UNITED
STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549



FORM 20-F



(Mark One)



 ̈   
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934



OR



x   
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended December 31,
2013



OR



 ̈   
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



OR



 ̈   
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Date of event requiring this shell company
report...................



For the transition period from ___________________________to _______________________



Commission file number 000-52699



|VERIS
    GOLD CORP.                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------
|(Exact name of Registrant as specified in its
    charter)                                                                        
|                                                                                                                                  
|N/A                                                                                                                               
|(Translation of Registrant’s name into
    English)                                                                               
|                                                                                                                                  
|British Columbia,
    Canada                                                                                                      
|(Jurisdiction of incorporation or organization)                                                                                   
|                                                                                                                                  
|688 West
    Hastings Street, Suite 900, Vancouver, British Columbia V6B 1P1                                                      
|(Address of principal executive offices)                                                                                          
|                                                                                                                                  
|Shaun Heinrichs,
    (604) 688-9427, shaun@verisgold.com, 688 West Hastings Street, Suite 900, Vancouver, British Columbia V6B 1P1
|(Name, Telephone, E-mail and/or Facsimile number
    and Address of Company Contact Person)                                       
|                                                                                                                                  
|Securities registered or to be registered pursuant
    to Section 12(b) of the Act.                                               



| | Title of each class |  |  | Name of each exchange
    on which registered | 
| | ------------------- |  |  | --------------------------------------------- | 
| | None                |  |  | N/A                                           | 



|Securities registered or to be registered pursuant
    to Section 12(g) of the Act.
|-----------------------------------------------------------------------------------
|                                                                                   
|Common shares,
    no par value                                                    
|(Title of Class)                                                                   



Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act.



|None            
|----------------
|(Title of Class)



Indicate the number of outstanding shares
of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.



|154,378,365
|-----------



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



 ̈ 
Yes             x 
No



If this report is an annual or transition
report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.



 ̈ 
Yes             x 
No



Note – Checking the box above will
not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.



x 
Yes              ̈ 
No



Indicate by check mark whether the registrant
has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).



 ̈ 
Yes              ̈ 
No



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and
large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):



Large accelerated filer  ̈            
Accelerated filer  ̈             
Non-accelerated filer x



Indicate by check mark which basis of accounting
the registrant has used to prepare the financial statements included in this filing:



|U.S. GAAP  ̈ | International Financial Reporting Standards as issued | Other  ̈
|----------- | ----------------------------------------------------- | -------
|            | By the International Accounting Standards Board  x    |        



If “Other” has been checked
in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.



 ̈  Item
17             ̈ Item
18



If this is an annual report, indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



 ̈ 
Yes             x 
No













TABLE OF CONTENTS



|PART I                                                                     | 1  
|-------------------------------------------------------------------------- | ---
|Introduction                                                               | 1  
|Cautionary Note Regarding Forward-Looking Information                      | 1  
|Cautionary Note to U.S. Investors Regarding Resource and Reserve Estimates | 2  
|Currency                                                                   | 3  
|Item 1. Identity of Directors, Senior Management and Advisers.             | 4  
|Item 2. Offer Statistics and Expected Timetable.                           | 4  
|Item 3. Key Information.                                                   | 4  
|A. Selected financial data.                                                | 4  
|B. Capitalization and indebtedness.                                        | 4  
|C. Reasons for the offer and use of proceeds.                              | 4  
|D. Risk factors.                                                           | 5  
|Item 4. Information on the Company.                                        | 13 
|A.History and development of the Company.                                  | 13 
|B.Business overview.                                                       | 14 
|C. Organizational structure.                                               | 21 
|D.Property, plants and equipment.                                          | 22 
|Item 4A. Unresolved Staff Comments.                                        | 90 
|Item 5. Operating and Financial Review and Prospects.                      | 90 
|A. Operating results.                                                      | 90 
|B. Liquidity and capital resources.                                        | 97 
|C. Research and development, patents and licenses, etc.                    | 108
|D. Trend information.                                                      | 108
|E. Off-balance sheet arrangements.                                         | 108
|F. Tabular disclosure of contractual obligations.                          | 108
|G. Safe harbor.                                                            | 109
|Item 6. Directors, Senior Management and Employees.                        | 109
|A. Directors and senior management.                                        | 109
|B. Compensation.                                                           | 110
|C. Board practices.                                                        | 111
|D. Employees.                                                              | 111
|E. Share ownership.                                                        | 112
|Item 7. Major Shareholders and Related Party Transactions.                 | 113
|A. Major shareholders.                                                     | 113
|B. Related party transactions.                                             | 114
|C. Interests of experts and counsel.                                       | 114
|Item 8. Financial Information.                                             | 115
|A. Consolidated Statements and Other Financial Information.                | 115
|B. Significant Changes.                                                    | 116
|Item 9. The Offer and Listing.                                             | 116
|A. Offer and listing details.                                              | 116
|B. Plan of distribution.                                                   | 116
|C. Markets.                                                                | 117
|D. Selling shareholders.                                                   | 117
|E. Dilution.                                                               | 117
|F. Expenses of the issue.                                                  | 117
|Item 10. Additional Information.                                           | 117
|A. Share capital.                                                          | 117
|B. Memorandum and articles of association.                                 | 117
|C. Material contracts.                                                     | 118
|D. Exchange controls.                                                      | 118
|E. Taxation.                                                               | 119



i







|F. Dividends and paying agents.                                                        | 124
|-------------------------------------------------------------------------------------- | ---
|G. Statement by experts.                                                               | 124
|H. Documents on display.                                                               | 125
|I. Subsidiary Information.                                                             | 125
|Item 11. Quantitative and Qualitative Disclosures About Market Risk.                   | 125
|Item 12. Description of Securities Other than Equity Securities.                       | 125
|PART II                                                                                | 125
|Item 13. Defaults, Dividend Arrearages and Delinquencies.                              | 125
|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds. | 125
|Item 15. Controls and Procedures.                                                      | 126
|Item 16. [Reserved]                                                                    | 127
|Item 16A. Audit Committee Financial Expert.                                            | 127
|Item 16B. Code of Ethics.                                                              | 127
|Item 16C. Principal Accountant Fees and Services.                                      | 127
|Item 16D. Exemptions from the Listing Standards for Audit Committees.                  | 128
|Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.      | 128
|Item 16F. Change in Registrant’s Certifying Accountant.                                | 128
|Item 16G. Corporate Governance.                                                        | 128
|Item 16H. Mine Safety Disclosure.                                                      | 128
|PART III                                                                               | 129
|Item 17. Financial Statements.                                                         | 129
|Item 18. Financial Statements.                                                         | 129
|Item 19. Exhibits.                                                                     | 129
|SIGNATURES                                                                             | 130
|EXHIBIT INDEX                                                                          | 131





ii









PART I



Introduction



Veris Gold Corp. is a corporation incorporated under the laws
of British Columbia, Canada and is referred to in this document, together with its subsidiaries, as “VG,” “Veris”
or the “Company”.



The Company’s consolidated financial statements are prepared
in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”) and are presented in US dollars unless otherwise indicated. All references in this Form 20-F
to financial information concerning the Company refer to such information in accordance with IFRS and all dollar amounts in this
Form 20-F are in US dollars unless otherwise indicated.



In this document, cross-references relevant to the information
being requested may be provided. These cross-references are provided for ease of reference only and are not meant to be exclusionary
to other relevant information in this document that may relate to the disclosure in question.



Cautionary
Note Regarding Forward-Looking Information



This Annual Report on Form 20-F contains “forward-looking
statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian
securities laws concerning the Company’s plans at its properties, plans related to its business and other matters. These
statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet
determinable and assumptions of management.



Forward-looking statements include, but are not limited to,
statements with respect to the future price of gold, the realization of mineral reserve estimates, the timing and amount of estimated
future production, costs of production, capital expenditures, costs and timing of the development of deposits, success of exploration
activities, permitting time lines, currency exchange rate fluctuations, requirements for additional capital, government regulation
of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance
coverage. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects,”
“anticipates,” “plans,” “estimates” or “intends,” or the negative or other variations
of these words or other comparable words or phrases or stating that certain actions, events or results “may,” “could,”
“would,” “might” or “will” be taken, occur or be achieved) are not statements of historical
fact and may be “forward-looking statements.”



With respect to forward-looking statements and the information
included in this document, the Company has made numerous assumptions, including, among other things, assumptions about the price
of gold, anticipated costs and expenditures and the Company’s ability to achieve its goals. By their nature, forward-looking
statements and information are based on assumptions and involve known and unknown risks, uncertainties and other factors that
may cause the Company’s actual results, performance or achievements, or industry results, to be materially different from
future results, performance or achievements expressed or implied by such forward-looking information. Such risks, uncertainties
and other factors include, among other things, the following: the Company’s indebtedness, the conditions and restrictive
covenants related thereto, and impairment of the Company’s ability to take advantage of future business opportunities; price
volatility of gold and other precious metals; changes in environmental regulations and permits; the effect of external factors
on operating costs and production; discrepancies between actual and estimated production and mineral reserves and resources; credit,
liquidity, interest rate and currency risk; the Company’s need for additional capital; general economic conditions; the
inherently dangerous nature of mining activities; any uninsured risks; risks relating to obtaining and renewing permits; ongoing
reclamation obligations; risks relating to defects in title and other rights to the Company’s mineral properties; the Company’s
reliance on a limited number of properties; potential legal proceedings; increased competition; difficulty attracting and retaining
qualified management and technical personnel; lack of assurance that the Company will acquire additional mineral rights; conflicts
of interest involving the Company’s directors; global climate change and the impact on the Company’s operations; adverse
publicity from non-governmental organizations; the speculative nature of gold exploration; mining operational and development
risk; and regulatory risks. This list is not exhaustive of the factors that may affect the forward-looking statements. Some of
the important risks and uncertainties that could affect forward-looking statements are described in this Annual Report on Form
20-F under “Item 3.D. Key Information – Risk Factors.”



1







Although the Company has attempted to identify important factors
that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended. Should one or more of these risks and uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements.
Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are
made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or
other circumstances should change, except as required by law. Investors are cautioned against placing undue reliance on forward-looking
statements.



CAUTIONARY NOTE TO U.S. INVESTORS REGARDING
RESOURCE AND RESERVE ESTIMATES



Certain disclosure in this Annual Report on Form 20-F has been
prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of
the United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable
mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 – Standards
of Disclosure for Mineral Projects(“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum
(the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM
Council, as amended (“CIM Standards”). These definitions differ from the definitions in the United States Securities
and Exchange Commission (“SEC”) Industry Guide 7 under the United States Securities Act of 1933, as amended (the “Securities
Act”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required
to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves
and the primary environmental analysis or report must be filed with the appropriate governmental authority.



In addition, the terms “mineral resource”, “measured
mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and
required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally
not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that
any part of or all of mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources”
have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or
legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations;
however the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC
Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.



Accordingly, information contained in this Annual Report on
Form 20-F and the documents incorporated by reference herein contain descriptions of the Company’s mineral deposits that
may not be comparable to similar information made public by US companies subject to the reporting and disclosure requirements
under the United States federal securities laws and the rules and regulations thereunder.



NI 43-101 Definitions



|“Mineral resource”  | Refers to a concentration or occurrence of natural, solid, inorganic
    or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that
    it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity
    of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.                                                                                                                                                                                                                                               
|------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                    | The terms “mineral resource”, “measured mineral resource”, “indicated
    mineral resource” and “inferred mineral resource” used in this Annual Report on Form 20-F are Canadian mining
    terms as defined in accordance with NI 43-101 under the guidelines set out in the CIM Standards.                                                                                                                                                                                                                                                                                                                                                                                                    
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|“Measured resource” | Refers to that part of a mineral resource for which quantity grade or quality, densities,
    shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow
    the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic
    viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered
    through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely
    enough to confirm both geological and grade continuity.



2







|“Indicated resource” | Refers to that part of a mineral resource for which quantity, grade or
    quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the
    appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability
    of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate
    techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological
    and grade continuity to be reasonably assumed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|“Inferred resource”  | Refers to that part of a mineral resource for which quantity and grade or quality can be
    estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and
    grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations
    such as outcrops, trenches, pits, workings and drill holes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|“Mineral reserve”    | Refers to the economically mineable part of a measured or indicated mineral resource demonstrated
    by at least a preliminary feasibility study. The study must include adequate information on mining, processing, metallurgical,
    economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
    A mineral reserve includes diluting materials and allowances for losses that might occur when the material is mined.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                     | Mineral reserves are categorized as follows on the basis of the degree of confidence in
    the estimate of the quantity and grade of the deposit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|“Proven reserve”     | Means, in accordance with CIM Standards, for the part of a deposit which is being mined,
    or which is being developed and for which there is a detailed mining plan, the estimated quantity and grade or quality of
    that part of a measured mineral resource for which the size, configuration and grade or quality and distribution of values
    are so well established, and for which economic viability has been demonstrated by adequate information on engineering, operating,
    economic and other relevant factors, so that there is the highest degree of confidence in the estimate. This definition differs
    from the standards in the United States, where proven or measured reserves are defined as reserves which (a) quantity is computed
    from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results
    of detailed sampling and (c) the sites for inspection, sampling and measurement are spaced so closely and the geographic character
    is so well defined that size, shape, depth and mineral content of reserves are well established.
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|“Probable reserve”   | Means, in accordance with CIM Standards, the estimated quantity and grade or quality of
    that part of an indicated mineral resource for which economic viability has been demonstrated by adequate information on engineering,
    operating, economic and other relevant factors, at a confidence level which would serve as a basis for decisions on major
    expenditures. This definition differs from the standards in the United States, where probable mineral reserves are defined
    as reserves for which quantity and grade and/or quality are computed from information similar to that of proven reserves (under
    United States standards), but the sites for inspection, sampling, and measurement are further apart or are otherwise less
    adequately spaced, and the degree of assurance, although lower than that for proven mineral reserves, is high enough to assume
    continuity between points of observation. The degree of assurance, although lower than that for proven mineral reserves, is
    high enough to assume continuity between points of observation.                                               



Currency



Unless otherwise indicated, all dollar amounts in this Annual
Report on Form 20-F are in United States dollars. The exchange rate of Canadian dollars into United States dollars, on December
31, 2013, based upon the noon rate of exchange as quoted by the Bank of Canada, was U.S.$1.00 = Cdn$1.0636.



3







Item 1. Identity of Directors, Senior Management and Advisers.



Not applicable.



Item 2. Offer Statistics and Expected Timetable.



Not applicable.



Item 3. Key Information.



A.Selected financial data.



The following table summarizes the Company’s selected
financial information (stated in thousands of U.S. dollars) for the fiscal years ended December 31, 2013, 2012, 2011 and 2010
prepared in accordance with IFRS as issued by the IASB. The information in the table was derived from the more detailed financial
statements for the fiscal years ended December 31, 2010 through December 31, 2013, and the related notes, and should be read in
conjunction with such financial statements. Selected financial information for the year ended December 31, 2009 is not included
as such information is not available on a basis that is consistent with the financial information for the years ended December
31, 2013, 2012, 2011 and 2010 and cannot be provided on an IFRS basis without unreasonable effort or expense.



Historical results are not necessarily indicative of results
to be expected for any future period. No dividends have been paid in any of the fiscal years ended December 31, 2010 throughout
the fiscal year ended December 31, 2013.



|(In thousands of U.S. dollars, except where
noted)                                                      |  | December
31, 2013 |          |   | December
31, 2012 |  |          | December
31, 2011 |  |  | December
31, 2010 |    
|------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | ----------------- |  | -------- | ----------------- |  |  | ----------------- | ---
|Revenue                                                                                                 |  |                   | 195,979  |   |                   |  | 160,561  |                   |  |  | 105,116           |    
|Cost of sales                                                                                           |  |                   | 180,885  |   |                   |  | 134,350  |                   |  |  | 130,975           |    
|Gross margin before depreciation and depletion                                                          |  |                   | 15,094   |   |                   |  | 26,211   |                   |  |  | (25,859           | )  
|Accretion of asset retirement obligations                                                               |  |                   | 1,707    |   |                   |  | 1,225    |                   |  |  | 1,704             |    
|Depletion, depreciation and amortization                                                                |  |                   | 20,733   |   |                   |  | 12,033   |                   |  |  | 6,676             |    
|(Loss) income from mine operations                                                                      |  |                   | (5,639   | ) |                   |  | 14,178   |                   |  |  | (32,535           | )  
|Impairment of mineral properties and expenditure                                                        |  |                   | 33,300   |   |                   |  | 31,763   |                   |  |  | 0                 |    
|Exploration expense                                                                                     |  |                   | -        |   |                   |  | 88       |                   |  |  | 781               |    
|Net (loss) income                                                                                       |  |                   | (66,652  | ) |                   |  | (20,015  | )                 |  |  | 26,382            |    
|Basic and diluted net loss per share (US dollars)                                                       |  |                   | (0.56    | ) |                   |  | (0.21    | )                 |  |  | 0.31              |    
|Total assets                                                                                            |  |                   | 312,951  |   |                   |  | 348,459  |                   |  |  | 327,646           |    
|Shareholders' equity other than accumulated deficit and,  accumulated other comprehensive income (loss) |  |                   | 491,044  |   |                   |  | 474,976  |                   |  |  | 447,009           |    
|Accumulated deficit and accumulated other comprehensive loss                                            |  |                   | (444,559 | ) |                   |  | (376,315 | )                 |  |  | (359,859          | )  
|Net assets                                                                                              |  |                   | 46,485   |   |                   |  | 98,661   |                   |  |  | 87,150            |    
|Outstanding shares, in thousands                                                                        |  |                   | 154,378  |   |                   |  | 107,641  |                   |  |  | 93,064            | (1)



(1) On October 11, 2012, the Company completed a ten for one
consolidation of its share capital. These numbers are shown on a post-consolidation basis.



B.Capitalization and indebtedness.



Not applicable.



C.Reasons for the offer and use of proceeds.



Not applicable.



4







D.Risk factors.



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



VG’s indebtedness and the conditions and
restrictive covenants imposed on VG by various financing agreements could materially and adversely affect VG’s business
and results of operations.



The Company is a party to various financing agreements, including
various forward gold purchase contracts. Under the forward gold purchase contracts, the Company has committed to deliver specified
amounts of gold in the aggregate amount of 121,808 ounces as of March 28, 2013 over specified periods of time in consideration
for gross cash payments from the lenders. The Company’s ability to meet regularly scheduled gold deliveries under the forward
gold purchase contracts will depend on the Company’s future operating performance, which in turn will depend on prevailing
economic conditions and other factors, many of which may be beyond the Company’s control.



In addition, the Company’s forward gold purchase contracts
include various conditions and covenants that require VG to obtain lenders’ consents prior to carrying out certain activities
and entering into certain transactions, such as incurring additional debt, creating additional charges on Company assets, and
providing additional guarantees or disposing of certain assets.



As a result of the restrictive covenants or other terms of
any existing or new loan or other financing agreements, the Company may be significantly restricted in its ability to raise additional
capital through bank borrowings and debt to engage in some transactions that VG expects to be of benefit to the Company. The inability
to meet these conditions and covenants or obtain lenders’ consent to carry out restricted activities could materially and
adversely affect the business and results of operations of VG.



On December 18, 2013 operations at the Company’s Jerritt
Canyon processing facility were interrupted due to an electrical arc-flash explosion that took place in the primary crushing building.
This incident affected various areas of the remaining milling operations and resulted in an unscheduled temporary shut-down of
the Jerritt Canyon operations for the remainder of December. This interruption negatively affected production during the December
and the fourth quarter of 2013, ultimately leading to a significant shortfall in production and the Company being unable to make
the scheduled December 2013 gold deliveries under each of the two forward gold purchase agreements held with Deutsche Bank. On
January 28, 2014 the Company received a notice of default from Deutsche Bank in respect of the failure to make the scheduled December
31, 2013 payment. Under the terms of the Gold Facility the default cannot be cured, however both parties are actively working
to a resolution to ensure the continuation of the Company’s operations for the benefit of the shareholders.



Changes in the market price of gold and other precious
metals, which in the past have fluctuated widely, affect the financial condition of VG.



The Company’s profitability and long-term viability depend,
in large part, upon the market price of gold and other metals and minerals produced from the Company’s mineral properties.
The market price of gold and other precious metals is volatile and is impacted by numerous factors beyond the Company’s
control, including:



| | · | global
                                         or regional consumption patterns;
| | - | ---------------------------------------------------------------------------------

| | · | expectations
                                         with respect to the rate of inflation;
| | - | --------------------------------------------------------------------------------------------

| | · | the
                                         relative strength of the U.S. dollar and certain other currencies;
| | - | ---------------------------------------------------------------------------------------------------------------

| | · | interest
                                         rates;
| | - | --------------------------------------------------------

| | · | global
                                         or regional political or economic conditions, including interest rates and currency values;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

| | · | supply
                                         and demand for jewellery and industrial products containing metals; and
| | - | -----------------------------------------------------------------------------------------------------------------------

| | · | sales
                                         by central banks and other holders, speculators and producers of metals in response to
                                         any of the above factors.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



5







The Company cannot predict the effect of these factors on metal
prices. A decrease in the market price of gold and other precious metals could affect the Company’s ability to finance its
mineral projects. There can be no assurance that the market price of gold and other precious metals will remain at current levels
or that such prices will improve. In particular, an increase or decrease in worldwide supply, and consequent downward or upward
pressure on prices, may result over the longer term from changes in production from mines which increase or decrease production
as a result of current metal prices.



Changes in environmental regulations and permits
could impact the ability or cost of VG to operate either the Nevada or Yukon properties.



The Company’s operations and exploration and development
activities in Canada and the United States are subject to extensive federal, state, provincial, territorial and local laws and
regulations governing various matters, including management of natural resources and environmental protections. The Company’s
current and anticipated future operations, including further exploration and development activities and commencement of production
on the Company’s properties, require permits from various United States and Canadian federal, state, provincial, territorial
and local governmental authorities. There can be no assurance that all permits that the Company requires for the construction
of mining facilities, to conduct mining operations and to conduct its other operations will be obtainable on reasonable terms,
or at all. Delays or a failure to obtain such permits, or a failure to comply with the terms of any such permits that the Company
has obtained, could have a material adverse impact on the Company.



The mine at Jerritt Canyon is currently operating under the
Consent Decree (as defined below) relating to certain environmental issues that the Company is to address. Delays or a failure
to remedy such issues could have a material adverse impact on the Company.



Operating costs and production are subject to a
number of external factors that could impact the sustainability of the Jerritt Canyon mining operations.



The cost of gold production may be impacted by numerous variables
including mined ore grade and gold recovery, backfill and development required, fuel and consumable costs, labour and benefit
cost, equipment operating and maintenance costs, and numerous other factors.



Production risk factors may include poor gold recovery, unavailability
of skilled labour and management, labour issues with the existing workforce, availability of mining equipment, availability of
consumables used in mining, mine plan implementation, weather, governmental regulations and other operating factors.



The figures for VG’s resources and reserves
are estimates based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently
estimated.



Unless otherwise indicated, mineralization figures presented
in this Annual Report on Form 20-F and in the Company’s other filings with securities regulatory authorities, press releases
and other public statements that may be made from time to time are based upon estimates made by Company personnel and independent
geologists. These estimates are imprecise and depend upon geologic interpretation and statistical inferences drawn from drilling
and sampling analysis, which may prove to be unreliable. There can be no assurance that:



| | · | these
                                         estimates will be accurate;
| | - | --------------------------------------------------------------------------

| | · | reserve,
                                         resource or other mineralization figures will be accurate; or
| | - | ---------------------------------------------------------------------------------------------------------------

| | · | this
                                         mineralization could be mined or processed profitably.
| | - | ----------------------------------------------------------------------------------------------------



Mineralization estimates for the Company’s properties
may require adjustments or downward revisions based upon further exploration or development work or actual production experience.
In addition, the grade of ore ultimately mined, if any, may differ from that indicated by drilling results. There can be no assurance
that minerals recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production
scale.



The estimating of mineral reserves and mineral resources is
a subjective process that relies on the judgment of the persons preparing the estimates. The process relies on the quantity and
quality of available data and is based on knowledge, mining experience, analysis of drilling results and industry practices. Valid
estimates made at a given time may significantly change when new information becomes available. By their nature, mineral resource
and reserve estimates are imprecise and depend, to a certain extent, upon analysis of drilling results and statistical inferences
that may ultimately prove to be inaccurate. There can be no assurances that actual results will meet the estimates contained in
studies. As well, further studies are required.



6







Estimated mineral reserves or mineral resources may have to
be recalculated based on changes in metal prices, further exploration or development activity or actual production experience.
This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other
important factors that influence mineral reserve or mineral resource estimates. The extent to which mineral resources may ultimately
be reclassified as mineral reserves is dependent upon the demonstration of their profitable recovery. Any material changes in
mineral resource estimates and grades of mineralization will affect the economic viability of placing a property into production
and a property’s return on capital. The Company cannot provide assurance that mineralization can be mined or processed profitably.



The resource and reserve estimates contained herein have been
determined and valued based on assumed future prices, cut-off grades and operating costs that may prove to be inaccurate. Extended
declines in market prices for precious metals may render portions of the Company’s mineralization uneconomic and result
in reduced reported mineralization. Any material reductions in estimates of mineralization, or of the Company’s ability
to extract this mineralization, could have a material adverse effect on VG’s results of operations or financial condition.



The failure to establish proven and probable reserves could
restrict the Company’s ability to successfully implement its strategies for long-term growth and could impact future cash
flows, earnings, results of operation and financial condition.



VG’s ability to continue its production and
exploration activities, and to continue as a going concern, will depend in part on its ability to continue production and generate
material revenues or to obtain suitable financing.



VG has limited financial resources. In the future, the Company’s
ability to continue its production and exploration activities, if any, will depend in part on the Company’s ability to continue
production and generate material revenues or to obtain suitable financing. Any unexpected costs, problems or delays could severely
impact the Company’s ability to continue these activities.



There can be no assurance that the Company will continue production
at its Jerritt Canyon Mine or generate sufficient revenues to meet its obligations as they become due or obtain necessary financing
on acceptable terms, if at all. The Company’s failure to meet its ongoing obligations on a timely basis could result in
the loss or substantial dilution of the Company’s interests (as existing or as proposed to be acquired) in its properties.
In addition, should the Company incur significant losses in future periods, it may be unable to continue as a going concern, and
realization of assets and settlement of liabilities in other than the normal course of business may be at amounts materially different
than the Company’s estimates.



VG is exposed to credit, liquidity, interest rate
and currency risk.



Credit risk is the risk of an unexpected loss if a customer
or third party to a financial instrument fails to meet its contractual obligations. The Company’s cash equivalents and short-term
investments are held through large Canadian financial institutions. Short-term and long-term investments (including those presented
as part of cash and cash equivalents) are composed of financial instruments issued by Canadian banks and companies with high investment-grade
ratings. These investments mature at various dates over the current operating period.



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.



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.



The Company is exposed to the financial risk related to the
fluctuation of foreign exchange rates. The Company operates in Canada and the United States and a portion of its expenses are
incurred in U.S. dollars. A significant change in the currency exchange rates between the Canadian dollar relative to the U.S.
dollar could have an effect on the Company’s results of operations, financial position or cash flows. The Company has not
hedged its exposure to currency fluctuations.



7







VG’s ability to continue as a going concern
is dependent on raising additional capital, which it may not be able to do on favorable terms, or at all.



VG will need to raise additional capital to support its continuing
operations. The Company can provide no assurance that additional funding will be available on a timely basis, on terms acceptable
to the Company, or at all. If the Company is unsuccessful raising additional funding, its business may not continue as a going
concern. Even if the Company does find additional funding sources, it may be required to issue securities with greater rights
than those currently possessed by holders of its common shares. The Company may also be required to take other actions that may
lessen the value of its common shares or dilute its common shareholders, including borrowing money on terms that are not favorable
to the Company or issuing additional equity securities. If the Company experiences difficulties raising money in the future, its
business and liquidity will be materially adversely affected.



General economic conditions may adversely affect
VG’s growth, future profitability and ability to finance.



Global financial markets continue to recover from the global
financial crisis but slack within world economies has led to continuing weakness and volatility in commodity prices. The slowdown
in world economies is demonstrated by the continuing contraction of credit markets and volatility in equity, commodity, and foreign
exchange as well as reduced market liquidity. Global equity markets, in particular markets for commodity companies, exhibit continued
contraction which has limited the Company’s growth and ability to raise financing. Specifically:



| | · | the
                                         global credit/liquidity crisis could impact the cost and availability of financing and
                                         the Company’s overall liquidity;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                         volatility of metal prices would impact the Company’s revenues, profits, losses
                                         and cash flow;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | negative
                                         economic pressures could adversely impact demand for the Company’s production;
| | - | --------------------------------------------------------------------------------------------------------------------------------

| | · | construction
                                         related costs could increase and adversely affect the economics of any of the Company’s
                                         projects;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | volatile
                                         energy, commodity and consumables prices and currency exchange rates would impact the
                                         Company’s production costs; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                         devaluation and volatility of global stock markets would impact the valuation of the
                                         Company’s equity and other securities.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Significant uncertainty exists related to inferred
mineral resources.



There is a risk that inferred mineral resources referred to
herein cannot be converted into measured or indicated mineral resources as there may be limited ability to assess geological continuity.
Due to the uncertainty relating to inferred mineral resources, there is no assurance that inferred mineral resources will be upgraded
to resources with sufficient geological continuity to constitute measured and indicated resources as a result of continued exploration.
See “Cautionary Note to U.S. Investors Regarding Resource and Reserve Estimates”.



Mining is inherently dangerous and subject to conditions
or events beyond VG’s control, which could have a material adverse effect on VG’s business.



Mining involves various types of risks and hazards, including:



| | · | environmental
                                         hazards;
| | - | ---------------------------------------------------------------

| | · | industrial
                                         accidents;
| | - | --------------------------------------------------------------

| | · | metallurgical
                                         and other processing problems;
| | - | -------------------------------------------------------------------------------------

| | · | unusual
                                         or unexpected rock formations;
| | - | -------------------------------------------------------------------------------

| | · | structural
                                         cave-ins or slides;
| | - | -----------------------------------------------------------------------

| | · | flooding;
| | - | ---------

| | · | fires;
| | - | ------

| | · | power
                                         outages;
| | - | -------------------------------------------------------



8







| | · | labour
                                         disruptions;
| | - | ------------------------------------------------------------

| | · | explosions;
| | - | -----------

| | · | landslides
                                         and avalanches;
| | - | -------------------------------------------------------------------

| | · | mechanical
                                         equipment and facility performance problems;
| | - | ------------------------------------------------------------------------------------------------

| | · | availability
                                         of materials and equipment;
| | - | ---------------------------------------------------------------------------------

| | · | metals
                                         losses; and
| | - | -----------------------------------------------------------

| | · | periodic
                                         interruptions due to inclement or hazardous weather conditions.
| | - | -----------------------------------------------------------------------------------------------------------------



These risks could result in damage to, or destruction of, mineral
properties, production facilities or other properties; personal injury or death, including to employees; environmental damage;
delays in mining; increased production costs; asset write downs; monetary losses; and possible legal liability. The Company may
not be able to obtain insurance to cover these risks at economically feasible premiums or at all. Insurance against certain environmental
risks, including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from
production, is not generally available to the Company or to other companies within the mining industry. The Company may suffer
a material adverse impact on its business if it incurs losses related to any significant events that are not covered by its insurance
policies.



Exploration, construction and production activities may be
limited and delayed by inclement weather and shortened exploration, construction and development seasons.



VG is subject to certain uninsured risks which
may result in losses and have a material adverse effect upon the financial performance and results of operations of VG.



The Company’s business is subject to a number of risks
and hazards generally, including adverse environmental conditions, industrial accidents, labour disputes, unusual or unexpected
geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as
inclement weather conditions, floods, fire and earthquakes. Such occurrences could result in damage to mineral properties or production
facilities, personal injury or death, environmental damage to the Company’s properties or the properties of others, delays
in mining, monetary losses and possible legal liability.



The Company currently maintains a limited amount of liability
insurance. Although the Company may in the future maintain additional insurance to protect against certain risks in such amounts
as it considers to be reasonable, its insurance will not cover all the potential risks associated with a mining company’s
operations. VG may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage
may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against risks such
as environmental pollution or other hazards as a result of exploration and production is not generally available to the Company
or to other companies in the mining industry on acceptable terms. The Company might also become subject to liability for pollution
or other hazards which may not be insured against or which the Company may elect not to insure against because of premium costs
or other reasons. Losses from these events may cause the Company to incur significant costs that could have a material adverse
effect upon its financial performance and results of operations.



VG requires various permits to conduct its current
and anticipated future operations, and delays or failures in renewing such permits, or a failure to comply with the terms of any
such permits that VG has obtained, could have a material adverse impact on VG.



The Company’s current and anticipated future operations,
including further exploration and development activities and commencement of production on the Company’s properties, require
permits from various United States and Canadian federal, state, provincial, territorial and local governmental authorities. There
can be no assurance that all permits that the Company requires for the construction of mining facilities and to conduct mining
operations will be obtainable on reasonable terms, or at all. Delays or a failure to obtain such permits, or a failure to comply
with the terms of any such permits that the Company has obtained, could have a material adverse impact on the Company.



The duration and success of efforts to obtain and renew permits
are contingent upon many variables not within the Company’s control. Shortage of qualified and experienced personnel in
the various levels of government could result in delays or inefficiencies. Backlog within the permitting agencies could affect
the permitting timeline of the various projects. Other factors that could affect the permitting timeline include (i) the number
of other large-scale projects currently in a more advanced stage of development which could slow down the review process and (ii)
significant public response regarding a specific project. As well, it can be difficult to assess what specific permitting requirements
will ultimately apply to all the projects.



9







VG is subject to significant regulation from various
governmental authorities and failure to comply with their requirements may result in increased cost or an interruption in VG’s
operations.



The Company’s operations and exploration and development
activities in Canada and the United States are subject to extensive federal, state, provincial, territorial and local laws and
regulations governing various matters, including:



| | · | management
                                         of natural resources;
| | - | -------------------------------------------------------------------------

| | · | exploration
                                         and development of mines, production and post-closure reclamation;
| | - | -----------------------------------------------------------------------------------------------------------------------

| | · | taxation
                                         and mining royalties;
| | - | -----------------------------------------------------------------------

| | · | regulations
                                         concerning business dealings with native groups;
| | - | -----------------------------------------------------------------------------------------------------

| | · | labor
                                         standards and occupational health and safety, including mine safety; and
| | - | -----------------------------------------------------------------------------------------------------------------------

| | · | historic
                                         and cultural preservation.
| | - | ----------------------------------------------------------------------------



Failure to comply with applicable laws and regulations may
result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities
enjoining, curtailing or closing operations or requiring corrective measures, installation of additional equipment or remedial
actions, any of which could result in the Company incurring significant expenditures. The Company may also be required to compensate
private parties suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also
possible that future laws and regulations, or a more stringent enforcement of current laws and regulations by governmental authorities,
could cause additional expense, capital expenditures, restrictions on or suspensions of the Company’s operations and delays
in the exploration and development of the Company’s properties.



VG has ongoing reclamation on some of its mineral
properties and may be required to fund additional work that could have a material adverse effect on its financial position.



Land reclamation requirements are generally imposed on mineral
exploration companies (as well as companies with mining operations) in order to minimize long term effects of land disturbance.
Reclamation may include requirements to:



| | · | treat
                                         ground and surface water to drinking water standards;
| | - | ----------------------------------------------------------------------------------------------------

| | · | control
                                         dispersion of potentially deleterious effluents; and
| | - | -----------------------------------------------------------------------------------------------------

| | · | reasonably
                                         re-establish pre-disturbance land forms and vegetation.
| | - | -----------------------------------------------------------------------------------------------------------



Financial resources spent on reclamation might otherwise be
spent on further exploration and development programs. In addition, regulatory changes could increase the Company’s obligations
to perform reclamation and mine closing activities. There can be no assurance that the Company will not be required to fund additional
reclamation work at these sites that could have a material adverse effect on the Company’s financial position.



Title and other rights to VG’s mineral properties
cannot be guaranteed, are subject to agreements with other parties and may be subject to prior unregistered agreements, transfers
or claims and other defects.



The Company cannot guarantee that title to its properties will
not be challenged. The Company may not have, or may not be able to obtain, all necessary surface rights to develop a property.
Title insurance is generally not available for mineral properties and the Company’s ability to ensure that it has obtained
secure claim to individual mineral properties or mining concessions may be severely constrained. The Company’s mineral properties
may be subject to prior unregistered agreements, transfers or claims, and title may be affected by, among other things, undetected
defects. The Company has not conducted surveys of all of the claims in which it holds direct or indirect interests. A successful
challenge to the precise area and location of these claims could result in the Company being unable to operate on its properties
as permitted or being unable to enforce its rights with respect to its properties. This could result in the Company not being
compensated for its prior expenditure relating to the property.



10







VG currently relies on a limited number of properties.



The principal property interests of the Company are currently
its interest in the properties known as the Jerritt Canyon gold mine in Nevada and the Ketza River and Silver Valley Properties
in the Yukon Territory. As a result, unless the Company acquires additional property interests, any adverse developments affecting
those properties could have a material adverse effect upon the Company and could materially and adversely affect the potential
mineral resource production, profitability, financial performance and results of operations of the Company.



VG’s issuance of debt may impair its ability
to take advantage of future business opportunities.



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



VG may be subject to legal proceedings.



Due to the nature of its business, the Company may be subject
to numerous regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of its business. The results
of these legal proceedings cannot be predicted with certainty due to the uncertainty inherent in litigation, including the effects
of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges and juries
and the possibility that decisions may be reversed on appeal. There can be no assurances that these matters will not have a material
adverse effect on the Company’s business.



Increased competition could adversely affect VG’s
ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in
the future.



The mining industry is intensely competitive. Significant competition
exists for the acquisition of properties producing or capable of producing metals. The Company may be at a competitive disadvantage
in acquiring additional mining properties because it must compete with other individuals and companies, many of which have greater
financial resources, operational experience and technical capabilities than the Company or are further advanced in their development
or are significantly larger and have access to greater mineral reserves, for the acquisition of mineral claims, leases and other
mineral interests. The Company may also encounter increasing competition from other mining companies in its efforts to hire experienced
mining professionals. Competition for exploration resources at all levels is currently very intense, particularly affecting the
availability of manpower, drill rigs and helicopters. Increased competition could adversely affect the Company’s ability
to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.
If the Company is unsuccessful in acquiring additional mineral properties or qualified personnel, it will not be able to grow
at the rate it desires, or at all.



VG may experience difficulty attracting and retaining
qualified management and technical personnel to meet the needs of its anticipated growth, and the failure to manage VG’s
growth effectively could have a material adverse effect on VG’s business and financial condition.



The Company is dependent on the services of key executives.
Due to the Company’s relatively small size, the loss of these persons or the Company’s inability to attract and retain
additional highly skilled employees required for the development of the Company’s activities may have a material adverse
effect on the Company’s business or future operations.



There can be no assurance that VG will successfully
acquire additional mineral rights.



Most exploration projects do not result in the discovery of
commercially mineable ore deposits and no assurance can be given that any particular level of recovery of ore reserves will be
realized or that any identified mineral deposit will ever qualify as a commercially mineable (or viable) ore body which can be
legally and economically exploited. Estimates of reserves, mineral deposits and production costs can also be affected by such
factors as environmental permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties,
unusual or unexpected geological formations and work interruptions. If current exploration programs do not result in the discovery
of commercial ore, the Company may need to write-off part or all of its investment in existing exploration stage properties, and
may need to acquire additional properties. Material changes in ore reserves, grades, stripping ratios or recovery rates may affect
the economic viability of any project.



11









VG’s future growth and productivity will depend, in part,
on its ability to identify and acquire additional mineral rights, and on the costs and results of continued exploration and development
programs. Mineral exploration is highly speculative in nature and is frequently non-productive. Substantial expenditures are required
to:



| | · | establish
                                         ore reserves through drilling and metallurgical and other testing techniques;
| | - | --------------------------------------------------------------------------------------------------------------------------------

| | · | determine
                                         metal content and metallurgical recovery processes to extract metal from the ore; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | · | construct,
                                         renovate or expand mining and processing facilities.
| | - | --------------------------------------------------------------------------------------------------------



In addition, if the Company discovers a mineral deposit, it
would take several years from the initial phases of exploration until production is possible. During this time, the economic feasibility
of production may change. As a result of these uncertainties, there can be no assurance that the Company will successfully acquire
additional mineral rights.



Some of the directors have conflicts of interest
as a result of their involvement with other natural resource companies.



Certain of the directors of the Company also serve as directors,
or have significant shareholdings in, other companies involved in natural resource exploration and development or mining-related
activities. To the extent that such other companies may participate in ventures in which the Company may participate in, or in
ventures which the Company may seek to participate in, the directors may have a conflict of interest. In all cases where the directors
have an interest in other companies, such other companies may also compete with the Company for the acquisition of mineral property
investments. Such conflicts of the directors may result in a material and adverse effect on the Company’s profitability,
results of operation and financial condition. As a result of these conflicts of interest, the Company may miss the opportunity
to participate in certain transactions, which may have a material adverse effect on the Company’s financial position.



Global climate change is an international concern,
and could impact VG’s ability to conduct future operations.



Global climate change is an international issue and receives
an enormous amount of publicity. The Company would expect that the imposition of international treaties or U.S. or Canadian federal,
state, provincial or local laws or regulations pertaining to mandatory reductions in energy consumption or emissions of greenhouse
gasses could affect the feasibility of mining projects and increase operating costs.



Adverse publicity from non-governmental organizations
could have a material adverse effect on the Company.



There is an increasing level of public concern relating to
the effect of mining production on its surroundings, communities and environment. Non-governmental organizations (“NGOs”),
some of which oppose resource development, are often vocal critics of the mining industry. While the Company seeks to operate
in a socially responsible manner, adverse publicity generated by such NGOs related to extractive industries, or the Company’s
operations specifically, could have an adverse effect on the reputation and financial condition of the Company or its relationships
with the communities in which it operates.



VG may be a “passive foreign investment company”
under the U.S. Internal Revenue Code, which could result in adverse tax consequences for investors in the United States.



U.S. Holders (as defined in “Item 10.E. Taxation –
United States Taxation”) should be aware that, although the Company has made no determination about its status, the Company
may be considered to be a passive foreign investment company (“PFIC”) under United States federal income tax rules
for the current and future taxable years. In general, the Company will be a PFIC for any taxable year in which at least 75% of
its gross income is passive income, or at least 50% of the value (determined based on a quarterly average) of its assets is attributable
to assets that produce or are held for the production of passive income. For this purpose, passive income generally includes dividends,
interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived
from a related person). If the Company owns at least 25% (by value) of the stock of another corporation, it will be treated, for
purposes of the PFIC tests, as owning its proportionate share of the other corporation’s assets and receiving its proportionate
share of the other corporation’s income.



12









If the Company is or becomes a PFIC, generally any gain recognized
on the sale of the common shares and any “excess distributions” (as specifically defined) paid on the common shares
must be rateably allocated to each day in a U.S. Holder’s holding period for the common shares. The amount of any such gain
or excess distribution allocated to prior years of such U.S. Holder’s holding period for the common shares generally will
be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each such prior year, and the U.S.
Holder will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability
had been due in each such prior year. Alternatively, a U.S. Holder that makes a “qualified electing fund” (a “QEF”)
election with respect to the Company generally will be subject to U.S. federal income tax on such U.S. Holder’s pro rata
share of the Company’s “net capital gain” and “ordinary earnings” (as specifically defined and calculated
under U.S. federal income tax rules), regardless of whether such amounts are actually distributed by the Company. U.S. Holders
should be aware, however, that there can be no assurance that the Company will satisfy record keeping requirements under the QEF
rules or that the Company will supply U.S. Holders with required information under the QEF rules, in the event that the Company
is a PFIC and a U.S. Holder wishes to make a QEF election. As an alternative, a U.S. Holder may make a “mark-to-market election”
if the Company is a PFIC and the common shares are “marketable stock” (as specifically defined). A U.S. Holder that
makes a mark-to-market election generally will include in gross income, for each taxable year in which the Company is a PFIC,
an amount equal to the excess, if any, of (a) the fair market value of the common shares as of the close of such taxable year
over (b) such U.S. Holder’s adjusted tax basis in the common shares.



VG is a Canadian company and U.S. investors may
have difficulty bringing actions and enforcing judgments against the Company.



The Company is incorporated under the laws of British Columbia,
Canada and certain of the Company’s directors and officers and experts named in this Annual Report on Form 20-F are residents
of Canada and Switzerland. Consequently, it may be difficult for U.S. investors to effect service of process within the United
States upon the Company or upon such persons who are not residents of the United States, or to realize in the United States upon
judgments of U.S. courts predicated upon civil liabilities under U.S. securities laws. A judgment of a U.S. court predicated solely
upon such civil liabilities may be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained
had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could
be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities.



The enforcement by U.S. investors of civil liabilities under
United States securities laws may be affected adversely by the fact that the Company is incorporated outside the United States,
that most of its officers and directors and the experts named herein are residents of a country other than the United States,
and that certain of the assets of the Company and of said persons are located outside the United States. As a result, it may be
difficult or impossible for U.S. investors to effect service of process within the United States upon the Company, its officers
or directors or the experts named herein, or to realize against them upon judgments of courts of the United States predicated
upon civil liabilities under the federal securities laws of the United States or “blue sky” laws of any state within
the United States. In addition, U.S. investors should not assume that the courts of Canada: (a) would enforce judgments of United
States courts obtained in actions against such persons predicated upon civil liabilities under the federal securities laws of
the United States or “blue sky” laws of any state within the United States; or (b) would enforce, in original actions,
liabilities against such persons predicated upon civil liabilities under the federal securities laws of the United States or “blue
sky” laws of any state within the United States.



Item 4. Information on the Company.



A. History and development of the Company.



Name, Address and Incorporation



The full corporate name of the Company is Veris Gold Corp.



The address of the Company’s head office is #900, 688
West Hastings Street, Vancouver, BC, V6B 1P1. The address of the Company’s registered office is #1040, 999 West Hastings
Street, Vancouver, BC, V6C 2W2 and the telephone number is 604-688-9427.



The Company was incorporated under the laws of the Province
of British Columbia under the name “YGC Resources Ltd.” on May 30, 1988. On January 25, 2002, the Company was struck
from the Register of Companies for British Columbia and dissolved. The Company was restored to the Register on August 1, 2003.
On January 5, 2004 the Company consolidated its share capital on a five (5) old for one (1) new basis and increased its authorized
share capital from 4,000,000 Shares without par value to 100,000,000 shares without par value. On June 23, 2005, the Company increased
its authorized share capital from 100,000,000 shares without par value to an unlimited number of shares without par value. On
June 20, 2007 the Company completed a plan or arrangement with QRL Resources Ltd. and changed its name to Yukon-Nevada Gold Corp.



13







At a Special General Meeting held on October 2, 2012, the Company
consolidated its share capital on a ten (10) old shares for one (1) new share basis and changed its name to its current name.



The table below shows the Company’s principal capital
expenditures for the past three years (in thousands of U.S. dollars):



|Fiscal Year |  | Property, plant and equipment |        |  | Mineral properties |  
|----------- |  | ----------------------------- | ------ |  | ------------------ | -
|Fiscal 2013 |  | $                             | 12,532 |  |                    | $
|Fiscal 2012 |  | $                             | 33,409 |  |                    | $
|Fiscal 2011 |  | $                             | 58,657 |  |                    | $



See “Item 4.B. – Information on the Company –
Business overview.”



B. Business overview.



GENERAL DEVELOPMENT OF THE BUSINESS



The Company is active in the evaluation, development and commercial
production of mineral properties. The Company’s principal assets are the Jerritt Canyon gold mine, Nevada and the Ketza
River property, Yukon Territory. The favourable price for gold has enabled the Company to raise equity financing, the proceeds
of which are used to fund improvements to the Jerritt Canyon processing facilities and exploration of the Ketza River property.



Certain of the disclosure in this Annual Report on Form 20-F
relating to the Jerritt Canyon and Ketza River properties is derived from the technical report entitled “NI 43-101 Technical
Report Veris Gold Corp. Jerritt Canyon Property, Elko County, Nevada” dated July 11, 2013, and the technical report entitled
“NI 43-101 Technical Report Yukon-Nevada Gold Corp. Ketza River project, Yukon Territory, Canada” dated June 28, 2011.
There have been no updates to such technical reports since July 11, 2013 and June 28, 2011, respectively. As such, certain data
relating to such properties is not available as of a date subsequent to July 11, 2013 and June 28, 2011, respectively.



Three-Year History



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



Jerritt Canyon



Over the past three years the Jerritt Canyon processing facility
and mining operations located in northern Nevada have developed significantly and this has resulted in incremental increases of
gold production each year. In order to facilitate this development the Company entered into various gold forward agreements including
a Senior Secured Forward Gold Sale Agreement with Deutsche Bank in August 2011 and February 2012. The combined gold forward agreements
enabled the Company to refurbish the processing facility resulting in an optimized, efficient and modernized facility. By mid-2012
the operations achieved steady state production.



The Smith Mine came back into production in the first quarter
of 2010 and the SSX-Steer Mine came back into production in the fourth quarter of 2011. Finally, the operations production pipeline
increased once a third mine, Starvation Canyon, came into production in April 2013. In order to further generate incremental revenues
(as the costs of operations are largely fixed) utilizing existing excess capacity at the processing facility the Company entered
into toll milling agreements with nearby gold mining companies in 2013.



A second tailings facility was completed in 2013 and options
for the reclamation of the original tailings facility are being evaluated. The Company has substantially completed all items under
the 2009 Consent Decree including the addition of air emissions control equipment for mercury on all points of emissions at the
mill. The final project under the Consent Decree is resolving the most effective treatment methods for seepage from various rock
disposal areas from historic mining activity.



14







Ketza River



The Yukon Environmental and Socio-Economic Assessment Application
was submitted in September 2011 and the final submission date has been extended to July 31, 2014 in order to answer the remaining
adequacy review questions as requested by the Yukon Environmental and Socio-Economic Assessment Board as part of the proposed
re-opening of the mine.



In April 2012 the Company entered into a Socio-Economic Participation
Agreement with the Kaska First Nations. The Agreement is designed to foster and promote social and economic opportunities for
First Nations members and contractors.



Ongoing baseline data activities continue on site including
monthly water reporting. In addition, the Company is still pursuing the existing tailings dam water license renewal.



Year ended December 31, 2011



In January 2011 the Company entered into a forward gold sale
agreement with Monument Mining Ltd. (“Monument”) a public company the shares of which trade on the TSX Venture Exchange.
The President of Monument is Robert Baldock, a former President and director of the Company. Graham Dickson and Jean-Edgar de
Trentinian, directors of the Company are also directors of Monument. Under the agreement, Monument prepaid $5,000,800 for the
gold and received, in lieu of physical gold, $6,000,960 on June 30, 2011. Underground mining continued in January and throughout
the year at the Smith Mine using Small Mine Development (SMD) as the mine operator.



In March 2011, the Company completed a $7.1 million non-brokered
flow-through private placement for 833,488 flow-through shares (the “FT Shares”) at $8.50 per FT Share. The proceeds
were used for new resource exploration at Ketza River at new targets as well as at the Silver Valley property.



At a Special Meeting of the Company held in March 2011, shareholders
approved the temporary reduction of the exercise price of eight series of unlisted warrants issued between April 2009 and August
2010 by approximately 18%. The holders of the warrants had 30 days from March 14, 2011 to exercise their warrants, after which
the exercise prices of the warrants reverted to their original respective exercise prices. The original prices ranged from $0.80
to $4.00 per share and the reduced prices range from $0.70 to $3.30 per share. An aggregate of 5,981,333 warrants were exercised
for gross proceeds of $12,637,880. During the period May 10 to 24, 2011, 14,040,000 warrants exercisable at a price of $3.20 per
share held by an insider of the Company were purchased and exercised by various entities, raising an aggregate of $44,928,000
for the Company. Concurrent with the exercise of the warrants, the Company completed a private placement of 3,348,837 units of
the Company at a price of $4.30 per Share, raising an aggregate of $14,400,000. Each unit was comprised of one Share and one warrant
exercisable at a price of $5.50 for 24 months from closing, subject to an accelerated expiry.



In May the Company announced that it had reached a $3.6M settlement
as a result of a class action suit initiated by former employees.



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



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



In October 2011 the Company entered into a Shareholder Rights
Plan Agreement with Computershare Trust Company. The agreement has a term of three years and its objective is to achieve full
and fair value for the Company’s shareholders in the event of an unsolicited take-over bid. Also in October, the Company
restarted underground mining activities at the SSX-Steer Complex.



15







On October 18, 2011, the Company and the other joint venture
shareholders of YS Mining Company Inc. (“YSM”) agreed to dissolve YSM by way of a consent resolution authorizing the
dissolution of YSM (the “Resolution”) and the execution of a Corporate Dissolution Agreement (the “Agreement”).
During 2011 there had been minimal activity in the joint venture, including in YSM’s wholly owned subsidiary Yukon-Shaanxi
Mining Company. Upon execution of the Agreement, all remaining assets, primarily cash, were distributed to the joint venture shareholders.
The Company received CAD $2.2 million from the distribution of assets on October 25, 2011. YSM was dissolved on February 9, 2012.



Year ended December 31, 2012



The Company updated its year-end 2012 mineral resource estimate
for its Jerritt Canyon gold mine. The mine’s measured and indicated mineral resource (including reserves) as of December
31, 2012 had increased by 290.0 koz of gold representing a 14.8% increase over year end 2007 levels. In addition, during this
time period, the following results were announced: the diamond drilling program on its 2011 Smith Mine underground diamond drilling
program at the Company’s Jerritt Canyon mine, the results of its 2011 surface drilling program at the Mahala Project and
the Starvation Canyon Project, the completion of construction work on a new ore dryer and fine crushing conveying system as well
as maintenance upgrades to the roasting facility at the Jerritt Canyon Mine. In March 2012 the Company received notification from
the Federal Mine Safety and Health Administration that they had determined a Potential Pattern of Violations did not exist at
the Jerritt Canyon mine.



Underground mining continued in January and throughout the
year at the Smith Mine using Small Mine Development (SMD) as the mine operator. In addition, the Company operated the SSX-Steer
underground mine complex throughout the entire year. Underground Mine development including portal construction was started in
November 2012 at Starvation Canyon.



In April 2012 the Company entered into a Socio-Economic Participation
Agreement with the Kaska First Nations. The Agreement is designed to foster and promote social and economic opportunities for
First Nations members and contractors.



In 2012 the Company entered into a second forward gold sale
agreement with Monument. Monument prepaid US$5,000,000 for gold and received, in lieu of physical gold, US$6,000,000 by June 30,
2012. The Company also entered into a Forward Gold Purchase Agreement with Deutsche Bank whereby Deutsche Bank funded a US$20
million prepaid gold forward facility. The Company issued to Deutsche Bank a share purchase warrant which can be exercised to
purchase 4,000,000 common shares at a price of $4.40 per share on or before February 7, 2015.



In May 2012, the Company closed a non-brokered private placement
of 3,908,177 units at $2.30 per unit for gross proceeds of $8,988,809. Each unit was comprised of one share and one share purchase
warrant. Each warrant is exercisable at $4.00 per share for 36 months from closing, subject to an accelerated expiry. There was
no commission paid. In June 2012, the Company completed a private placement of convertible debentures in the amount of $6,000,000
principal sum, which is convertible into up to 5,540,000 shares, 2,010,125 warrants to purchase an additional 2,010,125 shares
and 201,012 structuring shares. In July 2012, the Company completed a private placement of convertible debentures in the amount
of $4,000,000 principal sum, which is convertible into up to 3,693,333 shares, 133,333 warrants to purchase an additional 133,333
shares and 133,333 structuring shares. The Company also settled outstanding indebtedness in the amount of $6,854,220 by the issuance
of an aggregate of 2,284,740 shares. In October 2012, Whitebox Advisors LLC exercised its option to acquire $2,000,000 principal
amount of additional unsecured convertible debentures. The option bears interest at a rate of 11% per annum and will mature 42
months from the closing date.



In October 2012, the Company filed a preliminary short form
base shelf prospectus with the British Columbia, Alberta and Ontario Securities Commissions and filed the final prospectus on
October 31, 2012. The prospectus enables the Company to make offerings of up to $60,000,000 during the 25 month period that the
prospectus remains effective. In December 2012, the Company closed an offering of 7,200,000 units at a price of $2.10 per unit
to raise an aggregate of $15,120,000. Each unit is comprised of one share and one-half share purchase warrant. Each whole warrant
entitles the holder to purchase one share of the Company at a price of $2.35 expiring 48 months from closing.



During 2012 John Greenslade, Chairman of the Company resigned
and Robert Baldock resigned as the President and Chief Executive Officer. The Company appointed Randy Reichert, Dr. Barry Goodfield
and Shaun Heinrichs directors. Shaun Heinrichs and Randy Reichert (Chief Financial Officer and Chief Operating Officer) were appointed
the Company’s Co-Chief Executive Officers. François Marland and Gerald Ruth, both directors of the Company were appointed
Executive Chairman and Lead Director, respectively. Cameron Paterson was appointed the Company’s Vice President –
Finance.



16







At the Company’s Special Meeting held October 2, 2012,
shareholders approved the consolidation of the Company’s shares on a ten (10) pre-consolidated common share for one (1)
post consolidation share and the change of the Company’s name to its current name.



In December 2012, the Company entered into a Shareholder Rights
Plan Agreement with Computershare Trust Company. The Shareholder Rights Plan Agreement has a term of three years and its objective
is to achieve full and fair value for the Company’s shareholders in the event of an unsolicited take-over bid.



Year Ended December 31, 2013



In January 2013 the Company announced the board of directors
had adopted an Advance Notice Policy which policy, amongst other things, includes the provision that requires advance notice to
the Company in circumstances where nominations of persons for election to the board of directors are made by shareholders of the
Company.



During the year, the Company entered into several Toll Milling
Agreements to mill ore at the Jerritt Canyon Roaster facility in Nevada. Toll milling production started in May 2013. The Company
continued production at the Smith Mine throughout the year using SMD as the mine contract operator. The Company also continued
mine production and operational responsibilities at the SSX-Steer Complex throughout the year. The Company also started production
at its Starvation Canyon mine in early April 2013 which is located in the southern part of the Jerritt Canyon property. SMD is
operating the Starvation Canyon Mine. Ore from Starvation Canyon is trucked to the Jerritt Canyon processing plant via newly constructed
dirt roads from the portal to highway 226, and from highways 226 to 225 through the intersection at Tuscarora Junction. Underground
diamond drilling was focused at the SSX-Steer mine in 2013.



The Company secured an eight-month senior unsecured promissory
note of US$10,000,000 and in connection therewith issued 3,400,000 warrants which are exercisable at $1.80 per share for five
years. The Note bears interest at 9% per annum and matured eight months from the closing date. An extension of the agreement was
negotiated to January 12, 2014 with a reduction in the issued warrants strike price to $0.50 per share. The Company also completed
a marketed public offering of units, comprised of one share and one-half share purchase warrants and flow through units, comprised
of one flow-through share and one-half share purchase warrant, to raise approximately $8,500,000. The Company raised a further
$7,800,000 by the issuance of units, each unit comprised of one share and one-half of one share purchase warrant. In December
2013, the Company closed a public offering of units, each unit comprised of one share and one-half share purchase warrant and
flow-through units, comprised of one flow-through share and one-half share purchase warrant, to raise approximately $6,240,000.



In 2013 the Company appointed Robert L. Chapman as its President
and Chief Executive Officer and Mr. Chapman was elected as a director, Graham Dickson, a director and Senior Vice President of
Corporate Development was appointed the Company’s Chief Operating Officer and Joanne Jobin as its Vice President –
Investor Relations. Mr. Chapman was subsequently replaced by François Marland as its President and Chief Executive Officer.
Randy Reichert was also let go as the Company’s Chief Operating Officer and Co-Chief Executive Officer and resigned as a
director, and Shaun Heinrichs resigned as the Company’s Co-Chief Executive Officer, but remains as the Company’s Chief
Financial Officer. Pierre Besuchet and Shaun Heinrichs did not stand for election at the Company’s Annual General Meeting.
In October 2013, Robert Chapman resigned as a director, President and Chief Executive Officer and François Marland, a director
of the Company was appointed as the Company’s President and Chief Executive Officer and Gerald Ruth, a director of the Company,
was appointed Chairman.



Events subsequent to December 31, 2013



On January 29, 2014 the Company announced that it has received
a notice of default from Deutsche Bank with respect to payment defaults under two forward gold purchase agreements with the Company.
The Company failed to make its December 2013 monthly gold delivery or pay the cash equivalent due to an electrical accident which
resulted in a fire at Jerritt Canyon, which resulted in a temporary suspension of operations and negatively affected gold production
in December. The agreements with Deutsche Bank do not contain a “force majeure” provision. Deutsche Bank is considering
what actions, if any, it may make.



On February 24, 2014 Robert Baldock resigned as a director
of the Company.



17







On March 11, 2014 the Company’s annual maintenance shutdown
at Jerritt Canyon commenced and on April 1, 2014 the mill re-commenced operations.



On April 1, 2014, the British Columbia Securities Commission
granted the Company a Management Cease Trade Order (“MCTO”). Management had requested the MCTO due to the delay in
the preparation and the filing of the Company’s December 31, 2013 audited financial statements. Details are set out under
the heading Directors and Officers - Cease Trade Orders, Bankruptcies, Penalties or Sanctions.



DESCRIPTION OF THE BUSINESS



General



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



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



In April 2013, the Company announced commencement of production
at its third underground gold mine at Jerritt Canyon. The Company produced approximately 18,400 tons of ore averaging 0.15 ounce
per ton, per month, during the development phase and ramped up to 1,000 tons per day in June. The long term targeted mining rate
is 600 tons per day averaging 0.24 ounce per ton.



Summary



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



Production and Services



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



Specialized Skill and Knowledge



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



Competitive Conditions



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



18







Environmental Protection



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



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



For 2012 the Company budgeted significant environmental expenditures
(approximately $30 million) in order to not only meet the requirements of the Consent Decree, but also to meet commitments made
to the State of Nevada to improve the compliance of the operations and to improve its environmental performance. One of the most
significant capital projects in 2012 was completion of the new tailings facility (“TSF2”) and ancillary water storage
reservoirs. These reservoirs support ongoing operations and will facilitate the closure and reclamation of the first tailings
pond (“TSF1”). Other significant restoration projects in 2012 included improvements to stormwater controls for several
waste rock disposal areas (“RDAs”) and the advancement of technologies for treating seepage from the RDAs.



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



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



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



Employees



As of December 31, 2013, the Company had 10 full-time employees
at the head office in Vancouver, 14 full time employees and one seasonal worker, who work on a two weeks on and two weeks off
schedule at the Ketza River location (these numbers are subject to some seasonality), and approximately 386 employees at the Jerritt
Canyon gold mine. The Company uses a number of consultants and contractors for a variety of specialized tasks.



19







Reorganization



Commencing in December 2003, Graham Dickson, the then President
of the Company, took the initiative in reorganizing the Company by restoring it with the Register of Companies and returning the
Company to good standing as a reporting Company in the provinces of British Columbia and Alberta. On January 5, 2004, the Company’s
share capital was consolidated on a five (5) old for one (1) new basis and its authorized share capital was increased from 4,000,000
shares without par value to 100,000,000 shares without par value; subsequently the Company’s share capital was increased
to an unlimited number if shares without par value. On April 13, 2005, the Company’s shares commenced trading on the TSX.
In 2007 the Company amalgamated with QRL by way of a Plan of Arrangement and renamed the Company from YGC Resources Ltd. to Yukon-Nevada
Gold Corp. On October 9, 2012, the Company’s share capital was consolidated on a ten (10) old for one (1) new basis and
changed its name to its current name.



Social or Environmental Policies



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



Jerritt Canyon Property



The Company’s ownership of the Jerritt Canyon property
began on June 20, 2007, when QRL merged with YGC Resources Ltd. to form Yukon-Nevada Gold Corp. As part of this merger the latter
company acquired the wholly-owned subsidiary of VUSA (as defined below) (formerly Queenstake Resources USA, Inc.), which owns
and operates the Jerritt Canyon Mine in northern Nevada. As of October 5, 2012, Yukon-Nevada Gold Corp. changed its name to Veris
Gold Corp.



In summary, the Jerritt Canyon Mine is owned and operated by
VUSA, a wholly owned subsidiary of Veris. The Company commissioned an NI 43-101 compliant Technical Report update on its Jerritt
Canyon operating gold mine property north of Elko, Nevada which was prepared by Todd Johnson P.E., Vice President Exploration,
the Company, Mark Odell, P.E., Consulting Mine Engineer, Practical Mining LLC, Karl Swanson, Mining Consultant, SME, MAusIMM,
Michele White, Geologic Consultant, CPG#11252 AIPG, and John Fox, P. Eng., Consulting Metallurgist. The technical report was prepared
for Veris and reflects the most recent resource and reserves based on data produced through December 31, 2012. The effective date
of the Company’s most recent technical report is December 31, 2012 and it was filed on SEDAR as of July 11, 2013 (the “Technical
Report”).



Jerritt Canyon contains over 22 separately exploited Carlin-Type
sediment-hosted deposits that have either been mined from open pit and/or underground methods since 1981 and processed at the
property or remain intact still and form part of the December 31, 2012 Mineral Resources and/or Reserves. Since July 1981, the
Jerritt Canyon processing plant has produced over 8.0 million ounces of gold primarily from ores originating from the Jerritt
Canyon property.



Certain of Newmont’s ores and stockpiles have been processed
at the Jerritt Canyon processing plant. Newmont USA Limited’s (“Newmont”) original Carlin Deposit discovered
in the early 1960’s lies approximately 34 miles (55 km) southwest of the operating SSX-Steer underground mine at Jerritt
Canyon.



The Jerritt Canyon Carlin-Type deposits occur in a north-northeast
trending mineralized belt called the Independence trend. The primary host rock for the Jerritt Canyon Carlin-Type deposits is
the Silurian and Ordovician Hanson Creek Formation with much less mineralization hosted in the overlying Devonian and Silurian
Roberts Mountain Formation. Dike rocks locally contain ore grade gold mineralization but are volumetrically insignificant relative
to the sedimentary rock hosted ore materials.



The Jerritt Canyon sulfide ores are double refractory in nature
because the gold mineralization is both included in solid solution within sulfide minerals (arsenic-rich pyrite), and is also
locally associated as free grains with organic carbon in the host rock. The permitted and operating on-site Jerritt Canyon processing
facility contains crushing and grinding circuits, two parallel, two-stage oxygen fluid-bed Dorr Oliver roasters (commissioned
in 1989), a cyanidation circuit, and a refinery. The processing plant has a maximum capacity of 1.5 million tons per year. The
roaster helps oxidize the refractory ores for subsequent cyanidation and has a currently permitted capacity of 250 tons per hour
(6,000 tons per day) which is the engineering design capacity.



20







Underground mining production in 2012 at the property was from
the Smith and SSX-Steer mines. Underground mining methods use both long-hole stopping and modified drift and fill. Split set rock
bolts and welded wire mesh provide the primary means of ground support with supplementary resin anchor rebar bolts, cable bolts
and/or shotcrete where necessary.



Mining at Smith in 2013 was done by contract miner Small Mine
Development LLC (SMD) whereas mining at SSX-Steer was performed by VUSA staff. Exploration and development (resource conversion)
drilling was active at Smith and SSX-Steer in 2012 using one contract diamond drill. Development drift and stope drilling and
minor exploration using RC Cubex drills were also active at both operating mines in 2012. Initial underground development work
(portal excavation and drift development) at Starvation Canyon started in November 2012 and continued through the end of the year
and mining production at Starvation Canyon, operated by SMD, commenced in early April 2013.



The December 31, 2012 Mineral Resources and Reserves from 6
underground areas (Smith mine, SSX-Steer mine, Saval, Murray, Starvation Canyon and Winters Creek) and 6 open pits (Burns Basin,
Mill Creek, Pie Creek, Road Canyon, Saval, and Wright Window) have been updated in the Company’s Technical Report based
on additional drilling completed in 2012 and/or based on recent remodeling work. Reserve additions included in this Technical
Report relative to the previous report are located at the Smith, SSX-Steer and Starvation underground mines and at the Burns Basin
open pit. The Smith and SSX-Steer underground mines comprise the majority of the mineral reserves in the district.



Ketza River Property



The Company conducted a number of environmental and social
impact studies relating to the Yukon Environmental and Socio-economic Assessment Board (YESAB) project proposal and application
that was submitted in late September 2011. The Company currently manages its environmental compliance program in the Yukon Territory
with onsite personnel to administer the monitoring requirements with occasional help from contracted environmental engineering
firms during the YESSA application period. There are regular consultations with the Yukon Territorial Government to ensure the
Company is complying with regulatory requirements. In February 2013, the Company submitted responses to the first set of questions
from YESAB as part of the Adequacy Review process and has now received an extension to July 2014 to answer the following rounds
of inquiries. After the application has successfully passed Adequacy Review, the Screening process will continue. Approval of
this project proposal will allow the Company to commence construction of the tailings facility at the site and allow for mine
production.



C. Organizational structure.



Set forth below are the names of the Company’s material
subsidiaries:







21









D. Property, plants and equipment.



Mineral
Projects



Jerritt Canyon Mine, Nevada



The following description summarizes selected information about
the Company’s Jerritt Canyon Gold Project. Please refer to the Company’s National Instrument 43-101 compliant technical
report entitled NI 43-101 Technical Report, Veris Gold Corp., Jerritt Canyon Property, Elko County, Nevada filed July 11,
2013 with an effective date of December 31, 2012 available at www.sedar.com, for a further description of this property,
including its location, accessibility, climate, local resources, infrastructure, physiography, geological setting, mineralization,
past drilling programs and history.



Veris ownership of the Jerritt Canyon property began on June
20, 2007, when Queenstake Resources Ltd. merged with YGC Resources Ltd. to form Yukon Nevada Gold Corp. As part of this merger
the latter company acquired the wholly-owned subsidiary of Queenstake Resources USA, Inc. (“Queenstake”), which owns
and operates the Jerritt Canyon Mine in northern Nevada. As of October 5, 2012, YNG changed its name to Veris Gold Corp. In January
of 2013, Queenstake Resources USA, Inc. changed their name to Veris Gold USA, Inc. (“VUSA”).



In summary, the Jerritt Canyon Mine is owned and operated by
VUSA, a wholly owned subsidiary of Veris. The technical report was prepared for Veris and reflects the most recent resource and
reserves based on data produced through December 31, 2012. The effective date of the Company’s most recent technical report
is December 31, 2012 and it was filed on SEDAR as of July 11, 2013 (the “Technical Report”).



Jerritt Canyon contains over 22 separately exploited Carlin-Type
sediment-hosted deposits that have either been mined from open pit and/or underground methods and, since 1981, processed at the
property or are intact and never previously mined and part of the December 31, 2012 Mineral Resources and/or Reserves. The Jerritt
Canyon processing plant since July 1981 has produced over 8.0 million ounces of gold primarily from ores originating from the
Jerritt Canyon property.



Certain of Newmont’s ores and stockpiles have been processed
at the Jerritt Canyon processing plant. Newmont USA Limited’s (“Newmont”) original Carlin Deposit discovered
in the early 1960’s lies approximately 34 miles (55 km) southwest of the operating SSX-Steer underground mine at Jerritt
Canyon.



The Jerritt Canyon Carlin-Type deposits occur in a north-northeast
trending mineralized belt called the Independence trend. The primary host rock for the Jerritt Canyon Carlin-Type deposits is
the Silurian and Ordovician Hanson Creek Formation with much less mineralization hosted in the overlying Devonian and Silurian
Roberts Mountain Formation. Dike rocks locally contain ore grade gold mineralization but are volumetrically insignificant relative
to the sedimentary rock hosted ore materials.



The Jerritt Canyon sulfide ores are double refractory in nature
because the gold mineralization is both included in solid solution within sulfide minerals (arsenic-rich pyrite), and is also
locally associated as free grains with organic carbon in the host rock. The permitted and operating on-site Jerritt Canyon processing
facility contains crushing and grinding circuits, two parallel, two-stage oxygen fluid-bed Dorr Oliver roasters (commissioned
in 1989), a cyanidation circuit, and a refinery. The processing plant has a maximum capacity of 1.5 million tons per year. The
roaster helps oxidize the refractory ores for subsequent cyanidation and has a currently permitted capacity of 250 tons per hour
(6,000 tons per day) which is the engineering design capacity.



Underground mining production in 2012 at the property was from
the Smith and SSX-Steer mines. Underground mining methods use both long-hole stopping and modified drift and fill. Split set rock
bolts and welded wire mesh provide the primary means of ground support with supplementary resin anchor rebar bolts, cable bolts
and/or shotcrete where necessary.



Mining at Smith in 2012 was done by contract miner Small Mine
Development LLC (SMD) whereas mining at SSX-Steer was performed by both VUSA staff and separate SMD crews. Exploration and development
(resource conversion) drilling was active at Smith and SSX-Steer in 2012 using one contract diamond drill. Development drift and
stope drilling and minor exploration using RC Cubex drills were also active at both operating mines in 2012.Initial underground
development work (portal excavation and drift development) at Starvation Canyon started in November 2012 and continued through
the end of the year and mining production at Starvation Canyon, operated by SMD, commenced in early April 2013.



22







The December 31, 2012 Mineral Resources and Reserves from 6
underground areas (Smith mine, SSX-Steer mine, Saval, Murray, Starvation Canyon and Winters Creek) and 6 open pits (Burns Basin,
Mill Creek, Pie Creek, Road Canyon, Saval, and Wright Window) have been updated in the Company’s Technical Report based
on additional drilling completed in 2012 and/or based on recent remodeling work. Reserve additions included in this Technical
Report relative to the previous report are located at the Smith, SSX-Steer and Starvation underground mines and at the Burns Basin
open pit. The Smith and SSX-Steer underground mines comprise the majority of the mineral reserves in the district.



Mineral Resource Estimate



The December 31, 2012 Mineral Resources at Jerritt Canyon are
contained within 6 open pits including Burns Basin, Mill Creek, Pie Creek, Road Canyon, Saval, and Wright Window, and 6 underground
areas including Murray, Smith, SSX (including West Mahala), Saval, Starvation Canyon, and Winter’s Creek. The recently revised
underground mineral resource estimates are based on extensive underground and surface drilling data, a strict 0.10 opt grade shell
digitized by hand on 50 foot cross-sections, and using geology constrained kriging estimation methods. Block modeling techniques
incorporate 5x5x5 ft. block sizes within the digitized grade shells.



Measured Resources as of December 31, 2012 total 4511 ktons
averaging 0.198 opt Au containing 891.7 koz. Indicated Resources as of December 31, 2012 total 7,932 ktons averaging 0.171 opt
Au containing 1,359.4 koz. Combined Measured and Indicated Resources as of December 31, 2012 total 12,443 ktons at 0.181 opt Au,
containing 2,251.1 koz. There is an additional Inferred Resource of 3,845 tons at 0.170 opt Au, containing 653.2 koz. Resources
were determined using a US$1,620/oz two-year average trailing gold price.



For the Technical Report, new drilling information for the
open pit resources has been included for the Saval and Burns Basin open pits. Also new drilling information for underground resources
has been included for Starvation, Smith and SSX underground mines.



One of the independent contributory authors of the Technical
Report conducted a January 2013 database audit of assay results from drilled material sampled between June 18, 2011 and December
31, 2012 for underground drilling, and between July 18, 2011 and December 21, 2011 for surface drilling. There was very little
surface drilling in 2012. This database audit reviewed between 5 to 25 percent of the actual records and concluded excellent correlation
between certified sampling results and the database as discussed below. The results of this audit commend the 2013 database for
use in the new resource and reserve estimates listed below.



Jerritt Canyon mineral resources including reserves –
December 31, 2012



|                          |  | Measured |       |  | Indicated |  |       | Measured + Indicated |  |  | Inferred | 
|------------------------- |  | -------- | ----- |  | --------- |  | ----- | -------------------- |  |  | -------- | 
|Area                      |  | kt       |       |  | opt       |  |       | koz                  |  |  | kt       | 
|Open Pit                  |  |          |       |  |           |  |       |                      |  |  |          | 
|Burns Basin               |  |          | 46    |  |           |  | 0.106 |                      |  |  | 4.9      | 
|Mill Creek                |  |          | 3     |  |           |  | 0.089 |                      |  |  | 0.3      | 
|Saval                     |  |          | 51    |  |           |  | 0.148 |                      |  |  | 7.6      | 
|Wright Window             |  |          | 5     |  |           |  | 0.174 |                      |  |  | 0.9      | 
|Pie Creek                 |  |          | -     |  |           |  | -     |                      |  |  | -        | 
|Road Canyon               |  |          | -     |  |           |  | -     |                      |  |  | -        | 
|Stockpiles                |  |          | 37    |  |           |  | 0.124 |                      |  |  | 4.6      | 
|Open Pit
    Resource     |  |          | 144   |  |           |  | 0.128 |                      |  |  | 18.3     | 
|                          |  |          |       |  |           |  |       |                      |  |  |          | 
|Underground               |  |          |       |  |           |  |       |                      |  |  |          | 
|Smith                     |  |          | 2,980 |  |           |  | 0.200 |                      |  |  | 597.3    | 
|SSX Including West Mahala |  |          | 1,205 |  |           |  | 0.201 |                      |  |  | 242.6    | 
|Saval                     |  |          | 17    |  |           |  | 0.276 |                      |  |  | 4.6      | 
|Murray                    |  |          | 142   |  |           |  | 0.163 |                      |  |  | 23.1     | 
|Starvation                |  |          | 24    |  |           |  | 0.238 |                      |  |  | 5.8      | 
|Winters Creek             |  |          | -     |  |           |  | -     |                      |  |  | -        | 
|Underground Resource      |  |          | 4,367 |  |           |  | 0.200 |                      |  |  | 873.4    | 
|Resource Total            |  |          | 4,511 |  |           |  | 0.198 |                      |  |  | 891.7    | 



| | (1) | Mineral Resources that are not mineral reserves do not have demonstrated
                                         economic viability;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Open Pit Mineral Resources are contained within Lerch Grossman
                                         pit shells constructed at $1,620/oz. gold price and meet the minimum cutoff grade;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Open Pit Mineral Resources include 5% mining losses and 5% dilution;
| | --- | --------------------------------------------------------------------

| | (4) | Underground Mineral Resources are constrained to 0.10 opt grade
                                         shells and occur outside existing asbuilts workings and sterilized areas, and are deemed
                                         by the Qualified Person to be potentially economic; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Underground Mineral Resources include 5% mining losses and 5-10%
                                         dilution.
| | --- | -------------------------------------------------------------------------------------------------------------------



23







Mineral Reserves Estimate



Mineral Reserves as of December 31, 2012 are listed below.
The following parameters were used to determine Mineral Reserves for each area:



A three-year
average trailing gold price of $1,490 per ounce



Grade dependent
gold recoveries varying from 75% to 90%



$0.40 per
ounce refining charges



Open pit
cut off grades vary from a low of 0.043 to 0.046 opt



Underground
cut off grades vary from 0.106 to 0.116 opt.



Jerritt Canyon Mineral
Reserves – December 31, 2012



|                          |  | Proven |       |  | Probable |  |       | Proven
    + Probable | 
|------------------------- |  | ------ | ----- |  | -------- |  | ----- | --------------------- | 
|Area                      |  | kt     |       |  | opt      |  |       | koz                   | 
|Open Pit                  |  |        |       |  |          |  |       |                       | 
|Burns Basin               |  |        | 32    |  |          |  | 0.100 |                       | 
|Mill Creek                |  |        | 3     |  |          |  | 0.089 |                       | 
|Saval                     |  |        | 51    |  |          |  | 0.155 |                       | 
|Wright Window             |  |        | 5     |  |          |  | 0.174 |                       | 
|Stockpiles                |  |        | 37    |  |          |  | 0.124 |                       | 
|Open
    Pit Reserve      |  |        | 128   |  |          |  | 0.131 |                       | 
|                          |  |        |       |  |          |  |       |                       | 
|Underground               |  |        |       |  |          |  |       |                       | 
|Smith                     |  |        | 1,750 |  |          |  | 0.162 |                       | 
|SSX Including West Mahala |  |        | 566   |  |          |  | 0.172 |                       | 
|Saval                     |  |        | 18    |  |          |  | 0.239 |                       | 
|Murray                    |  |        | 142   |  |          |  | 0.163 |                       | 
|Starvation                |  |        | 24    |  |          |  | 0.238 |                       | 
|Underground
    Reserve   |  |        | 2,499 |  |          |  | 0.166 |                       | 
|Reserve Total             |  |        | 2,628 |  |          |  | 0.164 |                       | 



The reserves listed above are a subset of the resources listed
in the first table. Dewatering of some of the Smith, West Mahala and Murray reserve areas that lie below the water table will
be required. The operating and capital costs at these mines contain provisions for construction and operation of the dewatering
systems. The processing plant requires 700 gpm of makeup water which is derived from seepage wells surrounding the existing tailings
storage facility (TSF-1) and from fresh water supply wells. With the replacement of TSF-1, the source of seepage water will gradually
diminish and ultimately will no longer be available. Mine dewatering operations will replace the TSF-1 seepage over time. A water
treatment plant and rapid infiltration basin (RIB) will be required to dispose of dewatering in excess of the 700 gpm process
water requirement.



From January 1, 2012 to December 31, 2012 Jerritt Canyon processed
978 ktons of ore containing 127.7 kozs from Smith, SSX and stockpile sources (Hofer, W. 2013). During the year all ores processed
at Jerritt Canyon were from onsite sources and no ore from offsite was processed.



Reserve additions net of depletion total 84 koz relative to
the previous NI 43-101 report and the gains are concentrated at the Starvation and Smith underground mines with lesser additions
at Burns Basin open pit. Stockpile reserves decreased by 44 koz due to depletion and reclassification based on a trenching sampling
program conducted in 2012. Reserves at the SSX-Steer underground (including West Mahala) and Murray underground decreased slightly.



Conclusions



The six year Life of Mine Reserves Plan will produce robust
financial results. Achieving sustained ore mining and processing rates of 1.5 million tons per year is critical to the success
of the Jerritt Canyon mine operation. In 2013 ore will be sourced from the Smith and SSX underground mines, new underground mine
at Starvation Canyon, and low grade ore stockpiles.



24







Recommendations



Additional ore sources need to be developed at the Saval Underground
and Burns Basin Pit during the next two years to enhance production and replace the stockpile ores as they are depleted. Reopening
of the Murray underground mine and adding to open pit reserves will be required to maintain processing rates at the desired level
over the 6 year reserve life.



Resource conversion near the existing and planned underground
workings should remain a drilling priority. Conversion of resources near the planned open pits could also significantly add to
the project life and economics.



Dewatering will be necessary to recover 234 koz of the current
reserves located in the Smith, SSX and Murray mines. Engineering and permitting of the dewatering facilities must be a high priority
to ensure these reserves are available when needed.



Mining operations can implement more economical mining plans
including raising the cutoff grade and including inferred resources in the LOM plan. The processing of third party toll milling
ores to increase and maximize the mill capacity would also help lower the operating cost per ton and increase revenue but cannot
be included in the present Cash flow Analysis due to NI 43-101 rules that limit this work to reserve materials sourced from the
Jerritt Canyon property.



Property description and location



Property description



The Jerritt Canyon property is located primarily on private
land controlled by VUSA, and public land administered mostly by the United States Forest Service (“USFS”) and some
by the United States Bureau of Land Management (“BLM”). The land position covers over 119 square miles. The Jerritt
Canyon Mine has been an operating gold property since 1981 with two currently active underground mines: SSX-Steer and Smith, which
have been in production since the end of 2011. Mining at Smith has been conducted by a contract mining service since early 2010.
Mining at the SSX-Steer mine has been conducted by Veris staff since the fourth quarter of 2011. The mines produce feed for a
process plant located at the site, which includes 2 roasters and a carbon-in-leach (“CIL”) circuit. The project also
consists of three non-operating underground mining areas (Murray, MCE, and West Generator); rock disposal areas (RDAs); related
haul roads, maintenance facilities, ancillary structures; and a gold processing circuit, including mill facilities, heap leaching
facilities (inactive), tailings facilities, and support facilities. Exploration and drilling is ongoing at the property to add
additional resources and reserves.



Property location



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



Status of mineral titles



The property is 100% owned and operated by VUSA, which acquired
the mine from the previous owner, a joint venture between Anglo Gold (70%) and Meridian Gold (30%), at the end of June 2003. VUSA
is a wholly owned subsidiary of Veris. Claim details were discussed with the VUSA Land Manager as of April 19, 2013.



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



25







As of December 31, 2013, Veris owns 2,851 claims, 1,011 acres
of patented claims, and 12,433 acres of fee land; in addition, Veris leases 278 claims and 11,271 acres of fee land with mineral
rights. All Jerritt Canyon property claims expire on September 1, 2014 but are always renewed every year by filing the necessary
paperwork and claim fees with the BLM and the County. Estimated costs to maintain the 2,851 Veris-owned claims are $400,400 ($140
per claim), whereas the 278 leased claims are $38,920 (also at $140 per claim). A contributing author to the Company’s Technical
Report, has reviewed the lease agreements and Jerritt claim map and finds them to be current and in good order.



Land and claim summary for Veris Gold USA’s Jerritt
Canyon Project



|Land Status           |  | No. Claims |       |  | Acres | 
|--------------------- |  | ---------- | ----- |  | ----- | 
|Owned Claims          |  |            | 2,851 |  |       | 
|Leased Claims         |  |            | 278   |  |       | 
|Total Claims          |  |            | 3,129 |  |       | 
|Fee Land Owned        |  |            |       |  |       | 
|Patented Claims Owned |  |            |       |  |       | 
|Fee Land Leased       |  |            |       |  |       | 
|Total Acres           |  |            |       |  |       | 



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



Some property is leased from landowners in the region, and
a royalty is paid on production from these lands. The royalty for mined material in 2012 varied by location and was as much as
6 percent of net smelter return (NSR), the total cost of which is dependent upon the gold sale price and the refining results.



26







General location map of the Jerritt Canyon Mine







27







General land map of the Jerritt Canyon property with model
areas







Accessibility, climate, vegetation, physiography, local
resources and infrastructure



Access to the site



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



Climate



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



Vegetation



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



28







Physiography



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



Local resources and infrastructure



Elko, Nevada with a population of 18,300 is the closest city
to the mine. The city is on Interstate 80 and is serviced by daily commercial flights to Salt Lake City, Utah. Elko is a center
for the mining operations in northern Nevada and services necessary for the mine are readily available there. The local population,
along with the proximity of the other nearby cities (e.g. Salt Lake City in Utah and Battle Mountain, Winnemucca, Fernley, Fallon,
Reno in Nevada) is large enough to supply most of the workers and supplies for all of the mines in the area.



Power to the mine site is purchased from Nevada Energy through
a 125kV, 3-phase transmission line. Cost of electrical power is approximately US$0.066/kWh.



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



There are sufficient supplies of water at the site to allow
the processing facility and other mine facilities to efficiently operate. Approximately 700 gallons per minute (gpm) of water
is required to operate the mill with two primary water sources: (1) a “dirty” water source consisting of the tailings
storage facility 1 (TSF-1) seepage collection system that has contributions from 90 small diameter water wells around the TSF-1,
four seepage collection trenches, and three embankment blanket drains that collectively produce 1,000 gpm; and (2) a cleaner water
source from two deep water wells that are each capable of producing 500 gpm. A third deep water well exists at the property but
is currently not operating. Once the TSF-1 is decommissioned and reclaimed, the additional necessary water sources for the mine
facilities will come from the deep well sources and/or underground mine dewatering. All waters used at the Jerritt Canyon Mine
are from permitted and certificated water rights held by Veris and regulated by the Nevada Division of Water Resources.



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



History



Mining history



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



Open pit mining was conducted at the site from start-up in
1981 until 1999. The first underground operation at Jerritt Canyon started up in 1993 at West Generator. Subsequently, five different
underground mines have been operated at Jerritt Canyon over the years. West Generator Murray and MCE are now closed. Underground
mining at the SSX-Steer complex started in 1997, was temporarily stopped in August 2008, and was restarted in October 2011. Underground
mining at Smith started in 1999, was temporarily stopped in August 2008, and reopened in February 2010. The MCE underground mine
was shut down in 2004, whereas the Murray underground mine was shut down in 2006. The new Steer mine portal, now a part of the
SSX complex, was constructed in 2004.



29







Production history



Open pit mining was conducted at the site from start-up in
1981 until 1999. The first underground operation at Jerritt Canyon started up in 1993 at West Generator. Subsequently Underground
Mining was initiated at Murray, SSX, MCE and Smith. Currently only the Smith and SSX mines are operating.



On August 8, 2008, VG management decided to shut down mining
operations due to increasing costs associated with the mine plan, required infrastructure expenditures that remained to be completed,
and environmental concerns that remained to be addressed. The plan to continue toll milling after the shutdown of the mines was
halted to complete repair work at the process mill. As a result, the workforce at Jerritt Canyon was reduced to maintenance levels
while the Company undertook discussions with the Nevada Division of Environmental Protection (NDEP) to obtain permission to restart
the facility and sought additional financing to fund the recommencement of operations. In order to obtain authorization to restart,
the NDEP required detailed plans on how the aforementioned concerns would be addressed. On October 20, 2009, with these detailed
plans in place and approved by the NDEP, and many already completed, Queenstake was able to restart operations under a Consent
Decree order issued by the Attorney General of the State of Nevada, representing the NDEP. To address the environmental concerns,
Queenstake (now VUSA) completed the installation of a calomel emission system on July 20, 2009 which is used to control mercury
emissions. Queenstake also carried out significant overhauls and upgrades of many key components of the roaster, leach circuit,
thickener, and other sections of the mill.



New technical staff was hired in 2009 with directives to design
a new mine plan. Underground mining at Smith recommenced in late January 2010 using contract miner Small Mine Development (SMD).
Underground mining at SSX-Steer Complex recommenced in early October using Queenstake staff. Ore materials from Jerritt Canyon
that currently feed the processing facility include underground ore from the Smith Mine and stockpile materials that are either
called remote or mill. The “remote” stockpiles are located in piles away from the processing facility and require
hauling to the process plant while the “mill” stockpiles are located near the processing facilities.



Since its inception from July 1, 1981 to year-end 2012, the
Jerritt Canyon Mill has produced 7.97 million ounces of gold. Annual production has historically averaged between 125,000 and
350,000 ounces of gold, at historical cash costs ranging from $240 to $554 per ounce. Veris internal reports indicate the total
2012 and 2011 mill production from Jerritt Canyon ores (including Jerritt Canyon stockpile and Newmont ores at 978,262 and 599,555
dry tons containing 105,627 and 73,823 ounces, respectively.)



Veris records indicate the 2010 and 2008 mill production from
Jerritt Canyon ore (including Jerritt sourced stockpiles) at 628,418 and 224,618 tons with 89,238 and 32,131 ounces of recovered
gold attributed to the operation respectively. Cash operating costs were high in 2008 due to mill shut downs in the early part
of the year and the mine shut down on August 8, 2008.



Historical mineral resource and reserve estimates



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



Historic measured and indicated mineral resources, including
reserves



|Year       |  | Measured |         |  | Indicated |  |       | Measured
    + Indicated | 
|---------- |  | -------- | ------- |  | --------- |  | ----- | ------------------------ | 
|(Year-End) |  | kt       |         |  | opt       |  |       | koz   Au                 | 
|2003       |  |          | 2,219.3 |  |           |  | 0.306 |                          | 
|2004       |  |          | 2,263.0 |  |           |  | 0.287 |                          | 
|2005       |  |          | 3,094.6 |  |           |  | 0.281 |                          | 
|2006       |  |          | 2,573.9 |  |           |  | 0.272 |                          | 
|2007       |  |          | 2,626.0 |  |           |  | 0.269 |                          | 
|2010       |  |          | 4,549.9 |  |           |  | 0.236 |                          | 
|2011       |  |          | 4,906.8 |  |           |  | 0.210 |                          | 



Notes: Data relates to historic measured and indicated resources
during VUSA’s ownership since 2003 and is from historically published NI 43-101 reports: Odell et al. (2012); Johnson et
al. (2011; 2012); Pincock Allen and Holt (2004; 2005) and SRK Consulting (2006; 2007; 2008).



30







Historic inferred resources are listed below.



Historic inferred mineral resources



|Year       |  | Inferred |        
|---------- |  | -------- | -------
|(Year-End) |  | kt       |        
|2003       |  |          | 5,415.4
|2004       |  |          | 4,058.7
|2005       |  |          | 2,646.5
|2006       |  |          | 2,414.8
|2007       |  |          | 2,319.7
|2010       |  |          | 3,872.6
|2011       |  |          | 4,115.7



Notes: Data relates to historic inferred reserves during VUSA’s
ownership since 2003 and is from historically published NI 43-101 reports: Odell et al. (2012); Johnson et al. (2011; 2012); Pincock
Allen and Holt (2004; 2005) and SRK Consulting (2006; 2007; 2008).



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



Historic proven and probable mineral reserves



|Year       |  | Proven |         |  | Probable |  |       | Proven + Probable | 
|---------- |  | ------ | ------- |  | -------- |  | ----- | ----------------- | 
|(Year-End) |  | kt     |         |  | opt      |  |       | koz    Au         | 
|2003       |  |        | 932.8   |  |          |  | 0.299 |                   | 
|2004       |  |        | 760.5   |  |          |  | 0.271 |                   | 
|2005       |  |        | 1,211.3 |  |          |  | 0.257 |                   | 
|2006       |  |        | 636.1   |  |          |  | 0.273 |                   | 
|2007       |  |        | 653.4   |  |          |  | 0.229 |                   | 
|2010       |  |        | 1,406.1 |  |          |  | 0.193 |                   | 
|2011       |  |        | 1,980.2 |  |          |  | 0.189 |                   | 



Notes: Data relates to historic proven and probable reserves
during VUSA’s ownership since 2003 and is from historically published NI 43-101 reports: Odell et al. (2012); Johnson et
al. (2011; 2012); Pincock Allen and Holt (2004; 2005) and SRK Consulting (2006; 2007; 2008).



The aforementioned resources and reserves since 2003 have been
prepared by Qualified Persons employed by Pincock, Allen and Holt, SRK Consulting, Practical Mining LLC, and Veris and are therefore
viewed by the primary author of the Company’s more recent technical report, Todd Johnson (QP), as being reliable and relevant.
It is apparent that the historical proven and probable reserves documented every year in the NI 43-101 reports since 2003 range
from 1,984.9 to 6,056.9 kt. It is also recognized that the measured and indicated resources documented every year in the NI 43-101
reports since 2003 range from 8,196.9 to 12,289.5 kt.



Geological setting and mineralization



Regional geology



The Jerritt Canyon mining district is located in the Independence
Mountain Range in northern Nevada. The range is part of the Basin and Range province of Nevada and is a horst block consisting
primarily of Paleozoic sedimentary rocks with lesser Tertiary volcanic rocks and intrusive dikes. Much of this data was previously
presented in other published reports (Jones, 2005; McMillan, 2005; Daly et al., 1991) and is still considered to be relevant.



The Technical Report authors have reviewed the geological information
in the drill hole databases and finds the geological determinations in the logs to be adequate for use in geological modeling
of the resource areas and also deems them adequate for use in the present resource and reserve work.



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



31







| | · | The
                                         western facies, or upper plate of the thrust, consists of the Cambrian to Ordovician
                                         Valmy Group and forms about 70% of the exposed rock. In the Jerritt Canyon district,
                                         the Valmy Group consists of the Snow Canyon formation, a chert, argillite, greenstone,
                                         and carbonaceous siltstone sequence, and the McAfee Quartzite, a sequence of massive
                                         quartzite and shale;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | · | The
                                         Schoonover sequence occurs north of the district and consists of basaltic and andesitic
                                         greenstone, chert, tuff, volcaniclastics, and siliciclastic and limestone turbidites
                                         of Devonian to Permian age; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The
                                         Antler overlap sequence is restricted to the north end of the range and consists of conglomerates,
                                         argillite, siltstone and limestone.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Paleozoic sequences are cross-cut by Pennsylvanian basalt
dikes, Eocene basalt-quartz monzonite dikes, and Miocene basalt dikes. The Pennsylvanian and Eocene basaltic dikes are altered
and mineralized in most of the mines.



The structural fabric in the district consists of two dominant
fault trends, west-northwest trending and north-northeast-trending.



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



Local geology



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



The contact between the Roberts Mountains Formation and the
overlying Snow Canyon Formation is a regional thrust fault which transported the Snow Canyon eastward over the Roberts Mountains
Formation. The contact between the Roberts Mountain Formation and the underlying Hanson Creek Formation is a discontinuity locally
known as the Saval discontinuity. The discontinuity may be an angular unconformity of local extent or a thrust fault. Gold mineralization
is typically enriched along this discontinuity. The base of the Hanson Creek is gradational into the Eureka Quartzite. Locally,
the stratigraphic section has been repeated by thrust faulting.



32







Deposit types



The Jerritt Canyon deposits are typical of the Carlin-type
deposit consisting of micron to submicron-sized gold particles hosted primarily by carbonaceous, Paleozoic calcareous and sulfidic
sedimentary rocks. Lesser amounts of ore are hosted by intermediate to mafic intrusive rock. The deposits often consist of several
discrete pods or zones of mineralization whose location is controlled by intersections of major west-northwest and north-northeast
structures that cut folded, permeable and chemically favorable host rocks. Locally, intrusive dikes that follow the northwest
or northeast structures may be important host rocks. The combination of these structural and stratigraphic controls imparts a
highly irregular shape to the ore zones, though most have more horizontal than vertical continuity depending upon the orientation
of the host rocks.



Gold in the Jerritt Canyon ore deposits occurs as free particles
of inter-granular, native gold, on or within pyrite, or in association with sedimentary carbonaceous material. Due to the sulfide
and carbonaceous affinities, most of the gold deposits at Jerritt Canyon require fine grinding and oxidation to permit the gold
particles to be liberated by standard, carbon-in-leach cyanidation.



In addition, the planned 2012 exploration program focuses on
drilling resource conversion holes both proximal to the Smith and SSX-Steer underground mine infrastructure (underground workings),
in the planned Starvation Canyon underground mine, and in open pit resources that have the best potential to advance into potential
production. The drilling will be focused along well known mineralized trends (defined by previous drilling, mapping, geophysics,
or soil/rock surface sampling) with adjacent in-place infrastructure (underground workings and/or access roads or mining facilities)
in order to have the best chance of adding potential new resources and reserves. This will allow the Company to potentially keep
feeding ore to the processing facility at Jerritt Canyon well into the foreseeable future. The drilling methods to be employed
at Jerritt Canyon incorporate reverse circulation and diamond types which have been proven to work well at other northern Nevada
Carlin-Type deposits.



Mineralization



Gold mineralization at Jerritt Canyon is hosted by the Hanson
Creek Formation and the base of the Roberts Mountains Formation in the lower plate of the Roberts Mountains thrust. Gold mineralization
is structurally controlled by high angle west-northwest and north-northeast trending structures that acted as conduits for mineralizing
fluids. Much of the more continuous gold mineralization occurs within the favorable stratigraphic intervals along the limbs or
hinge zones of large anticlinal folds, and at the intersection of the two sets of high angle structures. The ore zones form along
well-defined structural and mineralization trends as stratigraphically controlled tabular pods that are locally stacked upon one
another resulting from the presence of more than one favorable stratigraphic unit and/or local thrust and/or high-angled fault
intersection controls. The deposits are Carlin-type, sediment-hosted gold mineralization within carbonaceous sediments. The gold
occurs as very fine-grained micron-sized particles as grain boundaries or inclusions in pyrite, and as free grains in carbonaceous-rich
carbonate and fine-grained, calcareous, clastic sedimentary rocks.



Alteration in the Jerritt Canyon district includes silicification,
dolomitization, remobilization, and reconstitution of organic carbon, decalcification, argillization, and pyritization (typically
containing elevated arsenic). The rocks also exhibit hypogene and supergene oxidation and bleaching. The most important alteration
types relative to gold deposition are silicification, remobilization and reconstitution of organic carbon, pyritization, and decalcification.



Mineralization characteristics in the main work areas are described
below. Zone numbers in the following descriptions refer to mining areas that are presented in the current report or the SRK year-end
2007 Technical Report.



SSX-Steer Mine



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



The SSX deposit was discovered in the early 1990’s following
the northeast structural trends between the Burns Basin and California Mountain deposits and the west-northwest trends from the
Steer/Saval deposits. Mining at SSX started in 1997.



33







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



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



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



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



At Steer and SSX the structural intersections are the primary
targets for resource expansion, as well as the westward extension of the South Boundary dike.



Saval Mine and Saval 4



Previous mining at Saval has included both open pit mining
(1994-1997) and small-scale underground mining from 2004 to 2006 in the high wall of the Saval 2 pit. Gold mineralization in the
Saval Basin area to the west of the SSX mine is primarily hosted in favorable Hanson Creek Formation unit III where it has been
structurally prepared by faulting and has locally been compartmentalized by northwest-trending dike systems. In this area, a series
of west-northwest trending structures have been cut by northeast-trending faults. Notable structural features include the west-northwest
trending Saval horst and the northeast-trending Husky fault, which cuts across the older Saval horst and down-drops it to the
southeast. Mineralization is mostly hosted in the Hanson III unit in the vicinity of structural intersections, often forming relatively
steep, narrow, plunging bodies. Dikes, such as the Saval 3 pit dike can be traced for thousands of feet. High-grade gold mineralization
has been concentrated along the Saval 3 dike in several locations, most prominently in the Saval 3 pit and in the north part of
Zone 5 at SSX.



Mineralization at Saval generally trends east-west from 200
to 1,000 feet. The width ranges from 50 to 200 feet and the thickness from 10 to 50 feet. The depth is from the surface to about
400 feet below the surface. Saval contains gold mineralization that has been recently remodeled with both 0.01 opt Au grade shells
and 0.10 opt gold grade shells.



The Saval 4 underground resource is a relatively steep and
vertically extensive high-grade zone that lies within the Saval horst beneath a splay fault of the Sheep Tank fault. It is interpreted
that the intersection of west-northwest trending faults that bound the horst with northeast trending faults helped form this resource.
The Saval 4 underground mine development is targeted to commence in Quarter 3 of 2013.



34







Smith Mine



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



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



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



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



The West and East Dash deposits occur at the extreme ends of
the west-northwest trending Dash Fault system which formed the mineralization mined in the Dash pit. The West Dash deposit occurs
at the intersection of the Coulee fault and the west-northwest trending Dash fault. Most gold mineralization at West Dash occurs
in fault-bounded slices of Hanson Creek unit III with minor amounts in the overlying Hanson Creek unit II and Roberts Mountains
Formation. West Dash is accessed through the Smith Portal.



The East Dash deposit lies approximately 1,800 feet southeast
of the Dash pit. A portion of this deposit has been accessed by a small portal in the pit. At East Dash, most gold occurs in two
lenses parallel to the Dash Fault and dipping to the northeast. The largest lens is about 1,100 feet and is 15 feet to 25 feet
thick. This mineralization is fairly flat lying and is hosted mostly at the contact between the Hanson Creek II and III units.
The north edge of the lens seems to be bounded by a steep east-west trending fault that is locally mineralized with high-grade
material. The second lens is smaller at about 350 feet across, but much thicker, up to 120 feet. Some 2011 drill holes tested
the mineralization extent of the East Dash deposit.



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



Murray Mine



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



35







Mineralization previously mined at Murray generally trends
southwest but the southern body trends west-northwest. One strong north-south mineralized trend connects to the southern body
on the west side. The main trends are continuous and range from 500 to 2,500 feet in length. The width is generally 50 to 400
feet and the thickness from 20 to 200 feet. The depth ranges from the surface to 750 feet deep. The groundwater table at this
former mine currently lies at approximately 6,100 feet in elevation; no dewatering wells are active at Murray today.



Remaining mineralization making up the current resource at
Murray has been remodeled as multiple 0.10 opt Au grade shells occurring in an area up to 1,500 feet long immediately west (and
south) of the existing underground workings. These grade shells range in size from 100 to 800 feet long, 20 to 230 feet wide,
and 5 to 40 feet thick and are located on a sub-horizontal to gently to moderately westerly dipping anticlinal fold limb.



Mineralization in Zone 9 is included in the recently remodeled
Murray resource. This mineralization is associated with a westward projection of the New Deep Fault and several northeast trending
faults. It was the focus of drilling campaigns in 2002-2005. Although there was no additional drilling in this resource it was
removed from reserves in 2006 because of economics and possible water issues; some of this mineralization has been added back
to reserves this year based on more favorable mining economics. It consists of two separate areas, a relatively flat-lying zone
at the base of the Roberts Mountains Formation and a main zone which is associated with the New Deep fault. Mineralization at
Zone 9 is hosted by the Hanson Creek III which is locally overlain by the Snow Canyon Formation.



Starvation Canyon



Starvation Canyon occurs in the southern half of the Jerritt
Canyon property. Gold mineralization at Starvation Canyon occurs at the Hanson II-III contact and is localized along a west-northwest
fault zone at northeast structural intersections. The majority of the mineralization is within the interbedded micrite and argillaceous
limestone unit III of the Hanson Creek Formation, starting at or just beneath the contact. There are instances where mineralization
has formed within the massive limestone of the basal Hanson Creek II, but these are rare. Drilling in 2007 and 2008 further defined
the resource at Starvation, along its outer edges as well as the internal grade distributions. High angled structures have also
been identified. In addition, core drilling has improved sample recovery.



The mineralized zone at Starvation Canyon trends northwest
for a length of 1,500 feet and a width ranging from 150 to 400 feet. The mineralized trend has a thickness is 5 to 100 feet and
the depth ranges from 300 to 600 feet below the surface. The reserves and resources at Starvation Canyon lie above the groundwater
table. Recent surface drilling in 2011 included infill drilling and geotechnical diamond drilling to help update the mine design.
The Year-End 2012 Starvation Canyon resources and reserves includes all 2011 drill hole assay results. The Starvation Canyon underground
mine development started in November 2012 and the mine was officially opened in early April 2013.



West Mahala



The West Mahala mineralized zone lies between the Smith Mine
to the east and the SSX Mine to the west and is hosted at the contact between the Roberts Mountain and Hanson Creek Formations.
The West Mahala mineralization is generally 1,000 to 1,200 feet below the surface.



Two main pods of mineralization make up most of the resource
at West Mahala. One of the mineralized pods (Zone 1) is located just east of the existing SSX-Steer underground workings that
strikes northwest and is approximately 900 feet long. This pod has been modeled with 4 separate, stacked 0.10 opt Au grade shells
ranging from 5 to up to 60 feet thick.



The northeastern pods of mineralization (Zone 9) were modeled
as two separate, continuous, gently westerly dipping and stacked 0.10 opt Au grade shells and are approximately 1,100 feet long
by up to 850 feet wide by 5 to 40 feet thick and are open to the west, east, and south. Mineralization in theses pods trends east-west
with continuity ranging from 400 to 1,100 feet in length. The majority of the resources at West Mahala lie below the groundwater
table.



Wright Window



Wright Window is a small open pit reserve and resource area
located on the west side of the Independence Mountains to the west of the Murray mine. The deposit is hosted by the lower Roberts
Mountains and Upper Hanson Creek Formations along the Saval Discontinuity. Mineralization in the resource occurs in several zones.
The west zone mineralization outcrops at the surface and is about 50 feet thick. The higher-grade eastern zone is about 200 by
300 feet long and wide, 45 feet thick, and lies about 400 feet below the surface.



36









Pie Creek



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



Mill Creek



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



Road Canyon



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



This mineralization was modeled in Vulcan as four separate
0.01 opt Au grade shells. A much lighter tonnage factor of 17.5 ft3/ton was used for the grade shell closest to the surface instead
of the standard 12.6 ft3/ton in order to better represent swelling and pore space in the unconsolidated material. The unconsolidated
material in the near surface mineralization could be potentially scraped or bulldozed in mining.



Burns Basin



The Burns Basin area was previously open pit mined from 1988
to 1998. Gold mineralization that comprises the intact open pit and underground resources is mostly hosted at the contact zone
between the Roberts Mountain Formation and the Hanson Creek Formation, and locally between the Hanson Creek III and IV units on
a gently easterly dipping anticlinal fold limb. The remodelled 0.01 opt gold grade shells that make up the bulk of the Burns Basin
resource are continuous to semi-continuous, locally stacked shapes ranging from 125 to 3,400 feet long, 40 to 1,360 feet wide,
and 20 to 100 feet thick. A significant amount of fill has been placed in portions of the Burns Basin pits, some of which is classified
as municipal solid waste and debris from crates, cartons, and perhaps demolition of equipment.



A total of 61 surface drill holes were completed at Burns Basin
in 2011 to help delineate and extend detection of the gold mineralization. The assays of these 2011 drill holes were not received
in time to be included in the Year-End 2011 resource but have been included in the current Year-End 2012 Mineral Resource and
Reserve.



California Mountain



Mineralization in the California Mountain area is located north
and west of the existing California open pit that was mined from 1993 to 1994. Mineralization is hosted both in the Roberts Mountain
Formation near the upper contact with the Hanson Creek Formation, and within unit III of the Hanson Creek Formation. Other mineralization
lies on a north-eastern mineralized trend. No resources or reserves from California Mountain have been included in the Year-End
2012 tables.



37









Exploration



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



Since then, the operators of Jerritt Canyon have conducted
exploration programs for the identification and development of new mineralized areas. Several open pit deposits were discovered,
developed, and mined during the 1980’s and 1990’s, including North Generator, Alchem, Marlboro Canyon, Burns, Steer,
Saval and Dash. The Dash open-pit was the last significant open pit to be mined on the property in 1999.



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



The Murray deposit, originally discovered by condemnation drilling,
produced over 1 million ounces. The SSX deposit was discovered in the early 1990’s by geologists following the structural
trends between Burns Basin and California Mountain open pits. The SSX mine has also produced over 1 million ounces. The MCE, Smith,
and Steer extension of SSX are more recent discoveries.



The Jerritt Canyon operation has had a history of exploration
and discovery since the 1970’s. In the last few years VUSA acquisition of the property, most of the exploration efforts
have been concentrated at and around the existing underground mines. Exploration efforts in the southern part of the range were
directed to areas such as Water Pipe, Pie Creek, and Starvation Canyon. Queenstake and now VUSA have recently increased the exploration
effort near the mine areas and also in the south. As a result, the known mineralization at Starvation Canyon has increased in
size and quality so that a portion of it was included in the end of 2005 reserves. Additional drilling at Starvation Canyon in
2007, 2008, and 2011 was targeted toward further definition and expansion of the resource.



Surface exploration drilling and underground core drilling,
which is also used as an exploration tool, generally decreased from 2000 to 2002, when the former owner, AngloGold, shifted focus
from exploration to reserve development. Drilling statistics for these recent years that document this change are presented in
Section 10 “Drilling and sampling methodology.” After the acquisition of Jerritt Canyon in mid-2003, VUSA started
more aggressive exploration and mine development programs and those programs generally continued after the merger of Queenstake
Resources Ltd. and YGC in June 2007 up to the August 2008 mine shut down.



Veris has carried out an aggressive program of exploration
since it acquired the property in mid-2003. Since then, a number of different contract drilling companies have completed both
underground and surface drilling at the property. The drilling companies for each drill hole are listed on the drill logs kept
in the digital drill hole databases (in acQuire software) and/or in the paper drill hole log files stored at the mine. In addition,
since mid-2003 Queenstake owned the underground production drills (e.g. Solo, Secoma and Cubex), which also completed part of
the underground drilling prior to the August 2008 mine shut down. The total underground and surface drilling completed since 2003
at the property is summarized below (excluding production drilling):



| | · | 2003: 280,151
                                         feet of underground and surface RC and Core Drilling;
| | - | ------------------------------------------------------------------------------------------------------------

| | · | 2004: 710,896
                                         feet of underground and surface RC and Core Drilling;
| | - | ------------------------------------------------------------------------------------------------------------

| | · | 2005: 450,694
                                         feet of underground and surface RC and Core Drilling;
| | - | ------------------------------------------------------------------------------------------------------------

| | · | 2006: 396,063
                                         feet of underground and surface RC and Core Drilling;
| | - | ------------------------------------------------------------------------------------------------------------

| | · | 2007: 467,242
                                         feet of underground and surface RC and Core Drilling;
| | - | ------------------------------------------------------------------------------------------------------------

| | · | 2008: 237,250
                                         feet of underground and surface RC and Core Drilling;
| | - | ------------------------------------------------------------------------------------------------------------

| | · | 2009: no drilling
                                         was completed in 2009;
| | - | ---------------------------------------------------------------------------------

| | · | 2010: 8,756
                                         feet of underground RC and Core Drilling;
| | - | ----------------------------------------------------------------------------------------------



38







| | · | 2011: 157,769
                                         feet of underground and surface RC and Core Drilling; and
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | 2012: 43,188
                                         feet of underground and surface RC and Core Drilling
| | - | ----------------------------------------------------------------------------------------------------------



Authors of the Company’s Technical Report reviewed the
drilled data results stored in multiple datasets from August 2008 to December 31, 2011 for the current analysis. Since the last
technical report for this property, additional data derived from 2012 drilling was reviewed in detail by author, Michele White.
These new datasets included:



| | 1) | the 2012 isis-format dataset used for modeling of the new
                                         resource and reserve estimates;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------

| | 2) | the centralized acQuire database;
| | -- | ---------------------------------

| | 3) | Jerritt lab analysis results for underground production drilling;
| | -- | -----------------------------------------------------------------

| | 4) | SMD’s internal dataset used in their daily mine plan;
                                         and
| | -- | --------------------------------------------------------------------------------------------------

| | 5) | outside certified lab results from ALS-Minerals commercial
                                         assay lab.
| | -- | --------------------------------------------------------------------------------------------------------------



Other data reviewed from 2012 drilling included drill hole
collar locations, downhole surveys, and geologic identification of lithology. Data sets derived prior to 2012 were in an excellent
state of coherency and standardization as of March 2011, as verified by author Michele White – previous Data Manager for
the Jerritt Canyon database. Paper drill hole log files, copies of assay certification, and other integral drill hole data information
are also in a state of excellent condition for use in the new resource and reserve estimate. The geology logs for the surface
drill holes compare well with one another in the local areas suggesting that the stratigraphy of the rock units was well understood
by project geologists working at the property.



Previous review of technical studies evaluating geophysical,
airborne magnetic data, ground gravity, and ground I.P.-Resistivity and soil geochem surveys identified specific important dike
sets, clay alteration, silicification and main structures that cross the property. These summaries have been previously cited
in past technical reports. The most recent geophysical work done in 2011 was completed at Starvation Canyon including the West
Starvation target that included a Titan 24 Magnetotellurics (MT) and Induced Polarization/Resistivity (DCIP) ground geophysical
survey by Quantec Geoscience.



Exploration expenditures by VUSA in recent years are listed
below:



| | · | 2007:
                                         $7.23 million;
| | - | -------------------------------------------------------------

| | · | 2008:
                                         $6.48 million;
| | - | -------------------------------------------------------------

| | · | 2009:
                                         $0;
| | - | --------------------------------------------------

| | · | 2010:
                                         $1.0 million;
| | - | ------------------------------------------------------------

| | · | 2011:
                                         $11.4 million;
| | - | -------------------------------------------------------------

| | · | 2012:
                                         $7.2 million; and
| | - | ----------------------------------------------------------------

| | · | 2013:
                                         $12.8 million
| | - | ------------------------------------------------------------



Exploration and resource conversion drilling in 2012 focused
near the underground mining operations at Smith Mine in Zones 4 and 5 and at SSX-Steer at Zone 1 (West Mahala). Exploration and
development surface and underground drilling conducted in 2012 targeted either:



| | (1) | locating new areas of resources and reserves away from existing
                                         underground development; or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

| | (2) | mostly converting existing resources to reserve (near-mine).
| | --- | ------------------------------------------------------------



The 2013 Jerritt Canyon geological program totals $12.8 million
dollars and is separated into four phases:



| | · | underground
                                         resource conversion and exploration drilling at SSX-Steer;
| | - | ---------------------------------------------------------------------------------------------------------------



| | · | surface
                                         exploration at Mahala, ND and California Mountain;
| | - | ---------------------------------------------------------------------------------------------------



| | · | surface
                                         drilling at Burns Basin, Saval, and Pattani;
| | - | ---------------------------------------------------------------------------------------------



| | · | surface
                                         drilling at Starvation Canyon, and surface drilling at Pie Creek and Warm Creek in the
                                         southern part of the district.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



39







A summary of the recommended drilling program for 2013 is included
below.



Some of the future exploration programs at Jerritt Canyon will
be devoted to drilling in or around the historic open pits. While the open pit resources at Saval, Burns Basin, and Upper West
Generator were drilled in 2011 and remodelled using present day gold prices, some of the larger open pits such as Alchem, Marlboro
Canyon, and North Generator Hill have only been partially modelled using historical drilling and require additional work to verify
and update. Some of these older pit areas were previously modelled and mined at a much lower price per ounce than is prevalent
today.



Drilling and sampling methodology



Numerous drilling campaigns have been executed at Jerritt Canyon
since its discovery in the 1970’s. During the early drilling years in the 1970’s and 1980’s when shallow open-pit
targets were being pursued, most of the surface drill holes were drilled to a maximum depth of 600 feet below the surface. As
a result, the district-wide surface drilling is extensive but only for shallow examination. The potential for deeper targets is
yet to be investigated.



In the underground mines from 2011 up to December 31, 2012,
definition drilling included core drilling on 50-foot centers from underground stations, using HQ-sized (2.5 inches in diameter)
and NQ-sized (1.875 inches in diameter) core. In 2010, underground diamond drilling was used for exploration and resource conversion.



Underground RC drilling (Cubex) is used for resource confirmation
and is generally drilled on 20 to 40 foot centers. Underground RC drill holes are generally less than 150 feet in length, but
can be as long as 300 feet. Up to August 2008, underground production sample drilling consisted of Cubex and rotary percussion
drilling (Solo and Secoma). In 2010 to 2012, a 5,200 DRC Cubex (RC) drill, owned and operated by SMD, was used primarily for underground
production sample drilling at the Smith Mine. These production drill holes were generally short, less than 60 feet, and were drilled
on close centers of 10 to 20 feet. The majority of drill holes, other than the production holes, have been measured for downhole
deviation. A used Cubex drill rig was purchased in 2011 by VUSA to conduct underground production drilling at SSX-Steer.



Tens of thousands of holes have been drilled on the property
over the years. As of January 18, 2012, there are a total of 15,058 surface drill holes totaling 8,591,992 feet and 38,031 underground
drill holes totaling 3,292,276 feet in the acQuire digital drill hole databases. The Murray mine has over 22,000 holes with more
than 2 million feet drilled; the Smith mine has over 7,500 underground drill holes with more than 1.61 million feet; and the SSX
mine has nearly 21,700 underground drill holes with 2.75 million feet of drilling.



Drilling in 2000 through 2002 for AngloGold and Meridian was
conducted either by contract drilling companies or with underground drill rigs owned by AngloGold and Meridian Gold. Since Queenstake
purchased the project in 2003 drilling continued to be performed using underground drill rigs owned by the Company or contract
drilling companies. The name of the drilling company is listed on each drill hole log stored either in the acQuire digital drill
hole database or listed on the paper drill hole log files stored at the mine.



In 2012, VUSA completed 2,577 feet (2 drill holes) of surface
reverse circulation (2 RC drill holes totalling 1,600 ft. and 2 diamond drill holes totalling 977 ft.) from several projects throughout
the property; 23,942 feet (7,299.3m) of underground diamond drilling (30 drill holes at the Smith Mine totalling 29,333 ft. and
3 drill holes totalling 2,473 ft from SSX/Steer); 90,115 feet (27,474m) of Cubex production drilling (826 drill holes) and 8,805
feet (2,684m) from the Smith and SSX-Steer underground mines. Drilling in 2012 focused on those areas proximal to existing underground
developments above the groundwater table (in Zones 4 and 5 at Smith Mine and Zone 1 at SSX/Steer Mine) to convert inferred resources
to measured and indicated resources, better define existing reserves, and expand reserves.



Drilling in 2008 was conducted both underground at the SSX
and Smith Mines and throughout the property on the surface. No underground drilling was conducted in 2009. No surface drilling
was conducted on the surface in 2009 or 2010; however underground drilling was conducted at the Smith Mine in 2010. All of the
recent surface and underground drilling methodologies used in 2010-2012 are similar and are described in previous technical reports
and summarized below.



40







Jerritt Canyon drilling (2000 through year end 2012)



|Year |  | Surface
    RC |     |  | Surface
    Core |  |         | UG
    Core |  |  | UG
    RC |  |  | Production |       
|---- |  | -------------- | --- |  | ---------------- |  | ------- | ----------- |  |  | --------- |  |  | ---------- | ------
|     |  | No.            |     |  | Footage          |  |         | No.         |  |  | Footage   |  |  | No.        |       
|2000 |  |                | 378 |  |                  |  | 444,795 |             |  |  | 2         |  |  |            | *     
|2001 |  |                | 59  |  |                  |  | 65,450  |             |  |  | 0         |  |  |            | 0     
|2002 |  |                | 27  |  |                  |  | 18,905  |             |  |  | 0         |  |  |            | 0     
|2003 |  |                | 108 |  |                  |  | 47,277  |             |  |  | 0         |  |  |            | 0     
|2004 |  |                | 377 |  |                  |  | 300,226 |             |  |  | 34        |  |  |            | 21,212
|2005 |  |                | 126 |  |                  |  | 101,413 |             |  |  | 4         |  |  |            | 1,403 
|2006 |  |                | 155 |  |                  |  | 135,940 |             |  |  | 0         |  |  |            | 0     
|2007 |  |                | 220 |  |                  |  | 216,592 |             |  |  | 15        |  |  |            | 12,495
|2008 |  |                | 100 |  |                  |  | 103,300 |             |  |  | 8         |  |  |            | 9,830 
|2009 |  |                | -   |  |                  |  | -       |             |  |  | -         |  |  |            | -     
|2010 |  |                | 0   |  |                  |  | 0       |             |  |  | 0         |  |  |            | 0     
|2011 |  |                | 208 |  |                  |  | 120,130 |             |  |  | 12        |  |  |            | 14,147
|2012 |  |                | 2   |  |                  |  | 1,600   |             |  |  | 2         |  |  |            | 977   



| | · | *2000
                                         surface core footage is included with surface RC;
| | - | ------------------------------------------------------------------------------------------------

| | · | **2000
                                         and underground RC drilling is included with production drilling;
| | - | -----------------------------------------------------------------------------------------------------------------

| | · | No
                                         drilling was conducted in 2009;
| | - | ---------------------------------------------------------------------------

| | · | VUSA
                                         and its predecessor company (Queenstake) has owned the Jerritt Canyon property since
                                         mid-2003;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Contract
                                         drilling companies have completed almost all of the surface drill holes in Table 10.1;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | · | Both
                                         Contract drill companies and company-owned drill rigs have completed the underground
                                         drilling from 2000 to 2008, and in 2011 and 2012; a single contract drilling company
                                         conducted the underground drilling in 2010, 2011, and 2012.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Surface drilling



Reverse circulation (RC) drilling:



The 2011 reverse circulation (“RC”) drilling was
conducted by three separate contract companies (Rimrock, National EWP, and WDC). Down-hole surveys were taken by a contractor
(IDS) using a gyroscopic instrument. Drill hole collar locations were surveyed by in-house surveyors. The vast majority of the
2011 drilling targeted conversion of both underground (ug) and open-pit (op) resources in the following areas: Mahala (ug), East
Mahala/East Dash (ug), West Mahala (ug), Starvation Canyon (ug), Burns Basin (op), Saval (op), West Generator (op), and Pie Creek
(op).



The 2011 surface RC holes ranged from 4 5/8 inches to 5 1⁄2
inches in diameter (dependent upon bit type – hammer vs. tri-cone). Sample collection was conducted on 5 foot intervals,
according to the following protocol established by VUSA.



| | · | RC
                                         drilling operations collected samples in 10 x 17 inch polypropylene bags throughout the
                                         entire length of each drill hole.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The
                                         wet splitter was thoroughly cleaned prior to drilling at the start of the drill shift.
                                         The rotation speed of the splitter was set to collect a continuous split from the bulk
                                         sample that is dropped out of the cyclone. The recommended rotation speed was 60 rpm
                                         but may have varied due to drilling conditions. The splitter was sprayed clean after
                                         each rod change or 5-foot sample interval depending on drilling conditions and thoroughly
                                         cleaned and checked during the rod change. The number of “pie covers” used
                                         for the upper part of the hole varied significantly due to drilling conditions and was
                                         usually determined by the driller and on-site geologist. If more than one pie was open
                                         for sample collection, all openings must be symmetrical. Two symmetrical pie division
                                         openings are usually sufficient to collect an appropriate volume of material (10 pounds
                                         to 15 pounds). Exceptions are: 1) zones of poor return, 2) extreme groundwater production
                                         that requires the use of a tri-cone bit, and 3) unique conditions agreed to by the driller
                                         and geologist. In these cases a variable number of openings was needed to obtain a continuous
                                         split.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Samples
                                         were collected in a labeled bag that was placed inside the bucket. Diluted liquid flocculent
                                         was added prior to placing the bucket under the splitter. After the interval was drilled
                                         the sample was stirred and allowed to set for a brief period to allow clearing of the
                                         water, usually 15 seconds to 30 seconds. Excessive clear water was then decanted off.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



41







| | · | RC
                                         drill chips were collected in a hand sieve from the waste port of the splitter and then
                                         put into the sample tray to represent each five-foot interval and sent to the logging
                                         facility for the geologist to log formation, alteration, and other minerals. Intervals
                                         of no sample return were marked on the tray with “No Sample” or “Void”.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A
                                         drill interval that does not return any sample is marked on the sample bag as “No
                                         Sample” and placed in the appropriate shipping bag along with the other samples.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



VUSA representatives transported the RC samples, on a nearly
daily basis, from the drill site to the lay-down area immediately adjacent to the surface core logging facility. Approximately
150-200 samples per day (on average) were handled at the lay-down area and prepared for shipment to the commercial lab. Sample
shipments occurred twice a week. American Laboratory Services (ALS) provided transport of samples (RC & Core) to their Elko,
NV sample preparation facility. During non-operational business hours the security of samples at the lay-down area was maintained
by Jerritt Canyon Mine Security Department.



Diamond drilling:



2011 surface diamond drilling and geotechnical drilling was
conducted by American Drilling, Inc. at the Starvation Canyon deposit using HQ diameter (2.5 inches) core. Two contract companies
(IDS & COLOG) were utilized to conduct down-hole gyroscopic and tele-viewer surveys, respectively, to enable 3 dimensional
orientation of the core. Representatives of Golder & Associates engineering firm conducted core orientation, collection of
geotechnical data and photographing the drill core as specified by VUSA. VUSA representatives conducted geologic logging and subsequent
sampling of the core. Sampling was conducted by halving the core using a diamond bladed masonry saw. Surface diamond drilling,
for resource conversion, was conducted at West Mahala, Mahala, and East Mahala/East Dash. Pre-collared holes were drilled by reverse
circulation to a depth of 800 feet and casing was installed. HQ core was drilled from the bottoms of the RC pre-collars to pre-planned
total depths. VUSA representatives collected the core from the respective drill sites and delivered it to the Jerritt Canyon core
shed. The core was photographed then logged for lithological information and for geotechnical data according to the Jerritt Canyon
logging manual at the logging facility. Surface core was cut or split with a diamond saw or hydraulic splitter and half of the
core was sent to the lab for analysis while the remaining half core was re-boxed and secured in containers under lock and key.



Underground drilling



In 2011 and 2012, underground drilling consisted of Cubex RC
drilling for the purpose of ore definition / delineation. Diamond drilling was conducted for the primary purpose of resource conversion
with a limited amount of exploration drilling.



Cubex RC drilling:



One Cubex RC drill was used underground in 2011 and 2012 at
the Smith Mine and was owned and operated by Small Mine Development LLC (SMD). The Cubex drill performed almost all definition
drilling and only 630 feet of resource conversion drilling by utilizing a conventional crossover tube above the down-hole hammer
with a 3.94-inch (100 mm) bit. The air cuttings were run through a cyclone but no splitter was used. Drill hole spacing was targeted
at 30 to 50 foot centers throughout the deposit and typically drilled in a ring pattern. The attitude of the drill hole can be
at any inclination to the mineralized unit although it was preferred to be as close to normal to the ore-controlling structure
as possible.



Drill hole length was generally less than 100 feet but occasionally
ranged up to 235 feet. The sample interval was 5 feet. Tyvek 11 x 17 inch sample bags were used for the 2010 Cubex drilling. The
sample bag was placed in an open-ended sample bag holding apparatus (not a bucket). Drill station ring locations begin at least
5 feet back from the face and were evenly spaced generally every 15 to 30 feet down the heading, and were surveyed and marked
in the drift prior to drilling. A Leica Total Robotic Station, owned and operated by SMD, was used as the main underground survey
tool.



The driller measured and recorded the location of the drill
hole collar after drilling of the drill hole. Collars were not resurveyed after the drill hole is completed. No down-hole survey
was performed on the 2011 Cubex drill holes. The azimuth for each underground Cubex drill hole comes from the original drill station
ring survey. The inclination was measured by the driller during setup using a magnetic angle finder that he attached to the drill
rods.



A limited amount of Cubex drilling was conducted at the VUSA
operated SSX-Steer mine in 2011. Drilling, sampling, and survey operations were coincident with that described above for the Smith
mine.



42







Diamond drilling:



Diamond drilling in 2011 and 2012 was conducted by American
Drilling Corp. utilizing a Diamec U8 hydraulic-electric drill and drilled HQ diameter core. The underground core rig was used
to drill exploration and resource conversion drill holes. All of the drill holes were surveyed at the collar by SMD after the
completion of the drill hole. Magnetic declination used at Smith mine in 2011 was 13° 45’E. Downhole surveys were conducted
using a downhole survey instrument (Flexit) either owned by Queenstake or rented by American Drilling Corp.



The diamond drill core was placed in labeled cardboard boxes
and transported by the drill contractor to the Jerritt Canyon surface core logging facility. Once the diamond drill core arrived
at the core logging facility, the core was stored in this locked facility or supervised by a geotechnician or a geologist during
normal operating business hours during the core logging and sampling process. The core was placed on tables in the core logging
facility and sample intervals were selected by the geologist at 5 foot intervals or as determined by the geologist based on lithology,
mineralogy, or alteration. Photographs were taken of the core for archive purposes. The geologist then logged the geology of the
drill hole on paper using a predefined logging scheme specific to the project that includes geology, alteration, mineralization,
and geotechnical data if core is being examined.



Once geologically logged, the drill core was sawed into two
equal pieces where the rock was competent or equally split where the rock was strongly fractured or broken. One half of the core
was typically sent out for analysis at ALS Laboratory and the other half was returned to the core box and stored at the mine typically
in a locked truck container for archival purposes. In general, sample lengths were set at a minimum of 6 inches to a maximum of
5 feet. An experienced Jerritt Canyon geologist monitored the progress of the diamond drill by occasionally visiting the underground
work site. The 2011 and 2012 sampling procedures, collection, and security for the underground diamond drilling at the Smith mine
have been completed under the direction of the Jerritt Canyon Chief Geologist.



The company’s protocols and procedures for surface and
underground drilling, geological drill hole logging, sampling, assaying by the Jerritt Canyon assay lab and other commercial labs,
quality assurance and quality control, and digital drill hole data have been reviewed by the primary author of the Company’s
most recent technical report, and have been determined to meet industry standards. All of the aforementioned protocols and procedures
are deemed adequate for use to support the resource and reserve estimates presented.



Sample preparation, analyses, security, and QAQC



Drill hole samples in 2008, and from 2010 to 2012 were analyzed
at both the Jerritt Canyon assay lab and two commercial laboratories: ALS and American Assay Laboratory (AAL). The discussion
below details the procedures and protocols used to collect and store the data for the Jerritt Canyon property. The Quality Assurance
and Quality Control (QAQC) programs are also detailed below.



Jerritt Canyon laboratory sampling procedures



All of the underground samples received at the JC lab in 2008-2012
arrived with bar-coded labels and were transported to the front laydown area in front of the garage door by the drillers, Queenstake
staff geologists, drilling support staff, or mine staff working with the contract miner SMD. The labels on the bags correlate
to sample logs maintained by samplers and drillers in the Jerritt Canyon Underground Department. Sample bar-codes in 2008 were
scanned into the LIMS (an automated sample tracking system that utilizes bar-code scanning devices). As a result of this event,
assay lots were auto-created in a database. During the process of bar-code acquisition, in 2009 and the first half of 2010, some
labels were manually entered into the database by hand because the LIMS system software was not fully operational. The surface
drill hole sample numbers arrived at the lab with labels on the sample bags and then those sample numbers were hand-logged into
the LIMS system by the lab technicians. All logged samples in 2008 and 2009 dried for four to six hours at 325°F prior to
further preparation for sampling procedures. All logged samples in 2010-2012 were dried for four to eighteen hours at 205°F
in ovens at the lab prior to any further sample preparation described below.



From 2008 - 2012, a rotary (automatic) 1:4 split (50 rotary
cuts minimum) followed the first stage of crushing. Core samples were first-stage crushed 99% to1-inch prior to the split; all
other types are typically crushed to 1/2 inch prior to the first-stage split. Second stage crushing (99% to 3/8 inch) automatically
passes through a rotary splitter (50 cut minimum). The assay split from 2008 – 2011 was pulverized in a plate mill to 95%-150
mesh (Tyler) and blended for five minutes on a rotary blending wheel. In 2012 the pulverizing was completed using ring & puck
mills to 95% passing -150 mesh. The processed samples are placed in bar-coded sample cups and transferred to fire assay.



43







Sampling analysis protocol



The current Jerritt laboratory prepares their samples according
to this protocol:



| | 1. | Contracted drillers from Small Mine Development (SMD), puts Cubex-drilled
                                         samples into pre-labeled, bar-coded bags, which are ordered ahead of time for specific
                                         numeric values.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | SMD drillers write the sample numbers on a cut-sheet to correspond
                                         to 5 foot intervals per each drill hole.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | SMD delivers the samples and cut sheet to the Jerritt lab.
| | -- | ----------------------------------------------------------

| | 4. | The Jerritt lab has sample numbers previously entered into LIMS
                                         by a staff Production Clerk.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------

| | 5. | Lab technicians use a bar-code scanner to begin tracking the samples
                                         as they enter the laboratory system.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | The samples go through a circuit of different evaluations, such
                                         as drying, crushing, splitting, pulverizing, blending, and weighing leading up to Fire
                                         Assay methodology of testing for gold.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7. | A tray of 24 thirty-gram charge crucibles is prepared with a standard
                                         litharge flux. Each sample is weighed at one assay ton. The samples in 2008-2012 were
                                         fired by the method of fusion/cupellation with a gravimetric finish. The balance used
                                         for the final weighing from 2008-2012 is a Cahn C-30 microbalance that was serviced and
                                         calibrated on a semi-annual basis by Microlab Services. During 2012 the JC lab introduced
                                         the multi-pour system and the instrument finish for gold determination to increase accuracy
                                         and production rate.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8. | QAQC samples, such as duplicates, blanks, and 4 types of standards
                                         (JCQ06, JCQ07, Si52, and SK54) are inserted into the sampling sequence utilizing unique
                                         sample numbers based on the previous sample. For example, sample number SC 0022767 might
                                         be followed by a blank labeled SC 022767B, and sample SC 0022775 might be followed by
                                         a duplicate SC 00775D, and sample SC 0022787 might be followed by the JCQ06 standard
                                         labeled SC 022787A and so on.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 9. | The detection values of the samples by the atomic absorption spectrophotometer
                                         are automatically uploaded into the LIMS system.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10. | Au values derived from Fire Assay gravimetric finish are also uploaded
                                         into the LIMS system.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------

| | 11. | A Production Clerk verifies all the data uploaded into LIMS for
                                         consistency and errors, such as sample number verification. The same clerk also supervises
                                         data being exported from LIMS for upload to acQuire and to SMD.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 12. | The lab manager regularly checks the results of assaying standards
                                         for consistency and isolates samples that are outside the acceptable limit. The lab manager
                                         will re-submit control samples to test the validity of the quality assurance system in
                                         place.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 13. | LIMS exports Au-fire assay values as opt in CSV format files. One
                                         set of these files is made available to SMD for their daily mine plan. The other set
                                         is copied to the main server for the Veris staff Data Manager to upload into acQuire.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The authors of the Technical Report accept this protocol as
acceptable methodology demonstrating VUSA’s staff’s knowledgeable handling of sampling and quality assurance checks.



Core is sent to an outside commercial certified assay lab for
analysis which is discussed further below.



Sample security measures



The pulps processed through the Jerritt lab are stored on skids
at the lab within the secure compound of the mine. Processed pulps are then stored in locked cargo sea cans on the property within
the compound.



Commercial laboratory sample preparation, analysis protocol,
and security



Samples derived from diamond drilling of core are sent to the
primary lab ALS Minerals Laboratory Group (also referred to as ALS Chemex or ALS in this document) and the secondary lab American
Assay Laboratories (AAL) in Reno and Sparks, respectively, Nevada. Detailed description of those labs’ sampling preparation,
sampling analysis protocol, and security are summarized below.



44







RC and diamond drilling completed in 2008 were sent to the
primary lab ALS Minerals Laboratory Group (also referred to as ALS Chemex or ALS in this document) and the secondary lab American
Assay Laboratories (AAL) in Reno and Sparks, respectively, Nevada. For 2008 and 2009, samples above 0.100 opt gold were routinely
fire assayed with a gravimetric finish. For 2010, the ALS Chemex lab in Reno, Nevada was used for all of the underground diamond
drill hole analyses. Samples above 0.070 opt Au were routinely fire assayed with a gravimetric finish. For all years 2008-2012,
blanks, standards, and pulps were routinely inserted into the sample stream for QA/QC, and check assay.



ALS Chemex typically picked up the
cut samples (bagged and labeled with bar codes) at the Jerritt Canyon core logging facility and brought them to their lab in Elko
for sample preparation. The 2010-2012 sample preparation procedures for ALS Chemex include:



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

| | · | Dry-21
                                         ALS method code; and
| | - | --------------------------------------------------------------------

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



Once the samples were prepared by
Jerritt Canyon geologists (geologically logged and sample intervals defined) and geotechnical staff (split or sawed core into
two equal pieces and placing one half of the core into a labeled and sealed sample bags for assay analysis), they were picked
up at the Jerritt Canyon mine site by ALS representatives who transported the samples to their sample preparation lab in Elko,
Nevada and eventually to their assay lab in Reno, Nevada for analysis. The 2010-2012 assay procedures for ALS Chemex included:



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

| | · | The
                                         Au-GRA21 ALS method code that consists of a 30 g Au fire assay with a gravimetric finish.
                                         The sample is fused with a mixture of lead oxide, sodium carbonate, borax, silica, and
                                         other reagents in order to produce a lead button; the lead button containing the precious
                                         metals is cupelled to remove the lead; the remaining gold (and silver) bead is parted
                                         in dilute nitric acid, annealed and weighed as gold. The assay range for this analysis
                                         is from 0.05 to 1,000 ppm Au. This assay method is used automatically for over-limit
                                         results from the Au-AA23 assay method.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



Quality control measures



Current Jerritt Canyon and commercial laboratory QAQC procedures



Sample quality control measures prior to 2011 were discussed
in previous technical reports. 2012 and current laboratory QAQC procedures are as follows:



Jerritt Canyon Laboratory:



| | · | One
                                         standard sample per 24 samples;
| | - | ----------------------------------------------------------------------------



45







| | · | One
                                         blank sample, consisting of silica sand, per 24 samples;
| | - | -----------------------------------------------------------------------------------------------------

| | · | One
                                         triplicate sample per 24 samples;
| | - | ------------------------------------------------------------------------------

| | · | Check
                                         assays of approximately 1% of the total sample population.
| | - | ---------------------------------------------------------------------------------------------------------



Commercial Laboratory:



A 2-tiered QAQC protocol for samples
sent to commercial labs is summarized below:



Tier 1: initial submittal



| | · | A
                                         blank sample consisting of silica sand inserted as the second sample for each drill hole;
                                         and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | One
                                         standard is inserted into the assay sample stream every 20th sample.
| | - | -----------------------------------------------------------------------------------------------------------------



Tier 2: quarterly checks



| | · | On
                                         a quarterly basis, part of an original sample (pulp reject, or standard) is re-submitted
                                         to the same lab (i.e., if it was assayed at ALS Chemex lab, then it is re-submitted to
                                         ALS Chemex) - re-labeled with new sample identification numbers.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Cross-checks
                                         of the same sample are submitted to different labs (i.e., if assayed at ALS lab, then
                                         part of the original pulp reject is also submitted to AAL lab.)
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



All samples submitted to be initially
analyzed via Fire Assay with an AA finish. Samples with initial assay result > 0.070 opt Au are re-analyzed via Fire Assay
with a Gravimetric Finish. In this instance the database recognizes the result attained from Fire Assay with a Gravimetric Finish
as the “best assay.” For the underground drill core, approximately 15% of the original samples assaying > 0.070
opt and 5% of original samples assaying 0.010-0.069 opt are randomly selected from the total sample population. For the surface
drilling (RC & Core) the same percentiles of original samples are randomly selected but from 30% of the total sample population.
Blanks and standards (as per Tier 1) are submitted with the pulp rejects.



Standards submitted with each dispatch
in 2011 and 2012 to both the Jerritt lab and to the commercial labs are listed below with their sources.



| | · | JCQ06
                                         – 0.159 opt (Jerritt Canyon Mineralized rock source);
| | - | ----------------------------------------------------------------------------------------------------

| | · | JCQ07
                                         – 0.241 opt (Jerritt Canyon Mineralized rock source);
| | - | ----------------------------------------------------------------------------------------------------

| | · | Si54
                                         – 0.0519 opt (Rocklabs certified standard); and
| | - | ---------------------------------------------------------------------------------------------

| | · | SK52
                                         – 0.1198 opt (Rocklabs certified standard).
| | - | -----------------------------------------------------------------------------------------



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



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



In order for an assay batch to pass the QA/QC review, >
90% of the standard assay results must be within two standard deviations (accuracy) of the recommended standard value listed above.
Various graphs and a discussion of the results for the 2012 QA/QC program are below.



Results from the standards or duplicates are reviewed by geologists
upon receipt from the laboratory. If there is significant deviation from the expected value then the batch of samples is re-fired.
If the lab is unable to match the original results within reasonable limits then the sample is re-fired until assay values match
or a valid reason for the standard assay discrepancy is determined (e.g. a mislabeled standard or a standard that was inserted
out of sequence).



46







Unfortunately, VUSA was unable to conduct a quarterly reassay
of randomly selected pulp samples for QAQC for Quarter 4 of 2012 due to staffing shortfalls. However, analysis of the performance
of the blanks, re-assays, and the four standards, combined with past positive quarterly re-assay results, provided examples of
acceptable QAQC protocols to the applicable technical report author.



In January, 2013, the Technical Report author conducted an
audit of randomly selected surface QAQC sample results from ALS lab covering a period from July 2011 to August 2012. The protocol
for surface and underground core sampling QAQC is to submit blanks and 4 standards into the sample dispatch as ordinary samples.



Randomly selected underground QAQC sample results from the
Jerritt lab were provided for the audit covering a period from June 2011 to December 2012. The protocol for underground production
Cubex-drilled sampling QAQC is to submit blanks and 4 standards into the sample dispatch every 24th sample and to duplicate
every 20th sample in a dispatch.



Re-assays and duplicates performance



Veris’ assay protocol for QAQC at Jerritt Canyon does
not include submitting duplicates as part of the regular sampling of exploration core (surface or underground) sent to outside
laboratories. However, the in-house Jerritt laboratory does include internal duplication of Cubex-drilled samples per sample submittal.



Core samples from underground drilling are initially submitted
to ALS for fire assay with AA finish methodology. Re-assay requests are generated in the sample submittal (dispatch) to the outside
lab (ALS or AAL) for samples with an assay value > / = 0.07 Au opt to automatically be re-analyzed using fire assay with gravimetric
finish methodology. If a drill hole produces no regular samples with values > / = 0.07 Au opt, then no re-assays are generated.
Standards submitted in the original submittal, which generate values over 0.07 Au opt, are re-assayed as duplicates. The Jerritt
lab will also re-assay samples with a gravimetric finish for samples with >0.07 Au opt.



Additionally, Jerritt Canyon’s regular QAQC protocol
requires randomly re-submitting 15% of the total sample population (by calendar quarter) of > / = 0.070 Au opt for duplicate
assaying (fire assay with gravimetric finish) and + / - 5% of the total sample population (by calendar quarter) for all other
samples <0.070 opt (fire assay with AA finish).



To meet proprietary QAQC protocol standards, Jerritt usually
re-submits bulk and pulp rejects to their primary lab (ALS) as well as to an additional independent lab (AAL) on a quarterly basis.
By this means, the lab is unaware of the original assay result. However, Veris was unable to submit quarterly bulk rejects for
2011 surface and 2012 underground core drilling due to staffing shortfalls. This is a temporary situation. As Veris has other
QAQC protocols in place which have performed well, such as blanks and standard, this lull in re-assay checking is not considered
to impact the integrity of sampling results during this period of time. Jerritt Canyon’s sampling methodology continues
to be considered acceptable as a documented protocol for QAQC standards.



There were no duplicates or re-assays of bulk or pulp samples
performed on the 2011 surface core drilling program, due to temporary constraints on this phase of quarterly testing.



There were 79 randomly selected duplicated samples with corresponding
original samples submitted for review from the Jerritt laboratory population of underground Cubex samples from a population dated
between June 18, 2011 and December 31, 2012. The results demonstrated excellent correlation with only 2 samples being within 0.02
and 0.04 Au opt difference.



Opinion on the adequacy of the sampling methodolgy



VUSA’s sampling protocol at Jerritt Canyon for both exploration
drilling and production Cubex drilling are ensuring accurate results that demonstrate reliable gold values derived from the underground
drilling program.



47







Further actions to insure the integrity of sampling drilled
material and subsequent certified assay results at Jerritt Canyon could include improvements in the area of QAQC. For example,
the performance of the standard Si54 is not as consistent with the commercial labs as it is with the Jerritt lab. Also, Jerritt
Canyon staff has skipped quarterly check assays for the last quarter of 2012. The QAQC protocol currently in place could be improved
by replacing the Si54 material with another more reliable standard that performs well with these ores. Also, it is important that
Jerritt resume quarterly check assay samples and not let this gap in testing comprise the otherwise excellent data integrity in
their Master database.



The author of the Company’s most recent technical report
expressed confidence in the accuracy of the assayed sampling results compared between certified assays and the master acQuire
database for contributing new 2011 to 2012 assay values to future estimates of resource and reserve.



Current data vetting June 18, 2011 to December 31, 2012



On January 23, 2013 an author of the Company’s most recent
technical report commenced an audit of assay data derived from sampling newly drilled material for the Jerritt Canyon property.
This audit was performed for verification purposes to contribute this dataset to future evaluations of the December 31, 2012 Jerritt
Canyon mineral resource and reserve estimates. This audit addresses assay results from drilled material sampled between June 18,
2011 and December 31, 2012 for underground drilling, and between July 18, 2011 and December 21, 2011 for surface drilling.There
was only minor surface drilling in 2012 (2,577 ft); however, numerous assays from surface drill holes completed in 2011 were received
after January 2012 and/or after the December 31, 2011 Vulcan models had been updated which were partially included for this current
drill hole audit.



Datasets submitted for evaluation



Jerritt Canyon Data Manager, Ling
Domenici, provided specific datasets for the audit based on requests by the auditor to analyze a random population representing
no less than 5% and optionally up to 25% of the total samples produced from drilled material for these 3 programs:



| | · | Underground
                                         Cubex production drilling, which is sampled on-site through the Jerritt production laboratory
                                         for minimizing turn-around time, as this data is utilized for daily mine planning and
                                         ore control. This material is not logged for lithology and the collar locations are estimated
                                         based on surveys provided to assist in setting the drill up on location at the correct
                                         orientation. Other surveys contributing to some of the underground collar locations are
                                         the mine asbuilt surveys. There are no downhole surveys performed. Drill traces for the
                                         production holes are generated from engineering designs for projecting the results in
                                         models. This method of locating the collars and traces is considered acceptable due to
                                         the short length of the holes and the high density of drilling. Sample results from the
                                         underground Cubex drilling are used in the resource estimate.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The audit reviewed the Jerritt lab
assay results from daily production samples for consistency and analyzed the Jerritt lab results based on comparison to detection
of known values for standards submitted within the sample dispatches. The chain of custody for assay results derived in the Jerritt
lab was also examined for consistency in data management procedures.



| | · | Underground
                                         core drilling for exploration purposes. Core from underground drilling is sent to an
                                         outside laboratory to ensure the results are derived from an accredited laboratory for
                                         use in the resource estimates. This drilled material is logged for lithology to contribute
                                         to a detailed geological model. The collar locations are surveyed for northing, easting,
                                         elevation, azimuth, and dip, and the drill trace is surveyed downhole.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



This audit compared the original
raw data derived from surveying, logging, and sampling underground-drilled core to electronic data as exists in the 2013 acQuire
database and then to data utilized for modeling geology and resource / reserve in the 2013 ISIS database. The data was examined
for consistency and accuracy. Assay values in acQuire and ISIS were correlated directly to the original assay certificates derived
from accredited laboratories.



| | · | Surface
                                         core drilling for exploration purposes. This drilled core material follows the same criteria
                                         listed above for underground core drilling.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, specific technical datasets related to evaluating
the integrity of the assay checks were also audited for purposes of correlation between original source data and the 2013 acQuire
database, then cross-checked against the 2013 ISIS database. The number of drill holes reviewed for technical data is lowest in
comparing downhole survey and lithology because none of the underground production holes are surveyed downhole or logged for geology
due to density of drilling within known geological units. Assay certificates, sample intervals, and collar coordinates reviewed
cover between 20% to 85% of all the drill hole data for the entire period under audit.



48







In addition to verifying gold values for sampled material derived
from drilling at Jerritt Canyon from June 18, 2011 to December 31, 2012, this audit also reviewed general technical data related
to sampling, such as the location of the collars and downhole surveys per sampled interval. Geologic data was also reviewed for
the purpose of validating data that would be used in geologic modeling as a premise for shaping and projecting trends of the ore
bodies for resource and reserve estimates.



Specific technical datasets audited were compared for direct
correlation record-by-record between the original source data and the 2013 acQuire database, then to the 2013 ISIS database for
validation purposes. The record-by-record validation produced a detailed examination of between 8% and 37% of the datasets that
uphold the integrity of the assay values in Jerritt Canyon’s master acQuire database.



acQuire to ISIS comparison of assay data



All assay values for both surface and underground samples in
the January 2013 ISIS database utilized by Practical Mining for updating the resource and reserve estimates at Jerritt Canyon
were directly correlated to assay values in Jerritt Canyon’s acQuire database in this audit.



Surface Assays



A total of 26,405 assay records occur in both the 2013 acQuire
database and the 2013 ISIS database for the 2011 surface-drilled core samples. With the exception of differences due to rounding
from 4 to 3 decimal places, the direct correlation between ISIS and acQuire for the 2011 surface core drilling program exactly
match for the entire population of assay records.



Results Surface Assay datasets check: Excellent matches
between acQuire and ISIS.



There were 3 non-matches in the surface core assays between
acQuire and ISIS, none of which contained significant gold grades. (Resource estimates by Practical Mining will use 0.03 opt Au
for bulk mineable cut off grades for the open pits.)



Underground Assays



A total of 36,971 individual assay records for all of the 2011
and 2012 underground samples (inclusive of Cubex and core material from SSX and Smith) exist in the January 2013 ISIS database.
However, 511 of these assay records in ISIS are empty place holders with a -99 value pending finalization of certified assays
imported into acQuire. The 2013 acQuire database reviewed in this audit has 60 assay records for Cubex underground production
drill hole SSX-C70057 that were not exported to the January 2013 ISIS database and will not be included in the resource / reserve
estimate.



As a result of these differences, the number of assay records
in the 2013 ISIS database differs from the number of assay records in the 2013 acQuire database. The acQuire database contains
36,520 assay records for the same period of time as the ISIS database. However, the ISIS database contains 36,970 assay records
– of which 783 are empty place holders. The total number of assay results examined between ISIS and acQuire is 37,031 –
of which only 36,460 assay records are mutual to both acQuire and ISIS for the period of time covered.



Results Underground Assay datasets Check: Excellent matches
between acQuire and ISIS



Of the 36,460 assay records checked in the 2013 acQuire underground
assay database against the 2013 ISIS underground assay database, 36 of the records (or 0.01%) did not match. Of these non-matches,
10 of the errors are in values of significance, that is >0.1 opt. In 8 of the 10 samples with significant Au values (>0.1
opt) that did not match between acQuire and ISIS, the error appears to be switches in intervals within a single sequence in the
same hole, which would not impact modeling of the resource.



49







Comparison of intervals versus sample numbers



To compare the accuracy of locations for assayed sample intercepts
in 3-D models for resource / reserve estimates, the sample intervals and corresponding sample numbers from the original cut-sheets
of 20 randomly selected surface-drilled core holes and 10 randomly selected underground-drilled core holes were checked against
their digital values in acQuire and then again in ISIS. The sample intervals for Cubex-drilled production holes are spaced in
regular 5-foot intervals and sample numbers corresponding to these intervals were reviewed from original cut-sheets for 71 randomly
selected underground production holes drilled in both the SSX mine and the Smith mine, which included 3,502 interval records in
cut-sheets compared to 29,189 total intervals of sample records in the acQuire underground database (about 12% of the underground
data population).



All the examined sample intervals and subsequent sample numbers
lined up exactly between the source data and acQuire and ISIS for both the surface and underground drilling programs.



Checks of format conversions: Au opt-Au ppb-Au ppm-Au best
selection



The gold values in the January 2013 ISIS database are in units
of opt. These values are derived from exported gold values of “best selection” in acQuire. The acQuire database includes
gold values reported in ppb, ppm, and opt from the Jerritt and the ALS laboratories using fire assay reported in ppm as the primary
testing method. Some samples are automatically submitted for re-assay using fire assay with gravimetric finish reported in ppb
if the original value is [> / =] to 0.07 opt Au. AcQuire will convert Au values from a variety of formats into opt values
for uniformity. As a result, the “best selected” Au value exported to Vulcan is based on criteria of preferred sampling
methodology and sequence of re-assays that may have been converted to opt from original ppm or ppb formats.



All assay values (100%) for both surface and underground samples
in the January 2013 acQuire database were tested for conversions reported in ppb, ppm, and opt from the original formats. With
the exception of minor discrepancies due to rounding from 4 to 3 decimal places, all (100%) of the converted values in the entire
population for surface and underground assay results examined were correct.



Assay certificates compared to acQuire and ISIS Au values



Certified assays of surface-drilled core material sampled at
the ALS laboratory between July 2011 and December 2011 were compared to assay values in the January 2013 acQuire database and
the January 2013 ISIS database. A random selection of 10% of the total surface-drilled core holes resulted in a review of 1,317
individual assay certificate records which corresponds to 5% of the total population of 26,405 individual assay records in the
2013 acQuire surface drilling database. The assay records in acQuire were directly matched to their corresponding certified assay
results from the ALS lab.



There were minor issues in comparing the original assay certificates
to the 2013 acQuire database for the surface drilled core assays related to rounding from 4 decimals to 3 decimals – none
of which impacted Au values of >0.1 opt. Otherwise, the assay certificates for 5% of the population under audit exactly matched
the acQuire database.



Certified assay results for underground-drilled core material
sampled at the ALS lab between October 2011 and September 2012 were compared to assay values in the January 2013 acQuire database
and the January 2013 ISIS database. A random selection of 10 out of 40 drill holes (25% of the underground core drill holes in
this audit) isolated 1,784 assay records out of 7,331 total assay records (about 24%) for direct certificate to assay record verification.



There were no discrepancies between the assay certificates
and the acQuire or ISIS databases for the underground core drilling.



Samples from underground production Cubex-drilled holes were
sent to the Jerritt laboratory and were not verified by an accredited outside laboratory except for samples re-assayed for QAQC
at ALS. The original CSV formatted files of Au values derived by the Jerritt lab’s LIM system were compared to both the
January 2013 acQuire database and the January 2013 ISIS database for consistency.



There were minor discrepancies between the Jerritt lab CSV
format LIMS reports and the acQuire / ISIS database related to decimal places and rounding. None of the issues were for assays
> 0.1 opt Au.



50







Note: Certified assay values from ALS lab for Au opt GRAV under
detection limit are entered as <0.0001 in the certificate. Assay values under detection limit in LIMS reports from the Jerritt
lab are entered as either <0.001or as -0.001 in the CSV format exports from LIMS. acQuire does not accept non-numeric characters
for assay values. To compensate for this, samples below detection limit from ALS were flagged with the value of 0.0001 in acQuire.
Samples under the detection limit from the Jerritt lab were flagged with the value of either 0.0005 or 0. These values of 0.0001
and 0.0005 and 0 were exported to Vulcan. These flagged values could infer Au detected at those levels. The users have to recognize
the flagged conventions to model the data correctly.



Lithology checks: formation, rock type, and intervals



Of the 221 surface core holes drilled in 2011, 23 (or about
10%) of the geological logs were reviewed. There was no surface drilling in 2012.



The only errors between original geologic logs reviewed and
the January 2013 acQuire / ISIS database, were for drill hole BB-1449. The entire length of that hole mismatched lithological
units and intervals.



For the 40 underground core holes drilled between October 2011
and December 2012, 10 (25%) of the geological logs were reviewed in this audit. Lithological codes from three of the randomly
selected drill hole logs were in the January 2013 ISIS database but were not in the January 2013 acQuire database. However, the
lithological codes and intervals in ISIS directly matched the geological logs without error and can be utilized in future modeling
of geology.



There were no geological logs recorded for the underground
Cubex drilled holes.



Summary of database verification



The results of the 2011 - 2012 data vetting analysis support
the opinion that the ISIS database is based on correct values to within acceptable industry standards. This dataset in conjunction
with the previously accepted datasets of drilling results, such as collar location, down-hole survey, lithology, and assay results,
form a cohesive, validated database for use by engineers in evaluating and reporting on resources and reserves at Jerritt Canyon
for the current Technical Report.



The Qualified Person for data vetting has independently verified
the quality of the drill hole data (both collar information and gold assays) used for the current resource and reserve work and
finds it adequate for use in the current study. Based on this assessment, the primary author of the Technical Report’s opinion
is confident that Jerritt Canyon is conducting exploration and development sampling and analysis programs using standard practices
and that the data can be effectively used in the estimation of the December 31, 2012 resources and reserves. It is recommended
that the logging of geological drill hole data that is currently being done on paper using pencils be done on the computer or
hand-held digital device in order to standardize the pick lists and more efficiently process the data in the future.



Mineral processing and metallurgical testing



The mineral processing operation at Jerritt Canyon is very
complex and is one of only three processing plants in Nevada that uses roasting in its treatment of refractory ores. Initially,
Jerritt Canyon was designed to process oxide and mildly refractory gold ores by conventional cyanidation using chlorine gas for
pre-oxidation of the refractory ores. The use of the wet mill to help treat the mildly refractory ores, which used chlorine for
ore oxidation pre-treatment, was stopped in February of 1987.In 1989, the roasting circuit (a dry milling process) was added to
the process flow sheet for the treatment of highly refractory ores which continues to be used at Jerritt Canyon today for processing
of the Jerritt Canyon and other second party (purchased or toll mill) ores.



Numerous metallurgical studies have been conducted on the ores
by the various mine owners at the property including cyanidation and roasting test work since the late 1970’s. In addition,
early metallurgical test work on ores from resource areas, including bottle roll tests for WaterPipe II, have also been conducted.
These reports are in the files stored at the mine site. The actual Au recoveries for the various deposits that have been previously
mined and processed are also noted in historic documents stored at the mine site.



51







The Jerritt Canyon ores are double refractory in nature because
the gold mineralization is both included in solid solution within sulfide minerals (arsenic-rich pyrite), and is also locally
associated with organic carbon in the host rock. Some limited amount of gold mineralization has also been noted in previous mineralogical
studies to be within quartz (silicification). The Jerritt Canyon roaster helps oxidize the majority of the refractory ores for
subsequent cyanidation.



A significant portion of the Jerritt Canyon ore contains high
amounts of clays. During the winter months, the clay-bearing ores can contain elevated moisture contents from snow and ice that
can cause serious handling problems in the plugging of chutes in the crushing circuits. As a result of these conditions, the processing
plant capacity during the summer and fall is typically 20% to 40% higher than winter, largely because the dry mill capacity is
adversely affected by high moisture in the feed.



Since mining development of a new underground mine at Starvation
Canyon started in November 2012, and since the mine officially opened in April 8, 2013, a summary of the existing Starvation Canyon
metallurgy results is described below. Two samples of Starvation Canyon ore were collected from diamond drill core from drill
hole TJ-216C and TJ-232C and separately tested in the Jerritt Canyon lab in February 2006. The samples were dried and pulverized
to 95% passing 150 mesh. The samples were tested before and after roasting (at 1030 ̊F) according to the standard procedure.



Mineral resource estimates



Introduction



In 2012, Veris updated the Jerritt Canyon resource estimate
incorporating additional drilling from the 2011 and 2012 drill campaigns. An additional 163 surface drill holes and 1,257 underground
drill holes were added since the last NI 43-101 report (Odell et al., April 2012). The 2012 year-end resource estimates were calculated
by Mark Odell, Owner, Practical Mining, LLC, P.E. and Karl Swanson, Independent Consultant, SME, MAusIMM using the Vulcan Software
versions 8.1.3 and 8.2.



The deposits at Jerritt Canyon which were re-estimated and
new resources and/or reserves calculated since the last NI 43-101 report (Odell et al., April 2012) are: Burns Basin, Saval, Smith,
Starvation, Steer-SSX-Saval and West Mahala.



Open pit and underground block models were built for the respective
deposits. The open pit models were based on both 0.01 opt and 0.1 opt gold grade shells whereas the underground models were based
on 0.1 opt gold grade shells. All block models include the geologic models of the stratigraphic units within the deposit.



The deposits with updated open pit block models are: Burns
Basin and Saval.



The deposits with updated underground block models are: Smith,
Starvation, Steer-SSX-Saval and West Mahala.



Note that only the Saval deposit has both an open pit and underground
block model.



Due to their close proximity to each other, the Saval, Steer-SSX,
and West Mahala deposits are included as a single underground block model called SSX.



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



Drill hole database and compositing



The drill hole database is stored in acQuire at Jerritt Canyon
in two parts; one for surface drilling and the other for underground or production drilling. The data cutoff date for this NI
43-101 report is December 31, 2012. The surface database contains 15,058 drill holes of which 14,132 have assay data with 500,812
gold assay entries greater than a value of zero and 13,947 drill holes that have geology data with 223,680 geology entries. The
underground database contains 38,030 drill holes of which 37,500 have gold assay data with 436,915 gold assay entries greater
than zero.



The acQuire data is extracted to .csv tables which are then
loaded into Vulcan. There are four tables extracted for each database; surface and underground. The tables are: collar, survey,
assay, and geology. The tables contain the following variables:



52







| | · | Collar
                                         - HoleID, Easting, Northing, Elevation and Total Depth;
| | - | -------------------------------------------------------------------------------------------------------

| | · | Survey
                                         - Downhole Depth, Azimuth, and Dip;
| | - | -----------------------------------------------------------------------------------

| | · | Assay
                                         - From, To, Sample ID, gold assay (AuFA), Flag, Zone, and Domain;
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | Geology
                                         – From, To, Formation Code, Lithology Code, Alteration Code, and Alteration Intensity
                                         Code.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



All of the surface and underground
holes extracted from acQuire and imported into the Vulcan databases were used for modeling. Any holes that were deemed invalid
or incomplete were not extracted and therefore, there was no reason to reject any holes which were in the Vulcan databases.



There are 61 new surface holes at
Burns Basin, BB-1442 to BB-1502. Saval has 23 new surface holes, SC-1372 to SC-1394. Starvation has 25 new surface holes, TJ-352
to TJ-373 and STV-U and STV-D. Mahala has 33 new surface holes, MAH-443 to MAH-475. Smith has 21 new surface holes, EM-121 to
EM-130, and SH-1203 to SH-1213.



There are 1,048 new underground holes at Smith:



SMI-C20443 to SMI-C20555

SMI-C30410 to SMI-C30448

SMI-C40838 to SMI-C40969

SMI-C50367 to SMI-C50717

SMI-C70766 to SMI-C70890

SMI-C80001 to SMI-C80302

SMI-LX-783 to SMI-LX-825



The SSX model has 209 new underground holes:



SSX-C10046 to SSX-C10117

SSX-C50001 to SSX-C50035

SSX-C70001 to SSX-C70102



Therefore, there are a total of 163 new surface holes and 1,257
new underground holes at Jerritt. Some of these new drill holes were used in the previous 43-101 report as they were drilled then
but not all of the logging or assaying was complete.



Sampled intervals are intervals with gold grade values greater
than zero. The underground model SSX includes Saval, Steer, and West Mahala.



The raw assay data in the drill holes was used to digitize
the grade shell polygons on cross section. Once finished the assays were flagged by the grade shell polygons and the flag name
stored in the FLAG field in the assay database. This allowed the high-grade assays to be discerned from the low-grade assays outside
of the grade shells. Each deposit has its own naming convention.



Composites were calculated down hole on 5 foot intervals with
the composite starting and stopping at each change in the FLAG name. Therefore there is no mixing of composite grades between
the high-grade and low-grade assays.



Geology and grade shell modeling



At Jerritt Canyon, most gold mineralization occurs as lenticular
bodies with relatively sharp hanging wall and footwall boundaries. These bodies generally follow the Roberts Mountain (DSrm) to
Hanson Creek (Ohc) Formation contact as well as the Hanson Creek 3 (Ohc3) to Hanson Creek 4 (Ohc4) contact. The Hanson Creek Formation
(Ohc) is the primary host for gold at Jerritt Canyon.



The gold mineralization is controlled by structures crossing
these stratigraphic contacts and the favorable bedded geology at the contacts. In addition, shallow anticline structures allow
the mineralization to be trapped and “pond” at the change in bedded geology. These important formation contacts were
modeled on 100 foot east-west cross sections prior to modeling the mineralized bodies (grade shells).



53







The grade shells were modeled on 50 foot and locally 25 foot
north-south and east-west cross sections based on the geologic contacts and grade continuity. These grade shells were modeled
at a 0.10 opt Au cut off for the underground models and 0.01 opt Au cut off for the surface models using Vulcan software. Where
necessary, the 0.10 opt Au grade shells were also used in the surface models. From the cross section polygons, 3-D grade shell
solids were built. The grade shell polygons are used to flag the drill hole assays and the grade shell solids are used to build
the blocks in the block model.



The Burns Basin model consists of 18 major 0.01 opt Au grade
shells and a few small shells, which generally trend north-south following the SDrm to Ohc contact and the Ohc3 to Ohc4 contact.



The Saval open pit model consists of 23 main 0.01 opt Au grade
shells, which generally trend north-northwest. Internal to the 0.01 opt grade shells are the 0.1 opt grade shells used in the
SSX underground model. The grade shells generally follow the DSrm (Roberts Mountain) to Ohc (Hanson Creek) contact and migrate
through Ohc to the Ohc3-Ohc4 contact.



The Smith model consists of 123 0.1 opt Au grade shells, which
generally trend northwest along three main zones and a fourth smaller zone. An anticline ridge intersects the three zones along
a northeast strike. The northern-most zone plunges shallowly away from the anticline ridge intersection and dips gently to the
north. The center and southern zones only plunge southeast from the anticline ridge and dip shallowly in all directions. The fourth
zone is northwest of the anticline ridge line and between the central and south zones. The fourth zone dips to the north-northwest.
Therefore the grade shells all together define an anticline which trends northeast-southwest which intersects three main northwest
trending mineralized zones which plunge gently away from the anticline ridge.



The Starvation model consists of 13 main 0.01 opt Au grade
shells and 10 main 0.1 opt Au grade shells, which generally trend east-west with a northwest trending structure which contorts
and steepens the grade shells on the northern edge and steepens the dip to near vertical in the east. The grade shells generally
follow the DSrm (Roberts Mountain) to Ohc (Hanson Creek) contact and exist within Ohc to the Ohc3-Ohc4 contact. The grade shells
range in depth from 6,800 to 7,200 feet in elevation.



The SSX model consists of 204 main 0.1 opt Au grade shells,
which generally trend east-west with a northwest trending anticline in the SSX deposit. The grade shells generally follow the
DSrm (Roberts Mountain) to Ohc (Hanson Creek) contact and migrate through Ohc to the Ohc3-Ohc4 contact



The West Mahala model, which is the SE corner of the SSX mode,
l consists of 9 main 0.1 opt Au grade shells, which generally trend east-west following the SDrm to Ohc contact.



All grade shell solids are modeled using all data and are not
altered for depletion due to mining. Depletion is accounted for during the block model process.



Specific gravity and density



The tonnage factor used for all Jerritt Canyon intact rock
is 12.6 cubic feet per ton which is a density of 0.0794 tons per cubic foot. No distinction is currently made for variations in
lithology, while it is recognized that significant differences may occur within various units at each mine.



The factor is based on testing done in 2000 at the University
of Nevada, Reno and Chemex lab on a total of 67 samples. The weighted tonnage factor returned on the samples was 12.616. Since
then 50 samples from Smith Zone 4 (Mahala) and 5 samples from Steer were analyzed by Zonge Engineering and Research of Tucson,
Arizona. The average for Smith Zone 4 was 12.45 cubic feet per ton, which is slightly heavier than the average used for all the
mines and the average for Steer was 13.0 cubic feet per ton, which is slightly lighter.



Additional tests were conducted in 2005 on 22 ore grade samples
and 24 waste samples from Starvation Canyon. The results were 11.8 cubic feet per ton for the ore grade samples and 12.2 for the
waste samples, both of which are heavier than the 12.6 cubic feet per ton average used at the other mines. However, for the December
31, 2012 resource and reserve calculation, Starvation Canyon intact rock was assigned a conservative density of 0.0794 which is
similar to all of the other Jerritt Canyon deposits.



54







The tonnage factor for dump and stockpile material on the surface
is 17.6 cubic feet per ton or a density of 0.0568 tons per cubic foot.



The tonnage factor for cemented rock fill used underground
is 15.4 cubic feet per ton or a density of 0.0649 tons per cubic foot.



Resources at Road Canyon hosted in near-surface colluvial material
used a tonnage factor of 17.5 ft3/ton to better represent swelling and pore space in the unconsolidated material.



Statistics and variography



Univariate and basic statistics were calculated for gold for
each deposit using the 5-foot composite samples within the grade shells. The Saval, Steer-SSX, and West Mahala statistics were
calculated together as they are combined in the same block model named collectively SSX. The composites consist of both surface
and underground drilling.



Grade capping



A cap grade was determined from the grade shell composites
for each deposit. The composites are plotted in Excel in descending order of grade and the cap grade picked from the graph. As
discussed previously, underground models Saval, Steer-SSX, and West Mahala are all in one SSX block model.



Variography



Variograms were generated in the SAGE2001 software from the
5 foot composites within the grade shells for two open pit models, Burns Basin and Saval, and three underground models, Smith,
SSX (Saval, Steer-SSX, West Mahala), and Starvation. These models have production data or otherwise closely spaced data, which
warrants variogram calculation and ordinary kriging estimation.



The variograms were modeled in SAGE using the exponential model
option with a practical range. The variogram model is output from SAGE using the custom LLL-ZYX option. The model data for the
two structures is entered into the Vulcan estimation parameters as the kriging weights for the ordinary kriging estimation of
gold.



Block modeling



New block models were created for each of the two open pit
deposits. Three block models were also created for the underground deposits with the SSX block model encompassing the Saval, Steer-SSX,
and West Mahala underground deposits. All of the block models were created in Vulcan Software for the Company’s most recent
NI 43-101 technical report.



The Burns Basin estimated block model was constructed using
a 10x10x10 foot block size (XYZ) with no sub-blocking. The block model origin (lower left corner) is 382700E, 398700N, 6700EL
and the upper right hand corner is 389200E, 402400N, 8200EL. The X length is 6500 feet, Y length is 3700 feet and the Z length
is 1500 feet. The final model used by engineering was regularized to 20x20x20 foot blocks.



The Saval block model is a subset of the SSX model that is
regularized to a 20x20x20 foot block size (XYZ). The Saval block model origin (lower left corner) is 384300E, 405700N, 6200EL
and the upper right hand corner is 392100E, 411400N, 8400EL. The X length is 7800 feet, Y length is 5700 feet and the Z length
is 2200 feet.



After grade estimation, the open pit block models are re-blocked
(or regularized) so that all of the blocks are the same size, 20x20x20 feet. The re-blocking allows a Lerchs-Grossman to run and
calculate optimized pit shells given certain constraints.



The Smith block model was constructed using a 100x100x100 foot
parent block size (XYZ), and sub-blocking down to 5x5x5 feet at the edges and all blocks within the 0.10 opt grade shells. The
as-built underground solids and pit surfaces were also defined at a 5x5x5 foot resolution. The low grade blocks also have a maximum
size of 5x5x5 feet. The block model origin (lower left corner) is 397100E, 404000N, 6100EL and the upper right hand corner is
408200E, 409800N, 8000EL. The X length is 11100 feet, Y length is 5800 feet and the Z length is 1900 feet.



55









The SSX block model is constructed using a 100x100x100 foot
parent block size (XYZ), and sub-blocking down to 5x5x5 feet at the edges and all blocks within the 0.10 opt grade shells. The
as-built underground solids and pit surfaces were also defined at a 5x5x5 foot resolution. The low grade blocks also have a maximum
size of 5x5x5 feet. The block model origin (lower left corner) is 384300E, 404000N, 6200EL and the upper right hand corner is 397100E,
411400N, 8400EL. The X length is 12800 feet, Y length is 7400 feet and the Z length is 2200 feet.



The Starvation block model was constructed using a 20x20x20
foot parent block size (XYZ), and sub-blocking down to 5x5x5 feet at the edges of the triangulations. All blocks within the 0.10
and 0.01 opt grade shells are 5x5x5 feet. The topographical surface was also defined at a 5x5x5 foot resolution. The block model
origin (lower left corner) is 368000E, 378000N, 6600EL and the upper right hand corner is 370600E, 379400N, 7500EL. The X length
is 2600 feet, Y length is 1400 feet and the Z length is 900 feet.



Triangulations are used to create the block models. The modeled
geologic formation surfaces were used and the names stored in the FM field. The names in the FM field are sdrm, ohc3, ohc4, osc,
oe, air, and dump. Grade shell solid names were stored in the SHELL field as well as “low” for the low-grade blocks
outside of the grade shells. At Smith and SSX, the asbuilt underground solids were used to name blocks “asb” in the
ZONE and MINED fields. The ZONE field is the same as SHELL except that the individual grade shell names for the blocks within the
grade shells are replaced by a single name, “au01” or “au1”.



At Jerritt Canyon, the current topography surface (July 2004
aerial survey) was used to define air blocks. In areas where surface mining has occurred, two topographical surfaces were used
to define air and dump blocks. The dump blocks are any blocks between the deepest pit topography and the current topography, which
would define backfill in the pit or between original topography and current topography where a current dump exists.



Gold grade estimation and block calculations



Three estimation methods were run on the gold grade on all of
the block models at Jerritt Canyon. These estimation methods are ordinary kriging (au_ok), inverse distance cubed (au_id3), and
nearest neighbor (au_nn). The ordinary kriging estimation was used to report resources and reserves.



For the Jerritt Canyon block model estimations, each of the
grade shell solids had individual estimation orientations and the blocks within the grade shells were estimated using these individual
search orientations with multiple passes. Due to the large number of grade shells used in all of the block models, it is deemed
unnecessary to show them all.



Three estimation passes were performed for each of the models.
The first pass has conservative parameters that classify the estimated blocks as measured with a search distance of 40x40x20 feet.
The second pass uses a larger search, 100x100x50 feet, and requires less samples, which classifies the estimated blocks as indicated.
The third and last pass uses either 300x300x150 or 500x500x250 feet and is the least restrictive and classifies the blocks as inferred.
The extent of the last pass ensures that all of the blocks within the grade shells are estimated.



During the estimations, only the composites flagged as inside
the grade shells (0.1 opt or 0.01 opt Au) were used to estimate the blocks inside the grade shells.



A parent block size of 10x10x10 feet was used for estimation.
This means that the estimation is done at the center of a 10x10x10 foot block grid and the result assigned to all blocks within
the parent block. If the sub-block size is 5x5x5 feet, then 8 blocks would be assigned the same estimated grade.



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



56







A different number of composites (samples) were used for each
estimation pass for each block model. The minimum number of samples for the measured pass is 8, for the indicated pass is 5, and
for the inferred pass is 2. The maximum number of samples is 12 for all three passes.



In addition, a maximum number of composites per drill hole are
used during the estimations. All models use a maximum of 3 samples per drill hole.



After the estimations are run, block calculations are run with
scripts to assign or calculate values to additional fields in the block models. Text names are assigned to the ZONE, CLASSNAME,
and MINED variables in the block models. A density of 0.0794 tons per cubic foot is applied to all intact rock blocks for all models.
The density for dumps is 0.0568 tons per cubic foot and 0.0649 tons per cubic foot for all rock within the underground workings.



Mined depletion and sterilization



The block models which have underground workings within their
limits are Smith, SSX, and Saval open pit. These mined out areas have been depleted by renaming the blocks “asb”, which
is short for asbuilt. During the block model construction, the underground drift and stope triangulations are defined by 5x5x5
foot block resolution and flagged “asb” in the SHELL, ZONE, and MINED variables. These blocks are not estimated and
therefore have no grade. The “asb” blocks are assumed to be backfilled and therefore have a density of 0.0649 tons
per cubic foot.



In addition to underground workings, some models have open pit
mines within their boundaries. Open pits exist at Burns Basin, Saval, and Smith. Most of these pits are backfilled to some degree
and ensuring that an accurate deepest mined pit bottom is used in the block model is important. In areas where the ground surface
has been disturbed, three topography surfaces are created. These are:



| | 1. | Original Topography
| | -- | -------------------

| | 2. | Current Topography
| | -- | ------------------

| | 3. | Deepest Topography
| | -- | ------------------



If these three topographical surfaces are accurate, then the
air, dump, and intact rock can be confidently modeled. In some areas, new drilling is necessary to accurately model the contact
between dump and intact rock as survey maps of the disturbed surface do not exist.



In the block models the topographic surfaces are defined by
a 5x5x5 foot block resolution. The blocks are named “air”, “dump”, or the correct formation name in the
FM variable. No blocks named “air” or “dump” are estimated and therefore are not included in either the
resource or reserve report. The density for the dump blocks is 0.0568 tons per cubic foot.



The grade shells shown in the section above colored red are
in air, dump, and intact rock. Only the portion of the grade shells that are in intact rock have grade estimated. All air and dump
blocks have a zero grade. The blocks above the original and current topographical surfaces are air. The blocks between current
and deepest and between current and original surfaces are dump.



In addition to depletion by the underground asbuilt workings
and the open pits, some blocks within the grade shells, especially around the underground workings, shouldn’t always be included
in the resource. These blocks have been flagged with the name “steril” in the MINED variable in the Smith and SSX block
models. This means that the blocks are “sterilized” and are not used for reporting even though they exist and have
estimated grades. Blocks are sterilized if they are next to or between underground workings and therefore considered un-mineable
by current methods.



Only the Smith and SSX model require sterilization as the grade
shells are in and around current underground workings, which leaves isolated blocks after depletion that can’t be accessed
and mined by underground methods.



The method used to flag the sterilized blocks was to view the
estimated blocks within the grade shells on 10 foot bench (plan) sections and draw polygons around the blocks that would not be
included in the resource or reserve. The blocks inside the polygons were then flagged as “steril”.



57







Sterilization of mineralization around the underground workings
is an ongoing process. Many areas look mineable when viewed on the screen in the computer but need verification of actual extraction
from direct inspection in the mine. Once a decision is made underground in the mine, then the model can be accurately updated.



Mineral resource classification



All blocks that have an estimated gold grade are subsequently
classified based on the confidence in the estimation. The confidence is based on the number of composites used in the estimation,
the distance to these composites, and the number of drill holes for the selected composites. The Jerritt Canyon mineral resource
was classified into Measured, Indicated and Inferred categories using logic consistent with the CIM (2005) definitions referred
to in Canadian National Instrument 43-101 and described in the glossary. The highest confidence is called Measured (CLASSNAME =
“meas” or CLASS = 1), the next is Indicated (CLASSNAME = “ind” or CLASS = 2), and the lowest confidence
is “Inferred” (CLASSNAME = “inf” or CLASS = 3).



Based on the drill hole spacing distance at each of the deposits,
distances were chosen which define the classification of the estimated block. At Smith and SSX, underground production drilling
is spaced between 10 and 25 feet apart. The variograms show a sill range just over 50 feet, so a slightly conservative range was
chosen. The measured classification for all models are blocks that were estimated with an ellipse range of 40x40x20 feet with a
minimum of 8 and a maximum of 12 composites, which requires a minimum of three drill holes using a maximum of three composites
per drill hole.



The indicated classification for all models are blocks that
were estimated with an ellipse range of 100x100x50 feet with a minimum of 5 and a maximum of 12 composites, which requires a minimum
of two drill holes using a maximum of three composites per drill hole.



The inferred classification for all models are blocks that were
estimated with an ellipse range of 300x300x150 feet or 500x500x250 feet with a minimum of 2 and a maximum of 12 composites, which
requires a minimum of one drill hole using a maximum of three composites per drill hole. The large increase in range is to ensure
that all of the blocks within the grade shells that were not estimated with the measured or indicated estimations get estimated
and are called inferred.



Block model validation



The drill hole composites were displayed with cross section
views of the block models to visually inspect the local estimations of the gold grade by comparing the composite grades to the
block grades. Those areas inspected for each block model, especially where high-grade composites exist, looked appropriate and
correlated well given the search distance and number of samples used. The modeling method itself ensured that mineralization and
the estimate were constrained within the 0.10 opt and/or 0.01 opt Au grade shells created in Vulcan.



The block models at Jerritt Canyon have been created with standard
modeling practices and can be considered reasonable predictors of resources within the modeled areas.



Drill hole composite statistics were compared to the block statistics
for each block model. All of the estimated blocks at a zero cut off and all classes, measured, indicated, and inferred were used
to calculate the average block grade. All composites flagged as inside the grade shells with a grade greater than zero were used
to calculate the average composite grade.



Results from this comparison on this global scale were acceptable.
In addition, ongoing reconciliation studies conducted in 2012 that compare actual mined grade and tonnage against the mined grade
and tonnage predicted in the block model for the Smith mine compare very well.



Mineral resource statement



The Jerritt Canyon mineral resources, including reserves, as
of December 31, 2012 are listed below.



58







Jerritt Canyon mineral resources including reserves –
December 31, 2012



|                           |  | Measured |       |  | Indicated |  |       | Measured + Indicated |  |  | Inferred | 
|-------------------------- |  | -------- | ----- |  | --------- |  | ----- | -------------------- |  |  | -------- | 
|Area                       |  | kt       |       |  | opt       |  |       | koz                  |  |  | kt       | 
|Open
    Pit               |  |          |       |  |           |  |       |                      |  |  |          | 
|Burns Basin                |  |          | 46    |  |           |  | 0.106 |                      |  |  | 4.9      | 
|Mill Creek                 |  |          | 3     |  |           |  | 0.089 |                      |  |  | 0.3      | 
|Saval                      |  |          | 51    |  |           |  | 0.148 |                      |  |  | 7.6      | 
|Wright Window              |  |          | 5     |  |           |  | 0.174 |                      |  |  | 0.9      | 
|Pie Creek                  |  |          | -     |  |           |  | -     |                      |  |  | -        | 
|Road Canyon                |  |          | -     |  |           |  | -     |                      |  |  | -        | 
|Stockpiles                 |  |          | 37    |  |           |  | 0.124 |                      |  |  | 4.6      | 
|Open
    Pit Resource      |  |          | 144   |  |           |  | 0.128 |                      |  |  | 18.3     | 
|                           |  |          |       |  |           |  |       |                      |  |  |          | 
|Underground                |  |          |       |  |           |  |       |                      |  |  |          | 
|Smith                      |  |          | 2,980 |  |           |  | 0.200 |                      |  |  | 597.3    | 
|SSX Including  West Mahala |  |          | 1,205 |  |           |  | 0.201 |                      |  |  | 242.6    | 
|Saval                      |  |          | 17    |  |           |  | 0.276 |                      |  |  | 4.6      | 
|Murray                     |  |          | 142   |  |           |  | 0.163 |                      |  |  | 23.1     | 
|Starvation                 |  |          | 24    |  |           |  | 0.238 |                      |  |  | 5.8      | 
|Winters Creek              |  |          | -     |  |           |  | -     |                      |  |  | -        | 
|Underground
    Resource   |  |          | 4,367 |  |           |  | 0.200 |                      |  |  | 873.4    | 
|Resource Total             |  |          | 4,511 |  |           |  | 0.198 |                      |  |  | 891.7    | 

| | (1) | Mineral resources that are not mineral reserves do not have demonstrated economic viability;
| | --- | --------------------------------------------------------------------------------------------

| | (2) | Open pit mineral resources are contained within Lerch Grossman pit shells constructed at $1,620/oz. gold price and meet the
minimum cutoff grade;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Open pit mineral resources include 5% mining losses and 5% dilution;
| | --- | --------------------------------------------------------------------

| | (4) | Underground mineral resources constrained to 0.10 opt grade shells and occur outside existing asbuilt workings and sterilized
areas, and are deemed by the Qualified Person to be potentially economic; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Underground mineral resources include 5% mining losses and 5-10% dilution.
| | --- | --------------------------------------------------------------------------



Underground mineral resources



The Jerritt underground mineral resources where tabulated using
two methodologies.



SSX-Steer and Smith



Underground resources at SSX-Steer and Smith were calculated
by determining which blocks within the 0.10 opt gold grade shells are potentially economic by Karl Swanson, SME; Consulting Mining
Engineer.



Blocks within the current asbuilt underground workings are named
“asb” in the variable named MINED in the block model and blocks within the sterilization solids are named “steril”.
These blocks were assigned a 0.001 opt gold grade. All other blocks have the name “intact” in the MINED variable.



The resource is determined from the “intact” blocks.
Blocks within the design solids and within the 0.10 opt gold grade shells and which are named “intact” are renamed
“des” in the MINED variable in the block model. Blocks within grade shells that are large enough to pay for their mining
and milling and that are named “intact” are renamed “reso” in MINED variable. In addition, any groups of
blocks around the current underground workings that are within the grade shells, are named “intact” and that are determined
to be potentially economic are renamed “reso” in the MINED variable.



Only blocks with a gold grade greater than 0.10 opt and named
“des” or “reso” in the MINED variable are included in the Smith and SSX resource. A mining recovery factor
of 5% and dilution factor of 5% was applied to these two underground resources.



Starvation, Murray, Saval, and Winters Creek



Underground mineral resources at Saval, Murray, Starvation,
and Winters Creek were calculated by Mark Odell, Practical Mining LLC. Resources at these mines are contained within designed mine
excavations that meet the respective cut off grades calculated at $1,620 per ounce. All of the resource designs can be developed
from nearby existing or planned excavations. A mining loss factor of 5% and a dilution factor of 10% have been applied to the resource.
These factors are reasonable for the type and scale of underground mining practiced at the Jerritt Canyon Mines.



59







Open pit mineral resources



Open pit resources were estimated by creating a Lerch Grossman
optimized $1,620/ ounce pit shell using measured, indicated and inferred blocks, all other blocks are considered waste. The resultant
pit only mines those ore blocks which will provide a positive value when including the cost of mining all the overlying waste blocks.
The resource only includes the measured, indicated and inferred blocks that are inside the $1,620 pit shell and exceed the minimum
cutoff grades. The reported open pit resources also include 5% mining dilution and 5% mining losses. These factors are reasonable
for the scale and scope of the resource pits.



Other resource constraints



Dewatering will be required to recover portions of the Murray,
Smith Mine, SSX and West Mahala resources. Veris plans to construct dewatering wells, treatment and disposal facilities to handle
all dewatering water that cannot be consumed in the process plant.



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



Mineral Reserve estimate



Mineral reserves were estimated by Practical Mining LLC under
the direction of Mark Odell (P.E.), Consulting Mine Engineer.



Jerritt Canyon Mineral Reserves
– December 31, 2012



|                          |  | Proven |       |  | Probable |  |       | Proven + Probable | 
|------------------------- |  | ------ | ----- |  | -------- |  | ----- | ----------------- | 
|Area                      |  | kt     |       |  | opt      |  |       | koz               | 
|Open Pit                  |  |        |       |  |          |  |       |                   | 
|Burns Basin               |  |        | 32    |  |          |  | 0.100 |                   | 
|Mill Creek                |  |        | 3     |  |          |  | 0.089 |                   | 
|Saval                     |  |        | 51    |  |          |  | 0.155 |                   | 
|Wright Window             |  |        | 5     |  |          |  | 0.174 |                   | 
|Stockpiles                |  |        | 37    |  |          |  | 0.124 |                   | 
|Open Pit Reserve          |  |        | 128   |  |          |  | 0.131 |                   | 
|                          |  |        |       |  |          |  |       |                   | 
|Underground               |  |        |       |  |          |  |       |                   | 
|Smith                     |  |        | 1,750 |  |          |  | 0.162 |                   | 
|SSX Including West Mahala |  |        | 566   |  |          |  | 0.172 |                   | 
|Saval                     |  |        | 18    |  |          |  | 0.239 |                   | 
|Murray                    |  |        | 142   |  |          |  | 0.163 |                   | 
|Starvation                |  |        | 24    |  |          |  | 0.238 |                   | 
|Underground Reserve       |  |        | 2,499 |  |          |  | 0.166 |                   | 
|Reserve Total             |  |        | 2,628 |  |          |  | 0.164 |                   | 



Underground mine reserves



Underground mining accounts for over 90% of the Jerritt Canyon
Reserves at year end 2012. The reserves are distributed among 5 underground mines located throughout the district. These are, listed
in decreasing order of reserves, the Smith Mine, SSX complex which includes the SSX, Steer and West Mahala reserves, Murray, Starvation
and Saval. The Smith and SSX mines are currently operating. Starvation was under development in late 2012 with mine production
that started in early April 2013. The Murray Mine operated from 1994 to 2006 while Saval is a planned new mine.



Mine designs for each mine have been created using Vulcan software.
Each mine design consists of a collection of individual excavations, each designed in accordance with the parameters outlined in
section 16. The excavations are oriented along preferred mining directions in each stoping area and arranged to extract as much
of the measured and indicated resource that meets the minimum breakeven cutoff grade requirements discussed in section 21.3 while
minimizing the amount of diluting material included.



60







The stope average grade must exceed the minimum breakeven cutoff
grade after the application of 5% mining losses and 10% dilution to be considered for inclusion in mineral reserves. If an excavation
is required to access a stope or other development drift and after the application of mining recovery and dilution factors the
average grade of the excavation exceeds the incremental cutoff grade, it will be considered for inclusion in mineral reserves.
Only the measured and indicated resources within the mine design excavations are used for the calculation of proven and probable
reserves.



The cut off grades for underground reserves were determined
using a gold price of $1,490 per ounce and the mining, haulage, processing and administrative costs listed in the Technical Report.
Process recoveries are grade dependent and vary between 75% and 90%.



Included in the updated reserve are 234 koz located below the
local water table. These include: the eastern portion of the SSX Mine including West Mahala; mine below the 6,600 ft. elevation;
the reserves at Murray below the 6,100 ft. elevation; Smith Mine Zones 2, 3 and 4 reserves below the 6,600 ft. elevation; and the
Smith East Zone 9 reserves below the 6,300 ft. elevation. The company plans to dewater these reserves by drilling wells from the
surface into targeted ground water compartments. This water will either be used in the process or treated and discharged to a rapid
infiltration basin. Engineering of the dewatering system is ongoing and the permitting process will be initiated in 2013. The Reserves
Life of Mine Plan includes capital spending and schedule allowances for the dewatering operations.



Open pit mine reserves



Open pit reserves are contained in four different mining areas.
These are, in decreasing order of reserves, Burns Basin, Mill Creek, Saval and Wright Window. Open pit reserves were estimated
by creating a Lerch Grossman optimized $1,490 per ounce pit shell using only measured and indicated blocks. The resultant pit only
mines those measured and indicated blocks which will provide a positive value when including the cost of mining all the overlying
waste blocks.



Using the optimized pit shell as a guide, a final engineered
pit was designed with haulage ramps and catch berms. If, after the application of mining recovery and dilution factors, the final
pit has positive economic value, then the measured and indicated blocks contained inside the pit design that are greater than the
cut offs grades can be considered proven and probable reserves.



The open pits included in the reserve estimation are of limited
size and scope. Three of the four are also located in areas previously mined by open pits and none of them will require dewatering.
The combination of these factors should allow timely receipt regulatory approvals.



Mining methods



Recent operating results, including production costs, of the
Jerritt Canyon Mines are presented in this section. In addition, geotechnical parameters, mining methods, ore control, stockpile
resources and reserve reconciliation are presented in this section.



Mining operations



Access to the Smith and SSX-Steer underground mines is through
portals, with internal ramps maintained at grades of 12% to 15%. The mines generally follow a drift-and-fill method, operated by
trackless equipment. Electric drill jumbos are used in preparation for blasting, and front loaders excavate the broken material
into diesel-driven underground mine trucks for hauling to a pad area outside the portals. Mined material is segregated near the
portals by placing the rock into several windrows; these are sampled and assays from the laboratory then dictate whether that material
is high-grade, low-grade, or waste. The waste is excavated and placed in a waste dump, whereas the high-grade and low-grade ore
types may or may not be blended depending on analytical results, and taken either to the process facility or stockpiled in a nearby
location for possible future processing, respectively. Because of the distances from the mine portals to the processing plant,
50 - 150-ton off-road haulers are used for surface ore transport.



61







Typical mine openings measure 15 x 15 to 20 x 25 feet in cross
section. All mine openings are primarily supported with bolts and mesh. Shotcrete may also be applied to supplement the bolts and
mesh in heavily jointed rock masses or in those areas where raveling has occurred. Ore is generally developed by drifting adjacent
to the zone and then cross-cutting through the deposit at specified intervals. Secondary openings are developed either alongside
a backfilled stope or underneath a previously-filled excavation. In the latter situation, cost savings are accomplished since the
cemented fill does not require artificial support. Extraction of ore-grade material is near 100%, and mining dilution for the most
part is confined to the end stopes.



Each mine has its own operational batch plant located outside
the mine portal. The backfill is a mixture of screened mine waste rock and cement. These products are blended according to the
backfill mix design, water is added, and the mixture placed into the underground haulage trucks for transport back into the mine.



Mining production



Jerritt Canyon is an operating property with over 20 years of
production experience, during which approximately 7.97 million ounces of gold have been produced up to year-end 2012. The Jerritt
Canyon Mine complex currently consists of two operating underground mines (Smith and SSX) located several miles southwest of the
processing plant and administration facilities which are 50 miles north of Elko, Nevada. Mining operations resumed at the SSX-Steer
complex during the third quarter of 2011. The Murray underground mine was closed in 2006 and the MCE underground mine was closed
in 2004.



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



All mines feed the same processing plant, with output from the
underground operations and other sources (e.g. remote and mill Jerritt stockpiles) totaling 0.98 million tons in 2012, 0.37 million
tons during 2011, and 0.41 million tons in 2010. The producing properties at Jerritt Canyon excluding third party purchased ores
(e.g. Newmont), and their annual production rates for years 2010 and 2012, are given in the table below and represent ore materials
processed through the mill on a dry ton basis.



Jerritt Canyon 2010-2012 production

|Property      |  | Annual Production (dry tons) |        
|------------- |  | ---------------------------- | -------
|Year          |  | 2010                         |        
|SSX Complex   |  |                              | 0      
|Smith         |  |                              | 176,409
|Stockpiles(4) |  |                              | 233,731
|Total         |  |                              | 410,140

| | (1) | Tonnages based on internal mine records;
| | --- | ----------------------------------------

| | (2) | Dry tonnage processed through the mill; based on 5% moisture content of wet ton delivery published by Veris in the March 31,
2011 MD&A (2011);
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Remote stockpile tonnage processed through the mill based on internal mine records;
| | --- | -----------------------------------------------------------------------------------

| | (4) | Stockpile data only includes those from Jerritt Canyon (mill and remote combined) and excludes Newmont and other third party
purchased ores.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------



As of October 18, 2012, the processing plant re-attained the
maximum permitted processing capacity, treating approximately 6,000 tons/day (125 tph for each roaster). The previous historical
processing capacity rate of 4,320 tpd (90tph for each roaster) was limited due to permitting constraints by the State of Nevada
imposed as part of the Consent Decree and was attainable in the past when the feed was derived mainly from open pit operations,
but was a significant surplus when accepting material from only the underground mines simply because the total mine output alone
could not attain this daily rate.



In mid-2007 Veris amended an agreement with Newmont USA Limited
to purchase material delivered to Jerritt Canyon by Newmont that continued into 2008, 2010, and 2011 which supplemented mined ores
feeding the roasters and thereby reduced certain unit operating costs. There was no Newmont-Veris agreement in place in 2012 so
no Newmont ores were processed through the mill that year. Discussions are currently in progress with Newmont regarding a possible
ore and/or stockpile purchase contract.



62







2012 underground mine production from Smith Mine and SSX-Steer
Complex totaled 687,028 tons (405,904 tons from Smith by contract miner Small Mine Development, LLC (SMD) and 281,124 tons from
SSX-Steer by Veris Gold USA, Inc. & SMD). From August 1, 2012 to Year-End 2012, total average underground mine production from
Smith Mine was 1,261 tons per day and 1,162 tons per day from SSX. A total of 291,234 tons of remote stockpile ore material was
mined in 2012. Also in November 2012, development commenced at the new Starvation Canyon underground mine by SMD. The Starvation
Canyon mine was officially opened on April 8, 2013 and is being operated by SMD. Total production from the Jerritt Canyon processing
plant was 105,626 oz Au from 978,262 tons of processed ore at an average metallurgical recovery of 82.7%. The plant operated for
approximately 247 total days in 2012.



The plant processed a total of 628,418 tons in 2011 and operated
for 339 total days to achieve an average processing rate of 1,853 tons/day for the year. Gold produced in 2011 from all sources
was 76,585 ounces (recovered) from 628,418 tons of processed ore and purchased material at a metallurgical recovery that averaged
85.8%. The Smith underground mine reported production of 269,795 tons of ore containing 46,971 ounces of Au. The daily average
ore production rate from the Smith Mine in the fourth quarter of 2011 was approximately 1,169 tons. Underground mining at the SSX-Steer
mine Complex started in early October of 2011 and averaged approximately 150 tons of ore per day in the fourth quarter of 2011.
A total of 95,351 tons of Jerritt stockpile material containing 7,182 oz of Au was processed through the mill in 2011.



The plant processed a total of 599,555 dry tons in 2010 and
operated for 322 total days to achieve an average processing rate of 1,862 tons/day for the year. Gold produced in 2010 from all
sources was 65,104 ounces (recovered) from 599,555 tons of processed ore and purchased material at a metallurgical recovery that
averaged 88.2%. For 2010, the Smith underground mine reported production of 176,409 dry tons of ore containing 29,278 ounces of
Au (Yukon-Nevada Gold Corp, 2011), along with 186,650 waste tons. The daily ore production rate from the Smith Mine in the third
quarter of 2010 reached the target of 1,000 ore tons. A total of 233,731 tons of Jerritt stockpile material containing 14,122 oz
of Au was processed through the mill in 2010.



The plant processed a total of 338,350 tons in 2008 and only
operated for 159 days that year due to the significant amount of down time. The plant therefore processed an average of 2,128 tons/day
in 2008. Plant capacity is limited to some extent by the “fuel content” of the ore (principally contained pyrite) which
tends to enhance temperatures in the roaster and so must be regulated carefully when this type of rock serves as feedstock. Blending
of various mined products is practiced constantly to reduce deleterious impacts from rock types with high fuel content, high arsenic
content, and so forth. Also the capacity was somewhat limited because of air permit requirements at that time. Gold produced in
2008 from all sources was 44,732 ounces from 338,350 tons of processed ore and purchased material at a metallurgical recovery that
averaged 87.3%.



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



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



No significant Newmont ores were purchased or processed in 2012.
Newmont ores were purchased and processed by Veris in 2011, 2010 and 2008. In 2011, VUSA processed 254,221 dry tons containing
33,968 ounces. A total of 86,257 wet tons of ore containing 16,905 ounces of Au were purchased from Newmont (all in Quarter 4 in
2010) and delivered to the mill in 2010 (Yukon-Nevada Gold Corp, 2011). During 2008 and 2010, VUSA processed 113,732 and 189,415
dry tons, respectively, of Newmont material. The Newmont stockpile ores processed in 2010 included material delivered to the mine
prior to 2010. The amount of Newmont ores processed in 2009 is unknown due to poor record keeping by the contract mill operator.



63







Underground mining methods



Underground Mining at Jerritt Canyon consists of two primary
mining methods: long-hole open stoping with delayed backfill and modified drift and fill. The preferred sequence for long-hole
stopes is to mine from the bottom up and for drift and fill to mine underhand or from the top down. These methods have been employed
successfully at Jerritt Canyon since 1993.



The stope development drifts for long-hole open stoping and
for drift and fill are typically from 15 to 20 feet high and 15 to 25 feet in width depending on the ground conditions and geometry
of the ore. The excavations are created using conventional drill, blast, muck and support techniques. All aspects of the mining
cycle are fully mechanized to provide the highest safety standards and productivity levels.



Split set rock bolts and welded wire mesh provide the primary
means of ground support. These can be supplemented with resin anchor rebar bolts, cable bolts and/or shotcrete when conditions
require additional support.



The development drifts for long-hole stopes are spaced with
a minimum back to sill separation of 25 feet vertically. This vertical separation can be increased to as much as 100 feet if the
geometry of the deposit will allow. Once the top and bottom stope development drift is completed the intervening ore will be drilled
with a mechanized production drill using 2 3⁄4 inch to 4 in diameter blast holes. The blast holes will be loaded with either
ANFO or emulsion explosives and fired in groups of three or four rows progressing from the hanging wall to footwall of the stope.
Following each blast the broken ore is removed from the stope by means of a remotely operated load haul dump unit. Remote operation
allows the operator to stay at a safe location under bolted ground at all times.



Once the stope has been extracted it is backfilled to the level
of the top access drift sill. The backfill material used is a cemented rock fill which contains from 4% to 8% cement and will have
unconfined compression strengths of 400 to 600 pounds per square inch (psi). The backfill will reach its required strength within
three to seven days at which time development of the adjacent stope may begin. If there are no further adjacent stopes to be extracted
the stope can be backfilled with unconsolidated waste or left open. If there is another stope immediately above the backfilled
stope then the top access drift of the prior stope will serve as the bottom access for the next otherwise it will be backfilled
in preparation to mine the adjacent stope.



If the vertical thickness of the ore is not great enough to
allow long-hole stoping then drift and fill methods are employed. In this method a top access drift will be driven at the upper
extent of the ore. Any ore remaining below the access drift is removed by means of breasting up the sill or of the access drift.
During breasting the footwall can be ramped at up to a -25% gradient to allow LHD access. The height of the breast can reach up
to 40 feet. Upon completion of the stope it will be backfilled similar to a long-hole stope.



Any underground mining dilution occurs at the fringes of the
ore pods or lenses. Within the pods, slices or drifts are extracted and then backfilled with cemented waste material. When the
backfill has consolidated, the ore between the primary stopes or drifts is then extracted. In the primary cuts, the interior stope
boundaries are surrounded by ore, so little dilution results. Within the secondary cuts, the walls and/or back are cemented backfill,
which has less jointing than the ore or enclosing rocks, and thus little dilution takes place. It is primarily on the fringes of
the individual ore bodies that dilution occurs, with the amount also being dependent upon the mining method. Historically dilution
at Jerritt Canyon has averaged 10% or less for all mines and mining methods. All dilution material is applied at zero ounces per
ton. All of the underground reserves have also been adjusted to include a mining recovery factor of 95%.



Mine development



Access drifts to the stoping areas are excavated in a manner
similar to stope development drifts. Access drift dimensions are 15 feet wide by 15 feet high to accommodate 30 ton haul trucks
and provide a large enough cross sectional area for ventilation. The gradient of access drifts can vary form -15% to +15%. Access
drifts are also equipped with compressed air piping, 4160 volt electrical distribution systems, mine water supply piping, water
discharge piping and communication systems.



Capital development rates will be as much as 9,800 feet per
year at SSX and 8,900 feet per year at Smith in order to achieve the planned ore production levels.



64







Underground geotechnical considerations



The Hanson Creek host rock at Jerritt Canyon has a fair to poor
classification with RMR values typically in the 30 – 40 range. These conditions are managed by limiting the span or hydraulic
radius of open excavations through the use of cemented backfill. And by applying the ground support materials mentioned above.
On occasion geologic structures are encountered with adverse orientations to the mine workings. These are controlled with the application
of the additional ground support materials. Under the most severe conditions the drift will be advanced following the installation
of spiling or steel sets.



A geotechnical evaluation program was completed at Starvation
Canyon by Golder Associates in 2012 (Golder Associates, 2012). Twelve diamond drill holes were completed using triple tube equipment.
The core was logged for geotechnical parameters at the rig and then transported to the core logging facility for additional characterization.
At the core shed the core was photographed, reconciled with tele-viewer images to collect structural orientation data, point load
tested, and samples were collected for laboratory testing.



The geotechnical program concluded that 75% of the rock mass
at Starvation Canyon will have a RMR rating of 61 or higher and 15% has an RMR rating between 41 and 60. The recommended ground
support for Starvation Canyon is similar to that used at the other mines in the district and consists of bolts and mesh supplemented
by shotcrete when necessary. A kinematic analysis of stope orientations revealed a low potential for wedge failures in the planned
excavations.



Ventilation



Underground Mining at Jerritt Canyon relies heavily on diesel
equipment to extract the ores. This requires large amounts of fresh ventilation air to remove the diesel exhaust and maintain a
healthy environment. A combination of the main access drifts and vertical raises are arranged in a manner to provide a complete
ventilation circuit. The mine portals can be either intake or exhaust.



Dewatering



A portion of the reserves and resources located in the Smith
and SSX/West Mahala areas are located below the local ground water table and will require dewatering. Dewatering will be accomplished
by means of high capacity production wells drilled from the surface and targeted into specific compartmentalized ground water horizons.
Each well can have a capacity of up to 500 gallons per minute. Discharge from the wells will be used to provide the 700 gallons
per minute of process makeup water required, following the closure of TSF 1, or will be treated and disposed of in a rapid infiltration
basin. Water treatment will be required to maintain allowed levels of arsenic, antimony and total dissolved solids.



Dewatering will also be required at the Murray Mine. During
its operation the Murray mine was dewatered through a series of small underground wells drilled to target specific water bearing
structures. This water did not require treatment and was pumped to 3 injection wells located below the Alchem pit for disposal.
The system remains in place and will be rehabilitated with the reopening of the Murray Mine.



The Life of Mine Reserves Plan contains $36M in capital for
the design and construction of the dewatering facilities. Production from the areas requiring dewatering is not scheduled to begin
until mid-2015. Engineering of these facilities is underway and permitting will commence in late 2013 and is not expected to delay
mining.



Open pit mining methods



Open pit methods will be used to extract some of the reserves
at Jerritt Canyon. Three of these areas, Burns Basin, Mill Creek and Saval were mined previously by open pit methods. The fourth
area, Wright Window, has not been the site of any previous mining activity. Open pit mining will provide between 100,000 and 350,000
tons of ore per year beginning in 2014. Stripping ratios will vary from a low of 2:1 at Wright Window to a high of 23:1 at Burns.



The open pits will be conventional drill, blast, load and haul
operations utilizing 10 to 15 cubic yard loaders and 100 – 150 ton haul trucks. The pits will be worked in 20 foot benches
with the ore and waste delineated using blast hole assays. It is anticipated that all open pit mining will be performed by a qualified
contractor. Operating and capital costs in the Life of Mine Plan have been adjusted accordingly.



65







Previous open pit mining allowed for a 55 – 65 degree
bench face angle and a 45 degree inter-ramp slope angle. These operations resulted in stable pit slopes that remain intact over
10 years following the cessation of mining activity in these areas. Similar allowances have been made in the planned reserve pits.



Mining recovery and dilution factors of 95% and 5%, respectively,
have been applied to all open pit reserves. The diluting material is assumed to be waste with no recoverable gold values. These
factors are within acceptable industry limits.



Waste Rock will be disposed of in waste rock storage facilities
adjacent to the pits, or will be backfilled into previously mined pits. The limited size and scope of the open pits and proximity
to previous mining activity does not present any permitting or environmental issues that could delay or prevent exploitation of
open pit reserves and resources.



Ore control and sampling procedures (underground)



Muck from each round is hauled from the portal and piled in
discreet windrows at the muck laydown area of each mine. Miners label each pile with a lath including heading, date, and shift.
Three samples are collected per round. An ore control technician will walk around the entire pile taking representative scoop samples
to fill three 5 pound sample bags. Flagging is tied to the lath to indicate the pile has been sampled. Bags are hand labeled with
unique sample identification numbers and transported to the Jerritt Canyon assay lab.



Assay results are issued 24 to 72 hours later. The Geologist
or Engineer marks the piles ore or waste by painting the lath orange for ore or blue for waste. Once a pile has been marked ore
or waste, it is hauled to its corresponding destination.



Jerritt Canyon Stockpiles



Stockpile materials are mined with 100- or 150-ton haul trucks
and a front-end loader. Muck material to be mined has previously been assayed for grade control and is typically flagged in the
field as ore or waste. Stockpile ore is delivered to the ROM whereas waste is delivered to a local waste dump.



The various stockpiles at Jerritt Canyon are categorized based
on their spatial distance to the mill. The Remote Stockpile consists of numerous individual stockpiles that reside proximal to
their original mined source. These stockpiles are located at varied distances distal to the mill. Prior to Year-End 2009 these
stockpiles were inventoried by physical survey then subsequently reconciled to the Year-End 2007 (NI 43-101) stockpile resource
(discussion of the reconciliation process can be found in the Jerritt Canyon January 6, 2012 Amended NI 43-101 report). This reconciliation
formed the basis for the reported Year-End 2010 reserves/resources.



The Mill Stockpile (a.k.a. ROM) consists of numerous individual
stockpiles located proximal to the primary crusher facility at the mill. Ores derived from various sources (including the remote
stockpiles) are delivered to the ROM prior to processing through the mill. All ROM deliveries are segregated by source.



ROM stockpiles are inventoried on a monthly basis via physical
survey conducted by the mine Engineering Department. This inventory provides the baseline for the monthly mine/mill reconciliation
and subsequent reserve/resource depletions.



The table below summarizes the change to inventory for the Jerritt
Canyon stockpiles as of the Year-End 2012. A trenching and sampling program undertaken in 2012 resulted in a grade reduction below
cutoff grade in three of the remote stockpile areas and their subsequent removal from reserves at the end of 2012.



Jerritt Canyon stockpile reserve summary



|          |  | Year-End
    2011 |     |  | Year-End
    2012 |  |       | Net
    Depletions | 
|--------- |  | ----------------- | --- |  | ----------------- |  | ----- | ------------------ | 
|Stockpile |  | ktons             |     |  | Grade
    (opt)   |  |       | koz                | 
|          |  |                   |     |  |                   |  |       |                    | 
|Remote    |  |                   | 623 |  |                   |  | 0.065 |                    | 
|Mill      |  |                   | 180 |  |                   |  | 0.094 |                    | 
|TOTAL     |  |                   | 803 |  |                   |  | 0.072 |                    | 



66







Jerritt Canyon Ore Stockpile assayed sample results were reviewed
and verified by Qualified Person, Michele White, based on review of data for assay checking and chain of custody including:



| | · | Raw assay reports from Jerritt lab
| | - | ----------------------------------

| | · | Certified assay results from outside laboratory
| | - | -----------------------------------------------

| | · | Compilations of sample assays in spreadsheet
format from staff: Paul Noland (Chief Geologist, 2009), William Hofer (Chief Geologist, 2010- current), and John Vipham (Staff
Surveyor).
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The datasets provided were reviewed for chain of custody from
2009 analysis performed by Paul Noland to current 2012 analysis by William Hofer, including additions and editing by John Vipham.
The sample results were reviewed for accuracy by comparing assay reports with subsequent eras of compilation spreadsheets between
2009 and December 2011. Some of the initial stockpile samples from 2009 were sent to ALS Chemex lab. Otherwise, all of the samples
were and continue to be assayed on-site at the Jerritt lab.



In 2010, a regular sampling program had been initiated for remote
stockpiles from which an estimate of the potential for inclusion in site resources is referenced. Of the total assay population
used in the stockpile compilations, 22% were matched to corresponding records in previous compilations and traced to original assay
certificates. This is an acceptable representative population of stockpile assay results.



There is excellent correlation between lab results and corresponding
compilation spreadsheets (100%). The chain of custody between sequential copies of stockpile assay assessment is also 100% accurate.
Based on excellent correlation between subsequent compilations and assay-checks the Jerritt Canyon Ore Stockpile compilations are
considered accurate by the primary author of the Company’s most recent technical report.



Recovery methods



Recent operating results, including production costs, of the
Jerritt Canyon Mines and processing facilities are presented in this section. In addition, details of the process flow sheet are
shown and described.



Processing facilities, operating parameters, and process
flow sheet



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



| | · | Primary crushing;
| | - | -----------------

| | · | Secondary crushing;
| | - | -------------------

| | · | Fine ore drying;
| | - | ----------------

| | · | Tertiary crushing;
| | - | ------------------

| | · | Dry grinding;
| | - | -------------

| | · | Roasting;
| | - | ---------

| | · | Carbon-in-leach (“CIL”) with cyanidation and carbon adsorption;
| | - | ---------------------------------------------------------------

| | · | Carbon stripping;
| | - | -----------------

| | · | Carbon reactivation;
| | - | --------------------

| | · | Electro-winning,
| | - | ----------------

| | · | Merrill-Crowe process using zinc cementation of gold and silver;
| | - | ----------------------------------------------------------------

| | · | Precipitate refining;
| | - | ---------------------

| | · | Oxygen plant;
| | - | -------------

| | · | Water evaporation pond; and
| | - | ---------------------------



| | · | Tailing impoundment.
| | - | --------------------



67







Operating parameters for the Jerritt Canyon processing plant



|Operating Parameter            |  | Units           |  | Value |          
|------------------------------ |  | --------------- |  | ----- | ---------
|Processing Capacity Rate       |  | tons/Year       |  |       | 1,500,000
|Processing Capacity Rate       |  | tons/Day        |  |       | 4,320    
|Planned Plant Availability     |  |                 |  |       | 95       
|NDEP Permitted Processing Rate |  | tons/day        |  |       | 6,000    
|Ore Grade                      |  | oz Au/ton       |  |       | 0.175    
|Gold Recovery                  |  | %               |  |       | 89.1     
|Operating Cost                 |  | $/ton Processed |  | $     | 39.44    



As part of the Consent Decree Agreement noted above, stack tests
are being conducted on a periodic basis to make sure that VUSA adheres to the emissions thresholds listed in the Consent Decree
or agreed to with the NDEP.



The Smith and SSX-Steer underground mines are currently the
primary local mine sources feeding the mill with approximately 1,483 (including high grade and low grade ores) and 975 ore tons
per day, respectively, in March 2013. Targeted 2013 ore production from Smith and SSX-Steer is 1,250 tons per day from each. An
additional 600 ore tons per day will be provided from the new Starvation Canyon Mine by the end of June 2013. The Jerritt Canyon
ore stockpiles will continue to be another mill feed source at the site for the first half of 2013. A total of 21,869 tons of remote
stockpile material was mined in March 2013.



Development at the Saval 4 mine will commence in Quarter 3 2013
at a targeted rate of 400 ore tons per day. The LoM plan in the Company’s technical report is targeting mill through put
of 4,110 tpd. Current production through the mill as of the end of March 2013 is approximately 252,758 tons.



The mill was shut down to complete a winterization and refurbishment
program from January 6, 2012 to February 2, 2012. During the shutdown period the following items were addressed:



| | · | constructing
                                         a new drying facility;
| | - | ----------------------------------------------------------------------------

| | · | reconfiguring
                                         the conveying system in fine crushing;
| | - | ---------------------------------------------------------------------------------------------

| | · | old
                                         dryer was replaced with a new ore dryer closer to the front end of the circuit which
                                         includes its own mercury scrubbing system;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | installation
                                         of a new Distributed Control System (“DCS”) for the entire plant;
| | - | -----------------------------------------------------------------------------------------------------------------------

| | · | installation
                                         of a new quench tank for the East Roaster which is one of the final requirements for
                                         compliance with the Consent Decree;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | realignment
                                         of the crushing conveyors;
| | - | -------------------------------------------------------------------------------

| | · | rebuild
                                         of the thickener rakes;
| | - | ------------------------------------------------------------------------

| | · | rebuild
                                         of the OSEPA particle-sizing system;
| | - | -------------------------------------------------------------------------------------

| | · | replacement
                                         of the pinion on the ball mill;
| | - | ------------------------------------------------------------------------------------

| | · | replacement
                                         of the feed-end of the ball mill;
| | - | --------------------------------------------------------------------------------------

| | · | replacement
                                         of portions of the dust-control ventilation system;
| | - | --------------------------------------------------------------------------------------------------------

| | · | replacement
                                         of air-slides feeding the roasters;
| | - | ----------------------------------------------------------------------------------------

| | · | clean-out
                                         of the roasters and some refractory repair;
| | - | ----------------------------------------------------------------------------------------------

| | · | replacement
                                         and repair of the fine ore bin conveyor and belt;
| | - | ------------------------------------------------------------------------------------------------------

| | · | rebuild
                                         of the CIL carbon screens;
| | - | ---------------------------------------------------------------------------

| | · | replacement
                                         of the retort and furnace in the refinery;
| | - | -----------------------------------------------------------------------------------------------

| | · | the
                                         Merrill-Crowe precipitation circuit was replaced with an electrowinning circuit; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------

| | · | replacement
                                         of some key components in the oxygen plant.
| | - | ------------------------------------------------------------------------------------------------



The new ore dryer has been placed before the screens and chutes
of the secondary cone crusher. The old ore dryer has been eliminated from the processing facility and used to be located after
the secondary and tertiary crusher, which allowed wet ore to freeze and result in handling problems. These ore handling problems
have now been eliminated with the new ore dryer configuration and are expected to help maintain more consistent ore production
throughout the year and through the winter months.



68







Commissioning of the new ore dryer, fine-crushing conveying,
and the DCS commenced on January 23, 2012. The remaining portions of the winterization and refurbishment program were commissioned
on February 1, 2012. The mercury scrubbing system associated with the roasting circuit was commissioned in November 2009.



In early March 2012, additional issues with the new ore dryer
and bucket elevator were identified. Flights and lifters in the dryer were detaching from the shell and caused downtime from plugging
the discharge chute. The bucket elevator experienced problems with buckets detaching and chain pins breaking which caused the bucket
elevator to jam and shut down. The chain was replaced in early April and the feed rate was reduced to less than 200 tph for crushing.
The bucket elevator was replaced with two standard belt conveyors in mid-June and the work was completed on July 11, 2012. During
this time, a mobile crusher was installed as a backup to bypass the bucket elevator if more problems were encountered with the
bucket elevator before it was replaced. In addition a new dust-extraction ducting was installed in fine crushing. The crushing
circuit is now operating at steady state throughput levels well over 300 tons per hour allowing for consistent operation of the
roasting and CIL circuits at over 4,000 tons per day.



The wet milling facilities are currently not in use or permitted
but include two lines with each containing one 800 HP SAG Mill and a 700 HP Ball Mill with a capacity of approximately 1,450 tons/day.
The existing wet mill therefore contains a maximum feed capacity for approximately 3,000 t/d. The Jerritt Geology and Mining groups
are targeting ores from previously mined open pits and/or new on-site open pit resources within the Jerritt Canyon property that
will be considered for feeding the existing wet milling process facilities. In addition, these wet mill facilities could also be
utilized for helping process third-party ores originating from off site.



Recoverability



Gold recovery in 2008 to 2012 is shown below and was recorded
by month. For 2012 the gold recovery averaged 82.7% of contained metal delivered to the process plant.



Jerritt Canyon 2008-2012 gold recovery by month





|             |  | Gold Recovery
|------------ |  | -------------
|Month – Year |  | 2008         
|January      |  | 83.3         
|February     |  | 85.8         
|March        |  | n/a          
|April        |  | 75.2         
|May          |  | 83.7         
|June         |  | 87.6         
|July         |  | 87.9         
|August       |  | 86.8         
|September    |  | n/a          
|October      |  | n/a          
|November     |  | n/a          
|December     |  | n/a          
|Average      |  | 87.3         



Note: The average gold recovery values for 2009 and 2011 are
arithmetic whereas the 2008, 2010, and 2012 averages are weighted averages



The average gold recovery for 2012 and 2011 was 82.7 percent
and 85.8 percent, respectively, which is lower than previous years. Plant recoveries were lower than planned due to a coarser grind
of ore feeding the roasters. This was a result of limiting the recirculating load in tertiary crushing to reduce the ore feeding
through to the recently replaced bucket elevator to minimize the risk of failure. It is believed that the lower 2011 gold recoveries
were related to equipment issues in the CIL circuit, which reduced leaching retention time and thus gold recovery. Future gold
recovery for 2013 is forecast at 86% based on the equipment upgrades made in the early 2012 mill shutdown. The gold recovery for
2010 and 2007 was the same at 88.2%. The lower gold recoveries attained in 2008 and 2009 are likely a result of the significant
down time for the mill and not being able to maintain steady state production. The authors of the Company’s most recent technical
report consider these figures acceptable, given the deposit characteristics and the method of extraction.



69







Historic processing plant production and cost data



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



In March 2006, an agreement was reached between Veris (formerly
Queenstake) and Newmont USA Limited (Newmont) whereby a minimum of 500,000 tons of ore per year from Newmont operations would be
purchased by Veris and processed through the Jerritt Canyon processing plant. This agreement was in effect for two years (2006
and 2007) with an option for three additional years (2008-2010). New agreements were made with Newmont on October 25, 2010 that
called for the delivery of 2,000 ore tons/day until December 31, 2010. A subsequent agreement with Newmont signed in April 2011,
allowed deliveries of Newmont ore, with no specified quantities, to continue to December 31, 2011.



Jerritt Canyon historic process production and cost data



|Operating Data         |  | Units        |  | Actual
    2008 |        |     | Actual
    2009 |  |          | Actual
    2010 |  |  | Actual
    2011                                     |     |  | Actual
    2012 |       
|---------------------- |  | ------------ |  | --------------- | ------ | --- | --------------- |  | -------- | --------------- |  |  | --------------------------------------------------- | --- |  | --------------- | ------
|Production Data        |  |              |  |                 |        |     |                 |  |          |                 |  |  |                                                     |     |  |                 |       
|Tons Processed:        |  |              |  |                 |        |     |                 |  |          |                 |  |  |                                                     |     |  |                 |       
|Annual (1)             |  | 000’s ktons  |  |                 | 338    |     |                 |  | UNK      |                 |  |  | 600                                                 |     |  |                 | 628   
|Daily Average          |  | tons         |  |                 | 2,128  | (1) |                 |  | UNK      |                 |  |  | 1,862                                               | (1) |  |                 | 1,853 
|Ore Grade              |  | oz Au/ton    |  |                 | 0.160  |     |                 |  | UNK      |                 |  |  | 0.123                                               |     |  |                 | 0.142 
|Recovery               |  | %            |  |                 | 87.3   |     |                 |  | 86.3     |                 |  |  | 88.2                                                |     |  |                 | 85.8  
|Gold Production (2)    |  | 000’s oz     |  |                 | 45     |     |                 |  | 10       |                 |  |  | 65                                                  |     |  |                 | 77    
|Cost Data              |  |              |  |                 |        |     |                 |  |          |                 |  |  |                                                     |     |  |                 |       
|Annual Total Cost (3)  |  | $000’s       |  |                 | 17,508 |     |                 |  | 10,437   |                 |  |  | 22,150                                              |     |  |                 | 40,505
|Unit Processing Costs: |  |              |  |                 |        |     |                 |  |          |                 |  |  |                                                     |     |  |                 |       
|Ore                    |  | $/ton Milled |  |                 | 51.75  |     |                 |  | UNK      |                 |  |  | 36.94                                               | (4) |  |                 | 64.46 
|Gold                   |  | $/oz Au      |  |                 | 391.68 |     |                 |  | 1,068.30 | (6)             |  |  | 340.23
                                         (4) |     |  |                 | 528.89

| | (1) | Includes actual tonnage (dry) for purchased ores in 2008 and 2010; the plant only operated for 159 days in 2008;
| | --- | ----------------------------------------------------------------------------------------------------------------

| | (2) | Includes purchased ores for actual 2007, 2008, 2010, and 2011;
| | --- | --------------------------------------------------------------

| | (3) | Annual total cost excludes Newmont inventory cost;
| | --- | --------------------------------------------------

| | (4) | Processing cost for 2010 is high due to the “loss” of approximately 2,700 oz Au in the process circuit and some
large NDEP charges;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------

| | (5) | Delays in implementing the new mine plan for 2011 resulted in reduced mill throughput for 2011 and therefore increased unit
processing costs;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | The unit processing cost is high due to poor record keeping of tons processed through the mill by the contract mill operator,
because of low Au production for the year, and because the plant only operated for 139 days in 2009;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | The mill was down for 118 days in 2012 for various reasons including a winterization shutdown from January 6 to February 2,
2012.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------



Since open pit mine production is being proposed at Burns Basin
and Saval and other sites that contain lower gold grades than current underground ore head grades, the open pit mine models for
the technical report have used a historic Au recovery equation for roast ores (Type II ore) that was previously used in historic
Jerritt open pit ore reserve estimates (Birak and Cole; 1990). The linear Au recovery equation is listed below:



| | · | Au
                                         recovery = 0.9042x +0.75169 with a cutoff grade of 0.053 opt Au.
| | - | ------------------------------------------------------------------------------------------------------------



This equation calculates a 90 percent recovery at 0.164 opt
Au head grade. In addition, this recovery equation was calculated using the tons and grade reported at the fine crushing plant.



The authors of the technical report considered the projected
production and cost estimates achievable, especially with the continued increasing underground ore production from the SSX-Steer
mine complex, and the recent startup of production from the Starvation Canyon underground mine in early April 2013.



70







Project infrastructure



Jerritt Canyon has been in production for many years and has
well established infrastructure including: office buildings, warehouse facilities, maintenance shops, laboratory facilities, communication
networks, and onsite security. The mineral processing facilities have been described in the previous section.



Road access



The main access road is approximately 7 miles long and is a
22-foot wide paved road between Nevada highway 225 and the mill site. A 100-foot wide haul road provides access between the major
ore-producing mines and the mill site. This road network is approximately 17 miles long.



Water sources



Water for the mill site comes from two sources: deep underground
water wells and a connected series of seepage recovery wells and pumps. All pumping wells are permitted through the Nevada Division
of Water Resources water rights. Three potable water systems exist on the property and are permitted as public water supplies.



Power



Power to the mine site is supplied by NV Energy through a 125kV,
3-phase transmission line. Monthly power consumption over the period from January to March 2011 has varied from 7.3 to 8.2 MWh.



Sewage and waste disposal



Domestic wastewater (sewage) at the mill site is treated in
a packaged wastewater treatment plant. Treatment includes primary settling, air-enhanced digestion, and chlorine disinfection.
Treated effluent is disposed of in the tailings storage facility where it infiltrates to the ground. Each of the underground mines
has an individual sewage disposal system consisting of a collection system, septic tank, and leach field.



Ore stockpiles



There are a number of ore stockpiles present at the mine site
that are included as resources and reserves. The remote stockpiles are located distal to the mill facilities and are spread throughout
the property mostly in the area of the North Generator, Alchem, and Marlboro Canyon open pits and the SSX-Steer mine area. There
are also several ore stockpiles located in the Run of Mine area adjacent to the mill.



Tailings facilities



The existing tailings storage facility (TSF-1) was initially
designed by Sergent Hauskins & Beckwith (SHB) and was commissioned in 1981. Knight Piesold designed the five subsequent raises,
including the final raise (Phase VII) that was constructed in 1998. The primary retention structure of the TSF-1, the East Embankment,
is a zoned earthen dam with an upstream low-permeability barrier zone, interior chimney drain, and mass random fill shell. Subsequent
raise construction incorporated extension of the barrier and drainage zones. The TSF-1 is currently operated as a managed sub-aerial
deposition system. VG has been transferring excess supernatant water to the Evaporation Pond and has been actively evaporating
this solution, which is expected to continue for the foreseeable future. At current production rates it is anticipated that the
TSF-1 will be filled to its maximum operational capacity by August 2013. The company’s goal is to enter the TSF-1 for closure
and reclamation at the point of maximum capacity.



A new Tailings Storage Facility (TSF-2) has been constructed
and Phase 1 was completed in early December 2012. As-built plan and reports were submitted to the State agencies and approval to
operate was granted in January 2013. The Phase 1 construction included a 73 acre tailings storage facility (TSF-2) and a 62 acre
water storage reservoir (WSR) that has an East Basin (WSR-E) and a West Basin (WSR-W).



71







TSF-2 is a double-lined facility. An 80 mil AGRU single-sided
micro-spike high density polyethylene (HDPE) primary liner was installed over a 60 mil AGRU HDPE drain liner. This phase will provide
4.5 million tons of storage space for tailings deposited at 85 pounds per cubic foot. This is 3 years of storage at an average
production rate of 4,100 tons per day.



WSR is also a double-lined facility. An 80 mil AGRU single-sided
micro-spike HDPE primary liner was installed over a 60 mil AGRU HDPE drain liner. The WSR was split into two separate basins by
a lined earthen embankment. WSR-E has an operating capacity of 216 million gallons. WSR-W has an operating capacity of 186 million
gallons. The combined storage is 402 million gallons. The earthen embankment area provides the necessary area and containment to
operate 20 evaporators. As the TSF-1 is closed down, the existing evaporators located there will be utilized for the WSR embankment
area. Both basins were approved for operation by the State in August 2012.



Originally budgeted at $39 million, Phase 1 of the project was
completed for about $30 million in an 18 month period. Phase 2 of the project provides an additional 3 years of storage capacity
in TSF-2 by raising the embankment height.



Market studies and contracts



Market studies



Gold markets are mature, global markets with reputable smelters
and refiners located throughout the world. Gold prices appreciated from 2002 until 2011 and have subsequently declined to lower
levels, although still high compared to historical prices. Gold prices achieved highs of over $1,800 per ounce in 2011 but declined
to average over $1,400 per ounce in 2013 and ended 2013 at $1,204 per ounce.



Contracts



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



Additional contracts with SMD for mining at Starvation Canyon
and SSX have been negotiated by the company during 2012.



The company has entered into two gold loan agreements with Duetsche
Bank (the first in August 2011 for 173,880 oz and the second in February 2012 for 27,950 oz) to secure the capital funding necessary
for the Construction of Tailings Storage Facility 2, replacing the ore dryer, purchasing mining equipment and other capital projects.
The terms of these agreements have been incorporated into the financial model used for the evaluation of reserves. As of May 2014,
approximately 105,230 oz remained to be delivered over the next 1.8 years.



The company has entered into and is seeking additional toll
milling agreements with other mines to process their ores through the Jerritt Canyon Roaster. These ores will be processed using
the excess capacity of the Jerritt Roaster and will not interfere with the processing of Jerritt Canyon ores. The costs and cash
flows presented in the Technical Report exclude any benefit which may be derived from processing third party ores.



These contracts are considered by the primary author of the
Technical Report to be within industry norms. The Company is focused on restructuring the existing debt facilities through a combination
of decreasing monthly commitments under the Senior Secured Gold Forward Facility, and by pursuing options to refinance with extended
terms, thereby lowering monthly interest charges and increasing cash flow.



Environmental studies, permitting, and social or community
impact



Veris has financed the Jerritt Canyon Operations’ reclamation
and closure costs by funding a commutation account within a reclamation insurance policy with Chartis Insurance (Chartis). This
reclamation insurance policy, and additional cash placed by VUSA in a money market account also with Chartis, collateralizes the
surety Chartis provides to government agencies for closure and reclamation. As of early December, 2012, the surety provided to
government agencies was US $81,590,537, including the closure and reclamation of the TSF-2, WSR, expanded mining activities, and
additional costs mandated by the State for closure of TSF-1.



72







The Mine Reclamation Plan and Reclamation Cost Estimate dated
June 2010 and revised in October 2012 was submitted to the Bureau of Mining Regulation and Reclamation (BMRR) Branch. The required
surety to government agencies for reclamation of the private land facilities was $70,015,433. Veris estimates the net present value
of its closure and reclamation obligations for the Jerritt Canyon Operations at the end of the mine life to be US $36,407,843.



Permitting activities with the State of Nevada to advance the
Starvation Canyon project to an underground mine project have been completed. The Nevada Department of Transportation has been
notified of the project ore hauling requirements on state highways.



Environmental management systems are in place and qualified
environmental staff on site. Various mitigation programs are in effect as required under the several plans of operations that have
been filed and approved for the project. No unusual costs associated with any of these programs were identified.



The surety costs for the agency bond for publically-owned lands
are calculated under the U.S. Forest Service bonding guidelines and the surety costs for privately-owned lands are calculated under
the requirements of the State of Nevada; this figure includes agency oversight and administration and is described above. The reclamation
insurance policy with the Chartis and the additional cash in a money market account with Chartis, provides the collateral for the
surety that has been accepted by the regulatory agencies to serve both to fund the physical reclamation and post-closure site management,
and meet agency requirements for bonding.



Closure and reclamation will consist of the following actions:



| | · | Open
                                         pits will be reclaimed by partially backfilling the pits with mine waste rock produced
                                         in the underground mining operations. Level areas in the pit bottom will be covered with
                                         fine-grained waste rock or growth medium and re-vegetated. Most open pits exist in a
                                         near-reclaimed state.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Portals
                                         for the underground mines will be sealed by blasting, backfilling or bulk-heading. Raises
                                         extending to the surface will be backfilled. Regional groundwater levels are below the
                                         elevation of the mine portals or raises, therefore seepage from the mines is not expected.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Waste
                                         rock disposal area will be left in a condition meeting slope stability requirements.
                                         Portions of the older rock disposal areas will be left with angle of repose side slopes
                                         that are covered with durable non-acid generating rock. Other rock disposal areas will
                                         have final slopes of 2.5H to 1V. Tops of the rock disposal areas will be graded to route
                                         surface water runoff off of the flat surfaces and away from rock disposal area slopes.
                                         Level surfaces of the rock disposal areas and the 2.5H to 1V side slopes will be covered
                                         with growth media and re-vegetated.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Haul
                                         roads and access roads not included in the USFS Travel Management Plan will be re-graded
                                         to conform to the original ground contours and re-vegetated. Haul roads that may be left
                                         partially reclaimed and permanently open will likely require some level of reclamation
                                         to reduce overall road width.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Sediment
                                         control structures will be reclaimed by breaching ponds and basins after sediment and
                                         erosion control issues are controlled through reclamation of the areas draining to the
                                         structures.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | TSF-1
                                         will be closed with the construction of a working platform of rock from the spent heap
                                         leach and from the DASH East RDA. The working platform will provide the location of forced
                                         evaporation of the free surface water and groundwater seepage from TSF-1. The working
                                         surface will have a synthetic liner installed with 2 feet of growth medium applied over
                                         the liner. Operation of the seepage recovery system will need to continue for a period
                                         of time after TSF-1 is closed and seepage ceases. Spent heap leach materials from a leach
                                         pad adjacent to the tailings impoundment will be excavated and placed as fill for grading
                                         TSF-1.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Solution
                                         ponds associated with the heap leach pad and the processing plant will be reclaimed by
                                         removing solution from the pond, and disposal of all contained sludge in the tailings
                                         impoundment. Pond liners will be folded into the ponds and backfilled. Growth medium
                                         will be placed over the backfilled ponds and re-vegetated.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Buildings
                                         and structures will be dismantled to the level of foundations and either salvaged or
                                         disposed of in an approved landfill. Process piping will be rinsed and neutralized. Disposition
                                         of underground piping is not specifically addressed; however SRK would assume it will
                                         be necessary to remove all piping.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



73







As the mine life progresses and certain components move to closure,
the overall detail of the closure plan may require refinement.



Environmental issues



Jerritt Canyon has been in operation since 1981. The mine is
located primarily on private land controlled by Veris, and public land mostly administered by the United States Forest Service
(USFS) and some administered by the Bureau of Land Management (BLM). The project consists of several surface mines; two operating
and three non-operating underground mining areas (Murray, MCE, and West Generator); eighteen rock disposal areas (RDAs); related
haul roads, maintenance facilities, ancillary structures; and a gold processing circuit, including mill facilities, heap leaching
facilities (inactive), tailings facilities, and support facilities.



Major operating permits for the project are in place. Mining
and milling are currently operating under a Consent Decree agreement (2009) between VUSA (Formerly Queenstake) and the State of
Nevada. Environmental management systems are in place and are managed by an experienced and qualified environmental staff onsite.



Environmental liabilities at the Jerritt Canyon property include:



| | · | High
                                         sulfate and total dissolved solids in seepage from waste rock from four RDAs; and
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | Site
                                         closure and restoration including management of seepage from the tailings impoundment.
| | - | ------------------------------------------------------------------------------------------------------------------------------------



On July 20, 2009, Queenstake installed a calomel-based scrubber
system on the roasters to reduce mercury emissions and to comply with the NDEP and State guidelines. The technology responsible
for the calomel-based scrubber system is patent-pending and owned by a senior executive of Veris. Stack tests over the past three
years have proven the efficiency of the newly installed emissions control system and meets the requirements in the Consent Decree
and/or agreements with the NDEP.



Construction of a new tailings storage facility (TSF-2) and
ancillary water storage reservoir (WSR) began in 2011. Construction of the WSR was largely completed in 2012 as was construction
of TSF2, with some follow-up corrections to liner systems being required for 2013. Beginning in the second or third quarter of
2013, the TSF-2 will transition as a replacement repository for mill tailings. The existing Tailings Storage Facility (TSF-1) will
cease receiving mill tailings no later than January 2014 and will then enter closure and reclamation.



Veris has financed the Jerritt Canyon Operations’ reclamation
and closure costs by an insurance policy with Chartis Insurance (Chartis). The capacity of this insurance policy, and additional
cash placed by Veris in a money market account also with Chartis, collateralizes the surety Chartis provides to government agencies
for closure and reclamation. As of early December 31, 2012, the surety provided to government agencies was US $72,016,224, including
the closure and reclamation of the TSF-2, WSR, expanded mining activities, and additional costs mandated by the State for closure
of TSF-1. The Company was obligated to fund an additional $5,969,313 of surety by June 30, 2013. Approximately 40% of the bond
costs are related to control and remediation of the seepage from TSF-1. The Mine Reclamation Plan and Reclamation Cost Estimate
dated June 2010 and later revised in September 2010 was submitted to the Bureau of Mining Regulation and Reclamation (BMRR) Branch.
The bonds costs and the surety placed under this plan are updated annually. The required surety to government agencies for reclamation
of the private land facilities was $65,867,666. Queenstake estimates the net present value of to its closure and reclamation obligations
for the Jerritt Canyon Operations at the end of the mine life to be US $33,849,619.



Environmental liabilities



Environmental liabilities at the mine include:



| | · | High
                                         sulfate and Total Dissolved Solids (TDS) in surface water seepage from four (RDAs); and
| | - | -------------------------------------------------------------------------------------------------------------------------------------



| | · | Site
                                         closure and restoration including management of underground seepage from the tailings
                                         impoundment.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



74







Waste rock seepage



Since being selected in the 1981 Environmental Impact Statement
(EIS), RDA design criteria have resulted in structuring the RDAs to avoid erosion by draining storm water runoff and snowmelt toward
the interior of the RDA. These design criteria have resulted in four RDAs that exhibit seepage from the toe of the RDA slope: the
Marlboro Canyon, Gracie, Snow Canyon, and DASH East RDAs. The quality of the seepage water does not meet the applicable State water
standards. Jerritt Canyon staff has worked with the Nevada Division of Environmental Protection – Bureau of Mining Regulation
and Reclamation (NDEP/BMRR) to develop mitigation actions and monitoring plans for these seepages since the late 1990s.



In 1999, the operations tested a biological treatment method
for the RDA seepage in a surface sedimentation pond that did not yield sufficient results. In 2003, the operations constructed
a test passive treatment works (a biological sulfate reduction trench) for the Marlboro Canyon RDA seepage under the State water
pollution control permit. Monitoring of the water from those treatment works has continued since that time. The water from the
treatment works has not met applicable water quality standards since late 2004 and the treatment method had not been considered
successful. During 2012, the Company evaluated the Marlboro Canyon treatment method and the treatment works. The evaluation showed
that the passive biological treatment method was successfully treating the seepage but that the capacity of the treatment works
was not sufficient to meet the applicable standards.



During 2012, the Company began testing remedial actions to:
1) diminish the capture and infiltration of precipitation by the RDAs that exhibit seepage and, 2) to diminish RDA seepage to the
extent practicable. During 2012, mitigation to diminish seepage was completed on the Gracie RDA; was 90% completed on the Snow
Canyon East RDA; and had begun on the Marlboro Canyon RDA. The Company anticipates completing the mitigation on the Snow Canyon
East RDA and the Marlboro Canyon RDA during 2013. Monitoring of these seepages will continue to evaluate the success of the mitigation.
Permitting requirements for the mitigation to diminish seepage on the DASH East RDA were under review at the end of 2012 and will
be scheduled accordingly. The Company anticipates remedial actions that successfully diminish seepage may be incorporated into
future designs for RDAs. If the efforts to diminish the flow rates are not sufficient to meet the applicable water quality standards
in the RDA seepages, then treatment may become required. During 2012, the Company expanded its efforts to test and evaluate treatment
methods.



The Company will continue to test during 2014 the effect of
adding a supplement to the inflow to the Marlboro Canyon treatment works in order to improve treatment using the existing treatment
works capacity. In 2011 and 2012, a pilot treatment plant was constructed to test on a pilot scale an active chemical treatment
method for the DASH East RDA seepage. During 2012, and based on the evaluation of the Marlboro Canyon test trench treatment method,
the Company submitted plans to the State for pilot treatment works to test biological treatment methods for the DASH East RDA seepage.



Tailings impoundment seepage control



The first phase of the existing tailings storage facility (TSF-1)
was designed in 1979-1980, incorporates an earthen embankment and compacted soil liner, and does not include a synthetic liner
as would be typically required today. The first phase of construction was completed in October of 1981. Seepage was first observed
in March of 1982 and efforts to control and manage the seepage have continued since that time. The Company expects to initiate
the full use of the new Tailings Storage Facility (TSF-2) and ancillary Water Storage Reservoir (WSR) during the second quarter
of 2013. The TSF-2 will transition as a replacement repository for TSF-1. It is anticipated that TSF-1 will cease receiving mill
tailings no later than January 1, 2014. TSF-1 will then enter closure and reclamation.



Air emissions control technology



In response to requirements under the October 13, 2009 Consent
Decree, the Company designed, installed and tested new control technology for mercury emissions for the roasters. The performance
tests have proven to be successful, and the technology was installed in all applicable stationary sources of mercury emissions
in 2012. New mercury controls for the Refinery were installed in 2012 that do not incorporate the new calomel-based technology
as other technology was more appropriate for that unit. Stack tests are being done on a routine basis and monitored by a third
party contractor. The new calomel-based controls are performing well and continue surpassing the control limits defined in the
Consent Decree and/or agreements with the NDEP. The technology responsible for the calomel-based scrubber system is patent pending
and owned by a senior VG executive.



75







Reclamation bond cost



Approved reclamation and closure plans are in place, and the
mine is concurrently reclaiming disturbance when possible. Approximately 25% of the mining disturbances have already been reclaimed
and await release of the re-vegetation requirement. Mine staff and the USFS/NDEP update the reclamation bond on an annual basis.



Veris has financed the Jerritt Canyon reclamation and closure
costs by funding a commutation account within an insurance policy with Chartis Insurance (Chartis). This insurance policy, and
additional cash placed by Queenstake in a money market account also with Chartis, together collateralizes the surety Chartis provides
to government agencies for closure and reclamation. As of early December 2013, the surety provided to government agencies was US$77,985,537,
including the closure and reclamation of the TSF-2, WSR, expanded mining activities, and additional costs mandated by the State
for closure of TSF-1. During 2013 the Company funded the remaining 2012 increase of $5,969,313 by June 30, 2013. Approximately
45% of the bond costs are related to control and remedy of the seepage from TSF-1. The Mine Reclamation Plan and Reclamation Cost
Estimate dated July 2013, were submitted to the USFS and to the Nevada Bureau of Mining Regulation and Reclamation (BMRR) Branch.
The required surety to government agencies for reclamation of the private land facilities was $65,867,666. Veris estimates the
net present value of its closure and reclamation obligations for the Jerritt Canyon Operations at the end of the mine life to be
US$51,471,759. Bond increases are a result of more surface disturbance, increased unit costs (labor, equipment, and fuel costs)
and increased remedial restoration actions mandated by government agencies.



Permits



Operating permits for the mine are in place and are presented
below. The mine is currently operating under a Consent Decree agreement (2009) between Queenstake and the State of Nevada. Environmental
management systems are in place and are managed by an experienced and qualified onsite environmental staff. Operating and maintenance
staffs are informed of their responsibilities during annual MSHA refresher classes. In addition to MSHA classes, the mine holds
leadership classes for the supervisory staff. During these classes, supervisors are informed of their environmental responsibilities.



Permitting activities with the State of Nevada are completed
at the Starvation Canyon underground mine project as of the filing date of the technical report and the mine production commenced
in early April 2013. Queenstake has secured the Water Pollution Control Permit for this project and the Reclamation permit, including
the bonding. Groundwater monitoring is in progress. The Nevada Highway Department was notified that Starvation Canyon ore is being
hauled on State Highways to the Jerritt Canyon Processing Facility.



Operating permits





|Permit/Approval                    |  | Granting Agency                                                                     |  | Comments                                                                                                                                                                                                                                                                                                                                             
|---------------------------------- |  | ----------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Plan of Operations                 |  | USFS                                                                                |  | Still active.                                                                                                                                                                                                                                                                                                                                        
|                                   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                      
|Work Plans                         |  | USFS                                                                                |  | Annual work plan submitted to USFS and NDEP                                                                                                                                                                                                                                                                                                          
|                                   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                      
|Clean Water Act Section 404 Permit |  | U.S. Army Corps of Engineers                                                        |  | Expired in 2007.  There are no triggers currently identified requiring an update.                                                                                                                                                                                                                                                                    
|                                   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                      
|EPA ID Number                      |  | U.S. Environmental Protection Agency                                                |  | The Mine, a large-quantity generator, has the typical hazardous wastes found at a mine such as laboratory cupels and crucibles, and cleaners from maintenance operations.  Wastes are accumulated and full drums are shipped once every calendar quarter for disposal.                                                                               
|                                   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                      
|Air Quality Permit                 |  | Nevada Division of Environmental Protection (NDEP)/ Bureau of Air Pollution Control |  | The Mine has a current Title V air permit as of March 31, 2014.    Improved pollution controls for mercury emissions and expanded monitoring and management systems developed under the Consent Decree have been incorporated in the permit.                                                                                                         
|                                   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                      
|Reclamation Permit                 |  | USFS and NDEP/
        Bureau of Mining Regulation and Reclamation (BMRR)           |  | The bond estimate is updated annually with the USFS and the NDEP.  The bonding includes the closure costs for the new tailings storage facility (TSF2), water storage reservoir, expanded mining activities, and additional costs for the closure of the previous TSF.                                                                               
|                                   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                      
|Water Pollution Control Permit     |  | NDEP-BMRR                                                                           |  | One water pollution control permit covers the entire mine area.  The tailings seepage/chloride plume is managed by a recovery system and will be mitigated by closure of the existing TSF; and the high sulfate/total dissolved solids emanating from four rock disposal areas will be diminished by improved reclamation and surface water controls.



76







|Permit/Approval                               |  | Granting Agency                                       |  | Comments                                                                                                                                                                                                         
|--------------------------------------------- |  | ----------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Underground Injection Control                 |  | NDEP/ Bureau of Water Pollution Control               |  | Addresses dewatering from the underground mines.  There is currently no active underground injection.                                                                                                            
|                                              |  |                                                       |  |                                                                                                                                                                                                                  
|Solid Waste Class III Landfill Waiver         |  | NDEP/ Bureau of Solid Waste                           |  | The Mine has three authorized landfills at the lower mill area, Burns Basin, and Alchem.  Employees are instructed during annual MSHA refreshers with regard to what is acceptable to dispose of in the landfill.
|                                              |  |                                                       |  |                                                                                                                                                                                                                  
|General Stormwater Discharge Permit NVR300000 |  | NDEP/Bureau of Water Pollution Control                |  | Annual reports are submitted to NDEP.  No concerns have been noted. A general permit is in place.  No concerns were noted.                                                                                       
|                                              |  |                                                       |  |                                                                                                                                                                                                                  
|Permit to Appropriate Waters                  |  | NV Division of Water Resources                        |  | No concerns were identified.  The Mine has sufficient appropriations to cover processing and dewatering needs.                                                                                                   
|                                              |  |                                                       |  |                                                                                                                                                                                                                  
|Permit to Construct Impoundments/Dam Safety   |  | NV Division of Water Resources                        |  | No concerns identified.                                                                                                                                                                                          
|                                              |  |                                                       |  |                                                                                                                                                                                                                  
|Industrial Artificial Pond Permits            |  | Nevada Department of Wildlife                         |  | No concerns identified.                                                                                                                                                                                          
|                                              |  |                                                       |  |                                                                                                                                                                                                                  
|Liquefied Petroleum Gas License               |  | NV Board of the Regulation of Liquefied Petroleum Gas |  | No concerns identified.                                                                                                                                                                                          
|                                              |  |                                                       |  |                                                                                                                                                                                                                  
|Potable Water System                          |  | Nevada State Health Division                          |  | Potable water systems are located at the Murray, SSX, and at the mill site.  Upgrades are underway in 2012 for the SSX and mill site systems.                                                                    
|                                              |  |                                                       |  |                                                                                                                                                                                                                  
|Septic System Permit                          |  | Nevada State Health Division                          |  | The Mine has general permits for five systems: SSX; Steer; Murray; USA; and Smith.  The mill site has a package plant that discharges to the tailings impoundment.  No concerns identified.                      



Capital and operating costs



Capital costs



Jerritt Canyon is forecasting a capital expenditure of $192
million over the coming six year period for mine-related capital items. Underground mine development is the largest capital requirement
and accounts for $112M of total capital spending. Mining and processing facilities total $39M and include $38M for dewatering wells,
treatment plant and disposal systems. Geology and drilling will require $12.1M. Mining equipment and sustaining capital total $29.2M.
A breakdown by area is given in the table below.



Jerritt Canyon Life of Mine (LoM) capital expenditures ($000’s)

|Area             |  | Equipment |        |  | Facilities |   |        | Mine Development |  |   | Total   | 
|---------------- |  | --------- | ------ |  | ---------- | - | ------ | ---------------- |  | - | ------- | 
|Smith            |  | $         | 0      |  |            | $ | 25,000 |                  |  | $ | 51,697  | 
|SSX Complex      |  | $         | 0      |  |            | $ | 8,000  |                  |  | $ | 29,470  | 
|Saval UG         |  | $         | 4,394  |  |            | $ | 630    |                  |  | $ | 10,095  | 
|Starvation       |  | $         | 7,593  |  |            | $ | 910    |                  |  | $ | 9,270   | 
|Murray           |  | $         | 12,839 |  |            | $ | 4,660  |                  |  | $ | 10,945  | 
|Burns Basin      |  |           |        |  |            |   |        |                  |  | $ | 100     | 
|Mill Creek       |  |           |        |  |            |   |        |                  |  | $ | 200     | 
|Saval OP         |  |           |        |  |            |   |        |                  |  | $ | 100     | 
|Wright Window    |  |           |        |  |            |   |        |                  |  | $ | 200     | 
|Process          |  | $         | 2,020  |  |            |   |        |                  |  |   |         | 
|Administration   |  | $         | 1,010  |  |            |   |        |                  |  |   |         | 
|Geology/Drilling |  |           |        |  |            |   |        |                  |  | $ | 12,120  | 
|TSF              |  |           |        |  |            |   |        |                  |  |   |         | 
|Total            |  | $         | 27,856 |  |            | $ | 39,200 |                  |  | $ | 123,598 | 



Operating costs



Actual operating costs for 2012 were reviewed and form the basis
of the processing and administrative cost projections. Processing costs were categorized as variable if it is a function of process
throughput or fixed if it is independent of process throughput. Additionally some cost accounts will see an improvement in efficiency
with the completion of the plant upgrades and also achieving planned processing rates. As a result of this analysis a linear function
relating throughput to processing cost was developed.



77







Processing Cost US $/Ton= 18.74+ 25,000,000 I tons processed
per annum.



An annual plant processing rate of 1,500,000 tons per year yields
a unit processing cost of $35.41 / ton.



All administrative costs were classified as fixed and totalled
$15,500,000 in 2013. At the planned 1.5M tons/year rate this equates to $10.33/ ore ton.



During 2011 - 2013, off site refining charges averaged $0.40/oz.
of recovered gold.



The company began using its own crews and equipment for underground
mining at SSX late in 2011 and continued buildup to a steady state production level in 2012 and does not have sufficient cost history
to permit the use of actual cost projections. Practical Mining estimated the underground mining costs using local labor rates and
consumable costs and applied these to the cutoff grade calculations and financial modeling. Variations in mining costs between
the different underground mines is the result of varying proportions of stoping, ore development drifting, backfill volumes, expensed
waste drifting and dewatering requirements.



The contract with Small Mine Development for mining at the Smith
Mine was extended in 2012 and 2013.



Open pit mining costs are based on similar operations and include
a premium for employing a contractor to exploit the open pit reserves. The base price for open pit mining is $2.75/ton mined.



Finally ore haulage costs to the process facility were estimated
for each deposit using the total haulage distance and grade profile. The average costs over the life of mine for each area are
shown below.



Jerritt Canyon Life of Mine (LoM) operating costs (US $/Ore
Ton)



|Area          |  | Mining |       |  | Ore Haulage |   |      | Processing |  |   | Site Overhead |  |  | Total |      
|------------- |  | ------ | ----- |  | ----------- | - | ---- | ---------- |  | - | ------------- |  |  | ----- | -----
|Underground   |  |        |       |  |             |   |      |            |  |   |               |  |  |       |      
|Smith         |  | $      | 91.03 |  |             | $ | 1.48 |            |  | $ | 41.93         |  |  | $     | 15.77
|SSX Complex   |  | $      | 86.83 |  |             | $ | 4.13 |            |  | $ | 38.52         |  |  | $     | 13.45
|Saval UG      |  | $      | 91.02 |  |             | $ | 4.62 |            |  | $ | 35.89         |  |  | $     | 11.66
|Starvation    |  | $      | 79.15 |  |             | $ | 8.40 |            |  | $ | 36.38         |  |  | $     | 12.00
|Murray        |  | $      | 74.52 |  |             | $ | 3.52 |            |  | $ | 41.96         |  |  | $     | 15.79
|Open Pit      |  |        |       |  |             |   |      |            |  |   |               |  |  |       |      
|Burns Basin   |  | $      | 66.39 |  |             | $ | 4.13 |            |  | $ | 35.60         |  |  | $     | 11.47
|Mill Creek    |  | $      | 35.04 |  |             | $ | 6.72 |            |  | $ | 36.56         |  |  | $     | 12.12
|Saval OP      |  | $      | 58.84 |  |             | $ | 4.16 |            |  | $ | 36.56         |  |  | $     | 12.12
|Wright Window |  | $      | 8.03  |  |             | $ | 3.48 |            |  | $ | 36.56         |  |  | $     | 12.12
|Stockpiles    |  |        | -     |  |             | $ | 2.85 |            |  | $ | 38.15         |  |  | $     | 13.20
|LOM Average   |  | $      | 80.18 |  |             | $ | 3.59 |            |  | $ | 39.54         |  |  | $     | 14.15



Cutoff grades



In order to determine the portion of the Measured and Indicated
resources that would qualify for Proven and Probable reserve status, it is necessary to configure the Measured and Indicated resources
into mineable shapes for the selected mining method, and then apply economic tests for establishing validity that the reserve blocks
will, indeed, show positive economics.



The economic exercise for this reserve study is normally accomplished
by calculating a breakeven cutoff grade, stated in ounces of gold per ton (oz Au/ton), which equates the total operating costs
at the property with gold recovery from the process plant, and the expected return from gold sales. Total costs include mining,
processing, assessed charges, and site administrative costs. Process recovery is a function of grade and is expected to average
8.9 % over the 6 year reserve life of mine plan. Revenues reflect an average gold price experienced during the previous three years,
after subtraction of refining charges.



78







Incremental cut off grades are sometimes employed where certain
costs have already been expended (sunk costs), and the block now must cover only the remaining down-stream charges. This material
can either be stockpiled for processing later in the mine life or added to the process stream if there is unused capacity. An example
is mineralized material which must be mined in order to gain access to stopes that lie beyond. Now that the drilling, blasting,
loading and underground haulage have been expended, it may be possible that the rock contains sufficient gold to pay for surface
hauling to the process plant or stockpile, and the process costs as well, rather than being carried to a waste dump for disposal.
An incremental cutoff grade calculation at this point will be lower than a breakeven grade, but this material should provide a
positive contribution to the operations cash flow.



The accepted formulas for calculating cutoff grade are given
below:



|Breakeven Cutoff grade   | = | Total Costs of Production                
|------------------------ | - | -----------------------------------------
|                         |   | (Gold Price – Deducts) x Process Recovery
|                         |   |                                          
|Incremental Cutoff grade | = | Remaining Production Costs               
|                         |   | (Gold Price – Deducts) x Process Recovery



Economic analysis



The LoM plan, technical and economic projections in the LoM
model include forward looking statements that are not historical facts and are required in accordance with the reporting requirements
of the Canadian Securities and Exchange. These forward looking statements are estimates and involve risks and uncertainties that
could cause actual results to differ materially. The LoM plan presented includes proven and probable reserves only.



LoM plan and economics



The annual production schedule from each mine used as the basis
for the life of mine plan and economic analysis is presented in the table below. The Smith Mine will need to increase production
from the current rate of 1250 tpd to 1480 tpd for three years beginning in 2015 in order for mining at Smith and SSX to conclude
concurrently.



Life of Mine production schedule



|Mine             |  | 2013 |       |  | 2014 |  |       | 2015 |  |  | 2016  |  |  | 2017 |       |  | 2018 |  |       | Total | 
|---------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  | ---- | ----- |  | ---- |  | ----- | ----- | 
|Smith            |  |      | 434   |  |      |  | 428   |      |  |  | 532   |  |  |      | 569   |  |      |  | 540   |       | 
|SSX Complex      |  |      | 396   |  |      |  | 364   |      |  |  | 343   |  |  |      | 174   |  |      |  | 211   |       | 
|Saval UG         |  |      | 20    |  |      |  | 102   |      |  |  | 58    |  |  |      |       |  |      |  |       |       | 
|Starvation       |  |      | 234   |  |      |  | 313   |      |  |  | 308   |  |  |      | 106   |  |      |  |       |       | 
|Murray           |  |      |       |  |      |  | 13    |      |  |  | 69    |  |  |      | 161   |  |      |  | 210   |       | 
|Burns Basin      |  |      |       |  |      |  | 281   |      |  |  | 178   |  |  |      |       |  |      |  |       |       | 
|Mill Creek       |  |      |       |  |      |  |       |      |  |  |       |  |  |      | 197   |  |      |  |       |       | 
|Saval OP         |  |      |       |  |      |  |       |      |  |  |       |  |  |      | 83    |  |      |  |       |       | 
|Wright Window    |  |      |       |  |      |  |       |      |  |  |       |  |  |      | 114   |  |      |  |       |       | 
|Stockpile        |  |      | 204   |  |      |  |       |      |  |  |       |  |  |      |       |  |      |  |       |       | 
|Total            |  |      | 1,288 |  |      |  | 1,500 |      |  |  | 1,453 |  |  |      | 1,403 |  |      |  | 961   |       | 
|Gold Grade (opt) |  |      | 0.155 |  |      |  | 0.150 |      |  |  | 0.162 |  |  |      | 0.141 |  |      |  | 0.183 |       | 



The Jerritt Canyon Mine has a positive cash flow in all years
except 2013 and 2014 which have significant underground development costs. Other statistics indicate robust economics at the reserve
gold price of $1,490 per ounce. The average gold sales price net of the gold loans is $1,356 per ounce.



The gold loans entered into in 2011 and 2012 with Deutsche Bank
require repayments to follow a specified schedule. When the gold is delivered, Veris Gold will receive the market price less $850
per ounce. The reduction in revenues is reflected as an adjustment to revenue when the gold is delivered to Deutsche Bank. In the
financial evaluation the market price is assumed to be the three year trailing average gold price of $1,490 per ounce.



79







Veris has previous year tax losses to apply against future federal
tax liabilities. These losses will be exhausted by year end 2016. Federal taxes are calculated at the 35% US corporate tax rate.
The 5% Nevada Net Proceeds tax is included in G&A costs. Payroll, employment taxes and sales taxes are included with labour
and supplies costs.



Project sensitivity



The sensitivity of NPV and IRR to variations in gold prices,
capital and operating costs is shown below. An 8% decrease in gold prices will result in a NPV of zero. However the project is
less sensitive to variations in operating or capital costs.



Adjacent properties



The Big Springs District is located approximately 10 miles north
of the Jerritt Canyon property in the northernmost portion of the Independence Mountains, Elko County, Nevada and contains several
small NI 43-101 inferred resources (Big Springs, Dorsey Creek, and Mac Ridge) reportedly totalling 1.2 million ounces using a 0.025
opt Au cu-toff (Peatfield and Rozelle, 2006). These resources are currently owned by MRG Copper LLC which is a US subsidiary of
Big Springs Project Pty Ltd. and which is concurrently being acquired by Anova Metals Limited. The Golden Dome and Jack Creek exploration
properties are also located near the Big Springs District.



The Big Springs District was previously operated by former owners
and operators at Jerritt Canyon and reportedly produced 386,000 ounces of Au from 1987 to 1993 from seven separate open pit deposits
that had an average grade of 0.12 opt Au (Adams, 1996). A heap leach facility was constructed in 1987 and the first gold pour occurred
in September 1987 (Adams, 1996). A 1000 – tpd mill and fluid bed roaster became operational in May of 1989 (Adams, 1996).
The deposits are structurally controlled and occur primarily in allochthonous rocks of the Devonian to Permian Schoonover Sequence
(Adams, 1996). There is currently no mining activity at the Big Springs District.



The Qualified Person for the Company’s technical report,
Todd Johnson, has not verified the above resource information for the Big Springs District published by Peatfield and Rozelle (2006)
or Adams (1996). In addition, the information provided in the Technical Report by Peatfield and Rozelle (2006) and in Adams (1996)
is not necessarily indicative of the mineralization on the Jerritt Canyon property.



Other relevant data and information



Veris signed an agreement in early 2011 to purchase ore from
Newmont that allowed Veris to utilize the full capacity of the mill. Negotiations are currently ongoing with Newmont to finalize
a similar agreement for 2013. The mill capacity exceeds the supply of ores from Jerritt Canyon so processing of third party ores
sourced outside Jerritt Canyon could provide additional revenues and lower the overall unit cost for processing and administration.



Veris will pursue an aggressive program of resource development
in order to convert a large portion of the measured and indicated resources not in reserves into proven and probable reserves.
Based on historic conversion rates and exploration success, there is a reasonable expectation of converting a portion of Jerritt
Canyon’s resources to reserves. In particular, significant opportunities exist at the Jerritt Canyon property to extend and/or
deepen the existing open pits based on exploration potential and higher relative gold prices today relative to when the pits were
originally mined. A significant amount of the future drilling will be targeting these open-pit opportunities.



As underground mining develops new resources and reserves, favorable
drill platforms are created to explore for and delineate additional resources that were previously cost prohibitive or unreachable
from the existing drill platforms. This is evidenced by: (1) the recent start of a 1,080 foot long drift from Zone 1 of the SSX
mine that will extend to the Zone 9 West Mahala inferred resource; and (2) the planned reopening of the Murray Mine and subsequent
development of new reserves to the west which will provide a platform to explore a potential area extending 2,000 feet along strike
that has seen little exploration activity.



As of early April 2013, the Company entered into two toll-milling
contracts with other companies that own adjacent Nevada gold properties that will help maximize Jerritt Canyon mill throughput
and lower production costs and increase revenue. Additional toll milling ore and ore concentrate purchase opportunities are currently
under review by the Company.



80







The authors of the Company’s Technical Report were not
aware of any other relevant data or information not already presented in the report.



Interpretations and conclusions



Recent improvements to the Jerritt Canyon Roaster Facility have
removed some of the limitations on plant throughput and will allow the processing of 1.5M tons per year or more in 2013 and beyond.
Production of 1,250 tons per day of ore from each the Smith and SSX mines is the cornerstone of the Life of Mine plan. The additional
planned 600 tons per day of ore production from the Starvation Canyon mine starting in June 2013 and the planned start-up of Saval
4 underground mine in Quarter 3 of 2013 will help increase total gold production in 2013.



Additional resources from stockpiles and other mining areas
will be required to keep the plant running at designed rates and maintain favourable processing and administration costs. Recently
secured contracts to process third-party ores at the Jerritt Canyon processing facility will help Veris maintain desired throughput
rates and delay mining and processing high cost high strip ratio open pit ores.



Other potential ore sources not listed above that could feed
the Jerritt Canyon mill in the future with additional work or effort includes:

| | 1. | other resources at the Jerritt Canyon property that require drilling to define and convert to reserves
(e.g. open pit areas and near-mine resource conversion targets that are being pursued in the 2013 drilling program);
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | purchased ores; and
| | -- | -------------------



| | 3. | toll milling of ores or ore concentrates.
| | -- | -----------------------------------------



The authors of the Company’s most recent technical report
consider the Jerritt Canyon Mine to be a relatively low-risk project for the next 6 years considering the amount of proven and
probable reserves currently defined at the Smith and SSX underground mines, and based on the abundance of Jerritt stockpile ores
at the site that currently meet cutoff grade to haul to the mill and process. Existing contracts and discussions with other mining
companies are currently in place to allow the purchase of additional ores to help feed the Jerritt Canyon mill and keep it operating
at near full capacity. These additional ore sources must be developed and placed in production in a timely manner to provide a
constant supply of the ores necessary to keep the plant operating at planned rates and efficiencies.



Recommendations



Dewatering



Approximately 234,000 ounces of reserves lie below the water
table at the Smith, SSX and Murray mines. Mining of these reserves is planned to begin in 2015. Exploitation of these reserves
will require a water management plan that sources all process make up water from the dewatering wells along with water treatment
to achieve levels of arsenic, antimony and total dissolved solids acceptable for disposal in a rapid infiltration basin. Final
engineering and permitting of these facilities must begin early in 2013 in order to meet the production requirements of the Life
of Mine Plan.



2013 Geological program



The proposed 2013 Jerritt Canyon geological program will be
implemented in one to four separate phases. If all four phases are conducted, the total cost of the geological program is estimated
at $12.1 million dollars. The four planned phases of work are contingent on the success of the beginning phases and the level of
funding that is allocated. The Phase 1 underground diamond drilling at SSX-Steer will include at least one underground drill and
will increase to two drills if the planned exploration drift is constructed from SSX Zone 1 to Zone 9. The Phase 1 surface drilling
(28,000 feet of reverse-circulation and diamond drilling) will first be undertaken at Mahala and later at the ND fault trend and
California Mountain targets. Phase 2 surface drilling will target the West Starvation target and other anomalies adjacent to the
Starvation Canyon mine. If Phase 2 is completed with successful results (7,500 feet of surface reverse circulation drilling), then
Phase 3 (25,000 feet of surface drilling) will be undertaken. Success will be determined by reviewing the assay results in respect
to interpreted geology and mineralization trends. Subsequent analysis will help determine which directions to offset subsequent
drilling to target known mineralization.



81







Drilling will consist of a maximum of 60,000 feet for surface
reverse circulation drilling method, and 109,500 feet for underground diamond core drilling method - both of which will target
near-mine resource conversion, resource expansion, and exploration. A portion of the surface reverse circulation drilling will
focus on stand-alone exploration targets both proximal and distal to existing, and planned, infrastructure. Further exploration
drilling at other targets in the southern part of the Jerritt District is targeting the West Starvation target, areas adjacent
to the Starvation Canyon Mine, and Pie Creek and Warm Creek. Underground core drilling will continue at the SSX-Steer mine throughout
2013.



Proposed 2013 Jerritt Canyon drilling and geology program
($M)



|Description                             |  | Drill  Footage |            |  | Drilling  Budget ($) |  |      | Other Budget ($) |  |  | Total Budget ($) | 
|--------------------------------------- |  | -------------- | ---------- |  | -------------------- |  | ---- | ---------------- |  |  | ---------------- | 
|Surface Drilling (Phase 1)              |  |                |            |  |                      |  |      |                  |  |  |                  | 
|Mahala/ND/Calif. Mtn.                   |  |                | 28,000     |  |                      |  | 1.61 |                  |  |  | 0.65             | 
|                                        |  |                |            |  |                      |  |      |                  |  |  |                  | 
|Surface Drilling (Phase 2)              |  |                |            |  |                      |  |      |                  |  |  |                  | 
|Starvation Canyon                       |  |                | 7,500      |  |                      |  | 0.30 |                  |  |  | 0.11             | 
|Surface Drilling (Phase 3)              |  |                |            |  |                      |  | 1.00 |                  |  |  | 0.37             | 
|Burns Basin/Saval/Pattani               |  |                | 25,000     |  |                      |  |      |                  |  |  |                  | 
|Surface Drilling (Phase 4)              |  |                |            |  |                      |  |      |                  |  |  |                  | 
|Pie Creek/Warm Creek                    |  |                | 7,500      |  |                      |  | 0.30 |                  |  |  | 0.11             | 
|Surface Total                           |  |                | 68,000     |  |                      |  | 3.21 |                  |  |  | 1.24             | 
|UG Diamond Drilling-SSX-Steer (Phase 1) |  |                | 109,500    |  |                      |  | 4.93 |                  |  |  | 0.78             | 
|Operating Expenses                      |  |                |            |  |                      |  |      |                  |  |  | 1.96             | 
|Total (for Phases 1-4)                  |  |                | 177,500 ft |  |                      |  | 8.14 |                  |  |  | 3.98             | 

| | (1) | Mahala targeting Zone 1, Zone 9 (West Mahala), East Dash, and ore trend extensions at the Smith Mine;
| | --- | -----------------------------------------------------------------------------------------------------

| | (2) | “Other Budget $” includes costs for: assays, core processing, surface road/pad building, downhole surveys, and
supplies.
| | --- | ------------------------------------------------------------------------------------------------------------------------



The Jerritt Canyon 2013 drill program plan is budgeted for both
surface and underground drilling with underground drilling being the priority. If moneys allow, the surface program will utilize
1 to 2 drilling rigs and is expected to start in early June or July and last 2 to 6 months until mid-December at the latest. An
underground diamond drill rig is currently drilling core at the SSX-Steer mine. In 2013 an exploration drift is planned for construction
that will start from the existing SSX Zone 1 drift and eventually end in proximity to the Zone 9 West Mahala resource that is mostly
inferred. It is envisioned that a second diamond drill rig will be used to help conduct additional underground drilling in the
SSX Zone 1/West Mahala area. This drift will allow drilling to help convert inferred resources at Zone 9 to indicated and in addition
be used to establish drill stations for near-mine exploration.



The direct and indirect cost for underground diamond (core)
drilling has been budgeted at $45.00 per foot. The direct and indirect surface RC drilling cost on a per foot basis has been budgeted
at $40.00 per foot. The direct and indirect surface diamond drilling cost on a per foot basis has been budgeted at $101 per foot.
All “other” costs related to the core and RC drilling has been accounted for in the drilling costs noted above. Staffing
costs are included in the operating expenses and include 4 to 5 full-time geologists, one database and ARCGIS mapping technical
person, one part-time geological modeler, and corporate geological management.



The primary author and Qualified Person for the Company’s
most recent technical report, Todd Johnson, has reviewed the proposed 2013 geological plan and believe that it is adequate and
well planned with estimated costs that are in line with industry standards.



Ketza River Project, Yukon Territory



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



82







Property Description and Location



The Property is located on the headwaters of Cache Creek, a
tributary of the Ketza River, in the Watson Lake Mining District of the Yukon Territory, Canada. Terrain is mountainous with elevations
ranging from 1,300m above mean sea level (amsl) to 2,100m amsl. The Ketza River property lies in National Topographic System (NTS)
Map Sheet number 105F09. The project and resulting geologic and mine models use the UTM NAD27 Zone 8N coordinate system and horizontal
datum.



The Property is accessible by a 40km all-weather road from Km
323 on the Robert Campbell Highway. The Property is approximately 80km by road from Ross River and 460km from Whitehorse.



Ownership



As of June 23, 2011 the Ketza River Project consists of 679
quartz claims and fractions of claims and 60 quartz leases that cover approximately 787.9ha. The claims are controlled by Ketza
River Holdings Ltd. (KRH), which is a 100% subsidiary of Veris, through ownership and leases of the quartz claims and quartz leases.
The surface is owned by the Crown and leased to the Company under the Government of Yukon Lease. As of December 31, 2013, the Ketza
River Project consists of a total of 802 active claims which include 71 claims along the access road that join to the Robert Campbell
Highway.



Environmental Liabilities



The existing Ketza River tailings impoundment (pond and dam)
that was originally established by the historic mine operators in 1987 is the only environmental liability at the site. The Ketza
River tailings impoundment is classified as a Type II site that is regulated by the Government of the Yukon and is currently under
owner-operator care and maintenance by Veris. Veris is planning to start decommissioning the existing tailings dam prior to the
startup of the next mining operation.



Past Exploration and Development



Lead-silver veins were discovered in the Ketza River area by
prospectors of the Hudson Bay Mining and Smelting Company Limited in 1947. Gold mineralization on the property was first discovered
in 1954 by Conwest Exploration Company Limited (Conwest). Between 1955 and 1960, Conwest explored several mineralized occurrences
with trenching and drilling. In 1983, Pacific Trans Ocean Resources Ltd. (Pacific Trans Ocean) optioned the property from Conwest
and carried out limited geochemical and geological surveys before entering into a joint venture with Canamax Resources Inc. (Canamax)
in 1984. Canamax conducted mapping, trenching, geophysical surveys, soil sampling, drilling, and underground drifting between 1984
and 1990. In 1987, Canamax completed a feasibility study that was reviewed by Wright Engineers Ltd. (Canamax and Pacific Trans-Ocean,
1987). A decision was made to construct a mill and commercial production started in 1988.



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



From July 1988 to November 1990, commercial production from
the Ketza River mill was approximately 93,312oz of gold from 307,397 tonnes milled at an average mill head grade of 10.68g/t-Au.
Average mill throughput over the life of the mine was 364t/d with an average gold recovery of 88.31 percent (Canamax, 1991). These
mill production statistics do not include preproduction milling that took place from March 1988 to June 1988 that milled an additional
29,946 tonnes at an average head grade of 7.78 g/t Au to produce 4,680 oz Au.



Wheaton River Minerals Ltd. (Wheaton) acquired the property
from Canamax in 1992 and in 1994 transferred it to Veris in exchange for a controlling interest. Wheaton later divested in Veris.



Veris conducted drilling, mapping and sampling programs between
1996 and 1997. Drilling and exploration campaigns at the Ketza River Project have been ongoing by Veris from 2005 to early August
2008, and again from mid-2009 to December 2010.



83







Geology and Mineralization



The Property is located in a shallow marine miogeoclinal sequence
of rocks forming a carbonate platform bounded by the Omenica Tectonic Belt to the southwest and a faulted lobe of the Yukon Tanana
Terrain to the northeast across the Tintina Fault. The region has been subjected to thrust faulting and possible intrusive rock
emplacement.



The Ketza River property occurs within the Ketza Uplift that
has been mapped by previous investigators as consisting of a large regional fault-bounded horst block which is inferred to have
been uplifted by a large intrusive rock body at depth. The Ketza River Property is underlain by Lower Cambrian carbonate and clastic
sedimentary rock units. The rock types include graphitic shale, argillite, phyllite, siltstone, sandstone, quartzite, and limestone.
Intrusive rocks are rarely encountered at the Ketza River Property. The property also lies on the southern flank of a westward
plunging anticline. A later deformation has overprinted these structures with broad, open folds and drag folds that occur adjacent
to thrust faults. Northeast-directed thrust faults exhibit displacements of up to 450m. The thrust faults have been cut by later
reverse, normal and strike slip faults.



There are two general types of sedimentary-rock hosted gold
deposits on the property: (1) manto-type replacement sulfide/oxide deposits; and (2) quartz-sulfide fissure vein and stockwork
systems (referred to as Shamrock-type in previous reports since most of these resources are located near Shamrock Mountain). Both
deposit types contain sulfide minerals that are dominanted by pyrrhotite, pyrite, arsenopyrite, and trace chalcopyrite. The manto
deposits consist of sub-horizontal tabular massive sulfide and/or oxide bodies. Chimneys are sub-vertical massive sulfide and/or
oxide bodies and are included in the “manto” subtype; both are hosted within Lower Cambrian limestone units. The Peel,
Penguin, Lab-Hoodoo, and Tarn resources are manto-type deposits.



The Au-bearing quartz-sulfide fissure vein and stockwork systems
are hosted in siliciclastic-rich rocks dominated by argillite. The host rocks for this mineralization style consist of interbedded
Lower Cambrian argillite, phyllite, siltite, quartzite and lesser carbonate rocks located on the eastern side of the Ketza Uplift.
The QB, Gully, and 3M resources are examples of the quartz-sulfide fissure vein and stockwork systems. The Knoll resource occurs
near Shamrock Mountain and contains both styles of mineralization (manto type and stockwork vein type).



Alteration assemblages that surround the Au-bearing manto-type
deposits include: dolomitization and/or other iron-carbonate minerals (siderite and ankerite), limestone recrystallization, and
calcite±quartz veins. Silicification, sulfidization, biotite hornfels, and bleaching are closely associated with the Au-bearing
quartz-sulfide veins and stockwork type deposits hosted by the argillite-rich units.



Exploration



Veris has been drilling at the Ketza River Project since May
2005 and as of December 10, 2010 has drilled 1,029 diamond drill holes totaling 136,656m. Additional exploration conducted at the
project includes: surface geologic mapping, geophysical surveys (ground magnetic, induced polarization, resistivity, and gravity),
trenching, surface soil and rock-chip sampling, metallurgy sampling and testing, geotechnical surface and underground mapping,
oriented core drilling, hydrogeology drilling and testing, and petrographic studies.



A total of 26 drill holes (4,402m) were completed at Ketza River
in 2011. No drilling was performed at Ketza River in 2012 or 2013.



All of the 2008 exploration drilling results and previous valid
drill holes were used to help support the current resource presented in this report and includes 225 diamond drill holes (drill
hole numbers KR-08-1269 to KR-08-1466; and GT-08-01 to GT-08-12; and HYD-08-01 to HYD-08-12 and HYD-08-16 and -17) totaling 30,436
m.



Topographic surveys were conducted in 2006 and 2007, producing
maps with 10m and 1m, and 5m contour intervals, respectively.



84







Sampling and Laboratory Procedures



The core is photographed and logged prior to sampling. Core
is typically sampled on 1.5m intervals for HQ-sized core and sulfide-rich replacements, and locally up to 3.05m intervals for NQ-sized
core. The drill hole samples from 2006 to 2008 were prepared at the ALS Chemex lab in Terrace, BC. Drill hole samples are typically
transported in sealed bean bags from the Ketza River property to Whitehorse by KRH personnel where they are shipped directly to
the ALS Chemex laboratory using a local freight delivery company. The metallurgy diamond drill holes (numbers KR-08-1269 to KR-08-1300)
drilled in 2008 were shipped from the project site in sealed 50-gallon barrels and prepared in the Jerritt Canyon Mine lab in Elko,
Nevada.



The drill hole samples since 2006 have been analyzed at ALS
Chemex in North Vancouver, BC. Samples are analyzed by fire assay with atomic absorption (AA) finish, with samples above 1.00ppm
being re-assayed with a gravimetric finish. The 2008 metalurgy drill hole samples described above were analyzed by ALS Chemex in
Reno, Nevada for inclusion into the drill hole database and resource model.



Multi-element geochemistry is also collected for every drill
hole sample analyzed for Au. Specific gravity data on all representative rock types and mineralization types have been used to
help support the current resource estimate and were analyzed at ALS-Chemex in 2007 and 2008 using the OA-GRA8a (paraffin wax) method.



Laboratory QA/QC consists of inserting a standard or blank every
15th sample. Prior to mid-2006, two samples were collected from a mineralized outcrop at the Ridge Pit in the Peel area. These
two samples were used as standards, but had not been correctly prepared and certified and the results therefore are problematic.
In mid-2006 up to the present, Veris has used commercial certified standard samples from CDN Resource Laboratories Ltd. The results
from these standards from the 2007 and 2008 drill programs indicate that the ALS Chemex laboratory results are acceptable.



Blank samples used from 2005 to 2008 are non-certified materials
and composed of local barren limestone from the site. These samples were not certified as barren and locally contain anomalous
Au. As of May 15, 2010 a barren crushed marble material purchased in Whitehorse has been used as blank material. This blank material
has yet to be certified but is giving more consistent results than blanks that were previously used.



Data Verification



Some data quality problems were observed in the historic Au
assays from drill holes completed from 1984 to 1997 that apparently did not use project-specific assay import routines or a consistent
selection criteria to enter the “best” gold assays into the master digital database. All of these original assay data
for drill holes prior to 1997 are only in paper log format (i.e. hand written on the geology logs) that are stored at the Ketza
River Project site. The problems observed with the historic drill hole assay data included local digital data entry errors, final
Au_Best assay values that were randomly selected from various laboratories with no consistent selection criteria, missing assay
values that were in the paper log files but never entered into the digital database, or the Au_Best assay value was locally entered
as an average value based on several values generated from different labs.



Based on the aforementioned problematic gold assay data for
years 1984 to 1997, a drill hole audit was conducted by Veris geologists from December 2009 to January 2010 at the Ketza site.
This drill hole audit digitally captured and compared all of the historical 1984-1997 assays from the various labs (and other geological
data) in paper log format to the digital data stored in the existing database. From this recent data verification work, a consistent
methodology for determining the Au_Best assay value was determined that primarily relied on the primary assay lab. The primary
assay lab was sometimes not identified in previous reports and for these cases was determined by the identifying the lab that contained
the highest number of Au assay results for that year. The Au_Best values determined from the historical Au assay data capture exercise
in conjunction with the more recent 2008 drill hole results were used for this current resource estimate.



In addition to capturing the historic gold assay data, Veris
geologists collected: sulfide mineral and oxide mineral data logged by the geologist as either a general intensity description
or as an estimated percentage by volume; RQD and core recovery estimates; and verified from/to sample assay intervals. In addition,
a data audit on the 2008 drill hole assays determined that the assays in the master digital database were properly imported. The
resulting revised and verified assay database was determined to be of suitable quality for resource estimation.



Resource Estimation and Resource
Statement



The resource estimation is presented in the below Table 1 and
was conducted by mine consultants and Veris personnel using drill hole assay data received up through January 25, 2010 and includes
all of the drilling completed in 2008.



85







The resource estimation was based on digitizing lithological
contacts and major faults, and 0.5 g/t grade shells on 10m east-west cross-sections using the available drill hole data. These
digitized polygons were ultimately used to construct 3-D wireframe solids around the mineralized drill intercepts, compositing
the data on 1.5m intervals, with breaks at the envelope boundaries, and then using the inverse distance cubed (id3) algorithm for
resource estimation limited to only within the 0.5 g/t Au envelopes. The average gold grade is calculated from the au_id3 variable
in the block models. Tonnage is calculated using the digitized grade shells and resulting triangulations using the SG variable
in the block models.



A Lerchs-Grossman pit optimization program was run on the new
block model to differentiate potentially open pit resources from potentially underground resources. The optimization was run using
current mine cost parameters and a gold price of $1,150 US/troy oz; using measured, indicated, and inferred ore classification
schemes; and only for the purpose of identifying potentially mineable resources. The resulting open-pit shapes were generated using
measured, indicated and inferred resource in order to maximize the potential open-pit footprint for Yukon permitting (YESAB project
proposal) purposes. Since inferred resources were used to help generate the resulting optimized pits and resource tables for this
study, they cannot be referred to as proven or probable reserves as defined by CIM (2000).



The resource at Ketza River using drill hole data received as
of January 25, 2010, and using all of the 2008 drilling are summarized in Table 1 which includes all REDOX types (oxide, sulfide,
and mixed oxide + sulfide materials). The cutoff grade for oxide ore material and sulfide ore material inside the optimized open
pit is 0.78g/t and 1.00g/t, respectively, and for material that is potentially mineable by underground methods outside of the optimized
open pit is 3.44 g/t and 4.43 g/t, respectively. A total of 41% of the measured and indicated recoverable resource ounces are hosted
in oxide ores which have a gold recovery of 90%; whereas the other 59% of the measured and indicated recoverable, resource ounces
are hosted in sulfide or mixed sulfide+oxide ores that generally have Au recoveries of 70 percent.



Including Oxide and Sulfide and Mixed
Oxide + Sulfide Ores









|                       |  | Open Pit Resource |         |  | Underground Resource |  |      | Combined (OP+UG) | 
|---------------------- |  | ----------------- | ------- |  | -------------------- |  | ---- | ---------------- | 
|Area                   |  | kt                |         |  | g/t-Au               |  |      | koz              | 
|Measured               |  |                   |         |  |                      |  |      |                  | 
|Peel                   |  |                   | 85.2    |  |                      |  | 5.76 |                  | 
|Penguin                |  |                   | 14.0    |  |                      |  | 1.88 |                  | 
|Lab-Hoodoo             |  |                   | 9.4     |  |                      |  | 6.92 |                  | 
|Tarn                   |  |                   | 11.4    |  |                      |  | 4.73 |                  | 
|Gully                  |  |                   | 7.0     |  |                      |  | 5.60 |                  | 
|QB                     |  |                   | 23.4    |  |                      |  | 4.55 |                  | 
|Knoll                  |  |                   | 11.1    |  |                      |  | 6.66 |                  | 
|Total  Measured        |  |                   | 161.5   |  |                      |  | 5.30 |                  | 
|                       |  |                   |         |  |                      |  |      |                  | 
|Indicated              |  |                   |         |  |                      |  |      |                  | 
|Peel                   |  |                   | 1,053.4 |  |                      |  | 6.22 |                  | 
|Penguin                |  |                   | 233.6   |  |                      |  | 2.89 |                  | 
|Lab-Hoodoo             |  |                   | 243.2   |  |                      |  | 5.20 |                  | 
|Tarn                   |  |                   | 79.3    |  |                      |  | 3.88 |                  | 
|Gully                  |  |                   | 45.1    |  |                      |  | 3.57 |                  | 
|QB                     |  |                   | 298.0   |  |                      |  | 3.21 |                  | 
|Knoll                  |  |                   | 2.9     |  |                      |  | 4.54 |                  | 
|Total  Indicated       |  |                   | 1,955.4 |  |                      |  | 5.08 |                  | 
|                       |  |                   |         |  |                      |  |      |                  | 
|Measured and Indicated |  |                   |         |  |                      |  |      |                  | 
|Peel                   |  |                   | 1,138.6 |  |                      |  | 6.19 |                  | 
|Penguin                |  |                   | 247.6   |  |                      |  | 2.84 |                  | 
|Lab-Hoodoo             |  |                   | 252.6   |  |                      |  | 5.26 |                  | 
|Tarn                   |  |                   | 90.7    |  |                      |  | 3.99 |                  | 
|Gully                  |  |                   | 52.1    |  |                      |  | 3.85 |                  | 
|QB                     |  |                   | 321.4   |  |                      |  | 3.31 |                  | 
|Knoll                  |  |                   | 14.0    |  |                      |  | 6.22 |                  | 
|Total  M&I             |  |                   | 2,116.9 |  |                      |  | 5.09 |                  | 





86









|                |  | Open Pit Resource |       |  | Underground Resource |  |      | Combined (OP+UG) | 
|--------------- |  | ----------------- | ----- |  | -------------------- |  | ---- | ---------------- | 
|Area            |  | kt                |       |  | g/t-Au               |  |      | koz              | 
|Inferred        |  |                   |       |  |                      |  |      |                  | 
|Peel            |  |                   | 195.2 |  |                      |  | 5.30 |                  | 
|Penguin         |  |                   | 44.0  |  |                      |  | 2.49 |                  | 
|Lab-Hoodoo      |  |                   | 37.5  |  |                      |  | 4.38 |                  | 
|Tarn            |  |                   | 3.2   |  |                      |  | 3.50 |                  | 
|Gully           |  |                   | 15.9  |  |                      |  | 3.46 |                  | 
|QB              |  |                   | 113.5 |  |                      |  | 3.80 |                  | 
|Knoll           |  |                   | 0.0   |  |                      |  | 0.00 |                  | 
|Total  Inferred |  |                   | 409.4 |  |                      |  | 4.41 |                  | 





| | 1. | The cutoff Au grade for oxide and sulfide ore inside the optimized open pit is 0.78 g/t and 1.00
g/t, respectively; whereas the cutoff Au grade for oxide and sulfide ore for material mineable by underground methods outside of
the optimized open pit are 3.44 g/t and 4.43 g/t, respectively;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Au price used for this resource estimate is US$1,150/troy oz;
| | -- | -------------------------------------------------------------

| | 3. | Assigned sulfide and oxide ore Au recoveries are 70 and 90 percent, respectively;
| | -- | ---------------------------------------------------------------------------------

| | 4. | All materials in this table include all REDOX types (oxide, sulfide, and mixed “oxide+sulfide”);
| | -- | ------------------------------------------------------------------------------------------------

| | 5. | Mining cost/t = $3.00 open pit and $80.00 underground; processing cost/t ore = $26.00; specific
gravity variable as modeled per block; 18.4:1 (waste:ore) average strip ratio for all resources; 1,500 t ore/day mill feed; a Lerchs-Grossman
pit optimization has been used to differentiate potential open pit resources from potential underground resources using mining
costs, Au cutoff grades, and other parameters documented in this report;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | This resource includes all drill holes completed in 2008 and does not include any drill holes completed
in 2009 or 2010; this resource statement has an effective date of January 25, 2010.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Conclusions and Recommendations



Problems with the QA/QC data and with the previous drill hole
database have been addressed in this document. The gold assay database for the years 1984 to 1997, and 2008 was thoroughly audited
and corrected for this resource estimate.



The current resource estimation is an improvement over previously
published resource reports, as it is well constrained by the drill hole assay intercepts in the z (elevation) direction, and tightly
constrained to within the newly digitized 0.5 g/t Au mineralization shapes. Additional effort was taken to accurately model the
previously mined underground workings for depletion in the estimated resource.



Specific gravity (SG) information was improved in the current
model and included additional SG data that was collected in 2008. The SG determinations for this study were determined by using
wt pct Fe data where the geochemistry data existed for recent samples (SG_ASY), or assigned by a geological characterization that
incorporated rock type and a defined quantity of total oxide and total sulfide minerals logged by the geologist (SG_GEO). This
model incorporates additional total sulfide and total oxide mineral data in the database to help better characterize the REDOX
types which were ultimately linked and averaged with the SG determination for the SG_GEO determination.



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



| | · | the measured resource estimate has declined from a previously reported 712.2kt averaging 6.40g/t (146.5koz
recovered) to the currently estimated of 167.8 ktonnes averaging 5.38 g/t Au (29 koz Au recovered);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the indicated resource estimate has declined from a previously reported 3,369.5 ktonnes averaging
4.61 g/t Au (499.9 koz recovered) to the currently estimated 2,212.3 ktonnes averaging 5.46 g/t Au (388.7 koz recovered) which
represents a decrease of 111.2 koz of recovered gold;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the inferred resource has declined from a previously reported 1,075.6kt averaging 3.26g/t Au (112.8
koz recovered) to the currently estimated 453.7 ktonnes averaging 4.62 g/t Au (67.3 koz Au recovered).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The decrease in measured, indicated, and inferred resources
reflects new drilling, more realistic constraints placed on the construction of the 0.5 g/t Au grade shells used to constrain the
estimation process, a higher quality drill hole database, better specific gravity assignments to the various ore types, and more
realistic and updated mining and milling parameters and costs.



87







Numerous encouraging stand alone exploration
targets and several resource extensions remain to be tested throughout the project area.



The authors have the following recommendations for Veris to
help advance the Ketza River Property:



| | (1) | Continue exploration at the Ketza River property focusing on identifying new resources outside of
the already defined resource areas; a reasonable 2011 drill program to complete this work includes 10,800m of total drilling at
an estimated cost of $4.9 million dollars (CAD); this work is in addition to the already completed 2009 (costs of $3.2 million)
and 2010 (cost of $8.1 million) exploration work that drilled in both the known resource areas and away from the resource areas;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Continue with a feasibility study and capital and operating cost studies to investigate the economic
viability of the current project; conduct future reserve calculations using only measured and indicated resources as per 43-101
guideline Item 19 (section i) for a true economic analysis;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Finish the detailed studies already underway that are required in order to submit a project proposal
to the Yukon Environmental and Socio-Economic Assessment Board (YESAB) in August 2011; Approximate costs to complete this as of
January 1, 2011 range from $1.3-2.1 million dollars (CAD).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Silver Valley Property, Yukon



The Company was granted an option to acquire a 100% interest
in six claims located in the Yukon Territory. The primary focus of exploration for this property will be silver, with a secondary
focus on gold, lead and zinc. The Company has staked or acquired 143 additional quartz claims and leases around the original six
claims, and these are registered in the name of the Company. As of years-end 2012 and 2013, there are a total of 149 quartz claims
and quartz leases showing in the figure below that comprise the Silver Valley Project all of which are owned 100% by KRH. As of
the years ended 2012 and 2013, there are a total of 6 quartz leases in the Silver Valley property that comprise 202 acres.



88







Silver Valley Claim Map





Historical Work



The Silver Valley Property consists mostly of Ag-Pb-Au±Cu±Zn
veins and is located approximately 1 kilometre east of the main Ketza River gold project. The K18B underground mine is a past producer
of Ag and Pb and minor Au that operated from 1965 to 1969 (including exploration work) by Stump Mines Ltd. and later again for
a brief time in 1980 and 1981 by Iona Silver Mines Ltd. Development work at the K18B vein was reportedly stopped in 1981 when a
fire destroyed the compressor shack.



Exploration Drilling



Diamond drilling totalling 75 holes in 11,163 m has been conducted
at the Silver Valley project in 2006, 2007, 2009 and during January of 2010 by KRH as shown in the table below. A total of seven
drill holes were completed in 2010 which tested two horizontal-loop E-M geophysical anomalies that were identified during the 2007
field season. No drilling was performed at Silver Valley since 2010.



2006-2012 Silver Valley Drilling Summary.



|Year        |  | Drill Holes Completed |    |  | Total Meters |  |          | Total Footage | 
|----------- |  | --------------------- | -- |  | ------------ |  | -------- | ------------- | 
|K-18B South |  |                       |    |  |              |  |          |               | 
|2006        |  |                       | 4  |  |              |  | 1.014.7  |               | 
|2007        |  |                       | 58 |  |              |  | 8,903.5  |               | 
|2008        |  |                       | 0  |  |              |  | 0        |               | 
|2010        |  |                       | 7  |  |              |  | 1,244.8  |               | 
|2011        |  |                       | 0  |  |              |  | 0        |               | 
|2012        |  |                       | 0  |  |              |  | 0        |               | 
|Total       |  |                       | 75 |  |              |  | 11,163.0 |               | 



89







Drilling



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



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



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



Geophysics



VG has conducted several geophysical surveys in the area. An
aerial helicopeter Dighem electromagnetic survey was conducted over the property by Fugro in 2007 with lines spaced every 0.1 km.
A ground horizontal-loop E-M (HLEM) geophysical ground survey was also conducted in 2007.



A Bouger gravity survey was conducted over portions of the Silver
Valley Property in 2011. Two grids, one northwest grid covering 355 hectares, and another southeast grid covering 108 hectares
was completed using a Scintrex CG-5 Gravimeter. Approximately 469 gravity stations were collected with stations spaced 100m apart
from one another.



Trenching and Reclamation



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



Other Properties



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



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



Item 4A. Unresolved Staff Comments.



None



Item 5. Operating and Financial Review and Prospects.



A. Operating results.



90







SELECTED ANNUAL FINANCIAL INFORMATION



(In thousands of dollars, except for share and per share
amounts)

|                                                 |  | 2013 |             |   | 2012 |   |            | 2011 | 
|------------------------------------------------ |  | ---- | ----------- | - | ---- | - | ---------- | ---- | 
|Statement of Operations                          |  |      |             |   |      |   |            |      | 
|Revenue                                          |  | $    | 195,979     |   |      | $ | 160,561    |      | 
|Cost of gold sold                                |  |      | 180,885     |   |      |   | 134,350    |      | 
|Gross margin before depreciation & depletion(1)  |  |      | 15,094      |   |      |   | 26,211     |      | 
|Loss income  from operations                     |  |      | (45,093     | ) |      |   | (26,072    | )    | 
|(Loss) income  before taxes                      |  |      | (75,301     | ) |      |   | (27,929    | )    | 
|Net (loss) income                                |  |      | (66,652     | ) |      |   | (20,015    | )    | 
|Basic (loss) income per share                    |  |      | (0.56       | ) |      |   | (0.21      | )    | 
|Weighted average # of shares outstanding (basic) |  |      | 119,297,144 |   |      |   | 97,371,112 |      | 
|Statement of Financial Position                  |  |      |             |   |      |   |            |      | 
|Cash and cash equivalents                        |  | $    | 1,161       |   |      | $ | 9,295      |      | 
|Total assets                                     |  |      | 312,951     |   |      |   | 348,459    |      | 
|Total non-current liabilities                    |  |      | 67,131      |   |      |   | 166,269    |      | 



| | (1) | Gross margin before depreciation & depletion (“D&D”) is a non-GAAP measure that the Company considers to
be a good indicator of the Company’s achieved operating results before being adjusted for non-cash D&D to arrive at mine
operating earnings.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



RESULTS OF ANNUAL OPERATIONS (fiscal years ended December
31, 2013 and 2012)



The Company had a net loss of $66.7 million for the year ended
December 31, 2013, compared to a loss of $20.0 million in 2012, representing a $46.7 million increased loss. The increased loss
in 2013 is primarily the result of the following items, all of which are described in detail below: (i) a $11.1 million decrease
in revenue less cost of sales (“Gross-margin before D&D”); (ii) a $8.7 million increase in depreciation and depletion
expense (“D&D”); (iii) a $1.5 million increase in non-cash impairment charges; (iii) a $2.2 million decrease in
general and administrative expense; (iv) $15.7 million increase in interest expense; (v) a $4.1 million decrease in non-cash derivative
gains; (vi) $10.6 million increase in environmental expense for an environmental provision; and (vii) a $0.9 million increase in
non-cash future income tax recovery.



The lower Gross-margin before D&D in 2013, compared to 2012,
is primarily attributable to the decline in the market price of gold experienced in 2013, where the average price of gold was $1,397
per ounce, 16% less than the average $1,665 per ounce in 2012. This diminished gold price resulted in the equivalent loss of 2013
gold revenues of approximately $38 million, which in turn resulted in costs of sales as a percentage of sales increasing from 84%
in 2012, to 92% in 2013.



Revenue:



For the year ended December 31, 2013, the Company realized gold
sales of $187.9 million on the sale of approximately 140,680 ounces of gold, this compares to $160.6 million on sales of 100,834
ounces of gold sold in 2012. The number of gold ounces sold in 2013 increased by 39,849 ounces, or 40%, from 2012. This increased
volume of sales arising from the significant increase in production experienced in 2013, largely driven by production from the
Starvation Canyon mine which opened in Q2-2013. The increase in sales volume was however offset by the declining gold price in
2013, with the average gold price per ounce sold of $1,397, 16% less than the average $1,665 per ounce sold in 2012. The deflated
gold price resulted in an estimated $37.7 million decrease to gold sales that would have otherwise been realized had the 2012 average
price remained though 2013. Included in 2013 revenues was $8.1 million in toll milling revenue recognized in the year, there were
no such revenues earned in 2012. This 2013 toll milling revenue was earned on the processing of approximately 119,290 tons of third
party ore (primarily Newmont) through the Jerritt Canyon roaster facilities.



Gross-margin before D&D:



In 2013, the Company had a gross income of $15.1 million, compared
to $26.2 million in 2012. This $11.1 million, or 42%, decrease in margin was almost exclusively driven by the 16% decrease in gold
price as previously discussed. The $46.5 million, or 35%, increase in cost of sales from $134.4 million in 2012 to $180.9 million
in 2013 was the direct result of increases in production, which had a similar increase of 32%, going from approximately 105,530
ounces produced in 2012 to approximately 139,556 ounces produced in 2013. This represents 2013 costs-per-gold-ounce-sold of $1,286
which is a 3% decrease to the $1,332 experienced in 2012. The addition of the Starvation Canyon mine, which opened in late Q1-2013,
and became a producing mine for accounting purposes in mid-2013, resulted in an additional $16 million of cost-of-sales which were
not experienced in 2012.



91







Impairment of mineral properties:



In Q4-13, a non-cash impairment charge of $33.3 million was
taken on the Company’s Ketza River property located in the Yukon, Canada. The impairment charge was largely driven by the
2013 observed decrease in the market price of gold. Future gold prices are used to estimate the recoverable fair-value of the Company’s
assets, including Ketza. In the current year a future gold price of $1,300 per ounce was used to do such an estimate, that being
$300 lower than the $1,600 per ounce used for the prior year estimation. This reduction in the assumed future gold price led to
the determination that the pre-impairment carrying amount of Ketza was in excess of the estimated recoverable amount, and thus
resulted in the impairment.



In the fourth quarter of 2012 an impairment charge of $31.8
million was taken on the Company’s Yukon properties, primarily made up of a $30 million impairment charge on the Ketza River
property. The 2012 impairment decision was primarily driven by observed impairment indicators - including the late-2012 downturn
in industry, specifically in relation to exploration and development stage mining projects, which implied that the current carrying
value was not fully recoverable under market conditions existing at that time.



Depreciation and depletion (“D&D”):



The Company had $20.7 million in depreciation and depletion
in 2013 compared to $12.0 million in 2012. The higher depreciation in 2013 is due to the increase in the depreciable/depletable
mineral property plant and equipment asset base. This increase largely attributable to the second tailings facility going into
operation in July, 2013, which increased the base approximately $34 million; and, the Starvation Canyon mine going into production
which increased depletable asset base by over $12 million. Increased mining production combined with the increase in depletable
mineral property base resulted in depletion increasing from $2.1 million in 2012 to $7.8 million in 2013.



General and administrative (“G&A”)
expenses and share-based payments:



During 2013 the Company incurred general and administrative
expenses (“G&A”) of $6.2 million, compared to the $8.4 million incurred in 2012. Included in G&A for the year
ended December 31, 2013 is $0.3 million of share based payments, compared to $2.2 million in 2012.



G&A excluding share based payments was $5.9 million in 2013,
comparable with the $6.2 million incurred in 2012. These expenses are for corporate head office and transactions costs and are
primarily comprised of salary and benefit costs as well as professional and advisory fees.



Total share based payments in 2012 were $2.8 million, of which
$2.2 million was included in G&A with the remainder included in cost of sales, this compares to total share based payments
in 2013 $0.5 million, of which $0.3 million was included in G&A and the remainder in cost of sales. The 2013 share based payments
related primarily to the vesting of 475 thousand stock options granted to employees in the second quarter of 2013 with a strike
price of $1.42 and an attributed fair value of $1.21, while the 2012 share based payments primarily related to the vesting of stock
options granted to employees and directors in 2012, with an average strike price of $2.76 and a fair-value of $2.43.



Interest expense



Interest expense is comprised:



92







|                                                           |  | 2013 |        |  | 2012 |  
|---------------------------------------------------------- |  | ---- | ------ |  | ---- | -
|Interest on senior secured gold facility                   |  | $    | 8,194  |  |      | $
|Interest on convertible debt                               |  |      | 5,186  |  |      |  
|Interest on trade payables                                 |  |      | 2,445  |  |      |  
|Accretion of decommissioning and rehabilitation provisions |  |      | 1,707  |  |      |  
|Interest on finance leases                                 |  |      | 458    |  |      |  
|Interest on forward contracts                              |  |      | 55     |  |      |  
|Other interest expense (income)                            |  |      | 170    |  |      |  
|                                                           |  |      |        |  |      |  
|                                                           |  | $    | 18,215 |  |      | $



Interest expense in 2013 was $18.2 million compared to $2.5
million in 2012. The $15.7 million increase the result of the $8.2 million interest expense recognized on the senior secured gold
facility; a $4.4 million increase in interest expense recognized on convertible debt; and $2.4 million in interest on trade payables
incurred in 2013. The $8.2 million interest on the senior secured gold facility is due to a Q3-2013 change in the accounting treatment
of the senior secured Deutsche Bank gold forward agreements (the “Senior Secured Gold Facility”). With the change in
accounting policy the Senior Secured Gold Facility now records periodic interest expense which was not the case in 2012 when deferred-revenue
accounting treatment was used on the Senior Secured Gold Facility. The increase in the interest expense on convertible debt in
2013 from 2012 is due to the additional $10 million convertible promissory note issued in April 2012; and, due to the fact that
the convertible debentures issued in primarily mid-2012 remained outstanding and incurring interest for the entirety of 2013. The
interest on trade payables incurred in 2013 related to interest charges incurred on outstanding amounts due to SMD, the contract
miners used for the Smith and Starvation Canyon mine. Included in these costs are $1.7 million in non-cash accretion expense incurred
in relation to the decommissioning and rehabilitation liability, comparable to the $1.2 million incurred in the prior year.



Finance and transaction costs



Finance and transaction costs in 2013 were $2.7 million, comparable
to the $3.3 million in 2012. These costs are comprised of the amortization of deferred transactions costs incurred on the issuance
of convertible debt and on the Senior Secured Gold Facility; as well as the expensed portion of costs incurred on financing activities
undertaken during the year. The $0.6 million decrease in 2013 compared to 2012 is primarily due to amortization of deferred transactions
costs no longer being recognized on the Senior Secured Gold Facility since July 1, 2013, as a result of the previously discussed
change in accounting treatment.



Derivative gain (loss)



Derivative gains (losses) are comprised of:



|                                                     |  | 2013 |         |   | 2012 |  
|---------------------------------------------------- |  | ---- | ------- | - | ---- | -
|Revaluation of senior secured gold facility          |  | $    | (12,119 | ) |      | $
|Gain on warrants                                     |  |      | 11,969  |   |      |  
|Gain (loss) on revaluation of gold forwards          |  |      | 4,004   |   |      |  
|Gain (loss) on convertible debt embedded derivatives |  |      | 728     |   |      |  
|Gain on senior secured gold embedded derivatives     |  |      | 646     |   |      |  
|                                                     |  |      |         |   |      |  
|                                                     |  | $    | 5,228   |   |      | $



The most significant change to non-cash derivatives in 2013
compared to 2012 was a $12.1 million loss recognized on the July 1, 2013 revaluation of the Senior Secured Gold facility liability
which occurred with the previously discussed change in accounting treatment. There was no such item in 2012, nor are there any
future revaluations of the Senior Secured Gold facility going forward.



Non-cash derivative gains in 2013 were $5.2 million compared
with $9.4 million in 2012. Warrants denominated in Canadian dollars are revalued at each reporting period with change in fair value
recorded to net income. The 2012. As with 2012, the decrease in the Company’s share-price experienced in 2013 resulted in
the value of the warrant decreasing, thus resulting in non-cash gains.



93







Derivative gains of $4.4 million were recognized in 2013 relating
to two gold forwards, this compares to a $7.9 million loss recognized on the forwards in 2012. The gain in the current year was
the result of the experienced decrease in the market gold price in 2013, thus decreasing the value of the liabilities. The losses
incurred in 2012 were the result of extensions in the terms of the agreements increasing the amount of the liabilities.



Environmental costs:



Environmental rehabilitation costs of $14.8 million incurred
in 2013 increased from the $4.1 million incurred in 2012 primarily due to the recognition of a provision of $10.6 million for penalties
and interest which may be due to the NDEP if the Company is unsuccessful in its ongoing discussions to resolve this matter. These
costs incurred primarily arise from the resurfacing work carried out on the historic rock disposal areas as required under the
Consent Decree as well as reclamation of historic environmental disturbance that was determined and incurred during the current
year.



Foreign exchange (gain) loss:



There was a foreign exchange gain of $0.4 million in 2013 compared
to a loss of $1.8 million in 2012. The 2013 gain being the result of U.S. denominated assets held in Canadian entities having increased
in value due to the weakening of the Canadian dollar. The 2012 loss was the result of U.S. denominated assets held in Canadian
entities having decreased value due to the strengthening of the Canadian dollar.



Income taxes:



The Company recorded income tax recovery of $8.6 million in
2013 compared to a recovery of $7.9 million in 2012. The 2013 recovery was driven by the impairment of Yukon mineral properties
with corresponding reduction in deferred income tax liabilities. The 2012 tax recovery arose from the impairment of Yukon mineral
properties with corresponding reduction in deferred income tax liabilities. As at December 31, 2013 the Company had non-capital
and net operating loss carry forwards of $151.5 million (2012 - $167.2 million) which expire between 2015 and 2033.



Working capital



The Company had a loss from operations of $45.1 million for
the year ended December 31, 2013 (2012 – $26.1 million), and a $3.0 million outflow of cash from operating activities for
the same period (2012 – outflow of $13.2 million). At December 31, 2013 the Company had a working capital deficiency of $167.1
million (December 31, 2012 – $34.3 million) and an accumulated deficit of $445.6 million (December 31, 2012 – $379.0
million). The Company’s working capital is not sufficient for its present requirements. To fund the recommencement of operations
after the March shutdown the Company recently obtained additional financing through a royalty financing agreement and continues
to work on additional sources of working capital from new equity and debt sources.  These activities are undertaken as part
of the Company’s overall capital restructuring plan with a primary focus on reducing the near term debt burden to the operations. 
On January 28, 2014, the Company received a Notice of Default under the terms of the Senior Secured Gold Forward Facility held
with Deutsche Bank AG.  The Notice of Default arose from the failure of the Company to deliver the required gold as at December
31, 2013 or pay the cash equivalent of the gold delivery shortfall as required under the Agreements.  Deutsche Bank advised
the Company that it is considering what actions, if any, it may wish to make in response to the contract concerning this event.
These actions may include an assignment of Deutsche Bank’s rights and obligations under the agreements to a third party,
or realizing on the security pledged, being the Company's direct and indirect interest in the Jerritt Canyon properties in Nevada. 
This event has accelerated efforts undertaken by the Company to restructure or refinance the existing debt commitments, both senior
and subordinated, by extending the terms or through the buyout of the debt under new terms.  The restructuring of these liabilities
will improve both the cash flow available to the Company as well as the overall capital structure.  As part of these efforts
the Company’s Board of Directors appointed a Special Committee, comprised of two independent and one non-independent Director,
to review the current options and work with the appointed advisor, Raymond James, to develop and explore refinancing alternatives.



94







RESULTS OF ANNUAL OPERATIONS (fiscal years ended December
31, 2012 and 2011)



The Company had a net loss of $20.0 million for the year ended
December 31, 2012, compared to net income of $26.4 million for the year-ended December 31, 2011. The decrease in net income from
2011 is primarily caused by a $31.8 million non-cash impairment charge on the Company’s Yukon properties in the fourth quarter
of 2012, with no comparable impairment in 2011. Also attributing to the decline in net-income was the recognition of $77.9 million
of interest and other income in 2011 which included a $97.2 million non-cash gain resulting from the change in fair-value of share
purchase warrants. In the current year the comparable non-cash gain from warrant revaluation was only $17.3 million resulting in
$10 million in interest and other income for the year, $67.9 million less than the prior year. This decrease in interest and other
income was offset by loss from operations of $26.1 million, a $15.4 million increase from the $41.5 million operating loss incurred
in 2011.



The Gross margin before D&D for 2012 was $26.2 million compared
to a $25.9 million gross loss for the year ended December 31, 2011. The increased margin is due to the increased revenue in 2012
resulting from the additional ounces coming from the now producing SSX-Steer mine and the significant improvement in throughput
at the Jerritt Canyon processing facility maintained since mid-year. In 2011 Jerritt Canyon experienced low overall production
rates due to excessive levels of down time at the milling facility and incurred higher costs of production due to the processing
of high cost purchased ore, which made up a significant portion of the ore processed for the first three quarters.



Gold sales:



For the year ended December 31, 2012, the Company realized gold
sales of $160.6 million on sales of 100,834 ounces of gold, compared with realized gold sales of $105.1 million on sales of 66,876
ounces of gold in 2011. With the average market gold price of $1,665 per ounce in 2012 being comparable to the $1,623 per ounce
experienced in 2011, the increase in sales is directly attributable to the 33,958 additional ounces sold, a 51% increase resulting
from the continued ramp up in production and the achievement of steady-state production from June 2012.



Gross margin before D&D:



The Company achieved a gross margin before D&D of $26.2
million for the year, a $52.1 million increase from the $25.9 million gross loss incurred in 2011. The increased margin is attributable
to the increased gold sales described above with overall cost of operations were comparable year over year. Additional costs of
the increased 2012 production (primarily mining costs) were offset by the decreased cost of processing ore mined at Jerritt Canyon
rather than higher cost ore purchased from third parties which comprised almost 50% of the production in 2011.



Impairment of mineral properties:



In the fourth quarter of 2012 an impairment charge of $31.8
million was taken on the Company’s Yukon properties, primarily made up of a $30 million impairment charge on the Ketza River
property. The impairment decision was primarily driven by observed impairment indicators including the recent downturn in industry,
specifically in relation to exploration and development stage mining projects, which implied that the current carrying value would
not be fully recoverable under existing market conditions. As previously described, management continued to work on the Ketza River
property throughout 2012 and plans to continue the permitting process in 2013 while continuing to monitor the project for any further
impairment indicators as the project progresses.



Depreciation, depletion and amortization:



The Company had $12.0 million in depreciation, depletion and
amortization for the year ended December 31, 2012 compared with $6.7 million for the years ended December 31, 2011. The increase
is attributable to the increased depreciable asset base resulting from the significant expenditures on property, plant and equipment
(“PP&E”) in the fourth quarter of 2011 and the first half of 2012 with the extensive refurbishment program undertaken
on the milling facility as well as the delivery of new underground mining equipment to support the ramp up of the SSX-Steer mine.
Included is $2.0 million of depletion in 2012 (2011 — nil) arising from the significant additions to mineral properties in
2012.



General and administrative expenses and share-based
payments:



During 2012 the Company incurred general and administrative
expenses (“G&A”) of $8.4 million, comparable to the $8.2 million incurred in 2011. Included in G&A for the
year ended December 31, 2012 is $2.2 million of share based payments compared to $1.8 million in 2011.



95







G&A excluding share based payments was $6.2 million in 2012,
comparable with the $6.4 million incurred in 2011. These expenses are for corporate head office and transactions costs and are
primarily comprised of: salary and benefit costs and, professional and consulting fees.



Total share based payments in 2012 were $2.8 million, of which
$2.2 million was included in G&A and the remainder included in cost of sales, this compares to total share based payments in
2011 $3.2 million, of which $1.8 million was included in G&A and the remainder in cost of sales. The 2012 share based payments
primarily relate to the vesting of 0.8 million stock options which were granted to employees and directors in 2012 with an average
strike price of $2.76 and a fair-value of $2.43. Similarly the charge in 2011 relates to the vesting of stock options that were
granted in 2009, 2010 and 2011, the majority of the cost pertaining to 0.8 million stock options granted during 2011, primarily
to key personnel at an average strike price of $4.60 and a fair-value of $3.88.



Interest and other income



Interest and other income is comprised of:

|                                 |  | 2012 |        |   | 2011 |  
|-------------------------------- |  | ---- | ------ | - | ---- | -
|Gain on warrants and derivatives |  | $    | 17,278 |   |      | $
|Loss on derivative gold forwards |  |      | (7,920 | ) |      |  
|Interest income                  |  |      | 46     |   |      |  
|Other income                     |  |      | 628    |   |      |  
|                                 |  | $    | 10,032 |   |      | $



The Company has share purchase warrants issued that are denominated
in Canadian dollars. As the Canadian dollar is not the functional currency of the Company, the issued and outstanding warrants
are treated as financial instruments (derivative liabilities), and are thus revalued at each reporting period with the change in
fair value recorded in net income. For the year ended December 31, 2012 a revaluation gain of $17.3 million was recognized compared
to a gain of $97.2 million in 2011. This $79.9 million decrease is the primary driver for the decrease in interest and other income
over the year. The gains in each year are the result of declined in the Company’s share price; the gain being larger in 2011
due to there being a larger number of warrants outstanding during the year, many of which expired in early 2012. This decrease
in the gain on warrants was offset by an $11.6 million decrease in derivative losses year over year. The derivative losses are
primarily attributable to derivative forward gold contracts resulting from the extension of the maturity dates of each, the increased
loss in 2012 compared to 2011 was largely due to the increase in the number of gold ounces required to settle the respective contracts.



Finance and transactions costs:



Finance and transactions costs are comprised of:

|                                                           |  | 2012 |        |  | 2011 |  
|---------------------------------------------------------- |  | ---- | ------ |  | ---- | -
|Interest on long term borrowings                           |  |      | -      |  |      |  
|Interest on convertible debenture                          |  |      | 763    |  |      |  
|Accretion of decommissioning and rehabilitation provisions |  |      | 1,225  |  |      |  
|Environmental rehabilitation expense                       |  |      | 4,128  |  |      |  
|Transaction costs and finance fees                         |  |      | 3,284  |  |      |  
|Other interest and transaction costs                       |  |      | 700    |  |      |  
|                                                           |  | $    | 10,100 |  |      | $



Finance and transactions costs for the year ended December 31,
2012 were $10.1 million compared to $11.6 million in 2011. The net $1.5 million decrease year over year is the result of interest
expense incurred in 2011 but not in 2012 on Senior Secured Notes, which were settled in August of 2011, offset by a $0.8 million
in interest incurred on the convertible debentures issued in June, July and October of 2012. As well environmental rehabilitation
expense increased in 2012 which arose from the resurfacing of existing rock disposal areas ($2.0 million increase); and a $1.7
million increase in transactions and finance costs arising from the December 2012 public offering as well as the convertible debentures
issued during the year.



96







Foreign exchange (gain) loss:



There was a foreign exchange loss of $1.8 million in 2012, compared
with a $1.8 million gain in 2011. This was due to the strengthening of the Canadian dollar relative to the U.S. dollar. The 2012
loss was the result of U.S. denominated assets held in Canadian entities having decreased value due to the strengthening of the
Canadian dollar. The 2011 gain was due to the opposite effect happening due to a weakening Canadian offset by Canadian dollar denominated
monetary liabilities.



Income taxes:



The Company recorded income tax recovery of $7.9 million in
2012 compared to a recovery of $0.2 million in 2011. The 2012 tax recovery arose from the impairment of Yukon mineral properties
with corresponding reduction in deferred income tax liabilities.



The total income tax recovery in 2011 reflected a current recovery
of $0.7 million, arising from a reversal in 2011 of prior years’ provisions, which was offset by a 2011 deferred income tax
expense of $0.5 million that resulted from increased future income tax liabilities relating to Ketza, primarily the result of the
issuance and renunciation of flow-through shares.



As at December 31, 2012 the Company had unrecognized deferred
tax assets of $322.0 million (2011 - $266.6 million). These unrecognized deductible temporary differences, unused tax losses, and
unused tax credits are predominantly made up of non-capital and net operating loss carry forwards of $167.2 million (2011 - $178.6
million) which expire between 2014 and 2032.



B. Liquidity and capital resources.



LIQUIDITY (fiscal years ended December 31, 2013 and 2012)



Cash and cash equivalents decreased from $9.3 million at December
31, 2012 to $1.2 million at December 31, 2013. As at December 31, 2013 the Company had a working capital deficiency of $ 167.1
million compared to a working capital deficiency of $34.3 million at December 31, 2012. This decrease in working capital is primarily
the result of: a 48.9 million increase in accounts payable; the $12.1 million revaluation of the Senior Secured Gold Facility in
Q3-13, and the $33.3 million previously long-term portion of the facility becoming current in Q4-13; a previously long-term $17.3
million derivative forward contract liability becoming a current liability in Q1-13, the issuance of a $10 million short term promissory
note in Q2-13, in addition to the decrease in cash and working capital activities described below.



Operating:



During the year ended December 31, 2013 the Company recorded
a net loss of $66.7 million, which, after adjusting for non-cash items, positive changes in working capital of $24.9 million; and
subtracting $4.2 million in cash-settled deferred revenue liabilities, resulted in cash outflows of $3.0 million from operations
for the year.



This compares to the year ended December 31, 2012 where the
Company incurred a net loss of $20.0 million, which, after subtracting non-cash items, including deductive cash changes in working
capital of $14.0 million, resulted in cash outflows of $22.3 million, which after adding net deferred revenue proceeds of $9.1
million resulted in operating cash outflows of $13.2 million.



Changes in non-cash working capital in 2013 have resulted in
a $24.9 million cash inflow compared to $14.0 million outflow in 2012. The inflows in 2013 resulted from an increase in operating
accounts payable of $31.1 million, a $1.6 outflow resulting from the decrease in accounts receivable; and after adjusting for non-cash
items and gold delivered to settle the Senior Secured Gold Facility a $7.8 million cash outflow from the change in inventory.



Changes in non-cash working capital in 2012 resulted in a $14.0
million cash outflow resulting from a decrease in operating accounts payable of $6.8 million; after adjusting for non-cash items
an increase in inventory of $6.6 million; and, a $0.6 increase in accounts receivable.



97







Investing:



Capital expenditures



|                                                                          |  | Year ended December 31,       |      
|------------------------------------------------------------------------- |  | ----------------------------- | -----
|                                                                          |  | 2013                          |      
|(in thousands)                                                            |  | Property, plant and equipment |      
|Jerritt Canyon - Mill and equipment expenditures                          |  | $                             | 8,901
|Jerritt Canyon  - Exploration expenditures & underground mine development |  |                               | -    
|Ketza River - Property, plant and equipment expenditures                  |  |                               | -    
|Ketza River - Exploration/development  expenditures                       |  |                               | -    
|Corporate -  property plant and equipment expenditures                    |  |                               | 14   
|                                                                          |  | $                             | 8,915



Significant property, plant and equipment capital expenditures
in 2013 include the following:



| | · | Mobile and mining equipment ($4.5 million)
| | - | ------------------------------------------



| | · | Mill facilities and equipment ($3.8 million)
| | - | --------------------------------------------



| | · | Various mine related equipment ($0.6 million)
| | - | ---------------------------------------------



Significant property, plant and equipment capital expenditures
in 2012 include the following:



| | · | Environmental and new tailings facility infrastructure ($10.7 million)
| | - | ----------------------------------------------------------------------



| | · | Mobile equipment ($5.4 million);
| | - | --------------------------------



| | · | Ore dryer and bag house ($2.8 million); and,
| | - | --------------------------------------------



| | · | Installation of a digital control system ($1.2 million);
| | - | --------------------------------------------------------



| | · | Various mill related equipment ($1.5 million)
| | - | ---------------------------------------------



Nevada mineral property expenditures during 2013 included the
approximate amounts: SSX development including, the new Saval portal, ($4.5 million); Smith mine development ($1.5 million); Starvation
canyon mine development, ($3.5 million); and, Jerritt Canyon exploration expenditures ($3.5 million).



Nevada mineral property expenditures during 2012 include payments
for exploration and evaluation programs at Burns Basin, Starvation Canyon, Pie Creek, and West Mahala; as well as the construction
of underground infrastructure and mine development at the Smith and SSX/Steer mines.



Exploration at Ketza River remained consistent as the Company
continued focused on evaluating available data for the preparation of responses regarding the YESAB proposal.



Financing:



On December 2, 2013, the Company closed a public offering of
8,488,780 Units at a price of C$0.405 per Unit and 6,515,628 Flow-Through Units at a price of C$0.43 per Unit for gross proceeds
of $5.9 million. Each Unit and Flow-Through Unit was comprised of one common share of the Company and one half of one common share
purchase warrant. Each whole Unit and whole Flow-Through Unit Warrant has an exercise price of C$0.50 and entitles the holder thereof
to acquire one common share of the Company until December 2, 2016. Of the gross proceeds $4.6 million was attributed to common
shares and recorded in equity; $1.1 million was attributed to the warrants and recorded in warrant liability; and, $0.2 million
was attributed to a flow-through share premium liability. The Company paid agents fees equivalent to 6% ($0.5 million) of the public
offering. The agents’ fees were satisfied with $0.4 million in cash, and 300,088 common shares of the Company. The shares
had a value of $0.1 million. 81% of the agents fees were recorded in equity and 19% were recorded in transaction costs and finance
fees.



98







On September 18, 2013, the Company closed a private placement
for gross proceeds of $7.6 million, from the issuance of an aggregate of 15,000,000 units at price of C$0.52 per unit. Each unit
consisted of one common share and one half of one share purchase warrant exercisable to purchase one additional common share at
a price of C$0.60 per share until September 18, 2016. Of the gross proceeds $6.0 million was attributed to common shares and recorded
in equity, and $1.6 million was attributed to the warrants and recorded in warrant liability. The Company paid agents fees equivalent
to 5% ($0.4 million) of the private placement. The agent’s fees were satisfied with $0.2 million in cash, and 375,000 units
under the same terms as the private placement. 79% of the agents fees were recorded in equity and 21% were recorded in transaction
costs and finance fees. The Company also issued agents 675,000 broker compensation warrants with a fair value of $0.1 million.
79% of the agents fees were recorded in equity and 21% were recorded in transaction costs and finance fees. Each broker compensation
warrant consisted of one common share purchase option exercisable to purchase one additional common share in the Company at a price
of C$0.65 per share until September 18, 2016.



On August 16, 2013, the Company closed a public offering of
9,349,362 Units at a price of C$0.52 per Unit and 6,393,310 Flow-Through Units at a price of C$0.55 per Unit for gross proceeds
of $8.1 million. Each Unit and Flow-Through Unit is comprised of one common share of the Company and one half of one common share
purchase warrant. Each Unit Warrant has an exercise price of C$0.60 and entitles the holder thereof to acquire one common share
of the Company until August 16, 2016. Each whole Flow-Through Unit warrant has an exercise price of C$0.65 and entitles the holder
thereof to acquire one common share of the Company until August 16, 2016. Of the gross proceeds $6.1 million was attributed to
common shares and recorded in equity, and $1.8 million was attributed to the warrants and recorded in warrant liability, and $0.2
million was attributed to a flow-through share premium liability. The Company paid agents fees equivalent to 7% ($0.9 million)
of the public offering. The agents’ fees were satisfied with $0.6 million in cash, and 314,853 common shares of the Company.
The shares had a value of $0.2 million. 78% of the agents fees were recorded in equity and 22% were recorded in transaction costs
and finance fees (Note 6). The Company also issued agents 708,420 broker compensation warrants with a fair value of $0.1 million.
78% of the broker compensation warrants were recorded in equity and 22% were recorded in transaction costs and finance fees. Each
broker compensation warrant consisted of one common share purchase option exercisable to purchase one additional common share in
the Company at a price of C$0.60 per share until August 16, 2015.



In April 2013 the Company closed a financing in the form of
an eight-month senior unsecured promissory note (the “Note”) with a principal sum of $10.0 million. In connection with
the Note, the Company issued 3.4 million common share purchase warrants with an exercise price of US$1.80 per warrant, which have
a 5 year life. The Note bears interest at a rate of 9% per annum, payable monthly and will mature eight months from the April 12,
2013 closing date.



Also included in financing is $16.9 million in cash outflows
representing cash payments made to Deutsche Bank on the Senior Secured Gold Facility, these payments were made via four $4.23 million
monthly cash payments made in lieu of delivering 4,980 ounces of gold. These net-cash settlements were made in July, August, October
and November of 2013. The accounting treatment for the Senior Secured Gold Facility changed in Q3-2013 upon the Company’s
election to cash-settle the July and August obligations under the facility. The Company made neither the 4,980 ounce delivery of
gold, nor the $4.23 million net-cash payment to Deutsche Bank as scheduled for December, 2013, further the Company has neglected
to make any further scheduled payment under the Senior Secured Gold Facility since December 31, 2013. On January 28, 2014 the Company
received a notice of default from Deutsche Bank in respect of failure to make the scheduled December 31, 2013 payment. The Company
is in continued discussions with Deutsche Bank, the outlook and status regarding the intended restructuring of this and other liabilities
of the Company are discussed further in the Liquidity and Outlook sections below.



During the first half of 2012 the Company raised $5.0 million
through a forward sales agreement entered into on January 2012. As well, $9.9 million of the $20 million prepayment received in
February, 2012 for the Second Gold Forward Agreement with Deutsche Bank was attributed to the warrants that were issued. In May,
2012 $9.1 million was raised through the private placement of 39.1 million units consisting of one common share and one share purchase
warrant, and in June 2012 raised an additional $5.96 million from the issuance of convertible debentures.



99







Liquidity risk:



Liquidity risk is the risk that the Company will not be able
to meet its financial obligations as they fall due. The Company manages liquidity risk through the preparation of annual budgets
to identify funding requirements early on, if any, and daily forecasting of its cash flows from operations to anticipate investing
and financing activities as well as pending treasury requirements.



The Company had losses from operations of $45.1 million and
$26.1 million for the years ended December 31, 2013 and 2012, respectively; and, $3.0 million and $13.2 million of cash outflows
from operations for 2013 and 2012, respectively. At December 31, 2013 the Company had a working capital deficiency of $167.1 million
(December 31, 2012 – $34.3 million) and an accumulated deficit of $445.6 million (December 31, 2012 – $379.0 million).
The Company is currently in default on the Deutsche Bank Senior Secured Gold Facility due to a failure to deliver the required
4,980 ounces at the end of December (or the cash payment equivalent) and is in regular communications with Deutsche Bank to come
to a resolution. Under the terms of the Gold Facility the default cannot be cured, however both parties are actively working to
a resolution to ensure the continuation of the Company’s operations for the benefit of the shareholders.



Throughout the year senior management is actively involved in
the review and approval of planned expenditures and typically ensures that it has sufficient cash on hand to meet expected operating
expenses for 60 days. The unexpected shutdown in December and January have significantly increased the need for the Company to
continue pursuing additional financing to meet the ongoing operational and capital requirements to ensure continuity of operations.
The operations have undergone significant upgrades in 2012 and 2013 which have had a significant impact on the mills output capacity
and also resulted in the ramp up of the SSX-Steer mine and the opening of a third mine in Q2-2013, Starvation Canyon, adding a
significant level of production to the operation. The Company also obtained several toll milling contracts in 2013, adding incremental
cash flows to offset the costs of existing operations. Through these investments the profitability and stability of the operations
has significantly improved, however additional financing has been required to support this growth and assist in the servicing of
the Senior Secured Gold Facility. As a result of the December shutdown and the shutdown the Company is undertaking in March of
2014 while awaiting the Air Permit for Jerritt Canyon, additional financing is required as well as significant negotiations with
current lenders are being undertaken.



There can be no assurance that the Company will succeed in these
negotiations or possibly experience further interruptions or delays in operations. If the Company is unable to generate positive
cash flows or obtain adequate financing, the Company will need to curtail operations activities.



The following are the contractual maturities of the undiscounted
cash flows of financial liabilities at December 31, 2013:





|                                         |  | Less than 3 months |         |  | 4 to 12 months |   |        | 1 to 2 years |  |   | Greater than
2 years |  |  | Total |      
|---------------------------------------- |  | ------------------ | ------- |  | -------------- | - | ------ | ------------ |  | - | -------------------- |  |  | ----- | -----
|Accounts payable and accrued liabilities |  | $                  | 84,373  |  |                | $ | -      |              |  | $ | -                    |  |  | $     | -    
|Finance lease obligations                |  |                    | 1,043   |  |                |   | 2,617  |              |  |   | 1,945                |  |  |       | 340  
|Convertible debt                         |  |                    | 10,000  |  |                |   | -      |              |  |   | 6,511                |  |  |       | 7,813
|Forward contracts                        |  |                    | 24,086  |  |                |   | -      |              |  |   | -                    |  |  |       | -    
|Senior secured debt facility             |  |                    | 16,932  |  |                |   | 38,097 |              |  |   | 34,417               |  |  |       | -    
|At December 31, 2013                     |  |                    | 136,434 |  |                |   | 40,714 |              |  |   | 42,873               |  |  |       | 8,153



Liquidity risk (ability to raise capital)



The availability of capital is dependent on both macroeconomic
factors and the Company’s track record in utilizing capital. The industry continues to go through a period of credit tightening,
with heightened security requirements and lowered funding expectations, which present significant challenges to companies attempting
to obtain financing. The ability to obtain regular debt financing continued to prove difficult for companies without a sufficient
history of sustainable earnings.



100









The Company was able to obtain funds financing in 2013 and
2012 through both debt and equity markets. The Company was able to raise equity financing with both a public offering and a private
placement during 2013. Debt financing in 2013 was done by way of issuing the $10 million Note. 2013 experienced downward pressures
on market metal prices, with significant declines in precious metal prices. The fall in the gold price resulted in the exodus
of capital in gold equities, and as with most gold-mining companies directly impacted the Company’s market capitalization
thus increasing the difficulty to do any significant forms of equity financing without incurring significant dilution. Management
attempts to use capital resources as efficiently as possible, while being aware of the need to invest money in the finding and
developing future gold-bearing ore bodies. The Company’s default status with certain creditors, as discussed in previous
sections, increased the risk relating to the ability to raise capital.



CAPITAL RESOURCES:



The Company had a cash balance of $1.2 million as of December
31, 2013. The Company has a total of $56.4 million of cash classified as restricted at December 31, 2013 (December 31, 2012 -
$51.3 million), primarily related to cash restricted under the existing bonding requirements for the future reclamation at the
Jerritt Canyon property.



The Company invested the funds from the December 2013 public
offering to assist with payments to the Senior Secured Gold Facility, to upgrade and refurbish the dry mill equipment at its Jerritt
Canyon mill operations, and to fund general working capital. The Company invested the funds from the August 2013 public offering
and September 2013 private placement into the refurbishment of its Jerritt Canyon mill operations; continued development of the
underground mine facilities at the existing mines as well as at the Saval 4 Gold Mine; to fund bonding required for future reclamation
obligations; to ensure that debt payments are met; and for general working capital purposes. Proceeds from the Flow-Through Units
will be used for the funding of exploration activities at the Company’s Ketza River property in the Yukon.



The Company invested the funds from the December 2012 public
offering primarily into the development of the Starvation Canyon mine but also for funding required bonding obligations and general
working capital purposes. The Company further funded the commencement of development on Saval 4 and completed the development
of Starvation Canyon with $8 million drawn from the performance reserve funds relating to the August 2011 Forward Gold Purchase
Agreement in February 2013; along with $10 million in proceeds obtained from an eight-month senior unsecured promissory note received
in April, 2013, described in detail below in the Commitments section of the MD&A. With development work completed, and the
full ramp up of the mine’s operations, it is expected that sufficient funds will be generated to support the ongoing sustaining
capital requirements.



Throughout 2013 the Company pursued opportunities to restructure
the existing debt commitments, primarily focusing on increasing the duration of the existing facilities, either by extending the
terms in cooperation with the current holders or through the buyout of the debt under new terms, enabling it to invest further
funds into existing operations or pursue further improvements to the capital structure. Due to the events of December and the
resulting shutdown, the Company defaulted on the Senior Secured Debt Facility which has further accelerated the need for a complete
refinancing of the capital structure, including a Company led buyout of the loan currently in default. To that end the Board of
Directors of the Company has appointed a Special Committee, comprised of two independent and one non-independent Director, to
review the current options and work with the appointed advisor, Raymond James, to develop and explore other alternatives.



Should the Company be able to extend the terms of the facility
or otherwise refinance on longer terms, and possibly negotiate better terms with the subordinated debt holders, this will significantly
improve the monthly free cash flow available to sustain the existing operations. The Company believes it can successfully complete
this restructuring over the coming quarters and make significant progress in 2014.



COMMITMENTS



On August 12, 2011, the Company entered into a Forward Gold
Purchase Agreement (the “Agreement”) with 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. Under the terms of the Agreement, the Company has
sold to Deutsche Bank, a Contract Quantity of Gold in the amount of 173,880 ounces to be delivered to Deutsche Bank over a forty-eight
month term commencing September 2011. The scheduled future gold deliveries to Deutsche Bank are: (i) 1,000 ounces per month during
the first nine months of the term; (ii) 2,000 ounces per month for the following nine months of the term; and, (iii) 4,330 ounces
per month for the final thirty-nine months of the term. On February 7, 2012, the Company entered into a Second Forward Gold Purchase
Agreement with Deutsche Bank (the “Second Agreement”). Under this agreement, the Company received a gross prepayment
of $20 million, of which net cash proceeds of $18.9 million were received on February 8, 2012, in exchange for the future delivery
of 650 ounces of gold per month, over a forty-three month term commencing March 31, 2012, representing total future delivery of
27,950 ounces of gold. As previously discussed, on January 28, 2014, the Company received a notice of default from Deutsche Bank,
with respect to payment defaults under the forward gold purchase Agreements. The Notice of Default relates to the failure to make
the monthly December gold delivery, or pay the cash equivalent of the gold delivery shortfall, for December, 2013, under each
of the Agreements. As of the date of this Annual Report on Form 20-F neither the scheduled December delivery, nor any other delivery
since has been made and the Company continues to be in default on each of the Agreements.



101







On November 25, 2010, the Company entered into a forward gold
sales contract which specifies that 6,255 troy ounces of refined gold would be sold to the counterparty by May 30, 2011. 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. The additional ounces to be delivered is based on a 2.25% monthly increase in the ounces of gold to
be delivered for each month the contracted gold delivery is outstanding from May 30, 2011. However, at the option of the counterparty,
the Company may be requested to settle the liability through a cash payment rather than through physical delivery of the gold.
In December 2012 the Company and the counterparty agreed that the greater of $17.3 million in cash, or the gold delivery required
(approximately 10 thousand ounces) to settle the contract, would occur in January 2014. As at the date hereof no settlement of
this contract has occurred and the Company continues to be in discussions with the counterparty to renegotiate settlement terms
and timing.



On January 12, 2012, the Company entered into a forward sales
contract with a related party which requires delivery of 3,665 ounces of gold by June 12, 2012 or cash payment of $6.0 million
at the option of the related party. 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, resulting in an agreed upon late-settlement charge of 2.25% per month on the
outstanding balance being imposed on the Company. This resulted in an additional charge of $0.4 million, or an estimated 165 ounces
being due on August 30, 2012. During the second quarter of 2013, the Company and the counterparty agreed to extend settlement
of the contract to June 30, 2013. Under the terms of the extension, the counterparty received the option to receive an amount
of $6.6 million, or alternatively the right to receive 3,839 troy ounces of refined gold. No settlement was made on either June
30, 2013, or since. As part of the ongoing extension and renegotiation discussions since June 30, 2013, the Company made a payment
of $0.5 million to the counterparty in September, 2013, this payment being almost entirely accrued interest. As at December 31,
2013 the contract had not been settled, the Company was, and continues to be in ongoing negotiations with the counterparty to
further extend the settlement date. The amount of the liability due as of December 31, 2013 was $6.8 million, and continues to
accrue interest on the outstanding balance at a rate of 10% per annum.



The Company issued unsecured convertible debentures on June
15, 2012, July 19, 2012, and October 11, 2012 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, discounted by 5% per Share.



On April 12, 2013, the Company entered into a senior unsecured
promissory note, which was amended on May 15, 2013 (the “Note”) with a principal sum of US$10.0 million. The Note
bears an interest at a rate of 9% per annum and will mature on October 12, 2014. In connection with the Note, the Company issued
to the counterparty (the “Lender”) 3.4 million five-year common share purchase warrants with an exercise price of
$1.80 per warrant. In connection with the Note transaction, the Company also paid a finder’s fee equal to 4% of the aggregate
gross proceeds to Casimir Capital Ltd. (“Casimir”) and also issued Casimir 100,000 common share purchase warrants
with an exercise price of $1.85 and a term of two years from the Closing Date. The Note provides that from and after the maturity
date or at the election of the Lender an Event of Default (as defined in the Note), the principal may be converted, in minimum
increments of $500,000 and no more than 20% of the original principal of the amended Note in any one 30-day period, into common
shares of the Company based on a conversion price equal to the greater of: (a) US$0.50, provided that if the US$0.50 floor price
would cause the Lender’s ownership interest in the Company to be greater than 19.9% of the Company’s issued and outstanding
common shares, the floor price shall be the price that would cause the Lender’s ownership interest in the Company to be
equal to 19.9% of the Company issued and outstanding common shares; and (b) the Market Price (as defined in the TSX Company Manual)
of the Company’s common shares discounted by 10% per share. The ability of the Lender to exercise its option to convert
the principal into common shares remains subject to TSX approval at the time of the conversion. In addition, pursuant to the terms
of the Note, the Company issued to the Lender an additional 500,000 common share purchase warrants with an exercise price of US$1.80
and an expiry date of April 12, 2018. The Company used the proceeds of the Note to complete development of the Starvation Canyon
Mine, which commenced production on April 6, 2013. As of December 31, 2013 the US $10 million principal, and accrued interest
of $0.05 million, had not been paid and remained outstanding. Subsequent to December 31, 2013 the Company entered into an agreement
with the Lender to extend the maturity date of the Note to January 12, 2014, and to amend the exercise price of the related warrants
from US$1.80 to US$0.50. The amendment to the exercise price of the warrants became effective as of February 14, 2014. The principal
amount was not settled on the extended January 12, 2014 maturity date, this resulted in the Company incurring interest on the
outstanding balance at a rate of 21% per annum, payable monthly.



102







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. The Company’s financial assets and liabilities include cash and cash equivalents, restricted funds, and derivative
assets and liabilities. The Company’s derivative liabilities are comprised of: (a) Warrants (considered derivatives due
to being denominated in Canadian dollars, a different currency than the Company’s U.S. dollar functional currency); (b)
derivative Forward Contracts; and, (c) the gold derivative embedded within the convertible debentures (the “Embedded Derivative”).



The Company’s cash and cash equivalents are held in Canadian
and U.S. dollars.



OUTLOOK:



Despite the interruption to operations in December of 2013
the Company was able to produce and sell approximately 140,000 ounces, less than targeted earlier in the year however in line
with adjusted year-end expectations. The Company believes it can sustain a production level of between approximately 160,000 to
170,000 ounces from its three existing underground mines (including Starvation Canyon mine which was completed in April of 2013)
with potential increases coming from a fourth mine, Saval 4. The Saval 4 lies in close proximity to the SSX-Steer mine and will
ultimately produce between 200-300 TPD of additional ore with comparable grades to the other mines. Some additional capital will
be required to complete and equip this mine; the final amounts are still being assessed due to the ability to use existing resources,
but will likely be between $4 million to $6 million in development and machinery over the next several quarters as production
increases.



To supplement the ores from the property, the Company has a
toll milling agreement with Newmont USA Ltd. to process up to 45,000 tons per month which extends to December 31, 2014, adding
additional incremental revenues and cash flows to the Jerritt Canyon operation. The Company also has other agreements in place,
including the Klondex toll milling agreement for their non-refractory ore.



As previously noted the Company has substantially completed
all items under the Consent Decree, including the addition of air emissions control equipment for mercury. Stack testing will
continue on a quarterly basis for the roaster stacks until the Consent Decree is extinguished. The roasters continue to pass the
testing requirements as well as all other points of emissions at the facility including the ore dryer and the refinery furnace.
The Company has entered into a second modified Consent Decree with the NDEP to revise the timelines and also clearly define the
ongoing requirements. Testing of treatment methods for RDA seepage (the remaining CD item) began in the first quarter of 2013
and continues with indications of success but will require several seasons to determine the most effective solution and also determine
what potential bonding would be needed to secure the completion of that work. In the interim, as part of modifying the Consent
Decree in December, the Company has agreed to place $10 million of bonding by May 31, 2014 related to the ongoing work around
the RDA water treatment until a solution has been agreed upon in lieu of possible penalties (totaling $10.6 million) that were
assessed under the Consent Decree. These penalties could still payable in the event the Company is unable to secure the bonding
required hence the Company has recorded a provision for this amount. The Company is confident in its ability to place the bonding
and believes the ultimate solution will require significantly less surety than this which would allow the Company to recover a
portion of these funds in the future.



103







As noted previously the Company is currently developing plans
for the 2014 surface exploration budget, identifying priority targets so that these can be matched to funding availability based
on overall expected return for each area. There is significant confidence in the long term exploration potential of Jerritt Canyon,
including additional drilling in the north end beyond the historical drill depths capped at 200 meters and also in the significantly
underexplored south end of the property. The near term focus is on developing out from Zone 1 of the SSX-Steer mine, targeting
resources in the Mahala basin that were identified during the 2011 drill program. The development drift will be established in
the fourth quarter of 2013 and the first quarter of 2014, with underground drilling occurring at the same time. It is expected
that this will increase the required confidence needed in the geostatistics to allow for approximately 300,000 ounces to be converted
from inferred resource into reserves.



The 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 obtain additional financing
in order to meet its planned business objectives and generate positive cash flows. However, there can be no assurance that the
Company will be able to obtain additional financial resources or achieve profitability or positive cash flows. Failure to continue
as a going concern would require that the Company’s assets and liabilities be restated on a liquidation basis, which values
could differ significantly from the going concern basis.



LIQUIDITY (fiscal years ended December 31, 2012 and 2011)



During 2012 cash and cash equivalents increased from $2.3 million
to $9.3 million. At December 31, 2012 the Company had a working capital deficiency of $34.3 million compared to a working capital
deficiency of $52.7 million at December 31, 2011 as a result of the activities described below.



Operating:



During 2012 the Company recorded a net loss of $20.0 million,
which, after subtracting non-cash items, including changes in working capital of $14.0 million, and adding net deferred revenue
proceeds of $9.1 million, resulted in cash outflows of $13.2 million for the year. This cash outflow is comprised primarily of
a gross margin of $26.2 million, less deferred revenue recognition net of deferred revenue proceeds of $14.9 million, changes
in working capital of $14 million, less general and administrative costs of $8.4 million and, environmental related expenses of
$4.1 million.



During 2011 the Company recorded net income of $26.4 million,
which, after subtracting interest paid and non-cash items, including changes in working capital, of $13.0 million, and adding
net deferred revenue proceeds of $114.0 million, resulted in cash inflows of $61.6 million for the year. This cash inflow is comprised
primarily of net deferred revenue proceeds of $114.0 million, gross losses of $25.9 million, general and administrative costs
$8.2 million, environmental related expense $2.2 million and exploration expenditures of $1 million.



Changes in non-cash working capital resulted in a $14.0 million
cash outflow compared to $13.0 million outflow in the comparable period in 2011. The outflows in 2012 were from a reduction in
accounts payable of $6.8 million a $0.6 million increase in accounts receivable, and an increase in inventory of $6.6 million.



The outflows in 2011 were from a reduction in accounts payable
of $16.7 million and a $3.0 million increase in accounts receivable (primarily due to the Deutsche Bank settlement on the December
delivery), offset by an inflow from the decrease in inventory of $6.7 million.



104







Investing:



Capital expenditures

|                                                                         |  | 2012                          |        |  | 2011               |  
|------------------------------------------------------------------------ |  | ----------------------------- | ------ |  | ------------------ | -
|(in thousands)                                                           |  | Property, plant and equipment |        |  | Mineral properties |  
|Jerritt Canyon - Mill and equipment expenditures                         |  | $                             | 23,108 |  |                    | $
|Jerritt Canyon - Exploration expenditures & underground mine development |  |                               | -      |  |                    |  
|Ketza River - Property, plant and equipment expenditures                 |  |                               | 248    |  |                    |  
|Ketza River - Exploration/development expenditures                       |  |                               | -      |  |                    |  
|Corporate - property plant and equipment expenditures                    |  |                               | 69     |  |                    |  
|                                                                         |  | $                             | 23,425 |  |                    | $



Cash disbursements on property, plant and equipment and mineral
properties were $36.1 million in 2012 compared to $66.9 million in the previous year.



Significant property, plant and equipment capital expenditures
during 2012 included:



| | • | Fabric and earthworks to complete the new tailings facility
                                         ($8.9 million);
| | - | --------------------------------------------------------------------------------------------------------------------



| | • | Payments on mobile and underground mining equipment ($5.4
                                         million), including a long-hole drill, two underground jumbo drills, a bolter, five trucks,
                                         and a loader.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Complete the installation of a new ore dryer, bag house,
                                         and scrubber along with a new fine crushing circuit ($4.9 million);
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Installation of a digital control system, replacing the
                                         existing pneumatic one, purchase of a new refinery furnace and construction of a waste
                                         water treatment facility ($1.7million);
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Nevada mineral property expenditures during 2012 included SSX
development including the new Saval portal ($1.7 million); Smith mine development ($3.5 million); Starvation canyon mine development,
including portal construction ($1.7 million); and Jerritt Canyon exploration expenditures ($0.1 million).



Significant property, plant and equipment capital expenditures
during 2011 include payments on:



| | • | SSX mining equipment ($10.2 million);
| | - | -------------------------------------



| | • | Completion of digital control system for mill operations,
                                         new ore dryer circuit, and refinery upgrades including electro winning equipment ($12.7
                                         million);
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Commencement of tailings facility and evaporation system
                                         work ($20.5 million);
| | - | -----------------------------------------------------------------------------------------------------------------------



Nevada mineral property expenditures during 2011 include payments
for exploration and evaluation programs at Burns Basin, Starvation Canyon, Pie Creek, and West Mahala ($8.3 million); as well
as the construction of underground infrastructure and mine development at the Smith and SSX/Steer mines ($3.0 million).



Exploration at Ketza River remained consistent as the Company
continued focused on evaluating available data for the preparation of the YESAB proposal.



105







Financing:



During 2012, the Company raised $5.0 million through a forward
sales contract entered into with a related party in January 2012. In February of 2012, the Company raised an additional $20 million
from Deutsche Bank under a similar prepaid Gold Purchase Agreement as completed in August of 2011. Warrants were issued as part
of this transaction, with $9.9 million of the $20 million attributable to the value of the warrants that were issued and treated
as financing proceeds. In May, 2012 $9.1 million was raised through the private placement of 3.9 million units consisting of one
common share and one share purchase warrant. In June, July and October 2012 the Company issued convertible debentures for total
proceeds of $11.5 million. In December, 2012 net proceeds of $14.4 million was raised through the public offering of units of
the Company, each unit being comprised of one common share and one-half share purchase warrant.



During the first quarter of 2011, the Company raised $7.2 million
of financing through the issuance of flow-through shares and a further $5.0 million through a forward sales contract entered into
in January 2011. The forward contract matured on June 30, 2011 and was settled through a combination of cash ($5.4 million) derived
from the sale of 3,465 ounces on behalf of the lender and the transfer of an additional 1,000 ounces to the account of the lender
to satisfy the terms of the contract.



On May 24, 2011, the Company raised C$14.7 million of financing
through the private placement of 33.5 million C$0.43 units with Deutsche Bank, each unit consisting of one common share and a
common share purchase warrant with an exercise price C$0.55. As well, an additional C$44.9 million was raised through the sale
of warrants from the Company’s major shareholder to a group of institutional investors, including Deutsche Bank, under the
condition the warrants were to be immediately exercised. A further C$12.5 million was raised from 59.1 million warrants that were
exercised during a 30 day period wherein the warrants could be exercised for an 18% discount to their original strike price.



In August 2011 the Senior Secured Notes entered into in August
2010 (the “Notes”, further detail below), including the embedded gold derivative, were settled in entirety. Total
cash repayments on the Notes in 2011 totaled $41.7 million.



Liquidity risk



Liquidity risk is the risk that the Company will not be able
to meet its 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 hand to meet expected operating expenses for 60 days.
The significant investment and experienced downtime relating to the Jerritt Canyon operations refurbishment and operating issues
since restarting increased the need for the Company to continue pursuing additional financing to meet the ongoing capital requirements
to ensure continuity of operations. The operations having undergone significant upgrades in the first half of 2012 had a significant
impact on the mills output capacity and returned the Company to positive operating cash flows in the third and fourth quarter
of 2012. However there can be no assurance that the Company will be able to obtain additional financial resources, or achieve
profitability or positive cash flows. If the Company is unable to generate positive cash flows or obtain adequate financing, the
Company will need to further curtail operations and exploration activities.



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



|                                         |  | Less than 3 months |        |  | 4 to 12 months |   |       | 1 to 2 years |  |   | Greater than 2 years |  |  | Total |       
|---------------------------------------- |  | ------------------ | ------ |  | -------------- | - | ----- | ------------ |  | - | -------------------- |  |  | ----- | ------
|Accounts payable and accrued liabilities |  | $                  | 37,373 |  |                | $ | -     |              |  | $ | -                    |  |  | $     | -     
|Finance lease obligations                |  |                    | 674    |  |                |   | 1,732 |              |  |   | 2,229                |  |  |       | 1,322 
|Operating lease obligations              |  |                    | 56     |  |                |   | 169   |              |  |   | 215                  |  |  |       | 143   
|Decommissioning and                      |  |                    |        |  |                |   |       |              |  |   |                      |  |  |       |       
|rehabilitation provisions                |  |                    | -      |  |                |   | 408   |              |  |   | 1,309                |  |  |       | 63,253
|Total                                    |  |                    | 38,103 |  |                |   | 2,309 |              |  |   | 3,753                |  |  |       | 64,718



106







Liquidity risk (ability to raise capital)



The availability of capital is dependent on both macroeconomic
factors and the Company's track record in utilizing capital. The industry continues to go through a period of credit tightening,
with heightened security requirements and lowered funding expectations, which present significant challenges to companies attempting
to obtain financing. The ability to obtain regular debt financing continued to prove difficult for companies without a sufficient
history of sustainable earnings, especially towards the latter part of 2012.



The Company was able to obtain funds financing in 2012 through
both debt and equity markets. The Company was able to raise equity financing with both a public offering and a private placement
in the year. Debt financing was done by way of issuing convertible debentures. In the latter half of 2012 the market for smaller
gold companies experienced an exodus of capital and this has directly impacted the Company's market capitalization, increasing
the difficulty to do any significant forms of equity financing without incurring significant dilution. Management attempts to
use capital resources as efficiently as possible, while being aware of the need to invest money in the finding and developing
future gold-bearing ore bodies.



CAPITAL RESOURCES:



The Company had a cash balance of $9.3 million as of December
31, 2012 and a negative working capital balance of $34.3 million. The Company had a $51.3 million restricted cash balance as of
December 31, 2012, primarily related to cash restricted for future reclamation at the Jerritt Canyon property.



The Company continues to generate positive cash flows from
operations and has been investing the funds from the recently completed public offering into developing the third underground
mine, Starvation Canyon mine. The Company expects to be able to fund the completion of that mine with the proceeds received as
well as through the distribution of $8 million of funds held from the Gold Forward Facility closed in August of 2011. These funds
were received by the Company in February of 2013. Once the development work is completed and the mine is in operations, the operations
should generate sufficient funds to support the ongoing capital expenditures and the Company will be free cash flow positive.



The Company is exploring opportunities to reduce the existing
debt commitments by extending out the existing terms of the Gold Forward Facilities, enabling it to invest further funds into
existing operations or pursue changes to its capital structure. Should these negotiations prove successful the monthly cash flow
from the Jerritt Canyon operations will increase by up to $2 million, lowering the breakeven point for the operations and increasing
cash available to support investment in the operations.



COMMITMENTS



On August 12, 2011, the Company entered into a Forward Gold
Purchase Agreement (the “Agreement”) with 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. Under the terms of the Agreement, the Company has
sold to Deutsche Bank, a Contract Quantity of Gold in the amount of 173,880 ounces to be delivered to Deutsche Bank over a forty-eight
month term commencing September 2011. The scheduled future gold deliveries to Deutsche Bank are: (i) 1,000 ounces per month during
the first nine months of the term; (ii) 2,000 ounces per month for the following nine months of the term; and, (iii) 4,330 ounces
per month for the final thirty-nine months of the term.



On February 7, 2012, the Company entered into a Second Forward
Gold Purchase Agreement with Deutsche Bank (the “Third Agreement”). Under this agreement, the Company received a gross
prepayment of $20 million, of which net cash proceeds of $18.9 million were received on February 8, 2012, in exchange for the
future delivery of 650 ounces of gold per month, over a forty-three month term commencing March 31, 2012, representing total future
delivery of 27,950 ounces of gold.



On November 25, 2010, the Company entered into a forward gold
sales contract which specifies that 6,255 troy ounces of refined gold would be sold to the counterparty by May 30, 2011. 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. The additional ounces to be delivered is based on a 2.25% monthly increase in the ounces of gold to
be delivered for each month the contracted gold delivery is outstanding from May 30, 2011. However, at the option of the counterparty,
the Company may be requested to settle the liability through a cash payment rather than through physical delivery of the gold.
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.



107







On January 12, 2012, the Company entered into a forward sales
contract with a related party which requires delivery of 3,665 ounces of gold by June 12, 2012 or cash payment of $6.0 million
at the option of the related party. 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, resulting in an agreed upon late-settlement charge of 2.25% per month on the
outstanding balance being imposed on the Company. This resulted in an additional charge of $0.4 million, or an estimated 165 ounces
being due on August 30, 2012. 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 Company issued unsecured convertible debentures on June
15, 2012, July 19, 2012, and October 11, 2012 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, discounted by 5% per Share.



C. Research and
development, patents and licenses, etc.



None.



D. Trend Information.



The Company is directly affected by trends in the metal industry.
The Company’s principal assets are its gold producing property in Nevada and an exploration property in the Yukon. The global
economic and credit crisis has affected all industries, including mining, and has resulted in additional pressure on the ability
and costs of obtaining project capital financing. Global metal prices, driven by rising global demand, climbed dramatically and
approached historic highs over the past several years but are volatile and subject to periodic corrections as happened in 2013.
The effect of high metal prices had a significant positive impact on the ability to raise equity capital, which has resulted in
increases in global exploration projects and in turn has caused the procurement of exploration services and skilled employees
to be increasingly difficult. In recent months however, decreased global metal prices and especially decreases in the gold price,
have reduced market appetite for equity issues and access to capital is more difficult than in recent years.



Overall market prices for securities in the mineral resources
sector and factors affecting such prices, including base metal prices, political trends in the countries such companies operate,
and general economic conditions, may have an effect on the terms on which financing is available to the Company, if at all.



Refer to “Item 3.D. Key Information - Risk factors”
for further information on uncertainty or items affecting the business or nature of business of the Company.



E. Off-balance sheet arrangements.



The Company has no off-balance sheet arrangements as of December
31, 2013.



F. Tabular disclosure of contractual obligations.



See
“Item 5.B. Operating and Financial Review and Prospects –Liquidity and Capital Resources– LIQUIDITY (fiscal years ended December 31, 2013 and 2012) – Liquidity risk” for the Company’s tabular
disclosure of contractual obligations as of December 31, 2013.



108







G. Safe harbor.



See “Cautionary Note Regarding Forward-Looking Information.”



Item 6. Directors, Senior Management and Employees.



A. Directors and senior management.



DIRECTORS AND OFFICERS



Name, Occupation and Security Holding



|Name of Director/ExecutiveOfficer, Province or State andCountry of Residence |  | Principal Occupation during the past fiveyears                                                                                                                                                          |  | Current Position and Date ofAppointment                                                                                             
|---------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Jean-Edgar de Trentinian
        Switzerland                                 |  | President and CEO of Orifer SA.                                                                                                                                                                         |  | Director since August 1, 2009.                                                                                                      
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Graham Dickson(5)
        British Columbia, Canada                           |  | President of Celec Inc. since June 1993; President and CEO of NouHgt Technologies.                                                                                                                      |  | COO since June 18, 2013 and Sr. VP of Acquisitions and Corporate Development since June
    27, 2011; Director since April 17, 1997.
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Barry A. Goodfield(3)(5)
        Arizona, USA                                |  | Founding Director of The Goodfield Institute LLC since June 1974; President, The Goodfield
    Foundation NGO registered in The Hague.                                                                  |  | Director since July 6, 2012.                                                                                                        
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Shaun Heinrichs
        British Columbia, Canada                             |  | CFO since November 2008, Controller from January 2008 to November 2008.                                                                                                                                 |  | CFO since November 21, 2008.                                                                                                        
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Joanne C. Jobin
        Ontario, Canada                                      |  | Vice President, Investor Relations since 2013; 2011 to 2013:
    Vice President, Investor Relations of  Excellon Resources Inc.; 2009 to 2011: Principal, Investor Relations Services
    Inc. (IR.INC) |  | Vice President, Investor Relations since April 30, 2013                                                                             
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Todd Johnson
        Washington, USA                                         |  | Vice President of the Company since April 2010; Consultant for Veris from January 2008 to
    March 2010.                                                                                               |  | Vice President of Exploration since April 1, 2010.                                                                                  
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Francois Marland(2)(5)
        Switzerland                                   |  | Businessman and Executive; formerly
    a Lawyer and a Writer.                                                                                                                                          |  | President and CEO since October 1, 2013; Director since July 2, 2010.                                                               
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Cameron Paterson(7)
        British Columbia, Canada                         |  | Vice President of the Company since July 2012; Corporate Controller of the Company from June
    2011 to June 2012; Auditor at Deloitte LLP from 2003 to 2011.                                          |  | Vice-President Finance since July 6, 2012.                                                                                          
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Gerald B. Ruth(1) (2) (3) (4) (5) (6)
        Ontario, Canada                |  | CEO of Gersan Capital Corp. and a Director of Monument Mining Limited.                                                                                                                                  |  | Chairman since October 1, 2013; Director since May 13, 2010.                                                                        
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Jay W. Schnyder(1) (2)
        Switzerland                                   |  | A member of the management committee (Head of Refining) of MKS Finance SA.                                                                                                                              |  | Director since May 13, 2010.                                                                                                        
|                                                                             |  |                                                                                                                                                                                                         |  |                                                                                                                                     
|Graham Scott
        British Columbia, Canada                                |  | Lawyer; Principal, Vector Corporate Finance Lawyers since July 2001.                                                                                                                                    |  | Secretary since May 19, 2005.                                                                                                       



109







|Name of Director/ExecutiveOfficer, Province or State andCountry of Residence |  | Principal Occupation during the past fiveyears |  | Current Position and Date ofAppointment
|---------------------------------------------------------------------------- |  | ---------------------------------------------- |  | ---------------------------------------
|                                                                             |  |                                                |  |                                        
|Simon Solomonidis(1)(2)(3)(4)
        Switzerland                            |  | Independent Consultant since 2008.             |  | Director since August 1, 2009.         

| | 1. | Member of the Audit Committee
| | -- | -----------------------------

| | 2. | Member of the Compensation Committee
| | -- | ------------------------------------

| | 3. | Member of the Corporate Governance Committee
| | -- | --------------------------------------------

| | 4. | Member of the Disclosure Committee (Corporate Disclosure Policy)
| | -- | ----------------------------------------------------------------

| | 5. | Member of the Special Committee
| | -- | -------------------------------

| | 6. | Member of the Audit Sub-Committee (Financial Disclosure)
| | -- | --------------------------------------------------------

| | 7. | Mr. Paterson resigned as the Company’s Vice President
                                         of Finance effective as of April 25, 2014.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------



The directors are elected at the annual general meeting for
a period of one year. The Company’s next Annual General Meeting is scheduled to be held on June 26, 2014 and it is anticipated
that all of the above directors will be nominated for re-election. Officers of the Company are appointed by the Board of Directors.



B. Compensation.



Compensation for the Company’s executive officers for
the fiscal year ended December 31, 2013 is as follows (in Canadian dollars):



|                                                   |  | Annual
    Compensation |         |  | Long
    Term Compensation |  |   |                                   | 
|-------------------------------------------------- |  | ----------------------- | ------- |  | -------------------------- |  | - | --------------------------------- | 
|                                                   |  |                         |         |  |                            |  |   |                                   | 
|Name and Principal Position                        |  | Salary
    ($)          |         |  | Bonus
    ($)              |  |   | Other
    Annual Compensation ($) | 
|Francois Marland, President and CEO(1)             |  | $                       | 87,500  |  |                            |  | - |                                   | 
|Graham Dickson, COO                                |  | $                       | 225,000 |  |                            |  | - |                                   | 
|Shaun Heinrichs, CFO                               |  | $                       | 357,917 |  |                            |  | - |                                   | 
|Todd Johnson, Vice President of Exploration        |  | $                       | 210,130 |  |                            |  | - |                                   | 
|Cameron Paterson, Vice President of Finance        |  | $                       | 200,000 |  |                            |  | - |                                   | 
|Joanne Jobin, Vice President of Investor Relations |  | $                       | 138,750 |  |                            |  | - |                                   | 



(1) Mr.
Marland was appointed as the Company’s President and Chief Executive Officer on October 1, 2013. The dollar amount reflected
under the column “All Other Compensation” represents compensation that Mr. Marland received as the Chairman of the
Board of Directors of the Company during the fiscal year ended December 31, 2013.



Option
grants to the Company’s executive officers during the fiscal year ended December 31, 2013 is as follows (in Canadian dollars):



|Name         |  | Common Shares  Underlying Options |         |  | Exercise Price ($/Security) |   |      | Expiration Date
|------------ |  | --------------------------------- | ------- |  | --------------------------- | - | ---- | ---------------
|Joanne Jobin |  |                                   | 150,000 |  |                             | $ | 1.43 |                



110







The Company’s Chairman of the Board of Directors is paid
an annual retainer of Cdn$160,000; and, the Company’s Audit Committee Chairman is paid an annual retainer of Cdn$20,000.
Each of the Company’s directors is paid Cdn$1,500 for each meeting of directors attended, with the Chairman of a meeting
receiving Cdn$2,000 per meeting. None of the Company’s directors were granted stock options for the fiscal year ended December
31, 2013 and no stock options were exercised during the Company’s most recently completed fiscal year.



The Company does not have any long-term incentive, retirement,
pension plan or other arrangement for non-cash compensation to its directors, except incentive stock options.



Stock Option Plan



The only equity compensation plan which the Company has in
place is an evergreen Incentive Stock Option Plan (the “Plan”) which was approved by the Company’s shareholders
on June 18, 2013. The Plan has been established to provide incentives to qualified parties to increase their proprietary interest
in the Company and thereby encourage their continuing association with the Company. The Plan is administered by the Company’s
directors and provides that options will be issued to its directors, officers, employees and consultants. The Plan provides that
the number of common shares issuable under the Plan, together with all of the Company’s other previously established or
proposed share compensation arrangements, may not exceed 10% of the Company’s total number of issued and outstanding common
shares.



C. Board practices.



The Company’s directors are elected at the annual general
meeting for a period of one year.



None of the Company’s directors have any service contracts
for serving as directors.



The Company has an Audit Committee, which recommends to the
full Board of Directors the engagement of the independent auditors and reviews with the independent auditors the scope and results
of the Company’s audits, its internal accounting controls, and the professional services furnished by the independent auditors
to the Company. The Audit Committee meets as required to review the annual and quarterly financial statements, matters relating
to the securities commissions, investments and transactions that could adversely affect the Company’s well-being and management’s
recommendations regarding share issues. The Audit Committee also establishes and monitors procedures to reduce conflicts of interest
and for reviewing audit and financial matters. Through meetings with external auditors and senior management, the Audit Committee
discusses, among other things, the effectiveness of the internal control procedures established for the Company. At all times,
at least one (1) audit committee member possesses accounting or related financial expertise, while the remaining members are,
at minimum, possessed of significant experience in analyzing the financial condition of corporations. The Board of Directors has
adopted a charter for the Audit Committee which sets out the responsibilities of the committee and provides guidance to committee
members as to their duties. The Company’s Audit Committee currently consists of three (3) members: Jay Schnyder, Gerald
Ruth (Chair) and Simon Solomonidis.



In addition, the Company has a Compensation Committee. The
Compensation Committee reviews compensation practices and management succession and approves the remuneration of the Company’s
senior executives, including the Chief Executive Officer. The Compensation Committee reviews matters such as compensation philosophy
and remuneration policy, Board of Directors retainer fees, performance objectives, evaluation of the performance of the Chief
Executive Officer, proposed stock option or share purchase plans, and bonuses. The Compensation Committee also monitors the integrity
of management through periodic meetings with the Chief Executive Officer. The members of the Compensation Committee are Messrs.
Gerald Ruth, Francois Marland, Jay Schnyder and Simon Solomonidis.



See “Item 6.A. Directors, Senior Management and Employees
– Directors and senior management.”



D. Employees.



As of December 31, 2013, the Company had 404 full time employees,
including 381 located in Nevada, 12 located in the Yukon, 10 located in British Columbia and one located in Ontario.



111







During the year ended December 31, 2013, the number of the
Company’s employees located in Nevada increased from 360 employees to over 430 employees by mid-year, and then decreased
to 381 employees by year-end (representing a net increase of 6%). Such increase was attributable to increased operations (e.g.,
addition of Starvation Canyon mine) offset by decreases from cost-cutting initiatives. The Company currently has 319 employees
located in Nevada, representing a 16% decrease since December 31, 2013 due to continued cost-cutting initiatives.



E. Share ownership.



As of April 23, 2014, the Company had 154,378,365 common shares
outstanding. The following table sets forth the common shares of the Company held outright by the Company’s directors and
executive officers, as of April 23, 2014. The following table does not reflect beneficial ownership of any common shares of the
Company that may be acquired pursuant to the exercise of stock options or warrants.



|Name                     |  | Number of Common Shares HeldOutright(1) |            |     | Percent of Common Shares Outstanding | 
|------------------------ |  | --------------------------------------- | ---------- | --- | ------------------------------------ | 
|Jean-Edgar de Trentinian |  |                                         | 19,043,050 | (2) |                                      | 
|Graham Dickson           |  |                                         | 382,700    | (3) |                                      | 
|Barry A. Goodfield       |  |                                         | Nil        |     |                                      | 
|Shaun Heinrichs          |  |                                         | 174,645    | (4) |                                      | 
|Joanne C. Jobin          |  |                                         | Nil        |     |                                      | 
|Todd Johnson             |  |                                         | Nil        |     |                                      | 
|Francois Marland         |  |                                         | 9,853,000  |     |                                      | 
|Cameron Paterson         |  |                                         | Nil        |     |                                      | 
|Gerald B. Ruth           |  |                                         | Nil        |     |                                      | 
|Jay W. Schnyder          |  |                                         | Nil        |     |                                      | 
|Graham Scott             |  |                                         | 3,700      |     |                                      | 
|Simon Solomonidis        |  |                                         | Nil        |     |                                      | 



* Represents less than 1%.



(1) Excludes common shares of the Company issuable upon the
exercise of stock options.



(2) Includes 18,953,050 common shares registered in the name
of Orifer S.A., a private company controlled by Mr. de Trentinian.



(3) Includes 82,000 common shares registered in the name of
Celec Inc. Mr. Dickson also beneficially owns (i) warrants exercisable for 3,270 common shares that have an exercise price of
Cdn$4.00 per share and expire on May 23, 2015 and (ii) warrants exercisable for 4,500 common shares that have an exercise price
of Cdn$0.60 per share and expire on August 16, 2016.



(4) Mr. Heinrichs also beneficially owns (i) warrants exercisable
for 43,500 common shares that have an exercise price of Cdn$4.00 per share and expire on May 23, 2015, (ii) warrants exercisable
for 5,000 common shares that have an exercise price of Cdn$2.35 per share and expire on December 18, 2016 and (iii) warrants exercisable
for 9,785 common shares that have an exercise price of Cdn$0.50 per share and expire on December 2, 2016.



The following table sets forth the stock options that have
been granted to directors and executive officers of the Company and that were outstanding as of April 11, 2014 (dollar amounts
are reflected in Canadian dollars). Such stock options are exercisable for common shares of the Company.



|Name of Optionee  |  | Position of Optionee (Director/Officer) |  | Date of Grant |  | No. of Shares |         |  | Exercise Price |   |      | Expiry Date
|----------------- |  | --------------------------------------- |  | ------------- |  | ------------- | ------- |  | -------------- | - | ---- | -----------
|JE de Trentinian  |  | Director                                |  | July 26,2009  |  |               | 100,000 |  |                | $ | 1.50 |            
|Graham Dickson    |  | Director and Officer                    |  | July 26,2009  |  |               | 400,000 |  |                | $ | 1.50 |            
|Simon Solomonidis |  | Director                                |  | July 26,2009  |  |               | 50,000  |  |                | $ | 1.50 |            



112







|Name of Optionee  |  | Position of Optionee (Director/Officer) |  | Date of Grant     |  | No. of Shares |         |  | Exercise Price |   |      | Expiry Date
|----------------- |  | --------------------------------------- |  | ----------------- |  | ------------- | ------- |  | -------------- | - | ---- | -----------
|Graham Scott      |  | Officer                                 |  | July 26,2009      |  |               | 50,000  |  |                | $ | 1.50 |            
|Shaun Heinrichs   |  | Officer                                 |  | July 26,2009      |  |               | 150,000 |  |                | $ | 1.50 |            
|Todd Johnson      |  | Officer                                 |  | July 26, 2009     |  |               | 22,500  |  |                | $ | 1.50 |            
|Graham Dickson    |  | Director and Officer                    |  | March 23, 2010    |  |               | 800,000 |  |                | $ | 3.20 |            
|Todd Johnson      |  | Officer                                 |  | March 23, 2010    |  |               | 77,500  |  |                | $ | 3.20 |            
|Francois Marland  |  | Director and Officer                    |  | July 12, 2010     |  |               | 900,000 |  |                | $ | 3.20 |            
|Jay Schnyder      |  | Director                                |  | July 15, 2010     |  |               | 100,000 |  |                | $ | 2.60 |            
|Gerald Ruth       |  | Director                                |  | July 15, 2010     |  |               | 100,000 |  |                | $ | 2.60 |            
|Simon Solomonidis |  | Director                                |  | July 15, 2010     |  |               | 50,000  |  |                | $ | 2.60 |            
|Todd Johnson      |  | Officer                                 |  | September 9, 2011 |  |               | 25,000  |  |                | $ | 4.50 |            
|Shaun Heinrichs   |  | Officer                                 |  | May 31, 2011      |  |               | 75,000  |  |                | $ | 5.00 |            
|Cameron Paterson  |  | Officer                                 |  | May 31,2011       |  |               | 20,000  |  |                | $ | 5.00 |            
|Shaun Heinrichs   |  | Officer                                 |  | May 31, 2011      |  |               | 75,000  |  |                | $ | 5.00 |            
|Todd Johnson      |  | Officer                                 |  | September 9, 2011 |  |               | 25,000  |  |                | $ | 4.50 |            
|Cameron Paterson  |  | Officer                                 |  | April 16, 2012    |  |               | 10,000  |  |                | $ | 2.60 |            
|Shaun Heinrichs   |  | Officer                                 |  | July 6, 2012      |  |               | 75,000  |  |                | $ | 3.00 |            
|Barry Goodfield   |  | Director                                |  | July 6, 2012      |  |               | 100,000 |  |                | $ | 3.00 |            
|Joanne Jobin      |  | Officer                                 |  | April 25, 2013    |  |               | 150,000 |  |                | $ | 1.43 |            



See “Item 6.B. Directors, Senior Management and Employees
– Compensation – Stock Option Plan” for a description of the Company’s Incentive Stock Option Plan.



Item 7. Major Shareholders and Related Party Transactions.



A. Major shareholders.



As of April 23, 2014, the Company had 154,378,365 common shares
outstanding. To the Company’s knowledge, the following are the only shareholders of the Company that beneficially own, directly
or indirectly, 5% or more of the Company’s common shares as of April 23, 2014:



|Name of Shareholder         |  | No. of Common Shares |            |     | % of Outstanding Common Shares | 
|--------------------------- |  | -------------------- | ---------- | --- | ------------------------------ | 
|683 Capital Management, LLC |  |                      | 10,147,950 | (1) |                                | 
|Deutsche Bank AG            |  |                      | 15,348,836 | (2) |                                | 
|Eric S. Sprott              |  |                      | 44,138,913 | (3) |                                | 
|Jean-Edgar de Trentinian    |  |                      | 19,143,050 | (4) |                                | 
|Francois Marland            |  |                      | 10,753,000 | (5) |                                | 



(1) The information regarding common shares beneficially owned
by 683 Capital Management, LLC was obtained from an Amendment No. 3 to Schedule 13G filed with the SEC on April 24, 2014 by 683
Capital Management, LLC, 683 Capital Partners, LP and Ari Zweiman. Includes 5,517,350 common shares issuable upon the exercise
of warrants. 683 Capital Management, LLC has shared voting and dispositive power over such shares.



(2) Includes 4,000,000 common shares issuable upon the exercise
of warrants that have an exercise price of Cdn$4.40 per share and expire on February 8, 2015.



(3) The information regarding common shares beneficially owned
by Mr. Sprott was obtained from an Amendment No. 1 to Schedule 13D filed with the SEC on January 22, 2014 by Sprott Inc., Sprott
Hedge Fund L.P., Sprott GenPar Ltd. and Eric S. Sprott. Certain of such common shares are issuable upon the exercise of warrants.
Mr. Sprott has sole voting and dispositive power over 15,350,341 of such common shares and has shared voting and dispositive power
over 28,788,572 of such common shares.



113







(4) Includes 18,953,050 common shares that are registered in
the name of Orifer S.A., a private company controlled by Mr. de Trentinian, a director of the Company. Includes 100,000 common
shares issuable upon the exercise of stock options that have an exercise price of Cdn$1.50 per share and expire on July 26, 2014.



(5) Includes 900,000 common shares issuable upon the exercise
of stock options that have an exercise price of Cdn$3.20 per share and expire on July 12, 2015.



The Company’s major shareholders do not have different
voting rights from other shareholders. With the exception of the holders identified above, there has not been any significant
change in the percentage ownership of common shares held by any major shareholder during the past three years. To the best of
the Company’s knowledge, there are no arrangements that may result in a change in control of the Company.



As of February 28, 2014, there were 289 U.S. registered holders
owning 6,285,306 (or approximately 4.1%) of the Company’s outstanding common shares.



B. Related party transactions.



During the year ended December 31, 2013, the Company was charged
a total of $0.4 million (2012 - $0.3 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, 2013 was $0.1 million (as at December 31, 2012 – $nil).



In January 2012 the Company entered into a gold forward contract
with a company related by common directors. The fair value of this liability was $6.1 million as at December 31, 2013 (2012 -
$7.0 million). For the year ended December 31, 2013, a revaluation loss of $0.2 million was recognized (2012 – $1.4 million).
See “Item 5.B. Operating and Financial Review and Prospects – Liquidity and capital resources – LIQUIDITY
(fiscal years ended December 31, 2013 and 2012) – COMMITMENTS.”



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, 2013, a total of $0.5 million was
charged to the Company under this agreement (2012 – $0.4 million). The amount owing at December 31, 2013 was $0.2 million
(December 31, 2012 – $0.1 million).



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:



|                                                  |  | 2013 |       |  | 2012 |  
|------------------------------------------------- |  | ---- | ----- |  | ---- | -
|Salaries, directors fees, and short-term benefits |  | $    | 1,852 |  |      | $
|Share-based payments                              |  |      | 363   |  |      |  
|                                                  |  | $    | 2,215 |  |      | $



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.



C. Interests of experts and counsel.



Not applicable.



114







Item 8. Financial Information.



A. Consolidated Statements and Other Financial
Information.



The audited consolidated statements of financial position as
at December 31, 2013 and December 31, 2012, and the consolidated statements of operations and comprehensive (loss) income, consolidated
statements of changes in shareholders’ equity and consolidated statements of cash flows for each of the three years in the
three year period ended December 31, 2013 (collectively, “consolidated financial statements”) of the Company are attached
to this Annual Report on Form 20-F and are incorporated herein by reference. These audited consolidated financial statements and
related notes were prepared under IFRS as issued by the IASB, and are accompanied by the Report of Independent Registered Public
Accounting Firm.



Legal Proceedings



The complex nature of the Company’s operations, as well
as the regulatory environment in which it operates can result in occasional claims; investigatory matters; and, legal and tax
proceedings that arise from time to time. Each of these matters is subject to various uncertainties and may ultimately be resolved
with terms unfavorable to the Company. In the opinion of management none of these matters are expected to have a material effect
on the results of operations, or the financial condition, of the Company.



| | a) | On April 22, 2009, the Company received a notice of complaint
                                         from the U.S. Department of Justice (“DOJ”) representing the Environmental
                                         Protection Agency (“EPA”), alleging the Company had violated specific provisions
                                         of the Resource Conservation and Recovery Act relating to the generation, storage, handling,
                                         and disposal of hazardous wastes at the Jerritt Canyon facility. The Company responded
                                         to the allegations and had numerous discussions with the EPA on the matter in order to
                                         determine the nature of the violations. In December of 2013 the Company negotiated a
                                         tentative settlement with the DOJ and the EPA which involves entering into a Consent
                                         Decree (“CD”) outlining the ongoing reporting requirements of the Company
                                         and, once this CD is ultimately and duly entered by a court of competent jurisdiction,
                                         a settlement payment of $1.1 million will be due within 60 days thereof. No admission
                                         of fault has been made with respect to these matters. Based on numerous factors, including
                                         economic considerations such as the ultimate cost and time required to prepare a defense
                                         of this matter, the Company made the decision that it would be better served with a settlement
                                         arrangement in this manner. A provision of $1.1 million relating to these matters has
                                         been made as of December 31, 2013.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | On September 30, 2013, the EPA filed an administrative complaint
                                         in EPA Region IX against the Company alleging violations of the Emergency Planning and
                                         Community Right-to-Know Act for the alleged failure to properly file Toxic Release Inventory
                                         Form Rs. The Company has responded to the EPA and been engaged in ongoing discussions
                                         with the EPA in order to determine the nature of the alleged violations. Discussions
                                         continue to proceed toward a possible settlement and discussions on settling the matter
                                         without admitting liability are actively underway. The final outcome and the extent of
                                         any potential liability or settlement payment(s), if any, is not yet determinable.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | During the fourth quarter of 2013 the Company and the NDEP
                                         negotiated and executed a second modified consent decree (the “Second Modified
                                         CD”), modifications were made to remove all the completed items included in the
                                         previous consent decree; and, to refine the timelines for the remaining restoration projects,
                                         primarily the engineering, design and implementation of facilities for the treatment
                                         of water seepage from the resurfaced RDA sites. In conjunction with these revised timelines
                                         for the water treatment plans, the Second Modified CD includes an agreement by the Company
                                         to secure $10 million of bonding before May 30, 2014 to provide surety for the potential
                                         solutions that will be put in place. By securing this bonding the Company can avoid all
                                         outstanding penalties and interest amounts potentially due to the NDEP, which could total
                                         as much as $10.5 million. Subsequent to year end, the Company failed to meet the first
                                         two payments for bonding which were necessary to have the penalties waived. The Company
                                         continues to work with the NDEP but has recorded a provision of $10.6 million for penalties
                                         which may be payable in the event that the Company is unable to resolve this matter.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dividend Policy



The Company currently does not have any plans for paying cash
dividends in the foreseeable future. In particular, there can be no assurance that the Company’s Board of Directors will
ever declare cash dividends, which action is completely within their discretion.



115







B. Significant Changes.



There have been no significant changes since December 31, 2013
that are not disclosed herein.



Item 9. The Offer and Listing.



A. Offer and listing details.



The Company’s common shares are currently listed for
trading on the Toronto Stock Exchange (“TSX”) under the trading symbol “VG” and on the OTCQB in the U.S.
under the trading symbol “YNGFF”.



The following table sets forth the annual high and low closing
prices of the Company’s common shares on the TSX and the OTCQB for the five most recent fiscal years:



|Fiscal Year Ended |  | TSX (Cdn$) |       |  | OTCQB (US$) | 
|----------------- |  | ---------- | ----- |  | ----------- | 
|                  |  | High       |       |  | Low         | 
|December 31, 2013 |  |            | 1.800 |  |             | 
|December 31, 2012 |  |            | 4.400 |  |             | 
|December 31, 2011 |  |            | 8.300 |  |             | 
|December 31, 2010 |  |            | 9.500 |  |             | 
|December 31, 2009 |  |            | 3.500 |  |             | 



The following table outlines the high and low closing prices
of the Company’s common shares for each fiscal quarter for the two most recent full fiscal years and any subsequent period:



|Fiscal Quarter Ended |  | TSX (Cdn$) |       |  | OTCQB (US$) | 
|-------------------- |  | ---------- | ----- |  | ----------- | 
|                     |  | High       |       |  | Low         | 
|March 31, 2014       |  |            | 0.495 |  |             | 
|December 31, 2013    |  |            | 0.600 |  |             | 
|September 30, 2013   |  |            | 0.880 |  |             | 
|June 30, 2013        |  |            | 1.740 |  |             | 
|March 31, 2013       |  |            | 1.800 |  |             | 
|December 31, 2012    |  |            | 3.290 |  |             | 
|September 30, 2012   |  |            | 3.450 |  |             | 
|June 30, 2012        |  |            | 3.450 |  |             | 
|March 31, 2012       |  |            | 4.400 |  |             | 



The following table outlines the high and low closing prices
of the Company’s common shares for each of the most recent six months:



|Month         |  | TSX (Cdn$) |       |  | OTCQB (US$) | 
|------------- |  | ---------- | ----- |  | ----------- | 
|              |  | High       |       |  | Low         | 
|March 2014    |  |            | 0.495 |  |             | 
|February 2014 |  |            | 0.380 |  |             | 
|January 2014  |  |            | 0.320 |  |             | 
|December 2013 |  |            | 0.345 |  |             | 
|November 2013 |  |            | 0.580 |  |             | 
|October 2013  |  |            | 0.600 |  |             | 



B. Plan of distribution.



Not applicable.



116







C. Markets.



The Company’s common shares are listed on the TSX under
the symbol “VG,” the OTCQB under the symbol “YNGFF” and the Frankfurt Stock Exchange under the symbol
“NG6A.”



D. Selling shareholders.



Not applicable.



E. Dilution.



Not applicable.



F. Expenses of the issue.



Not applicable.



Item 10. Additional Information.



A. Share capital.



Not applicable.



B. Memorandum and articles of association.



The Company was incorporated under the laws of the Province
of British Columbia under the name “YGC Resources Ltd.” (“YGC”) on May 30, 1988 under Certificate of Incorporation
Number 346183. On January 25, 2002, the Company was struck from the Register of Companies for British Columbia and dissolved and
on August 1, 2003 the Company was restored to the Register. On January 5, 2004 the Company consolidated its share capital on a
five (5) old for one (1) new basis and increased its authorized share capital from 4,000,000 shares without par value to 100,000,000
shares without par value. On June 23, 2005, the Company increased its authorized share capital from 100,000,000 common shares
without par value to an unlimited number of common shares without par value. The Company does not have any stated “objects”
or “purposes” as such are not required by the corporate laws of the Province of British Columbia. Rather, the Company
is, by such corporate laws, entitled to carry on any activities whatsoever, which are not specifically precluded by other statutory
provisions of the Province of British Columbia.



The powers and functions of the directors are set out in the
Company’s Articles which were adopted on May 19, 2005. They provide:



| | (a) | a director is obligated to disclose his potential interest in
                                         a proposal, arrangement or contract being considered by the Company, and may not vote
                                         on any proposal, arrangement or contract proposed, but such director shall be counted
                                         in the quorum at the meeting of the directors at which the proposal, arrangement or contract
                                         is approved;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | the directors may, in the absence of an independent quorum, vote
                                         compensation to themselves;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------



| | (c) | there are no limitations on the exercise by the directors of
                                         the Company’s borrowing powers;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------



| | (d) | there are no provisions for the retirement or non-retirement
                                         of directors under an age limit; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | there is no requirement for a director to hold any of the Company’s
                                         shares.
| | --- | --------------------------------------------------------------------------------------------------------------------



As all of the Company’s authorized and issued shares
are of one class there are no special rights or restrictions of any nature or kind attached to any of the shares. All authorized
and issued shares rank equally in respect to the declaration and receipt of dividends, the rights to share in any profits or surplus
on the Company’s liquidation, dissolution or winding. Each share has attached to it one non-cumulative vote.



117







To alter the rights of holders of the Company’s issued
shares such alteration must be approved by the majority vote of 2/3 of the Company’s issued shares attending and voting
at a meeting of its shareholders.



Annual general meetings are called and scheduled upon decision
by the Board of Directors.  The directors may convene an extraordinary general meeting of the shareholders.  The
holders of not less than 5% of the Company’s issued shares may requisition an extraordinary meeting of the shareholders.
All meetings of the shareholders may be attended by registered shareholders or persons who hold powers of attorney or proxies
given to them by registered shareholders.



The Company’s Articles do not contain limitations prohibiting
shares being held by non-residents, foreigners or any other group.



There are no provisions in the Company’s Articles that
would have an effect of delaying, deferring or preventing a change in control of the Company, or that would operate with respect
to any proposed merger, acquisition or corporate restructuring.



There are no provisions in the Company’s Articles requiring
share ownership to be disclosed. The securities laws of the Province of British Columbia require disclosure of shareholdings by:



| | (a) | persons who are the Company’s directors or senior officers;
                                         and
| | --- | --------------------------------------------------------------------------------------------------------



| | (b) | a person who has direct or indirect beneficial ownership
                                         of, control or direction over, or a combination of direct or indirect beneficial ownership
                                         of and control or direction over the Company’s securities carrying more than 10%
                                         of the voting rights attached to all of the Company’s outstanding voting securities.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



C. Material contracts.



The following is a summary of each material contract, other
than contracts entered into in the ordinary course of business, to which the Company is a party, for the two years immediately
preceding the date of this Annual Report on Form 20-F, including dates, parties, general nature of the contracts, terms and conditions,
and amount of any consideration passing to or from the Company.



| | 1. | Incentive Stock Option Plan authorizing the reservation of
                                         no more than 10% of the Company’s outstanding common shares for issuance under
                                         such plan.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Shareholder Rights Plan Agreement with Computershare Trust
                                         Company of Canada dated December 20, 2012.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------



See “Item 5.B. Operating and Financial Review and Prospects
– Liquidity and capital resources – LIQUIDITY (fiscal years ended December 31, 2013 and 2012) – COMMITMENTS.”



D. Exchange controls.



There are no laws, governmental decrees or regulations in Canada
that restrict the export or import of capital or which affect the remittance of dividends, interest or other payments to non-resident
holders of the Company’s common shares, other than withholding tax requirements. Reference is made to “Item 10.E.
Taxation.”



There are no limitations under the laws of Canada or the Province
of British Columbia, or in the Company’s constituting documents, with respect to the right of non-resident or foreign owners
to hold or vote common shares other than those imposed by the Investment Canada Act.



The Investment Canada Act is a federal Canadian statute
which regulates the acquisition of control of existing Canadian businesses and the establishment of new Canadian businesses by
an individual, a government or entity that is a “non-Canadian” as that term is defined in the Investment Canada
Act.



118







The Company’s management believes that it is not currently
a “non-Canadian” for purposes of the Investment Canada Act. If the Company becomes a “non-Canadian”
in the future, acquisitions of control of Canadian businesses by the Company would become subject to the Investment Canada
Act. Generally, the direct acquisition by a “non-Canadian” of an existing Canadian business with gross assets
of $5,000,000 or more is reviewable under the Investment Canada Act, with thresholds of $223 million and $237 million for
transactions closing in 2003 and 2004, respectively, for “WTO investors” as defined under the Investment Canada
Act. If the Company becomes a “non-Canadian” in the future, management believes the Company would likely become
a “non-Canadian” which is a “WTO investor.” Generally, indirect acquisitions of existing Canadian businesses
(with gross assets over certain threshold levels) are reviewable under the Investment Canada Act, except in situations
involving “WTO investors” where indirect acquisitions are generally not reviewable. In transactions involving Canadian
businesses engaged in the production of uranium, providing financial services, providing transportation services or which are
cultural businesses, the benefit of the higher “WTO investor” thresholds do not apply.



Acquisitions of businesses related to Canada’s cultural
heritage or national identity (regardless of the value of assets involved) may also be reviewable under the Investment Canada
Act. In addition, investments to establish new, unrelated businesses are not generally reviewable. An investment to establish
a new business that is related to the non-Canadian’s existing business in Canada is not notifiable under the Investment
Canada Act unless such investment relates to Canada’s cultural heritage or national identity.



Investments which are reviewable under the Investment Canada
Act are reviewed by the Minister, designated as being responsible for the administration of the Investment Canada Act.
Reviewable investments, generally, may not be implemented prior to the Minister’s determining that the investment is likely
to be of “net benefit to Canada” based on the criteria set out in the Investment Canada Act. Generally investments
by non-Canadians consisting of the acquisition of control of Canadian businesses which acquisitions are otherwise non-reviewable
or the establishment of new Canadian businesses require that a notice be given under the Investment Canada Act in the prescribed
form and manner.



Any proposed take-over of the Company by a “non-Canadian”
would likely be subject only to the simple “notification” requirements of the Investment Canada Act as in all
likelihood that non-Canadian would be a “WTO investor” for purposes of the Investment Canada Act. Generally,
a “WTO investor” is an individual, other than a Canadian, who is a national of a country that is a member of the World
Trade Organization. In the case of a person that is not an individual, a WTO investor is a person that generally is ultimately
controlled by individuals, other than Canadians, who are nationals of a WTO member. Currently there are 134 countries that are
members of the WTO, including virtually all countries of the Western world. The Company would have to have an asset base of at
least $344 million, before the “reviewable” transaction provisions of the Investment Canada Act became relevant
for consideration by a third party non-Canadian acquirer, which is a WTO investor. The threshold is reviewed annually by Industry
Canada.



E. Taxation.



Certain Canadian Federal Income Tax Consequences
– General



The following is a brief summary of the principal Canadian
federal income tax consequences generally applicable to a person who holds the Company’s common shares and who, at all relevant
times for the purposes of the Income Tax Act (Canada) (the “Canadian Tax Act”) and the Canada - United States Tax
Convention, 1980, as amended (the “US Treaty”),



| | · | is or is deemed
                                         to be a resident solely of the United States and has not and has never been or deemed
                                         been resident of Canada,
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | deals at arm’s
                                         length with the Company and is not affiliated with the Company,
| | - | -----------------------------------------------------------------------------------------------------------------------

| | · | is a “qualifying
                                         person” within the meaning of the US Treaty,
| | - | ------------------------------------------------------------------------------------------------------

| | · | holds the common
                                         shares as capital property and as beneficial owner,
| | - | -------------------------------------------------------------------------------------------------------------

| | · | does not and
                                         is not deemed to use or hold the common shares in or in the course of a business carried
                                         on in Canada, and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | does not carry
                                         on an insurance business in Canada and elsewhere,
| | - | ---------------------------------------------------------------------------------------------------------

| | · | (“United
                                         States Shareholders”)
| | - | -----------------------------------------------------------------------



Common shares will generally be considered capital property
to a United States Shareholder unless either (i) the United States Shareholder holds the common shares in the course of carrying
on a business of buying or selling securities or (ii) the United States Shareholder has acquired the common shares in a transaction
or transactions considered to be an adventure or concern in the nature of trade.



119







This summary is based on the facts set forth in this Annual
Report on Form 20-F, the current provisions of the US Treaty, the Canadian Tax Act and regulations thereunder, and the Company’s
understanding of the current published administrative and assessing policies and practices of the Canada Revenue Agency (the “CRA”),
and takes into account all specific proposals to amend the Canadian Tax Act (the “Proposed Amendments”) publicly announced
by or on behalf of the Minister of Finance (Canada) prior to the date hereof. It is assumed that all such amendments will be enacted
as currently proposed, and that there will be no other change to any relevant law or administrative or assessing policy or practice,
although no assurances can be given in this respect. Except as otherwise expressly set out herein, this summary also does not
take into account any provincial, territorial or non-Canadian income tax law, the implications of which may differ from the Canadian
federal income tax considerations.



The 2014 Canadian Federal Budget released on February 11, 2014
contained proposed rules for consultation with respect to treaty shopping. These rules are not discussed herein. United States
Shareholders should consult their own tax advisors with respect to the potential application of these rules in their particular
circumstances.



In some circumstances, fiscally transparent entities (including
limited liability companies) will be entitled to benefits under the US Treaty. United States Shareholders are urged to consult
their own tax advisors to determine their entitlement to benefits under the US Treaty based on their particular circumstance.



The following discussion is not intended to be, nor should
it be construed to be, legal or tax advice to any holder or prospective holder of the Company’s common shares and no opinion
or representation with respect to the Canadian federal income tax consequences to any such holder or prospective holder is made.
Accordingly, holders and prospective holders of the Company’s common shares should consult with their own tax advisors about
the federal, provincial, local and non-Canadian tax consequences of purchasing, owning and disposing of the Company’s common
shares.



Dividends



Dividends paid or credited or deemed to be paid or credited
to a United States Shareholder by the Company will be subject to Canadian withholding tax at the rate of 15% of the gross amount
of the dividend (or 5% in the case of a United States Shareholder that is a corporation beneficially owning at least 10% of the
Company’s “voting stock” within the meaning of the US Treaty). Dividends may be exempt from withholding tax
in the case of some United States Shareholders such as qualifying tax exempt entities.



Disposition of Common Shares



A United States Shareholder who realizes a capital gain on
the actual or deemed disposition of a common share will not be subject to Canadian federal income tax under the Canadian Tax Act
in respect of the capital gain unless such common share constitutes “taxable Canadian property” to the United States
Shareholders for purposes of the Canadian Tax Act and the United States Shareholder is not exempt from Canadian federal income
tax on such gain pursuant to the terms of the US Treaty.



Generally, a common share owned by a United States Shareholder
will not be taxable Canadian property of the United States Shareholder provided that, the Company’s common shares are listed
on a designated stock exchange (which currently includes the TSX) at the time of disposition and during the 60 month period immediately
proceeding the disposition:



| | · | neither
                                         the United States Shareholders, persons with whom the United States Shareholder does
                                         not deal at arm’s length, partnerships in which the United States Shareholders
                                         or persons with the United States Shareholder does not deal at arm’s length holds
                                         a membership interest (either directly or indirectly through one or more partnerships)
                                         alone or in any combination, has owned 25% or more of the issued shares of any class
                                         or series of shares in the capital of the Company,
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | more
                                         than 50% of the fair market value of the common shares was derived directly or indirectly
                                         from one or any combination of real or immovable property situated in Canada, Canadian
                                         resource properties (as defined in the Canadian Tax Act), timber resource properties
                                         (as defined in the Canadian Tax Act) or an option in respect of an interest in, or a
                                         civil law right in such property, whether or not such property exists, and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | A
                                         common share will also not be taxable Canadian property provided such common share was
                                         not acquired in a transaction, a result of which it was deemed to be taxable Canadian
                                         property of the United States Shareholders.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



120







A United States Shareholder that realizes a capital gain on
the disposition of common shares that do qualify as taxable Canadian property will, nevertheless, generally be exempt from Canadian
federal income tax thereon by virtue of the US Treaty unless more than 50% of the value of the common shares is derived from real
property (within the meaning of the US Treaty) that is located in Canada.



A United States Shareholder who is subject to Canadian federal
income tax in respect of a disposition of a common share will realize a capital gain (or capital loss) equal to the amount by
which the United States Shareholder’s proceeds of disposition, less reasonable costs of disposition, exceed (or are exceeded
by) the adjusted cost base of the common share to the United States Shareholder. In these circumstances, a United States Shareholder
who realizes a capital gain or capital loss in a taxation year will be required to include one half of the capital gain ( the
taxable capital gain) in income for Canadian federal income tax purposes, and may deduct one half of the capital loss (the allowable
capital loss) against taxable capital gains incurred in respect of dispositions of taxable Canadian property, subject to and in
accordance with the provisions of the Canadian Tax Act and the US Treaty.



United States Taxation



The following is a general summary of certain United States
federal income tax consequences, under current law, generally applicable to a U.S. Holder (as defined below). This summary does
not address all potentially relevant U.S. federal income tax matters and it does not address consequences to persons subject to
special provisions of U.S. federal income tax law, such as those described below as excluded from the definition of a U.S. Holder.
United States alternative minimum tax considerations are not addressed in this summary. In addition, this summary does not cover
any state, local or foreign tax consequences, nor any U.S. federal gift, estate or generation-skipping transfer tax consequences.
(Certain, but not all, foreign tax consequences are described above under “Item 10.E. Additional Information - Taxation- Certain Canadian Federal Income Tax Consequences - General.”)



The following summary is based upon the Internal Revenue Code
of 1986, as amended (the “Code”), Treasury Regulations, published Internal Revenue Service (“IRS”) rulings,
published administrative positions of the IRS, and court decisions that are currently applicable, any of which could be materially
and adversely changed, possibly on a retroactive basis, at any time including, without limitation, United States rates of taxation.
This summary does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation which,
if enacted, could be applied, possibly on a retroactive basis, at any time. No rulings have been or will be sought from the IRS
with respect to any of the U.S. federal income tax issues discussed in this summary, and no assurance can be given that the IRS
will not successfully challenge any tax positions described herein.



This summary is for general information only and it is not
intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares and
no opinion or representation with respect to the United States federal income tax consequences to any such holder or prospective
holder is made. Accordingly, holders and prospective holders of common shares should consult their own tax advisors about the
federal (income and non-income), state, local, and foreign tax consequences of purchasing, owning and disposing of common shares
of the Company.



U.S. Holders



As used herein, a “U.S. Holder” means a holder
of the Company’s common shares who is: (1) a citizen or individual resident (as defined under United States tax laws) of
the United States; (2) a corporation created or organized in or under the laws of the United States or of any political subdivision
thereof; (3) an estate the income of which is taxable in the United States irrespective of source; or (4) a trust if (a) a court
within the United States is able to exercise primary supervision over the trust’s administration and one or more United
States persons have the authority to control all of its substantial decisions or (b) the trust was in existence on August 20,
1996 and has properly elected to continue to be treated as a United States person.



This summary does not address the United States tax consequences
to, and the term “U.S. Holder” does not include, persons subject to special provisions of United States federal income
tax law, including, but not limited to, tax-exempt organizations, qualified retirement plans, individual retirement accounts and
other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment
companies, broker-dealers, non-resident alien individuals, U.S. tax expatriates, persons or entities that have a “functional
currency” other than the U.S. dollar, persons who acquire the Company’s common shares as part of a straddle, hedging
or a conversion transaction, and persons who acquire their common shares as compensation for services. This summary is limited
to U.S. Holders who own common shares as capital assets and who hold common shares directly (e.g., not through an intermediary
entity such as a corporation, partnership, limited liability company, or trust).



121







Distributions on the Company’s Common Shares



Subject to the discussion below regarding passive foreign investment
companies (“PFICs”) and controlled foreign corporations (“CFCs”), U.S. Holders receiving dividend distributions
(including constructive dividends) with respect to the common shares are required to include in gross income for United States
federal income tax purposes the gross amount of such distributions to the extent that the Company has current or accumulated earnings
and profits, as defined under U.S. federal tax law, without reduction for any Canadian income tax withheld from such distributions.
Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder’s United States federal
income tax liability or, alternatively, may be deducted in computing the U.S. Holder’s United States federal taxable income
by those who itemize deductions. (See more detailed discussion at “Foreign Tax Credit” below.) To the extent that
distributions exceed the Company’s current or accumulated earnings and profits, they will be treated first as a return of
capital up to the U.S. Holder’s adjusted basis in the shares and thereafter as gain from the sale or exchange of the shares.
Preferential tax rates for “long-term” net capital gains (e.g. gains realized on capital assets owned more than one
year) are applicable under current law to a U.S. Holder that is an individual, estate or trust. There are currently no preferential
tax rates for long-term capital gains for a U.S. Holder that is a corporation.



With respect to non-corporate United States investors, certain
dividends received from a qualified foreign corporation may be subject to reduced rates of taxation. In order for dividends paid
by foreign corporations to qualify for the reduced rates, (1) the foreign corporation must meet certain requirements, including
that it not be classified as a PFIC for United States federal income tax purposes in either the taxable year of the distribution
or the preceding taxable year and either (i) it is eligible for the benefits of a comprehensive income tax treaty with the United
States which the United States Treasury Department determines to be satisfactory for these purposes and which includes an exchange
of information provision, or (ii) its shares are readily tradable on an established securities market in the United States, and
(2) the U.S. Holder must meet the required holding period. In order to meet the required holding period, the U.S. Holder must
hold the common shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date.



Dividends paid on the common shares will generally not be eligible
for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.



In the case of a dividend paid in a foreign currency that is
not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency
equal to its U.S. dollar value on the date of receipt. Generally, any gain or loss recognized upon a subsequent sale or other
disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.



Disposition of Common Shares



Subject to the PFIC and CFC discussions below, a U.S. Holder
will recognize a gain or loss upon the sale of the common shares equal to the difference, if any, between (i) the amount of cash
plus the fair market value of any property received, and (ii) the U.S. Holder’s adjusted tax basis in the common shares.
This gain or loss will be a capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder, and
will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder. Preferential tax
rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust, under current law.
There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.



Gains and losses are netted and combined according to special
rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject
to significant limitations.



122







Foreign Tax Credit



A U.S. Holder who pays (or has withheld from distributions)
Canadian income tax with respect to the ownership or disposition of the common shares may be entitled, at the option of the U.S.
Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to
claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely
reduces the taxpayer’s income subject to tax. This election is made on a year-by-year basis and applies to all foreign taxes
paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations that apply to the credit,
among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United
States federal income tax liability that the U.S. Holder’s foreign source income bears to his or its worldwide taxable income.
In the determination of the application of this limitation, the various items of income and deduction must be classified into
foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately
with respect to specific “baskets” of income. Foreign taxes assigned to a particular basket generally cannot offset
United States tax on income assigned to another basket. Unused foreign tax credits can generally be carried back one year and
carried forward ten years. The availability of the foreign tax credit and the application of the limitations on the credit
are fact specific and U.S. Holders should consult their own U.S. tax advisors regarding their ability to utilize foreign tax credits
in light of their individual circumstances.



Other Considerations



In the following circumstances, the above sections of this
discussion may not describe the United States federal income tax consequences resulting from the holding and disposition of the
Company’s common shares:



Passive Foreign Investment Company



As a foreign corporation, the Company could potentially be
treated as a PFIC if 75% or more of its gross income in a taxable year is passive income, or the average percentage of its assets
(by value) during the taxable year which produce passive income or which are held for the production of passive income is at least
50%. Passive income is generally defined to include gross income in the nature of dividends, interest, royalties, rents and annuities;
excess of gains over losses from certain transactions in any commodities not arising inter alia from a PFIC whose business
is actively, with respect to certain distributions on, or dispositions of, shares of a PFIC, involved in such commodities; certain
foreign currency gains; and other similar types of income with respect to certain distributions or, of dispositions of shares,
of a PFIC. U.S. Holders are subject to an increased United States federal income tax liability and to an interest charge based
on the value of the tax deferral for the period during which the shares of the PFIC are owned.



The PFIC rules are very complex. The Company offers
no opinion or representations as to its status as a PFIC for the current year or any prior or future tax years. Each U.S.
Holder should consult a U.S. tax advisor with respect to the PFIC rules and their applicability to his or its particular tax situation.



Shareholder Election



The adverse tax consequences associated with a PFIC may be
avoided if the U.S. Holder has elected to treat the PFIC as a QEF with respect to that U.S. Holder (a “QEF Election”)
effective for each of the PFIC’s taxable years beginning on or after January 1, 1987, which include any portion of the U.S.
Holder’s holding period. In general, U.S. Holders of a QEF are taxable currently on their pro rata share of the QEF’s
ordinary income and net capital gain regardless of whether such income or gain is actually distributed. Certain reporting obligations
to the IRS must also be met by the U.S. Holder if there is a QEF Election in place.



The procedure a U.S. Holder must comply with in making an effective
QEF Election will depend on whether the year of election is the first year in the U.S. Holder’s holding period in which
the Company is classified as a PFIC. If the U.S. Holder makes a QEF Election in such first year (i.e., a timely QEF Election),
then the U.S. Holder may make the QEF Election by simply filing the appropriate documents at the time the U.S. Holder files his
tax return for such first year. If, however, the Company was classified as a PFIC in a prior year, then additional considerations
apply. U.S. Holders should consult their own U.S. tax advisors regarding making a QEF Election.



123







Mark to Market Election



As an alternative to making a QEF Election, U.S. Holders who
hold, actually or constructively, marketable stock of a foreign corporation that is a PFIC may elect to mark such stock to the
market (a “Mark-to-Market Election”). If such an election is made, such U.S. Holder will not be subject to the special
PFIC taxation rules described above for the taxable years for which the Mark-to-Market Election is made and subsequent taxable
years if not revoked. Instead, a U.S. Holder who makes such an election will include in income for each taxable year an amount
equal to the excess, if any, of the fair market value of the common shares as of the close of such tax year over such U.S. Holder’s
adjusted tax basis in such shares. In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any,
of such U.S. Holder’s adjusted tax basis in the common shares over the fair market value of such shares as of the close
of the tax year, or (ii) the excess, if any of (A) the mark-to-market gains for the common shares included by such U.S. Holder
for prior tax years, over (B) the mark-to-market losses for common shares that were allowed as deductions for prior tax years.
Amounts included in income or deducted under the Mark-to-Market Election, and gain or loss on a disposition of common shares,
are classified as ordinary income or loss. A U.S. Holder’s adjusted tax basis in the common shares will be increased or
decreased to reflect the amount included or deducted as a result of the Mark-to-Market Election. A Mark-to-Market Election will
apply to the tax year for which the election is made and to all later tax years, unless the PFIC stock ceases to be marketable
or the IRS consents to the revocation of the election. Various IRS reporting requirements may also apply to a U.S. Holder who
makes a Mark-to-Market Election.



The PFIC, QEF Election, and Mark-to-Market Election
rules are complex. U.S. Holders should consult their own tax advisors regarding the availability of, procedure for, and consequences
of, making an Election.



Controlled Foreign Corporation



If more than 50% of the voting power of all classes of stock
or the total value of the Company’s stock is owned, directly or indirectly, by citizens or residents of the United States,
United States domestic partnerships, corporations or estates or trusts (other than foreign estates or trusts), each of whom own
10% or more of the total combined voting power of all classes of stock (“United States Shareholders”), the Company
could be treated as a CFC under Subpart F of the Code. This classification would cause many complex results, including the required
inclusion by such United States Shareholders in income of their pro rata share of “Subpart F income” (as specially
defined by the Code). If we are both a PFIC and CFC, we will generally not be treated as a PFIC with respect to United States
Shareholders of the CFC that acquired the common shares on or after January 1, 1998. With respect to United States Shareholders
that acquired the common shares prior to January 1, 1998 and other U.S. Holders (that are not United States Shareholders), the
Company would generally remain a PFIC unless certain elections, if available, were made. In addition, under Section 1248 of the
Code, certain gains from the sale or exchange of shares by a U.S. Holder who is or was a United States Shareholder at any time
during the five year period ending with the sale or exchange is generally treated as ordinary dividend income to the extent of
the Company’s earnings and profits attributable to the stock sold or exchanged. Because of the complexity of Subpart F,
and because it is not clear that Subpart F would apply to the U.S. Holders of the common shares, a more detailed review of these
rules is outside of the scope of this discussion. The CFC rules are complex. The Company offers no opinion or representations
as to its status as a CFC for the current year or any prior or future tax years. U.S. Holders should consult their own
U.S. tax advisors regarding the CFC rules and their applicability to such U.S. Holder’s particular tax situation.



Information Reporting and Backup Withholding



In general, information reporting will apply to dividends in
respect of the Company’s common shares and the proceeds from the sale, exchange or redemption of the Company’s common
shares that are paid to U.S. Holders within the United States (and in certain cases, outside the United States), unless such U.S.
Holder is an exempt recipient.  A backup withholding tax may apply to such payments if a U.S. Holder fails to provide a taxpayer
identification number or certification of other exempt status or fails to report in full dividend and interest income.



Any amounts withheld under the backup withholding rules will
be allowed as a refund or a credit against a U.S. Holder’s United States federal income tax liability provided the required
information is timely furnished to the IRS.



F. Dividends and paying agents.



Not applicable.



G. Statement by experts.



Not applicable.



124







H. Documents on display.



Public documents are available for inspection at the Company’s
head offices located at 900 – 688 West Hastings Street, Vancouver, British Columbia V6B 1P1, and, for certain documents,
on the Internet at www.verisgold.com, by accessing the Canadian System for Electronic Data Analysis and Retrieval (SEDAR) website
at www.sedar.com and by the Electronic Data Gathering, Analysis and Retrieval (EDGAR) system at www.sec.gov.



Statements made in this Annual Report on Form 20-F about the
contents of contracts or other documents are not necessarily complete and shareholders are referred to the copy of such contracts
or other documents filed as exhibits to this Annual Report.



The Company’s SEC filings, and the exhibits thereto,
are available for inspection and copying at the SEC’s Public Reference Room, 100 F Street NE, Washington, D.C., 20549. Copies
of these filings may be obtained from these offices after the payment of prescribed fees. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. These filings are also available on the SEC’s website at www.sec.gov.



The Company will also provide its shareholders with proxy statements
prepared according to Canadian law. As a Canadian company, the Company is exempt from the rules of the U.S. Securities Exchange
Act of 1934, as amended (the “Exchange Act”) regarding the furnishing and content of proxy statements to shareholders
and is also exempt from the short-swing profit recovery and disclosure regime of Section 16 of the Exchange Act.



I.Subsidiary Information.



Not applicable.



Item 11. Quantitative and Qualitative Disclosures About
Market Risk.



Not applicable.



Item 12. Description of Securities Other than Equity Securities.



Not applicable.



PART II



Item 13. Defaults, Dividend Arrearages and Delinquencies.



See “Item 5.B. –
Operating and Financial Review and Prospects – Liquidity and capital resources – COMMITMENTS” and “Item
5.B. – Operating and Financial Review and Prospects – Liquidity and capital resources – LIQUIDITY (fiscal
years ended December 31, 2013 and 2012) – Financing” for a discussion of certain defaults under the Forward Gold Purchase
Agreements between Deutsche Bank and the Company.



Additionally, the Company
has not made the necessary maturity payments under either of the gold forward contracts in place or the bridge loan facility.
The counterparties have not taken any action against the Company to date or served any notice of default. The Company is in active
discussions with such counterparties and believes a resolution to settle these facilities can be achieved.



Item 14. Material Modifications to the Rights of Security
Holders and Use of Proceeds.



None.



E. Use of proceeds.



Not applicable.



125







Item 15. Controls and Procedures.



Disclosure Controls and Procedures



The Company’s management, with the participation of the
Chief Executive Officer and Chief Financial Officer, conducted an evaluation, pursuant to Rule 13a-15 promulgated under the Exchange
Act, of the effectiveness of its disclosure controls and procedures as of December 31, 2013. Based on this evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December
31, 2013.



Disclosure controls and procedures means controls and other
procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms and that such information required to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal
financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.



Management’s annual report on internal control over
financial reporting



The Company’s management, including its Chief Executive
Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Rule 13a-15(f) under the Exchange Act.



A Company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company; (ii) 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 (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the Company’s assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods
are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.



The Company’s management, including the Chief Executive
Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s internal control over financial reporting
as at December 31, 2013. This evaluation was based on the framework in Internal Control—Integrated Framework (1992) issued
by the Committee of Sponsoring Organizations of the Treadway Commission.



Based on that assessment, management concluded that the Company’s
internal control over financial reporting was effective as of December 31, 2013.



Attestation Report of the Independent Registered Public
Accounting Firm



This Annual Report on Form 20-F does not include an attestation
report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s independent registered public accounting firm
pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which permits the Company to provide only management’s
report in this Annual Report. The Dodd-Frank Act permits a “non-accelerated filer” to provide only management’s
report on internal control over financial reporting in an annual report and omit an attestation report of the Company’s
independent registered public accounting firm regarding management’s report on internal control over financial reporting.



Changes in internal control over financial reporting



During the period covered by this Annual Report on Form 20-F,
there has been no change to the Company’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, its internal control over financing reporting.



126







Item 16. Reserved



Item 16A. Audit Committee Financial Expert.



The Board of Directors has a separately-designated standing
Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act for the purpose of overseeing the accounting
and financial reporting processes of the Company and audits of the Company’s annual financial statements.



The Company has determined that all members of the Audit Committee
are “independent,” as such term is defined under the NYSE MKT LLC Company Guide. Further, the Company has determined
that the Chairman of the Audit Committee, Gerald Ruth, is an “audit committee financial expert,” as defined in Item
16A of Form 20-F.



Item 16B. Code of Ethics.



The Company has adopted a written code of ethics for all of
its directors and officers entitled “Code of Conduct and Conflict of Interest Guidelines for Directors and Officers”
(the “Code”). The Code includes, among other things, written standards for the Company’s principal executive
officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions
that are required by the SEC for a code of ethics applicable to such officers. A copy of the Code is posted on the Company’s
website at www.verisgold.com under Corporate/Governance Policy.



No amendments to the Code were adopted during the year ended
December 31, 2013. No “waiver” or “implicit waiver,” as such terms are defined in Form 20-F, were granted
relating to any provision of the Code during the year ended December 31, 2013.



Item 16C. Principal Accountant Fees and Services.



Deloitte LLP (“Deloitte”) was the Company’s
independent registered public accounting firm for the fiscal years ended December 31, 2013 and 2012. The following chart summarizes
the aggregate fees billed by Deloitte for professional services rendered during the fiscal years ended December 31, 2013 and 2012
for audit and non-audit related services (in Canadian dollars):



|Type of Work          |  | Year Ended December 31, 2013 |         |  | Year Ended December 31, 2012 |  
|--------------------- |  | ---------------------------- | ------- |  | ---------------------------- | -
|Audit fees(1)         |  | $                            | 379,000 |  |                              | $
|Audit-related fees(2) |  | $                            | 74,000  |  |                              | $
|Tax fees              |  |                              | nil     |  |                              |  
|All other fees        |  |                              | nil     |  |                              |  
|Total                 |  | $                            | 453,000 |  |                              | $



| | 1. | Aggregate fees billed for the annual audit and quarterly review
                                         of the Company’s consolidated financial statements and services normally provided
                                         by the auditor in connection with the Company’s statutory and regulatory filings.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Aggregate fees billed for assurance and related services that
                                         are reasonably related to the performance of the audit or review of the Company’s
                                         financial statements and are not reported under “Audit fees”, including:
                                         assistance with aspects of tax accounting, attest services not required by state or regulation
                                         and consultation regarding financial accounting and reporting standards.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



127







Pre-Approval Policies and Procedures



The Audit Committee engages the independent registered public
accounting firm to audit the financial statements, and approves all audit services, audit-related services, tax services and other
services provided by the auditors. Any services provided by the auditors that are not specifically included within the scope of
the audit must be pre-approved by the audit committee prior to any engagement. All of the services and fees described under the
categories of “Audit Fees”, “Audit Related Fees”, “Tax Fees” and “All Other Fees”
for the fiscal year ended December 31, 2013 were reviewed and approved by the Audit Committee before the respective services were
rendered, and none of such services were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation
S-X.



Item 16D. Exemptions from the Listing Standards for Audit
Committees.



Not applicable.



Item 16E. Purchases of Equity Securities by the Issuer
and Affiliated Purchasers.



None.



Item 16F. Change in Registrant’s Certifying Accountant.



Not applicable.



Item 16G. Corporate Governance.



Not applicable.



Item 16H. Mine Safety Disclosure.



The information concerning mine safety violations or other
regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 16H of
Form 20-F is included in Exhibit 16.1 to this Annual Report on Form 20-F.



128







PART III



Item 17. Financial Statements.



The Company has provided financial statements pursuant to Item
18.



Item 18. Financial Statements.



The financial statements commence on page F-1 of this Annual
Report on Form 20-F and are incorporated herein by reference.



Report of Independent Registered Public Accounting
Firm.

Consolidated Statements of Financial Position as
at December 31, 2013 and 2012.

Consolidated Statements of Operations and Comprehensive
(Loss) Income for the years ended December 31, 2013, 2012 and 2011.

Consolidated Statements of Changes in Shareholders’
Equity for the years ended December 31, 2013, 2012 and 2011.

Consolidated Statements of Cash Flows for the years
ended December 31, 2013, 2012 and 2011.

Notes to Consolidated Financial Statements.



Item 19. Exhibits.



The list of exhibits is included following the signature page
hereto.



129







SIGNATURES



The registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



|Date: May 7, 2014 | VERIS GOLD CORP.              
|----------------- | ------------------------------
|                  |                               
|                  | By:                           
|                  | Name: Shaun Heinrichs         
|                  | Title: Chief Financial Officer



130







ANNUAL REPORT ON FORM 20-Ffor the year endedDecember 31, 2013



EXHIBIT INDEX



|Exhibit  |  |                                                                                                                                                        
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|No. Item |  | Description of Exhibit                                                                                                                                 
|         |  |                                                                                                                                                        
|1.1      |  | Articles (incorporated by reference to Exhibit 1.1 to the Company’s Annual Report
    on Form 20-F filed with the SEC on April 1, 2010).               
|         |  |                                                                                                                                                        
|4.1      |  | Incentive Stock Option Plan (incorporated by reference to Schedule A to Exhibit 99.4 to
    the Company’s Form 6-K filed with the SEC on May 15, 2013).
|         |  |                                                                                                                                                        
|8.1*     |  | List of Subsidiaries.                                                                                                                                  
|         |  |                                                                                                                                                        
|12.1*    |  | Section 302 Certification by Francois Marland, Chief Executive Officer, dated May 7,
    2014.                                                         
|         |  |                                                                                                                                                        
|12.2*    |  | Section 302 Certification by Shaun Heinrichs, Chief Financial Officer, dated May 7,
    2014.                                                          
|         |  |                                                                                                                                                        
|13.1*    |  | Section 906 Certification by Francois Marland, Chief Executive Officer, dated May 7,
    2014.                                                         
|         |  |                                                                                                                                                        
|13.2*    |  | Section 906 Certification by Shaun Heinrichs, Chief Financial Officer, dated May 7,
    2014.                                                          
|         |  |                                                                                                                                                        
|15.1*    |  | Consent of Deloitte LLP.                                                                                                                               
|         |  |                                                                                                                                                        
|15.2*    |  | Consent of Karl Swanson.                                                                                                                               
|         |  |                                                                                                                                                        
|15.3*    |  | Consent of Mark Odell.                                                                                                                                 
|         |  |                                                                                                                                                        
|15.4*    |  | Consent of John R.W. Fox.                                                                                                                              
|         |  |                                                                                                                                                        
|15.5*    |  | Consent of Todd W. Johnson.                                                                                                                            
|         |  |                                                                                                                                                        
|15.6*    |  | Consent of Michele White.                                                                                                                              
|         |  |                                                                                                                                                        
|16.1*    |  | Mine Safety Disclosure.                                                                                                                                



* Filed herewith.



131







INDEX TO FINANCIAL STATEMENTS OF VERIS
GOLD CORP.



|Report of Independent Registered Public Accounting Firm.                                                                    |  | F-4
|--------------------------------------------------------------------------------------------------------------------------- |  | ---
|Consolidated Statements of Financial Position as at December 31, 2013 and 2012.                                             |  | F-5
|Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2013, 2012 and 2011. |  | F-6
|Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2013, 2012 and 2011.            |  | F-7
|Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011.                                 |  | F-8
|Notes to Consolidated Financial Statements.                                                                                 |  | F-9



F-1















Consolidated Financial Statements



(Expressed in United States Dollars)



VERIS
GOLD CORP.



For the year ended December 31,
2013, 2012 and 2011



F-2







MANAGEMENT’S RESPONSIBILITY FOR
FINANCIAL REPORTING



The accompanying consolidated financial
statements of Veris 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 registered public accounting firm 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 re-appointing
the external auditors.



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



|“Shaun Heinrichs”       |  | “Francois Marland”     
|----------------------- |  | -----------------------
|                        |  |                        
|Shaun Heinrichs         |  | Francois Marland       
|                        |  |                        
|Chief Financial Officer |  | Chief Executive Officer
|                        |  |                        
|April 14, 2014          |  |                        



VERIS GOLD CORP.| F-3











Report of Independent Registered Public
Accounting Firm



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, 2013 and December 31, 2012, and the consolidated statements of operations and comprehensive (loss) income, consolidated
statements of changes in shareholders’ equity and consolidated statements of cash flows for each of the three years in the
three year period ended December 31, 2013 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. We were not engaged to perform an audit of the Company’s internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.



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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.



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



Opinion



In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of Veris Gold Corp. and subsidiaries as at December 31, 2013 and December
31, 2012, and its financial performance and its cash flows for each of the three years in the three year period ended December
31, 2013 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.



Emphasis of Matters



Without qualifying our opinion, we draw attention to:



| | a) | Note 1 of 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 $167 million and has an accumulated deficit of $446 million as at December
31, 2013. These conditions, along with other matters as set forth in Note 1, indicate the existence of material uncertainties that
cast substantial doubt about the Company’s ability to continue as a going concern; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | Note 13 of the financial statements which describes the uncertainty related to the outcome of the negotiations to settle the
forward contract. The outcome of these negotiations could differ significantly from the amount recorded.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|/s/Deloitte LLP       | 
|--------------------- | 
|Chartered Accountants | 
|Vancouver, Canada     | 
|April 14, 2014        | 



VERIS GOLD CORP.| F-4









|Consolidated Statements of Financial Position
|---------------------------------------------
|(In thousands of US dollars)                 
|                                             





|                                             |  |       |  | December 31, |          |   | December 31, |  
|-------------------------------------------- |  | ----- |  | ------------ | -------- | - | ------------ | -
|                                             |  | Note  |  | 2013         |          |   | 2012         |  
|ASSETS                                       |  |       |  |              |          |   |              |  
|Current assets:                              |  |       |  |              |          |   |              |  
|Cash                                         |  |       |  | $            | 1,161    |   |              | $
|Restricted funds                             |  | 10    |  |              | -        |   |              |  
|Accounts receivable and other                |  |       |  |              | 6,407    |   |              |  
|Inventories                                  |  | 9     |  |              | 24,643   |   |              |  
|                                             |  |       |  |              | 32,211   |   |              |  
|Restricted funds                             |  | 10    |  |              | 56,369   |   |              |  
|Mineral property, plant and equipment        |  | 11    |  |              | 223,600  |   |              |  
|Deferred transaction costs                   |  | 16    |  |              | 119      |   |              |  
|Other assets                                 |  |       |  |              | 652      |   |              |  
|Total Assets                                 |  |       |  | $            | 312,951  |   |              | $
|                                             |  |       |  |              |          |   |              |  
|LIABILITIES                                  |  |       |  |              |          |   |              |  
|Current liabilities:                         |  |       |  |              |          |   |              |  
|Accounts payable and accrued liabilities     |  |       |  | $            | 84,373   |   |              | $
|Senior secured gold facility                 |  | 15    |  |              | 77,309   |   |              |  
|Deferred revenue                             |  | 15    |  |              | -        |   |              |  
|Forward contracts                            |  | 13    |  |              | 24,086   |   |              |  
|Convertible debt                             |  | 16    |  |              | 10,000   |   |              |  
|Finance lease obligations                    |  | 18    |  |              | 3,174    |   |              |  
|Embedded derivative liabilities              |  | 15,16 |  |              | 393      |   |              |  
|Warrants                                     |  | 14    |  |              | -        |   |              |  
|                                             |  |       |  |              | 199,335  |   |              |  
|Warrants                                     |  | 14    |  |              | 3,322    |   |              |  
|Convertible debt                             |  | 16    |  |              | 5,640    |   |              |  
|Forward contracts                            |  | 13    |  |              | -        |   |              |  
|Deferred revenue                             |  | 15    |  |              | -        |   |              |  
|Deferred tax liabilities                     |  | 21    |  |              | 785      |   |              |  
|Decommisioning and rehabilitation provisions |  | 17    |  |              | 54,970   |   |              |  
|Finance lease obligations                    |  | 18    |  |              | 2,414    |   |              |  
|                                             |  |       |  |              | 266,466  |   |              |  
|EQUITY                                       |  |       |  |              |          |   |              |  
|Share capital                                |  | 19    |  |              | 453,534  |   |              |  
|Share based payments reserve                 |  | 19    |  |              | 37,510   |   |              |  
|Accumulated other comprehensive income       |  |       |  |              | 1,050    |   |              |  
|Deficit                                      |  |       |  |              | (445,609 | ) |              |  
|                                             |  |       |  |              | 46,485   |   |              |  
|                                             |  |       |  |              |          |   |              |  
|Total Liabilities and Equity                 |  |       |  | $            | 312,951  |   |              | $



See accompanying notes to consolidated
financial statements.



Nature of operations and going concern – Note 1

Commitments and contingencies – Note 25



Approved on behalf of the Board on April 14, 2014:



|“Gerald Ruth” |  | Director | “Francois Marland” |  | Director
|------------- |  | -------- | ------------------ |  | --------



VERIS GOLD CORP.| F-5







|Consolidated Statements of Operations and Comprehensive Loss        
|--------------------------------------------------------------------
|Years Ended December 31                                             
|(In thousands of US dollars, except for share and per share amounts)
|                                                                    



|                                                              |  | Note  |  | 2013 |             |   | 2012 |   |            | 2011 | 
|------------------------------------------------------------- |  | ----- |  | ---- | ----------- | - | ---- | - | ---------- | ---- | 
|                                                              |  |       |  |      |             |   |      |   |            |      | 
|Revenue                                                       |  | 22    |  | $    | 195,979     |   |      | $ | 160,561    |      | 
|Cost of sales                                                 |  |       |  |      | 180,885     |   |      |   | 134,350    |      | 
|Gross margin before depreciation and depletion                |  |       |  |      | 15,094      |   |      |   | 26,211     |      | 
|Depreciation and depletion                                    |  |       |  |      | 20,733      |   |      |   | 12,033     |      | 
|(Loss) income from mine operations                            |  |       |  |      | (5,639      | ) |      |   | 14,178     |      | 
|Impairment of mineral properties and equipment                |  | 11(b) |  |      | 33,300      |   |      |   | 31,763     |      | 
|Exploration costs                                             |  |       |  |      | -           |   |      |   | 88         |      | 
|General and administrative expenses                           |  |       |  |      | 6,154       |   |      |   | 8,399      |      | 
|Loss from operations                                          |  |       |  |      | (45,093     | ) |      |   | (26,072    | )    | 
|Other (expense) income:                                       |  |       |  |      |             |   |      |   |            |      | 
|Loss from joint venture                                       |  |       |  |      | -           |   |      |   | -          |      | 
|Interest expense                                              |  | 6     |  |      | (18,215     | ) |      |   | (2,505     | )    | 
|Finance and transaction costs                                 |  | 7     |  |      | (2,732      | ) |      |   | (3,284     | )    | 
|Derivative gain                                               |  | 8     |  |      | 5,228       |   |      |   | 9,358      |      | 
|Environmental costs                                           |  |       |  |      | (14,845     | ) |      |   | (4,128     | )    | 
|Other (expense) income                                        |  |       |  |      | (32         | ) |      |   | 491        |      | 
|Foreign exchange income (loss)                                |  |       |  |      | 388         |   |      |   | (1,789     | )    | 
|                                                              |  |       |  |      | (30,208     | ) |      |   | (1,857     | )    | 
|(Loss) income before income taxes                             |  |       |  |      | (75,301     | ) |      |   | (27,929    | )    | 
|Income tax (expense) recovery                                 |  |       |  |      |             |   |      |   |            |      | 
|Current                                                       |  | 21    |  |      | (170        | ) |      |   | 24         |      | 
|Deferred                                                      |  | 21    |  |      | 8,819       |   |      |   | 7,890      |      | 
|(Loss) income for the year                                    |  |       |  |      | (66,652     | ) |      |   | (20,015    | )    | 
|                                                              |  |       |  |      |             |   |      |   |            |      | 
|Other Comprehensive (Loss) Income, net of tax:                |  |       |  |      |             |   |      |   |            |      | 
|Items that may be reclassified subsequently to income (loss): |  |       |  |      |             |   |      |   |            |      | 
|Foreign currency translation adjustments                      |  |       |  |      | (1,592      | ) |      |   | 3,559      |      | 
|Total Comprehensive (Loss) Income                             |  |       |  | $    | (68,244     | ) |      | $ | (16,456    | )    | 
|(Loss) income per share – basic                               |  | 24    |  |      | (0.56       | ) |      |   | (0.21      | )    | 
|(Loss) income per share – diluted                             |  | 24    |  |      | (0.56       | ) |      |   | (0.21      | )    | 
|                                                              |  |       |  |      |             |   |      |   |            |      | 
|Weighted average number of shares outstanding                 |  |       |  |      |             |   |      |   |            |      | 
|Basic                                                         |  |       |  |      | 119,297,144 |   |      |   | 97,371,112 |      | 
|Diluted                                                       |  |       |  |      | 119,297,144 |   |      |   | 97,371,112 |      | 



See accompanying notes to consolidated financial statements.



VERIS GOLD CORP.| F-6







|Consolidated Statements of Shareholders’ Equity            
|-----------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011       
|(In thousands of US dollars and thousands of common shares)
|                                                           





|                             |  |                |  | Share Capital, Note 19 |         |  |        |   |         |          |  |   |               |   |  |         |       
|---------------------------- |  | -------------- |  | ---------------------- | ------- |  | ------ | - | ------- | -------- |  | - | ------------- | - |  | ------- | ------
|                             |  |                |  |                        |         |  |        |   |         | Share    |  |   | Accumulated   |   |  |         |       
|                             |  |                |  |                        |         |  |        |   |         | Based    |  |   | Other         |   |  |         |       
|                             |  |                |  |                        |         |  |        |   |         | Payments |  |   | Comprehensive |   |  |         |       
|                             |  | Note           |  | Number                 |         |  | Amount |   |         | reserve  |  |   | (loss) income |   |  | Deficit |       
|Balance at January 1, 2011   |  |                |  |                        | 68,767  |  |        | $ | 281,855 |          |  | $ | 30,483        |   |  | $       | 2,169 
|Total comprehensive loss     |  |                |  |                        |         |  |        |   |         |          |  |   |               |   |  |         |       
|Net income                   |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | -     
|Other comprehensive loss     |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | (3,086
|                             |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | (3,086
|Flow through share issue     |  | 19(c)(b)       |  |                        | 833     |  |        |   | 6,677   |          |  |   | -             |   |  |         | -     
|Issued on private placement  |  | 19(c)(a)       |  |                        | 3,349   |  |        |   | 8,118   |          |  |   | -             |   |  |         | -     
|Exercise of warrants         |  |                |  |                        | 20,090  |  |        |   | 116,603 |          |  |   | -             |   |  |         | -     
|Exercise of options          |  | 19(d)          |  |                        | 19      |  |        |   | 62      |          |  |   | (26           | ) |  |         | -     
|Shares issued for services   |  |                |  |                        | 6       |  |        |   | 42      |          |  |   | -             |   |  |         | -     
|Share based payment expense  |  | 19(d)          |  |                        | -       |  |        |   | -       |          |  |   | 3,195         |   |  |         | -     
|Balance at December 31, 2011 |  |                |  |                        | 93,064  |  |        | $ | 413,357 |          |  | $ | 33,652        |   |  | $       | (917  
|                             |  |                |  |                        |         |  |        |   |         |          |  |   |               |   |  |         |       
|Balance at January 1, 2012   |  |                |  |                        | 93,064  |  |        |   | 413,357 |          |  |   | 33,652        |   |  |         | (917  
|Total comprehensive loss     |  |                |  |                        |         |  |        |   |         |          |  |   |               |   |  |         |       
|Net loss                     |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | -     
|Other comprehensive income   |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | 3,559 
|                             |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | 3,559 
|Issued on private placement  |  | 19(c)(i)/(ii)  |  |                        | 6,193   |  |        |   | 10,163  |          |  |   | -             |   |  |         | -     
|Issued on public offering    |  | 19(c)(vii)     |  |                        | 7,503   |  |        |   | 12,280  |          |  |   | 252           |   |  |         | -     
|Issued with convertible debt |  | 19(c)(iii)     |  |                        | 782     |  |        |   | 2,201   |          |  |   | -             |   |  |         | -     
|Exercise of warrants         |  |                |  |                        | 76      |  |        |   | 246     |          |  |   | -             |   |  |         | -     
|Exercise of options          |  | 19(d)          |  |                        | 23      |  |        |   | 66      |          |  |   | (32           | ) |  |         | -     
|Share based payment expense  |  | 19(d)          |  |                        | -       |  |        |   | -       |          |  |   | 2,791         |   |  |         | -     
|Balance at December 31, 2012 |  |                |  |                        | 107,641 |  |        | $ | 438,313 |          |  | $ | 36,663        |   |  | $       | 2,642 
|                             |  |                |  |                        |         |  |        |   |         |          |  |   |               |   |  |         |       
|Balance at January 1, 2013   |  |                |  |                        | 107,641 |  |        | $ | 438,313 |          |  | $ | 36,663        |   |  | $       | 2,642 
|Total comprehensive loss     |  |                |  |                        |         |  |        |   |         |          |  |   |               |   |  |         |       
|Net loss                     |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | -     
|Other comprehensive loss     |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | (1,592
|                             |  |                |  |                        | -       |  |        |   | -       |          |  |   | -             |   |  |         | (1,592
|Share based payment expense  |  | 19(d)          |  |                        | -       |  |        |   | -       |          |  |   | 472           |   |  |         | -     
|Issued on public offering    |  | 19(c)(ix)/(xi) |  |                        | 31,362  |  |        |   | 9,575   |          |  |   | 137           |   |  |         | -     
|Issued on private placement  |  | 19(c)(x)       |  |                        | 15,375  |  |        |   | 5,646   |          |  |   | 180           |   |  |         | -     
|Issued with convertible debt |  | 19(c)(viii)    |  |                        | -       |  |        |   | -       |          |  |   | 58            |   |  |         | -     
|Balance at December 31, 2013 |  |                |  |                        | 154,378 |  |        | $ | 453,534 |          |  | $ | 37,510        |   |  | $       | 1,050 





See accompanying notes to consolidated financial statements.



VERIS GOLD CORP.| F-7







|Consolidated Statements of Cash Flow
|------------------------------------
|Years Ended December 31             
|(In thousands of US dollars)        
|                                    



|                                                                                |  | Note           |  | 2013 |         |   | 2012 |   |         | 2011 | 
|------------------------------------------------------------------------------- |  | -------------- |  | ---- | ------- | - | ---- | - | ------- | ---- | 
|                                                                                |  |                |  |      |         |   |      |   |         |      | 
|Operating activities                                                            |  |                |  |      |         |   |      |   |         |      | 
|Net loss for the period                                                         |  |                |  | $    | (66,652 | ) |      | $ | (20,015 | )    | 
|Items not affecting cash:                                                       |  |                |  |      |         |   |      |   |         |      | 
|Depreciation and depletion                                                      |  |                |  |      | 20,733  |   |      |   | 12,033  |      | 
|Recognition of deferred revenue                                                 |  |                |  |      | (14,831 | ) |      |   | (23,958 | )    | 
|Loss on recognition of senior secured gold facility                             |  | 15             |  |      | 12,119  |   |      |   | -       |      | 
|Impairment of mineral properties and equipment                                  |  |                |  |      | 33,300  |   |      |   | 31,763  |      | 
|Finance cost                                                                    |  |                |  |      | (7,269  | ) |      |   | (5,485  | )    | 
|Interest on senior secured gold facility                                        |  |                |  |      | 8,194   |   |      |   | -       |      | 
|Share based payments                                                            |  |                |  |      | 472     |   |      |   | 2,791   |      | 
|Mark to market on embedded derivatives                                          |  |                |  |      | (646    | ) |      |   | -       |      | 
|Loss (gain) on disposal of assets                                               |  |                |  |      | 163     |   |      |   | -       |      | 
|Loss from joint venture                                                         |  |                |  |      | -       |   |      |   | -       |      | 
|Deferred tax recovery                                                           |  |                |  |      | (8,819  | ) |      |   | (7,914  | )    | 
|Unrealized foreign exchange loss                                                |  |                |  |      | (349    | ) |      |   | 2,541   |      | 
|Change in non cash working capital                                              |  | 20             |  |      | 24,860  |   |      |   | (14,020 | )    | 
|Deferred revenue proceeds, net of transaction costs                             |  |                |  |      | -       |   |      |   | 9,076   |      | 
|Cash settlement of deferred revenue                                             |  |                |  |      | (4,233  | ) |      |   | -       |      | 
|                                                                                |  |                |  |      | (2,958  | ) |      |   | (13,188 | )    | 
|Investing activities                                                            |  |                |  |      |         |   |      |   |         |      | 
|Development stage gold sales                                                    |  |                |  |      | 3,517   |   |      |   | -       |      | 
|Property, plant and equipment expenditures                                      |  |                |  |      | (8,915  | ) |      |   | (23,425 | )    | 
|Proceeds from sale of property, plant and equipment                             |  |                |  |      | 225     |   |      |   | -       |      | 
|Cash distribution from joint venture                                            |  |                |  |      | -       |   |      |   | -       |      | 
|Purchase of derivative financial asset                                          |  |                |  |      | -       |   |      |   | -       |      | 
|Restricted funds                                                                |  |                |  |      | 2,695   |   |      |   | 6,597   |      | 
|Mineral property expenditures                                                   |  |                |  |      | (14,999 | ) |      |   | (12,648 | )    | 
|                                                                                |  |                |  |      | (17,477 | ) |      |   | (29,476 | )    | 
|Financing activities                                                            |  |                |  |      |         |   |      |   |         |      | 
|                                                                                |  |                |  |      |         |   |      |   |         |      | 
|Proceeds from derivatives arising on gold forward contracts                     |  |                |  |      | -       |   |      |   | 14,824  |      | 
|Settlement of derivative gold forward contracts                                 |  | 13             |  |      | -       |   |      |   | -       |      | 
|Flow through shares issued for cash                                             |  |                |  |      | -       |   |      |   | -       |      | 
|Proceeds from units issued on public offering, net of transaction costs         |  | 19(c)(ix)/(xi) |  |      | 12,581  |   |      |   | 14,429  |      | 
|Proceeds from units issued on private placement, net of transaction
    costs   |  | 19(c)(x)       |  |      | 7,319   |   |      |   | 8,748   |      | 
|Proceeds from issuance of convertible debentures, net of transactions
    costs |  | 16             |  |      | 9,555   |   |      |   | 11,540  |      | 
|Repayment of senior secured gold facility                                       |  | 15             |  |      | (16,935 | ) |      |   | -       |      | 
|Repayment of long term debt                                                     |  |                |  |      | -       |   |      |   | -       |      | 
|Common shares issued upon exercise of stock options and
    warrants            |  |                |  |      | -       |   |      |   | 129     |      | 
|                                                                                |  |                |  |      | 12,520  |   |      |   | 49,670  |      | 
|Effect of exchange rate changes on cash                                         |  |                |  |      | (219    | ) |      |   | 28      |      | 
|Decrease in cash                                                                |  |                |  |      | (8,134  | ) |      |   | 7,034   |      | 
|Cash, beginning of year                                                         |  |                |  |      | 9,295   |   |      |   | 2,261   |      | 
|Cash, end of year                                                               |  |                |  | $    | 1,161   |   |      | $ | 9,295   |      | 



Supplemental cash flow information (Note
20)

See accompanying notes to consolidated
financial statements.

VERIS GOLD CORP.| F-8







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | 1. | Nature of operations and going concern
| | -- | --------------------------------------



Veris 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, 2013, and December 31, 2012, and for the years ended December 31, 2013, 2012 and 2011, 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 $45.1 million for the year ended December 31, 2013 (2012 – $26.1 million; 2011 - $41.5 million), and a $3.0
million outflow of cash from operating activities for the same period (2012 – outflow of $13.2 million; 2011 – inflow
of $61.6 million). At December 31, 2013 the Company had a working capital deficiency of $167.1 million (December 31, 2012 –
$34.3 million) and an accumulated deficit of $445.6 million (December 31, 2012 – $379.0 million). On January 28, 2014, the
Company received a Notice of Default under the terms of the Senior Secured Gold Forward Facility held with Deutsche Bank AG. 
The Notice of Default arose from the failure of the Company to deliver the required gold as at December 31, 2013 or pay the cash
equivalent of the gold delivery shortfall as required under the Agreements.  Deutsche Bank advised the Company that it is
considering what actions, if any, it may wish to make in response to the contract concerning this event. These actions may include
an assignment of Deutsche Bank’s rights and obligations under the agreements to a third party, or realizing on the security
pledged, being the Company's direct and indirect interest in the Jerritt Canyon properties in Nevada.



This event has accelerated efforts
undertaken by the Company to restructure or refinance the existing debt commitments, both senior and subordinated, by extending
the terms or through the buyout of the debt under new terms.  The restructuring of these liabilities will improve both the
cash flow available to the Company as well as the overall capital structure.  As part of these efforts the Company’s
Board of Directors appointed a Special Committee, comprised of two independent and one non-independent Director, to review the
current options and work with the appointed advisor, Raymond James, to develop and explore refinancing alternatives.



The Company continues to obtain
external financing to fund existing operations and to be able to settle obligations as they become due. The Company plans to continue
to seek out additional debt or equity financing at favorable terms, to restructure the Company’s capital structure.



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
cast significant 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.



VERIS GOLD CORP.| F-9







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | 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.



Comparative information



During
the year ended December 31, 2013, the Company changed the presentation of its financial statements in order to provide financial
statement users with more relevant information. Prior period comparative figures have been amended to conform to the current period’s
presentation. In prior periods included in finance and transactions costs, as presented on the consolidated statement of operations
and comprehensive income, were the following items: interest expense, including accretion of decommissioning and rehabilitation
provisions; environmental costs; finance and transaction costs; and, other expenses. These items are all now separately presented
on the consolidated statement of operations and comprehensive loss. Similarly, in prior periods derivative gains and losses, including
those on derivative warrant liabilities, were included in interest and other income as was presented on the consolidated statement
of operations and comprehensive loss, these derivative gains and losses are now presented separately on the consolidated statement
of operations and comprehensive loss. Further, in prior periods the current portion of finance lease obligations was included in
accounts payable and accrued liabilities as was presented on the consolidated statements of financial position and this item is
now separately presented. There was no impact on total loss before income taxes in periods presented.



| | 3. | Significant accounting policies
| | -- | -------------------------------



| | (a) | Basis of consolidation
| | --- | ----------------------



These consolidated financial
statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company. Control
exists when the Company has power over an investee, when the Company is exposed, or has rights, to variable returns from the investee
and when the Company has the ability to affect those returns through its power over the investee. Subsidiaries are included in
the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition
or loss of control. The principal subsidiaries of the Company and their geographic locations at December 31, 2013 were as follows:





|Property                  |  | Location |  | Ownership |    
|------------------------- |  | -------- |  | --------- | ---
|Ketza River Holdings Ltd. |  | Yukon    |  |           | 100
|Veris Gold U.S.A. Inc.    |  | Nevada   |  |           | 100
|Castle Exploration Inc.   |  | Colorado |  |           | 100







VERIS GOLD CORP.| F-10







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (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) | 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.



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.



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.



| | (d) | 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. Land is not depreciated.





|Depreciation rates are as follows: |  |                    
|---------------------------------- |  | -------------------
|Mineral properties being depleted  |  | Units of production
|Buildings                          |  | 20 years           
|Plant and equipment                |  | 3 - 20 years       





| | (e) | 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 commercial production, which occurs when the property is capable of operating at levels intended
by management. Costs incurred prior to this point, including depreciation of related plant and equipment, are capitalized and proceeds
from sales during this period are offset against costs capitalized.



VERIS GOLD CORP.| F-11







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



Mine development expenditures



Once it has been determined that the development of
a mineral property is commercially viable and technically feasible, 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. Capitalization
of costs incurred ceases when the mining property is capable of operating at levels intended by management.  Various factors
are considered by management when making this determination including: 1. major mine infrastructure has been completed; 2. designed
and targeted production levels are achieved; and 3. indicators have been observed to suggest that operating results will continue
at levels designed and targeted. 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.



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.



| | (f) | Impairment of mineral property plant & equipment
| | --- | ------------------------------------------------



At each reporting date, the Company
reviews the carrying amounts of its mineral property plant & equipment 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 periods. A reversal of an impairment is recognized as income immediately.

VERIS GOLD CORP.| F-12







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (g) | 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 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 at the end of each reporting period 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.



| | (h) | Share based payments
| | --- | --------------------



The Company has established a
share based payment plan as described in Note 19. 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 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.



| | (i) | Revenue recognition
| | --- | -------------------



Revenue is measured at the fair
value of the consideration received or receivable. Revenue from the sale of metals is recognized when the significant risks and
rewards of ownership have passed to the buyer; it is probable that economic benefits associated with the transaction will flow
to the Company; the sale price can be measured reliably; the Company has no significant continuing involvement; and the costs incurred
or to be incurred in respect of the transaction can be measured reliably.



Revenue from the sale of metals
for a mineral property in the development phase is credited against the carrying value of the related mineral property. Revenue
from the sale of metals for a mineral property in the production phase is recognized as income when revenue recognition criteria
are met.



Revenue from a contract to provide
service is recognized with reference to the stage of completion of the contract at the end of the reporting period. Revenue from
toll milling services is recognized as material is processed in accordance with the specifics of the applicable toll milling agreement.



VERIS GOLD CORP.| F-13







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (j) | 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.



| | (k) | 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 tax when the related tax benefits are renounced and the Company
has incurred the eligible expenditures.



| | (l) | 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 14).



VERIS GOLD CORP.| F-14







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (m) | 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.



| | (n) | Financial instruments
| | --- | ---------------------



Financial assets
and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instrument.



Financial assets
and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) 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
at fair value through profit or loss are recognized immediately in profit or loss.



Financial Assets



The Company classifies
its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available-for-sale
and held-to-maturity investments. The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of financial assets at initial recognition



| | (i) | Financial assets at fair value through profit or loss
| | --- | -----------------------------------------------------



Derivatives are
included in this category and are classified as current assets or non-current assets based on their maturity date. The Company
does not acquire financial assets for the purpose of selling in the short term. Financial assets carried at fair value through
profit or loss, are initially recognized at fair value. The directly attributable transaction costs are expensed in the income
statement in the period in which they are incurred. Subsequent changes in fair value are recognized in net earnings.



| | (ii) | Loans and receivables
| | ---- | ---------------------



Loans and receivables
are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables
comprise ‘trade and other receivables’, ‘other assets’ and ‘cash’ in the statement of financial
position. Loans and receivables are carried at amortized cost less any impairment.

VERIS GOLD CORP.| F-15







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (iii) | Available-for-sale financial assets
| | ----- | -----------------------------------



Available-for-sale
financial assets are non-derivatives that are either specifically designated as available-for- sale or not classified in any of
the other categories. They are included in non-current assets unless the Company intends to dispose of the investment within 12
months of the statement of financial position date. Changes in the fair value of available-for-sale financial assets denominated
in a currency other than the functional currency of the holder, other than equity investments, are analyzed between translation
differences and other changes in the carrying amount of the security. The translation differences are recognized in the income
statement. Any impairment charges are also recognized in the income statement, while other changes in fair value are recognized
in other comprehensive income. When financial assets classified as available-for-sale are sold, the accumulated fair value adjustments
previously recognized in accumulated other comprehensive income are reclassified to the income statement. Dividends on available-for-sale
equity instruments are also recognized in the income statement within investment income when the Company’s right to receive
payments is established.



| | (iv) | Held-to-maturity investments
| | ---- | ----------------------------



Non-derivative
financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has
the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included
in this classification. Other long-term investments that are intended to be held-to-maturity, such as bonds, are measured at amortized
cost. This cost is computed as the amount initially recognized minus principal repayments, plus or minus the cumulative amortization
using the effective interest method of any difference between the initially recognized amount and the maturity amount. This calculation
includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction
costs and all other premiums and discounts. For investments carried at amortized cost, gains and losses are recognized in income
when the investments are derecognized or impaired, as well as through the amortization process.



Financial Liabilities and
equity instruments



Borrowings and other financial
liabilities are classified as other financial liabilities and are recognized initially at fair value, net of transaction costs
incurred and are subsequently stated at amortized cost. Any difference between the amounts originally received (net of transaction
costs) and the redemption value is recognized in the income statement over the period to maturity using the effective interest
method. Excluded from financial liabilities are contracts that were entered into and continue to be held for the purpose of the
receipt or delivery of a non-financial item in accordance with the Company’s expected purchase, sale or usage requirements.



| | (i) | Classification as debt or equity
| | --- | --------------------------------



Debt and equity instruments issued
by a group entity are classified as either financial liabilities or as equity accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument.



| | (ii) | Equity instruments
| | ---- | ------------------



An equity instrument is any contract
that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued
by a group entity are recognized at the proceeds received, net of direct issue costs.



VERIS GOLD CORP.| F-16







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (iii) | Compound instruments
| | ----- | --------------------



The component parts of compound
instruments (convertible debt) issued by the Company are classified separately as financial liabilities and equity in accordance
with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Conversion
option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s
own equity instruments is an equity instrument. Conversion option that will be settled by the exchange of a fixed amount of cash
or another financial asset for a variable number of the Company’s own equity instruments is a financial liability.



At the date of issue, the fair
value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments.
This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion
or at the instrument’s maturity date.



The conversion option classified
as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a
whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the
conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance
recognized in equity will be transferred to equity. When the conversion option remains unexercised at the maturity date of the
convertible note, the balance recognized in equity will remain in equity. No gain or loss is recognized in profit or loss upon
conversion or expiration of the conversion option.



Transaction costs that relate to
the issue of convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross
proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the
liability component are included in the carrying amount of the liability and amortized over the lives of the convertible notes
using the effective interest method.



| | (iv) | Embedded derivatives
| | ---- | --------------------



Derivatives embedded in non-derivative
host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics
are not closely related to those of the host contracts.



| | (o) | 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).



VERIS GOLD CORP.| F-17







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (p) | Leases
| | --- | ------



Significant contracts are assessed
to determine whether they contain a lease in substance or legal form. Where the Company receives substantially all the risks and
rewards of ownership of the asset, these assets are capitalized at the lower of the fair value of the leased asset or the estimated
present value of the minimum lease payments. The corresponding lease obligation is included within other liabilities and interest
expense is recognized over the term of the lease. Operating leases are not capitalized and payments are included in the Consolidated
Statements of Operations and Comprehensive Income (Loss) on a straight-line basis over the lease term.



| | (q) | Borrowing costs
| | --- | ---------------



Borrowing costs incurred that
are attributable to acquiring and developing mineral property or acquiring or constructing property plant and equipment (qualifying
assets) are capitalized and included in the carrying amounts of qualifying assets until those qualifying assets are ready for their
intended use. Mineral properties are ready for intended use when they reach commercial production. Property, plant and equipment
are ready for intended use when they are substantially complete and available for their intended use. Capitalization commences
on the date that expenditures for the qualifying asset are being incurred, borrowing costs are being incurred by the Company and
activities that are necessary to prepare the qualifying asset for its intended use are being undertaken. All other borrowing costs
are expensed in the period in which they are incurred.



| | (r) | Provisions
| | --- | ----------



Provisions are liabilities that
are uncertain in timing or amount. The Company records a provision when:



| | (v) | The Company has a present obligation arising as a result of a past event;
| | --- | -------------------------------------------------------------------------



| | (vi) | It is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation; and
| | ---- | ----------------------------------------------------------------------------------------------------------------------



| | (vii) | A reliable estimate can be made of the amount of the obligation
| | ----- | ---------------------------------------------------------------



Provisions are reviewed at
the end of each reporting period and adjusted to reflect management’s current best estimate of the expense required to settle
the present obligation If it is no longer probable that an outflow of
resources embodying economic benefits will be required to settle the obligation, the provision is reversed.



| | 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.



VERIS GOLD CORP.| F-18









|Notes to Consolidated Financial
    Statements                     
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



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 future settlement of obligations under the Senior Secured Gold Facility
represent a financial liability
| | - | ------------------------------------------------------------------------------------------------------------------------------

| | · | 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
| | - | ------------------------



| | 5. | Changes in accounting standards
| | -- | -------------------------------



Accounting standards adopted 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. This amendment did not have an impact on the Company’s consolidated financial statements.



| | 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 Statements and 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. This standard did not have an
impact on the Company’s 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. This standard did not have an impact on the Company’s consolidated
financial statements.



VERIS GOLD CORP.| F-19







|Notes to Consolidated Financial
    Statements                     
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(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. This standard did not have an impact on the Company’s consolidated financial statements.



| | v) | IFRS 13 - Fair Value Measurement (“IFRS 13”)
| | -- | --------------------------------------------



Issued in May 2012, 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 has provided additional disclosure in its consolidated
financial statements as a result of this standard.



| | 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. This standard had an insignificant impact on disclosures in
the Company’s 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. This amendment did not have an impact on the Company’s 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. This standard did not have an impact on the Company’s
consolidated financial statements.



VERIS GOLD CORP.| F-20







|Notes to Consolidated Financial
    Statements                     
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



Accounting standards effective January
1, 2014 or later



| | 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 application. The Company is currently evaluating the impact the amendments are expected
to have on its consolidated financial statements.



| | ii) | IFRS 9 - Financial Instruments (“IFRS 9”)
| | --- | -----------------------------------------



The IASB intends to replace IAS 39 – Financial
Instruments: Recognition and Measurement in its entirety with IFRS 9 – Financial Instruments (“IFRS 9”) which
is intended to reduce the complexity for the classification and measurement of financial instruments. This project has now been
completed. However, as part of the Limited Amendments to IFRS 9 project, on July 24, 2013 the IASB tentatively decided to defer
the mandatory effective date of IFRS 9 and that the mandatory effective date should be left open pending the finalisation of the
impairment and classification and measurement requirements. IFRS 9 would still be available for early application. The Company
is currently evaluating the impact the final standard is expected to have on its consolidated financial statements.



| | iii) | IFRIC 21 - Levies (“IFRIC 21”)
| | ---- | ------------------------------



In May 2013, the IASB issued IFRIC 21 – Levies
(“IFRIC 21”), an interpretation of IAS 37 – Provisions, Contingent Liabilities and Contingent Assets (“IAS
37”), on the accounting for levies imposed by governments. IAS 37 sets out criteria for the recognition of a liability, one
of which is the requirement for the entity to have a present obligation as a result of a past event (“obligating event”).
IFRIC 21 clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant
legislation that triggers the payment of the levy. IFRIC 21 is effective for annual periods commencing on or after January 1, 2014.
The Company is currently evaluating the impact the final standard is expected to have on its consolidated financial statements.



VERIS GOLD CORP.| F-21







|Notes to Consolidated Financial
    Statements                     
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | 6. | Interest expense
| | -- | ----------------



Interest expense is comprised of:



|                                                           |  | Note |    |  | 2013 |   |         | 2012 |  |   | 2011   |  
|---------------------------------------------------------- |  | ---- | -- |  | ---- | - | ------- | ---- |  | - | ------ | -
|Interest on senior secured gold facility                   |  |      | 15 |  |      | $ | (8,194  | )    |  | $ | -      |  
|Interest on long term debt                                 |  |      |    |  |      |   | -       |      |  |   | -      |  
|Interest on convertible debt                               |  |      | 16 |  |      |   | (5,186  | )    |  |   | (763   | )
|Interest on trade payables                                 |  |      |    |  |      |   | (2,445  | )    |  |   | -      |  
|Accretion of decommissioning and rehabilitation provisions |  |      | 17 |  |      |   | (1,707  | )    |  |   | (1,225 | )
|Interest on finance leases                                 |  |      | 18 |  |      |   | (458    | )    |  |   | (206   | )
|Interest on forward contracts                              |  |      | 13 |  |      |   | (55     | )    |  |   | (911   | )
|Other interest (expense) income                            |  |      |    |  |      |   | (170    | )    |  |   | 600    |  
|                                                           |  |      |    |  |      |   |         |      |  |   |        |  
|                                                           |  |      |    |  |      | $ | (18,215 | )    |  | $ | (2,505 | )



| | 7. | Finance and transaction costs
| | -- | -----------------------------



Finance and transaction costs are comprised of:



|                                                             |  | Note |    |  | 2013 |   |        | 2012 |  |   | 2011   |  
|------------------------------------------------------------ |  | ---- | -- |  | ---- | - | ------ | ---- |  | - | ------ | -
|Finance and transaction costs                                |  |      |    |  |      | $ | (1,765 | )    |  | $ | (1,971 | )
|Transaction costs recognized on senior secured gold facility |  |      | 15 |  |      |   | (967   | )    |  |   | (1,313 | )
|                                                             |  |      |    |  |      |   |        |      |  |   |        |  
|                                                             |  |      |    |  |      | $ | (2,732 | )    |  | $ | (3,284 | )



| | 8. | Derivative gain (loss)
| | -- | ----------------------



Derivative gain (loss) is comprised of:



|                                                     |  | Note |         |  | 2013 |   |         | 2012 |  |   | 2011   |  
|---------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------ | -
|Loss on recognition of senior secured gold facility  |  |      | 15      |  |      | $ | (12,119 | )    |  | $ | -      |  
|Gain on warrants                                     |  |      | (i)     |  |      |   | 11,969  |      |  |   | 17,378 |  
|Gain (loss) on revaluation of gold forwards          |  |      | (ii)(a) |  |      |   | 4,004   |      |  |   | (7,920 | )
|Gain (loss) on convertible debt embedded derivatives |  |      | (ii)(b) |  |      |   | 728     |      |  |   | (100   | )
|Gain on senior secured gold embedded derivatives     |  |      | (ii)(c) |  |      |   | 646     |      |  |   | -      |  
|                                                     |  |      |         |  |      |   |         |      |  |   |        |  
|                                                     |  |      |         |  |      | $ | 5,228   |      |  | $ | 9,358  |  



| | (i) | The warrants denominated in Canadian dollars are revalued at each reporting period and the change
in fair value recorded in net income (Note 14).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Gain (loss) on derivatives is comprised of:
| | ---- | -------------------------------------------



| | a. | Three gold forward contracts entered into in November 2010, January 2011 and January 2012 plus
a $25 million debt entered into in 2010 are accounted for as derivatives.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company issued $25.0 million
in debt in the third quarter of 2010 with $6.8 million of the proceeds being allocated to a gold embedded derivative arising from
the loan repayment being indexed to the gold spot price. This debt was settled on August 12, 2011 with the revaluation of this
embedded derivative resulting in a loss of $11.9 million for the year ended December 31, 2011.



VERIS GOLD CORP.| F-22







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



The Company entered into a gold
forward in January 2011 which was settled in June 2011, resulting in a net loss of $1.4 million for the year ended December 31,
2011.



The fair value of the November
2010 forward contract as at December 31, 2013 was $17.3 million (December 31, 2012 - $21.5 million) resulting in a gain of $4.2
million being recognized in the year ended December 31, 2013 (2012 – loss of $1.1 million and financing charge of $5.4 million;
2011 - $6.1 million loss and $nil financing charge) (Note 13).



The fair value of the January 2012
forward contract as at December 31, 2013 was $6.8 million (December 31, 2012 - $7.0 million) resulting in a revaluation loss of
$0.2 million and interest expense of $0.1 million being recognized in the year ended December 31, 2013 (2012 – loss of $1.4
million and interest expense of $0.9 million; 2011 - $nil). During the year ended December 31, 2013, the Company made a payment
of $0.5 million (Note 13). As at December 31, 2013, the Company and the counterparty were in ongoing negotiations to extend the
settlement date of this forward contract.



| | b. | The share conversion option within the convertible debts issued on June 15, 2012, July 19, 2012,
October 11, 2012, and April 12, 2013 (Note 16) represents an embedded derivative liability for accounting purposes. These embedded
derivatives are bifurcated from the convertible debenture contracts and are 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 December 31, 2013 the fair value of the embedded derivatives was $0.2 million (2012 - $0.5 million)
with revaluation gains of $0.7 million being recognized in the year ended December 31, 2013 (2012 - $0.1 million loss; 2011 - $nil).
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | The variable nature of gold payments, represented by the minimum and maximum prices on future gold
deliveries (the “Collars”) relating to the Senior Secured Gold Facility Agreements, were determined to be embedded
derivatives (Note 15). The fair value of the Collars was $0.2 million at December 31, 2013 resulting in a gain of $0.6 million
being recognized in the year ended December 31, 2013. The Collars had not been recognized as at December 31, 2012.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9. | Inventories
| | -- | -----------



|                       |  | December 31, |        |  | December 31, |  
|---------------------- |  | ------------ | ------ |  | ------------ | -
|                       |  | 2013         |        |  | 2012         |  
|Finished goods         |  | $            | 1,696  |  |              | $
|Stockpiled ore         |  |              | 9,178  |  |              |  
|Purchased ore          |  |              | -      |  |              |  
|Work in progress       |  |              | 5,229  |  |              |  
|Materials and supplies |  |              | 8,540  |  |              |  
|                       |  | $            | 24,643 |  |              | $



All of the
Company’s inventories on hand are located at the Jerritt Canyon mine in Nevada, USA. As at December 31, 2013 there is a net
realizable value provision recorded against materials and supplies inventory of $0.7 million (December 31, 2012 - $0.6 million).

VERIS GOLD CORP.| F-23







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | 10. | Restricted funds
| | --- | ----------------



|                                                         |  |      |     |  | December 31, |   |        | December 31, | 
|-------------------------------------------------------- |  | ---- | --- |  | ------------ | - | ------ | ------------ | 
|                                                         |  | Note |     |  | 2013         |   |        | 2012         | 
|Chartis commutation account                              |  |      | (a) |  |              | $ | 25,538 |              | 
|Chartis money market account                             |  |      | (a) |  |              |   | 25,272 |              | 
|Gold forward sale performance reserve                    |  |      | (c) |  |              |   | 2,000  |              | 
|Water use license letter of credit                       |  |      | (b) |  |              |   | 2,895  |              | 
|Cash pledged as security for letters of credit           |  |      |     |  |              |   | 664    |              | 
|                                                         |  |      |     |  |              | $ | 56,369 |              | 
|Current portion of gold forward sale performance reserve |  |      | (c) |  |              |   | -      |              | 
|                                                         |  |      |     |  |              | $ | 56,369 |              | 



| | (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, $25.5 million was on deposit 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 currently has
on deposit $25.3 million in money market accounts with Chartis.



During the year ended December
31, 2013, the Company made a payment of $1.7 million to fund obligations with the ERTP and a payment of $1.7 million to fund additional
surety bond requirements with the NDEP.



During the year ended December
31, 2013, the Company earned interest in the amount of $0.1 million from the commutation and money market accounts (2012 - $0.1
million).



| | (b) | As required by The Yukon Territorial Government, the Company has funds on deposit in an interest-bearing
account with Toronto Dominion Bank reserved for future exploration work in the Yukon related to the Ketza River project.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | 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 were to be made available when defined production
targets have been met (Note 15). The Company met the defined production targets and $8 million of the funds held in escrow were
received in February, 2013, the final $2 million is to be released upon settlement of the final scheduled monthly gold delivery.
There were no funds received in 2012.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



VERIS GOLD CORP.| F-24







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | 11. | Mineral property, plant and equipment
| | --- | -------------------------------------



Mineral property,
plant and equipment comprise:



|                                                        |  | Mineral Properties |         |   |            |   |        |                    |  |   |                     |   |  |                          |         |   |       |  
|------------------------------------------------------- |  | ------------------ | ------- | - | ---------- | - | ------ | ------------------ |  | - | ------------------- | - |  | ------------------------ | ------- | - | ----- | -
|                                                        |  | Non- depletable    |         |   | Depletable |   |        | Land and Buildings |  |   | Plant and Equipment |   |  | Construction in Progress |         |   | Other |  
|Cost                                                    |  |                    |         |   |            |   |        |                    |  |   |                     |   |  |                          |         |   |       |  
|December 31, 2011                                       |  | $                  | 81,654  |   |            | $ | 8,426  |                    |  | $ | 50,349              |   |  | $                        | 78,054  |   |       | $
|Additions                                               |  |                    | 8,337   |   |            |   | 13,293 |                    |  |   | 1,805               |   |  |                          | 31,604  |   |       |  
|Commenced Use                                           |  |                    | -       |   |            |   | -      |                    |  |   | -                   |   |  |                          | 6,887   |   |       |  
|Foreign exchange                                        |  |                    | 1,890   |   |            |   | -      |                    |  |   | 60                  |   |  |                          | 2       |   |       |  
|December 31, 2012                                       |  |                    | 91,881  |   |            |   | 21,719 |                    |  |   | 52,214              |   |  |                          | 116,547 |   |       |  
|Additions                                               |  |                    | 16,837  |   |            |   | 11,920 |                    |  |   | -                   |   |  |                          | 4,285   |   |       |  
|Disposals                                               |  |                    | -       |   |            |   | -      |                    |  |   | -                   |   |  |                          | (460    | ) |       |  
|Commenced Use (d)                                       |  |                    | -       |   |            |   | -      |                    |  |   | -                   |   |  |                          | 34,357  |   |       |  
|Development stage   gold sales (c)                      |  |                    | (3,517  | ) |            |   | -      |                    |  |   | -                   |   |  |                          | -       |   |       |  
|Production   commencement, (c)                          |  |                    | (12,890 | ) |            |   | 12,890 |                    |  |   | -                   |   |  |                          | -       |   |       |  
|Foreign exchange                                        |  |                    | (2,159  | ) |            |   | -      |                    |  |   | (117                | ) |  |                          | (93     | ) |       |  
|December 31, 2013                                       |  | $                  | 90,152  |   |            | $ | 46,529 |                    |  | $ | 52,097              |   |  | $                        | 154,636 |   |       | $
|                                                        |  |                    |         |   |            |   |        |                    |  |   |                     |   |  |                          |         |   |       |  
|Accumulated depreciation & Impairment December 31, 2011 |  | $                  | -       |   |            | $ | -      |                    |  | $ | 10,440              |   |  | $                        | 19,589  |   |       | $
|Depreciation & depletion                                |  |                    | -       |   |            |   | 2,008  |                    |  |   | 1,737               |   |  |                          | 8,786   |   |       |  
|Impairment (b)                                          |  |                    | 31,763  |   |            |   | -      |                    |  |   | -                   |   |  |                          | -       |   |       |  
|Foreign exchange                                        |  |                    | -       |   |            |   | -      |                    |  |   | 24                  |   |  |                          | -       |   |       |  
|December 31, 2012                                       |  |                    | 31,763  |   |            |   | 2,008  |                    |  |   | 12,201              |   |  |                          | 28,375  |   |       |  
|Depreciation & depletion                                |  |                    | -       |   |            |   | 7,859  |                    |  |   | 646                 |   |  |                          | 13,031  |   |       |  
|Disposals                                               |  |                    | -       |   |            |   | -      |                    |  |   | -                   |   |  |                          | (72     | ) |       |  
|Impairment (b)                                          |  |                    | 31,708  |   |            |   | -      |                    |  |   | 1,564               |   |  |                          | 23      |   |       |  
|Foreign exchange                                        |  |                    | -       |   |            |   | -      |                    |  |   | (3                  | ) |  |                          | (89     | ) |       |  
|December 31, 2013                                       |  |                    | 63,471  |   |            |   | 9,867  |                    |  |   | 14,408              |   |  |                          | 41,268  |   |       |  
|                                                        |  |                    |         |   |            |   |        |                    |  |   |                     |   |  |                          |         |   |       |  
|Carrying Value                                          |  |                    |         |   |            |   |        |                    |  |   |                     |   |  |                          |         |   |       |  
|December 31, 2011                                       |  | $                  | 81,654  |   |            | $ | 8,426  |                    |  | $ | 39,909              |   |  | $                        | 58,465  |   |       | $
|December 31, 2012                                       |  | $                  | 60,118  |   |            | $ | 19,711 |                    |  | $ | 40,013              |   |  | $                        | 88,172  |   |       | $
|December 31, 2013                                       |  | $                  | 26,681  |   |            | $ | 36,662 |                    |  | $ | 37,689              |   |  | $                        | 113,368 |   |       | $



VERIS GOLD CORP.| F-25







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



|                                   |  | Jerritt Canyon |         |   | Ketza River |   |         | Silver Valley |  |   |        |   |  |       |    
|---------------------------------- |  | -------------- | ------- | - | ----------- | - | ------- | ------------- |  | - | ------ | - |  | ----- | ---
|                                   |  | (c)/(e)        |         |   | (a)/(i)     |   |         | (a)/(ii)      |  |   | Other  |   |  | Total |    
|Net book value                     |  |                |         |   |             |   |         |               |  |   |        |   |  |       |    
|December 31, 2011                  |  | $              | 155,382 |   |             | $ | 73,648  |               |  | $ | 1,814  |   |  | $     | 196
|Additions                          |  |                | 48,750  |   |             |   | 6,411   |               |  |   | -      |   |  |       | 42 
|Disposals                          |  |                | -       |   |             |   | -       |               |  |   | -      |   |  |       | -  
|Depreciation & depletion           |  |                | (12,586 | ) |             |   | (168    | )             |  |   | -      |   |  |       | (52
|Impairment (b)                     |  |                | -       |   |             |   | (29,914 | )             |  |   | (1,849 | ) |  |       | -  
|Foreign exchange                   |  |                | -       |   |             |   | 1,864   |               |  |   | 35     |   |  |       | 29 
|December 31, 2012                  |  | $              | 191,546 |   |             | $ | 51,841  |               |  | $ | -      |   |  | $     | 215
|                                   |  |                |         |   |             |   |         |               |  |   |        |   |  |       |    
|Additions                          |  |                | 38,760  |   |             |   | 2,529   |               |  |   | -      |   |  |       | 14 
|Disposals                          |  |                | (388    | ) |             |   | -       |               |  |   | -      |   |  |       | -  
|Development stage   gold sales (c) |  |                | (3,517  | ) |             |   | -       |               |  |   | -      |   |  |       | -  
|Depletion/depreciation             |  |                | (21,593 | ) |             |   | (120    | )             |  |   | -      |   |  |       | (95
|Impairment (b)                     |  |                | -       |   |             |   | (33,300 | )             |  |   | -      |   |  |       | -  
|Foreign exchange                   |  |                | -       |   |             |   | (2,277  | )             |  |   | -      |   |  |       | (15
|December 31, 2013                  |  | $              | 204,808 |   |             | $ | 18,673  |               |  | $ | -      |   |  | $     | 119



| | (a) | Yukon properties:
| | --- | -----------------



(i) 	Ketza
River properties, Yukon:



The Company has a 100% interest
in the Ketza River property including 802 mining claims and leases, a mill and all associated equipment. The focus of the Ketza
River property is gold.



(ii) 	Silver
Valley, Yukon:



The Company has a 100% interest
in 149 claims.



| | (b) | During the years ended December 31, 2013 and 2012 the Company assessed the carrying values of its
mineral properties for indications of impairment. The Company believed that certain indicators such as the recent downturn in the
resource industry, specifically in relation to exploration and development phase mining projects and the volatility in the global
economy, which had negatively affected precious metals prices had contributed to the decrease in the Company’s share price.
As a result, 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 $33.3 million (2012 - $31.8 million impairment) in the
year ended December 31, 2013. For the purposes of the impairment assessment, the Company projected a long term gold price per ounce
of $1,300 (2012 - $1,600 gold price per ounce projected) and assessed the recoverable amount at fair value less cost of disposal.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



VERIS GOLD CORP.| F-26







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (c) | Jerritt Canyon properties, Starvation Canyon, Nevada:
| | --- | -----------------------------------------------------



In June 2013 it was determined
that the Starvation Canyon mine was producing at a level intended by management, and as such became a production stage asset for
accounting purposes. Various factors were considered in making this determination including: 1. major mine infrastructure had been
completed; 2. designed and targeted production levels had been achieved; and 3. indicators were observed that suggested operating
results would continue at levels designed and targeted. Prior to this determination the Starvation Canyon mine produced an estimated
3,003 ounces of gold, approximately 2,453 of which were recovered and sold. Prior to the attainment of commercial production, an
estimated $3.5 million was generated from the sale of these ounces, the proceeds from which were credited to the carrying value
of the Starvation Canyon mineral property asset.



| | (d) | In September 2013 various assets, the most significant being the second tailings facility and water
storage reservoir, were commissioned and put into use.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | The First and Second Agreements with Deutsche Bank (Note 15) are guaranteed by the Company and
involve the registration of various charges to secure a direct and indirect interest in the Jerritt Canyon properties in Nevada.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 12. | Related party transactions
| | --- | --------------------------



During the year ended December
31, 2013, the Company was charged a total of $0.4 million (2012 - $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, 2013 is $0.1 million (as at December
31, 2012 – $nil).



In January 2012 the Company
entered into a gold forward contract with a company related by common directors. The fair value of this liability was $6.8 million
as at December 31, 2013 (December 31, 2012 - $7.0 million). For the year ended December 31, 2013, a revaluation loss of $0.2 million
and interest expense of $0.1 million was recognized (2012 – $1.4 million revaluation loss and $0.9 million interest expense;
2011 - $nil) (Note 13).



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
13).



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, 2013, a total of $0.5 million was charged to the Company under this agreement (2012 – $0.4 million; 2011 - $0.2 million).
The amount owing at December 31, 2013 is $0.2 million (December 31, 2012 – $0.1 million).



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.



VERIS GOLD CORP.| F-27







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | a) | Compensation of key management personnel
| | -- | ----------------------------------------



The remuneration of directors
and other members of key management personnel during the periods were as follows:



|                                                  |  | 2013 |       |  | 2012 |   |       | 2011 | 
|------------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- | 
|Salaries, directors fees, and short-term benefits |  | $    | 1,852 |  |      | $ | 1,718 |      | 
|Share-based payments                              |  |      | 363   |  |      |   | 1,927 |      | 
|                                                  |  | $    | 2,215 |  |      | $ | 3,645 |      | 



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.



| | 13. | Forward contracts
| | --- | -----------------



On January 12, 2012, the Company
entered into a forward sales contract with a related party (Note 12) which required delivery of 3,665 ounces of gold by June 12,
2012 or a cash payment of $6.0 million at the option of the related party. 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, resulting in an agreed upon late-settlement
charge of 2.25% per month on the outstanding balance being imposed on the Company.  This resulted in an additional charge
of $0.4 million, or an estimated 165 ounces being due on August 30, 2012.  During the second quarter of 2013, the Company
and the counterparty agreed to extend settlement of the contract to June 30, 2013.  Under the terms of the extension, the
counterparty received the option to receive an amount of $6.6 million, or alternatively the right to receive 3,839 troy ounces
of refined gold.  No settlement was made on either June 30, 2013, or since.  As part of the ongoing extension and renegotiation
discussions since June 30, 2013, the Company made a payment of $0.5 million to the counterparty in September, 2013, this payment
being almost entirely accrued interest. As at December 31, 2013 the contract had not been settled, the Company was, and continues
to be in ongoing negotiations with the counterparty to further extend the settlement date.  The amount of the liability due
as of December 31, 2013 was $6.8 million (December 31, 2012 - $7.0 million), and continues to accrue interest on the outstanding
balance at a rate of 10% per annum. The Company recorded revaluation losses of $0.2 million and $0.1 million of interest expense
(2012 - $1.4 million revaluation loss and $0.9 million interest expense) during the year ended December 31, 2013 (Note 8(ii)(a)).



On January 28, 2011, the Company
entered into a forward gold sales contract with a related party (note 12) 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.



VERIS GOLD CORP.| F-28







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



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. In return, the Company received an upfront payment of $7.0 million cash. In May 2011 the Company and the counterparty
agreed that the gold delivery would be delayed for a six month period and the Company began accruing a late payment penalty of
2.25% on the ounces of gold to be delivered. 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 $17.3 million rather than through
physical delivery of 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 $17.3 million as at December 31, 2013 (December 31, 2012 - $21.5
million), resulting in a gain of $4.2 million being recognized for the year ended December 31, 2013 (2012 – loss of $1.1
million and $5.4 million financing charge) (Note 8(ii)(a)). In January 2014, neither the $17.3 million, nor the amount of gold
ounces required, were delivered as scheduled to settle this contract. The Company is currently in negotiations to determine the
settlement amount and the final outcome of those negotiations could differ significantly from the amount recorded.



| | 14. | Warrants
| | --- | --------



| | (a) | Equity Warrants
| | --- | ---------------



Equity warrants issued to brokers
as compensation related to debt and equity financings are considered to be share-based payments and are thus included as a component
of equity (“Equity Warrants”) and are not classified as derivative instruments.



| | (b) | Derivative Liability Warrants
| | --- | -----------------------------



As the Company’s functional
currency is the US dollar, and the issued and outstanding warrants have an exercise price denominated in Canadian dollars, the
warrants are therefore 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.



VERIS GOLD CORP.| F-29







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



As at December 31, 2013 the
following warrants were outstanding:





|Derivative liability warrants      |  |      |            |                         |  |       |                   |        |  |                 |  |        |                                 |              |  |                   |   |        |                                        |        |  |                                       
|---------------------------------- |  | ---- | ---------- | ----------------------- |  | ----- | ----------------- | ------ |  | --------------- |  | ------ | ------------------------------- | ------------ |  | ----------------- | - | ------ | -------------------------------------- | ------ |  | --------------------------------------
|                                   |  |      |            |                         |  |       |                   |        |  |                 |  |        |                                 | In thousands |  |                   |   |        |                                        |        |  |                                       
|Expiry date                        |  | Note |            | Exercise price
    (C$) |  |       | December 31, 2012 |        |  | Warrants issued |  |        | Warrants exercised/
    expired |              |  | December 31, 2013 |   |        | Fair Value
    as at December 31, 2012 |        |  | Fair Value
    as at December 31, 2013
|                                   |  |      |            |                         |  |       |                   |        |  |                 |  |        |                                 |              |  |                   |   |        |                                        |        |  |                                       
|May 24, 2013                       |  |      |            |                         |  | 5.50  |                   |        |  | 3,349           |  |        |                                 | -            |  |                   |   | (3,349 | )                                      |        |  | -                                     
|February 8, 2015                   |  |      | 15         |                         |  | 4.40  |                   |        |  | 4,000           |  |        |                                 | -            |  |                   |   | -      |                                        |        |  | 4,000                                 
|May 23, 2015                       |  |      | 19(c)(i)   |                         |  | 4.00  |                   |        |  | 3,908           |  |        |                                 | -            |  |                   |   | -      |                                        |        |  | 3,908                                 
|June 15, 20151                     |  |      | 16(a)      |                         |  | 1.95  |                   |        |  | 2,010           |  |        |                                 | -            |  |                   |   | -      |                                        |        |  | 2,010                                 
|July 19, 20152                     |  |      | 16(a)      |                         |  | 1.95  |                   |        |  | 1,333           |  |        |                                 | -            |  |                   |   | -      |                                        |        |  | 1,333                                 
|October 12, 20152                  |  |      | 16(a)      |                         |  | 1.95  |                   |        |  | 670             |  |        |                                 | -            |  |                   |   | -      |                                        |        |  | 670                                   
|Dec 18, 2016                       |  |      | 19(c)(vii) |                         |  | 2.35  |                   |        |  | 3,600           |  |        |                                 | -            |  |                   |   | -      |                                        |        |  | 3,600                                 
|April 12, 2018                     |  |      | 16(b)      |                         |  | 1.803 |                   |        |  | -               |  |        |                                 | 3,400        |  |                   |   | -      |                                        |        |  | 3,400                                 
|July 5, 2018                       |  |      | 16(b)      |                         |  | 1.803 |                   |        |  | -               |  |        |                                 | 500          |  |                   |   | -      |                                        |        |  | 500                                   
|August 16, 2016                    |  |      | 19(c)(ix)  |                         |  | 0.60  |                   |        |  | -               |  |        |                                 | 4,675        |  |                   |   | -      |                                        |        |  | 4,675                                 
|August 16, 2016                    |  |      | 19(c)(ix)  |                         |  | 0.65  |                   |        |  | -               |  |        |                                 | 3,197        |  |                   |   | -      |                                        |        |  | 3,197                                 
|September 18, 2016                 |  |      | 19(c)(x)   |                         |  | 0.60  |                   |        |  | -               |  |        |                                 | 7,500        |  |                   |   | -      |                                        |        |  | 7,500                                 
|December 2, 2016                   |  |      | 19(c)(xi)  |                         |  | 0.50  |                   |        |  | -               |  |        |                                 | 7,502        |  |                   |   | -      |                                        |        |  | 7,502                                 
|                                   |  |      |            |                         |  |       |                   |        |  |                 |  |        |                                 |              |  |                   |   |        |                                        |        |  |                                       
|Derivative liability warrant total |  |      |            |                         |  |       |                   | 18,870 |  |                 |  | 26,774 |                                 |              |  | (3,349            | ) |        |                                        | 42,295 |  |                                       











|Equity warrants      |  |      |            |                     |  |      |                   |  |  |                 |  |  |                             |        |  |                   |  |        |                                          |  |  |                                          | 
|-------------------- |  | ---- | ---------- | ------------------- |  | ---- | ----------------- |  |  | --------------- |  |  | --------------------------- | ------ |  | ----------------- |  | ------ | ---------------------------------------- |  |  | ---------------------------------------- | 
|Expiry date          |  | Note |            | Exercise price (C$) |  |      | December 31, 2012 |  |  | Warrants issued |  |  | Warrants exercised/ expired |        |  | December 31, 2013 |  |        | Equity Value as at December
    31, 2012 |  |  | Equity Value as at December
    31, 2013 | 
|Dec 18, 2014         |  |      | 19(c)(vii) |                     |  | 2.10 |                   |  |  | 432             |  |  |                             | -      |  |                   |  | -      |                                          |  |  | 432                                      | 
|Dec 18, 2016         |  |      | 19(c)(vii) |                     |  | 2.35 |                   |  |  | 152             |  |  |                             | -      |  |                   |  | -      |                                          |  |  | 152                                      | 
|April 12, 2015       |  |      | 16(b)      |                     |  | 1.85 |                   |  |  | -               |  |  |                             | 100    |  |                   |  | -      |                                          |  |  | 100                                      | 
|August 16, 2015      |  |      | 19(c)(ix)  |                     |  | 0.60 |                   |  |  | -               |  |  |                             | 708    |  |                   |  | -      |                                          |  |  | 708                                      | 
|September 18, 2016   |  |      | 19(c)(x)   |                     |  | 0.60 |                   |  |  | -               |  |  |                             | 188    |  |                   |  | -      |                                          |  |  | 188                                      | 
|September 18, 2016   |  |      | 19(c)(x)   |                     |  | 0.65 |                   |  |  | -               |  |  |                             | 675    |  |                   |  | -      |                                          |  |  | 675                                      | 
|                     |  |      |            |                     |  |      |                   |  |  |                 |  |  |                             |        |  |                   |  |        |                                          |  |  |                                          | 
|Equity warrant total |  |      |            |                     |  |      |                   |  |  | 584             |  |  |                             | 1,671  |  |                   |  | -      |                                          |  |  | 2,255                                    | 
|Warrant total        |  |      |            |                     |  |      |                   |  |  | 19,454          |  |  |                             | 28,445 |  |                   |  | (3,349 | )                                        |  |  | 44,550                                   | 



1Warrant
holders exercised their option to amend the exercise price from $3.00 to $1.95 on January 14, 2013.

2Warrant
holders exercised their option to amend the exercise price from $3.00 to $1.95 on February 14, 2013.

3The
exercise price is denominated in $US.



VERIS GOLD CORP.| F-30







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



The fair value of the liability
warrants was $3.3 million as at December 31, 2013 (December 31, 2012 - $8.7 million) and all warrants were long-term in nature
(December 31, 2012 - $8.7 million). During the year ended December 31, 2013, a $12.0 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 (2012 - $17.1
million gain; 2011 - $97.2 million gain), and $nil was recognized in share capital as a result of the fair value of warrants exercised
during the period (2012 - $0.2 million; 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 90%, weighted average expected lives of the warrants of 2.5 years, and weighted average annual risk-free rates of
1.11%.



| | 15. | Senior secured gold facility
| | --- | ----------------------------



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 10(c)); (ii)
the $29.9 million settlement of the outstanding senior secured notes; and, (iii) $6.6 million in transaction and legal costs. The
February 2013 obligations under the Agreements were net cash settled contemporaneously with the release of $8 million of previously
restricted performance reserve funds (Note 10(c)). 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 has subsequently been revalued at each reporting date with the movement in fair
value recorded in net income (loss) at each reporting date (Note 14). 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”).



VERIS GOLD CORP.| F-31







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(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 is due on demand. For the Second
Agreement, interest will be charged on the Shortfall at 9% per annum and is 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.



Pursuant to the First Agreement
and the Second Agreement (collectively, the “Agreements”), the Company was required to deliver a total of 2,650; 4,980;
and, 1,980 ounces of gold on April 30, 2012; November 30, 2012; and June 30, 2013, respectively. 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; 4,000;
980; and,1,980 ounces of gold on May 17, 2012; December 10, 2012; December 14, 2012; and July 15, 2013. The Company made cash payments
in lieu of delivery of 4,980; and 4,980 ounces of gold on October 31, 2013; and November 30, 2013. The Company did not deliver
or make cash payment in lieu of delivery of 4,980 ounces of gold due on December 31, 2013.  The February 2013 obligations
under the Agreements were net cash settled contemporaneously with the release of $8 million of previously restricted performance
reserve funds (Note 10(c)). 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.



Pursuant to the terms of the
Agreements, in July and August of 2013 the Company elected to net-cash settle the two $4.23 million obligations due for those two
months. These cash payments represented the $850 per ounce due on the monthly 4,980 ounce gold delivery scheduled for those months.
The election to cash settle was indicative that the Agreements were no longer held for the purpose of delivering gold in accordance
with the Company’s expected requirements. As such, the cash-settlement election (the “Triggering Event”) triggered
the need to reassess the deferred revenue accounting treatment originally adopted for the Agreements. Under the original deferred
revenue treatment the initial proceeds received by the Company from the Agreements, less the $9.9 million attributable warrants
issued along with the Second Agreement, were being recognized from deferred revenue liabilities into revenue on a per-ounce basis,
as the ounces were delivered.



VERIS GOLD CORP.| F-32







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



The reassessment of the Agreements
required by the Triggering Event resulted in the Company concluding that as of July 1, 2013 the Agreements were financial liabilities.
Further, the variable pricing used for the additional gold payments, represented by the minimum and maximum prices on future gold
deliveries (the “Collars”), were determined to be derivatives embedded within the Agreements, thus making the Agreements
financial liabilities. It was determined that for accounting purposes upon the Triggering Event that the embedded derivative Collars
be initially recognized at fair value and then subsequently measured at fair value through profit or loss.



The initial and subsequent fair
value of the Collars is determined by reference to the aggregated value of certain gold calls with pricing and settlement dates
 similar to (i) the Collars’ pricing; and (ii) the Agreements’ scheduled future gold delivery obligation dates.
The initial fair value of these embedded derivative liabilities was determined to be $0.9 million. The fair value of this embedded
derivative as of December 31, 2013 was $0.2 million, resulting in a $0.6 million gain from derivatives being recognized in the
year ended December 31, 2013 (Note 8(ii)(c)).



The Senior Secured Gold Facility,
which represents the debt-host contract of the Agreements, excluding the separately valued and accounted for embedded derivative
liabilities, is a financial liability that was also recorded initially at fair value as of July, 2013; and, as been subsequently
measured at amortized cost using the effective interest method. The initial fair-value of this financial liability was $92.0 million,
which was determined by using an effective interest rate of 18% applied to the anticipated monthly cash-flows attributable to the
scheduled monthly gold delivery obligations of the Agreements. A $12.1 million loss was recognized in the year ended December 31,
2013 which resulted from recording the Senior Secured Gold Facility (Note 8) at fair value as of July 1, 2013. The resulting interest
expense recognized for the year ended December 31, 2013 was $8.2 million (Note 6).



As of December 31, 2013, the
Senior Secured Gold Facility had the following carrying values:



|                             |  | December 31, 2013 |        |  | December 31, 2012 |  
|---------------------------- |  | ----------------- | ------ |  | ----------------- | -
|                             |  | Current           |        |  | Long Term         |  
|Senior Secured Gold Facility |  | $                 | 77,309 |  |                   | $



As of December 31, 2013, the
Company has made the following settlements and has the following obligations for future deliveries:



|                              |  | December 31, 2013 |        |  | December 31, 2012 | 
|----------------------------- |  | ----------------- | ------ |  | ----------------- | 
|                              |  | Au oz's           |        |  | Au oz's           | 
|                              |  | Settled           |        |  | Future Delivery   | 
|Senior Secured Gold  Facility |  |                   | 96,600 |  |                   | 



The Company incurred $8.7 million
of fees to parties involved in the Agreement, of which $1.7 million was expensed as transaction costs and the balance of $7.0 million
paid to Deutsche Bank was originally deferred based on the direct relationship the fees have with the revenue expected to be recognized
in future periods.



These previously deferred transaction
costs were contemplated as part of the revaluation of the Senior Secured Gold Facility and, as of the July 2013 revaluation date,
are no longer separately presented and amortized.



VERIS GOLD CORP.| F-33







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



As of December 31, 2013, the
Company has the following deferred transaction costs:



|                              |  | December 31, 2013 |   |  | December 31, 2012  |  
|----------------------------- |  | ----------------- | - |  | ------------------ | -
|                              |  | Current Deferred  |   |  | Long Term Deferred |  
|                              |  | Transaction Costs |   |  | Transaction Costs  |  
|Senior Secured Gold  Facility |  | $                 | - |  |                    | $



On January 28, 2014, the Company
received a notice of default from Deutsche Bank for failure to make the full scheduled delivery as of December 31, 2013 or any
amount in cash corresponding to the gold delivery shortfall. Subsequent to year end, the Company has failed to make the scheduled
delivery for January, February and March 2014, or any amount in cash corresponding to the gold delivery shortfall.



Deutsche Bank has advised the
Company that it is considering what actions, if any, it may wish to make in response to the contract concerning this event. These
actions include an assignment of Deutsche Bank’s rights and obligations under the agreements to a third party or realizing
on the security granted.



| | 16. | Convertible debt
| | --- | ----------------



| | (a) | Convertible debentures
| | --- | ----------------------



The Company issued unsecured
convertible debentures on June 15, 2012 (the “June Debentures”), July 19, 2012 (the “July Debenture”),
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 June, July, and October 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 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 January 14, 2013 the holders of the June Debentures exercised their option to amend
the exercise price of the June Warrants from $3.00 to $1.95. On February 14, 2013 the holders of the July and October Debentures
exercised their option to amend the exercise price of the July and October Warrants from $3.00 to $1.95.



VERIS GOLD CORP.| F-34







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



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 19(c)(vi)) which resulted in a loss on
conversion of $0.7 million.



| | (b) | Convertible note
| | --- | ----------------



On April 12, 2013, the Company
entered into a senior unsecured promissory note, which was amended on May 15, 2013 (the “Note”) with a principal sum
of US$10.0 million. The Note bears an interest at a rate of 9% per annum and matured on December 12, 2013.



In connection with the Note,
the Company also issued to the lender 3,400,000 five-year common share purchase warrants with an exercise price of US$1.80 per
warrant. In connection with the Note transaction, the Company also paid a finder’s fee equal to 4% of the aggregate gross
proceeds to Casimir Capital Ltd. (“Casimir”), and also issued Casimir 100,000 common share purchase warrants with an
exercise price of C$1.85 and a term of two years from the Closing Date.



The Note provides that from
and after the maturity date or at the election of the Lender in an Event of Default (as defined in the Note), the principal may
be converted, in minimum increments of $500,000 and no more than 20% of the original principal of the amended Note in any one 30-day
period, into common shares of the Company based on a conversion price equal to the greater of: (a) US$0.50, provided that if the
US$0.50 floor price would cause the Lender’s ownership interest in the Company to be greater than 19.9% of the Company’s
issued and outstanding common shares, the floor price shall be the price that would cause the Lender’s ownership interest
in the Company to be equal to 19.9% of the Company issued and outstanding common shares; and (b) the Market Price (as defined in
the TSX Company Manual) of the Company’s common shares discounted by 10% per share. The ability of the Lender to exercise
its option to convert the principal into common shares remains subject to TSX approval at the time of the conversion. In addition,
pursuant to the terms of the Note, on July 5, 2013, the Company issued the Lender an additional 500,000 common share purchase warrants
with an exercise price of US$1.80 and an expiry date of July 5, 2018.



As a result of the conversion
option features in the Debentures and the Note, both convertible debt instruments are recorded as compound financial liabilities.
For accounting purposes the conversion options are embedded derivative liabilities which are initially bifurcated from the debt
host contracts (the Debentures and the Note), are measured separately at fair value, and subsequently re-measured at fair value
through interest and other income (expense) (Note 8) at each reporting date. The debt component of the Debentures and the Note
are measured at amortized cost, and is accreted over the expected term to maturity using the effective interest method.



As of December 31, 2013 the
US $10 million principal had not been paid and remained outstanding. Subsequent to December 31, 2013 the Company entered into an
agreement with the Lender to extend the maturity date of the Note to January 12, 2014, and to amend the exercise price of the related
warrants from US$1.80 to US$0.50. The amendment to the exercise price of the warrants became effective as of February 14, 2014.
The principal amount was not settled on the extended January 12, 2014 maturity date, this resulted in the Company incurring interest
on the outstanding balance at a rate of 21% per annum, payable monthly.



VERIS GOLD CORP.| F-35











|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



The table below provides a summary
of the allocation on the initial recognition of the issued convertible debt:



|Initial value    |  | Components |        |  |            |  
|---------------- |  | ---------- | ------ |  | ---------- | -
|                 |  |            |        |  | Embedded   |  
|                 |  | Debt       |        |  | Derivative |  
|CAD              |  |            |        |  |            |  
|June 15, 2012    |  | $          | 1,947  |  |            | $
|July 20, 2012    |  |            | 846    |  |            |  
|October 11, 2012 |  |            | 569    |  |            |  
|April 12, 2013   |  |            | 7,344  |  |            |  
|                 |  |            | 10,706 |  |            |  
|USD              |  |            |        |  |            |  
|June 15, 2012    |  |            | 1,901  |  |            |  
|July 20, 2012    |  |            | 840    |  |            |  
|October 11, 2012 |  |            | 578    |  |            |  
|April 12, 2013   |  |            | 7,247  |  |            |  
|                 |  | $          | 10,566 |  |            | $



The Debentures had a total of $1.3 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 $0.6
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 transaction costs (Note 7).



As at December 31, 2013 the carrying value of the
embedded derivative and debt components of the convertible debt instruments was as follows:



|Carrying value   |  | Embedded Derivative |     |  | Debt         | 
|---------------- |  | ------------------- | --- |  | ------------ | 
|                 |  | December 31,        |     |  | December 31, | 
|                 |  | 2013                |     |  | 2012         | 
|June 15, 2012    |  |                     | 149 |  |              | 
|July 20, 2012    |  |                     | 9   |  |              | 
|October 11, 2012 |  |                     | 5   |  |              | 
|April 12, 2013   |  |                     | 1   |  |              | 
|                 |  |                     | 164 |  |              | 
|Current portion  |  |                     | -   |  |              | 
|                 |  |                     | 164 |  |              | 



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



Changes in
reclamation obligations:



|                                                                 |  | December 31, |        |   | December 31, |  
|---------------------------------------------------------------- |  | ------------ | ------ | - | ------------ | -
|                                                                 |  | 2013         |        |   | 2012         |  
|Balance, beginning of year                                       |  | $            | 54,629 |   |              | $
|Accretion expense                                                |  |              | 1,707  |   |              |  
|Foreign exchange                                                 |  |              | (238   | ) |              |  
|Reclamation spending                                             |  |              | -      |   |              |  
|Revisions in estimates of liabilities and additional obligations |  |              | (1,128 | ) |              |  
|                                                                 |  | $            | 54,970 |   |              | $



As at December
31, 2013 and December 31, 2012 all of the decommissioning and rehabilitation provisions were long-term in nature.



VERIS GOLD CORP.| F-36







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



The Company’s decommissioning
and rehabilitation provisions 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 $51.5 million (2012 - $51.0 million) reflecting payments
for approximately the next 24 years. The present value of obligations relating to exploration activity are currently estimated
at $3.5 million (2012 - $3.6 million) reflecting payments for approximately the next 10 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 $70.5 million (2012 - $68.9 million). Inflation rate assumptions of 1.7% and discount rates of 2.5% – 3.5% have
been used to determine the present value of the obligation. The 2013 revision in estimates of liabilities and reduction in obligations
is primarily due to the recognition of additional future reclamation obligations offset by increased discount rates (2012 increased
due to recognition of additional future reclamation obligations). The majority of future estimated decommissioning and rehabilitation
work has been funded through cash deposits held at various financial and government institutions (Note 10).



| | 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 $8.7 million at December 31, 2013 (December 31, 2012 - $7.1 million)
(Note 11).



|                                     |  | December 31, |       |  | December 31, |  
|------------------------------------ |  | ------------ | ----- |  | ------------ | -
|Maturity analysis of finance leases: |  | 2013         |       |  | 2012         |  
|Current                              |  | $            | 3,174 |  |              | $
|Non-current                          |  |              | 2,414 |  |              |  
|                                     |  | $            | 5,588 |  |              | $



|                                         |  | December 31, |       |   | December 31, |  
|---------------------------------------- |  | ------------ | ----- | - | ------------ | -
|Reconciliation of minimum lease payments |  | 2013         |       |   | 2012         |  
|Less than a year                         |  | $            | 3,660 |   |              | $
|2 years                                  |  |              | 1,945 |   |              |  
|3 years                                  |  |              | 340   |   |              |  
|                                         |  |              | 5,945 |   |              |  
|Less: unearned finance income            |  |              | (357  | ) |              |  
|Present value of minimum lease payments  |  | $            | 5,588 |   |              | $



| | 19. | Share capital and share based payments
| | --- | --------------------------------------



| | (a) | Authorized share capital consists of an unlimited number of common shares
| | --- | -------------------------------------------------------------------------



| | (b) | On October 9, 2012, the Company completed a ten for one consolidation (the “Consolidation”)
of the Company's common shares. On October 9, 2012, the 996,901,669 common shares issued and outstanding were consolidated to approximately
99,689,930 common shares. The Company's outstanding stock options and listed warrants were adjusted on the same basis with proportionate
adjustments being made to the stock option exercise prices and warrant exercise prices respectively. All comparative period information
has been adjusted to reflect this Consolidation.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



VERIS GOLD CORP.| F-37







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (c) | Common shares issued and outstanding
| | --- | ------------------------------------



| | a. | On May 24, 2011, the Company closed a private placement for gross proceeds of $14.7 million, from
the issuance of an aggregate of 3,348,837 units at price of C$4.30 per unit. Each unit consisted of one common share and one share
purchase warrant exercisable to purchase one additional common share at a price of C$5.50 per share within twenty-four months of
closing of the private placement. Of the $14.7 million proceeds $8.1 million was attributed to common shares, and $6.6 million
was attributed to the warrants. There was no finder's or commission fee payable on the private placement.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | On March 2, 2011, the Company closed a private placement for gross proceeds of $7.2 million, from
the issuance of an aggregate of 833,488 flow-through shares (the "FT Shares") at C$8.50 per FT Share. There was no finder's
or commission fee payable on the private placement.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (i) | On May 23, 2012, the Company closed a private placement for gross proceeds of $8.7 million, from
the issuance of an aggregate of 3,908,174 units at price of C$2.30 per unit. Each unit consisted of one common share and one share
purchase warrant exercisable to purchase one additional common share at a price of C$4.00 per share within twenty-four months of
closing of the private placement. Of the $8.7 million proceeds $3.5 million was attributed to common shares, and $5.2 million was
attributed to the warrants. There was no finder's fee or commission payable on the private placement.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | May 28, 2012, the Company closed a private placement to settle $6.7 million in current accounts
payable by the issuance of an aggregate of 2,284,740 commons shares at a deemed price of C$3.00 per share. There was no finder's
fee or commission payable on the private placement.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | 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.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | 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.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (v) | 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.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (vi) | 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.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (vii) | On 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 14).
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



VERIS GOLD CORP.| F-38







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



The Company paid agents fees
equivalent to 6% ($0.9 million) of the public offering. The agents fees were satisfied with $0.3 million in cash, and 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 transaction costs and finance fees (Note 7).



The Company also issued agents
432,000 broker compensation options with a fair value of $0.2 million at issuance which was recorded in equity (Note 14). 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.



| | (viii) | On April 12, 2013, the Company issued 100,000 broker compensation warrants concurrently with the
issuance of convertible note (Note 16). The broker compensation warrants had a fair value of $0.1 million at issuance which was
recorded in equity (Note 14).
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ix) | On August 16, 2013, the Company closed a public offering of 9,349,362 Units at a price of C$0.52
per Unit and 6,393,310 Flow-Through Units at a price of C$0.55 per Unit for gross proceeds of $8.1 million. Each Unit and Flow-Through
Unit is comprised of one common share of the Company and one half of one common share purchase warrant. Each Unit Warrant has an
exercise price of C$0.60 and entitles the holder thereof to acquire one common share of the Company until August 16, 2016. Each
whole Flow-Through Unit warrant has an exercise price of C$0.65 and entitles the holder thereof to acquire one common share of
the Company until August 16, 2016. Of the gross proceeds $6.1 million was attributed to common shares and recorded in equity, $0.2
million was attributed to the flow-through share premium and recorded in deferred tax liabilities, and $1.8 million was attributed
to the warrants and recorded in warrant liability.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company paid agents fees
equivalent to 7% ($0.9 million) of the public offering. The agents’ fees were satisfied with $0.6 million in cash, and 314,853
common shares of the Company. The shares had a value of $0.2 million. 78% of the agents fees were recorded in equity and 22% were
recorded in transaction costs and finance fees (Note 7).



The Company also issued agents
708,420 broker compensation warrants with a fair value of $0.1 million. 78% of the broker compensation warrants were recorded in
equity and 22% were recorded in transaction costs and finance fees (Note 7). Each broker compensation warrant consisted of one
common share purchase option exercisable to purchase one additional common share in the Company at a price of C$0.60 per share
until August 16, 2015.



| | (x) | On September 18, 2013, the Company closed a private placement for gross proceeds of $7.6 million,
from the issuance of an aggregate of 15,000,000 units at price of C$0.52 per unit. Each unit consisted of one common share and
one half of one share purchase warrant exercisable to purchase one additional common share at a price of C$0.60 per share until
September 18, 2016. Of the gross proceeds $6.0 million was attributed to common shares and recorded in equity, and $1.6 million
was attributed to the warrants and recorded in warrant liability.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company paid agents fees
equivalent to 5% ($0.4 million) of the private placement. The agents fees were satisfied with $0.2 million in cash, and 375,000
units under the same terms as the private placement. 79% of the agents fees were recorded in equity and 21% were recorded in transaction
costs and finance fees (Note 7).



The Company also issued agents
675,000 broker compensation warrants with a fair value of $0.1 million. 79% of the broker compensation warrants were recorded in
equity and 21% were recorded in transaction costs and finance fees (Note 7). Each broker compensation warrant consisted of one
common share purchase option exercisable to purchase one additional common share in the Company at a price of C$0.65 per share
until September 18, 2016.



VERIS GOLD CORP.| F-39







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | (xi) | On December 2, 2013, the Company closed a public offering of 8,488,780 Units at a price of C$0.405
per Unit and 6,515,628 Flow-Through Units at a price of C$0.43 per Unit for gross proceeds of $5.9 million. Each Unit and Flow-Through
Unit is comprised of one common share of the Company and one half of one common share purchase warrant. Each whole Unit and whole
Flow-Through Unit Warrant has an exercise price of C$0.50 and entitles the holder thereof to acquire one common share of the Company
until December 2, 2016. Of the gross proceeds $4.6 million was attributed to common shares and recorded in equity, $0.2 million
was attributed to the flow-through share premium and recorded in deferred tax liabilities, and $1.1 million was attributed to the
warrants and recorded in warrant liability.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company paid agents fees
equivalent to 6% ($0.5 million) of the public offering. The agents fees were satisfied with $0.4 million in cash, and 300,088 common
shares of the Company. The shares had a value of $0.1 million. 81% of the agents fees were recorded in equity and 19% were recorded
in transaction costs and finance fees (Note 7).



| | (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. The company is currently restricted from issuing new stock
options pending the completion of regulatory compliance matters pertaining to the Company’s most recently approved Stock
Option Plan.



The total fair value of the stock based compensation
recognized during the year ended December 31, 2013 was $0.5 million (2012 - $2.8 million; 2011 - $3.2 million). Of this amount
for the year ended December 31, 2013, $0.2 million is included in cost of sales (2012 - $0.6 million; 2011 - $1.4 million), and
$0.3 million is included in general and administrative expense for the year then ended (2012 – $2.2 million; 2011 - $1.8
million). The fair value of stock options granted during the year ended December 31, 2013 was calculated using the Black-Scholes
option pricing model with the following weighted average assumptions:



|                                              |  | 2013 |      |   | 2012 |   |      | 2011 | 
|--------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | ---- | 
|Weighted average fair value at grant date ($) |  | $    | 1.22 |   |      | $ | 2.43 |      | 
|Expected dividend yield (%)                   |  |      | 0    | % |      |   | 0    | %    | 
|Average risk-free interest rate (%)           |  |      | 1.2  | % |      |   | 1.3  | %    | 
|Expected life (years)                         |  |      | 5.0  |   |      |   | 5.0  |      | 
|Expected volatility (%)                       |  |      | 128  | % |      |   | 125  | %    | 
|Forfeiture rate (%)                           |  |      | 0    | % |      |   | 0    | %    | 



VERIS GOLD CORP.| F-40







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



Continuity of stock options
outstanding is as follows:



|                     |  | Options outstanding (000's) |        |   | Weighted average exercise price (C$/option) | 
|-------------------- |  | --------------------------- | ------ | - | ------------------------------------------- | 
|At December 31, 2010 |  |                             | 5,344  |   |                                             | 
|Granted              |  |                             | 792    |   |                                             | 
|Exercised            |  |                             | (19    | ) |                                             | 
|Expired              |  |                             | (58    | ) |                                             | 
|Forfeited            |  |                             | (38    | ) |                                             | 
|At December 31, 2011 |  |                             | 6,021  |   |                                             | 
|Granted              |  |                             | 818    |   |                                             | 
|Exercised            |  |                             | (23    | ) |                                             | 
|Expired              |  |                             | (546   | ) |                                             | 
|Forfeited            |  |                             | (24    | ) |                                             | 
|At December 31, 2012 |  |                             | 6,246  |   |                                             | 
|Granted              |  |                             | 515    |   |                                             | 
|Exercised            |  |                             | -      |   |                                             | 
|Expired              |  |                             | (1,043 | ) |                                             | 
|Forfeited            |  |                             | (198   | ) |                                             | 
|At December 31, 2013 |  |                             | 5,520  |   |                                             | 



The following
information pertains to the options outstanding at December 31, 2013:



|Options Outstanding |  | Vested                      |      
|------------------- |  | --------------------------- | -----
|Exercise Price (C$) |  | Options outstanding (000's) |      
|1.42 - 2.50         |  |                             | 1,668
|2.51 – 3.50         |  |                             | 3,371
|3.51 – 4.50         |  |                             | 161  
|4.51 – 7.40         |  |                             | 320  
|                    |  |                             | 5,520



| | 20. | Supplemental cash flow information
| | --- | ----------------------------------



|Years ended December 31                  |  | 2013 |        |   | 2012 |   |         | 2011 | 
|---------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | ---- | 
|Change in operating working capital      |  |      |        |   |      |   |         |      | 
|Accounts receivable and other            |  | $    | 1,594  |   |      | $ | (640    | )    | 
|Inventories                              |  |      | (7,826 | ) |      |   | (6,570  | )    | 
|Accounts payable and accrued liabilities |  |      | 31,092 |   |      |   | (6,810  | )    | 
|                                         |  | $    | 24,860 |   |      | $ | (14,020 | )    | 



|Years ended December 31                               |  | 2013 |       |  | 2012 |   |     | 2011 | 
|----------------------------------------------------- |  | ---- | ----- |  | ---- | - | --- | ---- | 
|Operating activities include the following cash paid: |  |      |       |  |      |   |     |      | 
|Interest paid                                         |  | $    | 1,050 |  |      | $ | 353 |      | 
|Income taxes paid                                     |  |      | 335   |  |      |   | 43  |      | 
|                                                      |  | $    | 1,385 |  |      | $ | 396 |      | 



VERIS GOLD CORP.| F-41







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | 21. | Income taxes
| | --- | ------------



|                                      |  | 2013 |        |   | 2012 |   |        | 2011 | 
|------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- | 
|Current tax expense                   |  | $    | 45     |   |      | $ | 469    |      | 
|Adjustments in respect of prior years |  |      | 125    |   |      |   | (493   | )    | 
|Total current tax expense (recovery)  |  |      | 170    |   |      |   | (24    | )    | 
|Deferred tax recovery                 |  |      | (8,819 | ) |      |   | (7,890 | )    | 
|Total deferred tax recovery           |  |      | (8,819 | ) |      |   | (7,890 | )    | 
|Income tax recovery                   |  | $    | (8,649 | ) |      | $ | (7,914 | )    | 



Effective April 1, 2013, the
BC provincial tax rate increased from 10% to 11% resulting in an overall increase in the statutory rate from 25% to 25.75% for
2013. 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:



|                                                                                       |  | 2013 |         |   | 2012 |   |         | 2011 | 
|-------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- | 
|Loss before income taxes                                                               |  | $    | (75,301 | ) |      | $ | (27,929 | )    | 
|Canadian federal and provincial income tax rates                                       |  |      | 25.75   | % |      |   | 25.00   | %    | 
|Expected income tax recovery based on Canadian federal and provincial income tax rates |  |      | (19,390 | ) |      |   | (6,982  | )    | 
|Increase (decrease) attributable to:                                                   |  |      |         |   |      |   |         |      | 
|Non-deductible (taxable) items                                                         |  |      | (473    | ) |      |   | (4,000  | )    | 
|Non-deductible share based payments                                                    |  |      | 75      |   |      |   | 550     |      | 
|Utilization of previously unrecognized deferred tax assets                             |  |      | (2,149  | ) |      |   | -       |      | 
|Change in unrecognized deferred assets                                                 |  |      | 12,805  |   |      |   | 3,986   |      | 
|Effects of different statutory tax rates on earnings of subsidiaries                   |  |      | (4,689  | ) |      |   | (1,747  | )    | 
|Nevada Net Proceeds Tax                                                                |  |      | 170     |   |      |   | 469     |      | 
|Effect of foreign currency exchange rate change                                        |  |      | 3,940   |   |      |   | (364    | )    | 
|Effect of flow through share renunciation                                              |  |      | 1,079   |   |      |   | 1,101   |      | 
|Impact of future income tax rates applied versus current statutory rates               |  |      | (204    | ) |      |   | -       |      | 
|Adjustment in respect of prior years                                                   |  |      | 143     |   |      |   | -       |      | 
|Other                                                                                  |  |      | 44      |   |      |   | (927    | )    | 
|                                                                                       |  | $    | (8,649  | ) |      | $ | (7,914  | )    | 



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



|                                                                 |  | December 31,  2013 |         |   | December 31,  2012 |  
|---------------------------------------------------------------- |  | ------------------ | ------- | - | ------------------ | -
|Deferred tax assets:                                             |  |                    |         |   |                    |  
|Decommisioning and rehabilitation provision                      |  | $                  | 2,454   |   |                    | $
|Non-capital and net operating loss carry forwards                |  |                    | 26,010  |   |                    |  
|Excess tax value of property plant and equipment over book value |  |                    | 413     |   |                    |  
|Other                                                            |  |                    | -       |   |                    |  
|                                                                 |  |                    | 28,877  |   |                    |  
|                                                                 |  |                    |         |   |                    |  
|Deferred tax liabilities:                                        |  |                    |         |   |                    |  
|Excess book value of property plant and equipment over tax value |  |                    | (24,209 | ) |                    |  
|Mineral properties                                               |  |                    | (4,133  | ) |                    |  
|Flow-through share premium                                       |  |                    | (334    | ) |                    |  
|Unrealized foreign exchange gain and other                       |  |                    | (986    | ) |                    |  
|                                                                 |  |                    | (29,662 | ) |                    |  
|Deferred tax liability, net                                      |  | $                  | (785    | ) |                    | $



VERIS GOLD CORP.| F-42







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



In 2013, the Company included as part of the deferred
tax liabilities, a premium on flow-through shares equal to $0.3 million (2012 - $0.3 million).



During 2013, the Company renounced
C$4.8 million (2012 - C$5.6 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 $1.4 million (2012
- $1.7 million) deferred tax liability was recorded on the date of filing the renunciation and a deferred tax expense recognized.
In addition, in 2013 the company released $0.3 million (2012 - $0.6 million) of the flow-through share premium discussed above
that offset the deferred tax liability and related expense recorded on renunciation.



Deductible temporary differences, unused tax losses
and unused tax credits for which no deferred tax assets have been recognized are attributable to the following:



|                                                                      |  | 2013 |         |  | 2012 |  
|--------------------------------------------------------------------- |  | ---- | ------- |  | ---- | -
|Decommisioning and rehabilitation provision                           |  | $    | 60,383  |  |      | $
|Non-capital and net operating loss carry forwards (i)                 |  |      | 151,484 |  |      |  
|Financing costs                                                       |  |      | 5,629   |  |      |  
|Unrealized foreign exchange losses                                    |  |      | 236     |  |      |  
|Mineral property and property plant and equipment book less tax basis |  |      | 18,909  |  |      |  
|Mark to market adjustment                                             |  |      | 12,530  |  |      |  
|Other temporary differences                                           |  |      | 37,919  |  |      |  
|                                                                      |  | $    | 287,090 |  |      | $



(i) The unrecognized tax losses will expire between
2015 and 2033.



The Company has income tax loss
carry-forwards of approximately $13 million (2012 - $14 million) for Canadian tax purposes and $221 million (2012 - $203 million)
for 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 and public offerings. 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")



The 2010 Limitation may be increased
to $31 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 2013 which may further restrict the Company’s ability to utilize its U.S. tax loss carry-forwards.



VERIS GOLD CORP.| F-43







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(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
 Jurisdictions |        |  | U.S. Tax
 Jurisdictions |   |         | TOTAL | 
|--------- |  | --------------------------- | ------ |  | ----------------------- | - | ------- | ----- | 
|2014-2020 |  | $                           | 793    |  |                         | $ | -       |       | 
|2021      |  |                             | -      |  |                         |   | -       |       | 
|2022      |  |                             | -      |  |                         |   | -       |       | 
|2023      |  |                             | -      |  |                         |   | -       |       | 
|2024      |  |                             | -      |  |                         |   | -       |       | 
|2025      |  |                             | -      |  |                         |   | -       |       | 
|2026      |  |                             | 1,556  |  |                         |   | -       |       | 
|2027      |  |                             | 2,991  |  |                         |   | -       |       | 
|2028      |  |                             | 2,625  |  |                         |   | 45,262  |       | 
|2029      |  |                             | 1,298  |  |                         |   | 38,617  |       | 
|2030      |  |                             | 1,429  |  |                         |   | 32,244  |       | 
|2031      |  |                             | 353    |  |                         |   | 67,359  |       | 
|2032      |  |                             | 1,525  |  |                         |   | 14,345  |       | 
|2033      |  |                             | 277    |  |                         |   | 23,099  |       | 
|          |  | $                           | 12,847 |  |                         | $ | 220,926 |       | 



| | 22. | Segmented information
| | --- | ---------------------



All of the Company’s operations
are within the mining sector, primarily the acquisition, exploration and production of gold, conducted through operations in North
America. As of December 31, 2013, 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, 2013 and 2012, 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.



|Year ended December 31, 2013 |  | Canada |        |  | USA |   |         | Consolidated | 
|---------------------------- |  | ------ | ------ |  | --- | - | ------- | ------------ | 
|Current assets               |  | $      | 1,594  |  |     | $ | 30,617  |              | 
|Non current assets           |  |        | 22,459 |  |     |   | 258,281 |              | 
|Total assets                 |  |        | 24,053 |  |     |   | 288,898 |              | 
|                             |  |        |        |  |     |   |         |              | 
|Current liabilities          |  |        | 16,205 |  |     |   | 183,130 |              | 
|Non current liabilities      |  |        | 13,245 |  |     |   | 53,886  |              | 
|Total liabilities            |  | $      | 29,450 |  |     | $ | 237,016 |              | 



|Year ended December 31, 2012 |  | Canada |        |  | USA |   |         | Consolidated | 
|---------------------------- |  | ------ | ------ |  | --- | - | ------- | ------------ | 
|Current assets               |  | $      | 8,099  |  |     | $ | 41,122  |              | 
|Non current assets           |  |        | 55,949 |  |     |   | 243,289 |              | 
|Total assets                 |  |        | 64,048 |  |     |   | 284,411 |              | 
|                             |  |        |        |  |     |   |         |              | 
|Current liabilities          |  |        | 6,668  |  |     |   | 76,861  |              | 
|Non current liabilities      |  |        | 25,710 |  |     |   | 140,559 |              | 
|Total liabilities            |  | $      | 32,378 |  |     | $ | 217,420 |              | 



VERIS GOLD CORP.| F-44







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



|Year ended December 31, 2013                       |  | Canada |         |   | USA |   |         | Consolidated | 
|-------------------------------------------------- |  | ------ | ------- | - | --- | - | ------- | ------------ | 
|Mining sales                                       |  | $      | -       |   |     | $ | 187,911 |              | 
|Toll milling sales                                 |  |        | -       |   |     |   | 8,068   |              | 
|Cost of sales (excluding depreciation & depletion) |  |        | -       |   |     |   | 180,885 |              | 
|Depreciation & depletion                           |  |        | 85      |   |     |   | 20,648  |              | 
|Income tax expense (recovery)                      |  |        | (8,819  | ) |     |   | 170     |              | 
|Net income (loss)1                                 |  |        | (16,378 | ) |     |   | (50,274 | )            | 
|Capital expenditures                               |  | $      | 2,543   |   |     | $ | 38,760  |              | 



|Year ended December 31, 2012                       |  | Canada |         |   | USA |   |         | Consolidated | 
|-------------------------------------------------- |  | ------ | ------- | - | --- | - | ------- | ------------ | 
|Mining sales                                       |  | $      | -       |   |     | $ | 160,561 |              | 
|Toll milling sales                                 |  |        | -       |   |     |   | -       |              | 
|Cost of sales (excluding depreciation & depletion) |  |        | -       |   |     |   | 134,350 |              | 
|Depreciation & depletion                           |  |        | 52      |   |     |   | 11,981  |              | 
|Income tax recovery                                |  |        | (7,890  | ) |     |   | (24     | )            | 
|Net income (loss)1                                 |  |        | (12,227 | ) |     |   | (7,788  | )            | 
|Capital expenditures                               |  | $      | 6,453   |   |     | $ | 48,750  |              | 



1Includes
an impairment charge in Canada of $33.3 million (2012 - $31.8 million) (Note 11(b)).



|Year ended December 31, 2011                       |  | Canada |        |   | USA |   |         | Consolidated | 
|-------------------------------------------------- |  | ------ | ------ | - | --- | - | ------- | ------------ | 
|Mining sales                                       |  | $      | -      |   |     | $ | 105,116 |              | 
|Toll milling sales                                 |  |        | -      |   |     |   | -       |              | 
|Cost of sales (excluding depreciation & depletion) |  |        | -      |   |     |   | 130,975 |              | 
|Depreciation & depletion                           |  |        | 58     |   |     |   | 6,618   |              | 
|Income tax recovery                                |  |        | (484   | ) |     |   | 676     |              | 
|Net income (loss)                                  |  |        | 59,640 |   |     |   | (33,258 | )            | 
|Capital expenditures                               |  | $      | 7,559  |   |     | $ | 73,727  |              | 



| | 23. | 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 classified as FVTPL are carried at fair value with changes in fair value recorded in income. Interest income
and expense are both recorded in income.



VERIS GOLD CORP.| F-45







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



The Company’s derivative
financial assets and liabilities classified as FVTPL are as follows:



|                                                     |  |       |  | December 31, |        |  | December 31, |  
|---------------------------------------------------- |  | ----- |  | ------------ | ------ |  | ------------ | -
|                                                     |  | Notes |  | 2013         |        |  | 2012         |  
|Current derivative liabilities                       |  |       |  |              |        |  |              |  
|Warrants                                             |  | 14    |  |              | -      |  |              |  
|Derivatives embedded in convertible debt             |  | 16    |  |              | 164    |  |              |  
|Derivatives embedded in senior secured gold facility |  | 15    |  |              | 229    |  |              |  
|Derivative forward contracts                         |  | 13    |  |              | 23,403 |  |              |  
|                                                     |  |       |  |              | 23,796 |  |              |  
|Non-current derivative liabilities                   |  |       |  |              |        |  |              |  
|Derivative forward contracts                         |  | 13    |  |              | -      |  |              |  
|Warrants                                             |  | 14    |  |              | 3,322  |  |              |  
|                                                     |  |       |  | $            | 3,322  |  |              | $



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.



| | b) | 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.
| | - | -----------------------------------------------------------------------------------------

There have been no transfers
between fair value levels during the reporting period.



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



|                                             |  | December 31, 2013 |        |  | December 31, 2012 |  
|-------------------------------------------- |  | ----------------- | ------ |  | ----------------- | -
|                                             |  | Level 1           |        |  | Level 2           |  
|Financial Assets                             |  |                   |        |  |                   |  
|Cash and cash equivalents                    |  | $                 | 1,161  |  |                   | $
|Restricted funds                             |  |                   | 56,369 |  |                   |  
|                                             |  |                   | 57,530 |  |                   |  
|Financial Liabilities                        |  |                   |        |  |                   |  
|Derivatives embedded in convertible debt     |  |                   | -      |  |                   |  
|Derivatives embedded in senior gold facility |  |                   | -      |  |                   |  
|Warrants                                     |  |                   | -      |  |                   |  
|Derivative forward contracts                 |  |                   | -      |  |                   |  
|                                             |  | $                 | -      |  |                   | $



VERIS GOLD CORP.| F-46







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



The fair value measurement methodologies
used for the level 2 inputs were as follows:



The fair value of the derivative
liability forward contracts (Note 13) are calculated using quoted forward gold curve prices applied to the amount of ounces the
Company is obligated to deliver under the terms of the forward contract liability;



The fair value of derivative
liability warrants (Note 14) is calculated using an option pricing model with the following assumptions: no dividends are paid,
weighted average volatilities of the Company’s share price of 90%, weighted average expected lives of the warrants of 2.5
years, and weighted average annual risk-free rates of 1.11%;



The fair value of the embedded
derivative liabilities represented by the equity conversion options included in the convertible debt instruments (Note 16) is determined
through forecasted conversion option values determined through Monte Carlo simulation analysis’; and,



The fair value of the embedded
derivative liabilities arising from the Collars included in the Deutsche Bank Agreements (Note 15), is determined by reference
to the aggregated value of certain gold calls with pricing and settlement dates similar to (i) the Collars’ pricing;
and (ii) the Agreements’ scheduled future gold delivery obligation dates.



At December 31, 2013 there were
no financial assets or financial liabilities recognized at fair value on a non-recurring basis.



| | c) | 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



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.



| | (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.



VERIS GOLD CORP.| F-47







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



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, |  
|---------------------------------------- |  | ------------ | ------ | - | ------------ | -
|                                         |  | 2013         |        |   | 2012         |  
|Cash and cash equivalents                |  | $            | -      |   |              | $
|Accounts receivable                      |  |              | 1,144  |   |              |  
|Restricted funds                         |  |              | 3,786  |   |              |  
|Accounts payable and accrued liabilities |  | $            | (6,428 | ) |              | $



Based on the above net exposures
as at December 31, 2013, a 10% appreciation or depreciation in the Canadian dollar against the US dollar, assuming all other variables
remain constant, would result in $0.1 million (2012 - $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.



The Company is not exposed to
interest rate risk on any borrowings because they are all held at fixed interest rates.



| | (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.



The Company is 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.



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.



| | (ii) | Restricted funds
| | ---- | ----------------



The Company has funds of $50.8
million included in restricted funds (Note 10) 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.



VERIS GOLD CORP.| F-48







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



Also included in restricted
funds is $2.0 million in an escrow account held in the Company’s name at a European bank with a Standard & Poor’s
rating of A+ (Note 10). These funds relate to the senior secured gold facility (Note 15), and will be made available to the Company
when defined production targets are achieved.



The remaining $3.6 million
in restricted funds at December 31, 2013, which relate to a water use license letter of credit and cash pledged as security for
letters of credit (Note 10), 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.



The following are the contractual
maturities of the undiscounted cash flows of derivative and non-derivative liabilities at December 31, 2013 and 2012:



|                                         |  | Less than 3  months |         |  | 4 to 12  months |   |        | 1 to 2 years |  |   | Greater than 2  years |  |  | Total |       
|---------------------------------------- |  | ------------------- | ------- |  | --------------- | - | ------ | ------------ |  | - | --------------------- |  |  | ----- | ------
|Accounts payable and accrued liabilities |  | $                   | 84,373  |  |                 | $ | -      |              |  | $ | -                     |  |  | $     | -     
|Finance lease obligations                |  |                     | 1,043   |  |                 |   | 2,617  |              |  |   | 1,945                 |  |  |       | 340   
|Convertible debt                         |  |                     | 10,000  |  |                 |   | -      |              |  |   | 6,511                 |  |  |       | 7,813 
|Forward contracts                        |  |                     | 24,086  |  |                 |   | -      |              |  |   | -                     |  |  |       | -     
|Senior secured debt facility             |  |                     | 16,932  |  |                 |   | 38,097 |              |  |   | 34,417                |  |  |       | -     
|At December 31, 2013                     |  |                     | 136,434 |  |                 |   | 40,714 |              |  |   | 42,873                |  |  |       | 8,153 
|                                         |  |                     |         |  |                 |   |        |              |  |   |                       |  |  |       |       
|Accounts payable and accrued liabilities |  |                     | 35,431  |  |                 |   | -      |              |  |   | -                     |  |  |       | -     
|Finance lease obligations                |  |                     | 674     |  |                 |   | 1,732  |              |  |   | 2,229                 |  |  |       | 1,322 
|Convertible debt                         |  |                     | -       |  |                 |   | -      |              |  |   | -                     |  |  |       | 15,312
|Forward contracts                        |  |                     | 28,486  |  |                 |   | -      |              |  |   | -                     |  |  |       | -     
|At December 31, 2012                     |  | $                   | 64,591  |  |                 | $ | 1,732  |              |  | $ | 2,229                 |  |  | $     | 16,634



| | d) | Managing Capital
| | -- | ----------------



The Company manages capital so
as to support the capital required for the ongoing operations, and for development of the Companies mineral properties.  The
capital of the Company consists of shareholders’ equity; debt and convertible debt instruments; and, cash.



The capital structure of the
Company is evaluated by management on an ongoing basis and is adjusted as changes occur in both the economic conditions of
the industry in which the Company operates, and the capital markets available to the Company.   A component of managing
capital includes planning, budgeting and forecasting processes to determine the Company’s capital requirements.  As
part of the management of capital, subsequent to December 31, 2013, the Company appointed a Restructuring Special Committee (the
"Special Committee") to investigate strategic refinancing alternatives, and to plan the financial restructuring of the
Company. The Special Committee, which is comprised of two independent Directors and one non-independent Director, has engaged,
Raymond James Inc. as its sole investment banking advisor to assist with identifying and evaluating refinancing alternatives.



VERIS GOLD CORP.| F-49







|Notes to Consolidated Financial Statements                         
|-------------------------------------------------------------------
|For The Years Ended December 31, 2013, 2012 and 2011               
|(Tabular amounts in thousands of US dollars unless otherwise noted)
|                                                                   



| | 24. | Earnings per share
| | --- | ------------------



As a result of the diluted net loss incurred
during the year ended December 31, 2013, the effect of the convertible debt and convertible note (Note 16), 44,550,000 warrants
(Note 14), and 5,520,000 options (Note 19) outstanding was anti-dilutive, and therefore excluded from the computation of diluted
net loss per share.



| | 25. | Commitments and contingencies
| | --- | -----------------------------



The complex nature of the Company’s
operations, as well as the regulatory environment in which it operates can result in occasional claims; investigatory matters;
and, legal and tax proceedings that arise from time to time.  Each of these matters is subject to various uncertainties and
may ultimately be resolved with terms unfavorable to the Company.   This being the case certain conditions may exist
as of the date the financial statements are issued, which could result in a loss to the Company.  In the opinion of management
none of these matters are expected to have a material effect on the results of operations, or the financial condition, of the Company.
In the event of a change in management’s estimate of the future resolution of such matters, the Company will recognize the
effects of the change in its consolidated financial statements at that time.



| | a) | On April 22, 2009, the Company received a notice of complaint from the U.S. Department of Justice
(“DOJ”) representing the Environmental Protection Agency (“EPA”), alleging the Company had violated specific
provisions of the Resource Conservation and Recovery Act relating to the generation, storage, handling, and disposal of hazardous
wastes at the Jerritt Canyon facility.  The Company responded to the allegations and had numerous discussions with the EPA
on the matter in order to determine the nature of the violations.  In December of 2013 the Company negotiated a tentative
settlement with the DOJ and the EPA which involves entering into a Consent Decree (“CD”) outlining the ongoing reporting
requirements of the Company and, once this CD is ultimately and duly entered by a court of competent jurisdiction, a settlement
payment of $1.1 million will be due within 60 days thereof. No admission of fault has been made with respect to these matters. 
Based on numerous factors, including economic considerations such as the ultimate cost and time required to prepare a defense of
this matter, the Company made the decision that it would be better served with a settlement arrangement in this manner. A provision
of $1.1 million relating to these matters has been made as of December 31, 2013.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | On September 30, 2013, the EPA filed an administrative complaint
in EPA Region IX against the Company alleging violations of the Emergency Planning and Community Right-to-Know Act for the alleged
failure to properly file Toxic Release Inventory Form Rs.  The Company has responded to the EPA and been engaged in ongoing
discussions with the EPA in order to determine the nature of the alleged violations.  Discussions continue to proceed toward
a possible settlement and discussions on settling the matter without admitting liability are actively underway.  The final
outcome and the extent of any potential liability or settlement payment(s), if any, is not yet determinable.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | During the fourth quarter of 2013 the Company and the NDEP negotiated and executed a second modified
consent decree (the “Second Modified CD”), modifications were made to remove all the completed items included in the
previous consent decree; and, to refine the timelines for the remaining restoration projects, primarily the engineering, design
and implementation of facilities for the treatment of water seepage from the resurfaced RDA sites.  In conjunction with these
revised timelines for the water treatment plans,the Second Modified CD includes an agreement
by the Company to secure $10 million of bonding before May 30, 2014 to provide surety for the potential solutions that will be
put in place.  By securing this bonding the Company can avoid all outstanding penalties and interest amounts potentially due
to the NDEP, which could total as much as $10.5 million. Subsequent to year end, the Company failed to meet the first two payments
for bonding which were necessary to have the penalties waived. The Company continues to work with the NDEP but has recorded a provision
of $10.6 million for penalties which may be payable in the event that the Company is unable to resolve this matter.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



VERIS GOLD CORP.| F-50







| | d) | The Company is required to incur $5.0 million on exploration in Canada before January 1, 2015 in
order to be able to satisfy its obligations to renounce the related tax benefit as required by flow-through share financings closed
in the year ended December 31, 2013. The Company would record a provision after January 1, 2015, of $2.2 million, to satisfy flow-through
share obligations in the event that the Company did not incur and renounce further exploration expenditures in Canada after December
31, 2013.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | Lease Commitments
| | -- | -----------------



The Company is committed under
various operating leases to the following annual minimum payments:



|     |  | 2013 |     |  | 2012 |  
|---- |  | ---- | --- |  | ---- | -
|2013 |  | $    | -   |  |      | $
|2014 |  |      | 316 |  |      |  
|2015 |  |      | 210 |  |      |  
|     |  | $    | 526 |  |      | $



VERIS GOLD CORP.| F-51