schedule A to the Annual Information Form of
Yukon-Nevada Gold Corp. (the "Company")

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
Company.

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 Company; 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 Company. The Members
will be appointed to hold office until the next annual general meeting of
shareholders of the Company 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 Company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 Company (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 Company, the
Chief Executive Officer or the Chief Financial Officer of the Company 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.

---

143

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 Company 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 Company 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 Company;                                                                                                                                      
| |      |                                                                                                                                                                                                                                                  
| | iii. | reviewing the independence, qualifications and
      objectivity of the Company's auditors, and making recommendations to the
      board of directors in the ease of vacancy of an auditor, as to the
      selection of the Company's auditors;
| |      |                                                                                                                                                                                                                                                  
| | iv.  | reviewing and recommending auditors'
  remuneration;                                                                                                                                                                                             
| |      |                                                                                                                                                                                                                                                  
| | v.   | reviewing the scope, results and findings of the
      Company'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
      Company the relationships existing between them and the management of the
      Company 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:                                                                                                                                                                    

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144

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

| | i.   | the adequacy of the Company's internal financial
      controls;                                                     
| | ---- | ---------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                      
| | ii.  | recommendations for the improvement of the Company'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 Company, including any disagreements
      that may have arisen between the auditors and management in any
    area:
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                    
| | ii.  | meeting(s) with management of the Company 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
Company;           
| |      |                                                                                                                                                                                                                                                                                                    
| | 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
      Company 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:                                                                                                                                                                   

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145

| | 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                                                                                                                                        
| |      |                                                                                                                                                                                                       
| | 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 Company compliance policies and programs and
      reports prepared to manage and monitor the Company compliance policies.
      The Audit Committee shall receive reports concerning the Company'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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146

Schedule B to the Annual Information Form of
Yukon-Nevada Gold Corp. (the "Company")

WHISTLEBLOWER POLICY


The Companys confidential whistleblowing policy is posted on
its website at: (http://www.yukon-nevadagold.com/s/Governance.asp).

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