---



Consolidated Financial Statements

(Expressed in United States Dollars)



VERIS GOLD CORP.(FORMERLY
YUKON-NEVADA GOLD CORP.)



For the year ended December 31, 2012
and 2011

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MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING



The accompanying consolidated financial statements of VERIS
GOLD CORP. (formerly Yukon-Nevada Gold Corp) (the Company) have been prepared by
management in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board, and within the framework
of the summary of significant accounting policies disclosed in the notes to
these consolidated financial statements.

A system of internal accounting control is maintained in order
to provide reasonable assurance that assets are safeguarded and that
transactions are properly recorded and executed in accordance with managements
authorization. This system includes established policies and procedures, the
selection and training of qualified personnel and an organization providing for
appropriate delegation of authority and segregation of responsibilities.

The Audit Committee of the Board of Directors meets
periodically with management and the Companys independent auditors to review
the scope and results of their annual audit and to review the consolidated
financial statements and related financial reporting matters prior to submitting
the consolidated financial statements to the Board of Directors for approval.
The Audit Committee is appointed by the Board of Directors and all of its
members are independent directors. The Audit Committee is responsible for
engaging or reappointing the external auditors.

These consolidated financial statements have been approved by
the Board of Directors on the recommendation of the Audit Committee.



Shaun Heinrichs
    Randall ReichertShaun Heinrichs
    Randall ReichertCo-Chief Executive Officer
    Co-Chief Executive OfficerChief Financial Officer
    Chief Operating OfficerMarch 25, 2013


---

Report of Independent Registered Chartered
Accountants

To the Board of Directors and Shareholders of Veris Gold Corp.

We have audited the accompanying consolidated financial statements of Veris Gold Corp. and subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2012 and December 31, 2011 and the consolidated statements of operations and comprehensive (loss) income, shareholders’ equity, and cash flows for the years ended December 31, 2012, December 31, 2011 and December 31, 2010, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial
Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement. An audit involves
performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the
auditor's judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the consolidated
financial statements in order to design audit procedures that are appropriate in
the circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated
financial statements.

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

Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial performance and cash flows of
Veris Gold Corp. and subsidiaries for the years ended December 31, 2012,
December 31, 2011 and December 31, 2010, and their financial position as at
December 31, 2012 and December 31, 2011 in accordance with International
Financial Reporting Standards as issued by the International Accounting
Standards Board.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which indicates that the Company has incurred net losses over the past several years and has a working capital deficit in the amount of $34.3 million and has an accumulated deficit of $379 million as at December 31, 2012. These conditions, along with other matters as set forth in Note 1, indicate the existence of material uncertainties that may cast substantial doubt about the Company’s ability to continue as a going concern.

---

Other Matter

We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the Company's
internal control over financial reporting as of December 31, 2012, based on the
criteria established in Internal ControlIntegrated Frameworkissued by
the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March 25, 2013 expressed an unqualified opinion on the Companys
internal control over financial reporting.

/s/ Deloitte LLP

Independent Registered Chartered Accountants Vancouver,
Canada March 25, 2013

---

Report of Independent Registered Chartered
Accountants

To the Board of Directors and Shareholders of Veris Gold Corp.

We have audited the internal control over financial reporting
of Veris Gold Corp. and subsidiaries (the Company) as of December 31, 2012,
based on the criteria established in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The Company's management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in Managements Report on
Internal Control over Financial Reporting. Our responsibility is to express an
opinion on the Company's internal control over financial reporting based on our
audit.

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

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

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

In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31,
2012, based on the criteria established in Internal Control  Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission.

We have also audited, in accordance with Canadian generally
accepted auditing standards and the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements as of and
for the year ended December 31, 2012 of the Company and our report dated March
25, 2013 expressed an unqualified opinion on those financial statements.

/s/ Deloitte LLP

Independent Registered Chartered Accountants Vancouver,
Canada March 25, 2013

---

VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD
CORP.)Consolidated Statements of Financial Position (In thousands of US dollars)

|                                                    |       |   | December 31, |   |   | December 31, |  
|--------------------------------------------------- | ----- | - | ------------ | - | - | ------------ | -
|ASSETS                                              | Note  |   | 2012         |   |   | 2011         |  
|Current assets:                                     |       |   |              |   |   |              |  
|Cash and cash equivalents                           |       | $ | 9,295        |   | $ | 2,261        |  
|Restricted funds                                    | 9     | $ | 8,000        |   | $ | -            |  
|Accounts receivable and
      other                 |       |   | 10,201       |   |   | 8,542        |  
|Inventories                                         | 8     |   | 21,725       |   |   | 14,476       |  
|                                                    |       |   | 49,221       |   |   | 25,279       |  
|Restricted funds                                    | 9     |   | 51,307       |   |   | 65,810       |  
|Mineral property, plant and equipment               | 10    |   | 243,602      |   |   | 231,040      |  
|Deferred transaction costs                          | 15,16 |   | 3,666        |   |   | 4,781        |  
|Other assets                                        |       |   | 663          |   |   | 736          |  
|Total
      Assets                                  |       | $ | 348,459      |   | $ | 327,646      |  
|                                                    |       |   |              |   |   |              |  
|                                                    |       |   |              |   |   |              |  
|LIABILITIES                                         |       |   |              |   |   |              |  
|Current liabilities:                                |       |   |              |   |   |              |  
|Accounts payable and
      accrued liabilities      |       | $ | 37,373       |   | $ | 40,534       |  
|Deferred revenue                                    | 15    |   | 38,671       |   |   | 21,614       |  
|Forward contracts                                   | 12    |   | 7,006        |   |   | 15,003       |  
|Embedded derivative
      liability                 | 16    |   | 467          |   |   | -            |  
|Warrants                                            | 13    |   | 12           |   |   | 850          |  
|                                                    |       |   | 83,529       |   |   | 78,001       |  
|Warrants                                            | 13    |   | 8,700        |   |   | 1,785        |  
|Convertible debenture                               | 16    |   | 3,769        |   |   | -            |  
|Forward contracts                                   | 12    |   | 21,480       |   |   | -            |  
|Deferred revenue                                    | 15    |   | 64,686       |   |   | 95,625       |  
|Deferred tax liabilities                            | 19    |   | 9,647        |   |   | 17,537       |  
|Decommisioning and rehabilitation provisions        | 17    |   | 54,629       |   |   | 47,548       |  
|Finance lease                                       | 18    |   | 3,358        |   |   | -            |  
|                                                    |       |   | 249,798      |   |   | 240,496      |  
|EQUITY                                              |       |   |              |   |   |              |  
|Share capital                                       | 20    |   | 438,313      |   |   | 413,357      |  
|Share based payments
      reserve                  | 20    |   | 36,663       |   |   | 33,652       |  
|Accumulated other
      comprehensive income (loss) |       |   | 2,642        |   |   | (917         | )
|Deficit                                             |       |   | (378,957     | ) |   | (358,942     | )
|                                                    |       |   | 98,661       |   |   | 87,150       |  
|Total
      Liabilities and Equity                  |       | $ | 348,459      |   | $ | 327,646      |  
|Nature of operations and going concern  Note 1     |       |   |              |   |   |              |  

Commitments and contingencies  Note 25

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board on March 25, 2013:

|Randall
      Reichert | Director | Shaun Heinrichs | Director
|------------------------ | -------- | ----------------- | --------

1

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VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD
CORP.)Consolidated Statements of Operations and Comprehensive
Income (Loss) (In thousands of US dollars, except for share and per share amounts)

|                                                     |  | Note |  |       | 2012        |       |   | 2011       |   |   | 2010       |  
|---------------------------------------------------- |  | ---- |  | ----- | ----------- | ----- | - | ---------- | - | - | ---------- | -
|Revenue                                              |  |      |  | $     | 160,561     |       | $ | 105,116    |   | $ | 71,370     |  
|Cost of sales                                        |  |      |  |       | 134,350     |       |   | 130,975    |   |   | 82,943     |  
|Gross margin (loss)                                  |  |      |  |       | 26,211      |       |   | (25,859    | ) |   | (11,573    | )
|Depreciation, depletion, and amortization            |  |      |  |       | 12,033      |       |   | 6,676      |   |   | 5,428      |  
|Income (loss) from mine operations                   |  |      |  |       | 14,178      |       |   | (32,535    | ) |   | (17,001    | )
|Impairment of mineral properties and equipment       |  |      |  |       | 31,763      |       |   | -          |   |   | 745        |  
|Exploration costs                                    |  |      |  |       | 88          |       |   | 781        |   |   | 963        |  
|General and administrative expenses                  |  |      |  |       | 8,399       |       |   | 8,158      |   |   | 6,447      |  
|Loss from operations                                 |  |      |  |       | (26,072     | )     |   | (41,474    | ) |   | (25,156    | )
|Other (loss) income:                                 |  |      |  |       |             |       |   |            |   |   |            |  
|Loss from joint venture                              |  |      |  |       | -           |       |   | (370       | ) |   | (188       | )
|Finance and transactions costs                       |  | 6    |  |       | (10,100     | )     |   | (11,608    | ) |   | (51,524    | )
|Interest and other income
      (expense)            |  | 7    |  |       | 10,032      |       |   | 77,873     |   |   | (114,953   | )
|Foreign exchange (loss) gain                         |  |      |  |       | (1,789      | )     |   | 1,769      |   |   | (197       | )
|                                                     |  |      |  |       | (1,857      | )     |   | 67,664     |   |   | (166,862   | )
|(Loss) income before income taxes                    |  |      |  |       | (27,929     | )     |   | 26,190     |   |   | (192,018   | )
|Income tax recovery (expense)                        |  |      |  |       |             |       |   |            |   |   |            |  
|Current                                              |  |      |  |       | 24          |       |   | 676        |   |   | 1,555      |  
|Deferred                                             |  | 19   |  |       | 7,890       |       |   | (484       | ) |   | 75         |  
|Net (Loss) Income for the year                       |  |      |  |       | (20,015     | )     |   | 26,382     |   |   | (190,388   | )
|                                                     |  |      |  |       |             |       |   |            |   |   |            |  
|Other Comprehensive (Loss) Income:                   |  |      |  |       |             |       |   |            |   |   |            |  
|Foreign currency translation
      adjustments       |  |      |  |       | 3,559       |       |   | (3,086     | ) |   | 2,169      |  
|Total
      Comprehensive (Loss) Income for the year |  |      |  | **$** | **(16,456** | **)** | $ | 23,296     |   | $ | (188,219   | )
|                                                     |  |      |  |       |             |       |   |            |   |   |            |  
|Income (loss) per share  basic                      |  |      |  |       | (0.21       | )     |   | 0.31       |   |   | (2.95      | )
|Income (loss) per share  diluted                    |  |      |  |       | (0.21       | )     |   | 0.30       |   |   | (2.95      | )
|                                                     |  |      |  |       |             |       |   |            |   |   |            |  
|Weighted average number of shares outstanding        |  |      |  |       |             |       |   |            |   |   |            |  
|Basic                                                |  |      |  |       | 97,371,112  |       |   | 84,564,832 |   |   | 64,495,498 |  
|Diluted                                              |  |      |  |       | 97,371,112  |       |   | 88,849,374 |   |   | 64,495,498 |  

See accompanying notes to consolidated financial statements.

2

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VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD
CORP.)Consolidated Statements of Changes in Shareholders
Equity(In thousands of US dollars and thousands of common shares)

|                                        |  |            |  |  |                        |  |   |         |   |   |          |   |   |               |   |   |          |  
|--------------------------------------- |  | ---------- |  |  | ---------------------- |  | - | ------- | - | - | -------- | - | - | ------------- | - | - | -------- | -
|                                        |  |            |  |  | Share Capital, Note 20 |  |   |         |   |   |          |   |   |               |   |   |          |  
|                                        |  |            |  |  |                        |  |   |         |   |   | Share    |   |   | Accumulated   |   |   |          |  
|                                        |  |            |  |  |                        |  |   |         |   |   | based    |   |   | other         |   |   |          |  
|                                        |  |            |  |  |                        |  |   |         |   |   | payments |   |   | comprehensive |   |   |          |  
|                                        |  | Note       |  |  | Number                 |  |   | Amount  |   |   | reserve  |   |   | income (loss) |   |   | Deficit  |  
|Balance at January 1, 2010              |  |            |  |  | 59,085                 |  |   | 254,453 |   | $ | 25,930   |   | $ | -             |   | $ | (194,936 | )
|Flow through share issue                |  |            |  |  | 3,456                  |  |   | 8,071   |   |   | -        |   |   | -             |   |   | -        |  
|Issued on private placement             |  |            |  |  | 2,273                  |  |   | 4,807   |   |   | -        |   |   | -             |   |   | -        |  
|Share issue costs                       |  |            |  |  | -                      |  |   | (739    | ) |   | -        |   |   | -             |   |   | -        |  
|Exercise of warrants                    |  |            |  |  | 3,063                  |  |   | 12,277  |   |   | -        |   |   | -             |   |   | -        |  
|Exercise of options                     |  |            |  |  | 240                    |  |   | 776     |   |   | (286     | ) |   | -             |   |   | -        |  
|Shares issued for services              |  |            |  |  | 450                    |  |   | 1,207   |   |   | -        |   |   | -             |   |   | -        |  
|Forfeiture of unvested options          |  |            |  |  |                        |  |   | -       |   |   | (83      | ) |   | -             |   |   | -        |  
|Share based payment expense             |  |            |  |  |                        |  |   | -       |   |   | 4,922    |   |   | -             |   |   | -        |  
|Net loss for the year                   |  |            |  |  |                        |  |   | -       |   |   | -        |   |   | -             |   |   | (190,388 | )
|Foreign currency translation            |  |            |  |  |                        |  |   | -       |   |   | -        |   |   | 2,169         |   |   | -        |  
|Other                                   |  |            |  |  | 200                    |  |   | 1,003   |   |   | -        |   |   | -             |   |   | -        |  
|Balance at January 1, 2011              |  |            |  |  | 68,767                 |  |   | 281,855 |   | $ | 30,483   |   | $ | 2,169         |   | $ | (385,324 | )
|Flow through share issue                |  | 20 (c)(ii) |  |  | 833                    |  |   | 6,677   |   |   | -        |   |   | -             |   |   | -        |  
|Issued on private placement             |  | 20 (c)(i)  |  |  | 3,349                  |  |   | 8,118   |   |   | -        |   |   | -             |   |   | -        |  
|Exercise of warrants                    |  |            |  |  | 20,090                 |  |   | 116,603 |   |   | -        |   |   | -             |   |   | -        |  
|Exercise of options                     |  | 20 (d)     |  |  | 19                     |  |   | 62      |   |   | (26      | ) |   | -             |   |   | -        |  
|Shares issued for services              |  |            |  |  | 6                      |  |   | 42      |   |   | -        |   |   | -             |   |   | -        |  
|Share based payment expense             |  | 20 (d)     |  |  | -                      |  |   | -       |   |   | 3,195    |   |   | -             |   |   | -        |  
|Net income for the year                 |  |            |  |  | -                      |  |   | -       |   |   | -        |   |   | -             |   |   | 26,382   |  
|Foreign currency translation            |  |            |  |  | -                      |  |   | -       |   |   | -        |   |   | (3,086        | ) |   | -        |  
|Balance at
      December 31, 2011      |  |            |  |  | 93,064                 |  | $ | 413,357 |   | $ | 33,652   |   | $ | (917          | ) | $ | (358,942 | )
|                                        |  |            |  |  |                        |  |   |         |   |   |          |   |   |               |   |   |          |  
|Balance at January 1, 2012              |  |            |  |  | 93,064                 |  |   | 413,357 |   |   | 33,652   |   |   | (917          | ) |   | (358,942 | )
|Private placement                       |  | 20 (c)     |  |  | 6,193                  |  |   | 10,163  |   |   | -        |   |   | -             |   |   | -        |  
|Public offering                         |  |            |  |  | 7,503                  |  |   | 12,280  |   |   | 252      |   |   | -             |   |   | -        |  
|Issued with convertible debenture 20(c) |  |            |  |  | 782                    |  |   | 2,201   |   |   | -        |   |   | -             |   |   | -        |  
|Exercise of warrants                    |  | 13         |  |  | 76                     |  |   | 246     |   |   | -        |   |   | -             |   |   | -        |  
|Exercise of options                     |  | 20 (d)     |  |  | 23                     |  |   | 66      |   |   | (32      | ) |   | -             |   |   | -        |  
|Share based payment expense             |  | 20 (d)     |  |  | -                      |  |   | -       |   |   | 2,791    |   |   | -             |   |   | -        |  
|Net loss for the year                   |  |            |  |  | -                      |  |   | -       |   |   | -        |   |   | -             |   |   | (20,015  | )
|Foreign currency translation            |  |            |  |  | -                      |  |   | -       |   |   | -        |   |   | 3,559         |   |   | -        |  
|Balance at
      December 31, 2012      |  |            |  |  | 107,641                |  |   | 438,313 |   |   | 36,663   |   |   | 2,642         |   |   | (378,957 | )

See accompanying notes to consolidated financial statements.

3

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VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD
CORP.)Consolidated Statements of Cash Flows (In thousands
of US dollars)
  For the year ended December 31, 2012 and 2011

|                                                                                                            | Note |   | 2012    |   |   | 2011    |   |   | 2010     |  
|----------------------------------------------------------------------------------------------------------- | ---- | - | ------- | - | - | ------- | - | - | -------- | -
|Operating activities                                                                                        |      |   |         |   |   |         |   |   |          |  
|Net (loss) income for the year                                                                              |      | $ | (20,015 | ) | $ | 26,382  |   | $ | (190,388 | )
|Items not affecting cash:                                                                                   |      |   |         |   |   |         |   |   |          |  
|Depreciation,
      depletion, and amortization                                                             |      |   | 12,033  |   |   | 6,676   |   |   | 5,428    |  
|Recognition of
      deferred revenue                                                                       |      |   | (23,958 | ) |   | (2,761  | ) |   | -        |  
|Net finance
      cost/income                                                                               |      |   | (5,485  | ) |   | (71,159 | ) |   | 163,135  |  
|Impairment of
      mineral properties and equipment                                                        |      |   | 31,763  |   |   | -       |   |   | 745      |  
|Gain on disposal
      of assets                                                                            |      |   | -       |   |   | (8      | ) |   | -        |  
|Share based
      payments                                                                                  |      |   | 2,791   |   |   | 3,195   |   |   | 4,846    |  
|Deferred tax
      recovery                                                                                 |      |   | (7,914  | ) |   | (192    | ) |   | (1,630   | )
|Loss from joint
      venture                                                                               |      |   | -       |   |   | 371     |   |   | 189      |  
|Unrealized foreign
      exchange loss (gain)                                                               |      |   | 2,541   |   |   | (1,807  | ) |   | 201      |  
|Change in non cash working capital                                                                          | 21   |   | (14,020 | ) |   | (13,015 | ) |   | (1,515   | )
|Cash used in operating activities before the undernoted                                                     |      |   | (22,264 | ) |   | (52,318 | ) |   | (18,989  | )
|Deferred revenue
      proceeds net of transaction costs                                                    |      |   | 9,076   |   |   | 114,000 |   |   | -        |  
|Interest paid                                                                                               |      |   | -       |   |   | (97     | ) |   | -        |  
|                                                                                                            |      |   | (13,188 | ) |   | 61,585  |   |   | (18,989  | )
|                                                                                                            |      |   |         |   |   |         |   |   |          |  
|Investing activities                                                                                        |      |   |         |   |   |         |   |   |          |  
|Property, plant and equipment
      expenditures                                                            |      |   | (23,425 | ) |   | (50,347 | ) |   | (5,204   | )
|Proceeds from
      sales of property, plant and equipment                                                  |      |   | -       |   |   | 18      |   |   | -        |  
|Restricted funds                                                                                            |      |   | 6,597   |   |   | (33,709 | ) |   | (2,812   | )
|Mineral property expenditures                                                                               |      |   | (12,648 | ) |   | (16,565 | ) |   | (8,276   | )
|Cash distribution from joint
      venture                                                                  |      |   | -       |   |   | 2,134   |   |   | -        |  
|Purchase of derivative financial
      asset                                                                |      |   | -       |   |   | (15     | ) |   | -        |  
|                                                                                                            |      |   | (29,476 | ) |   | (98,484 | ) |   | (16,292  | )
|                                                                                                            |      |   |         |   |   |         |   |   |          |  
|Financing activities                                                                                        |      |   |         |   |   |         |   |   |          |  
|Notes payable and finance leases                                                                            |      |   | -       |   |   | -       |   |   | (32      | )
|Proceeds from
      derivatives arising on gold forward contracts                                           |      |   | 14,824  |   |   | 5,000   |   |   | 7,006    |  
|Settlement of gold forward
      contract                                                                   |      |   | -       |   |   | (5,366  | ) |   | (9,560   | )
|Flow through shares issued for
      cash                                                                   |      |   | -       |   |   | 7,184   |   |   | -        |  
|Proceeds from
      units issued on private placement, net
      of               transaction
      costs   |      |   | 8,748   |   |   | 14,738  |   |   | 14,055   |  
|Proceeds from
      units issued on public offering, net
      of               transaction
      costs     |      |   | 14,429  |   |   | -       |   |   | -        |  
|Share issue costs                                                                                           |      |   | -       |   |   | -       |   |   | (611     | )
|Proceeds from issuance of
      long-term debt                                                              |      |   | -       |   |   | -       |   |   | 24,800   |  
|Proceeds from
      issuance of convertible debentures, net
      of               transactions
      costs |      |   | 11,540  |   |   | -       |   |   | -        |  
|Repayment of long term debt                                                                                 |      |   | -       |   |   | (41,638 | ) |   | (4,034   | )
|Common shares
      issued upon exercise of shareholder warrants                                            |      |   | 95      |   |   | 59,237  |   |   | 3,071    |  
|Common shares issued upon
      exercise of stock options                                                   |      |   | 34      |   |   | 36      |   |   | 490      |  
|                                                                                                            |      |   | 49,670  |   |   | 39,191  |   |   | 35,185   |  
|Effect of exchange rate changes on cash                                                                     |      |   | 28      |   |   | (31     | ) |   | -        |  
|Increase (decrease) in cash and cash equivalents                                                            |      |   | 7,034   |   |   | 2,261   |   |   | (96      | )
|Cash and cash equivalents, beginning of year                                                                |      |   | 2,261   |   |   | -       |   |   | 96       |  
|Cash and cash
      equivalents, end of year                                                                |      | $ | 9,295   |   | $ | 2,261   |   | $ | -        |  

See accompanying notes to consolidated financial statements.

4

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular
      amounts in thousands of US dollars unless otherwise noted)

|1. | Nature of operations and going concern:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Veris Gold Corp (formerly Yukon-Nevada Gold Corp.) (the
      Company) is a gold metal producer engaged in the mining, exploration and
      development of mineral properties located in Canada and the United States.
      The Company is incorporated under the laws of the Province of British
      Columbia, Canada and its shares are listed on the Toronto Stock Exchange
      and the Frankfurt Exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Companys registered address is 999 West Hastings
      Street, Suite 1040, Vancouver, British Columbia, Canada V6C 2W2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The consolidated financial statements of the Company as
      at December 31, 2012, and 2011, and for the years ended December 31, 2012,
      2011 and 2010, comprise the Company and its wholly owned subsidiaries
      (note 3a).
      For properties other than the producing mine at Jerritt Canyon,
        Nevada, the Company is in the process of mineral exploration and has yet
        to determine whether these properties contain reserves that are
        economically recoverable. The recoverability of the amount shown for these
        mineral properties is dependent upon the existence of economically
        recoverable reserves, confirmation of the Company's ownership interest in
        the mining claims, the ability of the Company to obtain necessary
        financing to complete the development, and upon future profitable
        production or proceeds from the disposition of the mineral
    properties.                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company had a loss from operations of $26.1 million for the year ended December 31, 2012 (2011 – loss of $41.5 million), and a $13.2 million outflow of cash from operations for the same period (2011 – inflow of $61.6 million). At December 31, 2012 the Company had a working capital deficiency of $34.3 million (December 31, 2011 – $52.7 million) and an accumulated deficit of $379.0 million (December 31, 2011 – $358.9 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements are prepared on
      the basis that the Company will continue as a going concern. The Companys
      ability to continue as a going concern and recover its investment in
      property, plant, and equipment and mineral properties is dependent on its
      ability to generate positive cash flows and obtain additional financing in
      order to meet its planned business objectives. However, there can be no
      assurance that the Company will be able to obtain additional financial
      resources, or maintain profitability or positive cash flows. If the
      Company is unable to maintain positive cash flows or obtain adequate
      financing, the Company will need to further curtail operations and
      exploration activities. These conditions and matters indicate the
      existence of material uncertainties that may cast substantial doubt about
      the Companys ability to continue as a going concern. Failure to continue
      as a going concern would require that the Company's assets and liabilities
      be restated on a liquidation basis which would differ significantly from
      the going concern basis.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | Basis of Preparation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Statement of compliance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements are prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IFRS”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The preparation of financial statements in accordance
      with IFRS requires the use of certain critical accounting estimates and
      judgments when applying the Companys accounting policies. The areas
      involving a higher degree of judgment or complexity, or areas where
      assumptions and estimates are significant to the financial statements are
      disclosed in note 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

5

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|3. | Significant accounting policies:
|-- | --------------------------------
|   |                                 
|   | (a)                             
|   |                                 
|   |                                 

| | Property                         | Location               | Ownership
| | -------------------------------- | ---------------------- | ---------
| | Ketza
      River Holdings Ltd.  | Yukon                  | 100%     
| | YGC Resources Arizona Inc.       | Arizona                | 100%     
| | Queenstake
      Resources Ltd.  | British
      Columbia | 100%     
| | Queenstake Resources U.S.A. Inc. | Delaware               | 100%     
| | Castle
      Exploration Inc.    | Colorado               | 100%     

| | (b) | Cash and cash equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Cash and cash equivalents include cash and short-term
      investments that are readily convertible to cash and have a maturity date
      within 90 days of the purchase date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (c) | Derivative financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | When the Company enters into forward metal sale option
      contracts (Puts) it is for the purposes of reducing exposure to the
      fluctuation of future metal prices. These Puts are derivative financial
      instruments that are initially recorded at fair value on the date they are
      entered into, and are subsequently re-measured at fair value at each
      financial reporting date. Any gains or losses that results from subsequent
      fair value measurement is recognized in the statement of
  operations.                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (d) | Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Stockpiles represent ore that has been mined or purchased
      and is available for future processing. Stockpiles are measured by
      estimating the number of tons added and removed from the stockpile, the
      number of contained ounces (based on assay data) and the estimated
      metallurgical recovery rates (based on expected processing method).
      Stockpile ore tonnages are verified by periodic surveys. Costs are
      allocated to stockpiles based on relative values of material stockpiled
      and processed using current mining costs incurred up to the point of
      stockpiling the ore. These costs include direct labor, mine-site overhead
      expenses, and depreciation and depletion on Jerritt Canyon mine equipment
      and mineral properties. Purchased ore is recorded at cost based on the
      contracted purchase price, net of an allowance for the Companys
      processing charged to a third party.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Work-in-process inventories are valued at the lower of
      average production cost and net realizable value. Production costs include
      the cost of raw materials, direct labour, mine-site overhead expenses and
      depreciation and depletion of property, plant and equipment and mineral
      properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Finished goods inventories are valued at the lower of
      average production cost and net realizable value. Net realizable value is
      the estimated selling price in the ordinary course of business, less
      estimated selling expenses. Materials and supplies inventories are valued
      at the lower of average cost and net realizable
value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

6

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| |     | When inventories have been written down to net realizable
      value, an assessment of net realizable value is made in each subsequent
      period. If the circumstances which resulted in the impairment no longer
      exist, the remaining amount of the write down is reversed.                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (e) | Property, plant and equipment:                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Property, plant and equipment is recorded at cost less
      accumulated depreciation less impairment. Depreciation is recorded on a
      straight-line basis to residual values over the estimated useful lives of
      the assets. Residual values and useful lives are reviewed at least
      annually. Property, plant and equipment used in exploration is depreciated
      and included in mineral properties.

| | Depreciation rates are as follows: |                                   
| | ---------------------------------- | ----------------------------------
| | Buildings                          | 20 years                          
| | Computer hardware and software     | 3 years                           
| | Equipment and facilities           | 5 - 20 years                      
| | Furniture and fixtures             | 7 years                           
| | Vehicles                           | 3 - 7 years                       
| | Leases and leasehold improvements  | over the shorter of lease term and
| |                                    | expected useful life of asset     

| | (f) | Mineral properties:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Exploration and evaluation expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Exploration and evaluation expenditure relates to the
      initial costs incurred on the search for, and evaluation of, potential
      mineral reserves and resources. Exploration includes such costs as
      exploratory drilling, sampling, mapping and other costs involved in
      searching for ore. Evaluation includes costs incurred to establish the
      technical and commercial viability of developing mineral properties
      acquired or identified through exploration. Exploration and evaluation
      expenditures, net of any option payments or income tax credits received,
      are deferred until the property is placed into production, sold or
      abandoned or determined to be impaired. These deferred expenditures are
      amortized on a units-of-production (UOP) basis over the estimated useful
      life of the property based on proven and probable reserves following
      commencement of production.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Mine development expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Once it has been determined that the development of a
      mineral property is commercially and technically viable, as a result of
      establishing proven and probable reserves, the costs incurred to develop a
      property are capitalized. These costs include engineering and
      metallurgical studies; drilling and other related costs to delineate an
      ore body; the costs of removing overburden to initially expose the ore
      body prior to the start of mining operations; and, the building of access
      ways, shafts, drifts, ramps and other infrastructure at underground mines.
      These capitalized expenditures are amortized on a UOP basis over the
      estimated useful life of the property based on proven and probable
      reserves following commencement of production.                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Underground mine development costs incurred during
      production                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | During the production phase the Company incurs
      underground development costs for major underground excavation done to
      establish new access ways. These costs include building new shafts,
      drifts, ramps, lateral access ways, and other infrastructure to access
      specific ore blocks which provide probable future economic benefits to the
      Company. Costs directly attributable to this underground development are
      capitalized and amortized on a UOP basis over the estimated useful life of
      the property.                                                                                                                                                                                                                                                                                                                                                                                                      

7

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| | (g) | Impairment of long lived assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | At each reporting date, the Company reviews the carrying
      amounts of its long-lived assets to determine whether there is any
      indication that those assets are impaired. If such impairment exists, the
      recoverable amount of the asset is estimated in order to determine the
      extent, if any, of the impairment. Where the asset does not generate cash
      inflows that are independent from other assets, the Company estimates the
      recoverable amount of the cash generating unit (CGU) to which the asset
      belongs.                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Recoverable amount is the higher of fair value less costs
      to sell and value in use. In assessing value in use, the estimated future
      cash flows are discounted to their present value using a pre-tax discount
      rate that reflects current market assessments of the time value of money
      and the risks specific to the asset for which estimates of future cash
      flows have not been adjusted.                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | If the recoverable amount of an asset (or CGU) is
      estimated to be less than its carrying amount, the carrying amount of the
      asset is reduced to its recoverable amount. An impairment is recognized
      immediately as an expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | All capitalized exploration and evaluation expenditures
      are monitored for indications of impairment. Where a potential impairment
      is indicated, assessments are performed for each area of
  interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Where an impairment subsequently reverses, the carrying
      amount of the asset (or CGU) is increased to the revised estimate of its
      recoverable value, but so that the increased carrying amount does not
      exceed the carrying amount that would have been determined had no
      impairment been recognized for the asset (or CGU) in prior for the year. A
      reversal of an impairment is recognized as income immediately.                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (h) | Decommissioning and rehabilitation provisions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company recognizes liabilities for statutory,
      contractual, constructive or legal obligations for environmental
      rehabilitation in the period in which it is incurred. The net present
      value of future rehabilitation cost estimates arising from the
      decommissioning of plant and other site preparation work is capitalized to
      the mining assets along with a corresponding increase in the
      rehabilitation provision. Discount rates using a pre- tax value rate that
      reflect the time value of money and risks specific to the obligation are
      used to calculate the net present value. The Companys estimates are
      reviewed annually for changes in regulatory requirements, discount rates,
      effects of inflation and changes in estimates.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Accretion expense is charged to the statement of
      operations, while adjustments related to changes in estimated cashflows
      are recorded as increases or decreases in the carrying value of the asset.
      The capitalized cost is amortized over the useful life of the related
      asset. Upon settlement of the liability, a gain or loss is recorded if the
      actual costs incurred are different from the liability recorded.                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (i) | Share based payments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company has established a share based payment plan as
      described in note 20. The Company measures share based payments at fair
      value and recognizes the expense over the vesting period. The Company uses
      the Black-Scholes option pricing model to determine the fair value of each
      stock option on the date of the grant. The value of the stock options
      issued to directors, employees and service providers is expensed or
      capitalized to mineral properties as share based payment and is credited
      to the share based payments reserve. The value of the stock options issued
      to agents in exchange for brokerage services is netted against share
      capital as share issuance costs and credited to the share based payments
      reserve.    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | At the end of each reporting period, the Company
      re-assesses its estimates of the number of awards that are expected to
      vest and recognizes the impact of the revisions in the statement of
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

8

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| | (j) | Revenue recognition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Revenue is measured at the fair value of the
      consideration received. A sale is recognized when the significant risks
      and rewards of ownership have passed. This is when title and insurance
      risk has passed to the customer, the amount of revenue can be measured
      reliably and it is probable that the economic benefits associated with the
      transaction will flow to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (k) | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The income tax expense for the period comprises current
      and deferred taxation. Taxation is recognized in the statement of
      operations and comprehensive income, except to the extent that it relates
      to items recognized directly in equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Current tax is the expected tax payable on the taxable
      income for the period, using tax rates enacted or substantively enacted at
      the reporting date in countries where the Companys subsidiaries operate
      and generate taxable income. Management periodically evaluates positions
      taken in tax returns with respect to situations in which applicable tax
      regulation is subject to interpretation. It establishes provisions, where
      appropriate, on the basis of amounts expected to be paid to tax
      authorities.                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Deferred taxation is recognized using the liability
      method, on unused tax losses, unused tax credits, and temporary
      differences between the carrying amounts of assets and liabilities for
      financial reporting purposes and the amounts used for taxation purposes.
      However, the deferred taxation is not recognized if it arises from initial
      recognition of an asset or liability in a transaction other than a
      business combination, that at the time of the transaction affects neither
      accounting nor taxable profit or loss. Deferred taxation is determined
      using tax rates and laws that have been enacted or substantively enacted
      by the reporting date and are expected to apply when the related deferred
      taxation asset is realized or the deferred taxation liability is
      settled.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Deferred tax assets and liabilities are offset if there
      is a legally enforceable right to offset current tax liabilities and
      assets, and they relate to income taxes levied by the same tax authority
      on the same taxable entity; or on different tax entities, but they intend
      to settle current tax liabilities and assets on a net basis; or, their tax
      assets and liabilities will be realized simultaneously.                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | A deferred tax asset is recognized to the extent that it
      is probable that future taxable profits will be available against which
      unused tax losses, unused tax credits, and the temporary difference can be
      utilized. Deferred tax assets are reviewed at each reporting date and are
      reduced to the extent that it is no longer probable that the related tax
      benefit will be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Additional income taxes that arise from the distribution
      of dividends are recognized at the same time that the liability to pay the
      related dividend is recognized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (l) | Flow-through shares:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company has financed a portion of its exploration
      expenditures through the issuance of flow-through shares. Under the terms
      of these share issues, the tax attributes of the related expenditures are
      renounced to subscribers. The premium paid for the flow-through shares in
      excess of market value of those shares is credited to liabilities and
      included in income when the related tax benefits are renounced by the
      Company.                                                                                                                                                                                                                                                                                                                                                                                     

9

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| | (m) | Warrants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | When the Company issues units that are comprised of a
      combination of common shares and warrants, the value is assigned to common
      shares and warrants based on their relative fair values. The fair value of
      the common shares is determined by the closing price on the date of the
      transaction and the fair value of the warrants is determined based on a
      Black-Scholes option pricing model.                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Those warrants which are denominated in a currency other
      than the Companys functional currency are recognized on the consolidated
      statement of financial position as derivative instruments (Note
  13).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (n) | Earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Basic earnings per share is computed by dividing the
      amount of income / (loss) for the period by the weighted average number of
      common shares outstanding during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Diluted earnings per share is calculated using the
      treasury stock method. Under the treasury stock method, the weighted
      average number of shares outstanding used in the calculation of diluted
      earnings / (loss) per share assumes that the deemed proceeds received from
      the exercise of stock options, agents' options and share purchase warrants
      that are "in the money" would be used to repurchase common shares of the
      Company at the average market price during the period.                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | For convertible securities that may be settled in cash or
      shares at the holders option, returns to shareholders and income charges
      are added back to net earnings used for basic earnings per share and the
      maximum number of ordinary shares that could be issued on conversion are
      used in the computing diluted earnings per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (o) | Financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Financial assets and financial liabilities, including
      derivatives, are measured at fair value on initial recognition and
      recorded on the statement of financial position. Measurement in subsequent
      periods depends on whether the financial instrument has been classified as
      fair value through profit or loss (FVTPL), available- for-sale,
      held-to-maturity, loans and receivables or other financial
    liabilities.                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Financial assets and liabilities classified as FVTPL are
      measured at fair value with changes in those fair values recognized in the
      statement of operations. Financial assets and financial liabilities
      considered held-to- maturity, loans and receivables, and other financial
      liabilities are measured at amortized cost using the effective interest
      method of amortization. Available-for-sale financial assets are measured
      at fair value with unrealized gains and losses recognized in accumulated
      other comprehensive income until realized, or until a loss in value is
      determined to be significant or prolonged. Investments in equity
      instruments classified as available-for-sale that do not have a quoted
      market price in an active market are measured at cost.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Changes in the fair values of derivative instruments are
      recognized in the statement of operations with the exception of
      derivatives designated as effective cash flow hedges. The Company has no
      such designated hedges.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Transaction costs that are directly attributable to the
      acquisition or issue of financial assets and financial liabilities (other
      than financial assets and financial liabilities at FVTPL) are added to or
      deducted from the fair value of the financial assets or financial
      liabilities, as appropriate, on initial recognition. Transaction costs
      directly attributable to the acquisition of financial assets or financial
      liabilities FVTPL are recognized immediately in profit or
  loss.                                                                                                                                                                                                                                                                                                        

10

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| | (p) | Foreign currency translation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | The consolidated financial statements are presented in US
      dollars, which is the Companys presentation currency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Items included in the financial statements of each of the
      Companys subsidiaries are measured using the currency of the primary
      economic environment in which the entity operates (the functional
      currency). Foreign currency transactions are translated into the
      functional currency using the exchange rates at the date of transactions.
      Foreign exchange gains and losses resulting from the settlement of such
      transactions and from the translation of monetary assets and liabilities
      denominated in a currency other than the functional currency are
      recognized in the consolidated statement of operations.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Assets and liabilities of entities with non-US dollar
      denominated functional currencies are translated at the period end rates
      of exchange and the results of their operations translated at the average
      rate for the period. The resulting translation adjustments are included in
      other comprehensive income (loss). Additionally, foreign exchange gains
      and losses related to certain intercompany loans that are permanent in
      nature are included in other comprehensive income
(loss).                                                                                                                                        

|4. | Critical accounting judgments and
  estimates:                                                                                                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                     
|   | IFRS requires management to make estimates and judgments
      that affect the amounts reported in the financial statements. By their
      nature, these estimates and judgments are subject to measurement
      uncertainty and the effect on the financial statements of changes in such
      estimates in future periods could be significant.
|   |                                                                                                                                                                                                                                                                                                                                                     
|   | Areas of judgment that have the most significant effect
      on the amounts recognized in the financial statements
  include:                                                                                                                                                                                                                      

| |  | Recognition of deferred tax on
      mineral rights                                                     
| | - | --------------------------------------------------------------------------------------------------------
| |  | Capitalization and impairment of
      exploration, evaluation and development expenditures             
| |  | Determination of functional
      currencies                                                            
| |  | Determination that the sale of
      future gold deliveries to Deutsche Bank represents deferred revenue
| |  | Applicability of the going
      concern assumption                                                     
| |  | Determination of commencement of
      commercial production                                            

Critical accounting estimates include:

| |  | Determination of ore reserves                                                    
| | - | ---------------------------------------------------------------------------------
| |  | Impairment of property, plant and
      equipment                                
| |  | Decommissioning and
      rehabilitation provisions                              
| |  | Contingent liabilities                                                           
| |  | Valuation of share based
      compensation, warrants, and derivative liabilities
| |  | Income taxes                                                                     
| |  | Useful lives of assets                                                           
| |  | Asset depreciation rates                                                         

11

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|5. | Changes in accounting standards:                 
|-- | -------------------------------------------------
|   |                                                  
|   | Accounting standards adopted January 1,
    2012:
|   |                                                  
|   | i)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | ii)                                              
|   |                                                  
|   |                                                  

Accounting standards effective
January 1, 2013:

| | i)   | Amendments to IFRS 7 - Financial Instruments:
      Disclosures (IFRS 7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |      | The amendments to IFRS 7 require entities to disclose
      information about rights of offset and related arrangements (such as
      collateral posting requirements) for financial instruments under an
      enforceable master netting agreement or similar arrangement. The
      disclosures should be provided retrospectively for all comparative
      periods.                                                                                                                                                                                                                                                                                                                                          
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ii)  | IFRS 10 - Consolidated Financial Statements (IFRS
      10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |      | Issued in May 2011, IFRS 10 replaces the consolidation
      guidance previously provided by IAS 27- Consolidated and Separate
      Financial Statementsand SIC 12 Consolidation  Special Purpose
      Entities. IFRS 10 is effective for annual periods beginning on or
      after January 1, 2013, with earlier adoption permitted. This new standard
      redefines the principle of control for all types of entities, being based
      on exposure or rights to variable returns from the investee and the
      ability to affect the reporting entitys returns. The Company is currently
      evaluating the impact the standard is expected to have on its consolidated
      financial statements.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | iii) | IFRS 11 - Joint Arrangements(IFRS 11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |      | IFRS 11 replaces IAS 31 - Interests in Joint
      Ventures, and SIC 31- Jointly Controlled Entities  Non- Monetary
      Contributions by Venturers. IFRS 11 establishes a principle based
      approach to accounting for joint arrangements, in which an entity is
      involved, by assessing its rights and obligations and classifying the type
      of joint arrangement based on such an assessment. This standard is
      effective for annual periods beginning on or after January 1, 2013, with
      early application permitted. The Company is currently evaluating the
      impact the standard is expected to have on its consolidated financial
      statements.                          

12

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| | iv)   | IFRS 12 - Disclosure of Interests in Other Entities(IFRS 12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | IFRS 12 requires enhanced disclosure of the Companys
      interests in both consolidated and non-consolidated entities to enable
      readers of the financial statements to evaluate the nature of and risks
      associated with these interests. This standard is effective for annual
      periods beginning on or after January 1, 2013, with early application
      permitted. The Company is currently evaluating the impact the standard is
      expected to have on its consolidated financial statements.                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | v)    | IFRS 13 - Fair Value Measurement(IFRS
  13)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | Issued in May 2011, IFRS 13 sets out a single framework
      for measurement and disclosure of information regarding fair value
      measurement. This standard applies when another IFRS requires, or permits,
      fair value measurements and/or disclosures about fair value measurements.
      IFRS 13 is effective for annual periods beginning on or after January 1,
      2013, with early adoption permitted. The Company is currently evaluating
      the impact the standard is expected to have on its consolidated financial
      statements.                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | vi)   | Amendments to IAS 1 - Presentation of Financial
      Statements(IAS 1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | This amendment, issued in June 2011, requires an entity
      to group items presented in the Statement of Comprehensive Income on the
      basis of whether they may be reclassified to earnings subsequent to
      initial recognition. For those items presented before taxes, the
      amendments to IAS 1 also require that the taxes related to the two
      separate groups be presented separately. The amendments are effective for
      annual periods beginning on or after July 1, 2012, with earlier adoption
      permitted. The Company does not anticipate the application of the IAS 1
      amendments to have a significant impact on its consolidated financial
      statements.                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | vii)  | Amendment to IAS 19  Employee Benefits(IAS
      19)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | This amendment, issued in June 2011, introduced changes
      to the accounting for defined benefit plans and other employee benefits.
      The amendments include elimination of the option to defer, or recognize in
      full in earnings, actuarial gains and losses, and instead mandates the
      immediate recognition of all actuarial gains and losses in other
      comprehensive income, and requires use of the same discount rate for both
      defined benefit obligation and expected asset return when calculating
      interest costs. Other amendments include modification of the accounting
      for termination benefits and classification of other employees. The
      Company does not anticipate application of IAS 19 amendments to have a
      significant impact on its consolidated financial statements.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | viii) | IFRIC 20  Stripping Costs in the Production Phase of
      A Surface Mine (IFRIC 20)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       | In October 2011, the IASB issued IFRIC 20 which clarifies
      the requirements for accounting for the costs of stripping activity in the
      production phase when two benefits accrue: (i) usable ore that can be used
      to produce inventory; and (ii) improved access to further quantities of
      material that will be mined in future periods. IFRIC 20 is effective for
      annual periods beginning on or after January 1, 2013, with earlier
      application permitted, and includes guidance on transition for
      pre-existing stripping assets. The Company is currently evaluating the
      impact the new guidance is expected to have on its consolidated financial
      statements.                                                                                                                          

13

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

Accounting standards effective
January 1, 2014:

| | i) | IAS 32 - Offsetting Financial Assets and Financial
      Liabilities (IAS 32)                                                                                                                                                                                                                                                                                                        
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The amendments to IAS 32 clarify existing application
      issues relating to the offset of financial assets and financial
      liabilities requirements. Specifically, the amendments clarify the meaning
      of currently has a legally enforceable right of set-off and
      simultaneous realization and settlement. The amendments to IAS 32
      require retrospective.

Accounting standards effective
January 1, 2015:

| | i) | IFRS 9 - Financial Instruments(IFRS
9)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | This new standard for financial instruments is intended
      to replace IAS 39 - Financial instruments: Recognition and measurement(IAS 39), in entirety, in three main phases. IFRS 9 is intended to
      be principles-based, and less complex than IAS 39. The first phase of IFRS
      9 was issued and amended in November 2009 and October 2010, respectively,
      and addressed the classification and measurement of financial assets and
      financial liabilities. IFRS 9 requires that all financial assets be
      classified as subsequently measured at amortized cost or at fair value
      based on the contractual cash flow characteristics, and the Companys
      business model for managing, financial assets. Financial liabilities are
      classified and subsequently measured at amortized cost, except for
      financial liabilities classified as at fair value through profit or loss
      (FVTPL), financial guarantees, and other certain exceptions.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | In response to delays to the completion of the remaining
      two phases of the project, on December 16, 2011, the IASB issued
      amendments to IFRS 9 which deferred the mandatory effective date of IFRS 9
      from January 1, 2013 to annual periods beginning on or after January 1,
      2015. The amendments also provided relief from the requirement to restate
      comparative financial statements for the effects of applying IFRS
  9.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The Company is currently evaluating the impact the final
      standard is expected to have on its consolidated financial
    statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|6. | Finance and transactions costs                    
|-- | --------------------------------------------------
|   |                                                   
|   | Finance and transactions costs are comprised
  of:

| |                                                            | Note         |   | 2012   |  |   | 2011   |  |   | 2010   | 
| | ---------------------------------------------------------- | ------------ | - | ------ |  | - | ------ |  | - | ------ | 
| | Inducement warrants expense                                |              | $ | -      |  | $ | -      |  | $ | 43,631 | 
| | Interest on long term borrowings                           | 14           |   | -      |  |   | 5,784  |  |   | 3,681  | 
| | Interest on convertible debenture                          | 16           |   | 763    |  |   | -      |  |   | -      | 
| | Accretion of decommissioning and rehabilitation provisions | 17           |   | 1,225  |  |   | 1,704  |  |   | 1,794  | 
| | Environmental rehabilitation expense                       |              |   | 4,128  |  |   | 2,165  |  |   | -      | 
| | Transaction costs and finance fees                         | 20/ (c)/(ix) |   | 3,284  |  |   | 1,604  |  |   | -      | 
| | Other interest and
      transaction costs                 |              |   | 700    |  |   | 351    |  |   | 2,418  | 
| |                                                            |              | $ | 10,100 |  | $ | 11,608 |  | $ | 51,524 | 

14

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|7. | Interest and other income (expense)                     
|-- | --------------------------------------------------------
|   |                                                         
|   | Interest and other income (expense) is comprised
    of:

| |                                           | Note              |   | 2012   |   |   | 2011    |   |   | 2010     |  
| | ----------------------------------------- | ----------------- | - | ------ | - | - | ------- | - | - | -------- | -
| | Gain on warrants and derivatives          | (i)/(iv)/(v)/(vi) | $ | 17,278 |   | $ | 97,203  |   | $ | (100,412 | )
| | Loss on derivatives                       | (ii)/(iii)        |   | (7,920 | ) |   | (19,524 | ) |   | (7,163   | )
| | Provisions for and settlement of lawsuits |                   |   | -      |   |   | -       |   |   | (4,612   | )
| | Cash settlement of deferred revenue       |                   |   | -      |   |   | -       |   |   | (3,071   | )
| | Interest income                           |                   |   | 46     |   |   | 57      |   |   | 54       |  
| | Other income                              |                   |   | 628    |   |   | 137     |   |   | 251      |  
| |                                           |                   | $ | 10,032 |   | $ | 77,873  |   | $ | (114,953 | )

| | (i)   | The warrants denominated in Canadian dollars are revalued
      at each reporting period and the change in fair value recorded in net
      income (note 13). For the year ended December 31, 2012 a gain of $17.3
      million was recognized (2011  $97.2 million gain).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (ii)  | As part of the $25.0 million debt issued in the third
      quarter of 2010, $6.8 million of the proceeds were allocated to a gold
      embedded derivative arising from the loan repayments being indexed to the
      gold spot price (note 14). This debt was settled on August 12, 2011 (note
      14). The revaluation of this embedded derivative resulted in a loss of
      $11.9 million for the year ended December 31, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (iii) | Three gold forward contracts entered into in November
      2010, January 2011, and January 2012 are accounted for as
    derivatives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       | The fair value of the November 2010 forward contract as
      at December 31, 2012 was $21.5 million (2011 - $15 million) resulting in a
      loss of $1.1 million (2011 - $6.1 million loss) and financing charge of
      $5.4 million (2011 - $nil) for the year ended December 31, 2012 (note 12).
      The financing charge resulted from an extension of the November 2010
      forward contract delivery to January 31, 2014.                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       | The January 2011 forward contract was settled in June
      2011, resulting in a net loss $1.4 million for the year ended December 31,
      2011, respectively (note 12).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       | The fair value of the January 2012 forward contract as at
      December 31, 2012 was $7.0 million resulting in a loss of $1.4 million and
      interest expense of $0.9 million being recognized in the year ended
      December 31, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (iv)  | The share conversion option within the $6.0 million ($1.0
      million was converted to shares on October 24, 2012) convertible debenture
      issued on June 15, 2012 (note 16) represents an embedded derivative
      liability for accounting purposes. This embedded derivative is bifurcated
      from the convertible debenture contract and is recorded at fair value both
      at inception and at each reporting period based on quoted market prices
      for the common stock of the Company, with changes in fair value being
      recognized through other income or loss. On June 15, 2012 and December 31,
      2012 the fair value of the embedded derivative was $0.1 million and $0.3
      million, respectively, with the difference arising on revaluation recorded
      in other income or loss for the year ended December 31, 2012.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (v)   | The share conversion option within the $4.0 million
      convertible debenture issued on July 19, 2012 (note 16) represents an
      embedded derivative liability for accounting purposes. This embedded
      derivative is bifurcated from the convertible debenture contract and is
      recorded at fair value both at inception and at each reporting period
      based on quoted market prices for the common stock of the Company, with
      changes in fair value being recognized through other income or loss. On
      July 19, 2012 and December 31, 2012 the fair value
of the embedded derivative was $0.1 million and $0.1
      million, respectively, with the difference arising on revaluation recorded
  in other income or loss for the year ended December 31, 2012.                                                                     

15

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| | (vi) | The share conversion option within the $2.0 million
      convertible debenture issued on October 11, 2012 (note 16) represents an
      embedded derivative liability for accounting purposes. This embedded
      derivative is bifurcated from the convertible debenture contract and is
      recorded at fair value both at inception and at each reporting period
      based on quoted market prices for the common stock of the Company, with
      changes in fair value being recognized through other income or loss. On
      October 11, 2012 and December 31, 2012 the fair value of the embedded
      derivative was $0.1 million and $nil, respectively, with the difference
      arising on revaluation recorded in other income or loss for the year ended
      December 31, 2012.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | Inventories
|-- | -----------

| |                              |   | December 31, |  |   | December 31, | 
| | ---------------------------- | - | ------------ |  | - | ------------ | 
| |                              |   | 2012         |  |   | 2011         | 
| | Finished goods               | $ | 2,511        |  | $ | 897          | 
| | Stockpiled ore               |   | 1,167        |  |   | 2,542        | 
| | Purchased ore                |   | 434          |  |   | 435          | 
| | Work in progress             |   | 11,642       |  |   | 7,179        | 
| | Materials and
      supplies |   | 5,971        |  |   | 3,423        | 
| |                              | $ | 21,725       |  | $ | 14,476       | 

All of the Company’s inventories on hand are located at the Jerritt Canyon mine in Nevada, USA.  The costs of inventories recognized as an expense are equivalent to cost of sales for the years ended December 31, 2012 and December 31, 2011.  As at December 31, 2012, there is a net realizable value provision recorded against inventory of $0.6 million (December 31, 2011 - $0.5 million).

16

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|9. | Restricted funds
|-- | ----------------

| |                                                                |  |      |  |   | December 31, |   |   | December 31, | 
| | -------------------------------------------------------------- |  | ---- |  | - | ------------ | - | - | ------------ | 
| |                                                                |  | Note |  |   | 2012         |   |   | 2011         | 
| | Chartis commutation account                                    |  | (a)  |  | $ | 25,778       |   | $ | 25,730       | 
| | Chartis money market account                                   |  | (a)  |  |   | 19,810       |   |   | 19,791       | 
| | Gold forward sale performance reserve                          |  | (e)  |  |   | 10,000       |   |   | 10,000       | 
| | Cash restricted to class action settlement                     |  | (c)  |  |   | -            |   |   | 1,761        | 
| | Cash restricted for future exploration in Canada               |  | (b)  |  |   | -            |   |   | 4,984        | 
| | Water use license letter of credit                             |  | (d)  |  |   | 3,103        |   |   | 3,036        | 
| | Cash pledged as security for letters of credit                 |  |      |  |   | 616          |   |   | 508          | 
| |                                                                |  |      |  | $ | 59,307       |   | $ | 65,810       | 
| | Current portion of
      gold forward sale performance reserve |  | (e)  |  |   | (8,000       | ) |   | -            | 
| |                                                                |  |      |  | $ | 51,307       |   | $ | 65,810       | 

| | (a) | The Company purchased from American Insurance Group
      (AIG), now known as Chartis, an environmental risk transfer program (the
      ERTP). As part of the ERTP, $25.7 million was deposited in an
      interest-bearing account with AIG (the Commutation Account). The
      Commutation Account principal plus interest earned on the principal is
      used to fund Jerritt Canyon mines ongoing reclamation and mine closure
      obligations (note 17).                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | During 2010 the Company was required to provide further
      surety to the Nevada Division of Environmental Protection (NDEP) and the
      US Forestry Service to fund the ongoing reclamation and mine closure
      obligations. To meet this additional surety requirement, the Company
      deposited $2.7 million into two money market accounts with Chartis and
      provided cash security for two new surety instruments issued to these two
      agencies. In July and October of 2011 the Company posted an additional
      $7.2 million, and $9.8 million respectively, to the money market account
      to satisfy increases in the bonding requirements related to increased
      coverage requirements and also the construction of a second tailings
      facility and water storage reservoir currently taking place at Jerritt
      Canyon.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | During the year ended December 31, 2012, the Company
      earned interest in the amount of $0.1 million, from the commutation and
      money market accounts (2011 - $0.1 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (b) | During 2010 and 2011, the Company raised funds by way of
      a private placement of flow-through shares (FTS). Under the conditions
      of this private placement, the funds must be spent in 2011 and 2012 on
      Canadian Exploration Expenditures (CEE) on properties located in Canada.
      As at December 31, 2011, a total of $5.0 million is required to fund
      future exploration, no later than December 31, 2012, under the terms of
      the FTS subscription agreements issued in 2011. As of December 2012, the
      Company had incurred all required FTS expenditures on CEE properties in
      Canada.                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (c) | During the second quarter of 2011 the Company placed in a
      segregated account, under the terms of the April 2011 settlement
      agreement, funds required to settle a class action claim brought upon the
      Company (note 25(a)). The remaining segregated funds were disbursed in
      June, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (d) | The Yukon Territorial Government has letters of credit
      with the Company which were put in place to secure payment of potential
      reclamation work relating to the Ketza River project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (e) | As part of the August, 2011 forward gold purchase
      agreement, the Company was required to deposit $10 million in an escrow
      account held in the Companys name. These funds will be made available
      when defined production targets have been met (note 15). The Company
      subsequently met the defined production targets and $8 million of the
      funds held in escrow were received subsequent to year
  end.                                                                                                                                                                                                                                                                                                                                                                                                                                   

17

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|10. | Mineral property, plant and equipment            
|--- | -------------------------------------------------
|    |                                                  
|    | Mineral property, plant and equipment
  comprise:

| |                         |   |                          |   |   |            |  |   |           |  |   |           |   |   |                 |   |   |       |  
| | ----------------------- | - | ------------------------ | - | - | ---------- |  | - | --------- |  | - | --------- | - | - | --------------- | - | - | ----- | -
| |                         |   | Mineral
      Properties |   |   |            |  |   | Mobile    |  |   |           |   |   |                 |   |   |       |  
| |                         |   | Non-                     |   |   |            |  |   | Land and  |  |   | Plant and |   |   | Construction    |   |   |       |  
| |                         |   | depletable               |   |   | Depletable |  |   | Buildings |  |   | Equipment |   |   | in
    Progress |   |   | Other |  
| |                         |   |                          |   |   |            |  |   |           |  |   |           |   |   |                 |   |   |       |  
| | Cost                    |   |                          |   |   |            |  |   |           |  |   |           |   |   |                 |   |   |       |  
| | December 31, 2010       | $ | 69,307                   |   | $ | -          |  | $ | 48,667    |  | $ | 60,740    |   | $ | 2,355           |   | $ | 1,220 |  
| | Additions               |   | 13,776                   |   |   | 8,426      |  |   | 1,682     |  |   | 17,381    |   |   | 39,594          |   |   | 427   |  
| | Disposals               |   | (10                      | ) |   | -          |  |   | -         |  |   | -         |   |   | -               |   |   | -     |  
| | Foreign exchange        |   | (1,419                   | ) |   | -          |  |   | -         |  |   | (67       | ) |   | -               |   |   | (6    | )
| | December 31, 2011       |   | 81,654                   |   |   | 8,426      |  |   | 50,349    |  |   | 78,054    |   |   | 41,949          |   |   | 1,641 |  
| |                         |   |                          |   |   |            |  |   |           |  |   |           |   |   |                 |   |   |       |  
| | Additions               |   | 8,337                    |   |   | 13,293     |  |   | 1,805     |  |   | 38,491    |   |   | (6,887          | ) |   | 164   |  
| | Disposals               |   | -                        |   |   | -          |  |   | -         |  |   | -         |   |   | -               |   |   | -     |  
| | Impairment              |   | (31,763                  | ) |   | -          |  |   | -         |  |   | -         |   |   | -               |   |   | -     |  
| | Foreign exchange        |   | 1,891                    |   |   | -          |  |   | 60        |  |   | 2         |   |   | -               |   |   | -     |  
| | December 31, 2012       | $ | 60,119                   |   | $ | 21,719     |  | $ | 52,214    |  | $ | 116,547   |   | $ | 35,062          |   | $ | 1,805 |  
| | Accumulated             |   |                          |   |   |            |  |   |           |  |   |           |   |   |                 |   |   |       |  
| | depreciation            |   |                          |   |   |            |  |   |           |  |   |           |   |   |                 |   |   |       |  
| | December 31, 2010       | $ | -                        |   | $ | -          |  | $ | 8,689     |  | $ | 14,869    |   | $ | -               |   | $ | 795   |  
| | Depreciation            |   | -                        |   |   | -          |  |   | 1,751     |  |   | 4,745     |   |   | -               |   |   | 211   |  
| | Disposals               |   | -                        |   |   | -          |  |   | -         |  |   | -         |   |   | -               |   |   | -     |  
| | Foreign exchange        |   | -                        |   |   | -          |  |   | -         |  |   | (25       | ) |   | -               |   |   | (2    | )
| | December 31, 2011       |   | -                        |   |   | -          |  |   | 10,440    |  |   | 19,589    |   |   | -               |   |   | 1,004 |  
| | Depreciation            |   | -                        |   |   | 2,008      |  |   | 1,737     |  |   | 8,786     |   |   | -               |   |   | 275   |  
| | Disposals               |   | -                        |   |   | -          |  |   | -         |  |   | -         |   |   | -               |   |   | -     |  
| | Foreign exchange        |   | -                        |   |   | -          |  |   | 24        |  |   | -         |   |   | -               |   |   | -     |  
| | December 31, 2012       |   | -                        |   |   | 2,008      |  |   | 12,201    |  |   | 28,375    |   |   | -               |   |   | 1,279 |  
| |                         |   |                          |   |   |            |  |   |           |  |   |           |   |   |                 |   |   |       |  
| | Carrying Value          |   |                          |   |   |            |  |   |           |  |   |           |   |   |                 |   |   |       |  
| | December 31, 2010       | $ | 69,307                   |   | $ | -          |  | $ | 39,978    |  | $ | 45,871    |   | $ | 2,355           |   | $ | 425   |  
| | December 31, 2011       | $ | 81,654                   |   | $ | 8,426      |  | $ | 39,909    |  | $ | 58,465    |   | $ | 41,949          |   | $ | 637   |  
| | December 31,
      2012 | $ | 60,119                   |   | $ | 19,711     |  | $ | 40,013    |  | $ | 88,172    |   | $ | 35,062          |   | $ | 526   |  

18

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

Jerritt Canyon
    
    
    Ketza River
    
    
    Silver Valley
    
    
    Other
    
    
    Total(a)(i)/(b)
    
    
    (a)(ii)/(b)Net book valueDecember 31, 2010
    $
    88,091
    
    $
    67,846
    
    $
    1,810
    
    $
    189
    
    $
    157,936Additions
    
    73,727
    
    
    7,448
    
    
    46
    
    
    65
    
    
    81,286Disposals
    
    -
    
    
    (10
    )
    
    -
    
    
    -
    
    
    (10
    )Depreciation charge
    
    (6,436
    )
    
    (213
    )
    
    -
    
    
    (58
    )
    
    (6,707
    )Impairment
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Foreign exchange
    
    -
    
    
    (1,423
    )
    
    (42
    )
    
    -
    
    
    (1,465
    )December 31, 2011
    $
    155,382
    
    $
    73,648
    
    $
    1,814
    
    $
    196
    
    $
    231,040Additions
    
    48,750
    
    
    6,411
    
    
    -
    
    
    42
    
    
    55,203Disposals
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Depreciation charge
    
    (12,587
    )
    
    (168
    )
    
    -
    
    
    (52
    )
    
    (12,807
    )Impairment (b)
    
    -
    
    
    (29,914
    )
    
    (1,849
    )
    
    -
    
    
    (31,763
    )Foreign exchange
    
    -
    
    
    1,865
    
    
    35
    
    
    29
    
    
    1,929December 31,
      2012
    $
    191,545
    
    $
    51,842
    
    $
    -
    
    $
    215
    
    $
    243,602


| | (a) | Yukon properties:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (b) | During the year ended December 31, 2012 the Company
      assessed the carrying values of its mineral properties for indications of
      impairment at each quarter end. The Company believes that certain
      indicators such as the recent downturn in the resource industry
      specifically in relation to exploration and development stage mining
      projects and the volatility in the global economy, which have negatively
      affected precious metals prices have contributed to the decrease in the
      Companys share price. The Company recorded an impairment charge in the
      quarter ended December 31, 2012 as described below. The Company concluded
      that, as at December 31, 2012, there was no further impairment to be
      recorded.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | During the quarter ended December 31, 2012, the Company determined that the carrying value of its Yukon exploration properties exceeded the expected net present value of its future cash flows. This resulted in an impairment charge of $31.8 million (2011 – $nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | The expected net present value of the Ketza River projects’ future cash flows were calculated using a weighted average cost of capital of 9.0%, and gold prices of $1,600 per ounce declining to a long term price of $1,400 per ounce.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|11. | Related party transactions:                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                 
|    | During the year ended December 31, 2012, the Company was
      charged a total of $0.3 million (2011 - $0.4 million) in legal fees by a
      law firm in which the corporate secretary of the Company is a partner. The
      amount owing at December 31, 2012 is $nil (as at December 31, 2011 
      $nil).

19

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

In January 2012 the Company entered
into a gold forward contract with a company related by common directors. The
fair value of this this liability as at December 31, 2012 was $7.0 million
resulting in a loss of $1.5 million and interest expense of $0.9 million being
recognized in the year ended December 31, 2012 (note 12).

In January 2011 the Company entered
into a gold forward contract with the same company which was settled in in June
2011. The fair value of the liability was $6.9 million as at June 30, 2011,
resulting in a loss of $1.4 million being recognized for the year ended December
31, 2011 (note 12).

In July 2011 the Company entered into a
royalty agreement with a company owned by a director of the Company. The royalty
agreement arose in connection with the use of proprietary mercury emissions
technology, owned by the related party, at Jerritt Canyon. During the year ended
December 31, 2012, a total of $0.4 million was charged to the Company under this
agreement (2011  $0.2 million). The amount owing at December 31, 2012 is $0.1
million (as at December 31, 2011  $nil).

In March 2012 the Company entered into
a lease agreement with a company owned by a director of the Company for the
lease of office space. During the year ended December 31, 2012 a total of $0.1
million (2011 - $nil) was charged to the Company under this agreement. The
amount owing at December 31, 2012 is $nil (as at December 31, 2011  $nil).

The amounts outstanding are unsecured
and will be settled in cash. No expense has been recognized for bad or doubtful
debts in respect of the amounts owed by related parties.

| | a) | Compensation of key management personnel:                                                                            
| | -- | ---------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                      
| |    | The remuneration of directors and other members of key
      management personnel during the periods were as
follows:

| |                            |   | 2012  |  |   | 2011  |  |   | 2010  | 
| | -------------------------- | - | ----- |  | - | ----- |  | - | ----- | 
| | Short-term benefits        | $ | 1,718 |  | $ | 1,605 |  | $ | 902   | 
| | Share-based
      payments |   | 1,927 |  |   | 789   |  |   | 2,713 | 
| |                            | $ | 3,645 |  | $ | 2,394 |  | $ | 3,615 | 

The remuneration of directors and key
executives is determined by the compensation committee and is dependent upon the
performance of individuals, the performance of the Company, and external market
trends.

20

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|12. | Forward Contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | On January 12, 2012, the Company entered into a forward
      gold sales contract with a related party (note 11) for which the Company
      received advance proceeds of $5.0 million. The agreement specified that
      3,665 troy ounces of refined gold was to be sold to the counterparty by
      June 12, 2012, however at the related partys option the Company may be
      obliged to settle the contract with a cash payment of $6.0 million. In
      June 2012 the Company and the counterparty agreed that the gold delivery
      required to settle the contract would be extended to August 30, 2012, and
      a late-settlement charge of 2.25% per month on the outstanding balance
      would be imposed. As at December 31, 2012 the contract had not been
      settled and the Company is in negotiations with the counterparty to
      further extend the settlement date. The fair value of this liability was
      $7.0 million as at December 31, 2012. A derivative loss of $1.4 million
      was recognized in the year ended December 31, 2012. The Company incurred
      late-settlement charges during the year ended December 31, 2012 of $0.9
      million.                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | On January 28, 2011, the Company entered into a forward
      gold sales contract with a related party (note 11) for which the Company
      received advance proceeds of $5.0 million. The agreement specified that
      4,465 troy ounces of refined gold was to be sold to the counterparty by
      June 30, 2011. In June of 2011 the contract was settled through (i) a cash
      payment of $5.4 million generated though the sale of 3,465 ounces of
      refined gold to a third party; and, (ii) the delivery of 1,000 ounces of
      refined gold with a fair value of $1.5 million at the time of delivery.
      For the six months ended June 30, 2011 a net loss on the derivative of
      $1.5 million was recognized which was comprised of a $1.9 million loss
      recognized for the increase in fair value of the liability from inception
      to settlement date, offset by a $0.4 million gain recognized on the gross
      margin for the 1,000 ounces delivered on settlement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | On November 25, 2010, the Company entered into a gold
      sales contract which specifies that 6,255 troy ounces of refined gold
      would be sold to the counterparty by May 30, 2011 or a late penalty would
      be assessed as a 2.25% monthly increase in the ounces of gold to be
      delivered. In return, the Company received an upfront payment of $7.0
      million cash. In November 2011 the Company and the counterparty agreed
      that the gold delivery required to settle the contract would occur in
      December 2012, and that approximately 2,674 additional ounces would be
      delivered at that time. In December 2012 the Company and the counterparty
      agreed that the gold delivery required to settle the contract would occur
      in January 2014, and that approximately 3,819 additional ounces would be
      delivered at that time. However, at the option of the counterparty, the
      Company may be requested to settle the liability through a cash payment of
      USD $17.3 million rather than through physical delivery of the gold. The
      forward contract has been assessed to be a derivative liability and is
      recorded at fair value at each reporting date. This derivative liability
      had a fair value of $21.5 million as at December 31, 2012, resulting in a
      loss of $1.1 million and financing charges of $5.4 million being recorded
      for the year ended December 31, 2012.

21

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|13. | Warrants                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Due to the Companys functional currency being the US
      dollar, the issued and outstanding warrants that have an exercise price
      that is denominated in Canadian dollars are classified as derivative
      instruments. The warrants have been recognized as a liability in the
      statement of financial position with the movement in fair value recorded
      in net income (loss) at each reporting date.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | As at December 31, 2012 the following warrants were
      outstanding:                                                                                                                                                                                                                                                                                                                                                     

| |                    |             |  |          |  |  |          |  |  |          |  |  |              |   |  |          |  |   |            |  |  |                | 
| | ------------------ | ----------- |  | -------- |  |  | -------- |  |  | -------- |  |  | ------------ | - |  | -------- |  | - | ---------- |  |  | -------------- | 
| |                    |             |  |          |  |  |          |  |  |          |  |  | In thousands |   |  |          |  |   |            | 
| |                    |             |  |          |  |  |          |  |  |          |  |  |              |   |  |          |  |   |            |  |  |                | 
| |                    |             |  |          |  |  |          |  |  |          |  |  |              |   |  |          |  |   | Fair Value |  |  | Fair Value     | 
| |                    |             |  | Exercise |  |  |          |  |  |          |  |  | Warrants     |   |  |          |  |   | as at      |  |  | as at          | 
| |                    |             |  | price    |  |  | December |  |  | Warrants |  |  | exercised/   |   |  | December |  |   | December   |  |  | December       | 
| | Expiry date        | Note        |  | (C$)     |  |  | 31, 2011 |  |  | issued   |  |  | expired      |   |  | 31, 2012 |  |   | 31, 2011   |  |  | 31,
      2012 | 
| | June 20 ,2012      |             |  | 30.00    |  |  | 2,143    |  |  | -        |  |  | (2,143       | ) |  | -        |  | $ | -          |  |  |                | 
| | February 7, 2012   |             |  | 1.25     |  |  | 206      |  |  | -        |  |  | (206         | ) |  | -        |  |   | 334        |  |  |                | 
| | February 28, 2012  |             |  | 1.25     |  |  | 30       |  |  | -        |  |  | (30          | ) |  | -        |  |   | 49         |  |  |                | 
| | January 12, 2012   |             |  | 2.60     |  |  | 925      |  |  | -        |  |  | (925         | ) |  | -        |  |   | 319        |  |  |                | 
| | January 12, 2012   |             |  | 3.20     |  |  | 2,390    |  |  | -        |  |  | (2,390       | ) |  | -        |  |   | 148        |  |  |                | 
| | May 24, 2013       | 20 (c)(i)   |  | 5.50     |  |  | 3,349    |  |  | -        |  |  | -            |   |  | 3,349    |  |   | 1,785      |  |  | 12             | 
| | February 8, 2015   | 15          |  | 4.40     |  |  | -        |  |  | 4,000    |  |  | -            |   |  | 4,000    |  |   | -          |  |  | 1,339          | 
| | May 23, 2015       | 20 (c)(iii) |  | 4.00     |  |  | -        |  |  | 3,908    |  |  | -            |   |  | 3,908    |  |   | -          |  |  | 1,700          | 
| | June 15, 20151     | 16          |  | 3.00     |  |  | -        |  |  | 2,010    |  |  | -            |   |  | 2,010    |  |   | -          |  |  | 1,156          | 
| | July 19, 20151     | 16          |  | 3.00     |  |  | -        |  |  | 1,333    |  |  | -            |   |  | 1,333    |  |   | -          |  |  | 782            | 
| | October 12, 20151  | 16          |  | 3.00     |  |  | -        |  |  | 670      |  |  | -            |   |  | 670      |  |   | -          |  |  | 423            | 
| | December 18, 20162 | 20 (c)(ix)  |  | 2.35     |  |  | -        |  |  | 3,600    |  |  | -            |   |  | 3,600    |  |   | -          |  |  | 3,300          | 
| |                    |             |  |          |  |  | 9,043    |  |  | 15,521   |  |  | (5,694       | ) |  | 18,870   |  |   | 2,635      |  |  | 8,712          | 

1Warrant
holders exercised their option to amend the exercise price from $3.00 to $1.95
subsequent to the year ended December 31, 2012.

2Brokers
compensation options and brokers unit warrants issued with this public offering
are excluded given they are share-based payments.

The fair value of the warrants was $8.7
million as at December 31, 2012 (December 31. 2011 - $2.6 million) of which $nil
was short-term in nature and $8.7 million was long-term in nature ($0.9 million
was recognized as a short-term liability as at December 31, 2011). During the
year ended December 31, 2012, a $17.1 million gain was recognized in the
consolidated statement of operations and comprehensive income (loss) as a result
of changes in the fair value of the warrants (December 31, 2011 - $97.2 million
gain), and $0.2 million was recognized in share capital as a result of the fair
value of warrants exercised during the year (2011 - $57.4 million).

The warrants were fair valued using an
option pricing model with the following assumptions: no dividends are paid,
weighted average volatilities of the Companys share price of 77%, weighted
average expected lives of the warrants of 2.3 years, and weighted average annual
risk-free rates of 1.13%.

22

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|14. | Borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In August 2010 the Company issued $25 million in Senior
      Secured Notes (the "Notes") and 2,500,000 common share purchase warrants
      (the "Warrants"), raising net proceeds (after transaction costs of $0.2
      million) of $24.8 million. Each Warrant entitles the holder thereof to
      purchase one common share of the Company at a price of C$4.00 per share
      for a period of three for the year following closing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Notes had a maturity date of December 31, 2012 and
      were 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. The Notes were to be repaid through monthly cash
      installments based on a notional amount of approximately 28,411 shares of
      SPDR GLD Gold Shares (an exchange listed fund trading on the NYSE and
      other global exchanges). The Company guaranteed a minimum rate of return
      of 5% per annum on the aggregate principal amount over the term of the
      Notes. In connection with the closing, a finder's fee in the amount of 4%
      of the gross proceeds raised was payable in shares of the
  Company.                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Of the total proceeds of $24.8 million, $5.8 million was
      allocated on initial recognition to the warrants which are classified as a
      derivative. The fair value of the 2.5 million warrants was calculated
      using the Black-Scholes model assuming a risk-free interest rate of 1.91%
      per annum, an expected term of 3 years, expected volatility of
      approximately 86% and no dividends. A further $6.8 million was allocated
      to the gold embedded derivative arising from the loan repayments being
      indexed to the gold spot price. This resulted in an initial liability
      being recorded of $12.3 million representing the Companys residual debt.
      The carrying amount of the liability is accreted to the face value of the
      notes over the term of the notes. Accretion included in finance and
      transactions costs totaled $nil for the year ended Dec 31, 2012 (2011 -
      $5.8 million) (note 6), based on an effective interest rate of
  78%.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On August 12, 2011 the Notes were settled. Immediately
      prior to the settlement the fair value of the derivative liability was
      determined to be $19.1 million. The Company has included the resulting
      change in the fair value in the consolidated statement of operations and
      comprehensive loss (note 7(ii)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

23

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|15. | Deferred revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On August 12, 2011, the Company entered into a Forward
      Gold Purchase Agreement (the First Agreement) with Deutsche Bank, AG,
      London Branch (Deutsche Bank), which holds more than 10% of the
      Companys issued and outstanding common shares. Under the Agreement the
      Company received a gross prepayment of $120 million (the Prepayment), of
      which net cash proceeds of $73.5 million were received on August 12, 2011.
      The net cash proceeds represent the $120 million Prepayment net of: (i)
      $10 million deposited into an escrow account in the Companys name to be
      made available upon the Company achieving defined production targets (Note
      9(e)); (ii) the $29.9 million settlement of the outstanding Notes (note
      14); and, (iii) $6.6 million in transaction and legal costs. The Agreement
      is guaranteed by the Company and involves the registration of various
      charges against certain assets of the Company in favour of Deutsche
      Bank.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On February 7, 2012, the Company entered into a second
      Forward Gold Purchase Agreement (the Second Agreement) with Deutsche
      Bank. Under the Second Agreement the Company received a gross prepayment
      of $20 million (the Second Prepayment), of which net cash proceeds of
      $18.9 million were received on February 8, 2012. The net cash proceeds
      represent the $20 million Second Prepayment net of $1.1 million in
      transaction and legal costs. The Second Agreement is guaranteed by the
      Company and involves the registration of various charges against certain
      assets of the Company in favour of Deutsche Bank.                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | As part of the Second Agreement in addition to the
      Additional Future Gold Deliveries, the Company also issued to Deutsche
      Bank one share purchase warrant (the Warrant), which can be exercised to
      purchase 4,000,000 common shares of the Company (each Share Warrant) at
      a price of C$4.40 per share on or before February 8, 2015. The fair value
      of the Warrant on the date of issuance was determined to be $9.9 million
      using an option pricing model. Of the Second Prepayment $9.9 million was
      therefore attributed to the Warrant, and was recorded as a derivative
      liability which will be subsequently revalued at each reporting date with
      the movement in fair value recorded in net income (loss) at each reporting
      date (Note 13). The remaining $10.1 million of the Second prepayment was
      initially recorded as deferred revenue.                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Under the terms of the First and Second Agreements, the
      Company has sold to Deutsche Bank, a Contract Quantity of Gold in the
      amount of 173,880 ounces and 27,950 ounces, respectively, to be delivered
      to Deutsche Bank over a forty-eight and forty-three month term,
      respectively, commencing September 2011 and March 2012, respectively. For
      the First Agreement, the scheduled future gold deliveries to Deutsche Bank
      are: (i) 1,000 ounces per month during the first six months of the term;
      (ii) 2,000 ounces per month for the following six months of the term; and,
      (iii) 4,330 ounces per month for the final thirty-six months of the term
      (the Future Gold Deliveries). For the Second Agreement, the scheduled
      future gold deliveries are 650 ounces delivered per month from March 2012
      to September 2015 inclusive (the Additional Future Gold
    Deliveries).                                                                                   

24

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

In addition to the Prepayment, Deutsche
Bank will make additional payments to the Company for the Future Gold
Deliveries. For the First Agreement, the amounts being determined by the number
of ounces delivered multiplied by the market price of gold, less a minimum price
of US$850 per ounce, and up to a maximum price of US$1,950 per ounce. For the
Second Agreement, the amounts being determined by the number of ounces delivered
multiplied by the market price of gold, less a minimum price of US$850 per
ounce, and up to a maximum price of US$1,750 per ounce. For the First Agreement,
any shortfall which would occur in the event the Company is unable to produce
gold compared to that scheduled under the terms of the Agreement will result in
the Company being obligated to pay a US dollar amount equal to the market price
of gold per ounce on the scheduled delivery date, multiplied by the shortfall
number of gold ounces (the Shortfall). For the Second Agreement, any shortfall
which would occur in the event the Company is unable to produce gold compared to
that scheduled under the terms of the Agreement will result in the Company being
obligated to either (a) pay a US dollar amount equal to the market price of gold
per ounce on the scheduled delivery date, multiplied by the shortfall number of
gold ounces (the Shortfall); or (b) issue to Deutsche bank common shares of
the Company with equivalent market value of the Shortfall.

For the First Agreement, interest will
be charged on the Shortfall at the LIBOR rate plus 2% per annum (based on 360
days/year) and would be due on demand. For the Second Agreement, interest will
be charged on the Shortfall at 9% per annum and would be due on demand. However,
under the Agreement the Company may deliver a monthly Shortfall in gold, plus
interest, if it can do so within fourteen days of the scheduled monthly delivery
date. The Company is only allowed to exercise this late delivery right no more
frequently than four times in total during the term of the Agreement, and no
more frequently than during two consecutive calendar months.

For the First Agreement, the Company
incurred $7.6 million of fees to parties involved in the Agreement, of which
$1.6 million was expensed as transaction costs and the balance of $6.0 million
paid to Deutsche Bank deferred based on the direct relationship the fees have
with the revenue expected to be recognized in future periods. For the Second
Agreement, the Company incurred $1.1 million of fees to parties involved in the
Agreement, of which $0.1 million was expensed as transaction costs and the
balance of $1.0 million paid to Deutsche Bank was deferred based on the direct
relationship the fees have with the revenue expected to be recognized in future
periods. As such the deferred fees are being amortized based on the ounces to be
delivered under the terms of the First and Second Agreements. The current
portion of deferred fee is included in Accounts receivable and other.

Pursuant to the First Agreement and the
Second Agreement (collectively, the Agreements), the Company was required to
deliver a total of 2,650 ounces of gold to Deutsche Bank on April 30, 2012.
Under the Agreements the Company was entitled to and did request a fourteen day
extension to that delivery requirement and the Company delivered 2,650 ounces of
gold on May 17, 2012.

As of December 31, 2012, the Company
has made the following deliveries and has obligations for future deliveries of:

| |                  |  |                   |  |  |                   | 
| | ---------------- |  | ----------------- |  |  | ----------------- | 
| |                  |  | December 31, 2012 |  |  | December 31, 2011 | 
| |                  |  | Au oz's           |  |  | Au oz's           | 
| |                  |  | Delivered         |  |  | Future Delivery   | 
| | First Agreement  |  | 35,320            |  |  | 138,560           | 
| | Second Agreement |  | 6,500             |  |  | 21,450            | 
| | Total            |  | 41,820            |  |  | 160,010           | 

25

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

As of December 31, 2012, the Company
has recognized the following deferred revenue:

| |                  |   |                   |  |   |                   | 
| | ---------------- | - | ----------------- |  | - | ----------------- | 
| |                  |   | December 31, 2012 |  |   | December 31, 2011 | 
| |                  |   | Current           |  |   | Long Term         | 
| |                  |   | Deferred Revenue  |  |   | Deferred Revenue  | 
| | First Agreement  | $ | 35,859            |  | $ | 59,765            | 
| | Second Agreement |   | 2,812             |  |   | 4,921             | 
| | Total            | $ | 38,671            |  | $ | 64,686            | 

As of December 31, 2012, the Company
has recognized the following deferred transaction costs:

| |                  |   |                   |  |   |                    | 
| | ---------------- | - | ----------------- |  | - | ------------------ | 
| |                  |   | December 31, 2012 |  |   | December 31, 2011  | 
| |                  |   | Current Deferred  |  |   | Long Term Deferred | 
| |                  |   | Transaction Costs |  |   | Transaction Costs  | 
| | First Agreement  | $ | 1,793             |  | $ | 2,988              | 
| | Second Agreement |   | 279               |  |   | 489                | 
| | Total            | $ | 2,072             |  | $ | 3,477              | 

|16. | Convertible debentures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company issued unsecured convertible debentures on
      June 15, 2012 (the June Debentures), July 19, 2012 (the July
      Debenture), and October 11, 2012 (the October Debenture) for gross
      proceeds of C$6.0 million, C$4.0 million, and C$2.0 million, respectively
      (collectively, the "Debentures"). The Debentures bear interest at a rate
      of 11% per annum and have December 15, 2015, January 19, 2016, and April
      11, 2016 maturity dates (the "Maturity Date"), respectively. At the option
      of the holder, the principal amount of the Debentures, and all interest
      accrued thereon, will be convertible into common shares of the Company
      (the "Shares") at any time after expiry of the four month hold period of
      the Debentures and prior to the close of business on the Maturity Date,
      based on a conversion price equal to the greater of: (a) $1.50; and, (b)
      the market price of the Shares, as defined in the TSX Company Manual (the
      Market Price), discounted by 5% per Share (the "Conversion
    Option").
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Upon the Maturity Date, the Debentures and all interest
      accrued thereon may, at the Company's discretion, be paid in cash, Shares
      (up to a maximum of 75%), or any combination of cash and Shares (up to a
      maximum of 75% Shares). The Company may only elect to convert all or any
      part of the Debentures outstanding in Shares if the market price for the
      Shares is greater than $2.00 for at least five out of the ten trading days
      preceding the date in which the Company delivers the Shares to the holder
      (such date not to be less than twenty days prior to the Maturity Date).
      The holder will have the option to require early repayment in the event of
      default by the Company.                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | For the June, July, and October Debentures, the Company
      also issued 201,011; 133,332; and, 66,956 common shares, respectively of
      the Company (the "Structuring Shares"), and 2,010,125; 1,333,333; and,
      669,568 common share purchase warrants (the "Warrants"), respectively, to
      the Debenture holders. Each Warrant entitles the holder to purchase one
      Share at an exercise price of $3.00 and will expire three years following
      the Closing Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | On October 24, 2012 the holders of the June Debentures
      elected to convert C$1 million of the face value into 380,373 shares. The
      carrying value of the debt component settled was $0.4 million and the fair
      value of the shares issued was $1.1 million (Note 20(c)(viii)) which
      resulted in a loss on conversion of $0.7 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | As a result of the Conversion Option feature the
      Debentures are recorded as compound financial liabilities. For accounting
      purposes the Conversion Option is an embedded derivative liability which
      is initially bifurcated from the Debentures, measured separately at
fair value, and subsequently re-measured at fair value through interest and
other income (expense) (Note 7) at each reporting date. The debt component of
the Debentures is measured at amortized cost, and is accreted over the expected
term to maturity using the effective interest method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

26

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

On February 13, 2013 the holders of the
June, July, and October Debentures exercised their option to amend the exercise
price of the June, July and October Warrants from $3.00 to $1.95.

The table below provides a summary of
the allocation on the initial recognition of the Debentures:

Initial value
    
    
    
    
    ComponentsDebt
    
    
    Embedded
    
    
    Equity
    
    
    Warrant Liability
    
      
      TotalDerivative
    
    
    Note
      20 (v)/(vi)
    
    
    Note
      13CADJune 15, 2012
    $
    1,947
    
    $
    152
    
    $
    584
    
    $
    3,317
    
      $
      6,000July 20, 2012
    
    846
    
    
    141
    
    
    453
    
    
    2,560
    
      
      4,000October 11, 2012
    
    569
    
    
    71
    
    
    213
    
    
    1,147
    
      
      2,0003,362
    
    
    364
    
    
    1,250
    
    
    7,024
    
      
      12,000USDJune 15, 2012
    
    1,901
    
    
    148
    
    
    570
    
    
    3,238
    
      
      5,857July 20, 2012
    
    840
    
    
    140
    
    
    450
    
    
    2,539
    
      
      3,969October 11, 2012
    
    578
    
    
    69
    
    
    214
    
    
    1,169
    
      
      2,030$
    3,319
    
    $
    357
    
    $
    1,234
    
    $
    6,946
    
      $
      11,856


The Debentures had a total of $0.8
million of transactions costs incurred with the issuance which were allocated to
the components noted above on a pro-rata basis. The Debentures had a $0.2
million portion attributed to the debt components which have been deferred and
will be amortized over the term of the Debentures; $0.1 million portion
attributed to the Structuring shares which was recorded in equity net of the
allocated proceeds; and the remainder was included in expensed transactions
costs in the year ended December 31, 2012 (note 6).

As at December 31, 2012 the carrying
value of the embedded derivative and debt component of the Debentures was as
follows:

| |                  |  |                     |  |  |              |  |  |              |  |  |              | 
| | ---------------- |  | ------------------- |  |  | ------------ |  |  | ------------ |  |  | ------------ | 
| | Carrying value   |  | Embedded Derivative |  |  | Debt         | 
| |                  |  | December 31,        |  |  | December 31, |  |  | December 31, |  |  | December 31, | 
| |                  |  | 2012                |  |  | 2011         |  |  | 2012         |  |  | 2011         | 
| | June 15, 2012    |  | 332                 |  |  | -            |  |  | 2,041        |  |  | -            | 
| | July 20, 2012    |  | 91                  |  |  | -            |  |  | 1,094        |  |  | -            | 
| | October 11, 2012 |  | 44                  |  |  | -            |  |  | 634          |  |  | -            | 
| |                  |  | 467                 |  |  | -            |  |  | 3,769        |  |  | -            | 

27

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|17. | Decommissioning and rehabilitation
    provisions:
|--- | --------------------------------------------------

| |                                                                        |   | December 31, |   |   | December 31, |  
| | ---------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                                                        |   | 2012         |   |   | 2011         |  
| | Balance, beginning of year                                             | $ | 47,548       |   | $ | 41,071       |  
| | Accretion expense                                                      |   | 1,225        |   |   | 1,704        |  
| | Foreign exchange                                                       |   | 77           |   |   | (77          | )
| | Reclamation spending                                                   |   | (63          | ) |   | (64          | )
| | Revisions in
      estimates of liabilities and additional obligations |   | 5,842        |   |   | 4,914        |  
| |                                                                        | $ | 54,629       |   | $ | 47,548       |  

As at December 31, 2012 and December
31, 2011 all of the asset retirement obligations were long-term in nature.

The Companys asset retirement
obligations consist of reclamation and closure costs for both active mines and
exploration activities. The present value of obligations relating to active
mines is currently estimated at $51.0 million (2011 - $44.1 million) reflecting
payments for approximately the next 24 years. The present value of obligations
relating to exploration activity in the Yukon is currently estimated at $3.6
million (2011 - $3.5 million) reflecting payments for approximately the next 12
years. Significant reclamation and closure activities include land and water
rehabilitation, demolition of buildings and mine facilities, ongoing care and
maintenance, and other costs.

The undiscounted value of this
liability is $68.9 million (2011 - $60.7 million). Inflation rate assumptions of
1.7% and discount rates of 2.2%  3.6% have been used to determine the fair
value of the obligation. The 2012 revision in estimates of liabilities and
additional obligations is primarily due to a recognition of additional future
reclamation obligations. An accretion expense component of $1.2 million has been
charged to finance and transaction costs for the year ended December 31, 2012
(2011 - $1.7 million).

|18. | Finance lease obligations                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                  
|    | The Company has finance lease obligations at the
      Queenstake Resources U.S.A., Inc. subsidiary for equipment used for the
      Jerritt Canyon operations. The net carrying amount of the leased equipment
      included in mobile plant and equipment was $7.1 million at December 31,
      2012, and nil at December 31, 2011 (note 10).

| |                                            |   | December 31, |  |   | December 31, | 
| | ------------------------------------------ | - | ------------ |  | - | ------------ | 
| | Maturity analysis
      of finance leases: |   | 2012         |  |   | 2011         | 
| | Current1                                   | $ | 1,942        |  | $ | 26           | 
| | Non-current                                |   | 3,358        |  |   | -            | 
| |                                            | $ | 5,300        |  | $ | 26           | 

1Current
portion of finance lease obligations is included in accounts payable and accrued
liabilities.

| |                                                |   | December 31, |  |   | December 31, | 
| | ---------------------------------------------- | - | ------------ |  | - | ------------ | 
| | Reconciliation of
      minimum lease payments |   | 2012         |  |   | 2011         | 
| | Less than a year                               | $ | 2,406        |  | $ | 27           | 
| | 2 years                                        |   | 2,229        |  |   | -            | 
| | 3 years                                        |   | 1,322        |  |   | -            | 
| |                                                |   | 5,957        |  |   | 27           | 
| | Present value of
      minimum lease payments  | $ | 5,300        |  | $ | 26           | 

28

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|19. | Income taxes
|--- | ------------

| |                                             |   | 2012   |   |   | 2011 |   |   | 2010   |  
| | ------------------------------------------- | - | ------ | - | - | ---- | - | - | ------ | -
| | Current tax expense (recovery)              | $ | 469    |   | $ | -    |   | $ | -      |  
| | Adjustments in
      respect of prior years |   | (493   | ) |   | (676 | ) |   | (1,555 | )
| | Total current tax
      expense (recovery)  |   | (24    | ) |   | (676 | ) |   | (1,555 | )
| | Deferred tax
      expense (recovery)       |   | (7,890 | ) |   | 484  |   |   | (75    | )
| | Total deferred tax
    expense (recovery)   |   | (7,890 | ) |   | 484  |   |   | (75    | )
| | Income tax expense
      (recovery)         | $ | (7,914 | ) | $ | (192 | ) | $ | (1,630 | )

As of January 1, 2012, the applicable income tax rate in Canada was reduced from 26.5% to 25%. Income tax expense reported differs
from the amount computed by applying the combined Canadian federal and
provincial income tax rates, applicable to Veris Gold Corp., to the income
(loss) before the tax provision due to the following:

| |                                                                                    |   | 2012    |   |   | 2011    |   |   | 2010     |  
| | ---------------------------------------------------------------------------------- | - | ------- | - | - | ------- | - | - | -------- | -
| | Income (loss) before income taxes                                                  | $ | (27,929 | ) | $ | 26,190  |   | $ | (192,018 | )
| | Canadian federal
      and provincial income taxe rates                            |   | 25.0%   |   |   | 26.5%   |   |   | 28.5%    |  
| | Income tax expense based on Canadian federal and provincial
      income tax rates |   | (6,982  | ) |   | 6,940   |   |   | (54,725  | )
| | Nevada Net Proceeds Tax                                                            |   | 469     |   |   | -       |   |   | -        |  
| |                                                                                    |   | (6,513  | ) |   | 6,940   |   |   | (54,725  | )
| | Increase (decrease) attributable to:                                               |   |         |   |   |         |   |   |          |  
| | Non-deductible (taxable) expenditures                                              |   | (4,000  | ) |   | (21,951 | ) |   | 16,212   |  
| | Non-deductible share based payments                                                |   | 550     |   |   | 478     |   |   | 1,172    |  
| | Changes in unrecognized deferred tax assets                                        |   | 3,986   |   |   | 16,706  |   |   | 26,364   |  
| | Effects of different statutory tax rates on
      earnings of subsidiaries         |   | (1,747  | ) |   | (3,957  | ) |   | (1,870   | )
| | Effect of foreign currency exchange rate
      change                              |   | (364    | ) |   | 566     |   |   | (1,453   | )
| | Effect of flow through share renunciation                                          |   | 1,101   |   |   | -       |   |   | -        |  
| | Other                                                                              |   | (927    | ) |   | 1,026   |   |   | 12,670   |  
| |                                                                                    | $ | (7,914  | ) | $ | (192    | ) | $ | (1,630   | )

The significant components of the
Companys deferred tax assets and liabilities are as follows:

| |                                                                        |   | December 31, |   |   | December 31, |  
| | ---------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                                                        |   | 2012         |   |   | 2011         |  
| | Deferred tax assets:                                                   |   |              |   |   |              |  
| | Decommisioning and rehabilitation provision                            | $ | 1,465        |   | $ | 943          |  
| | Non-capital and net operating loss carry
      forwards                |   | 17,200       |   |   | 8,139        |  
| | Excess tax value of property plant and
      equipment over book value |   | 658          |   |   | 344          |  
| | Other                                                                  |   | 87           |   |   | -            |  
| |                                                                        |   | 19,410       |   |   | 9,426        |  
| |                                                                        |   |              |   |   |              |  
| | Deferred tax liabilities:                                              |   |              |   |   |              |  
| | Excess book value of property plant and
      equipment over tax value |   | (6,855       | ) |   | -            |  
| | Mineral properties                                                     |   | (21,847      | ) |   | (25,100      | )
| | Flow-through share premium                                             |   | (344         | ) |   | (918         | )
| | Other                                                                  |   | (11          | ) |   | (945         | )
| |                                                                        |   | (29,057      | ) |   | (26,963      | )
| |                                                                        | $ | (9,647       | ) | $ | (17,537      | )

29

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

The following is the amount of
deferred tax assets (liabilities) presented in the consolidated statements of
financial position:

| |                                 |   | December 31, |   |   | December 31, |  
| | ------------------------------- | - | ------------ | - | - | ------------ | -
| |                                 |   | 2012         |   |   | 2011         |  
| | Net deferred tax
      liabilty | $ | (9,647       | ) | $ | (17,537      | )

In 2011, the Company included as part
of the deferred tax liabilities, a premium on flow-through shares equal to $0.9
million which has been reduced to $0.3 million in 2012.

During 2012, the Company renounced
C$5.6 million (2011 - C$6.1 million) of Canadian Exploration Expenditures to
flow-through shareholders. The result of this renunciation was that the
"Cumulative Canadian Exploration Expenditures" pool of the Company was reduced
and a $1.7 million (2011 - $1.8 million) deferred tax liability was recorded on
the date of filing the renunciation and a deferred tax expense recognized. In
addition, in 2012 the company released $0.6 million (2011 - $0.8 million) of the
flow-though share premium discussed above that offset the deferred tax liability
and related expense recorded on renunciation.

Unrecognized deductible temporary
differences, unused tax and unused tax credits losses are attributable to the
following:

| |                                                                             |   | 2012    |  |   | 2011    | 
| | --------------------------------------------------------------------------- | - | ------- |  | - | ------- | 
| | Decommisioning and rehabilitation provision                                 | $ | 90,636  |  | $ | 43,341  | 
| | Non-capital and net operating loss carry forwards (i)                       |   | 167,213 |  |   | 178,621 | 
| | Share issuance costs                                                        |   | 2,132   |  |   | 1,573   | 
| | Unrealized foreign exchange losses                                          |   | 8,608   |  |   | 3,364   | 
| | Mineral property and property plant and equipment book less
      tax basis |   | 6,258   |  |   | 13,561  | 
| | Mark to market adjustment                                                   |   | 16,480  |  |   | -       | 
| | Other temporary
      differences                                           |   | 30,711  |  |   | 26,138  | 
| |                                                                             | $ | 322,038 |  | $ | 266,598 | 

(i) The unrecognized tax losses will
expire between 2014 and 2032.

The Company has income tax loss
carry-forwards of approximately $218 million (2011 - $201.6 million) for both
Canadian and U.S. tax purposes. Under U.S. tax law, the Company experienced a
number of changes of control largely due to raising capital through various
private placements. The U.S. tax implication to the Company is a limitation of
the ability to utilize its U.S. net operating loss carry-forwards in future
taxation years. The Company's annual limitations are currently as follows:

| |                                     | Annual Limitation                   
| | ----------------------------------- | ------------------------------------
| | Pre-2008 Losses                     | $0.3 million                        
| | Pre-2011 but
      Post-2008 Losses | $5.9 million (the "2010 Limitation")

However, the 2010 Limitation may be
increased to $32 million in the first five year period starting from the 2010
change of control date. In addition, the Company may have experienced another
change of control in 2012 which may further restrict the Company's ability to
utilize its U.S. tax loss carry-forwards.

30

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

The loss carry-forwards if unused
expire as follows for both the Canadian and U.S. tax jurisdictions:

| |           |   | Canadian Tax  |  |   | U.S. Tax      |  |   |         | 
| | --------- | - | ------------- |  | - | ------------- |  | - | ------- | 
| |           |   | Jurisdictions |  |   | Jurisdictions |  |   | TOTAL   | 
| | 2014-2020 | $ | 1,694         |  | $ | 2,560         |  | $ | 4,254   | 
| | 2021      |   | -             |  |   | 278           |  |   | 278     | 
| | 2022      |   | -             |  |   | 165           |  |   | 165     | 
| | 2023      |   | -             |  |   | 1,217         |  |   | 1,217   | 
| | 2024      |   | -             |  |   | 2,213         |  |   | 2,213   | 
| | 2025      |   | -             |  |   | 3,361         |  |   | 3,361   | 
| | 2026      |   | 1,663         |  |   | 2,353         |  |   | 4,016   | 
| | 2027      |   | 3,197         |  |   | -             |  |   | 3,197   | 
| | 2028      |   | 2,806         |  |   | 45,365        |  |   | 48,171  | 
| | 2029      |   | 1,388         |  |   | 38,620        |  |   | 40,008  | 
| | 2030      |   | 1,527         |  |   | 32,245        |  |   | 33,772  | 
| | 2031      |   | 378           |  |   | 67,851        |  |   | 68,229  | 
| | 2032      |   | 1,664         |  |   | 7,097         |  |   | 8,761   | 
| |           | $ | 14,317        |  | $ | 203,325       |  | $ | 217,642 | 

|20. | Share capital and share based payments:
|--- | ---------------------------------------
|    |                                        
|    | (a)                                    
|    |                                        
|    | (b)                                    
|    |                                        
|    | (c)                                    
|    |                                        
|    |                                        
|    |                                        
|    |                                        
|    |                                        
|    |                                        
|    |                                        
|    |                                        

31

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| | (v)    | On June 15, 2012, the Company issued 201,011 Structuring
      shares concurrently with the issuance of convertible debentures (note 16).
      $0.6 million of the gross proceeds were attributed to the structuring
      shares which were recorded in equity net of transaction costs of $41
      thousand.                                                                                                                                                                                                                                                                                                                                                 
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (vi)   | On July 19, 2012, the Company issued 133,332 Structuring
      shares concurrently with the issuance of convertible debentures (note 16).
      $0.4 million of the gross proceeds were attributed to the structuring
      shares which were recorded in equity net of transaction costs of $32
      thousand.                                                                                                                                                                                                                                                                                                                                                 
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (vii)  | On October 12, 2012, the Company issued 66,956
      Structuring shares concurrently with the issuance of convertible
      debentures (note 16). $0.2 million of the gross proceeds were attributed
      to the structuring shares which were recorded in equity net of transaction
      costs of $15 thousand.                                                                                                                                                                                                                                                                                                                                               
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (viii) | On November 13, 2012, the Company issued 380,373
      Structuring shares upon conversion of convertible debentures (note 16).
      The fair value of the structuring shares issued upon conversion was $1.1
      million.                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (ix)   | December 18, 2012, the Company closed
      a public offering of 7,200,000 Units at a price of C$2.10 per Unit
      representing aggregate gross proceeds of $15.3 million. Each Unit
      comprises one common share of the Company and one-half of one common share
      purchase warrant. Each whole warrant entitles the
      holder to purchase one common share of the Company at an exercise price of
      C$2.35 until December 18, 2016. Of the gross proceeds $13.4 million
      was attributed to common shares and recorded in equity, and $1.9 million
      was attributed to the warrants and recorded in warrant liability (Note
      13).
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |        | The Company paid agents fees equivalent to 6% ($0.9
      million) of the public offering. The agents fees were satisfied with 1.
      $0.3 million in cash, and 2. 304,085 units under the same terms as the
      public offering. The unit shares had a value of $0.6 million, which was
      recorded in equity, and the unit warrants had a fair value of $0.1
      million, which was recorded in financing fees (Note 6).                                                                                                                                                                                                                              
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |        | The Company also issued agents 432,000 broker
      compensation options with a fair value of $0.2 million which was recorded
      in equity. Each broker compensation option consisted of one common share
      purchase option exercisable to purchase one additional common share in the
      Company at a price of C$2.10 per share until December 18,
  2014.                                                                                                                                                                                                                                                                                            

| | (d) | Stock options:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The Company has a stock option plan (the Plan) in place
      under which the Board of Directors may grant options to acquire common
      shares of the Company to directors, employees and service providers. Under
      the terms of the Plan, the number of securities issuable to insiders,
      cannot exceed 10% of the issued and outstanding securities. The options
      vest over a variable period of time up to three years dependent upon the
      individuals role and any specified performance
criteria.

32

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

Under the fair value method, the total
fair value of the stock based compensation recognized during the year ended
December 31, 2012 was $2.8 million (2011 - $3.2 million). Of this $0.6 million
is included in cost of sales (2011 - $1.4), and $2.2 million is included in
general and administrative expense for the year ended December 31, 2012 (2011 
$1.8 million). The fair value of stock options granted during the year ended
December 31, 2012 was calculated using the Black-Scholes option pricing model
with the following weighted average assumptions:

| |                                               |   | 2012   |  |   | 2011   | 
| | --------------------------------------------- | - | ------ |  | - | ------ | 
| | Weighted average fair value at grant date ($) | $ | 2.43   |  | $ | 3.88   | 
| | Expected dividend yield (%)                   |   | 0%     |  |   | 0%     | 
| | Average risk-free interest rate (%)           |   | 1.3%   |  |   | 1.9%   | 
| | Expected life (years)                         |   | 5.0    |  |   | 5.0    | 
| | Expected volatility (%)                       |   | 124.9% |  |   | 125.4% | 
| | Forfeiture rate (%)                           |   | 0%     |  |   | 0%     | 

Continuity of stock options
outstanding is as follows:

| |                      |  |                     |   |  | Weighted average | 
| | -------------------- |  | ------------------- | - |  | ---------------- | 
| |                      |  | Options             |   |  | exercise price   | 
| |                      |  | outstanding (000's) |   |  | (C$/option)      | 
| | At December 31, 2010 |  | 5,344               |   |  | 3.66             | 
| | Granted              |  | 792                 |   |  | 4.64             | 
| | Exercised            |  | (19                 | ) |  | 1.92             | 
| | Expired              |  | (58                 | ) |  | 9.17             | 
| | Forfeited            |  | (38                 | ) |  | 1.50             | 
| | At December 31, 2011 |  | 6,021               |   |  | 3.76             | 
| | Granted              |  | 818                 |   |  | 2.76             | 
| | Exercised            |  | (23                 | ) |  | 1.50             | 
| | Expired              |  | (546                | ) |  | 11.38            | 
| | Forfeited            |  | (24                 | ) |  | 3.92             | 
| | At December 31, 2012 |  | 6,246               |   |  | 2.97             | 

Continuity of brokers compensation
options outstanding is as follows:

| |                      |  |                     |  |  | Weighted average | 
| | -------------------- |  | ------------------- |  |  | ---------------- | 
| |                      |  | Brokers options     |  |  | exercise price   | 
| |                      |  | outstanding (000's) |  |  | (C$/option)      | 
| | At December 31, 2010 |  | -                   |  |  | -                | 
| | Granted              |  | -                   |  |  | -                | 
| | Exercised            |  | -                   |  |  | -                | 
| | Expired              |  | -                   |  |  | -                | 
| | Forfeited            |  | -                   |  |  | -                | 
| | At December 31, 2011 |  | -                   |  |  | -                | 
| | Granted              |  | 432                 |  |  | 2.10             | 
| | Exercised            |  | -                   |  |  | -                | 
| | Expired              |  | -                   |  |  | -                | 
| | Forfeited            |  | -                   |  |  | -                | 
| | At December 31, 2012 |  | 432                 |  |  | 2.10             | 

33

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

The following information pertains to
the options outstanding at December 31, 2012:

| |                     |  | Options Outstanding         |  |  |                |  |  |                    |  |  |             |  |  | Vested         |  |  |                    | 
| | ------------------- |  | --------------------------- |  |  | -------------- |  |  | ------------------ |  |  | ----------- |  |  | -------------- |  |  | ------------------ | 
| |                     |  |                             |  |  |                |  |  | Weighted           |  |  |             |  |  |                |  |  | Weighted           | 
| |                     |  |                             |  |  | Weighted       |  |  | average            |  |  |             |  |  | Weighted       |  |  | average            | 
| |                     |  | Options                     |  |  | average        |  |  | remaining          |  |  | Options     |  |  | average        |  |  | remaining          | 
| |                     |  | outstanding                 |  |  | exercise price |  |  | contractual        |  |  | outstanding |  |  | exercise price |  |  | contractual        | 
| | Exercise Price (C$) |  | (000's)                     |  |  | (C$/option)    |  |  | life
      (years) |  |  | (000's)     |  |  | (C$/option)    |  |  | life
      (years) | 
| | 1.50-3.10           |  | 2,806                       |  |  | 2.08           |  |  | 2.51               |  |  | 2,681       |  |  | 2.05           |  |  | 2.46               | 
| | 3.11-8.20           |  | 3,420                       |  |  | 3.62           |  |  | 2.55               |  |  | 3,400       |  |  | 3.62           |  |  | 2.55               | 
| | 8.21-16.00          |  | 20                          |  |  | 16.00          |  |  | 0.24               |  |  | 20          |  |  | 16.00          |  |  | 0.24               | 
| |                     |  | 6,246                       |  |  | 2.97           |  |  | 2.53               |  |  | 6,101       |  |  | 2.97           |  |  | 2.50               | 
| |                     |  |                             |  |  |                |  |  |                    |  |  |             |  |  |                |  |  |                    | 
| |                     |  | Brokers Options Outstanding |  |  |                |  |  |                    |  |  |             |  |  | Vested         |  |  |                    | 
| | 2.10                |  | 432                         |  |  | 2.10           |  |  | 1.96               |  |  | 432         |  |  | 2.10           |  |  | 1.96               | 
| |                     |  | 432                         |  |  | 2.10           |  |  | 1.96               |  |  | 432         |  |  | 2.10           |  |  | 1.96               | 

|21. | Net change in non-cash operating working
      capital:
|--- | -------------------------------------------------------

| |                                                |   | 2012    |   |   | 2011    |   |   | 2010    |  
| | ---------------------------------------------- | - | ------- | - | - | ------- | - | - | ------- | -
| | Accounts receivable and prepaid expenses       | $ | (640    | ) | $ | (2,988  | ) | $ | (777    | )
| | Inventories                                    |   | (6,570  | ) |   | 6,697   |   |   | (10,862 | )
| | Accounts payable and
      accrued liabilities |   | (6,810  | ) |   | (16,724 | ) |   | 10,124  |  
| |                                                | $ | (14,020 | ) | $ | (13,015 | ) | $ | (1,515  | )

|22. | Segmented information                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Companys operations are primarily related to the
      acquisition, exploration and production of gold in North America. As of
      December 31, 2012, the Company had one producing gold mine located in
      Nevada, USA and exploration properties in Canada (Yukon) and the USA. For
      the year ended December 31, 2012 and December 31, 2011, 100% of the
      Companys gold production was sold through a single broker.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Companys operating segments reflect the Companys
      geographical operations and are reported in a manner consistent with the
      internal reporting provided to the chief operating decision maker, the
      Chief Operating Officer.                                                                                                                                                                                          

| |              |   | December 31, |  |   | December 31, | 
| | ------------ | - | ------------ |  | - | ------------ | 
| |              |   | 2012         |  |   | 2011         | 
| |              |   |              |  |   |              | 
| | Assets       |   |              |  |   |              | 
| | Canada       | $ | 64,048       |  | $ | 86,275       | 
| | USA          |   | 284,411      |  |   | 241,371      | 
| | Consolidated | $ | 348,459      |  | $ | 327,646      | 
| |              |   |              |  |   |              | 
| | Liabilities  |   |              |  |   |              | 
| | Canada       | $ | 50,224       |  | $ | 33,522       | 
| | USA          |   | 199,574      |  |   | 206,974      | 
| | Consolidated | $ | 249,798      |  | $ | 240,496      | 

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| |              |  |         |  |  |                       |  |  | 2012                |  |  |                         |   |  |              | 
| | ------------ |  | ------- |  |  | --------------------- |  |  | ------------------- |  |  | ----------------------- | - |  | ------------ | 
| |              |  |         |  |  | Cost of sales         |  |  | Depreciation        |  |  |                         |   |  | Capital      | 
| |              |  | Sales   |  |  | (excluding depletion) |  |  | and
      Depletion |  |  | Net
      income (loss) |   |  | Expenditures | 
| | Canada       |  | -       |  |  | -                     |  |  | 52                  |  |  | (12,203                 | ) |  | 4,190        | 
| | USA          |  | 160,561 |  |  | 134,350               |  |  | 11,981              |  |  | (7,812                  | ) |  | 24,152       | 
| | Consolidated |  | 160,561 |  |  | 134,350               |  |  | 12,033              |  |  | (20,015                 | ) |  | 28,342       | 

| |              |  |         |  |  |                       |  |  | 2011                |  |  |                         |   |  |              | 
| | ------------ |  | ------- |  |  | --------------------- |  |  | ------------------- |  |  | ----------------------- | - |  | ------------ | 
| |              |  |         |  |  | Cost of sales         |  |  | Depreciation        |  |  |                         |   |  | Capital      | 
| |              |  | Sales   |  |  | (excluding depletion) |  |  | and
      Depletion |  |  | Net
      income (loss) |   |  | Expenditures | 
| | Canada       |  | -       |  |  | -                     |  |  | 58                  |  |  | 59,640                  |   |  | 7,559        | 
| | USA          |  | 105,116 |  |  | 130,975               |  |  | 6,618               |  |  | (33,258                 | ) |  | 73,727       | 
| | Consolidated |  | 105,116 |  |  | 130,975               |  |  | 6,676               |  |  | 26,382                  |   |  | 81,286       | 

|23. | Management of Capital                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                    
|    | The Company manages its common shares, stock options,
      warrants and debt, net of cash and cash equivalents as capital. At
      December 31, 2012 the Company held the following as
  capital:

| |                                      |   | 2012    |  |   | 2011   | 
| | ------------------------------------ | - | ------- |  | - | ------ | 
| | Equity                               | $ | 98,661  |  | $ | 87,150 | 
| | Debt                                 |   | 3,769   |  |   | -      | 
| |                                      |   | 102,430 |  |   | 87,150 | 
| | Less cash and cash
      equivalents |   | 9,295   |  |   | 2,261  | 
| |                                      | $ | 93,135  |  | $ | 84,889 | 

The Companys objectives in managing
capital are to safeguard its ability to continue as a going concern to provide
returns for shareholders and benefits for other stakeholders. To meet this
objective the Company will attempt to ensure it has sufficient cash resources to
pursue the exploration and development of its mineral properties and fund
potential acquisitions and maintain necessary personnel, supplies and equipment
at its Jerritt Canyon operations.

To support these objectives the Company
manages its capital structure and makes adjustments to it in light of changes in
economic conditions and risk characteristics of underlying assets. To maintain
or adjust its capital structure, the Company may attempt to issue new shares,
issue new debt, acquire or dispose of assets or adjust the amount of cash and
cash equivalents. In order to maximize the exploration and development efforts,
the Company does not pay out dividends.

The Companys investment policy is to
invest its cash in highly liquid short-term interest-bearing investments with
maturities of 90 days or less from the original date of acquisition, selected
with regards to the expected timing of expenditures from continuing operations.
During 2012, the Company obtained additional cash by: (i) receiving $20 million
through a forward gold sale agreement (Note 15); (ii) receiving $5 million
through a derivative forward gold sales agreement (Note 12); (iii) receiving
$11.9 million through the issuance of convertible debentures (Note 16); (iv)
raising $8.7 million with the private placement of units consisting of common
shares and share purchase warrants (Note 20(c)(iii)); (v) and, by raising $15.3
million by closing a public offering of units consisting of common shares and
share purchase warrants (Note 20(c)(ix)).

35

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

|    | At December 31, 2012, there was no externally imposed
      capital requirement to which the Company is subject, which the Company has
      not complied with.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|24. | Financial Instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Companys financial instruments consist of cash and
      cash equivalents, receivables, restricted funds, accounts payable and
      accrued liabilities, borrowings, and derivative liabilities. The Companys
      derivative liabilities include forward contracts, the embedded gold
      derivative component of borrowings, and warrants.
      a)    Financial assets and liabilities
      classified as Fair Value Through Profit or Loss (FVTPL):
      The Companys financial assets and liabilities are
      classified as FVTPL and therefore are carried at fair value with changes
      in fair value recorded in income. Interest income and expense are both
      recorded in income. The Companys financial assets and liabilities include
      cash and cash equivalents, restricted funds, and derivative assets and
      liabilities.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Companys derivative financial assets and liabilities
      classified as FVTPL are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                                    |  |       |  |   | December 31, |  |   | December 31, | 
| | ---------------------------------- |  | ----- |  | - | ------------ |  | - | ------------ | 
| |                                    |  | Notes |  |   | 2012         |  |   | 2011         | 
| | Current derivative assets          |  |       |  |   |              |  |   |              | 
| | Forward metal sale options         |  | (i)   |  | $ | -            |  | $ | 3            | 
| | Current derivative liabilities     |  |       |  |   |              |  |   |              | 
| | Derivative embedded in borrowings  |  | 16    |  |   | 467          |  |   | -            | 
| | Derivative forward contracts       |  | 12    |  |   | 7,006        |  |   | 15,003       | 
| | Warrants                           |  | 13    |  |   | 12           |  |   | 850          | 
| |                                    |  |       |  |   | 7,485        |  |   | 15,853       | 
| | Non-current derivative liabilities |  |       |  |   |              |  |   |              | 
| | Derivative forward contracts       |  | 12    |  |   | 21,480       |  |   | -            | 
| | Warrants                           |  | 13    |  |   | 8,700        |  |   | 1,785        | 
| |                                    |  |       |  | $ | 30,180       |  | $ | 1,785        | 

| | (i) | During the fourth quarter of 2011 the Company began
      employing forward metal sale options (Puts) to manage exposure to
      fluctuations in metal prices. The Puts are presented on the consolidated
      statement of financial position as a component of Accounts receivable and
      other. These derivative assets are recorded at fair value with changes in
      fair value being recognized in net income (loss). During 2011 a total
      expense of $82 thousand was recorded relating to these Puts; $12 thousand
      of which is an unrecognized loss on a single Put outstanding at December
      31, 2011 with a fair-value of $3 thousand. There were no puts outstanding
      as at December 31, 2012.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

b)    Other categories
of financial instruments:

Accounts receivables are classified as
loans and receivables. Accounts payable and accrued liabilities, as well as the
debt component of borrowings are classified as other liabilities and are
measured at amortized cost, using the effective interest method. The fair values
of accounts receivables, accounts payable and accrued liabilities approximate
the carrying value because of the short term nature of these instruments.

The fair value of borrowings was
determined using discounted cash flows at prevailing market rates and the fair
value is approximately equal to the carrying value of the debt.

36

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

c)     Fair value
measurements of financial assets and liabilities

The categories of fair value hierarchy
that reflect the significance of inputs used in making fair value measurements
are as follows:

| |  | Level 1  quoted prices in active markets for identical
      assets or liabilities;                                                                                                                      
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                           
| |  | Level 2  inputs other than quoted prices included in
      Level 1 that are observable for the asset or liability, either directly
      (i.e., as prices) or indirectly (i.e., derived from prices); and
| |   |                                                                                                                                                                                                           
| |  | Level 3  inputs for the asset or liability that are not
      based on observable market data.                                                                                                           

An assessment of the companys
financial instruments carried at fair value is set out below:

| |                                  |   | December 31, 2012 |  |   | December 31, 2011 | 
| | -------------------------------- | - | ----------------- |  | - | ----------------- | 
| | December 31, 2012                |   | Level 1           |  |   | Level 2           | 
| | Financial Assets                 |   |                   |  |   |                   | 
| | Cash and cash equivalents        | $ | 9,295             |  | $ | -                 | 
| | Restricted funds                 |   | 59,307            |  |   | -                 | 
| | Derivative asset                 |   | -                 |  |   | -                 | 
| |                                  |   | 68,602            |  |   | -                 | 
| | Financial Liabilities            |   |                   |  |   |                   | 
| | Current and non-current warrants |   | -                 |  |   | 8,712             | 
| | Derivative forward contracts     |   | -                 |  |   | 28,486            | 
| |                                  | $ | -                 |  | $ | 37,198            | 

| | (i) | The fair value measurement methodologies used for the
      level 2 inputs were as follows:
| | --- | -------------------------------------------------------------------------------------------
| |     |                                                                                            
| |     | a.                                                                                         
| |     |                                                                                            
| |     | b.                                                                                         
| |     |                                                                                            
| |     |                                                                                            

d) Financial Risk Management

The Company is exposed to the certain
risks through its use of financial instruments, including market risk (currency
risk, interest rate risk and commodity price risk), credit risk, and liquidity
risk.

The Company manages its exposure to
risk through the identification and analysis of risks faced by the Company,
setting appropriate risk limits and controls, and monitoring those risks and
adherence to the limits and controls that are established. Risk management is
carried out by senior management under the approval of the Board of Directors.
Risk management practices are reviewed regularly by senior management and the
Audit Committee to reflect changes in market conditions and the Companys
activities.

Market risk:

37

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

Market risk is the risk that changes
in market factors, such as foreign exchange rates, interest rates or commodity
prices will affect the fair values or future cash flows of the Company.

38

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

| | (i) | Currency risk:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Results are reported in US dollars.  The majority of our operating and capital expenditures are denominated and settled in US dollars.  The largest single exposure we have is to the Canadian dollar through cash holdings and corporate administration costs.  Consequently, fluctuations in the US dollar exchange rate against the Canadian dollar increases the volatility of corporate administration costs and overall net earnings, when translated into US dollars. The Company manages this risk by maintaining funds in Canadian dollars to support the cash requirements of those operations.  The Company does not use any foreign exchange contracts to hedge these currency risks.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company is exposed to currency risk through the
      following financial assets and liabilities denominated in Canadian
      dollars:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | In thousands of CAD                            |   | December 31, |  |   | December 31, | 
| | ---------------------------------------------- | - | ------------ |  | - | ------------ | 
| |                                                |   | 2012         |  |   | 2011         | 
| | Cash and cash equivalents                      | $ | 6,674        |  | $ | 259          | 
| | Accounts receivable                            |   | 735          |  |   | 1,791        | 
| | Restricted funds                               |   | 3,700        |  |   | 3,607        | 
| | Accounts payable
      and accrued liabilities | $ | 6,160        |  | $ | 11,785       | 

| |       | Based on the above net exposures as at December 31, 2012,
      a 10% appreciation or depreciation in the Canadian dollar against the US
      dollar, assuming all other variables remain constant, would result in a
      $0.5 million increase or decrease, respectively, in operating results and
      shareholders equity.                                                                                                                                                                                                                                                                                                
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (ii)  | Interest rate risk:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | Interest rate risk is the risk that the fair values and
      future cash flows of the Company will fluctuate because of changes in
      market interest rates. The Company is exposed to interest rate risk on its
      cash and cash equivalents. The Companys cash and cash equivalents contain
      highly liquid investments that earn interest at market rates. Fluctuations
      in market interest rates do not have a significant impact on the Companys
      results from operations due to the short term to maturity of the
      investments held.                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iii) | Commodity price risk:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | The Company sells its gold production in the world
      market. The market prices of gold are the primary drivers of our
      profitability and ability to generate free cash flow. All of our future
      gold production is unhedged in order to provide our shareholders with full
      exposure to changes in the market gold price.
      We are also exposed to
        fluctuations in the market prices of gold through our derivative and
        non-derivative forward gold contracts as increases in the market prices of
        gold will increase the value of gold used for settlement of these
    contracts.

39

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

Credit risk:

Credit risk is the risk of financial
loss to the Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. Credit risk arises from cash and cash
equivalents, restricted funds, and trade and other receivables. For cash and
cash equivalents, restricted funds, and trade and accounts receivable, credit
risk exposure equals the carrying amount on the statement of financial position.

| | (i)  | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                     
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                               
| |      | The Company manages its credit risk on cash and cash
      equivalent balances by maintaining balances with Tier 1 Canadian banks
      with a Standard & Poors rating of AA. As at December 31, 2011 $nil of
      cash and cash equivalents were held as short-term deposits.                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                               
| | (ii) | Restricted funds                                                                                                                                                                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                               
| |      | The Company has funds of $45.6 million included in
      restricted funds (note 9 (a)) with a third party insurer with a Standard
      & Poors rating of A+ to fund future reclamation costs at Jerritt
      Canyon. The Company maintains title to these funds should the third party
      be in default of their obligations or enters into bankruptcy
      protection.
| |      |                                                                                                                                                                                                                                                                                                                                                                               
| |      | Also included in restricted funds is $10.0 million in an
      escrow account held in the Companys name at a European bank with a
      Standard & Poors rating of A+ (note 9(e)). These funds relate to the
      forward gold purchase agreement (note 16), and will be made available to
      the Company when defined production targets are achieved.                 
| |      |                                                                                                                                                                                                                                                                                                                                                                               
| |      | Funds raised through the issuance of FTS, of which $5.0
      million were restricted for future exploration in Canada (Note 9(b)), were
      on deposit with a Tier 1 Canadian bank with a Standard & Poors rating
      of AA-. As at December 31, 2012 $nil of this restricted funds were held as
      short-term deposits.                                             
| |      |                                                                                                                                                                                                                                                                                                                                                                               
| |      | The Company also had $nil (2011 - $1.8 million) of
      restricted funds held on deposit with a U.S. Bank, these funds were
      restricted for the settlement of a class action suit (notes 9(c), and
      25(a)). As at December 31, 2012 $nil (2011 - $nil) of this restricted
      funds were held as short-term deposits.                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                               
| |      | The remaining $3.7 million in restricted funds at
      December 31, 2012, which relate to a water use license letter of credit
      and cash pledged as security for letters of credit (note 9), are held as
      short term deposits with a Tier 1 Canadian bank with a Standard &
      Poors rating of AA-.                                                            

Liquidity risk:

Liquidity risk is the risk of loss
from not having sufficient funds to meet financial obligations as they fall due.
The Company manages liquidity risk through forecasting its cash flows from
operations and anticipating investing and financing activities. Senior
management is actively involved in the review and approval of planned
expenditures and typically ensures that it has sufficient cash on demand to meet
expected operating expenses.

At December 31, 2012 the cash balance
of the Company was $9.3 million.

40

---

|VERIS GOLD CORP.(FORMERLY YUKON-NEVADA GOLD CORP.)                       
|-------------------------------------------------------------------------
|Notes to Consolidated Financial Statements                               
|(Tabular amounts
      in thousands of US dollars unless otherwise noted)

The following are the contractual
maturities of the undiscounted cash flows of financial and non-financial liabilities at December
31, 2012:

Less than 3
    
    
    4 to 12
    
    
    1 to 2 years
    
    
    Greater than
    
    
    Totalmonths
    
    
    months
    
    
    
    
    
    2
      yearsAccounts payable and accrued
    $
    37,373
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    37,373liabilitiesFinance lease obligations
    
    674
    
    
    1,732
    
    
    2,229
    
    
    1,322
    
    
    5,957Operating lease obligations
    
    56
    
    
    169
    
    
    215
    
    
    143
    
    
    583Decommissioning and
    
    -
    
    
    408
    
    
    1,309
    
    
    63,253
    
    
    64,970rehabilitation
      provisions$
    38,103
    
    $
    2,309
    
    $
    3,753
    
    $
    64,718
    
    
    108,883


|25. | Commitments and contingencies
|--- | -----------------------------
|    |                              
|    | a)                           
|    |                              
|    | b)                           
|    |                              
|    | c)                           
|    |                              
|    |                              

| | 2013 | $ | 225 | 
| | ---- | - | --- | 
| | 2014 |   | 215 | 
| | 2015 |   | 143 | 
| |      | $ | 583 | 

41

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