----

----

----

| FOURTH QUARTER AND FULL YEAR 2010 FINANCIAL AND OPERATIONAL HIGHLIGHTS | 3                                                    |
|------------------------------------------------------------------------|------------------------------------------------------|
| BACKGROUND                                                             | 4                                                    |
| CORPORATE RESPONSIBILITY                                               | 4                                                    |
| CORPORATE DEVELOPMENTS                                                 | 5                                                    |
| A.                                                                     | EL MORRO TRANSACTION                                 | 5 |
| B.                                                                     | AMAPARI MINE SALE AGREEMENT                          | 5 |
| C.                                                                     | REVOLVING CREDIT FACILITY                            | 6 |
| D.                                                                     | UPDATE ON CERRO SAN PEDRO MINE RECENT COURT DECISION | 6 |
| RESERVES AND RESOURCES UPDATE                                          | 6                                                    |
| ECONOMIC TRENDS                                                        | 7                                                    |
| SELECTED ANNUAL FINANCIAL INFORMATION                                  | 8                                                    |
| OVERVIEW OF 2010 FOURTH QUARTER FINANCIAL RESULTS                      | 8                                                    |
| OVERVIEW OF 2010 FINANCIAL RESULTS                                     | 9                                                    |
| OPERATIONS REVIEW                                                      | 10                                                   |
| A.                                                                     | MESQUITE MINE, CALIFORNIA, USA                       | 10 |
| B.                                                                     | CERRO SAN PEDRO MINE, MEXICO                         | 12 |
| C.                                                                     | PEAK MINES, NEW SOUTH WALES, AUSTRALIA               | 15 |
| PROJECT DEVELOPMENT REVIEW                                             | 17                                                   |
| A.                                                                     | MESQUITE MINE, CALIFORNIA, USA                       | 17 |
| B.                                                                     | CERRO SAN PEDRO MINE, SAN LUIS POTOSÍ, MEXICO   | 17 |
| C.                                                                     | PEAK MINES, NEW SOUTH WALES, AUSTRALIA               | 18 |
| D.                                                                     | NEW AFTON PROJECT, BRITISH COLUMBIA, CANADA          | 18 |
| E.                                                                     | EL MORRO PROJECT, ATACAMA REGION, CHILE              | 20 |
| REVIEW OF FINANCIAL RESULTS                                            | 21                                                   |
| FOURTH QUARTER 2010 COMPARED TO FOURTH QUARTER 2009                    | 21                                                   |
| QUARTERLY INFORMATION                                                  | 25                                                   |
| BALANCE SHEET REVIEW                                                   | 25                                                   |
| A.                                                                     | ASSETS                                               | 25 |
| B.                                                                     | ASSET BACKED NOTES                                   | 25 |
| C.                                                                     | INVESTMENT IN BEADELL SHARES                         | 26 |
| D.                                                                     | FUEL CONTRACTS                                       | 26 |
| E.                                                                     | GOLD HEDGE CONTRACTS                                 | 26 |
| F.                                                                     | LONG-TERM DEBT                                       | 27 |
| G.                                                                     | FUTURE INCOME AND MINING TAXES                       | 29 |
| H.                                                                     | ASSET RETIREMENT OBLIGATION                          | 30 |

----

| NON-GAAP MEASURE – TOTAL CASH COST(1) PER GOLD OUNCE CALCULATION                                     | 30                                |
|------------------------------------------------------------------------------------------------------------|-----------------------------------|
| LIQUIDITY AND CAPITAL RESOURCES OUTLOOK                                                                    | 32                                |
| OUTLOOK                                                                                                    | 32                                |
| COMMITMENTS                                                                                                | 34                                |
| CONTINGENCIES                                                                                              | 34                                |
| A.                                                                                                         | AMAPARI MINE                      | 34 |
| B.                                                                                                         | EL MORRO TRANSACTION              | 34 |
| C.                                                                                                         | CERRO SAN PEDRO MINE              | 34 |
| OFF-BALANCE SHEET ARRANGEMENTS                                                                             | 35                                |
| RELATED PARTY TRANSACTIONS                                                                                 | 35                                |
| RISK FACTORS                                                                                               | 35                                |
| FINANCIAL RISK MANAGEMENT                                                                                  | 36                                |
| A.                                                                                                         | CREDIT RISK                       | 36 |
| B.                                                                                                         | LIQUIDITY RISK                    | 37 |
| C.                                                                                                         | CURRENCY RISK                     | 38 |
| D.                                                                                                         | INTEREST RATE RISK                | 40 |
| E.                                                                                                         | COMMODITY PRICE RISK              | 40 |
| F.                                                                                                         | ENVIRONMENTAL RISK                | 41 |
| CONTRACTUAL OBLIGATIONS                                                                                    | 42                                |
| OUTSTANDING SHARES                                                                                         | 43                                |
| ACCOUNTING POLICIES TO BE IMPLEMENTED SUBSEQUENT TO DECEMBER 31, 2010                                      | 43                                |
| CRITICAL ACCOUNTING POLICIES AND ESTIMATES                                                                 | 43                                |
| A.                                                                                                         | INVENTORIES                       | 43 |
| B.                                                                                                         | MINERAL PROPERTIES                | 44 |
| C.                                                                                                         | RECLAMATION OBLIGATIONS           | 45 |
| D.                                                                                                         | FUTURE TAX ASSETS AND LIABILITIES | 45 |
| E.                                                                                                         | REVENUE RECOGNITION               | 45 |
| F.                                                                                                         | STOCK-BASED COMPENSATION          | 46 |
| INTERNATIONAL FINANCIAL REPORTING STANDARDS                                                                | 46                                |
| CONTROLS AND PROCEDURES                                                                                    | 54                                |
| ENDNOTES                                                                                                   | 56                                |
| CAUTIONARY NOTE TO U.S. READERS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED MINERAL RESOURCES | 56                                |
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS                                                       | 57                                |

----

| §   | Fourth quarter gold production increased by 11% to 124,445 ounces from 111,672 ounces in the same period in 2009, representing the Company’s highest ever quarterly production. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Fourth quarter gold sales of 116,964 ounces, up 10% from 106,475 ounces in the same period in 2009. |
|--------------------|-----------------------------------------------------------------------------------------------------|

| §   | Cash flow from operations increased by 63% to $88.0 million from $54.4 million in the same period in 2009. |
|--------------------|------------------------------------------------------------------------------------------------------------|

| §   | Fourth quarter total cash cost(1) per ounce sold, net of by-product sales, decreased by $118 per ounce to  $354 per ounce from $472 per ounce in the same period in 2009, representing the lowest cost quarter in the Company’s history. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Net earnings from continuing operations during the fourth quarter of $72.9 million or $0.19 per basic share compared to a loss of $2.3 million or $(0.01) per basic share in the same period in 2009. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Quarterly Earnings from mine operations of $83.9 million, up from $39.7 million in the same period in 2009. |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| §   | In the quarter, New Gold disposed of its shares in Beadell Resources Limited (“Beadell”) for net proceeds of $58.4 million and recorded a related gain on sale of investments of $39.7 million. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | On December 16, 2010, New Gold entered into an agreement with a syndicate of banks to establish a $150.0 million undrawn revolving credit facility (“Facility”) further enhancing the Company's financial flexibility. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | In the fourth quarter, underground development at New Afton advanced a total of 1,394 metres compared to an advance of 1,066 metres in the third quarter of 2010.  New Afton 2010 underground development of 3,873 metres beat target by 11%. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| §   | Cerro San Pedro remains fully operational achieving record quarterly performance, producing 38,874 ounces of gold at a total cash cost(1) of $138 per ounce, net of by-product sales. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Cash and cash equivalents totaled $490.8 million at December 31, 2010, up 81% from $271.5 million (including restricted cash) at December 31, 2009. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Delivering on operational targets (safety, cost, production, environmental and social responsibility); |
|--------------------|--------------------------------------------------------------------------------------------------------|

| §   | Maintaining a strong financial position; |
|--------------------|------------------------------------------|

| §   | Internal growth through project development and the continuous improvement of existing      operations; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| §   | External growth through additional value enhancing merger and acquisition opportunities. |
|--------------------|------------------------------------------------------------------------------------------|

----

| A. | EL MORRO TRANSACTION |
|----|----------------------|

| B. | AMAPARI MINE SALE AGREEMENT |
|----|-----------------------------|

----

| C. | REVOLVING CREDIT FACILITY |
|----|---------------------------|

| D. | UPDATE ON CERRO SAN PEDRO MINE RECENT COURT DECISION |
|----|------------------------------------------------------|

| §   | Mesquite Mine replaced 2010 ounces mined and added 0.8 million ounces in measured and indicated resources; |
|--------------------|------------------------------------------------------------------------------------------------------------|

| §   | El Morro gold and copper reserves increased 22% and 8% to 2.5 million ounces and 1.8 billion pounds, respectively; |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

----

| §   | Cerro San Pedro Mine inferred manto sulphide resource increased by 30%; and |
|--------------------|-----------------------------------------------------------------------------|

| §   | Peak Mines measured and indicated resources increased by 15% to 1.0 million ounces. |
|--------------------|-------------------------------------------------------------------------------------|

----

|                          | Three months  ended December 31,                                                                         |                                                                                                                                   | Year ended December 31, |
|-------------------------------|--------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|-------------------------|
|                          |                                                                                                               | 2010                     2009 |                    | 2010 | 2009 | 2008 |
| Operating Data (1)            |                                                                                                               |                                                                                                                                   |                    |   |   |   |
| Tonnes of ore mined (000's)   |                    6,413 |  7,429                                                                                                                            |                    |  22,857 |  21,943 | 6,958 |
| Tonnes of waste mined (000's) |  13,295                                                                                                       |  8,800                                                                                                                            |                    |  52,570 |  38,409 | 16,623 |
| Ratio of waste to ore         |  2.07                                                                                                         |  1.18                                                                                                                             |                    |  2.30 |  1.75 | 2.39 |
| Gold (ounces):                |                                                                                                               |                                                                                                                                   |                    |   |   |   |
|   Produced          |              124,445                                   |  111,672                                                                                                                          |                    |  382,911 |  301,773 | 233,103 |
|   Sold              |  116,964                                                                                                      |  106,475                                                                                                                          |                    |  369,077 |  292,407 | 237,590 |
| Silver (ounces):              |                                                                                                               |                                                                                                                                   |                    |   |   |   |
|   Produced          |              700,988                                   |  312,848                                                                                                                          |                    |  2,188,235 |  1,496,958 | 572,575 |
|   Sold              |              696,161                                   |  298,107                                                                                                                          |                    |  2,143,721 |  1,475,317 | 595,211 |

| Copper (000's of pounds):                       |                                                                                                               |          |   |          |            |         |
|-------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|---------------|--------|---------------|-----------------|--------------|
|   Produced                            |                    4,236 |  3,905   |   |  15,340  |  15,613    | 8,249        |
|   Sold                                |                    4,709 |  4,831   |   |  14,050  |  13,901    | 7,754        |
| Realized prices(2):                             |                                                                                                               |          |   |          |            |         |
|   Gold ($/ounce)                      |  1,316                                                                                                        |  1,074   |   |  1,194   |  987       | 863          |
|   Silver ($/ounce)                    |  26.98                                                                                                        |  17.36   |   |  21.40   |  14.48     | 12.73        |
|   Copper ($/lb)                       |  3.89                                                                                                         |  2.94    |   |  3.48    |  2.54      | 1.25         |
| Total cash cost per gold ounce sold(3)          |  354                                                                                                          |  472     |   |  428     |  465       | 566          |
| Financial Data                                  |                                                                                                               |          |   |          |            |         |
| Revenues                                        |  189,355                                                                                                      |  131,765 |   |  530,450 |  323,780   | 143,083      |
| Earnings from mine operations                   |  83,890                                                                                                       |  39,682  |   |  203,096 |  88,621    | 21,402       |
| Net earnings (loss) from continuing operations  |  72,879                                                                                                       |  (2,295) |   |  134,931 |  (183,434) | 70,884       |
| Earnings (loss) per share – basic:        |                                                                                                               |          |   |          |            |         |
|   From continuing operations          |  0.19                                                                                                         |  (0.01)  |   |  0.35    |  (0.60)    | 0.48         |
|   From discontinued operations        |  -                                                                                                            |  (0.01)  |   |  0.11    |  (0.04)    | (1.17)       |
|   Total                               |  0.19                                                                                                         |  (0.02)  |   |  0.45    |  (0.64)    | (0.69)       |
| Operating cash flows from continuing operations |  88,008                                                                                                       |  54,356  |   |  182,260 |  78,981    |  23,073 |
|                                            |                                                                                                               |          |   |          |            |         |
|                                            |                                                                                                               |          |   |          |            |         |

| (1) | The 2008 and 2009 tables include results for the Amapari Mine which is presented as a discontinued operation for financial reporting purposes. The company acquired Mesquite Mine on May 27th, 2009. The 2009 table presented is for comparative purposes only. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Realized price is a non-GAAP financial performance measure with no standard meaning under Canadian GAAP.  See Endnote 2 at the end of this MD&A. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Total cash cost is a non-GAAP financial performance measure with no standard meaning under Canadian GAAP.  See Endnote 1 at the end of this MD&A.  The calculation of total cash cost per ounce of gold sold for the Peak Mines is net of by-product copper sales revenue.  The calculation of total cash cost per ounce of gold for the Cerro San Pedro Mine is net of by-product silver sales revenue. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| A. | MESQUITE MINE, CALIFORNIA, USA |
|----|--------------------------------|

|                                        |   |   Three Months Ended December 31, | Year Ended December 31, |
|---------------------------------------------|--------|---------------------------------------------|-------------------------|
|                                        |   | 2010                                        |                    | 2009 | 2010 | 2009 |
| Operating Data                              |   |                                        |                    |   |   |   |
| Tonnes of ore  mined (000's)      |   |  3,301                                 |                    |  4,409 |  11,327 |  13,084 |
| Tonnes of waste removed (000's)             |   |  8,052                                 |                    |  5,701 |  35,990 |  40,857 |
| Ratio of waste to ore                       |   |  2.44                                  |                    |  1.29 |  3.18 |  3.12 |
| Tonnes of ore to leach pad (000's)          |   |  3,301                                 |                    |  4,409 |  11,327 |  13,084 |
| Average gold  grade (grams/tonne) |   |  0.94                                  |                    |  0.63 |  0.62 |  0.51 |
| Gold (ounces):                              |   |                                        |                    |   |   |   |
|   Produced (1)                    |   |  55,990                                |                    |  61,245 |  169,023 |  150,002 |
|   Sold                            |   |  50,393                                |                    |  55,861 |  169,571 |  143,509 |
| Realized prices: (2)                        |   |                                        |                    |   |   |   |
|   Gold ($/ ounce) (3)             |   |  1,234                                 |                    |  1,041 |  1,117 |  955 |
| Total cash cost per gold ounce sold (4)     |   |  544                                   |                    |  551 |  596 |  596 |
|                                        |   |                                        |                    |   |   |   |
| Financial Data                              |   |                                        |                    |   |   |   |
| Revenues                                    |   |  62,208                                |                    |  58,158 |  189,361 |  136,004 |
| Earnings from mine operations               |   |  27,122                                |                    |  18,332 |  62,086 |  29,948 |
|                                        |   |                                        |                    |   |   |   |

| (1) | Tonnes of ore processed each quarter does not necessarily correspond to ounces produced during the quarter, as there is a time delay between placing tonnes on the leach pad and pouring ounces of gold. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Realized price is a non-GAAP financial performance measure with no standard meaning under Canadian GAAP. See Endnote 2 at the end of this MD&A. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes realized gains and losses from gold hedge settlements. |
|-----|-----------------------------------------------------------------|

| (4) | Total cash cost is a non-GAAP financial performance measure with no standard meaning under Canadian GAAP. See Endnote 1 at the end of this MD&A. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| FOURTH QUARTER OF 2010 COMPARED TO FOURTH QUARTER OF 2009 |
|-----------------------------------------------------------|

| YEAR ENDED 2010 COMPARED TO YEAR ENDED 2009 |
|---------------------------------------------|

----

| B. | CERRO SAN PEDRO MINE, MEXICO |
|----|------------------------------|

----

|                                      |      Three Months Ended December 31, | Year Ended December 31, |
|-------------------------------------------|---------------------------------------------------------------|-------------------------|
|                                      |  2010                                                    |  2009              | 2010 | 2009 |
| Operating Data                            |                                                          |                    |   |   |
| Tonnes of ore mined (000's)               |  2,952                                                   |  2,818             |  10,790 |  11,899 |
| Tonnes of waste mined (000's)             |  5,243                                                   |  3,099             |  16,580 |  16,768 |
| Ratio of waste to ore                     |  1.78                                                    |  1.10              |  1.54 |  1.41 |
| Tonnes of ore processed (000's)           |  2,952                                                   |  2,818             |  10,790 |  11,899 |
| Average gold grade (grams/tonne)          |  0.58                                                    |  0.44              |  0.62 |  0.45 |
| Average silver grade (grams/tonne)        |  30.66                                                   |  28.10             |  37.84 |  30.68 |
| Gold (ounces):                            |                                                          |                    |   |   |
|   Produced(1)                   |  38,874                                                  |  25,781            |  118,708 |  95,502 |
|   Sold                          |  38,666                                                  |  24,455            |  114,713 |  93,312 |
| Silver (ounces):                          |                                                          |                    |   |   |
|   Produced(1)                   |  700,988                                                 |  312,848           |  2,188,235 |  1,496,958 |
|   Sold                          |  696,161                                                 |  298,107           |  2,143,721 |  1,475,317 |
| Realized prices(3):                       |                                                          |                    |   |   |
|   Gold ($/ounce)                |  1,373                                                   |  1,079             |  1,262 |  978 |
|   Silver ($/ounce)              |  26.91                                                   |  17.36             |  21.40 |  14.48 |
| Total cash cost per gold ounce sold(2)(4) |  138                                                     |  436               |  230 |  407 |
|                                      |                                                          |                    |   |   |
| Financial Data                            |                                                          |                    |   |   |
| Revenues                                  |  71,831                                                  |  31,563            |  190,459 |  112,642 |
| Earnings from mine operations             |  36,515                                                  |  10,117            |  84,200 |  28,124 |
|                                      |                                                          |                    |   |   |

| (1) | Tonnes of ore processed each quarter do not necessarily correspond to ounces produced during the quarter, as there is a time delay between placing tonnes on the leach pad and pouring ounces of gold and silver. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The calculation of total cash cost per ounce of gold is net of by-product silver revenue.  If the silver revenues were treated as a co-product, average total cash cost at Cerro San Pedro Mine for the three months ended December 31, 2010, would be $460 per ounce of gold (2009 - $541 ) and $9.01 per ounce of silver (2009 - $8.71 ). For the year ended December 31, 2010 the average total cash cost at Cerro San Pedro Mine would be $478 per ounce of gold (2009 - $515 ) and $8.08 per ounce of silver (2009 - $7.63 ). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Realized price is a non-GAAP financial performance measure with no standard meaning under Canadian GAAP.  See Endnote 2 at the end of this MD&A. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Total cash cost is a non-GAAP financial performance measure with no standard meaning under Canadian GAAP.   See Endnote 1 at the end of this MD&A. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| YEAR ENDED 2010 COMPARED TO YEAR ENDED 2009 |
|---------------------------------------------|

----

| IMPACT OF FOREIGN EXCHANGE ON OPERATIONS |
|------------------------------------------|

| C. | PEAK MINES, NEW SOUTH WALES, AUSTRALIA |
|----|----------------------------------------|

|                                             |   | Three Months Ended December 31,                                                                                                    | Year Ended December 31, |
|--------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|-------------------------|
|                                             |   |                      2010 | 2009                    | 2010 | 2009 |
| Operating Data                                   |   |                                                                                                                               |                    |   |   |
| Tonnes of ore  processed (000’s) |   |  200                                                                                                                          |  202               |  775 |  794 |
| Average gold grade (grams/tonne)                 |   |  5.18                                                                                                                         |  4.24              |  4.23 |  4.05 |
| Average copper grade (%)                         |   |  1.11                                                                                                                         |  0.99              |  1.01 |  1.00 |
| Gold (ounces):                                   |   |                                                                                                                               |                    |   |   |
|   Produced                             |   |  29,581                                                                                                                       |  24,646            |  95,180 |  93,247 |
|   Sold                                 |   |  27,905                                                                                                                       |  26,159            |  84,793 |  87,812 |
| Copper (thousands of pounds):                    |   |                                                                                                                               |                    |   |   |
|   Produced                             |   |  4,236                                                                                                                        |  3,905             |  15,340 |  15,613 |
|   Sold                                 |   |  4,709                                                                                                                        |  4,831             |  14,050 |  13,901 |
| Realized prices (1):                             |   |                                                                                                                               |                    |   |   |
|   Gold ($/ ounce)                      |   |  1,385                                                                                                                        |  1,139             |  1,257 |  994 |
|   Copper ($/ pound)                    |   |  3.89                                                                                                                         |  2.94              |  3.48 |  2.54 |
| Total cash cost per gold ounce sold (2)          |   |  312                                                                                                                          |  339               |  361 |  334 |
|                                             |   |                                                                                                                               |                    |   |   |
| Financial Data                                   |   |                                                                                                                               |                    |   |   |
| Revenues                                         |   |  55,316                                                                                                                       |  42,044            |  150,630 |  116,631 |
| Earnings from mine operations                    |   |  20,253                                                                                                                       |  10,816            |  56,810 |  41,811 |
|                                             |   |                                                                                                                               |                    |   |   |

| (1) | Realized price is a non-GAAP financial performance measure with no standard meaning under U.S. GAAP.  See Endnote 2 at the end of this MD&A. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Total cash cost is a non-GAAP financial performance measure with no standard meaning under Canadian GAAP.  See Endnote 1 at the end of this MD&A.  The calculation of total cash cost per ounce of gold is net of by-product copper revenue.  If the copper revenue was treated as a co-product, average total cash cost at Peak Mines for the three month period ended December 31, 2010 would be $601 per ounce of gold and $1.95 per pound of copper, as compared to $540 per ounce of gold and $1.65 per pound of copper for the period ended December 31, 2009.  For the year ended December 31, 2010 the average cash cost at Peak Mines would be $593 per ounce of gold (2009 - $482 ) and $1.88 per pound of copper (2009 - $1.41 ). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| FOURTH QUARTER OF 2010 COMPARED TO FOURTH QUARTER OF 2009 |
|-----------------------------------------------------------|

| YEAR ENDED 2010 COMPARED TO YEAR ENDED 2009 |
|---------------------------------------------|

----

| IMPACT OF FOREIGN EXCHANGE ON OPERATIONS |
|------------------------------------------|

| A. | MESQUITE MINE, CALIFORNIA, USA |
|----|--------------------------------|

| B. | CERRO SAN PEDRO MINE, SAN LUIS POTOSÍ, MEXICO |
|----|----------------------------------------------------|

----

| C. | PEAK MINES, NEW SOUTH WALES, AUSTRALIA |
|----|----------------------------------------|

| D. | NEW AFTON PROJECT, BRITISH COLUMBIA, CANADA |
|----|---------------------------------------------|

----

----

| E. | EL MORRO PROJECT, ATACAMA REGION, CHILE |
|----|-----------------------------------------|

----

| FOURTH QUARTER 2010 COMPARED TO FOURTH QUARTER 2009 |
|-----------------------------------------------------|

----

----

----

----

|                                                 | 2010          | 2010          | 2010          | 2010          | 2009          | 2009         | 2009            | 2009         |
|------------------------------------------------------|---------------|---------------|---------------|---------------|---------------|--------------|-----------------|--------------|
|                                                 | Q4            | Q3            | Q2            | Q1            | Q4            | Q3           | Q2              | Q1           |
|                                                 |          |          |          |          |          |         |            |         |
|  Gold sales (ounces)                            |  116,964 |  89,692  |  82,401  |  80,020  |  106,475 |  77,645 |  52,890    |  55,397 |
| Revenues                                             |  189,355 |  127,116 |  112,359 |  101,620 |  131,765 |  88,491 |  59,199    |  44,325 |
|                                                 |          |          |          |          |          |         |            |         |
| Net earnings (loss) from continuing operations       |  72,879  |  27,446  |  17,418  |  17,188  |  (2,295) |  6,096  |  (199,304) |  12,069 |
|                                                 |          |          |          |          |          |         |            |         |
| Earnings (loss) per share from continuing operations |          |          |          |          |          |         |            |         |
|   Basic                                    |  0.19    |  0.07    |  0.04    |  0.04    |  (0.01)  |  0.02   |  (0.77)    |  0.06   |
|   Diluted                                  |  0.18    |  0.07    |  0.04    |  0.04    |  (0.01)  |  0.02   |  (0.77)    |  0.06   |
|                                                 |          |          |          |          |          |         |            |         |
| Net earnings (loss)                                  |  72,879  |  27,446  |  59,136  |  17,493  |  (7,650) |  4,101  |  (202,846) |  12,079 |
| Earnings (loss) per share                            |          |          |          |          |          |         |            |         |
|   Basic                                    |  0.19    |  0.07    |  0.15    |  0.04    |  (0.02)  |  0.01   |  (0.79)    |  0.06   |
|   Diluted                                  |  0.18    |  0.07    |  0.15    |  0.04    |  (0.02)  |  0.01   |  (0.79)    |  0.06   |

| A. | ASSETS |
|----|--------|

| B. | ASSET BACKED NOTES |
|----|--------------------|

----

| C. | INVESTMENT IN BEADELL SHARES |
|----|------------------------------|

| D. | FUEL CONTRACTS |
|----|----------------|

| E. | GOLD HEDGE CONTRACTS |
|----|----------------------|

----

| F. | LONG-TERM DEBT |
|----|----------------|

----

| Minimum tangible net worth                                              | $1.38 billion at September 30, 2010 + 25% of positive quarterly net income  |
|-------------------------------------------------------------------------|----------------------------------------------------------------------------------|
| Minimum interest coverage ratio (EBITDA to interest)                    | 4.0:1.0                                                                     |
| Maximum leverage ratio (debt to EBITDA)                                 | 3.0:1.0                                                                     |
| The Company is in compliance with these covenants at December 31, 2010. |

----

| G. | FUTURE INCOME AND MINING TAXES |
|----|--------------------------------|

----

| H. | ASSET RETIREMENT OBLIGATION |
|----|-----------------------------|

|                                                  | Three months ended December 31, | Twelve months ended December 31, |
|-------------------------------------------------------|---------------------------------|----------------------------------|
|                                                  | 2010                            | 2009                             | 2010 | 2009 |
| Operating expenses from continuing operations         |  80,790                    |  67,369                     |  250,338 |  176,491 |
|  Operating expenses from discontinued operations |  -                         |  -                          |  - |  11,427 |
| Treatment and refining charges on concentrate sales   |  2,708                     |  2,643                      |  7,477 |  7,912 |
|   By-product copper and silver sales        |  (38,097)                  |  (20,075)                   |  (97,273) |  (58,612) |
|   Non-cash adjustments                      |  (3,966)                   |  317                        |  (2,421) |  (1,368) |
| Total cash cost                                       |  41,435                    |  50,254                     |  158,121 |  135,850 |
| Ounces of gold sold                                   |  116,964                   |  106,475                    |  369,077 |  292,407 |
|                                                  |                            |                             |   |   |
| Total cash cost(1) per ounce of gold sold             |  354                       |  472                        |  428 |  465 |

----

| §   | Strong cash flows from gold sales at the Company’s Peak Mines, Cerro San Pedro Mine, and Mesquite operating mines which benefited from prevailing average market gold and silver prices of $1,367 and $26.43 per ounce during the quarter; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Project spending at the New Afton project for the quarter ended December 31, 2010 of $47.9 million; |
|--------------------|-----------------------------------------------------------------------------------------------------|

| §   | Interest paid on senior secured notes and convertible debentures of $10.8 million; |
|--------------------|------------------------------------------------------------------------------------|

| §   | Proceeds received from the monetization of the Beadell shares of $58.4 million; and |
|--------------------|-------------------------------------------------------------------------------------|

| §   | Value received from the strengthening of the Canadian dollar compared to the U.S. dollar, which has increased the U.S. dollar value of the Company’s cash and cash equivalents held in Canadian dollars (approximately $331 million) to fund New Afton construction. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Mine                 | Forecast 2011 Gold Production (ounces) | Forecast 2011 Total Cash Cost(1) |
|----------------------|----------------------------------------|----------------------------------|
| Mesquite Mine        | 145,000 – 155,000                | $620 - $640                      |
| Cerro San Pedro Mine | 135,000 – 145,000                | $240 - $260                      |
| Peak Mines           | 90,000 – 100,000                 | $410 - $430                      |
| Total                | 380,000 – 400,000                | $430 - $450                      |

----

| A. | AMAPARI MINE |
|----|--------------|

| B. | EL MORRO TRANSACTION |
|----|----------------------|

| C. | CERRO SAN PEDRO MINE |
|----|----------------------|

----

----

| A. | CREDIT RISK |
|----|-------------|

|                                  |   |                      2010                                  |   |                      2009            |
|---------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                  |   |  $                                                                                                                                                             |   |  $                                                                                                                                       |
|                                  |   |                                                                                                                                                                |   |                                                                                                                                          |
| Cash and cash equivalents             |   |                490,754                                                                   |   |                262,325                                             |
| Restricted cash                       |   |                            - |   |                     9,201                 |
| Accounts receivable                   |   |                   11,929                                                  |   |                   10,345                            |
| Mark-to-market gain on fuel contracts |   |                            - |   |                        706 |
| Investments                           |   |                     7,533                                       |   |                   45,890                            |
| Reclamation deposits and other        |   |                   31,295                                                  |   |                   17,646                            |
|                                  |   |                541,511                                                                   |   |                346,113                                             |

| (U.S. dollars in thousands) |   |                                                                                                            |   |                                                                                                                      |   |                                                                                                                                  |   |                                                                                                                       |   |                                                                                                                       |   |                                                                  |
|-----------------------------|--------|-----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|
|                        |   |  0-30                                                                                                      |   |  31-60                                                                                                               |   |  61-90                                                                                                                           |   |  91-120                                                                                                               |   |  Over 120                                                                                                             |   |           2010      |   |               2009 |
|                        |   |  days                                                                                                      |   |  days                                                                                                                |   |  days                                                                                                                            |   |  days                                                                                                                 |   |  days                                                                                                                 |   |  Total                                                           |   |  Total |
|                        |   |  $                                                                                                         |   |  $                                                                                                                   |   |  $                                                                                                                               |   |  $                                                                                                                    |   |  $                                                                                                                    |   |  $                                                               |   |  $ |
|                        |   |                                                                                                            |   |                                                                                                                      |   |                                                                                                                                  |   |                                                                                                                       |   |                                                                                                                       |   |                                                                  |   |   |
| Mesquite mine               |   |                   193 |   |                     - |   |                  249                             |   |                     -  |   |                     -  |   |            442 |   |             273 |
| Cerro San Pedro             |   |                3,501                 |   |                    74      |   |                    42                  |   |                     18 |   |                   163            |   |          3,798           |   |          5,348 |
| Peak Mines                  |   |                3,159                 |   |                     - |   |                       1 |   |                     -  |   |                     16 |   |          3,176           |   |          3,922 |
| New Afton                   |   |                3,581                 |   |                     - |   |                     -             |   |                     -  |   |                     -  |   |          3,581           |   |             632 |
| Corporate                   |   |                  932       |   |                     - |   |                     -             |   |                     -  |   |                     -  |   |            932 |   |              170 |
|                        |   |              11,366                            |   |                    74      |   |                  292                             |   |                     18 |   |                   179            |   |         11,929                |   |         10,345 |

----

| Metal sales            |                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                        |
|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Customer               |                                                               2010      |                                                            2009      |
|                   |  $                                                                                                                                                                                                                                                                                                                                                                                       |  $                                                                                                                                                                                                                                                                                                                                                                     |
| 1                      |                                                          186,450                                 |                                                       112,733                                 |
| 2                      |                                                          142,029                                 |                                                         59,516                      |
| 3                      |                                                            87,758                      |                                                         48,011                      |
| 4                      |                                                            62,735                      |                                                         47,677                      |
| 5                      |                                                            22,986                      |                                                         24,728                      |
| Total                  |                                                          501,958                                 |                                                       292,665                                 |
| % of total metal sales |                                                                95% |                                                             90% |

| B. | LIQUIDITY RISK |
|----|----------------|

----

| (U.S. dollars in thousands) |   |                                                                            |   |                                                                            |   |                                                                            |   |                                                                            |   |                                                                                                          |   |
|-----------------------------|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|
|                        |   |  Less than                                                                 |   |                                                                            |   |                                                                            |   |  After                                                                     |   |              2010                            |   |            2009 |
|                        |   |  1 year                                                                    |   |  1-3 years                                                                 |   |  4-5 years                                                                 |   |  5 years                                                                   |   |  Total                                                                                                   |   |  Total |
|                        |   |  $                                                                         |   |  $                                                                         |   |  $                                                                         |   |  $                                                                         |   |  $                                                                                                       |   |  $ |
| Accounts payable and        |   |                                                                            |   |                                                                            |   |                                                                            |   |                                                                            |   |                                                                                                          |   |   |
| accrued liabilities         |   |      66,654                                            |   |              - |   |              - |   |              - |   |           66,654                                            |   |         36,033 |
| Long-term debt              |   |              - |   |              - |   |      55,297                                            |   |    188,010                                                       |   |         243,307                                                       |   |       258,467 |
| Interest payable on         |   |              - |   |              - |   |              - |   |              - |   |                   - |   |                 - |
| long-term debt              |   |      21,566                                            |   |      43,132                                            |   |      38,958                                            |   |      28,201                                            |   |         131,857                                                       |   |       147,352 |
| Gold contracts              |   |      40,072                                            |   |      76,620                                            |   |      36,683                                            |   |              - |   |         153,375                                                       |   |         95,986 |
|                        |   |    128,292                                                       |   |    119,752                                                       |   |    130,938                                                       |   |    216,211                                                       |   |         595,193                                                       |   |       537,838 |

| C. | CURRENCY RISK |
|----|---------------|

|   | i. | Transaction exposure |
|--------|----|----------------------|

|   | ii. | Exposure to currency risk |
|--------|-----|---------------------------|

----

|                                     |   |                                                                          |   |                                                                                                    |   |                                                                                                                            |   |  December 31, 2010                                                                                                                      |
|------------------------------------------|--------|-------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|
|   (in thousands)               |   |  Canadian                                                                |   |  Australian                                                                                        |   |  Mexican                                                                                                                   |   |  Chilean                                                                                                                                |
|                                     |   |  dollar                                                                  |   |  dollar                                                                                            |   |  peso                                                                                                                      |   |  peso                                                                                                                                   |
|                                     |   |                                                                          |   |                                                                                                    |   |                                                                                                                            |   |                                                                                                                                         |
| Cash and cash equivalents                |   |          331,948                 |   |            41,254                                |   |                 5,224                           |   |                        11 |
| Investments                              |   |             7,533 |   |                  - |   |                      - |   |                       -        |
| Accounts receivable                      |   |             4,556 |   |             3,176                           |   |                 3,063                           |   |                       39       |
| Reclamation deposit                      |   |             8,043 |   |                  - |   |                      - |   |                       -        |
| Prepayment option                        |   |             7,679 |   |                  - |   |                      - |   |                       -        |
| Accounts payable and accruals            |   |          (24,458)                |   |          (24,415)                                          |   |              (34,003)                                          |   |                       -        |
| Reclamation and closure cost obligations |   |            (2,163)     |   |           (11,361)                                    |   |               (5,739)                                     |   |                       -        |
| Share award units                        |   |           (3,294)           |   |                  - |   |                      - |   |                       -        |
| Long-term debt                           |   |        (221,832)                           |   |                  - |   |                      - |   |                       -        |
| Gross balance sheet exposure             |   |          108,012                 |   |             8,654                           |   |              (31,455)                                          |   |                       50       |

|                                     |   |                                                                                                    |   |                                                                                                    |   |                                                                                                                            |   |  December 31,2009                                                                                                                       |
|------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                     |   |  Canadian                                                                                          |   |  Australian                                                                                        |   |  Mexican                                                                                                                   |   |  Chilean                                                                                                                                |
|                                     |   |  dollar                                                                                            |   |  dollar                                                                                            |   |  peso                                                                                                                      |   |  peso                                                                                                                                   |
|                                     |   |                                                                                                    |   |                                                                                                    |   |                                                                                                                            |   |                                                                                                                                         |
| Cash and cash equivalents                |   |          165,147                                           |   |           32,008                                      |   |                 2,670                           |   |                        18 |
| Investments                              |   |           45,890                                      |   |                  - |   |                      - |   |                       -        |
| Accounts receivable                      |   |                549           |   |             3,922                           |   |                 5,674                           |   |                       -        |
| Reclamation deposit                      |   |              6,211                     |   |                  - |   |                      - |   |                       -        |
| Prepayment option                        |   |                  - |   |                  - |   |                      - |   |                       -        |
| Accounts payable and accruals            |   |           (6,529)                                     |   |           (11,566)                                    |   |               (8,806)                                     |   |                      (94)           |
| Reclamation and closure cost obligations |   |            (1,846)                               |   |           (8,330)                                     |   |                (4,314)                               |   |                       -        |
| Share award units                        |   |                  - |   |                  - |   |                      - |   |                       -        |
| Long-term debt                           |   |        (206,653)                                                     |   |                  - |   |                      - |   |                       -        |
| Gross balance sheet exposure             |   |             2,769                           |   |            16,034                                |   |               (4,776)                                     |   |                      (76)           |

|   | iii. | Translation exposure |
|--------|------|----------------------|

| (in thousands)    |   |                       2010                                  |   |                       2009                              |
|-------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |   |  $                                                                                                                                                                   |   |  $                                                                                                                                                               |
|              |   |                                                                                                                                                                      |   |                                                                                                                                                                  |
| Canadian dollar   |   |                    10,801                                                  |   |                         277                   |
| Australian dollar |   |                         865                       |   |                      1,603                                   |
| Mexican peso      |   |                     (3,146)                                           |   |                        (478)                       |
| Chilean peso      |   |                             5 |   |                            (8) |
|              |   |                      8,525                                       |   |                      1,394                                   |

----

| D. | INTEREST RATE RISK |
|----|--------------------|

| E. | COMMODITY PRICE RISK |
|----|----------------------|

| §   | the strength of the U.S. economy and the economies of other industrialized and developing nations; |
|--------------------|----------------------------------------------------------------------------------------------------|

| §   | global or regional political or economic crises; |
|--------------------|--------------------------------------------------|

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

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

| §   | interest rates; |
|--------------------|-----------------|

| §   | purchases and sales of gold by central banks and other holders; |
|--------------------|-----------------------------------------------------------------|

| §   | demand for jewelry containing gold; and |
|--------------------|-----------------------------------------|

| §   | investment activity, including speculation, in gold as a commodity. |
|--------------------|---------------------------------------------------------------------|

----

|             |   |                   2010            |   |                         2010                      |   |                   2009                            |   |                      2009                            |
|------------------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                        |   |  Other                                                                                                                                                               |   |                                                                                                                                        |   |  Other                                                                                                                                                   |
|             |   |  Net                                                                                                                   |   |  Comprehensive                                                                                                                                                       |   |  Net                                                                                                                                   |   |  Comprehensive                                                                                                                                           |
|             |   |  Earnings                                                                                                              |   |  Income                                                                                                                                                              |   |  Earnings                                                                                                                              |   |  Income                                                                                                                                                  |
|             |   |  $                                                                                                                     |   |  $                                                                                                                                                                   |   |  $                                                                                                                                     |   |  $                                                                                                                                                       |
|             |   |                                                                                                                        |   |                                                                                                                                                                      |   |                                                                                                                                        |   |                                                                                                                                                          |
| Gold price       |   |                44,076                            |   |                      33,201                                      |   |                27,303                                            |   |                   31,793                                            |
| Copper price     |   |                  4,889                 |   |                             - |   |                  3,531                                 |   |                           - |
| Silver price     |   |                  4,588                 |   |                             - |   |                  2,136                                 |   |                           - |
| Fuel price       |   |                  3,624                 |   |                             - |   |                  2,700                                 |   |                        695                 |
| Share Award Unit |   |                     329 |   |                             - |   |                        - |   |                           - |

| F. | ENVIRONMENTAL RISK |
|----|--------------------|

----

|  (U.S. dollars in thousands)      |          | Payments due by period |
|----------------------------------------|---------------|------------------------|
|                                   |          |                   |   |   |   |
| Contractual obligations                | Total         | Less than 1 year       | 1 - 3 years | 4 - 5 years | After 5 years |
| Long-term debt                         |  243,307 |  -                |  55,297 |  - |  188,010 |
| Interest payable on long-term debt     |  131,857 |  21,566           |  43,132 |  38,958 |  28,201 |
| Operating Leases and Other Commitments |  156,855 |  86,167           |  41,462 |  29,173 |  53 |
| Asset retirement obligations           |  44,193  |  1,426            |  1,742 |  1,315 |  39,710 |
| Total contractual obligations          |  576,212 |  109,159          |  141,633 |  69,446 |  255,974 |

----

| International Financial Reporting Standards |
|---------------------------------------------|

| A. | INVENTORIES |
|----|-------------|

----

| B. | MINERAL PROPERTIES |
|----|--------------------|

----

| C. | RECLAMATION OBLIGATIONS |
|----|-------------------------|

| D. | FUTURE TAX ASSETS AND LIABILITIES |
|----|-----------------------------------|

| E. | REVENUE RECOGNITION |
|----|---------------------|

----

| F. | STOCK-BASED COMPENSATION |
|----|--------------------------|

| IFRS PROJECT UPDATE |
|---------------------|

----

----

|                                          |   | As at December 31,                                                                                                                                                                                                        | Effect of                                                                                                                                   | As at January 1,                                                                                                                                  |
|-----------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|                                          |   | 2009                                                                                                                                                                                                                      | IFRS                                                                                                                                        | 2010                                                                                                                                              |
|                                          |   | CGAAP                                                                                                                                                                                                                     | Transition                                                                                                                                  | IFRS                                                                                                                                              |
| (Expressed in thousands of U.S. dollars)      | Notes  | (Audited)                                                                                                                                                                                                                 | (Unaudited)                                                                                                                                 | (Unaudited)                                                                                                                                       |
| Assets                                        |   |                                                                                                                                                                                                                      |                                                                                                                                        |                                                                                                                                              |
| Current assets                                |   |                                                                                                                                                                                                                      |                                                                                                                                        |                                                                                                                                              |
| Cash and cash equivalents                     |   |                       262,325                                                                               |                                                                                                                                        |                262,325                                                 |
| Restricted cash                               |   |                            9,201                                                   |                                                                                                                                        |                    9,201                           |
| Trade and other receivables                   |   |                          10,345                                                              |                                                                                                                                        |                  10,345                                      |
| Inventories                                   |   |                         86,299                                                                    |                                                                                                                                        |                  86,299                                      |
| Deferred income and mining taxes              | A      |                           8,848                                                         |             (8,848)                                                             |                         - |
| Current portion of derivative assets          |   |                              706                                         |                                                                                                                                        |                       706           |
| Prepaid expenses and other                    |   |                           6,933                                                         |                                                                                                                                        |                    6,933                           |
| Current portion of operations held for sale   |   |                          10,298                                                              |                                                                                                                                        |                  10,298                                      |
| Total current assets                          |   |                           394,955                                                       |                 (8,848)                                     |                386,107                                                 |
|                                          |   |                                                                                                                                                                                                                      |                                                                                                                                        |                                                                                                                                              |
| Investments                                   |   |                             45,890                                            |                                                                                                                                        |                  45,890                                      |
| Mining interests                              | B      |                        2,000,438                                                                       |             (324,980)                                                           |             1,683,373                                                                 |
|                                          | C      |                                                                                                                                                                                                                      |                 (2,626)                                     |                                                                                                                                              |
|                                          | D      |                                                                                                                                                                                                                      |                   8,743                           |                                                                                                                                              |
|                                          | E      |                                                                                                                                                                                                                      |                    4,311                     |                                                                                                                                              |
|                                          | F      |                                                                                                                                                                                                                      |                  (2,513)                               |                                                                                                                                              |
| Deferred tax assets                           | A      |                               2,250                                 |                   8,848                           |                   11,098                                |
| Reclamation deposits and other                |   |                              17,646                                      |                                                                                                                                        |                  17,646                                      |
| Assets of operations held for sale            | G      |                             27,080                                            |                 51,909                                      |                  78,989                                      |
| Total assets                                  |   |                        2,488,259                                                                       |              (265,156)                                                     |             2,223,103                                                                 |
|                                          |   |                                                                                                                                                                                                                      |                                                                                                                                        |                                                                                                                                              |
| Liabilities                                   |   |                                                                                                                                                                                                                      |                                                                                                                                        |                                                                                                                                              |
| Current liabilities                           |   |                                                                                                                                                                                                                      |                                                                                                                                        |                                                                                                                                              |
| Trade and other payables                      | H      |                         36,033                                                                    |               1,966                                                   |                  37,999                                      |
| Current portion of long-term debt             |   |                          12,088                                                              |                                                                                                                                        |                  12,088                                      |
| Current portion of derivative liability       |   |                          19,206                                                              |                                                                                                                                        |                  19,206                                      |
| Current tax liabilities                       | H      |                          15,677                                                              |              (1,966)                                                       |                    13,711                          |
| Assets of operations held for sale            |   |                          10,414                                                              |                                                                                                                                        |                   10,414                                |
| Total current liabilities                     |   |                              93,418                                      |                        - |                  93,418                                      |
|                                          |   |                                                                                                                                                                                                                      |                                                                                                                                        |                                                                                                                                              |
| Reclamation and closure cost obligations      | E      |                              19,889                                      |                   4,875                           |                  24,764                                      |
| Provisions                                    | I      |                                                                                                                                                                                                                      |                   4,541                           |                    4,541                           |
| Non-current portion of derivative liabilities |   |                             76,780                                            |                                                                                                                                        |                  76,780                                      |
| Share purchase warrants                       | J      |                                     - |                 29,841                                      |                  29,841                                      |
| Deferred taxes liabilities                    | B      |                            316,426                                                 |                (81,245)                                          |                262,092                                                 |
|                                          | C      |                                                                                                                                                                                                                      |                   1,356                           |                                                                                                                                              |
|                                          | D      |                                                                                                                                                                                                                      |                   2,186                           |                                                                                                                                              |
|                                          | F      |                                                                                                                                                                                                                      |                    (754)                     |                                                                                                                                              |
|                                          | J      |                                                                                                                                                                                                                      |                   11,913                          |                                                                                                                                              |
|                                          | K      |                                                                                                                                                                                                                      |                 (9,507)                                     |                                                                                                                                              |
|                                          | L      |                                                                                                                                                                                                                      |                  21,717                                |                                                                                                                                              |
| Long-term debt                                | C      |                           225,456                                                       |                   9,519                           |                234,975                                                 |
| Employee benefits and other                   | I      |                               5,355                                 |                  (4,541)                               |                       814           |
| Liabilities of operations held for sale       |   |                              19,890                                      |                                                                                                                                        |                  19,890                                      |
| Total liabilities                             |   |                            757,214                                                 |                (10,099)                                          |                 747,115                                           |

----

|                                        |   | As at December 31,                                                                                                                                                 | Effect of                                                                                                                   | As at January 1,                                                                                            |
|---------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------|
|                                        |   | 2009                                                                                                                                                               | IFRS                                                                                                                        | 2010                                                                                                        |
|                                        |   | CGAAP                                                                                                                                                              | Transition                                                                                                                  | IFRS                                                                                                        |
| (Expressed in thousands of U.S. dollars)    | Notes  | (Audited)                                                                                                                                                          | (Unaudited)                                                                                                                 | (Unaudited)                                                                                                 |
| Equity                                      |   |                                                                                                                                                               |                                                                                                                        |                                                                                                        |
| Common shares                               | J      |                     1,810,865                                  |                   (826)           |          1,810,039                                             |
| Contributed surplus                         |   |                           82,984 |                                                                                                                        |                82,984            |
| Share purchase warrants                     | J      |                         150,656            |           (138,806)                                                       |                11,850            |
| Equity components of convertible debentures | C      |                           21,604 |             (14,145)                                            |                  7,459 |
| Other reserves                              | M      |                          (29,205)     |                 1,566                       |              (27,639)                      |
| Deficit                                     | B      |                       (305,859)                      |           (243,735)                                                       |            (408,705)                                 |
|                                        | C      |                                                                                                                                                               |                     644 |                                                                                                        |
|                                        | D      |                                                                                                                                                               |                 6,557                       |                                                                                                        |
|                                        | E      |                                                                                                                                                               |                   (564)           |                                                                                                        |
|                                        | F      |                                                                                                                                                               |                (1,759)                           |                                                                                                        |
|                                        | G      |                                                                                                                                                               |               51,909                                  |                                                                                                        |
|                                        | J      |                                                                                                                                                               |               97,878                                  |                                                                                                        |
|                                        | K      |                                                                                                                                                               |                 9,507                       |                                                                                                        |
|                                        | L      |                                                                                                                                                               |             (21,717)                                            |                                                                                                        |
|                                        | M      |                                                                                                                                                               |                (1,566)                           |                                                                                                        |
| Total equity                                |   |                     1,731,045                                  |           (255,057)                                                       |          1,475,988                                             |
| Total liabilities and equity                |   |                     2,488,259                                  |           (265,156)                                                       |          2,223,103                                             |

| NOTES TO THE ABOVE RECONCILIATION |
|-----------------------------------|

| A. | Deferred tax classified as current |
|----|------------------------------------|

| B. | Fair value as deemed cost |
|----|---------------------------|

----

| C. | Convertible debentures |
|----|------------------------|

| D. | Foreign currency translation |
|----|------------------------------|

| E. | Decommissioning Liabilities (Reclamation and closure cost obligations) |
|----|------------------------------------------------------------------------|

| F. | Property, plant and equipment |
|----|-------------------------------|

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| G. | Reversal of Impairment loss |
|----|-----------------------------|

| H. | Interest and Penalties related to income taxes payable |
|----|--------------------------------------------------------|

| I. | Provisions |
|----|------------|

| J. | Share purchase warrants |
|----|-------------------------|

| K. | Deferred taxes |
|----|----------------|

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| L. | Deferred taxes |
|----|----------------|

| M. | Foreign currency IFRS 1 transitional provision |
|----|------------------------------------------------|

| IFRS 1 EXEMPTIONS |
|-------------------|

| i) | Business combinations |
|----|-----------------------|

| ii) | Fair value as deemed cost |
|-----|---------------------------|

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| iii) | Cumulative translation account (“CTA”) |
|------|----------------------------------------------------|

| iv) | Decommissioning liabilities |
|-----|-----------------------------|

| v) | Share-based payment |
|----|---------------------|

| vi) | Borrowing costs |
|-----|-----------------|

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| Preliminary Impact of IFRS conversion on 2010 Results |
|-------------------------------------------------------|

|   A. |  DISCLOSURE CONTROLS AND PROCEDURES |
|-----------|------------------------------------------|

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|   B. |  MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING |
|-----------|------------------------------------------------------------------------------|

| § | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| § | 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 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| § | Provide reasonable assurance regarding prevention or timely detections of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   C. |  CHANGES IN INTERAL CONTROL OVER FINANCIAL REPORTING |
|-----------|-----------------------------------------------------------|

| 1. | “Total cash cost” figures are calculated in accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard is the accepted standard of reporting cash cost of production in North America. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies. The Company reports total cash cost on a sales basis. Total cash cost includes mine site operating costs such as mining, processing, administration, royalties and production taxes, realized gains and losses on fuel contracts, but is exclusive of amortization, reclamation, capital and exploration costs and net of by-product sales. Total cash cost is then divided by gold ounces sold to arrive at the total cash cost per ounce sold. The measure, along with sales, is considered to be a key indicator of a company’s ability to generate operating earnings and cash flow from its mining operations. This data is furnished to provide additional information and is a non-GAAP measure. It should not be considered in isolation as a substitute for measures of performance prepared in accordance with GAAP and is not necessarily indicative of operating costs presented under GAAP. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Average realized price per ounce of gold sold is a non-GAAP financial measure which: |
|----|--------------------------------------------------------------------------------------|

| §   | excludes from revenues unrealized gains and losses on non-hedge derivative contracts; and, |
|--------------------|--------------------------------------------------------------------------------------------|

| §   | includes revenues from the Amapari Mine which has been presented as a discontinued operation. |
|--------------------|-----------------------------------------------------------------------------------------------|

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