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KPMG LLP
      Telephone
      (604) 691-3000Chartered Accountants
      Fax
      (604) 691-3031PO Box 10426 777 Dunsmuir Street
      Internet
      www.kpmg.caVancouver BC V7Y 1K3Canada




AUDITORS' REPORT ON RECONCILIATION TO UNITED
  STATES GAAP

To the Board of Directors of Yukon-Nevada Gold Corp.

On March 20, 2008, we reported on the consolidated balance
  sheets of Yukon-Nevada Gold Corp. ("the Company") as at December 31, 2007 and
  2006 and the consolidated statements of operations, deficit, comprehensive loss
  and cash flows for each of the years then ended which are included in the annual
  report on Form 40-F. In connection with our audits conducted in accordance with
  Canadian generally accepted auditing standards of the aforementioned
  consolidated financial statements, we also have audited the related supplemental
  note entitled "Reconciliation to United States GAAP" included in the Form 40-F.
  This supplemental note is the responsibility of the Company's management. Our
  responsibility is to express an opinion on this supplemental note based on our
  audits.

In our opinion, such supplemental note, when considered in
  relation to the basic consolidated financial statements taken as a whole,
  presents fairly, in all material respects, the information set forth
  therein.

Chartered Accountants

Vancouver, Canada

September 24, 2008





KPMG LLP, a Canadian
  limited liability partnership is the Canadian 
  member firm of KPMG
  International, a Swiss cooperative.

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Reconciliation between Canadian and United States Generally
Accepted Accounting Principles

These consolidated financial statements have been prepared in
accordance with Canadian generally accepted accounting principles (Canadian
GAAP). Material variations in the accounting principles, practices and methods
used in preparing these consolidated financial statements from principles,
practices and methods accepted by United States of America generally accepted
accounting principles (US GAAP) are described and quantified below.

The impact of US GAAP on the consolidated statement of
operations is as follows:

|                                                    |   | December 31, |   |   | December 31, |  
|--------------------------------------------------- | - | ------------ | - | - | ------------ | -
|In thousands                                        |   | 2007         |   |   | 2006         |  
|                                                    |   |              |   |   |              |  
|Net loss under Canadian GAAP                        | $ | (1,899       | ) | $ | (1,189       | )
|Write-off of exploration mineral property costs (i) |   | (23,629      | ) |   | (6,862       | )
|Premium received on flow-through shares (ii)        |   | 3,897        |   |   | 1,022        |  
|                                                    |   |              |   |   |              |  
|Net loss under US GAAP                              |   | (21,631      | ) |   | (7,029       | )
|                                                    |   |              |   |   |              |  
|Other comprehensive income  foreign
      exchange |   |              |   |   |              |  
|adjustment                                          |   | 2,599        |   |   | (316         | )
|                                                    |   |              |   |   |              |  
|Comprehensive
      income                          | $ | (19,032      | ) | $ | (7,345       | )
|                                                    |   |              |   |   |              |  
|Loss per share under US GAAP  basic and diluted    | $ | (0.18        | ) | $ | (0.13        | )

The impact of US GAAP on the consolidated balance sheet is as
follows:

|                                                                        |   | December 31, |   |   | December 31, |  
|----------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|In thousands                                                            |   | 2007         |   |   | 2006         |  
|                                                                        |   |              |   |   |              |  
|Assets under Canadian GAAP                                              | $ | 296,167      |   | $ | 31,912       |  
|Opening adjustment to mineral property costs (i)                        |   | (11,737      | ) |   | (5,068       | )
|Write-off of exploration mineral property costs (i)                     |   | (23,629      | ) |   | (6,669       | )
|                                                                        |   |              |   |   |              |  
|Assets under US GAAP                                                    | $ | 260,801      |   | $ | 20,175       |  
|                                                                        |   |              |   |   |              |  
|Liabilities under Canadian GAAP                                         | $ | 90,323       |   |   | 6,316        |  
|Opening adjustment to future income tax liabilities (ii)                |   | (557         | ) |   | 1,022        |  
|Recognition of future income tax asset due
      to write-off of        |   |              |   |   |              |  
|exploration mineral property costs
      (i)                            |   | (2,278       | ) |   |             |  
|Net premium received on flow-through shares
      (ii)                  |   | 1,031        |   |   | 597          |  
|Reversal of future income tax liability arising from
      renunciation |   |              |   |   |              |  
|under Canadian GAAP (ii)                                                |   | (3,902       | ) |   | (2,176       | )
|                                                                        |   |              |   |   |              |  
|Liabilities under US GAAP                                               | $ | 84,617       |   | $ | 5,759        |  
|                                                                        |   |              |   |   |              |  
|Shareholders equity under Canadian GAAP                                | $ | 205,844      |   | $ | 25,596       |  
|Opening adjustments to record the write-off of mineral
      property   |   |              |   |   |              |  
|costs and premium on
      flow-through shares                          |   | (11,180      | ) |   | (6,090       | )
|Write-off of exploration mineral property costs (i)                     |   | (23,629      | ) |   | (6,862       | )
|Recognition of future income tax asset due
      to write-off of        |   |              |   |   |              |  
|exploration mineral property costs
      (i)                            |   | 2,278        |   |   |             |  
|Recognition of future income tax asset due
      to write-off of        |   |              |   |   |              |  
|exploration mineral property costs
      (i)                            |   | 1,619        |   |   | 1,022        |  
|Reversal of future income tax liability
      arising from renunciation |   |              |   |   |              |  
|under Canadian GAAP (ii)                                                |   | 3,902        |   |   | 2,176        |  
|Premium received on flow-through shares
      (ii)                      |   | (2,650       | ) |   | (1,619       | )
|Foreign exchange
      translation adjustment                           |   |             |   |   | 193          |  
|                                                                        |   |              |   |   |              |  
|Shareholders equity under US GAAP                                      | $ | 176,184      |   | $ | 14,416       |  

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The components of Shareholders' equity under US GAAP would be
as follows:

|                                       |   | December 31, |   |   | December 31, |  
|-------------------------------------- | - | ------------ | - | - | ------------ | -
|In thousands                           |   | 2007         |   |   | 2006         |  
|                                       |   |              |   |   |              |  
|Share capital                          | $ | 185,507      |   | $ | 31,560       |  
|Warrants                               |   | 20,603       |   |   | 687          |  
|Contributed surplus                    |   | 8,092        |   |   | 1,155        |  
|Accumulated other comprehensive income |   | 2,264        |   |   | (335         | )
|Deficit                                |   | (40,282      | ) |   | (18,651      | )
|Total
      Shareholders equity       | $ | 176,184      |   | $ | 14,416       |  

The impact of US GAAP on the consolidated statements of cash
flows is as follows:

|                                                            |   | December 31, |   |   | December 31, |  
|----------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|In thousands                                                |   | 2007         |   |   | 2006         |  
|                                                            |   |              |   |   |              |  
|Cash used in operating activities under
      Canadian GAAP | $ | (11,768      | ) | $ | (702         | )
|Write-off of
      exploration mineral property costs (i)   |   | (23,629      | ) |   | (6,559       | )
|Cash used in operating activities under
      US GAAP       |   | (35,397      | ) |   | (7,261       | )
|                                                            |   |              |   |   |              |  
|Cash used in investing activities under
      Canadian GAAP |   | (33,231      | ) |   | (8,883       | )
|Write-off of
      exploration mineral property costs (i)   |   | 23,629       |   |   | 6,559        |  
|Cash used in investing activities under
      US GAAP       | $ | (9,602       | ) | $ | (2,324       | )

Under US GAAP there would be no subtotal to the cashflow from
operations in the cashflow statement.

|(i)   | Mineral properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|      | Under Canadian GAAP, resource property acquisition costs
      and exploration costs may be deferred and amortized to the extent they
      meet certain criteria. Capitalized costs under Canadian GAAP are amortized
      on a unit-of-production basis based on proven, probable and possible
      reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|      | Under US GAAP, exploration costs must be expensed as
      incurred unless the resource properties have proven and probable reserves
      at which time costs incurred to bring the mine into production are
      capitalized as development costs. Drilling and related costs in
      delineating an ore body and converting mineral resources to mineral
      reserves are expensed as exploration costs under US GAAP. Capitalized
      costs are then amortized on a unit-of-production basis based on proven and
      probable reserves rather than over the proven and probable reserves of the
      mine and the applicable portion of resources expected to ultimately be
      mined. This additional depletion and exploration expense is recognized in
      the statement of operations under US GAAP. For the purposes of the
      consolidated statements of cash flows, the exploration costs are
      classified as cash used in investing activities under Canadian GAAP and
      cash used in operating activities under US GAAP.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(ii)  | Flow-through shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|      | Under Canadian income tax legislation, the Company is
      permitted to issue shares whereby the Company agrees to incur Canadian
      exploration expenditures (as defined in the Income Tax Act, Canada) and
      renounce the related income tax deductions to investors. Under Canadian
      GAAP, the full amount of funds received from flow-through share issuances
      are initially recorded as share capital. Upon renouncing the expenditures,
      the amount of deferred tax on the expenditures is deducted from share
      capital. Under US GAAP, the premium paid for the flow-through shares in
      excess of market value is credited to liabilities and included in income
      when the related tax benefits are renounced by the Company.                                                                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(iii) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|      | Under Canadian GAAP, future tax assets and liabilities
      are recorded at substantially enacted tax rates. Under Financial
      Accounting Standards Board (FASB) Statement of Financial Accounting
      Standards (SFAS) 109, Income taxesfor US GAAP, deferred tax assets
      and liabilities are recorded at enacted tax rates. In 2007, there were no
      differences between enacted and substantially enacted rates. As a result,
      the application of US GAAP in accounting for income taxes does not result
      in any material measurement differences from Canadian GAAP for future tax
      assets or liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                

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|     | Due to the treatment of exploration costs under US GAAP
      described in note 1 above, there would be a larger tax benefit arising
      under US GAAP when compared to Canadian GAAP. With respect to the Canadian
      operations, any future tax assets arising are fully offset by a valuation
      allowance as it is not more likely than not that the future tax assets
      would be realized. For the US operations, an additional future income tax
      asset of $2.3 million has been recognized and offset against the future
      income tax liability.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(iv) | Accounting for uncertainty in income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The Company adopted Financial Accounting Standards Board
      Interpretation No. 48, Accounting for Uncertainty in Income Taxes(FIN 48) effective January 1, 2007. FIN 48 prescribes a recognition
      threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be
      taken in a tax return. FIN 48 requires that the Company recognize on
      adoption only those tax positions that are "more-likely-than-not" (50% or
      greater) of being sustained on audit, based on the technical merits of the
      position. Additionally, this standard provides guidance on de-recognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition. With the adoption of this standard, the Company
      has performed a comprehensive review of all material tax positions in
      accordance with recognition and measurement standards established by FIN
      48.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | Based on this review, the provisions of FIN 48 did not
      have a material impact on the Company's annual consolidated financial
      statements. The Company has elected to apply the provisions of FIN 48 in
      assessing their uncertain tax positions under Canadian GAAP as well,
      removing any differences that would arise with US GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(v)  | Impact of Recent US Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | Recently issued US accounting pronouncements are outlined
      below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | In September 2006, FASB issued SFAS No. 157, Fair
      Value Measurements(SFAS 157). This statement defines fair value,
      establishes guidelines for measuring fair value and expands disclosures
      regarding fair value measurements. SFAS 157 does not require any new fair
      value measurements but rather eliminates inconsistencies in guidance found
      in various prior accounting pronouncements. SFAS 157 is effective for
      fiscal years beginning after November 15, 2007. The Company expects that
      adoption of SFAS 157 will not have a material effect on its financial
      condition or its statement of operations.                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | In February 2007, the FASB issued SFAS No.159, the
      Fair Value Option for Financial Assets and Financial Liabilities-
      including an amendment to FAS 115. This standard permits a company to
      choose to measure certain financial assets, financial liabilities and firm
      commitments at fair value. The standard is effective for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating the
      impact SFAS No.159 will have on its financial condition and its statement
      of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | In December 2007, the FASB released SFAS 141-R,
      Business Combinations. This Statement applies prospectively to
      business combinations for which the acquisition date is on or after the
      beginning of the first annual reporting period beginning on or after
      December 15, 2008, which is a business combination in the year ending
      December 31, 2009 for the Company. The objective of this Statement is to
      improve the relevance, representational faithfulness, and comparability of
      the information that a reporting entity provides in its financial reports
      about a business combination and its effects. The Company will assess the
      impact of this standard for Business Combinations occurring after January
      1, 2009.                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | In March 2008, FASB issued FASB Statement No. 161,
      Disclosures about Derivative Instruments and Hedging Activities -an amendment of FASB Statement No. 133. This Statement requires
      enhanced disclosures about an entity's derivative and hedging activities
      and thereby improves the transparency of financial reporting. This
      Statement is effective for financial statements issued for fiscal years
      and interim periods beginning after November 15, 2008, with early
      application encouraged. This Statement encourages, but does not require,
      comparative disclosures for earlier periods at initial adoption. The
      Company is assessing the impact of the new standard.                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The Securities and Exchange Commission ("SEC") and FASB
      have issued recent interpretations for US GAAP that suggest warrants with
      an exercise price that is different from the entity's functional currency
      cannot be classified as equity. On June 12, the EITF reached final
      consensus on the application of EITF 00-19,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | Determining Whether and Instrument (or an Embedded
      Feature) is Indexed to an Entity's Own Stock, to foreign currency
      denominated warrants and the decision was approved by the FASB. The EITF
      is applicable for years beginning after December 15, 2008 and will be
      treated as a change in accounting principle through prospective
      application. As the Company's functional currency is the US dollar, upon
      adoption of this abstract the issued and outstanding warrants that have an
      exercise price that is denominated in Canadian dollars will be treated
      as                                                                                                                                                                                                                                                                                                                                                                                                    

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derivative instruments and recorded as
liabilities under US GAAP and changes in fair value will be calculated at each
reporting period. Any gain or loss arising from this revaluation will be
recorded in the statement of operations.

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