----

----

----

----

| ·   | 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 detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

| Consolidated statements of operations                  | 1      |
|--------------------------------------------------------|--------|
|                                                   |   |
|                                                   |   |
| Consolidated statements of comprehensive income (loss) | 2      |
|                                                   |   |
|                                                   |   |
| Consolidated balance sheets                            | 3      |
|                                                   |   |
|                                                   |   |
| Consolidated statements of shareholders’ equity  | 4      |
|                                                   |   |
|                                                   |   |
| Consolidated statements of cash flows                  | 5      |
|                                                   |   |
|                                                   |   |
| Notes to the consolidated financial statements         | 6-65   |

----

| New Gold Inc.                                                                |   |                                                                                                                                              |   |                                                                                                                                              |
|------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| Consolidated statements of operations                                        |   |                                                                                                                                              |   |                                                                                                                                              |
| Years ended December 31                                                      |   |                                                                                                                                              |   |                                                                                                                                              |
| (Expressed in thousands of U.S. dollars, except share and per share amounts) |   |                                                                                                                                              |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
|                                                                         |   |                    2010                            |   |                    2009                            |
|                                                                         |   |  $                                                                                                                                           |   |  $                                                                                                                                           |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Revenues                                                                     |   |              530,450                                                             |   |              323,780                                                             |
| Operating expenses                                                           |   |             (250,338)                                                                 |   |             (176,491)                                                                 |
| Depreciation and depletion                                                   |   |               (77,016)                                                      |   |               (58,668)                                                      |
| Earnings from mine operations                                                |   |              203,096                                                             |   |                88,621                                                  |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Corporate administration                                                     |   |               (32,622)                                                      |   |               (24,689)                                                      |
| Business combination transaction costs                                       |   |                         - |   |                 (6,583)                                           |
| Exploration                                                                  |   |               (12,834)                                                      |   |                 (6,412)                                           |
| Impairment charge of exploration assets (Note 9(b))                          |   |               (15,728)                                                      |   |                         - |
| Goodwill impairment charge (Note 4)                                          |   |                         - |   |             (192,099)                                                                 |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Earnings (loss) from operations                                              |   |              141,912                                                             |   |             (141,162)                                                                 |
| Other income (expense)                                                       |   |                                                                                                                                              |   |                                                                                                                                              |
| Realized and unrealized gain on gold contracts (Note 11)                     |   |                         - |   |                   8,161                                 |
| Realized and unrealized gain on fuel contracts (Note 11)                     |   |                         - |   |                      797                 |
| Realized and unrealized gain on investments (Note 7)                         |   |                   9,128                                 |   |                      351                 |
| Unrealized gain on prepayment option (Note 11)                               |   |                   7,679                                 |   |                         - |
| Interest and other income                                                    |   |                   3,258                                 |   |                   4,158                                 |
| Gain on sale of investment (Note 7 (a))                                      |   |                39,710                                                  |   |                         - |
| Gain on redemption of long-term debt (Note 10 (a))                           |   |                         - |   |                14,236                                                  |
| Interest and finance fees (Note 10 (f))                                      |   |                    (947)                           |   |                 (1,435)                                           |
| Other expense                                                                |   |                 (2,883)                                           |   |                    (967)                           |
| Loss on foreign exchange                                                     |   |               (21,816)                                                      |   |               (52,667)                                                      |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Earnings (loss) before taxes                                                 |   |              176,041                                                             |   |             (168,528)                                                                 |
| Income and mining taxes (Note 13)                                            |   |               (41,110)                                                      |   |               (14,906)                                                      |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Net earnings (loss) from continuing operations                               |   |              134,931                                                             |   |             (183,434)                                                                 |
| Earnings (loss) from discontinued operations (Note 8)                        |   |                42,023                                                  |   |               (10,882)                                                      |
| Net earnings (loss)                                                          |   |              176,954                                                             |   |             (194,316)                                                                 |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Earnings (loss) per share from continuing operations                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Basic                                                                        |   |                     0.35                      |   |                   (0.60)                                |
| Diluted                                                                      |   |                     0.34                      |   |                   (0.60)                                |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Earnings (loss) per share from discontinued operations                       |   |                                                                                                                                              |   |                                                                                                                                              |
| Basic                                                                        |   |                     0.11                      |   |                   (0.04)                                |
| Diluted                                                                      |   |                     0.11                      |   |                   (0.04)                                |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Earnings (loss) per share                                                    |   |                                                                                                                                              |   |                                                                                                                                              |
| Basic                                                                        |   |                     0.46                      |   |                   (0.64)                                |
| Diluted                                                                      |   |                     0.45                      |   |                   (0.64)                                |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Weighted average number of shares outstanding                                |   |                                                                                                                                              |   |                                                                                                                                              |
| (in thousands)                                                               |   |                                                                                                                                              |   |                                                                                                                                              |
| Basic                                                                        |   |              390,883                                                             |   |              306,288                                                             |
| Diluted                                                                      |   |              395,233                                                             |   |              306,288                                                             |
|                                                                         |   |                                                                                                                                              |   |                                                                                                                                              |
| Stock option expense (a non-cash item included in corporate                  |   |                                                                                                                                              |   |                                                                                                                                              |
| administration)                                                              |   |                   8,151                                 |   |                   6,621                                 |

----

| New Gold Inc.                                                           |   |                                                                                                                    |   |                                                                                                                              |
|-------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
| Consolidated statements of comprehensive income (loss)                  |   |                                                                                                                    |   |                                                                                                                              |
| Years ended December 31                                                 |   |                                                                                                                    |   |                                                                                                                              |
| (Expressed in thousands of U.S. dollars)                                |   |                                                                                                                    |   |                                                                                                                              |
|                                                                    |   |                    2010  |   |                    2009            |
|                                                                    |   |  $                                                                                                                 |   |  $                                                                                                                           |
|                                                                    |   |                                                                                                                    |   |                                                                                                                              |
|                                                                    |   |                                                                                                                    |   |                                                                                                                              |
| Net earnings (loss)                                                     |   |              176,954                                   |   |             (194,316)                                                 |
|                                                                    |   |                                                                                                                    |   |                                                                                                                              |
| Other comprehensive income (loss)                                       |   |                                                                                                                    |   |                                                                                                                              |
| Unrealized losses on mark-to-market of gold contracts (Note 11)         |   |               (85,849)                            |   |               (49,101)                                      |
| Realized losses on mark-to-market of gold contracts (Note 11)           |   |                20,035                        |   |                   3,403                 |
| Unrealized (losses) gains on mark-to-market of fuel contracts (Note 11) |   |                    (366) |   |                      189 |
| Future income tax                                                       |   |                27,572                        |   |                17,870                                  |
| Total other comprehensive loss                                          |   |               (38,608)                            |   |               (27,639)                                      |
| Total comprehensive income (loss)                                       |   |              138,346                                   |   |             (221,955)                                                 |
|                                                                    |   |                                                                                                                    |   |                                                                                                                              |

----

| New Gold Inc.                                            |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
|----------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| Consolidated balance sheets                              |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| as at December 31                                        |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| (Expressed in thousands of U.S. dollars)                 |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |
|                                                     |   |                                                                                                                                              |                                                                                             |                    2010                            |                                                                                             |                    2009                            |
|                                                     |   |                                                                                                                                              |                                                                                             |  $                                                                                                                                           |                                                                                             |  $                                                                                                                                           |
| Assets                                                   |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Current assets                                           |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Cash and cash equivalents (Note 2 (c))                   |   |                                                                                                                                              |              490,754            |                                                                                                                                              |              262,325            |
| Restricted cash (Note 5)                                 |   |                                                                                                                                              |                                                                                             |                         - |                                                                                             |                   9,201                                 |
| Accounts receivable                                      |   |                                                                                                                                              |                                                                                             |                11,929                                                  |                                                                                             |                10,345                                                  |
| Inventories (Note 6)                                     |   |                                                                                                                                              |                                                                                             |              106,325                                                             |                                                                                             |                86,299                                                  |
| Future income and mining taxes (Note 13)                 |   |                   9,127                                 |                                                                                             |                   8,848                                 |
| Current portion of derivative assets (Note 11)           |   |                         - |                                                                                             |                      706                 |
| Prepaid expenses and other                               |   |                                                                                                                                              |                                                                                             |                   7,325                                 |                                                                                             |                   6,933                                 |
| Current assets of operations held for sale (Note 8)      |   |                         - |                                                                                             |                10,298                                                  |
| Total current assets                                     |   |                                                                                                                                              |                                                                                             |              625,460                                                             |                                                                                             |              394,955                                                             |
|                                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Investments (Note 7 (b))                                 |   |                                                                                                                                              |                                                                                             |                   7,533                                 |                                                                                             |                45,890                                                  |
| Mining interests (Note 9)                                |   |                                                                                                                                              |                                                                                             |           2,073,695                                                                             |                                                                                             |           2,000,438                                                                             |
| Future income tax asset (Note 13)                        |   |                                                                                                                                              |                                                                                             |                      931                 |                                                                                             |                   2,250                                 |
| Reclamation deposits and other (Note 14)                 |   |                31,295                                                  |                                                                                             |                17,646                                                  |
| Assets of operations held for sale (Note 8)              |   |                         - |                                                                                             |                27,080                                                  |
| Total assets                                             |   |                                                                                                                                              |                                                                                             |           2,738,914                                                                             |                                                                                             |           2,488,259                                                                             |
|                                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Liabilities                                              |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Current liabilities                                      |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Accounts payable and accrued liabilities                 |   |                                                                                                                                              |                66,654 |                                                                                                                                              |                36,033 |
| Current portion of long-term debt (Note 10)              |   |                         - |                                                                                             |                12,088                                                  |
| Current portion of derivative liabilities (Note 11)      |   |                40,072                                                  |                                                                                             |                19,206                                                  |
| Income and mining taxes payable                          |   |                                                                                                                                              |                                                                                             |                33,983                                                  |                                                                                             |                15,677                                                  |
| Current liabilities of operations held for sale (Note 8) |   |                         - |                                                                                             |                10,414                                                  |
| Total current liabilities                                |   |                                                                                                                                              |                                                                                             |              140,709                                                             |                                                                                             |                93,418                                                  |
|                                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Reclamation and closure cost obligations (Note 14)       |   |                25,721                                                  |                                                                                             |                19,889                                                  |
| Derivative liabilities (Note 11)                         |   |                                                                                                                                              |                                                                                             |              113,303                                                             |                                                                                             |                76,780                                                  |
| Future income and mining taxes (Note 13)                 |   |              280,026                                                             |                                                                                             |              316,426                                                             |
| Long-term debt (Note 10)                                 |   |                                                                                                                                              |                                                                                             |              229,884                                                             |                                                                                             |              225,456                                                             |
| Deferred benefit (Note 9 (a))                            |   |                                                                                                                                              |                                                                                             |                46,276                                                  |                                                                                             |                         - |
| Employee benefits and other                              |   |                                                                                                                                              |                                                                                             |                   9,804                                 |                                                                                             |                   5,355                                 |
| Liabilities of operations held for sale (Note 8)         |   |                         - |                                                                                             |                19,890                                                  |
| Total liabilities                                        |   |                                                                                                                                              |                                                                                             |              845,723                                                             |                                                                                             |              757,214                                                             |
|                                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Shareholders' equity                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Common shares (Note 12 (a))                              |   |                                                                                                                                              |                                                                                             |           1,846,712                                                                             |                                                                                             |           1,810,865                                                                             |
| Contributed surplus                                      |   |                                                                                                                                              |                                                                                             |                82,787                                                  |                                                                                             |                82,984                                                  |
| Share purchase warrants (Note 12 (d))                    |   |                                                                                                                                              |              138,806            |                                                                                                                                              |              150,656            |
| Equity component of convertible debentures               |   |                21,604                                                  |                                                                                             |                21,604                                                  |
| Accumulated other comprehensive loss                     |   |                                                                                                                                              |               (67,813)     |                                                                                                                                              |               (29,205)     |
| Deficit                                                  |   |                                                                                                                                              |                                                                                             |             (128,905)                                                                 |                                                                                             |             (305,859)                                                                 |
|                                                     |   |                                                                                                                                              |                                                                                             |             (196,718)                                                                 |                                                                                             |             (335,064)                                                                 |
| Total shareholders' equity                               |   |                                                                                                                                              |                                                                                             |           1,893,191                                                                             |                                                                                             |           1,731,045                                                                             |
| Total liabilities and shareholders' equity               |   |                                                                                                                                              |           2,738,914                            |                                                                                                                                              |           2,488,259                            |
|                                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Commitments and contingencies (Note 21)                  |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |
|                                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Approved by the Board                                    |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
|                                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| "Robert Gallagher"                                       |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| Robert Gallagher, Director                               |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
|                                                     |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| "James Estey"                                            |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |
| James Estey, Director                                    |   |                                                                                                                                              |                                                                                             |                                                                                                                                              |                                                                                             |                                                                                                                                              |

----

| New Gold Inc.                                                           |   |                                                                                                                                              |   |                                                                                                                                              |
|-------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| Consolidated statements of shareholders' equity                         |
| Years ended December 31                                                 |   |                                                                                                                                              |   |                                                                                                                                              |
| (Expressed in thousands of U.S. dollars, except share amounts)          |   |                                                                                                                                              |   |                                                                                                                                              |
|                                                                    |   |                    2010                            |   |                    2009                            |
|                                                                    |   |  $                                                                                                                                           |   |  $                                                                                                                                           |
| Common shares                                                           |   |                                                                                                                                              |   |                                                                                                                                              |
| Balance, beginning of year                                              |   |           1,810,865                                                                             |   |           1,321,110                                                                             |
| Shares issued, net of share issue costs                                 |   |                         - |   |              103,122                                                             |
| Shares issued for mineral properties                                    |   |                         - |   |                        63      |
| Acquisition of Western Goldfields (Note 4)                              |   |                         - |   |              375,367                                                             |
| Exercise of options (Note 12 (a))                                       |   |                19,394                                                  |   |                11,203                                                  |
| Exercise of warrants (Note 12 (a))                                      |   |                16,453                                                  |   |                         - |
| Balance, end of year                                                    |   |           1,846,712                                                                             |   |           1,810,865                                                                             |
|                                                                    |   |                                                                                                                                              |   |                                                                                                                                              |
| Contributed surplus                                                     |   |                                                                                                                                              |   |                                                                                                                                              |
| Balance, beginning of year                                              |   |                82,984                                                  |   |                65,409                                                  |
| Exercise of options                                                     |   |                 (8,348)                                           |   |                 (5,803)                                           |
| Acquisition of Western Goldfields (Note 4)                              |   |                         - |   |                   9,949                                 |
| Expiry of warrants                                                      |   |                         - |   |                   6,808                                 |
| Stock-based compensation                                                |   |                   8,151                                 |   |                   6,621                                 |
| Balance, end of year                                                    |   |                82,787                                                  |   |                82,984                                                  |
|                                                                    |   |                                                                                                                                              |   |                                                                                                                                              |
| Share purchase warrants                                                 |   |                                                                                                                                              |   |                                                                                                                                              |
| Balance, beginning of year                                              |   |              150,656                                                             |   |              145,614                                                             |
| Acquisition of Western Goldfields (Note 4)                              |   |                         - |   |                11,850                                                  |
| Exercise of warrants                                                    |   |               (11,850)                                                      |   |                         - |
| Expiry of warrants                                                      |   |                         - |   |                 (6,808)                                           |
| Balance, end of year                                                    |   |              138,806                                                             |   |              150,656                                                             |
|                                                                    |   |                                                                                                                                              |   |                                                                                                                                              |
| Equity component of convertible debentures                              |   |                21,604                                                  |   |                21,604                                                  |
|                                                                    |   |                                                                                                                                              |   |                                                                                                                                              |
| Accumulated other comprehensive loss                                    |   |                                                                                                                                              |   |                                                                                                                                              |
| Balance, beginning of year                                              |   |               (29,205)                                                      |   |                    (406)                           |
| Net change in fair value of hedging instruments (Note 11)               |   |               (38,608)                                                      |   |               (27,639)                                                      |
| Reclassification of gains on available-for-sale investments to earnings |   |                         - |   |                 (1,160)                                           |
| Balance, end of year                                                    |   |               (67,813)                                                      |   |               (29,205)                                                      |
|                                                                    |   |                                                                                                                                              |   |                                                                                                                                              |
| Deficit                                                                 |   |                                                                                                                                              |   |                                                                                                                                              |
| Balance, beginning of year                                              |   |             (305,859)                                                                 |   |             (111,543)                                                                 |
| Net earnings (loss)                                                     |   |              176,954                                                             |   |             (194,316)                                                                 |
| Balance, end of year                                                    |   |             (128,905)                                                                 |   |             (305,859)                                                                 |
|                                                                    |   |                                                                                                                                              |   |                                                                                                                                              |
| Total shareholders' equity                                              |   |           1,893,191                                                                             |   |           1,731,045                                                                             |
|                                                                    |   |                                                                                                                                              |   |                                                                                                                                              |

----

| New Gold Inc.                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
|------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| Consolidated statements of cash flows                                        |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Years ended December 31                                                      |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| (Expressed in thousands of U.S. dollars)                                     |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
|                                                                         |                                                                                                                                              |                    2010                            |                                                                                                                                              |                    2009                            |
|                                                                         |                                                                                                                                              |  $                                                                                                                                           |                                                                                                                                              |  $                                                                                                                                           |
|                                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Operating activities                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Net earnings (loss)                                                          |                                                                                                                                              |              176,954                                                             |                                                                                                                                              |             (194,316)                                                                 |
| (Earnings) loss from discontinued operations                                 |                                                                                                                                              |               (42,023)                                                      |                                                                                                                                              |                10,882                                                  |
| Items not involving cash                                                     |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Goodwill impairment charge                                                   |                                                                                                                                              |                         - |                                                                                                                                              |              192,099                                                             |
| Unrealized gain on gold contracts                                            |                                                                                                                                              |                 (8,425)                                           |                                                                                                                                              |               (12,389)                                                      |
| Unrealized (gain) loss on fuel contracts                                     |                                                                                                                                              |                      340                 |                                                                                                                                              |                    (523)                           |
| Unrealized foreign exchange loss                                             |                                                                                                                                              |                21,816                                                  |                                                                                                                                              |                46,057                                                  |
| Unrealized and realized (gain) loss on investments                           |                                                                                                                                              |                 (9,128)                                           |                                                                                                                                              |                      351                 |
| Gain on sale of Beadell shares                                               |                                                                                                                                              |               (39,710)                                                      |                                                                                                                                              |                         - |
| Impairment charge of exploration asset                                       |                                                                                                                                              |                15,728                                                  |                                                                                                                                              |                         - |
| Loss on disposal of assets                                                   |                                                                                                                                              |                   1,054                                 |                                                                                                                                              |                         - |
| Depreciation and depletion                                                   |                                                                                                                                              |                76,307                                                  |                                                                                                                                              |                59,473                                                  |
| Stock option expense                                                         |                                                                                                                                              |                   8,151                                 |                                                                                                                                              |                   6,621                                 |
| Unrealized gain on prepayment option                                         |                                                                                                                                              |                 (7,679)                                           |                                                                                                                                              |                         - |
| Future income and mining taxes                                               |                                                                                                                                              |               (17,197)                                                      |                                                                                                                                              |                 (1,441)                                           |
| Gain on redemption of long-term debt                                         |                                                                                                                                              |                         - |                                                                                                                                              |               (14,236)                                                      |
| Change in non-cash working capital (Note 15)                                 |                                                                                                                                              |                   6,072                                 |                                                                                                                                              |               (13,597)                                                      |
| Cash provided by continuing operations                                       |                                                                                                                                              |              182,260                                                             |                                                                                                                                              |                78,981                                                  |
| Cash provided by (used in) discontinued operations (Note 8)                  |                                                                                                                                              |                 (1,696)                                           |                                                                                                                                              |                   5,576                                 |
|                                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Investing activities                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Mining interests                                                             |                                                                                                                                              |             (149,165)                                                                 |                                                                                                                                              |             (111,522)                                                                 |
| Cash acquired in business combination and asset acquisition (Note 4)         |                         - |                                                                                                                                              |                20,735                                                  |
| Reclamation deposits                                                         |                                                                                                                                              |                 (1,590)                                           |                                                                                                                                              |                 (1,547)                                           |
| Receipt of accrued interest on investments                                   |                                                                                                                                              |                         - |                                                                                                                                              |                   3,015                                 |
| Reduction of restricted cash (Note 5)                                        |                                                                                                                                              |                   9,201                                 |                                                                                                                                              |                   -                                     |
| Proceeds from disposal of assets                                             |                                                                                                                                              |                      439                 |                                                                                                                                              |                   -                                     |
| Cash received in El Morro transaction, net of transaction costs (Note 9 (a)) |                46,276                                                  |                                                                                                                                              |                         - |
| Investment in El Morro (Note 9 (a))                                          |                                                                                                                                              |             (463,000)                                                                 |                                                                                                                                              |                         - |
| Proceeds from sale of Beadell shares                                         |                                                                                                                                              |                58,364                                                  |                                                                                                                                              |                         - |
| Proceeds from settlement of investments                                      |                                                                                                                                              |                48,112                                                  |                                                                                                                                              |                36,636                                                  |
| Cash used in continuing operations                                           |                                                                                                                                              |             (451,363)                                                                 |                                                                                                                                              |               (52,683)                                                      |
| Cash provided by (used in) discontinued operations (Note 8)                  |                                                                                                                                              |                34,410                                                  |                                                                                                                                              |                 (1,405)                                           |
|                                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Financing activities                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Common shares issued                                                         |                                                                                                                                              |                         - |                                                                                                                                              |              107,015                                                             |
| Exercise of options and warrants to purchase common stock                    |                                                                                                                                              |                15,649                                                  |                                                                                                                                              |                         - |
| El Morro loan (Note 9 (a))                                                   |                                                                                                                                              |              463,000                                                             |                                                                                                                                              |                         - |
| Revolving credit facility initiation costs                                   |                                                                                                                                              |                 (4,225)                                           |                                                                                                                                              |                         - |
| Repayment of long-term debt (Note 10 (c))                                    |                                                                                                                                              |               (27,235)                                                      |                                                                                                                                              |               (66,981)                                                      |
| Cash provided by continuing operations                                       |                                                                                                                                              |              447,189                                                             |                                                                                                                                              |                40,034                                                  |
| Cash used in discontinued operations (Note 8)                                |                                                                                                                                              |                         - |                                                                                                                                              |                 (7,000)                                           |
|                                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Effect of exchange rate changes on cash and cash equivalents                 |                                                                                                                                              |                16,803                                                  |                                                                                                                                              |                13,980                                                  |
|                                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Increase in cash and cash equivalents                                        |                                                                                                                                              |              227,603                                                             |                                                                                                                                              |                77,483                                                  |
| Cash and cash equivalents, beginning of year                                 |                                                                                                                                              |              263,151                                                             |                                                                                                                                              |              185,668                                                             |
| Cash and cash equivalents, end of year                                       |                                                                                                                                              |              490,754                                                             |                                                                                                                                              |              263,151                                                             |
|                                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Comprised of                                                                 |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Cash and cash equivalents of continuing operations                           |                                                                                                                                              |              490,754                                                             |                                                                                                                                              |              262,325                                                             |
| Cash and cash equivalents of discontinued operations                         |                                                                                                                                              |                         - |                                                                                                                                              |                      826                 |
|                                                                         |                                                                                                                                              |              490,754                                                             |                                                                                                                                              |              263,151                                                             |
|                                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Cash and cash equivalents are comprised of                                   |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Cash                                                                         |                                                                                                                                              |              191,844                                                             |                                                                                                                                              |                84,961                                                  |
| Short-term money market instruments                                          |                                                                                                                                              |              298,910                                                             |                                                                                                                                              |              178,190                                                             |
|                                                                         |                                                                                                                                              |              490,754                                                             |                                                                                                                                              |              263,151                                                             |
|                                                                         |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |
| Supplemental cash flow information (Note 15)                                 |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |

----

|   |
|--------|

| Subsidiary                                | Basis of Presentation |   | Interest        |
|-------------------------------------------|-----------------------|--------|-----------------|
|                                      |                  |   |            |
| Inversiones El Morro Limitada             | Consolidation         |   | 100%            |
| Metallica Resources Inc.                  | Consolidation         |   | 100%            |
| Minera Metallica Resources Chile Limitada | Consolidation         |   | 100%            |
| Minera San Xavier, S.A. de C.V.           | Consolidation         |   | 100%            |
| Peak Gold Mines Pty Ltd                   | Consolidation         |   | 100%            |
| Sociedad Contractual Minera El Morro      | Equity method         |   |   30% |
| Western Goldfields Inc.                   | Consolidation         |   | 100%            |
| Western Goldfields (USA) Inc.             | Consolidation         |   | 100%            |
| Western Mesquite Mines, Inc.              | Consolidation         |   | 100%            |

----

|   |
|--------|

----

|   |
|--------|

----

|   |
|--------|

----

|   |
|--------|

----

|   |
|--------|

----

|   |
|--------|

----

|   |
|--------|

|                                                    |                                                                      |  $                                                                                         |
|---------------------------------------------------------|---------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|
|                                                    |                                                                      |                                                                                            |
| Issuance of New Gold shares (142,796,000 common shares) |            375,554 |
| Fair value of options issued                            |                                                                      |                9,949 |
| Fair value of warrants issued                           |                                                                      |              11,850            |
| Purchase consideration                                  |                                                                      |            397,353                       |
|                                                    |                                                                      |                                                                                            |
| Net assets acquired                                     |                                                                      |                                                                                            |
| Net working capital (including cash of $20,735)         |                                                                      |              39,427            |
| Plant and equipment                                     |                                                                      |            102,693                       |
| Mining interest                                         |                                                                      |            234,479                       |
| Reclamation deposits                                    |                                                                      |                8,978 |
| Other assets                                            |                                                                      |                1,790 |
| Fair value of gold contracts                            |                                                                      |             (50,960)                |
| Long-term debt                                          |                                                                      |             (56,984)                |
| Reclamation and closure costs obligations               |                                                                      |               (5,221)     |
| Future income taxes                                     |                                                                      |             (68,948)                |
| Goodwill                                                |                                                                      |            192,099                       |
|                                                    |                                                                      |            397,353                       |

----

|   |
|--------|

----

|   |
|--------|

|                |                                                                                                                                                     |                                                                                                                                                     |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |                      2010                       |                      2009                       |
|                |  $                                                                                                                                                  |  $                                                                                                                                                  |
|                |                                                                                                                                                     |                                                                                                                                                     |
| Heap leach ore (a)  |                   61,391                                       |                   58,169                                       |
| Work-in-process (b) |                   22,206                                       |                   13,907                                       |
| Finished goods      |                     5,506                            |                     4,819                            |
| Stockpiled ore (c)  |                          79 |                          55 |
| Supplies            |                   17,143                                       |                     9,349                            |
|                |                106,325                                                        |                   86,299                                       |

----

|   |
|--------|

|                             |   | December 31,                                                                    |   | December 31                                                                           |   |                                                                              |
|----------------------------------|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|
|                             |   | 2010                                                                            |   | 2009                                                                                  |   |                                                                              |
|                             |   |                                                                            |   |  Fair                                                                            |   |                                                                              |   |  Fair |   |   |
|                             |   |  Face                                                                      |   |  value                                                                           |   |  Face                                                                        |   |  value |   |  Expected |
| Restructuring categories         |   |   value                                                               |   |  estimate                                                                        |   |   value                                                                 |   |  estimate |   |  maturity date |
|                             |   |  $                                                                         |   |  $                                                                               |   |  $                                                                           |   |  $ |   |   |
|                             |   |  (millions)                                                                |   |  (millions)                                                                      |   |  (millions)                                                                  |   |  (millions) |   |   |
| MAV 2 Notes                      |   |                                                                            |   |                                                                                  |   |                                                                              |   |   |   |   |
| A1 (rated A)                     |   |              - |   |               - |   |           66.7                  |   |                 39.3 |   |   |
| A2 (rated A)                     |   |              - |   |               - |   |            12.7            |   |                   5.9 |   |   |
| B                                |   |            5.8           |   |             2.4           |   |             5.5       |   |                   0.5 |   | December 31, 2016 |
| C                                |   |            4.3           |   |             0.4           |   |              4.1 |   |                    - |   | December 31, 2016 |
| Traditional asset tracking notes |   |                                                                            |   |                                                                                  |   |                                                                              |   |   |   |   |
| MAV3 - Class 9                   |   |             0.1     |   |              0.1     |   |              0.1 |   |                   0.1 |   | September 12, 2015 |
| Ineligible asset tracking notes  |   |                                                                            |   |                                                                                  |   |                                                                              |   |   |   |   |
| MAV2 - Class 3/13                |   |           10.8                |   |             4.6           |   |            10.3            |   |                   0.1 |   | December 20, 2012 to October 24, 2016 |
|                             |   |           21.0                |   |             7.5           |   |           99.4                  |   |                 45.9 |   |   |

----

|   |
|--------|

|                  |   |                                                                                                                                                                |   |                                                                                                                          |
|-----------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|
|                  |   |  2010                                                                                                                                                          |   |  2009                                                                                                                    |
|                  |   |  $                                                                                                                                                             |   |  $                                                                                                                       |
|                  |   |                                                                                                                                                                |   |                                                                                                                          |
| Current assets        |   |                            - |   |                   10,298            |
| Non-current assets    |   |                            - |   |                   27,080            |
| Current liabilities   |   |                            - |   |                 (10,414)                      |
| Long-term liabilities |   |                            - |   |                 (19,890)                      |
|                  |   |                            - |   |                     7,074 |

|                         |                          |                                                                     |
|------------------------------|-------------------------------|--------------------------------------------------------------------------|
|                         |                          |                                                                     |
|                         |  2010                    |  2009                                                               |
|                         |  $                       |  $                                                                  |
|                         |                          |                                                                     |
| Revenue                      |     2,746 |            18,738 |
| Earnings (loss) before taxes |   42,023            |          (10,882)           |
| Net earnings (loss)          |   42,023            |          (10,882)           |

----

|   |
|--------|

|                                             |   |   |                                                                            |                                            |
|--------------------------------------------------|--------|--------|---------------------------------------------------------------------------------|-------------------------------------------------|
|                                             |   |   |                                                                            |                                            |
|                                             |   |   |  2010                                                                      |  2009                                      |
|                                             |   |   |  $                                                                         |  $                                         |
|                                             |   |   |                                                                            |                                            |
| Operating activities                             |   |   |       (1,696)                                     |        5,576 |
| Investing activities                             |   |   |      34,410                                            |      (1,405)           |
| Financing activities                             |   |   |              - |      (7,000)           |
| Increase (decrease) in cash and cash equivalents |   |   |                                                                            |                                            |
| from discontinued operations                     |   |   |      32,714                                            |      (2,829)           |

|                |                                                                                              |   |                                                                                                               |   |  December 31, 2010                                                                           |
|---------------------|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|
|                |                                                                                              |   |  Accumulated                                                                                                  |   |                                                                                              |
|                |                                                                                              |   |  depreciation                                                                                                 |   |  Net book                                                                                    |
|                |  Cost                                                                                        |   |  and depletion                                                                                                |   |  value                                                                                       |
|                |  $                                                                                           |   |  $                                                                                                            |   |  $                                                                                           |
|                |                                                                                              |   |                                                                                                               |   |                                                                                              |
| Mining properties   |             1,837,970                 |   |                100,364                  |   |             1,737,606                 |
| Plant and equipment |                403,065 |   |                   66,976 |   |                336,089 |
|                |             2,241,035                 |   |                167,340                  |   |             2,073,695                 |

|                |                                                                                              |   |                                                                                                               |   |  December 31, 2009                                                                           |
|---------------------|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|
|                |                                                                                              |   |  Accumulated                                                                                                  |   |                                                                                              |
|                |                                                                                              |   |  depreciation                                                                                                 |   |  Net book                                                                                    |
|                |  Cost                                                                                        |   |  and depletion                                                                                                |   |  value                                                                                       |
|                |  $                                                                                           |   |  $                                                                                                            |   |  $                                                                                           |
|                |                                                                                              |   |                                                                                                               |   |                                                                                              |
| Mining properties   |             1,744,236                 |   |                   43,464 |   |             1,700,772                 |
| Plant and equipment |                348,078 |   |                   48,412 |   |                299,666 |
|                |             2,092,314                 |   |                   91,876 |   |             2,000,438                 |

----

|   |
|--------|

|                 |   |                                                                                        |   |                                                                                        |   |  Mining properties                                                                     |   |                                                                                        |   |
|----------------------|--------|---------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|
|                 |   |                                                                                        |   |  Non-                                                                                  |   |                                                                                        |   |  Plant and                                                                             |   |  December 31 |
|                 |   |  Depletable                                                                            |   |  depletable                                                                            |   |  Total                                                                                 |   |  equipment                                                                             |   |  2010 |
|                 |   |  $                                                                                     |   |  $                                                                                     |   |  $                                                                                     |   |  $                                                                                     |   |  $ |
|                 |   |                                                                                        |   |                                                                                        |   |                                                                                        |   |                                                                                        |   |   |
| Mesquite Mine        |   |        165,263                                           |   |         45,637                                      |   |        210,900                                           |   |         95,888                                      |   |             306,788 |
| Cerro San Pedro Mine |   |       204,740                                                 |   |         84,822                                      |   |       289,562                                                 |   |         70,449                                      |   |              360,011 |
| Peak Mine            |   |          71,238                                |   |          46,671                                |   |        117,909                                           |   |          71,448                                |   |             189,357 |
| New Afton Project    |   |                - |   |        721,833                                           |   |        721,833                                           |   |          97,148                                |   |              818,981 |
| El Morro Project (a) |   |                - |   |       387,742                                                 |   |       387,742                                                 |   |                - |   |             387,742 |
| Other projects (b)   |   |                - |   |           9,660                           |   |           9,660                           |   |                - |   |                9,660 |
| Corporate            |   |                - |   |                - |   |                - |   |            1,156                     |   |                 1,156 |
|                 |   |        441,241                                           |   |     1,296,365                                                           |   |     1,737,606                                                           |   |       336,089                                                 |   |          2,073,695 |

|                 |   |                                                                                                                            |   |                                                                                                                            |   |  Mining properties                                                                                                         |   |                                                                                                                            |   |                                                                                                                                                 |
|----------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |   |                                                                                                                            |   |  Non-                                                                                                                      |   |                                                                                                                            |   |  Plant and                                                                                                                 |   |                                                                                                                                                 |
|                 |   |  Depletable                                                                                                                |   |  depletable                                                                                                                |   |  Total                                                                                                                     |   |  equipment                                                                                                                 |   |                         2009 |
|                 |   |  $                                                                                                                         |   |  $                                                                                                                         |   |  $                                                                                                                         |   |  $                                                                                                                         |   |  $                                                                                                                                              |
|                 |   |                                                                                                                            |   |                                                                                                                            |   |                                                                                                                            |   |                                                                                                                            |   |                                                                                                                                                 |
| Mesquite Mine        |   |             180,625                                                 |   |               44,547                                      |   |             225,172                                                 |   |               97,254                                      |   |                    322,426                            |
| Cerro San Pedro Mine |   |             232,830                                                 |   |               84,822                                      |   |             317,652                                                 |   |               66,208                                      |   |                    383,860                            |
| Peak Mine            |   |               56,932                                      |   |               61,506                                      |   |              118,438                                           |   |               59,765                                      |   |                    178,203                            |
| New Afton Project    |   |                      - |   |             630,890                                                 |   |             630,890                                                 |   |               75,417                                      |   |                    706,307                            |
| El Morro Project (a) |   |                      - |   |             383,347                                                 |   |             383,347                                                 |   |                      - |   |                    383,347                            |
| Other projects (b)   |   |                      - |   |               25,273                                      |   |               25,273                                      |   |                      - |   |                      25,273                 |
| Corporate            |   |                      - |   |                      - |   |                      - |   |                 1,022                           |   |                        1,022      |
|                 |   |             470,387                                                 |   |          1,230,385                                                                 |   |          1,700,772                                                                 |   |             299,666                                                 |   |                 2,000,438                                            |

----

|   |
|--------|

|   | • | Datawave received a $50.0 million payment which was recorded, net of $3.7 million of transaction costs, as a deferred benefit which will be amortized into income over a period of time equal to the life of the Shareholders Agreement. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Goldcorp (through its subsidiary) will fund 100% of Datawave’s program funding share until commercial production is reached. The funding will be interest bearing at U.S. 7-year Treasury Rate plus 1.87% and is compounded monthly. As at December 31, 2010 the interest rate has been locked in at 4.58% based on the 7 year U.S. treasury bond yield plus 1.87%. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Datawave will be entitled to a penalty payment of $1.5 million per month up to a maximum of $36.0 million if the construction on the El Morro Project does not commence within 60 days of receipt of required permits and approvals. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Canada - Ajax |
|--------|-----|---------------|

|   | (3) | USA – Liberty Bell |
|--------|-----|--------------------------|

----

|   |
|--------|

|                                        |   |                                                                                                                                  |   |                                                                                                                                  |
|---------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|                                        |   |  2010                                                                                                                            |   |  2009                                                                                                                            |
|                                        |   |  $                                                                                                                               |   |  $                                                                                                                               |
|                                        |   |                                                                                                                                  |   |                                                                                                                                  |
| Senior secured notes (a)                    |   |            179,197                                                             |   |            169,044                                                             |
| Subordinated convertible debentures (b)     |   |              42,635                                                  |   |              37,609                                                  |
| Term loan facility (c)                      |   |                       - |   |              27,235                                                  |
| El Morro project funding loan (d)           |   |                8,052                                       |   |                3,656                                       |
| Revolving credit facility (e)               |   |                       - |   |                       - |
|                                        |   |            229,884                                                             |   |            237,544                                                             |
| Less: Current portion of term loan facility |   |                       - |   |             (12,088)                                                      |
|                                        |   |            229,884                                                             |   |            225,456                                                             |

----

|   |
|--------|

----

|   |
|--------|

|                                                                                                                                                                                                                                     |                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|
|                                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                                                                    |

----

|   |
|--------|

|                                           |                                                      |                                                        |
|------------------------------------------------|-----------------------------------------------------------|-------------------------------------------------------------|
|                                           |                                                      |                                                        |
|                                           |  2010                                                |  2009                                                  |
|                                           |  $                                                   |  $                                                     |
|                                           |                                                      |                                                        |
| Interest                                       |     21,773                            |        20,468            |
| Non-cash interest charges                      |       4,234                 |          3,780 |
|                                           |     26,007                            |        24,248            |
| Less: Interest capitalized to mining interests |   (25,060)                                      |       (22,813)                |
|                                           |          947 |          1,435 |

|                                          |   |                                                                                                                                                                            |   |  Asset derivatives                                                                                                               |
|-----------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|                                          |   |                                                                                                                                                                            |   |                                                                                                                                  |
|                                          |   |  2010                                                                                                                                                                      |   |  2009                                                                                                                            |
|                                          |   |  $                                                                                                                                                                         |   |  $                                                                                                                               |
| Derivatives classified as hedging instruments |   |                                                                                                                                                                            |   |                                                                                                                                  |
| for accounting purposes                       |   |                                                                                                                                                                            |   |                                                                                                                                  |
| Fuel contracts                                |   |                              - |   |                    706                 |
|                                          |   |                              - |   |                    706                 |
| Less:  Current portion              |   |                              - |   |                  (706)                           |
|                                          |   |                              - |   |                       - |

----

|   |
|--------|

|                                          |   |                                                                                                                 |   |  Liability derivatives                                                          |
|-----------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|
|                                          |   |                                                                                                                 |   |                                                                                 |
|                                          |   |  2010                                                                                                           |   |  2009                                                                           |
|                                          |   |  $                                                                                                              |   |  $                                                                              |
| Derivatives classified as hedging instruments |   |                                                                                                                 |   |                                                                                 |
| for accounting purposes                       |   |                                                                                                                 |   |                                                                                 |
| Gold hedging contracts                        |   |                  153,375        |   |              95,986 |
|                                          |   |                  153,375        |   |              95,986 |
| Less:  Current portion              |   |                   (40,072) |   |             (19,206)     |
|                                          |   |                  113,303        |   |              76,780 |

|                                              |                                                                        |                                                                   |
|---------------------------------------------------|-----------------------------------------------------------------------------|------------------------------------------------------------------------|
|                                              |                                                                        |                                                                   |
|                                              |  2010                                                                  |  2009                                                             |
|                                              |  $                                                                     |  $                                                                |
| Derivatives classified as hedging instruments for |                                                                        |                                                                   |
| accounting purposes                               |                                                                        |                                                                   |
| Gold hedging contracts                            |   (20,035)                                                        |       (3,403)                            |
| Fuel contracts                                    |             (5) |            (66) |
|                                              |   (20,040)                                                        |       (3,469)                            |

|                                                  |                                                                |                                                                                        |
|-------------------------------------------------------|---------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                  |                                                                |                                                                                        |
|                                                  |  2010                                                          |  2009                                                                                  |
|                                                  |  $                                                             |  $                                                                                     |
| Derivatives not classified as hedging instruments for |                                                                |                                                                                        |
| accounting purposes                                   |                                                                |                                                                                        |
| Prepayment option                                     |     7,679                                       |                - |
| Gold hedging contracts                                |            - |         8,161                                       |
| Fuel contracts                                        |            - |            797                       |
|                                                  |     7,679                                       |         8,958                                       |

----

|   |
|--------|

|                                                 |  2010                                      |  2009                                                            |
|------------------------------------------------------|-------------------------------------------------|-----------------------------------------------------------------------|
|                                                 |  $                                         |  $                                                               |
| Effective portion of change in fair value of hedging |                                            |                                                                  |
| instruments                                          |                                            |                                                                  |
| Gold hedging contracts - unrealized                  |  (85,849)                                  |     (49,101)                                      |
| Gold hedging contracts - realized                    |    20,035                        |        3,403                       |
| Fuel contracts                                       |        (366) |            189 |
| Future income tax                                    |    27,572                        |      17,870                                  |
|                                                 |  (38,608)                                  |     (27,639)                                      |

----

|   |
|--------|

|                                                 |   | Number                                                                                                                     |   |                                                                                                                       |
|------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|
|                                                 |   | of shares                                                                                                                  |   |                                                                                                                       |
|                                                 |   |  (000's)                                                                                                              |   |  $                                                                                                                    |
|                                                 |   |                                                                                                                       |   |                                                                                                                       |
| Balance, January 1, 2009                             |   |            212,841                                                  |   |         1,321,110                                                                  |
| Shares issued for mineral properties ((i) and (iii)) |   |                     25 |   |                     63 |
| Acquisition of Western Goldfields (ii)               |   |            142,796                                                  |   |            375,367                                                  |
| Shares issued (iv)                                   |   |              30,705                                       |   |            103,122                                                  |
| Exercise of options (v)                              |   |                2,448                            |   |              11,203                                       |
| Balance, December 31, 2009                           |   |            388,815                                                  |   |         1,810,865                                                                  |
| Exercise of options (vi)                             |   |                4,171                            |   |              19,394                                       |
| Exercise of warrants (vii)                           |   |                6,056                            |   |              16,453                                       |
| Balance, end of year                                 |   |            399,042                                                  |   |         1,846,712                                                                  |

|   | (i) | On February 27, 2009, the Company issued 20,000 common shares valued at $46,000 related to other exploration projects |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------|

|   | (ii) | On May 27, 2009, the Company issued 142,796,000 common shares to effect the acquisition of Western Goldfields, as described in Note 4.  These shares were issued at the closing share price of the Company on May 27, 2009, the transaction completion date, of $2.63 per share for total consideration of $375.4 million. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | On August 31, 2009, the Company issued 5,000 common shares valued at $17,000 related to other exploration projects. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

|   | (iv) | On September 11, 2009, the Company closed a bought deal public offering of 26,700,000 common shares and the underwriters’ exercise in full of an over-allotment option to purchase an additional 4,005,000 common shares granted the Company in connection with such offering at a price of $3.49 per share (Cdn$3.75 per share) for total gross proceeds of $107.2 million (Cdn$115.0 million). The Company incurred related share issuance costs of $4.1 million. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | During the year ended December 31, 2009, 2,448,000 common shares were issued pursuant to the exercise of stock options.  The Company received proceeds of $5.4 million from these exercises and transferred $5.8 million from contributed surplus. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | During the year ended December 31, 2010, 4,171,000 common shares were issued pursuant to the exercise of stock options.  The Company received proceeds of $11.0 million from these exercises and transferred $8.4 million from contributed surplus. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vii) | On December 22, 2010, 6,056,000 common shares were issued pursuant to the exercise of warrants. The Company received proceeds of $4.6 million from these exercises and transferred $11.9 million from share purchase warrants. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |   |                                                                                                  |   |  Weighted                                                                                                   |
|-------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|
|                                      |   |                                                                                                  |   |  average                                                                                                    |
|                                      |   |  Number of                                                                                       |   |  exercise                                                                                                   |
|                                      |   |  options                                                                                         |   |  price                                                                                                      |
|                                      |   |  (000's)                                                                                         |   |  Cdn$                                                                                                       |
|                                      |   |                                                                                                  |   |                                                                                                             |
| Balance, January 1, 2009                  |   |                 8,990 |   |                   6.94 |
| Options assumed on acquisition of Western |   |                                                                                                  |   |                                                                                                             |
| Goldfields                                |   |              5,699                   |   |               1.58                         |
| Granted                                   |   |                 5,762 |   |                   3.02 |
| Exercised                                 |   |                (2,448)     |   |                   2.29 |
| Cancelled                                 |   |                (2,679)     |   |                   6.27 |
| Balance, December 31, 2009                |   |               15,324            |   |                   4.34 |
| Granted                                   |   |                 2,704 |   |                   4.80 |
| Exercised                                 |   |                (4,171)     |   |                   2.74 |
| Cancelled                                 |   |                (1,609)     |   |                   8.00 |
| Balance, December 31, 2010                |   |               12,248            |   |                   4.50 |

----

|   |
|--------|

|                |   |                                                                                                                               |   |                                                                                                                                                                  |   |  Options outstanding                                                                                                          |   |                                                                                                                                                                |   |  Options exercisable                                                                                                                         |
|---------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |  Weighted                                                                                                                     |   |                                                                                                                                                                  |   |                                                                                                                               |   |                                                                                                                                                                |   |                                                                                                                                              |
|                |   |  average                                                                                                                      |   |                                                                                                                                                                  |   |  Weighted                                                                                                                     |   |                                                                                                                                                                |   |  Weighted                                                                                                                                    |
|                |   |  remaining                                                                                                                    |   |  Number of                                                                                                                                                       |   |  average                                                                                                                      |   |  Number of                                                                                                                                                     |   |  average                                                                                                                                     |
|  Exercise      |   |  contractual                                                                                                                  |   |  stock options                                                                                                                                                   |   |  exercise                                                                                                                     |   |  options                                                                                                                                                       |   |  exercise                                                                                                                                    |
|  prices        |   |  life (years)                                                                                                                 |   |  outstanding                                                                                                                                                     |   |  price                                                                                                                        |   |  exercisable                                                                                                                                                   |   |  price                                                                                                                                       |
|  Cdn$          |   |                                                                                                                               |   |  (000's)                                                                                                                                                         |   |  Cdn$                                                                                                                         |   |  (000's)                                                                                                                                                       |   |  Cdn$                                                                                                                                        |
|                |   |                                                                                                                               |   |                                                                                                                                                                  |   |                                                                                                                               |   |                                                                                                                                                                |   |                                                                                                                                              |
|  0.34 - 0.99   |   |                      2.73 |   |                            771 |   |                      0.73 |   |                          771           |   |                      0.73                |
|  1.00 - 1.99   |   |                      2.58 |   |                           394       |   |                      1.68 |   |                         394                 |   |                      1.68                |
|  2.00 - 2.99   |   |                      4.75 |   |                         1,722                 |   |                      2.59 |   |                         600                 |   |                      2.37                |
|  3.00 - 3.99   |   |                      4.96 |   |                        3,499                       |   |                      3.26 |   |                       1,248                           |   |                      3.34                |
|  4.00 - 4.99   |   |                      5.86 |   |                         2,180                 |   |                      4.39 |   |                           37      |   |                      4.49                |
|  5.00 - 5.99   |   |                      3.99 |   |                           473       |   |                      5.70 |   |                          177           |   |                      5.44                |
|  6.00 - 6.99   |   |                      1.80 |   |                            631 |   |                      6.38 |   |                          631           |   |                      6.38                |
|  7.00 - 7.99   |   |                      2.39 |   |                         1,545                 |   |                      7.71 |   |                       1,358                           |   |                      7.69                |
|  8.00 - 8.99   |   |                      6.86 |   |                            150 |   |                      8.84 |   |                            - |   |                         - |
|  9.00 - 9.99   |   |                      1.20 |   |                           700       |   |                      9.30 |   |                         700                 |   |                      9.30                |
|  10.00 - 11.00 |   |                      0.41 |   |                            183 |   |                     11.00      |   |                          183           |   |                     11.00                     |
|  0.34 - 11.00  |   |                      4.09 |   |                       12,248                            |   |                      4.50 |   |                      6,099                                 |   |                      5.07                |

----

|   |
|--------|

|                       |   | Number                                                                                                                          |
|----------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|
|                       |   | of units                                                                                                                        |
|                       |   |                                                                                                                            |
| Balance, January 1, 2009   |   |                      - |
| Units granted              |   |            560,000                                                       |
| Balance, December 31, 2009 |   |            560,000                                                       |
| Units granted              |   |            723,500                                                       |
| Units settled in cash      |   |          (361,000)                                                                 |
| Units cancelled            |   |          (165,000)                                                                 |
| Balance, December 31, 2010 |   |            757,500                                                       |

----

|   |
|--------|

|                                                                                        |   |                                                                                                           |   |                                                                                                           |   |  Weighted                                                                                                   |
|---------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|
|                                                                                        |   |                                                                                                           |   |  Common                                                                                                   |   |  average                                                                                                    |
|                                                                                        |   |  Number of                                                                                                |   |  Shares                                                                                                   |   |  exercise                                                                                                   |
|                                                                                        |   |  warrants                                                                                                 |   |  Issuable                                                                                                 |   |  price                                                                                                      |
|                                                                                        |   |  (000's)                                                                                                  |   |  (000's)                                                                                                  |   |  Cdn$                                                                                                       |
|                                                                                        |   |                                                                                                           |   |                                                                                                           |   |                                                                                                             |
| Balance, January 1, 2009 (i)                                                                |   |          322,337                                                  |   |            60,111                                       |   |                 13.80            |
| Issued (i)                                                                                  |   |                   25 |   |                   25 |   |                 15.00            |
| Western Goldfields share purchase warrants                                                  |   |                                                                                                           |   |                                                                                                           |   |                                                                                                             |
| exercisable into New Gold shares* (ii)                                                      |   |              6,056                            |   |              6,056                            |   |                   0.76 |
| Expired (iii)                                                                               |   |             (3,150)                                |   |             (3,150)                                |   |                   6.11 |
| Balance,  December 31, 2009                                                       |   |          325,268                                                  |   |            63,042                                       |   |                 12.93            |
| Exercised* (ii)                                                                             |   |             (6,056)                                |   |             (6,056)                                |   |                   0.76 |
| Balance,  December 31, 2010                                                       |   |          319,212                                                  |   |            56,986                                       |   |                 14.22            |
|  *The exercise price of these US$0.76 warrants have been converted to Canadian dollars |
| for presentation purposes.                                                                  |   |                                                                                                           |   |                                                                                                           |   |                                                                                                             |

|   | (i) | The Company has 217,500,000 share purchase warrants (Series B) outstanding that entitle the holders of these warrants to purchase one common share for Cdn$15.00 per share for every 10 share purchase warrants held.  These warrants expire on April 3, 2012. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | On May 27, 2009, the Company issued 6,056,000 share purchase warrants to effect the acquisition of Western Goldfields, as described in Note 4.  The warrants were valued at $11.9 million as part of the business combination valuation.  The holders of these warrants were entitled to purchase one common share for US$0.76 per share for every share purchase warrant held. During the year ended December 31, 2010 these share purchase warrants were exercised resulting in the Company issuing 6,056,000 common shares. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

|   | (iii) | During the year ended December 31, 2009, the remaining 3,150,000 share purchase warrants relating to the June 30, 2008 acquisition of Metallica expired resulting in a transfer from share purchase warrants to contributed surplus of $6.8 million. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     |   |                                                                                 |   | Common                                                                                          |   |                                                                                                             |   |              |
|----------|--------|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|-------------------|
|     |   |  Number                                                                         |   |  Shares                                                                                    |   |  Exercise                                                                                                   |   |              |
| Series   |   |  of warrants                                                                    |   |  Issuable                                                                                  |   |  prices                                                                                                     |   | Expiry date       |
|     |   |  (000's)                                                                        |   |  (000's)                                                                                   |   |  Cdn$                                                                                                       |   |              |
|     |   |                                                                                 |   |                                                                                            |   |                                                                                                             |   |              |
| Series B |   |            217,500            |   |             21,750                  |   |                15.00                  |   | April 3, 2012     |
| Series C |   |              73,862 |   |                7,386 |   |                   9.00 |   | November 28, 2012 |
| Series A |   |              27,850 |   |             27,850                  |   |                15.00                  |   | June 28, 2017     |
|     |   |            319,212            |   |             56,986                  |   |                                                                                                             |   |              |

----

|   |
|--------|

|                                                     |   |   |  2010                                                          |  2009                                                          |
|----------------------------------------------------------|--------|--------|---------------------------------------------------------------------|---------------------------------------------------------------------|
|                                                     |   |   |                                                                |                                                                |
|                                                     |   |   |                                                                |                                                                |
| Earnings (loss) from continuing operations               |   |   | $134,931                                                            | ($183,434)                                                          |
| Earnings (loss) from discontinued operations, net of tax |   |   |       42,023                          |      (10,882)                              |
| Net earnings (loss)                                      |   |   | $176,954                                                            | ($194,316)                                                          |
|                                                     |   |   |                                                                |                                                                |
| (in thousands)                                           |   |   |                                                                |                                                                |
| Basic weighted average number of shares outstanding      |   |   |     390,883                                     |     306,288                                     |
|                                                     |   |   |                                                                |                                                                |
| Effect of diluted securities                             |   |   |                                                                |                                                                |
| Stock options                                            |   |   |      4,350                                 |            - |
| Warrants                                                 |   |   |            - |            - |
| Diluted weighted average number of shares outstanding    |   |   |     395,233                                     |     306,288                                     |
|                                                     |   |   |                                                                |                                                                |
| Earnings (loss) per share from continuing operations     |   |   |                                                                |                                                                |
| Basic                                                    |   |   | $0.35                                                               | ($0.60)                                                             |
| Diluted                                                  |   |   | $0.34                                                               | ($0.60)                                                             |
|                                                     |   |   |                                                                |                                                                |
| Earnings (loss) per share from discontinued operations   |   |   |                                                                |                                                                |
| Basic                                                    |   |   | $0.11                                                               | ($0.04)                                                             |
| Diluted                                                  |   |   | $0.11                                                               | ($0.04)                                                             |
|                                                     |   |   |                                                                |                                                                |
| Earnings (loss) per share                                |   |   |                                                                |                                                                |
| Basic                                                    |   |   | $0.46                                                               | ($0.64)                                                             |
| Diluted                                                  |   |   | $0.45                                                               | ($0.64)                                                             |

|                    |   |  2010                                                                                            |   |  2009                                                                                      |
|-------------------------|--------|-------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|
|                    |   |  (000's)                                                                                         |   |  (000's)                                                                                   |
|                    |   |                                                                                                  |   |                                                                                            |
| Stock options           |   |                 2,881 |   |                9,465 |
| Share purchase warrants |   |               56,986            |   |              56,986            |
| Convertible debentures  |   |                 5,900 |   |                5,900 |

----

|   |
|--------|

|                                  |   |   |                     |                                        |
|---------------------------------------|--------|--------|--------------------------|---------------------------------------------|
|                                  |   |   |                     |                                        |
|                                  |   |   |  2010               |  2009                                  |
|                                  |   |   |  $                  |  $                                     |
| Current income and mining tax expense |   |   |    58,307 |      16,347        |
| Future income and mining tax recovery |   |   |   (17,197)     |       (1,441) |
|                                  |   |   |    41,110 |      14,906        |

|                                                              |   |   |                                                                            |                                                                                  |
|-------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|
|                                                              |   |   |                                                                            |                                                                                  |
|                                                              |   |   |  2010                                                                      |  2009                                                                            |
|                                                              |   |   |  $                                                                         |  $                                                                               |
|                                                              |   |   |                                                                            |                                                                                  |
| Earnings (loss) before taxes                                      |   |   |   176,041                                                             |  (168,528)                                                                       |
|                                                              |   |   |                                                                            |                                                                                  |
| Canadian federal and provincial income tax rates                  |   |   | 28.50%                                                                          | 30.00%                                                                                |
|                                                              |   |   |                                                                            |                                                                                  |
| Income tax expense based on above rates                           |   |   |     50,172                                                  |     (50,987)                                                      |
| Increase (decrease) due to                                        |   |   |                                                                            |                                                                                  |
|    Non-taxable income                              |   |   |   (12,851)                                                            |     (11,715)                                                      |
|    Non-deductible expenditures                     |   |   |       3,623                                       |      14,287                                                  |
|    Different statutory tax rates on earnings of    |   |   |                                                                            |                                                                                  |
|       foreign subsidiaries          |   |   |       9,993                                       |        2,882                                       |
|    Impact of decrease in tax rates on future       |   |   |                                                                            |                                                                                  |
|       income taxes                  |   |   |         (702)                           |        9,832                                       |
|    Adjustment of prior year provision to statutory |   |   |                                                                            |                                                                                  |
|       tax returns                   |   |   |       1,645                                       |       (2,839)                                           |
|    Non-taxable gain                                |   |   |   (15,993)                                                            |               - |
|    Goodwill write down                             |   |   |              - |      57,769                                                  |
|    Benefit of losses not recognized in period      |   |   |          595                       |            650                 |
|    Change in valuation allowance and other         |   |   |       4,628                                       |       (4,973)                                           |
|                                                              |   |   |     41,110                                                  |      14,906                                                  |

----

|   |
|--------|

|                                              |   | 2010                                                                                                                                                                        |                    2009                            |
|---------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|                                              |   | $                                                                                                                                                                           |  $                                                                                                                                           |
| Future income and mining tax assets               |   |                                                                                                                                                                        |                                                                                                                                              |
| Tax loss carryforwards                            |   |                        42,343                            |                19,708                                                  |
| Unrealized hedging losses                         |   |                        45,440                            |                20,228                                                  |
| Investment tax credits                            |   |                        11,256                            |                         - |
| Deductible temporary differences                  |   |                        27,937                            |                   3,770                                 |
| Deferred financing costs and other                |   |                        11,241                            |                14,616                                                  |
| Value of future income tax and mining assets      |   |                     138,217                                             |                58,322                                                  |
| Valuation allowance                               |   |                      (15,570)                                      |               (18,202)                                                      |
| Future income and mining tax assets               |   |                     122,647                                             |                40,120                                                  |
|                                              |   |                                                                                                                                                                        |                                                                                                                                              |
| Future income and mining tax liabilities          |   |                                                                                                                                                                        |                                                                                                                                              |
| Accumulated cost base differences on assets       |   |                    (392,615)                                                 |             (345,448)                                                                 |
| Future income and mining tax liabilities, net     |   |                    (269,968)                                                 |             (305,328)                                                                 |
|                                              |   |                                                                                                                                                                        |                                                                                                                                              |
| Presented on the consolidated balance sheets as   |   |                                                                                                                                                                        |                                                                                                                                              |
| Future income and mining tax assets               |   |                          9,127                 |                   8,848                                 |
| Future income and mining tax assets - non-current |   |                             931 |                   2,250                                 |
| Future income and mining tax liabilities          |   |                    (280,026)                                                 |             (316,426)                                                                 |
| Future income and mining tax liabilities, net     |   |                    (269,968)                                                 |             (305,328)                                                                 |

| (i) | Canadian income tax losses of approximately $67.1 million that expire from 2014 through 2030; |
|-----|-----------------------------------------------------------------------------------------------|

| (ii) | Canadian capital loss carryforwards of approximately $89.9 million that may be available for tax purposes. These losses carryforward indefinitely. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii) | U.S. loss carryforwards of approximately $22.0 million that expire from 2021 through 2028; |
|-------|--------------------------------------------------------------------------------------------|

| (iv) |   Mexican loss carryforwards of approximately $0.1 million that expire from 2011 through 2017; |
|------|-----------------------------------------------------------------------------------------------------|

| (v) | Chilean loss carryforwards of approximately $1.6 million that may be available for tax purposes. These losses carry forward indefinitely. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

| Canada        |  2006 to 2010 |
|---------------|--------------------|
| United States |  2005 to 2010 |
| Mexico        |  2005 to 2010 |
| Australia     |  2005 to 2010 |

|                             |   |                                                                        |   | Cerro                                                                                 |   |                                                                |   | New                                                                 |   |                                                       |
|----------------------------------|--------|-----------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|------------------------------------------------------------|
|                             |   | Mesquite                                                                    |   | San Pedro                                                                             |   | Peak                                                                |   | Afton                                                               |   |                                                       |
|                             |   |  Mine                                                                  |   |  Mine                                                                            |   |  Mine                                                          |   | Project                                                             |   | Total                                                      |
|                             |   |  $                                                                     |   |  $                                                                               |   |  $                                                             |   |  $                                                             |   |  $                                                    |
|                             |   |                                                                        |   |                                                                                  |   |                                                                |   |                                                                |   |                                                       |
| Balance, January 1, 2009         |   |             -   |   |         3,258                                 |   |      5,509                                 |   |         182                 |   |      8,949                        |
| Acquisition (Note 4)             |   |        5,221                             |   |               - |   |            - |   |            - |   |      5,221                        |
| Reclamation expenditures         |   |             -   |   |               - |   |         (32)                |   |            - |   |          (32) |
| Accretion                        |   |           203             |   |            316                 |   |         521                 |   |           75      |   |      1,115                        |
| Revisions to expected cash flows |   |           163             |   |            843                 |   |         880                 |   |      1,556                                 |   |      3,442                        |
| Foreign exchange                 |   |             -   |   |            201                 |   |      1,574                                 |   |           33      |   |      1,808                        |
|                             |   |                                                                        |   |                                                                                  |   |                                                                |   |                                                                |   |                                                       |
| Balance, December 31, 2009       |   |        5,587                             |   |         4,618                                 |   |      8,452                                 |   |      1,846                                 |   |    20,503                                   |
| Reclamation expenditures         |   |           (23)            |   |               - |   |         (19)                |   |            - |   |          (42) |
| Accretion                        |   |           391             |   |            411                 |   |         747                 |   |         134                 |   |      1,683                        |
| Revisions to expected cash flows |   |         (386)                       |   |         1,855                                 |   |      1,881                                 |   |           81      |   |      3,431                        |
| Foreign exchange                 |   |             -   |   |            242                 |   |      1,117                                 |   |         102                 |   |      1,461                        |
|                             |   |                                                                        |   |                                                                                  |   |                                                                |   |                                                                |   |                                                       |
| Balance, December 31, 2010       |   |        5,569                             |   |         7,126                                 |   |    12,178                                            |   |      2,163                                 |   |    27,036                                   |
| Less: current portion            |   |             (8) |   |           (490)                     |   |       (817)                           |   |            - |   |     (1,315)                            |
|                             |   |                                                                        |   |                                                                                  |   |                                                                |   |                                                                |   |                                                       |
|                             |   |        5,561                             |   |         6,636                                 |   |    11,361                                            |   |      2,163                                 |   |    25,721                                   |

----

|   |
|--------|

----

|   |
|--------|

|                                                  |   |                                                              |   |                                                                                            |
|-------------------------------------------------------|--------|-------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|
|                                                  |   |                                                              |   |  December 31,                                                                              |
|                                                  |   |           2010  |   |               2009        |
|                                                  |   |  $                                                           |   |  $                                                                                         |
| Change in non-cash working capital                    |   |                                                              |   |                                                                                            |
| Accounts receivable                                   |   |           (145) |   |                (233) |
| Inventories and stockpiled ore                        |   |       (13,517)                      |   |           (18,239)                            |
| Accounts payable and accrued liabilities              |   |       23,493                        |   |               5,210       |
| Prepaids and other                                    |   |        (3,759)                 |   |                (335) |
|                                                  |   |         6,072             |   |           (13,597)                            |
|                                                  |   |                                                              |   |                                                                                            |
| Operating activities included the following payments: |   |                                                              |   |                                                                                            |
| Interest paid                                         |   |       20,895                        |   |             22,614                  |
| Income taxes paid                                     |   |        41,855                  |   |              8,290             |

----

|   |
|--------|

|                                        |   |                                                                            |   |                                                                      |   |    Year ended December 31, 2010                                       |
|---------------------------------------------|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|
|                                        |   | USA                                                                             |   |  Mexico                                                              |   |  Australia                                                                 |   | Other (1) |   | Total |
|                                        |   |  $                                                                         |   |  $                                                                   |   |  $                                                                         |   |  $ |   | $ |
|                                        |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Revenues                                    |   |    189,361                                                       |   |   190,459                                                       |   |    150,630                                                       |   |           - |   |    530,450 |
| Operating expenses                          |   |  (100,896)                                                                 |   |   (72,461)                                                      |   |    (76,981)                                                      |   |           - |   |  (250,338) |
| Depreciation and depletion                  |   |    (26,379)                                                      |   |   (33,798)                                                      |   |    (16,839)                                                      |   |           - |   |    (77,016) |
| Earnings from mine operations               |   |      62,086                                            |   |     84,200                                            |   |      56,810                                            |   |           - |   |    203,096 |
|                                        |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Corporate administration                    |   |              - |   |             - |   |              - |   |  (32,622) |   |    (32,622) |
| Exploration                                 |   |      (2,912)                                           |   |     (1,971)                                           |   |      (5,109)                                           |   |    (2,842) |   |    (12,834) |
| Impairment charge of exploration asset      |   |              - |   |             - |   |              - |   |  (15,728) |   |    (15,728) |
|                                        |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Earnings (loss) from operations             |   |      59,174                                            |   |     82,229                                            |   |      51,701                                            |   |  (51,192) |   |    141,912 |
| Other income (expense)                      |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Realized and unrealized loss on investments |   |              - |   |             - |   |              - |   |      9,128 |   |        9,128 |
| Unrealized gain on prepayment option        |   |              - |   |             - |   |              - |   |      7,679 |   |        7,679 |
| Interest and other income                   |   |           227                 |   |          524                 |   |           300                 |   |      2,207 |   |        3,258 |
| Gain on sale of investment                  |   |              - |   |             - |   |              - |   |    39,710 |   |      39,710 |
| Interest and finance fees                   |   |         (246)                           |   |        (314)                           |   |           (93)                |   |       (294) |   |         (947) |
| Other expense                               |   |             76      |   |     (1,819)                                           |   |      (1,146)                                           |   |             6 |   |      (2,883) |
| Gain (loss) on foreign exchange             |   |             72      |   |   (13,769)                                                      |   |      (7,777)                                           |   |       (342) |   |    (21,816) |
|                                        |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Earnings before taxes                       |   |      59,303                                            |   |     66,851                                            |   |      42,985                                            |   |      6,902 |   |    176,041 |
| Income and mining taxes                     |   |    (18,202)                                                      |   |   (20,504)                                                      |   |    (16,102)                                                      |   |    13,698 |   |    (41,110) |
|                                        |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Net earnings from continuing operations     |   |      41,101                                            |   |     46,347                                            |   |      26,883                                            |   |    20,600 |   |    134,931 |

|   | (1) | Other includes corporate balances and exploration properties.  Results of operations for the Canadian and Chilean development properties have been included in Other as these properties are still in the development phase with no revenues or operating costs. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

|                                           |   |                                                                            |   |                                                                      |   |      Year ended December 31, 2009                                |
|------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|
|                                           |   | USA (1)                                                                         |   |  Mexico                                                              |   |  Australia                                                                 |   | Other (2) |   | Total |
|                                           |   |  $                                                                         |   |  $                                                                   |   |  $                                                                         |   |  $ |   | $ |
|                                           |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Revenues                                       |   |      94,506                                            |   |   112,642                                                       |   |    116,632                                                       |   |           - |   |    323,780 |
| Operating expenses                             |   |    (59,245)                                                      |   |   (59,448)                                                      |   |    (57,798)                                                      |   |           - |   |  (176,491) |
| Depreciation and depletion                     |   |    (16,513)                                                      |   |   (25,070)                                                      |   |    (17,023)                                                      |   |         (62) |   |    (58,668) |
| Earnings from mine operations                  |   |      18,748                                            |   |     28,124                                            |   |      41,811                                            |   |         (62) |   |      88,621 |
|                                           |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Corporate administration                       |   |              - |   |             - |   |              - |   |  (24,689) |   |    (24,689) |
| Business combination transaction costs         |   |              - |   |             - |   |              - |   |    (6,583) |   |      (6,583) |
| Exploration                                    |   |              - |   |     (3,011)                                           |   |      (1,270)                                           |   |    (2,131) |   |      (6,412) |
| Impairment charge of exploration asset         |   |              - |   |             - |   |              - |   |           - |   |             - |
| Goodwill impairment charge                     |   |  (192,099)                                                                 |   |             - |   |              - |   |           - |   |  (192,099) |
|                                           |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| (Loss) earnings from operations                |   |  (173,351)                                                                 |   |     25,113                                            |   |      40,541                                            |   |  (33,465) |   |  (141,162) |
| Other income (expense)                         |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Realized and unrealized gain on gold contracts |   |        8,161                                 |   |             - |   |              - |   |           - |   |        8,161 |
| Realized and unrealized gain on fuel contracts |   |           797                 |   |             - |   |              - |   |           - |   |           797 |
| Realized and unrealized gain on investments    |   |              - |   |             - |   |              - |   |         351 |   |           351 |
| Interest and other income                      |   |             78      |   |          619                 |   |         (207)                           |   |      3,668 |   |        4,158 |
| Gain on redemption of long-term debt           |   |              - |   |             - |   |              - |   |    14,236 |   |      14,236 |
| Interest and finance fees                      |   |      (1,108)                                           |   |             - |   |         (151)                           |   |       (176) |   |      (1,435) |
| Other expense                                  |   |         (715)                           |   |             - |   |              - |   |       (252) |   |         (967) |
| Gain (loss) on foreign exchange                |   |           112                 |   |   (20,674)                                                      |   |      (8,284)                                           |   |  (23,821) |   |    (52,667) |
|                                           |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| (Loss) earnings before taxes                   |   |  (166,026)                                                                 |   |       5,058                                 |   |      31,899                                            |   |  (39,459) |   |  (168,528) |
| Income and mining taxes                        |   |        7,548                                 |   |   (15,697)                                                      |   |      (5,239)                                           |   |    (1,518) |   |    (14,906) |
|                                           |   |                                                                            |   |                                                                      |   |                                                                            |   |   |   |   |
| Net (loss) earnings from continuing operations |   |  (158,478)                                                                 |   |   (10,639)                                                      |   |      26,660                                            |   |  (40,977) |   |  (183,434) |

|   | (1)   | Segment acquired on May 27, 2009 (Note 4) - results from operations for period of ownership. |
|--------|-----------------|----------------------------------------------------------------------------------------------|

|   | (2) | Other includes corporate balances and exploration properties.  Results of operations for the Canadian  and Chilean development properties have been included in Other as these properties are still in the  development phase with no revenues or operating costs. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|      |                                                                                                       | Total  |                                                                                                       |   Expenditures for |
|-----------|------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|-------------------------|
|      |                                                                                                       | Assets | (3)                                                                                                        |                    |   |   |  mining interest |
|      |                  2010 |   |                  2009 |                    |           2010 |   |          2009 |
|      |  $                                                                                                    |   |  $                                                                                                    |                    |  $ |   |  $ |
|      |                                                                                                       |   |                                                                                                       |                    |   |   |   |
| USA (1)   |             421,089                            |   |             414,893                            |                    |          9,081 |   |         1,527 |
| Mexico    |             454,785                            |   |             442,300                            |                    |        10,993 |   |         3,460 |
| Australia |             257,620                            |   |             228,420                            |                    |        32,481 |   |       28,581 |
| Canada    |             860,174                            |   |             739,251                            |                    |      132,355 |   |       81,471 |
| Chile     |             397,402                            |   |             392,976                            |                    |          4,394 |   |         5,186 |
| Other (2) |             347,844                            |   |             233,041                            |                    |             406 |   |            696 |
|      |          2,738,914                                            |   |          2,450,881                                            |                    |      189,710 |   |     120,921 |

|   | (1) | Segment acquired on May 27, 2009 (Note 4). |
|--------|-----|--------------------------------------------|

|   | (2) | Other includes corporate balances and exploration properties. |
|--------|-----|---------------------------------------------------------------|

|   | (3) |  Includes assets from continuing operations only. |
|--------|-----|--------------------------------------------------------|

----

|   |
|--------|

|                      |   |                                                                                                                               |   |                                                                                                                               |
|---------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |                      2010 |   |                      2009 |
|                      |   |  $                                                                                                                            |   |  $                                                                                                                            |
|                      |   |                                                                                                                               |   |                                                                                                                               |
| Shareholders' equity      |   |             1,893,191                                                  |   |             1,731,045                                                  |
| Long-term debt            |   |                229,884                                  |   |                237,544                                  |
|                      |   |             2,123,075                                                  |   |             1,968,589                                                  |
| Cash and cash equivalents |   |               (490,754)                                      |   |               (262,325)                                      |
| Investments               |   |                   (7,533)                |   |                 (45,890)                           |
|                      |   |             1,624,788                                                  |   |             1,660,374                                                  |

----

|   |
|--------|

|                                  |   |                                                                                                                                                                |   |                                                                                                                                          |
|---------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                  |   |                      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 assets |   |                   31,295                                                  |   |                   17,646                            |
|                                  |   |                541,511                                                                   |   |                346,113                                             |

|                 |   |                                                                              |   |                                                                                        |   |                                                                                                    |   |                                                                                         |   |                                                                                         |   |                                                |   |                                                                               |
|----------------------|--------|-----------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                 |   |  0-30                                                                        |   |  31-60                                                                                 |   |  61-90                                                                                             |   |  91-120                                                                                 |   |  Over                                                                                   |   |        2010      |   |              2009 |
|                 |   |  days                                                                        |   |  days                                                                                  |   |  days                                                                                              |   |  days                                                                                   |   |  120 days                                                                               |   |  Total                                         |   |  Total                                                                        |
|                 |   |  $                                                                           |   |  $                                                                                     |   |  $                                                                                                 |   |  $                                                                                      |   |  $                                                                                      |   |  $                                             |   |  $                                                                            |
|                 |   |                                                                              |   |                                                                                        |   |                                                                                                    |   |                                                                                         |   |                                                                                         |   |                                                |   |                                                                               |
| Mesquite Mine        |   |              193 |   |                - |   |             249                             |   |                -  |   |                -  |   |         442 |   |             273        |
| Cerro San Pedro Mine |   |           3,501                 |   |               74      |   |               42                  |   |                18 |   |              163            |   |      3,798                 |   |          5,348                        |
| Peak Mine            |   |           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% |

----

|   |
|--------|

|                 |   |                                                                                                    |   |                                                                                                    |   |                                                                                                    |   |                                                                                                    |   |                                                                               |   | December 31                                                                                                      |
|----------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|
|                 |   |  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                            |

|   | (i) | Transaction exposure |
|--------|-----|----------------------|

----

|   |
|--------|

|   | (ii) | Exposure to currency risk |
|--------|------|---------------------------|

|                                     |   |                                                              |   |                                                                                        |   |                                                                                                          |   |  December 31,2010                                                                                                           |
|------------------------------------------|--------|-------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|
|                                     |   |  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           |   |                      - |   |                           - |   |                             -  |
| Accounts payable and accruals            |   |               (6,529)                           |   |              (11,566)                                          |   |                    (8,806)                                     |   |                           (94)           |
| Reclamation and closure cost obligations |   |                (1,846)                     |   |               (8,330)                                     |   |                     (4,314)                               |   |                             -  |
| Long-term debt                           |   |           (206,653)                                                 |   |                      - |   |                           - |   |                             -  |
| Gross balance sheet exposure             |   |                 2,769                 |   |               16,034                                      |   |                    (4,776)                                     |   |                           (76)           |

|   | (iii) | Translation exposure |
|--------|-------|----------------------|

----

|   |
|--------|

|              |   |                      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                                   |

|   | • | 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. |
|--------|---------|---------------------------------------------------------------------|

----

|   |
|--------|

|             |   |                                                                                                      |   |                                                                                                                                              |   |                                                                                                                |   |   December 31,                                                                                                              |
|------------------|--------|-----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                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 |   |                         - |   |                    - |   |                       - |

----

|   |
|--------|

|                                     |   |                                                                                                                            |   |                                                                                                    |   |   December 31, 2010                                                                                                        |
|------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|
|                                     |   |                                                                                                                            |   |                                                                                                    |   |  Financial                                                                                                                 |   |   |
|                                     |   |                                                                                                                            |   |                                                                                                    |   |  Liabilities at                                                                                                            |   |   |
|                                     |   |  Loans and                                                                                                                 |   |  Held at                                                                                           |   |  Amortized                                                                                                                 |   |   |
|                                     |   |  Receivables                                                                                                               |   |  Fair value                                                                                        |   |  Cost                                                                                                                      |   | Total |
|                                     |   |  $                                                                                                                         |   |  $                                                                                                 |   |  $                                                                                                                         |   | $ |
| Financial Assets                         |   |                                                                                                                            |   |                                                                                                    |   |                                                                                                                            |   |   |
| Cash and cash equivalents                |   |                      - |   |        490,754                                                       |   |                      - |   |    490,754 |
| Accounts receivable                      |   |              11,929                                            |   |                  - |   |                      - |   |      11,929 |
| Prepayment option                        |   |                      - |   |            7,679                                 |   |                      - |   |        7,679 |
| Investments                              |   |                      - |   |            7,533                                 |   |                      - |   |        7,533 |
| Reclamation deposits                     |   |                      - |   |          17,955                                            |   |                      - |   |      17,955 |
| Financial Liabilities                    |   |                                                                                                                            |   |                                                                                                    |   |                                                                                                                            |   |   |
| Accounts payable and accrued liabilities |   |                      - |   |                  - |   |               66,654                                      |   |      66,654 |
| Long-term debt                           |   |                      - |   |                  - |   |             229,884                                                 |   |    229,884 |
| Gold contracts                           |   |                      - |   |        153,375                                                       |   |                      - |   |    153,375 |
| Share award units                        |   |                      - |   |            3,294                                 |   |                      - |   |        3,294 |
|                                     |   |                                                                                                                            |   |                                                                                                    |   |                                                                                                                            |   |   |

|                                     |   |                                                                                                                            |   |                                                                                                    |   |   December 31, 2009                                                                                                        |
|------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|
|                                     |   |                                                                                                                            |   |                                                                                                    |   |  Financial                                                                                                                 |   |   |
|                                     |   |                                                                                                                            |   |                                                                                                    |   |  Liabilities at                                                                                                            |   |   |
|                                     |   |  Loans and                                                                                                                 |   |  Held at                                                                                           |   |  Amortized                                                                                                                 |   |   |
|                                     |   |  Receivables                                                                                                               |   |  Fair value                                                                                        |   |  Cost                                                                                                                      |   | Total |
|                                     |   |  $                                                                                                                         |   |  $                                                                                                 |   |  $                                                                                                                         |   | $ |
| Financial Assets                         |   |                                                                                                                            |   |                                                                                                    |   |                                                                                                                            |   |   |
| Cash and cash equivalents                |   |                      - |   |        262,325                                                       |   |                      - |   |    262,325 |
| Restricted cash                          |   |                      - |   |            9,201                                 |   |                      - |   |        9,201 |
| Accounts receivable                      |   |              10,345                                            |   |                  - |   |                      - |   |      10,345 |
| Fuel contract                            |   |                      - |   |               706                 |   |                      - |   |           706 |
| Prepayment option                        |   |                      - |   |                  - |   |                      - |   |             - |
| Investments                              |   |                      - |   |          45,890                                            |   |                      - |   |      45,890 |
| Reclamation deposits                     |   |                      - |   |          17,646                                            |   |                      - |   |      17,646 |
| Financial Liabilities                    |   |                                                                                                                            |   |                                                                                                    |   |                                                                                                                            |   |   |
| Accounts payable and accrued liabilities |   |                      - |   |                  - |   |               36,033                                      |   |      36,033 |
| Long-term debt                           |   |                      - |   |                  - |   |             237,544                                                 |   |    237,544 |
| Gold contracts                           |   |                      - |   |          95,986                                            |   |                      - |   |      95,986 |
| Share award units                        |   |                      - |   |               217                 |   |                      - |   |           217 |

----

|   |
|--------|

|                                     |   |  December 31, 2010                                                                                                         |   |  December 31, 2009                                                                                 |
|------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|
|                                     |   |  Carrying                                                                                                                  |   |  Fair                                                                                              |   |  Carrying |   |  Fair |
|                                     |   |  Value                                                                                                                     |   |  Value                                                                                             |   |  Value |   |  Value |
|                                     |   |  $                                                                                                                         |   |  $                                                                                                 |   |  $ |   | $ |
| Financial Assets                         |   |                                                                                                                            |   |                                                                                                    |   |   |   |   |
| Cash and cash equivalents                |   |            490,754                                                       |   |        490,754                                                       |   |             262,325 |   |    262,325 |
| Restricted cash                          |   |                      - |   |                  - |   |                 9,201 |   |        9,201 |
| Accounts receivable                      |   |              11,929                                            |   |          11,929                                            |   |               10,345 |   |      10,345 |
| Fuel contract                            |   |                      - |   |                  - |   |                    706 |   |           706 |
| Prepayment option                        |   |                7,679                                 |   |            7,679                                 |   |                      - |   |             - |
| Investments                              |   |                7,533                                 |   |            7,533                                 |   |               45,890 |   |      45,890 |
| Reclamation deposits                     |   |              17,955                                            |   |          17,955                                            |   |               17,646 |   |      17,646 |
| Financial Liabilities                    |   |                                                                                                                            |   |                                                                                                    |   |   |   |   |
| Accounts payable and accrued liabilities |   |              66,654                                            |   |          66,654                                            |   |               35,816 |   |      35,816 |
| Long-term debt                           |   |            229,884                                                       |   |        276,887                                                       |   |             237,544 |   |    265,696 |
| Gold contracts                           |   |            153,375                                                       |   |        153,375                                                       |   |               95,986 |   |      95,986 |
| Share award units                        |   |                3,294                                 |   |            3,294                                 |   |                    217 |   |           217 |

----

|   |
|--------|

|                      |   |                                                                                                                                                          |   |                                                                                                                                                          |   |                     2010                                  |
|---------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |  Level 1                                                                                                                                                 |   |  Level 2                                                                                                                                                 |   |  Level 3                                                                                                                                                 |
|                      |   |  $                                                                                                                                                       |   |  $                                                                                                                                                       |   |  $                                                                                                                                                       |
|                      |   |                                                                                                                                                          |   |                                                                                                                                                          |   |                                                                                                                                                          |
| Cash and cash equivalents |   |                490,754                                                             |   |                           - |   |                           - |
| Reclamation deposits      |   |                  17,955                                                  |   |                           - |   |                           - |
| Prepayment option         |   |                           - |   |                    7,679                                       |   |                           - |
| Gold contracts            |   |                           - |   |              (153,375)                                                                       |   |                           - |
| Investments               |   |                           - |   |                    7,533                                       |   |                           - |
| Share award units         |   |                           - |   |                    3,294                                       |   |                           - |

|   | (a) | The Company has entered into a number of contractual commitments related to equipment orders to purchase long lead items or critical pieces of mining equipment and operating leases for its operations.  At December 31, 2010, these commitments totaled $156.9 million, of which $86.2 million are expected to fall due over the next 12 months. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

|   | (b) | The Company had previously recognized a contingent liability for certain claims against the Amapari Mine, of which claims were assumed by Beadell upon closing of the Amapari Mine sale on April 13, 2010. As part of the agreement selling the Amapari Mine, the Company provided general indemnity for one year in connection with the representations and obligations of the Company under the sale agreement.  The indemnity is limited to claims in excess of an amount equal to $5.0 million and in no event shall the aggregate amount of all claims exceed $10 million. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

----

|   |
|--------|

|                                                                             |   |                                                                                                    |   |                                                                                                                |   | 2010                                                                                                    |
|----------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|
|                                                                             |   | Canadian                                                                                                |   |                                                                                                                |   |                                                                                                    |
|                                                                             |   | GAAP                                                                                                    |   |                                                                                                                |   |                                                                                                    |
|                                                                             |   |  As reported                                                                                       |   |  Adjustments                                                                                                   |   |  U.S. GAAP                                                                                         |
|                                                                             |   |  $                                                                                                 |   |                                                                                                                |   |  $                                                                                                 |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Revenues                                                                         |   |         530,450                                                 |   |                    - |   |         530,450                                                 |
| Operating expenses                                                               |   |        (250,338)                                                     |   |                    - |   |        (250,338)                                                     |
| Depreciation and depletion                                                       |   |          (77,016)                                          |   |                    - |   |          (77,016)                                          |
| Earnings from mine operations                                                    |   |         203,096                                                 |   |                    - |   |         203,096                                                 |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Corporate administration (note a)                                                |   |          (32,622)                                          |   |              (6,050)                               |   |          (38,672)                                          |
| Exploration                                                                      |   |          (12,834)                                          |   |                    - |   |          (12,834)                                          |
| Impairment charges of exploration assets                                         |   |          (15,728)                                          |   |                                                                                                                |   |          (15,728)                                          |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Loss from operations                                                             |   |           141,912                                     |   |              (6,050)                               |   |          135,862                                           |
| Other income (expense)                                                           |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Realized and unrealized gain on investments                                      |   |             9,128                           |   |                                                                                                                |   |             9,128                           |
| Unrealized loss on equity-linked instruments (notes (a) and (d))                 |   |                  - |   |            (92,551)                                          |   |          (92,551)                                          |
| Unrealized gain on prepayment option (note f)                                    |   |             7,679                           |   |              (7,679)                               |   |                  - |
| Interest and other income                                                        |   |             3,258                           |   |                    - |   |             3,258                           |
| Gain on sale of investment                                                       |   |            39,710                                |   |                    - |   |            39,710                                |
| Interest and finance fees                                                        |   |              (947)                     |   |                    - |   |              (947)                     |
| Other expense                                                                    |   |           (2,883)                                     |   |                    - |   |           (2,883)                                     |
| Loss on foreign exchange (notes (a), (d) and (g))                                |   |           (21,816)                                    |   |              (8,388)                               |   |          (30,204)                                          |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Earnings before taxes                                                            |   |          176,041                                           |   |           (114,668)                                               |   |            61,373                                |
| Income and mining taxes (note d)                                                 |   |           (41,110)                                    |   |              11,887                                |   |          (29,223)                                          |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Net earnings from continuing operations                                          |   |          134,931                                           |   |           (102,781)                                               |   |            32,150                                |
| Earnings from discontinued operations, net of taxes                              |   |           42,023                                      |   |                    - |   |           42,023                                      |
| Net earnings                                                                     |   |          176,954                                           |   |           (102,781)                                               |   |            74,173                                |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Earnings per share from continuing operations                                    |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Basic                                                                            |   |               0.35                |   |                    - |   |               0.08                |
| Diluted                                                                          |   |               0.34                |   |                    - |   |               0.08                |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Earnings per share from discontinued operations                                  |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Basic                                                                            |   |                0.11          |   |                    - |   |                0.11          |
| Diluted                                                                          |   |                0.11          |   |                                                                                                                |   |                0.11          |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Earnings per share                                                               |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Basic                                                                            |   |               0.46                |   |                                                                                                                |   |               0.19                |
| Diluted                                                                          |   |               0.45                |   |                    - |   |               0.19                |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Weighted average number of shares outstanding                                    |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| (in thousands)                                                                   |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| Basic                                                                            |   |         390,883                                                 |   |                    - |   |         390,883                                                 |
| Diluted                                                                          |   |         395,233                                                 |   |                    - |   |         395,233                                                 |
|                                                                             |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| (i)   Stock option expense (a non-cash item included in corporate |   |                                                                                                    |   |                                                                                                                |   |                                                                                                    |
| administration) (note a)                                                         |   |              8,151                     |   |               6,050                           |   |            14,201                                |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   | 2009                                                                                                                                    |
|----------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|                                                                             |   | Canadian                                                                                                                                          |   |                                                                                                                                                                 |   |                                                                                                                                    |
|                                                                             |   | GAAP                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
|                                                                             |   |  As reported                                                                                                                                 |   |  Adjustments                                                                                                                                                    |   |  U.S. GAAP                                                                                                                         |
|                                                                             |   |  $                                                                                                                                           |   |                                                                                                                                                                 |   |  $                                                                                                                                 |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Revenues (note b)                                                                |   |               323,780                                                       |   |                        (825)                      |   |               322,955                                             |
| Operating expenses (note b)                                                      |   |               (176,491)                                                     |   |                         358                  |   |               (176,133)                                           |
| Depreciation and depletion (note b)                                              |   |                (58,668)                                                |   |                            61 |   |                (58,607)                                      |
| Earnings from mine operations                                                    |   |                  88,621                                      |   |                        (406)                      |   |                  88,215                            |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Corporate administration (note a)                                                |   |                (24,689)                                                |   |                      4,929                                  |   |                (19,760)                                      |
| Business combination transaction costs                                           |   |                  (6,583)                                     |   |                            -  |   |                  (6,583)                           |
| Exploration                                                                      |   |                  (6,412)                                     |   |                            -  |   |                  (6,412)                           |
| Goodwill impairment charge                                                       |   |              (192,099)                                                           |   |                            -  |   |              (192,099)                                                 |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Loss from operations                                                             |   |                (141,162)                                               |   |                      4,523                                  |   |              (136,639)                                                 |
| Other income (expense)                                                           |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Realized and unrealized gain on gold contracts                                   |   |                     8,161                     |   |                            -  |   |                     8,161           |
| Realized and unrealized gain on fuel contracts                                   |   |                      797                 |   |                            -  |   |                      797       |
| Realized and unrealized gain on investments                                      |   |                       351           |   |                            -  |   |                       351 |
| Unrealized loss on equity-linked instruments (notes (a) and (d))                 |   |                         - |   |                   (10,643)                                                 |   |                (10,643)                                      |
| Interest and other income                                                        |   |                    4,158                           |   |                            -  |   |                    4,158                 |
| Gain on redemption of long-term debt                                             |   |                  14,236                                      |   |                            -  |   |                  14,236                            |
| Interest and finance fees                                                        |   |                  (1,435)                                     |   |                            -  |   |                  (1,435)                           |
| Other expense                                                                    |   |                     (967)                     |   |                                                                                                                                                                 |   |                     (967)           |
| Loss on foreign exchange (notes (a), (d) and (h))                                |   |                (52,667)                                                |   |                     (8,896)                                      |   |                (61,563)                                      |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Loss before taxes                                                                |   |              (168,528)                                                           |   |                    (15,016)                                           |   |              (183,544)                                                 |
| Income and mining taxes (notes (b) and (h))                                      |   |                (14,906)                                                |   |                      4,750                                  |   |                 (10,156)                                |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Net loss from continuing operations                                              |   |              (183,434)                                                           |   |                   (10,266)                                                 |   |              (193,700)                                                 |
| Loss from discontinued operations, net of taxes                                  |   |                (10,882)                                                |   |                            -  |   |                (10,882)                                      |
| Net loss                                                                         |   |               (194,316)                                                     |   |                   (10,266)                                                 |   |              (204,582)                                                 |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Loss per share from continuing operations                                        |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Basic and diluted                                                                |   |                    (0.60)                          |   |                            -  |   |                    (0.63)                |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Loss per share from discontinued operations, net of taxes                        |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Basic and diluted                                                                |   |                    (0.04)                          |   |                            -  |   |                    (0.04)                |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Loss per share                                                                   |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Basic and diluted                                                                |   |                    (0.64)                          |   |                            -  |   |                    (0.67)                |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Weighted average number of shares outstanding                                    |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| (in thousands)                                                                   |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| Basic                                                                            |   |               306,288                                                       |   |                            -  |   |               306,288                                             |
| Diluted                                                                          |   |               306,288                                                       |   |                            -  |   |               306,288                                             |
|                                                                             |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| (i)   Stock option expense (a non-cash item included in corporate |   |                                                                                                                                              |   |                                                                                                                                                                 |   |                                                                                                                                    |
| administration) (note a)                                                         |   |                    6,621                           |   |                     (4,929)                                      |   |                    1,692                 |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|                                                  |   |                                                                                            |   |                                                                                                                            |   | 2010                                                                                            |
|-------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|
|                                                  |   | Canadian                                                                                        |   |                                                                                                                            |   |                                                                                            |
|                                                  |   | GAAP                                                                                            |   |                                                                                                                            |   |                                                                                            |
|                                                  |   |  As reported                                                                               |   |  Adjustments                                                                                                               |   |  U.S. GAAP                                                                                 |
|                                                  |   |  $                                                                                         |   |                                                                                                                            |   |  $                                                                                         |
|                                                  |   |                                                                                            |   |                                                                                                                            |   |                                                                                            |
| Net earnings                                          |   |           176,954                             |   |            (102,781)                                                     |   |             74,173                  |
|                                                  |   |                                                                                            |   |                                                                                                                            |   |                                                                                            |
| Other comprehensive income (loss)                     |   |                                                                                            |   |                                                                                                                            |   |                                                                                            |
| Unrealized losses on mark-to-market of gold contracts |   |            (85,849)                      |   |                      - |   |            (85,849)                      |
| Realized losses on mark-to-market of gold contracts   |   |             20,035                  |   |                      - |   |             20,035                  |
| Unrealized losses on mark-to-market of fuel contracts |   |                (366) |   |                      - |   |                (366) |
| Future income tax                                     |   |             27,572                  |   |                      - |   |             27,572                  |
| Total other comprehensive loss                        |   |            (38,608)                      |   |                      - |   |            (38,608)                      |
| Total comprehensive income                            |   |           138,346                             |   |            (102,781)                                                     |   |             35,565                  |

|                                                  |   |                                                                                                |   |                                                                                                                            |   | 2009                                                                                                |
|-------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|
|                                                  |   | Canadian                                                                                            |   |                                                                                                                            |   |                                                                                                |
|                                                  |   | GAAP                                                                                                |   |                                                                                                                            |   |                                                                                                |
|                                                  |   |  As reported                                                                                   |   |  Adjustments                                                                                                               |   |  U.S. GAAP                                                                                     |
|                                                  |   |  $                                                                                             |   |                                                                                                                            |   |  $                                                                                             |
|                                                  |   |                                                                                                |   |                                                                                                                            |   |                                                                                                |
| Net loss                                              |   |          (194,316)                                     |   |              (10,266)                                          |   |          (204,582)                                     |
|                                                  |   |                                                                                                |   |                                                                                                                            |   |                                                                                                |
| Other comprehensive income (loss)                     |   |                                                                                                |   |                                                                                                                            |   |                                                                                                |
| Unrealized losses on mark-to-market of gold contracts |   |            (49,101)                          |   |                      - |   |            (49,101)                          |
| Realized losses on mark-to-market of gold contracts   |   |              3,403                 |   |                      - |   |              3,403                 |
| Unrealized gains on mark-to-market of fuel contracts  |   |                 189 |   |                      - |   |                 189 |
| Future income tax                                     |   |             17,870                      |   |                      - |   |             17,870                      |
| Total other comprehensive loss                        |   |            (27,639)                          |   |                      - |   |            (27,639)                          |
| Total comprehensive loss                              |   |          (221,955)                                     |   |              (10,266)                                          |   |          (232,221)                                     |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|                                                                 |   |                                                                                              |   |                                                                                                           |   | 2010                                                                                              |
|----------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|
|                                                                 |   | Canadian                                                                                          |   |                                                                                                           |   |                                                                                              |
|                                                                 |   | GAAP                                                                                              |   |                                                                                                           |   |                                                                                              |
|                                                                 |   |  As reported                                                                                 |   |  Adjustments                                                                                              |   |  U.S. GAAP                                                                                   |
|                                                                 |   |  $                                                                                           |   |                                                                                                           |   |  $                                                                                           |
|                                                                 |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Assets                                                               |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Current assets                                                       |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Cash and cash equivalents                                            |   |         490,754                                           |   |                   -  |   |         490,754                                           |
| Accounts receivable                                                  |   |           11,929                                |   |                   -  |   |           11,929                                |
| Inventories                                                          |   |         106,325                                           |   |                   -  |   |         106,325                                           |
| Future income and mining taxes                                       |   |             9,127                     |   |                   -  |   |             9,127                     |
| Prepaid expenses and other                                           |   |            7,325                           |   |                   -  |   |            7,325                           |
| Total current assets                                                 |   |         625,460                                           |   |                   -  |   |         625,460                                           |
|                                                                 |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Investments                                                          |   |            7,533                           |   |                   -  |   |            7,533                           |
| Mining interests (note g)                                            |   |      2,073,695                                                           |   |             (6,647)                                |   |      2,067,048                                                           |
| Future income tax asset                                              |   |               931           |   |                   -  |   |               931           |
| Reclamation deposits and other (note f)                              |   |           31,295                                |   |             (7,679)                                |   |           23,616                                |
| Total assets                                                         |   |      2,738,914                                                           |   |           (14,326)                                           |   |      2,724,588                                                           |
|                                                                 |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Liabilities                                                          |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Current liabilities                                                  |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Accounts payable and accrued liabilities                             |   |          66,654                                      |   |                   -  |   |          66,654                                      |
| Current portion of derivative liabilities                            |   |          40,072                                      |   |                   -  |   |          40,072                                      |
| Income and mining taxes payable                                      |   |          33,983                                      |   |                   -  |   |          33,983                                      |
| Total current liabilities                                            |   |         140,709                                           |   |                   -  |   |         140,709                                           |
|                                                                 |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Reclamation and closure cost obligations                             |   |           25,721                                |   |                   -  |   |           25,721                                |
| Mark-to-market loss on gold contracts                                |   |          113,303                                     |   |                   -  |   |          113,303                                     |
| Mark-to-market loss on equity-linked instruments (notes (a) and (d)) |   |                 - |   |           134,942                                            |   |         134,942                                           |
| Future income and mining taxes (note d)                              |   |         280,026                                           |   |                   26 |   |         280,052                                           |
| Long-term debt (note g)                                              |   |         229,884                                           |   |             15,527                                 |   |          245,411                                     |
| Deferred benefit                                                     |   |          46,276                                      |   |                   -  |   |          46,276                                      |
| Employee benefits and other                                          |   |            9,804                           |   |                   -  |   |            9,804                           |
| Total liabilities                                                    |   |         845,723                                           |   |           150,495                                            |   |         996,218                                           |
|                                                                 |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Shareholders' equity                                                 |   |                                                                                              |   |                                                                                                           |   |                                                                                              |
| Common shares (note a)                                               |   |       1,846,712                                                     |   |             (2,256)                                |   |      1,844,456                                                           |
| Contributed surplus / paid in capital (note a)                       |   |          82,787                                      |   |                (815)                |   |           81,972                                |
| Share purchase warrants (note d)                                     |   |         138,806                                           |   |          (138,806)                                                |   |                 - |
| Equity component of convertible debentures (note g)                  |   |           21,604                                |   |           (21,604)                                           |   |                 - |
| Accumulated other comprehensive loss                                 |   |         (67,813)                                          |   |                   -  |   |         (67,813)                                          |
| Deficit                                                              |   |        (128,905)                                               |   |             (1,340)                                |   |        (130,245)                                               |
|                                                                 |   |        (196,718)                                               |   |             (1,340)                                |   |        (198,058)                                               |
| Total shareholders' equity                                           |   |       1,893,191                                                     |   |          (164,821)                                                |   |      1,728,370                                                           |
| Total liabilities and shareholders' equity                           |   |      2,738,914                                                           |   |           (14,326)                                           |   |      2,724,588                                                           |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|                                                                 |   |                                                                                                                                        |   |                                                                                                                                                          |   | 2009                                                                                                                                        |
|----------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                 |   | Canadian                                                                                                                                    |   |                                                                                                                                                          |   |                                                                                                                                        |
|                                                                 |   | GAAP                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
|                                                                 |   |  As reported                                                                                                                           |   |  Adjustments                                                                                                                                             |   |  U.S. GAAP                                                                                                                             |
|                                                                 |   |  $                                                                                                                                     |   |                                                                                                                                                          |   |  $                                                                                                                                     |
|                                                                 |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Assets                                                               |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Current assets                                                       |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Cash and cash equivalents                                            |   |              262,325                                                       |   |                           - |   |              262,325                                                       |
| Restricted cash                                                      |   |                   9,201                           |   |                           - |   |                   9,201                           |
| Accounts receivable                                                  |   |                 10,345                                      |   |                           - |   |                 10,345                                      |
| Inventories (note b)                                                 |   |                86,299                                            |   |                       (185)                     |   |                  86,114                                |
| Future income and mining taxes                                       |   |                  8,848                                 |   |                           - |   |                  8,848                                 |
| Current portion of mark-to-market gain on fuel contracts             |   |                     706                 |   |                           - |   |                     706                 |
| Prepaid expenses and other                                           |   |                  6,933                                 |   |                           - |   |                  6,933                                 |
| Current assets of operations held for sale                           |   |                 10,298                                      |   |                           - |   |                 10,298                                      |
| Total current assets                                                 |   |              394,955                                                       |   |                       (185)                     |   |              394,770                                                       |
|                                                                 |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Investments                                                          |   |                45,890                                            |   |                           - |   |                45,890                                            |
| Mining interests (notes (b), (g) and (h))                            |   |           2,000,438                                                                       |   |                   (3,909)                                           |   |            1,996,529                                                                 |
| Future income tax asset                                              |   |                  2,250                                 |   |                           - |   |                  2,250                                 |
| Reclamation deposits and other                                       |   |                 17,646                                      |   |                           - |   |                 17,646                                      |
| Assets of operations held for sale                                   |   |                27,080                                            |   |                           - |   |                27,080                                            |
| Total assets                                                         |   |           2,488,259                                                                       |   |                   (4,094)                                           |   |            2,484,165                                                                 |
|                                                                 |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Liabilities                                                          |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Current liabilities                                                  |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Accounts payable and accrued liabilities                             |   |                36,033                                            |   |                           - |   |                36,033                                            |
| Current portion of long-term debt                                    |   |                 12,088                                      |   |                           - |   |                 12,088                                      |
| Current portion of mark-to-market loss on gold contracts             |   |                 19,206                                      |   |                           - |   |                 19,206                                      |
| Income and mining taxes payable                                      |   |                 15,677                                      |   |                           - |   |                 15,677                                      |
| Current liabilities of operations held for sale                      |   |                  10,414                                |   |                           - |   |                  10,414                                |
| Total current liabilities                                            |   |                 93,418                                      |   |                           - |   |                 93,418                                      |
|                                                                 |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Reclamation and closure cost obligations                             |   |                 19,889                                      |   |                           - |   |                 19,889                                      |
| Mark-to-market loss on gold contracts                                |   |                76,780                                            |   |                           - |   |                76,780                                            |
| Mark-to-market loss on equity-linked instruments (notes (a) and (d)) |   |                        - |   |                   33,375                                            |   |                33,375                                            |
| Future income and mining taxes (notes (b) and (h))                   |   |               316,426                                                 |   |                     11,791                                |   |               328,217                                                 |
| Long-term debt (notes (g) and (h))                                   |   |              225,456                                                       |   |                    17,400                                      |   |              242,856                                                       |
| Employee benefits and other                                          |   |                  5,355                                 |   |                           - |   |                  5,355                                 |
| Liabilities of operations held for sale                              |   |                 19,890                                      |   |                           - |   |                 19,890                                      |
| Total liabilities                                                    |   |               757,214                                                 |   |                   62,566                                            |   |               819,780                                                 |
|                                                                 |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Shareholders' equity                                                 |   |                                                                                                                                        |   |                                                                                                                                                          |   |                                                                                                                                        |
| Common shares (note a)                                               |   |             1,810,865                                                           |   |                      (560)                           |   |             1,810,305                                                           |
| Contributed surplus / paid in capital (note a)                       |   |                82,984                                            |   |                   (5,887)                                           |   |                77,097                                            |
| Share purchase warrants (note d)                                     |   |               150,656                                                 |   |                (138,806)                                                           |   |                  11,850                                |
| Equity component of convertible debentures (notes (g) and (h)        |   |                 21,604                                      |   |                  (21,604)                                                |   |                        - |
| Accumulated other comprehensive loss                                 |   |               (29,205)                                                |   |                           - |   |               (29,205)                                                |
| Deficit                                                              |   |             (305,859)                                                           |   |                  100,197                                                 |   |             (205,662)                                                           |
|                                                                 |   |             (335,064)                                                           |   |                  100,197                                                 |   |             (234,867)                                                           |
| Total shareholders' equity                                           |   |             1,731,045                                                           |   |                 (66,660)                                                      |   |            1,664,385                                                                 |
| Total liabilities and shareholders' equity                           |   |           2,488,259                                                                       |   |                   (4,094)                                           |   |            2,484,165                                                                 |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|                                                  |   |                                                                                                          |   |                                                                                                                            |   | 2010                                                                                                          |
|-------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|
|                                                  |   | Canadian                                                                                                      |   |                                                                                                                            |   |                                                                                                          |
|                                                  |   | GAAP                                                                                                          |   |                                                                                                                            |   |                                                                                                          |
|                                                  |   |  As reported                                                                                             |   |  Adjustments                                                                                                               |   |  U.S. GAAP                                                                                               |
|                                                  |   |  $                                                                                                       |   |                                                                                                                            |   |  $                                                                                                       |
|                                                  |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                          |
| Operating activities from continuing operations       |   |           182,260                                           |   |                      - |   |           182,260                                           |
| Operating activities from discontinued operations     |   |             (1,696)                               |   |                      - |   |             (1,696)                               |
| Investing activities from continuing operations       |   |          (451,363)                                               |   |                      - |   |          (451,363)                                               |
| Investing activities from discontinued operations     |   |             34,410                                |   |                      - |   |             34,410                                |
| Financing activities from continuing operations       |   |           447,189                                           |   |                      - |   |           447,189                                           |
| Financing activities from discontinued operations     |   |                   - |   |                      - |   |                   - |
| Effect of exchange rates on cash and cash equivalents |   |             16,803                                |   |                      - |   |             16,803                                |
| Increase in cash and cash equivalents                 |   |           227,603                                           |   |                      - |   |           227,603                                           |
|                                                  |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                          |
|                                                  |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                          |
| Comprised of                                          |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                          |
| Cash and cash equivalents of continuing operations    |   |           490,754                                           |   |                      - |   |           490,754                                           |

|                                                  |   |                                                                                                |   |                                                                                                                            |   | 2009                                                                                                |
|-------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|
|                                                  |   | Canadian                                                                                            |   |                                                                                                                            |   |                                                                                                |
|                                                  |   | GAAP                                                                                                |   |                                                                                                                            |   |                                                                                                |
|                                                  |   |  As reported                                                                                   |   |  Adjustments                                                                                                               |   |  U.S. GAAP                                                                                     |
|                                                  |   |  $                                                                                             |   |                                                                                                                            |   |  $                                                                                             |
|                                                  |   |                                                                                                |   |                                                                                                                            |   |                                                                                                |
| Operating activities from continuing operations       |   |             78,981                      |   |                  (282)                     |   |             78,699                      |
| Operating activities from discontinued operations     |   |              5,576                 |   |                      - |   |              5,576                 |
| Investing activities from continuing operations       |   |            (52,683)                          |   |                   282                 |   |            (52,401)                          |
| Investing activities from discontinued operations     |   |             (1,405)                     |   |                      - |   |             (1,405)                     |
| Financing activities from continuing operations       |   |             40,034                      |   |                      - |   |             40,034                      |
| Financing activities from discontinued operations     |   |             (7,000)                     |   |                      - |   |             (7,000)                     |
| Effect of exchange rates on cash and cash equivalents |   |             13,980                      |   |                      - |   |             13,980                      |
| Increase in cash and cash equivalents                 |   |             77,483                      |   |                      - |   |             77,483                      |
|                                                  |   |                                                                                                |   |                                                                                                                            |   |                                                                                                |
|                                                  |   |                                                                                                |   |                                                                                                                            |   |                                                                                                |
| Comprised of                                          |   |                                                                                                |   |                                                                                                                            |   |                                                                                                |
| Cash and cash equivalents of continuing operations    |   |           262,325                                 |   |                      - |   |           262,325                                 |
| Cash and cash equivalents of discontinued operations  |   |                 826 |   |                      - |   |                 826 |
|                                                  |   |           263,151                                 |   |                      - |   |           263,151                                 |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|                                                 | 2010   | 2009                                                  |
|------------------------------------------------------|--------|-------------------------------------------------------|
|                                                 | $      | $                                                     |
|                                                 |   |                                                  |
| Balance at January 1                                 | 4,191  |         2,701 |
| Additions for tax positions taken during prior years | 1,160  | 1,490                                                 |
| Balance at December 31                               | 5,351  | 4,191                                                 |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|                     |   | 2010                                                                                                                      |   | 2009                                                                                  |
|--------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|
|                     |   | $                                                                                                                         |   | $                                                                                     |
|                     |   |                                                                                                                      |   |                                                                                  |
| Australia                |   |                                                                                                                      |   |                                                                                  |
| Deferred tax assets      |   |                     - |   |               - |
| Deferred tax liabilities |   |          (33,477)                                                            |   |    (25,712)                                                            |
|                     |   |          (33,477)                                                            |   |    (25,712)                                                            |
| Canada                   |   |                                                                                                                      |   |                                                                                  |
| Deferred tax assets      |   |            12,767                                                  |   |        9,661                                       |
| Deferred tax liabilities |   |          (79,847)                                                            |   |    (99,156)                                                            |
|                     |   |          (67,080)                                                            |   |    (89,495)                                                            |
| Chile                    |   |                                                                                                                      |   |                                                                                  |
| Deferred tax assets      |   |              8,730                                       |   |               - |
| Deferred tax liabilities |   |                     - |   |               - |
|                     |   |              8,730                                       |   |               - |
| Mexico                   |   |                                                                                                                      |   |                                                                                  |
| Deferred tax assets      |   |                     - |   |               - |
| Deferred tax liabilities |   |        (156,195)                                                                       |   |  (163,668)                                                                       |
|                     |   |        (156,195)                                                                       |   |  (163,668)                                                                       |
| United States            |   |                                                                                                                      |   |                                                                                  |
| Deferred tax assets      |   |            63,487                                                  |   |      30,459                                                  |
| Deferred tax liabilities |   |          (85,459)                                                            |   |    (68,703)                                                            |
|                     |   |          (21,972)                                                            |   |    (38,244)                                                            |
|                     |   |        (269,994)                                                                       |   |  (317,119)                                                                       |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|                                          |   |                    2009   |
|-----------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------|
|                                          |   |  $                                                                                                                  |
|                                          |   |                                                                                                                     |
| Revenues                                      |   |               364,453                              |
| Income (loss) from continuing operations      |   |              (223,663)                                  |
| Net income (loss)                             |   |              (234,545)                                  |
|                                          |   |                                                                                                                     |
| Basic and diluted earnings per share          |   |                                                                                                                     |
| Income (loss) from continuing operations      |   |                    (0.61) |
| Net income (loss)                             |   |                    (0.64) |
|                                          |   |                                                                                                                     |
| Weighted average number of shares outstanding |   |                                                                                                                     |
| Basic                                         |   |               365,786                              |
| Diluted                                       |   |               365,786                              |

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

|   | • | power to direct the activities of a VIE that most significantly impact the entity’s economic performance; and, |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | • | an obligation to absorb losses or receive benefits from the entity that could potentially be significant to the VIE. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

----

|   |
|--------|

| 24. | Differences between generally accepted accounting principles in Canada and the United States (continued) |
|-----|----------------------------------------------------------------------------------------------------------|

----

----