Message To Shareholders

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2 Message To Shareholders To the Shareholders of Premier Gold Mines Limited I have had the pleasure of working with Ewan and the rest of the Premier Gold team since the Company s inception in I am honoured to write you my first letter as Executive Chairman of Premier. Navigating through uncertain times The mining industry has recently been through some tumultuous and volatile times. The erosion in the price of gold over the last several years has resulted in operating and exploration companies having to make drastic decisions to stay profitable and relevant. We have also seen some companies completely vanish through mergers and acquisitions or cease being going concerns. In an environment challenged to raise investment dollars, your company remained able to secure capital to continue to advance its projects, including through the joint venture of the Trans-Canada property. Leveraging the funds received from this transaction, we were able to secure a near-term producing asset in Nevada operated by a technical group with decades of experience in the camp. First gold production Active Governance One of the key roles of your Board is to ensure adherence to the Company s strategy and plan for future growth. As such, each year the board visits a project site first-hand to see its progress. The Board meets, reviews and plans with our dynamic and dedicated management teams to help drive value to you, our shareholders. In 2014, we visited the Trans-Canada Project and in 2015 our Nevada operations. At both projects we were met with professionalism, strategy and focus of how to forward each respective property as well as an infectious enthusiasm for their work. In 2016, we plan to visit our Red Lake properties where I am looking forward to visiting your company s largest planned exploration program this year. Confidence Moving Forward During 2015, Premier saw some changes at the Board level. Frist, our former Chairman, Ebe Scherkus, retired after being instrumental in the transition of our Trans-Canada Property from an exploration asset into a development story. Secondly, Ron Little, joined Premier s Board of Directors. Ron brings to Premier a strong history in corporate development, mine development and project finance experience and will be a key person for Premier as it continues its transition into a producing entity. Your company, with Ewan at the helm, and a skilled management team along-side has put itself in the enviable position of maintaining a healthy balance sheet and has remained active at all of its five core exploration and development projects. With the Company s first gold pour expected to occur this year, Premier is in the process of transforming into a producing gold company with an exciting pipeline of projects that could become our next mines. This success would not be possible without the dedication of the people that work in it. To that end, I would like to thank our incredible team for their extraordinary efforts to execute the Company s plans and strategy. Their passion for this business and determination is the cornerstone of our success. The Premier Board of Directors is proud of our team and believe that you the shareholder have placed your investment in good hands. John Begeman Executive Chairman May 18, 2016

3 Set a Strategy.. Execute! A phrase that was passed along to me by one of our shareholders and now epitomizes what we strive to achieve at Premier. Three years ago we implemented a five-year plan to transition Premier from an explorer/developer into a producer. The goal was not to be solely a single-asset producer, but a mid-tier company with a pipeline of advanced projects in favourable mining jurisdictions. Recognizing the difficult capital market conditions and the cyclical nature of the sector, our strategy is to always remain open to partnerships to mitigate risks, increase our odds and open doors to other opportunities. This strategy will continue to be an important part of the Company s success. Too few recognize the value of Partnerships; at Premier, we embrace them! Although 2015 was a challenging year for the mining sector, Premier had one of its most successful years that included corporate and project transactions that led to a stronger treasury and share price performance relative to its peers. By ensuring a strong treasury, the Company was able to pursue growth and production opportunities while maintaining a significant exploration platform. Early in the year, Premier entered into a 50/50 partnership with Centerra Gold Inc. for the development of the Hardrock Project at Trans-Canada through subsidiary company, Greenstone Gold Mines. The partnership bolstered the corporation s balance sheet and reduced the risk to develop the multi-million ounce deposit with a strong partner that has both mining and financial bench strength. The South Arturo transaction is equally significant, as it will transform the Company into a producer and has added another strong partner in Barrick Gold Corporation. Located in the heart of the Carlin Trend, one of the world s most productive gold districts, South Arturo will be the Company s first producing asset as gold production ramps up in Exploration our past, our future, our strength Bolstering the Company s exploration pipeline, we completed a land swap with Goldcorp Inc. in order to hold a 100% ownership in the highly prospective Hasaga Property in Red Lake. Early indications from drilling suggest the potential for both open pit and underground style mineralization. In just over a year, we will have completed close to 100,000 metres of drilling and expect to complete a maiden resource estimate in the second half of This kind of success is what led us to acquire some adjacent ground from Pure Gold in order to solidify and strong land position in the district. As part of our Rahill-Bonanza joint venture with Goldcorp (56%), the 2015 underground drilling program resulted in the discovery of a favourable geological environment including gold mineralization similar to that at the Red Lake Gold Mines Complex located immediately to the east. This discovery is located only 200 metres south of the haulage drift and will remain the focus of the 2016 drilling program. The McCoy-Cove project in Nevada continues to deliver positive drill results and remains a core project within Premier s portfolio. The numerous discoveries suggest a district-scale opportunity exists at McCoy-Cove along with significant upside. Management is focused on delineating a world-class gold deposit and plans to deliver a new resource estimate in With increasingly strong results from properties in districts know for hosting elephants, Premier will continue to build on its success and look for additional growth opportunities in Nevada. Our strategy for achieving long-term growth and returns remains unchanged: Maintain a strong treasury Establish an industry-best management team Consolidate key land packages in safe, accessible mining jurisdictions Establish a project portfolio that can deliver organic growth well into the future Leverage relationships with key industry players through partnership and collaboration On behalf of all shareholders, I would like to offer our sincere appreciation of the substantial input of Henry (Hank) Knowles, who will be departing Premier in Henry was Wolfden Resources Inc. s (Premier s predecessor) first director. Along with John Pollock, Hank has been a significant mentor and played a pivotal role in allowing me to build my career in the mining sector and public companies. Although it is with great sadness that you retire from our board, we can take pleasure in achieving a goal we set years ago; our first producing mine. Henry, I thank you along with our shareholders and stakeholders for your unwavering support. Lastly, I would like to acknowledge the impressive team of professionals I work with. With great effort, comes great success and this year, I expect nothing less than more of the same Ewan S. Downie President & Chief Executive Officer May 18,

4 A World of Opportunity for Today and Tomorrow Ontario Projects Our projects in Ontario underwent significant transformation in Premier s Made in Ontario accomplishments have allowed our company to look to the future from a position of strength and confidence. Trans-Canada Property (50% Premier) At Trans-Canada, Premier began 2015 by confirming it had reached an agreement with Centerra Gold Inc. to jointly develop the Hardrock Project. The agreement provided clarity as to how the project would be financed and also added some $96 million to Premier s treasury during the year. Activity at the project site included the final phase of delineation drilling required to ensure appropriate condemnation was conducted, and to ensure the resource estimate used in the Feasibility study was optimized. Permitting initiatives continue so that approvals for mine development can be acquired. The Trans-Canada Property has many advantages including its location in Canada, ease of access and proximity to infrastructure and services. We look forward to delivering on the Feasibility Study for the Hardrock deposit in Rahill-Bonanza Property (44% Premier) Late in 2014, a joint strategic review resulted in the establishment of a 3-year vision to ensure a more balanced approach to our exploration planning. This in part led to the joint venture intersecting strong exploration results that included grams per tonne (g/t) gold across 11.0 metres at the Fold Target area. Fundamentally, the opportunity for Premier at the RBJV is an option on what could be. The Red Lake camp surpassed an important milestone in 2015 when more than 30 million ounces in total district gold endowment was realized from production and exploration. During 2016, the Mine Trend alone will surpass more than 25 million ounces of historic gold production. Our belief in its future remains as strong as ever. Hasaga Property (100% Premier) In 2015, Premier embarked on an ongoing program to streamline property holdings in order to sharpen our focus on core project opportunities. An important step in this process was realized when it was announced that Premier had secured a 100% interest in the historic Hasaga Property in Red Lake by divesting itself of secondary assets in a non-cash property swap with Goldcorp Inc.. The Premier team views Hasaga today much the same as we viewed Hardrock in The Hasaga Property has historic gold production of some 650,000 ounces, but only saw intermittent exploration in the last 60 years. Interesting historic drilling completed in the late 1980 s and early 1990 s suggested mineralization on the property is still open at depth, and could be extensive near surface as well. Premier completed some 60,000 metres or more to test this model in 2015 and realized drill hole intercepts such as HLD004, which highlighted 0.94 g/t gold across metres, but also included higher grade internal intervals of up to 3.62 g/t gold across 31.0 metres. Interesting indeed! The Hasaga Property was expanded late in the year that would allow for the potential strike length of the Hasaga Porphyry target to increase significantly. We anticipate drilling more than 50,000 metres in 2016 with the expectation that we will have sufficient data to report an initial mineral resource estimate. Premier Gold Mines USA Nevada hosts some of the world s most endowed gold regions, and is a safe and accessible jurisdiction that complements our Ontario assets. When an opportunity to secure a 40% interest at South Arturo on the famed Carlin Trend presented itself, Premier moved quickly. The short and low risk path to production dovetailed well with advanced activities at Trans-Canada and McCoy-Cove, brought critical mass to our Nevada-based programs, and secured for the Company another premier joint venture partner in Barrick Gold. South Arturo Property (40% Premier) The cascading effect of good decision-making is highlighted by the South Arturo acquisition, which was made possible by the cash infusion following the Centerra Gold agreement at Trans-Canada. The purchase was made near the bottom of an historic cyclical downturn and contains plenty of upside in a strong gold price environment. South Arturo is technically de-risked, requires little new infrastructure to be built, and is operated by a strong operating team at Barrick. Most importantly, advancing South Arturo will strengthen our ability to meet our future obligations to the Trans-Canada Partnership in Ontario or our other exploration-based assets. During 2016, the Barrick team is continuing pre-stripping South Arturo, completing necessary infrastructure specific to the project, and conducting exploration and delineation drilling with the hope of confirming and/or making additional contributions to the mineral resources. The El Nino underground target provided exploration results that included highlights such as g/t gold across 27.4 metres in BD Initial production of 80,000 ounces of gold is anticipated to begin during the summer. 2

5 McCoy-Cove Property (100% Premier) Properties with true world class potential are rare, and finding them often requires patience and a longer term view. Premier s original purchase of the Cove Property in 2012 was based on the belief that its multi-million ounce gold and silver production history was only a window into the true potential of the property. This quote made last year by myself is a reflection of the confidence we have in the property and the team leading the exploration there. Much of the work planned at McCoy-Cove in 2016 will seek to validate this statement. Currently, we have drills actively testing the remaining potential of the original leach pads near the McCoy open pit and also targeting for extensions of the Helen Zone deposit at Cove. The implications of success east of the Helen Zone will be significant as the program is designed to confirm continuity between the Helen Zone and CSD mineralized horizons. In addition to demonstrating the potential to significantly expand mineralization, we are focussed on defining a path forward toward advanced exploration and hopefully one day..production. We view the Helen Zone / CSD area as having all the attributes of an underground opportunity in the making; grade, width, expansion potential, a best efforts processing agreement and an improving gold price. The first step will be an updated mineral resource statement late in 2016 or early in The McCoy-Cove property will surprise many in 2016, which of course will be no surprise to us. Realizing Opportunity (100% Premier s Focus) At Premier Gold, we continue to define what A World of Opportunity really means to our shareholders, employees and community stakeholders. Our business model leads to exploration discoveries, while reducing shareholder exposure to risk, by focusing on: Proven Management, Accessible Districts, Safe Jurisdictions and Sensible Partnerships. This is always our focus. During 2015, we took significant steps to better communicate our message. Our updated website includes detailed information about our business and community partnerships. We have streamlined our project areas with only the most relevant content, and created a C-Suite Blog that provides additional insight to our press releases with commentaries by our CEO, Vice-Presidents and senior project personnel. It s fresh, colourful and definitely worth a look. Optimism is finally returning to our sector.it has never left Premier Gold. Stephen McGibbon Executive Vice-President, Corporate & Project Development May 18, 2016 Financial Strength & Stability 2015 was a year of significant change for Premier. It was a year where striking a balance between growth and financial stability would prove challenging. At Premier we know that to overcome challenge you must play to your strengths. And we know that relationships are a strength; a competitive advantage that can set you apart from your peers. During 2015 we drew upon that strength. Through our relationships we accessed opportunities that may have otherwise been unavailable. We leveraged those relationships to build our balance sheet, fund existing projects, and add key assets to our portfolio. Through those relationships we became a stronger company. With five active projects and a solid balance sheet we are well on our way toward realizing our 5year plan, and therefore well on our way toward becoming the multi-asset producer that we aspire to be. As your management we will continue to strive for balance between growth and stability. We will continue to play to our strengths and in doing so will drive each of our projects forward and create yet another year of unprecedented growth for Premier. Steve Filipovic Chief Financial Officer May 18,

6 CORPORATE SCORECARD Catalysts for Growth and What we Have Delivered 50/50 partnership with Centerra Gold Inc for the development of Hardrock Project at Trans- Canada for $85M cash and the first $185M to be spent on the project Hardrock resource contingency payment of $11M received Completed land swap with Goldcorp Inc. resulting Premier holding 100% of the Hasaga Property Entered into and agreement to acquire Goldcorp s 40% interest in the South Arturo Project Commenced development of South Arturo Ongoing exploration results from the McCoy-Cove and Hasaga Gold Projects Initial production from South Arturo Hardrock Feasibility Study to be released Submission of Federal and Provincial Environmental Assessments for the development of the Hardrock Deposit. Initial Mineral Resource Estimate at Hasaga Exploration results from McCoy- Cove to be included in a mineral resource estimate early 2017 Underground exploration results from the Rahill-Bonanza Joint venture Continue to optimize asset portfolio, through sale of noncore assets and evaluating potential opportunities to position the Company for longterm focused growth 4

7 Management s Discussion & Analysis Management s Discussion XX & Analysis 7 Financial Statements XX Financial Statements 25 Auditors Report XX Auditors Report 26 Notes to Financial Statements XX Notes to Financial Statements 31 Corporate Directory Corporate Directory XX 73

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9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2015 The following Management's Discussion and Analysis ( MD&A ) of Premier Gold Mines Limited (the Corporation or Premier ) should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2015 and 2014 and the notes thereto. The Corporation s audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). Unless otherwise stated, all amounts discussed herein are denominated in Canadian dollars. This MD&A was prepared as of March 28, 2016 and all information is current as of such date. Readers are encouraged to read the Corporation s public information filings on SEDAR at This discussion provides management's analysis of Premier s historical financial and operating results and provides estimates of Premier s future financial and operating performance based on information currently available. Actual results will vary from estimates and the variances may be significant. Readers should be aware that historical results are not necessarily indicative of future performance. Cautionary Statement on Forward-Looking Statements Certain information set forth in this MD&A, including management's assessment of the Corporation's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation s control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of resource estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be inaccurate and, as such, reliance should not be placed on forward-looking statements. Premier s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, if any, that Premier will derive there from. Premier disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law. Company Overview Premier is a Canadian-based mineral exploration company, focused on exploring for and developing gold deposits within Canada and the United States of America. Premier has a diverse portfolio of advanced-stage gold exploration properties located in Northwestern Ontario - Canada and Nevada - USA. Canada In Canada, Premier has properties in two districts; and the Beardmore-Geraldton Greenstone Belt and the Red Lake Mining District. Beardmore-Geraldton Greenstone Belt This highly prospective high-grade gold district boasts more than 4.1 Million ounces of historic gold production that, prior to Premier s sustained exploration and development focus, had seen relatively little exploration over the past several decades. The Hardrock and Brookbank Projects are located in the heart of this district, host to several past-producing mines and covering some of the most strategic ground in the region. Since late 2007, Premier has completed in excess of 650,000 metres of diamond drilling at the property, which concluded with NI mineral resource estimate reports being completed on four deposits. In early 2014, 1 Page 7

10 Preliminary Economic Assessments (PEA) were completed at Hardrock and Brookbank with continuing progress towards feasibility during Greenstone Gold Property, Northwestern Ontario On March 9, 2015 Centerra Gold Inc. ( Centerra ) and Premier announced the formation of a 50/50 partnership (TCP GP Corporation and TCP Limited Partnership) for the purpose of the joint ownership, exploration and development of the Trans-Canada Property including the Hardrock Gold Project located in the Geraldton- Beardmore Greenstone belt in Ontario, Canada. On July 20, 2015, the Board of the general managing partner (TCP GP Corporation) approved a name change of the corporation and the partnership (TCP Limited Partnership) to Greenstone Gold Mines GP Inc. and Greenstone Gold Mines LP respectively, collectively to be referred to as Greenstone Gold Mines Greenstone Gold. Premier, through a wholly-owned subsidiary, contributed all property, assets and rights it held in respect of the Greenstone Gold Property to the partnership and Centerra: (i) in return for a 50% limited partnership interest, has made an initial cash contribution to the partnership in the amount of $85 million (Premier withdrew $85 million from the partnership in return for its contribution); and (ii) has agreed to make capital contributions to the partnership in the aggregate amount of $185 million to be used to complete a comprehensive technical and economic feasibility study including an updated mineral resource calculation for the Hardrock Project at the Greenstone Gold Property and for further development of the project. The $185 million is subject to the satisfaction of certain feasibility study results and project advancement criteria. As part of the transaction Centerra agreed to make an additional contingent payment to Premier not to exceed $30 million based on the results of an updated mineral resource study in respect of the Greenstone Gold Property which was settled at $19 million in the third quarter. Centerra and Premier have formed a joint board of directors to oversee future exploration, development and operations by the partnership at the Greenstone Gold Property. Red Lake Mining District World renowned for high-grade gold, the mines of Red Lake Mining District have produced tens of millions of ounces of gold, making it one of the world s most prolific gold districts. In the heart of the district lies Goldcorp s Red Lake Gold Mine (RLGM), considered to be one of the highest grade producing gold mines in the world. Premier s flagship project in Red Lake is the Rahill-Bonanza Property (44% Premier) located immediately adjacent to, and along strike from, Goldcorp s RLGM complex and is a joint venture with Goldcorp Inc. s affiliate, Red Lake Gold Mine. The Rahill-Bonanza joint venture includes the Broulan Reef Property purchased by Premier in 2013, which is immediately adjacent to Goldcorp s Bruce Channel deposit and Cochenour Mine complex. Early in 2015, Premier entered into a property swap agreement with Goldcorp that saw Premier transfer to Goldcorp its 35% interest in the East Bay Property as well as its 100% interest in the PQ North property. Premier retains a 2% NSR in the PQ North Property. In return, Premier received from Goldcorp, a 100% interest in the Hasaga Property in Red Lake. This non-financial transaction helps streamline Premier s property interests in the district and puts greater control over exploration in the Company s hands. Hasaga was last explored in 1996 and has a production history which (when combined with the Howey Mine) exceeds 650,000 ounces of gold. United States of America In the United States of America, Premier is focused on its McCoy-Cove Property as well as the recently acquired South Arturo Property in the Eureka-Battle Mountain Trend in Nevada, where ongoing exploration and development activities are focused on advancing both open pit and underground deposit opportunities. Early in Q2, Premier announced that it had entered into an agreement to purchase from Goldcorp Inc. its 40% interest in the South Arturo property located 5 kilometres northwest of Barrick Gold s Goldstrike Mine. Barrick Gold is the 60% joint venture partner and operator of the joint venture and the deal was completed on June 2, The acquisition provided key benefits to Premier including: 8 2 Page

11 Reasonable gold purchase price for total resource ounces being acquired at South Arturo. The Phase 2 open pit mine project is fully-permitted and in construction. Upside could be realized through further exploration drilling for potential underground resources. Meets Premier's criteria of establishing an exploration and development project portfolio within world class districts and safe mining jurisdictions. The partnership model has been an important part of Premier's past and recent successes. Premier continues to evaluate other high quality Americas based gold projects in proven pro mining districts with the belief that A World of Opportunity lies before it. Premier believes that an aggressive exploration strategy complimented by mine operating and building capability will repeatedly reward our shareholders. Results of Operations Development South Arturo Property, Nevada, USA Premier closed its acquisition of the South Arturo Property on June 2, Pursuant to the terms of the acquisition, Premier has paid US$20 million, has transferred to Goldcorp a 5% interest in the Rahill-Bonanza Joint Venture in Red Lake and has granted Goldcorp a right of first refusal for a period of three years on any proposed sale or joint venture transaction by Premier of the McCoy-Cove project located in Nevada. In connection with the acquisition, Premier also reimbursed Goldcorp $16.6 million USD for costs and contributions paid by Goldcorp with respect to the South Arturo mine project since March 16, In addition, Goldcorp has contributed $12.5 million to Premier in a financing that was completed in June. Current work included a capitalized pre-stripping program of some 43.5 million tons versus a budget of 60.7 million tons. Initial gold production is expected to ramp up by mid-2016, with an approximate 50% increase in overall ore tons to 1.7M tons mined during 2016 versus the original 2015 budget. Some 17 million tons of pre-stripping was deferred to 2016 versus the original 2015 budget due to the late start in 2015 resulting in a capital stripping improvement of $31.5 million USD versus budget. Pre-stripping has accelerated in late Q Minex-related expenditures included surface drilling on the Dee Capital program that included completing 40,710 feet of drilling in 38 holes at a cost of some $2.9 million USD; all costs are under budget. Several cost saving measures being adopted include deferral of drilling on the Hinge, East Dee/Jerry underground targets and some of the condemnation drilling related to the Phase 1 & 3 pits. On October 19, 2015 Premier released to the public the results and guidance of work completed to date that included: Development work continues to advance open pit operations with first gold production expected in 2016 Drilling to test the continuity and expansion of the NE Button Hill underground target confirms high-grade gold mineralization with intercepts as high as 0.75 ounces per ton gold (oz/t Au) across 90 feet (25.7 grams per tonne (g/t) Au across 27.4 metres (m)) gold production projected to be in excess of 200,000 ounces of gold (>80,000 to Premier) from some 2.5 million tons of ore. Exploration, evaluation and pre-development Greenstone Gold Property (formerly Trans-Canada Property), Northwestern Ontario Canada Planned expenditures of approximately $26.5 million were budgeted for the Greenstone Gold Property during The expenditures included technical studies, environmental and social impact assessments, project support and costs associated with securing certain properties for future project development (collectively, $20.5 million) and 3 Page 9

12 $4.0 million for drilling and exploration related costs, consisting of $1.6 million for resource drilling to further define the Hardrock deposit, along with site preparation of $1.8 million for condemnation drilling and geotechnical studies. The remaining $2 million was to be spent on the Brookbank deposit ($.7 million) and general and administration ($1.3 million). Pursuant to the 50/50 partnership agreement with Centerra, exploration and project development work including completion of the feasibility study will be funded via capital contributions to the partnership in the aggregate amount of $185 million, which obligation is subject to certain feasibility study results and project advancement criteria, as such planned expenditures for 2015 were fully-funded by Centerra and 2016 planned expenditures will also be full funded by Centerra. On September 17, 2015 Premier confirmed that it had received the contingent payment of $11,009,680 from Centerra Gold Inc., pursuant to the terms of the agreement signed earlier in Exploration Rahill-Bonanza Joint Venture Diamond drilling of 11,432 metres was completed in 23 holes from surface and underground on the Rahill-Bonanza project during The Rahill-Bonanza project (44% Premier & 56% RLGM) covers approximately 4.5 kilometres of the main Red Lake "Mine Trend" between the Red Lake Gold Mines complex to the east, and the Cochenour Complex to the west. The haulage drift was excavated from the 5400 foot Level of Red Lake Gold Mines and intersected several kilometres of some of the highest potential and untested geology in the heart of the Red Lake camp. Underground diamond drilling at Rahill-Bonanza began in early March after completion of a revised budget proposal that will see drilling focused on a greater range of targets during During 2015, targets tested were those expanding on the folded ultramafic area where intriguing results require additional drilling. The final expenditures for 2015 for this project were slightly below the budget of approximately $2 million. In early December Premier released to the public an update of new intercepts and developments that included: Drilling continued testing a favourable geological setting to the south of the tram that shares similarities with the Red Lake Gold Mines complex including favourable alteration and mineralization proximal to an ultramafic rock unit. Hole D36987 grades g/t Au across 2.1m contained within a mineralized alteration zone grading 6.58 g/t Au across 6.3m. Hole D36994 contains g/t Au across 3.4m. Hole D36999 grades g/t Au across 1.7m & 11.0 g/t Au across 2.5m. Hole D with g/t Au across 11.0 m (1.34 oz/ton Au across 36.0 feet) including g/t Au across 3.8 m (3.54 oz/ton Au across 12.3 feet); one of the deepest holes drilled to test this horizon to-date. It is expected that some $899,000 will be spent by Premier during 2016 at Rahill-Bonanza to maintain its 46% interest in the project. Hasaga Property Premier acquired a 100% interest in the past-producing Hasaga Property, located in Red Lake, Ontario, from Goldcorp in February, A property swap assigned to Goldcorp Premier s 35% participating interest in the East Bay Property (Red Lake) and its 100% interest in the PQ-North Property located near Goldcorp s Musselwhite Mine in Ontario. Exploration drilling was activated on May 1, Three drills have completed some 60,000 metres of drilling in three target areas that included the Hasaga Porphyry, Central Zone and North Gate areas Page

13 A summary of accomplishments during the 2015 program included: Drilling identified two prospective areas containing wide-spread gold mineralization with intercepts up to 0.98 g/t Au over m including 2.04 g/t Au across 49.0 m in the Hasaga Porphyry Zone and 0.94 g/t Au over m including 1.61 g/t Au across m in the Central Zone. The 2016 exploration program at Hasaga is budgeted at $6.8 million will include approximately 50,000 metres of additional drilling, designed to support an initial mineral resource estimate in H Late in 2015, Premier entered into an agreement to acquire a 100% interest in a 513-hectare land package located immediately west of, and contiguous with, the Hasaga Property from Pure Gold Mining Inc. (See Figure 2). This acquisition was completed on December 29, The Central Zone Target encompasses a series of conjugate structures occurring within the Dome Stock, a large granitic intrusive unit in the heart of the Red Lake camp. A historic hole drilled in the target area by Lac Minerals in the 1980 s reporting widespread mineralization (HRL87-05, 0.75 g/t Au/218.0m) was never followed up until the current program. The Dome and nearby McKenzie stocks are host to several mines having historic gold production exceeding 1,000,000 ounces McCoy-Cove Gold Project, Battle Mountain-Eureka District, Nevada, USA Exploration in 2015 saw a focus on the McCoy portion of the McCoy-Cove property. The McCoy-Cove Gold Mines have produced some 3.3 million ounces of gold and million ounces of silver between 1986 and 2006; a 20-year period of historically low gold and silver prices. While the ores mined at Cove and McCoy occurred in different rock units, the two mines are believed to have a close genetic relationship through their association with the same fault/feeder structures. These feeder structures have seen only limited previous exploration and represent a priority future exploration target. A summary of activity at McCoy-Cove in 2015 includes: Several exploration and development initiatives are being advanced at the McCoy-Cove Project including reprocessing opportunities, open pit drill targets, and drilling for prospective high-grade structures in deeper areas previously untested on the property. Exploration drilling resulted in new discoveries and the identification of multiple favourable structures in several areas. Some 1450 McCoy drill holes were compiled into a database, leaving some 500 holes remaining to be completed. Exploration in 2016 will see continued drilling that will support a revised mineral resource estimate for the property in the second half of the year. Permitting initiatives will ensure flexibility of both surface and underground opportunities to be developed in the future. The 2016 exploration program at McCoy-Cove is set at $6.5 million. Drill results from the 2015 exploration program have confirmed expansion potential within the historic UPC Zone and intersected multiple intercepts of Au-Ag±Cu skarn and polymetallic mineralization at depth beneath the historic McCoy pit. Two new mineralized zones were also intersected at previously undrilled depths, while testing the Deep IP target between the McCoy and Cove pits. 5 Page 11

14 Selected Financial Data The following table provides selected financial information and should be read in conjunction with the Corporation s audited consolidated financial statements for the periods below: Year ended Year ended Year ended December 31, December 31, December 31, (i) 2013 * $ $ $ Operations Investment and other income 485, , ,440 Loss for the year: (ii) From continuing operations 24,789,599 (63,373,442) (60,132,947) From discontinued operations - - (82,230) 24,789,599 (63,373,442) (60,215,177) Basic and diluted loss per share Continuing operations 0.15 (0.41) (0.19) Discontinued operations (0.41) (0.19) Comprehensive loss for the year: From continuing operations 37,888,149 (61,280,895) (57,721,157) From discontinued operations - - (82,230) 37,888,149 (61,280,895) (57,803,387) Comprehensive loss for the year attributable to: Non-controlling interest - - (29,018) Owners of the parent 37,888,149 (61,280,895) (57,774,369) 37,888,149 (61,280,895) (57,803,387) Balance Sheet Working capital 66,044,868 33,295,761 58,884,838 Total assets 313,182, ,899, ,614,450 Total liabilities 32,867,112 22,698,563 23,693,435 (i) as restated for change in accounting described in Note 2(e) to the audited consolidated financial statements, 2013 includes an estimate of exploration, evaluation and pre-development expense impact based on 2013 mineral property additions (ii) previously reported 2014 as $63,593,848 on this schedule, no change to comprehensive loss for period other than for rounding The Corporation prepares its consolidated annual financial statements in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ) Page

15 Quarterly Information The following is a summary of selected financial information of the Corporation for the quarterly periods indicated. Quarter (i) 2014 (i) 2014 (i) 2014 (i) Fourth Third Second First Fourth Third Second First $ $ $ $ $ $ $ $ Investment and other income 76, , , , , , , ,681 Other significant income / (loss): Unrealized gain / (loss) on investments (338,621) 318, ,312 56,660 (883,069) (1,334,361) 2,683,333 19,549,913 Realized loss on sale of investments - (358,515) (1,047,564) - - (1,031,472) (976,583) (13,954,677) Gain on divestment of mineral property interests (7,709,060) 10,970,081 2,848,261 39,777, Gain attributable to Greenstone Gold development commitment 2,924,234 3,846,121 4,020,786 1,852, (8,047,681) 14,776,200 6,470,795 41,686,513 (883,069) (2,365,833) 1,706,750 5,595,236 (ii) Net income / (loss) for the period (17,651,485) 5,341,819 (976,554) 38,075,819 (8,862,540) (18,983,304) (34,238,569) (1,289,029) Basic and diluted income / (loss) per common share (0.11) 0.03 (0.01) 0.24 (0.06) (0.12) (0.23) (0.01) Comprehensive income / (loss) for the period: (12,116,769) 10,857,812 (989,395) 40,136,501 (9,374,092) (16,982,278) (34,240,235) (684,290) Total long-term liabilities 17,893,606 11,901,056 11,890,304 12,154,908 18,378,633 17,280,594 11,018,159 11,705,585 Cash dividends (i) As restated to reflect change in accounting policy to expense exploration, evaluation and pre-development expenditures. (ii) Previously reported Q as $9,082,947 on this schedule, no change to comprehensive loss for period other than for rounding Change in Accounting Policy As of January 1, 2015, the Corporation changed its accounting policy for property, plant and equipment and in particular to exploration and evaluation expenditures. The new policy expenses exploration and evaluation expenditures that were previously capitalized in order to provide more relevant information in comparison to our peers as well as to align our policy with strategic partners. This change is fully disclosed in Note 2(e) of the audited consolidated financial statements for the year ended December 31, It was determined that certain costs previously recorded as deferred exploration and evaluation assets should have been classified as acquisition costs as a result of the Goldstone transaction that took place in As a result, exploration, evaluation and pre-development expense for purposes of the restated January 1, 2014 opening balances in the amount of $15,450,192 were adjusted on the audited consolidated financial statements to property, plant and equipment and removed from the December 31, 2013 opening deficit. As these assets were subsequently sold in 2015 (see divestment of 50% interest in the Greenstone Gold property disclosed in Note 8 of the audited consolidated financial statements for the year ending December 31, 2015), the gain on disposal of mineral interest was adjusted by 50% of this amount or $7,725,096 in the fourth quarter of 2015 and is included in the gain on divestment of mineral property interests. There was no change to the restated 2014 income statement as a result of this adjustment. Total assets as originally reported in the December 31, 2014 audited financial statements were $384,214,839, reduced by $159,315,831 to $224,899,008 as a result of the restatement of mineral property costs to exclude capitalized exploration as per the change in accounting policy discussed in note 2(e) of December 31, 2015 audited financial statements. 7 Page 13

16 The total restatement of $159,315,831 affected exploration, evaluation and pre-development expense, impairment on mineral properties and loss of disposal of mineral properties due to the effect of removing capitalized exploration costs. The effect on 2013 and earlier was $144,877,846 and $14,437,985 for The breakdown of the restatement by property is: At December 31, 2014 As originally reported Cumulative Restatement Restated $ $ $ Mineral Properties Rahill Bonanza, Ontario 36,694,091 16,795,479 19,898,612 East Bay, Ontario 8,111,139 1,802,760 6,308,379 PQ North, Ontario 12,675,013 11,085,540 1,589,473 Hardrock, Ontario 191,722, ,003,264 84,719,118 Brookbank, Ontario 16,666,516 1,669,532 14,996,984 McCoy-Cove, Nevada 75,955,639 20,959,256 54,996, ,824, ,315, ,508,949 Other property, plant & equipment 779, , ,604, ,315, ,288, and earlier restatement: At January 1, 2014 As originally reported Cumulative Restatement Restated $ $ $ Mineral Properties Rahill Bonanza, Ontario 35,837,625 15,939,013 19,898,612 East Bay, Ontario 7,893,540 1,585,406 6,308,134 PQ North, Ontario 12,674,857 11,085,384 1,589,473 Hardrock, Ontario 173,944,156 89,228,498 84,715,658 Brookbank, Ontario 16,639,298 1,642,314 14,996,984 McCoy-Cove, Nevada 39,928,245 12,163,280 27,764,965 Saddle, Nevada 40,126,726 13,229,303 26,897,423 Other areas 2,658,635 4,650 2,653, ,703, ,877, ,825,234 Other property, plant & equipment 3,247,546-3,247, ,950, ,877, ,072, Page

17 Overall performance Three months ended December 31, 2015 and 2014 Loss for the three months ended December 31, 2015 was $17,651,485 compared to a restated loss of $8,862,540 for the same period of the previous year for a variance of $8,788,945. The variances for the three months ended December 31, 2015 compared to the same period of 2014 are: Increase Q4 Q4 (Decrease) As restated $ $ $ EXPENSES Depreciation and impairment loss on property, plant and equipment 181, ,324 (8,498) Share-based payments 377,862 71, ,152 General and administrative 4,163,437 1,484,924 2,678,513 Exploration, evaluation and pre-development 7,742,137 7,503, ,541 Property maintenance 114, ,311 (31,846) Long term debt accretion 156, ,443 19,788 Environmental rehabilitation accretion 13,111 14,231 (1,120) Loss from operating activities 12,749,069 9,547,539 3,201,530 Investment and other income 76, ,238 (30,854) Unrealized loss on investments (338,621) (883,069) 544,448 Unrealized foreign exchange gain/(loss) (1,365,797) 61,277 (1,427,074) Realized foreign exchange gain / (loss) 72,930 (51,512) 124,442 Loss on sale of investments Gain on divestment of mineral property interests (7,709,060) - (7,709,060) Gain attributable to Greenstone Gold development commitment 2,924,234-2,924,234 Other income (6,339,930) (766,066) (5,573,864) Loss before income taxes (19,088,999) (10,313,605) (8,775,394) Current tax recovery / (expense) 997,716 (547) 998,263 Deferred tax recovery 439,798 1,451,612 (1,011,814) Loss for the period (17,651,485) (8,862,540) (8,788,945) Exchange difference on translation of foreign operations 6,553,363 1,677,211 4,876,152 Deferred tax expense (1,018,647) (2,188,764) 1,170,117 Other comprehensive income / (loss) 5,534,716 (511,553) 6,046,269 Comprehensive loss for the period (12,116,769) (9,374,093) (2,742,676) 9 Page 15

18 The significant items with variances comparing the three months ending December 31, 2015 to the three months ending December 31, 2014 include: Increase in general and administrative costs of $2,678,513 due to the additional general and administrative costs associated with Premier s portion of costs for the Greenstone Gold and the South Arturo partnerships and an increase in professional fees due to legal fees incurred as a result of the lawsuit discussed in Note 21 to the audited consolidated financial statements for activity during the quarter. Flow through interest penalty and professional fees have been reclassified to general and administrative expense. Increase in exploration, evaluation and pre-development of $238,541 as follows: For the three months ended December 31, Variance $ $ $ Rahill Bonanza, Ontario 386, , ,386 East Bay, Ontario - 13,101 (13,101) Hasaga, Ontario 2,512,888-2,512,888 Greenstone Gold, Ontario 2,655,607 6,564,777 (3,909,170) McCoy-Cove, Nevada 1,460, , ,496 South Arturo, Nevada 727, ,042 7,742,137 7,503, ,541 Hasaga spending for the three months ended December 31, 2015 was $2,512,888. The property was acquired in the first quarter of 2015 and expenditures during the period include: $1,722,866 for approximately 20,000 meters of drilling related costs $114,986 in geological costs for exploration including wages and salaries $392,062 in analytical and sampling costs $282,974 in operations support and property work including wages and salaries The decrease in spending is due to only 50% of Greenstone Gold expenditures for this quarter versus 100% of Hardrock and Brookbank for this quarter in % of the expenditures for Greenstone Gold in this period of $5,531,104 include: $469,805 in exploration $1,769,322 in environmental permitting and social impact assessment $595,674 in geology, mine development and metallurgy feasibility test work $1,445,351 in pre-development infrastructure $1,250,952 in pre-development management and administration McCoy-Cove spending for the period ended December 31, 2015 was $1,460,599, and includes: $610,667 in drilling related costs $295,037 in geological costs including wages and salaries $100,460 in analytical and sampling costs $252,750 in operations support including wages and salaries $201,685 in pre-development and environmental permitting costs The negative variance relating to unrealized foreign exchange gains (losses) of $1,427,074 is due to the reversal of unrealized exchange gains from the previous quarter in relation to the utilization of cash for US operations. A negative variance on gain on disposal of mineral property interests of $7,709,060 is due to the fourth quarter adjustment to the acquisition cost of mineral properties related to the change in accounting policy. On reclassifying Page

19 deferred exploration costs to acquisition costs for the 2014 opening balances, the gain in 2015 was affected by 50% of the cost of the properties disposed in the Greenstone Gold partnership arrangement. A positive variance on the gain attributable to the Greenstone Gold development commitment of $2,924,234 related to Premier s 50% of exploration, evaluation and pre-development and project related general and administration expenditures funded by Centerra on behalf of Premier. A decrease in current tax of $998,263 due to the reversal of income tax booked in a previous quarter related to the divestment of the 5% interest in the Rahill Bonanza property. The liability reversed in the fourth quarter due to the acquisition of the Pure Gold mineral interests, effectively eliminating the taxable gain. A decrease in deferred income tax recovery of $1,011,814 as the recovery related to the provision included with the exchange difference on the translation of foreign operations in comprehensive income was booked in this quarter last year whereas this year, it was booked throughout the year and required less of an adjustment for this quarter. Other comprehensive income (loss) Included in the comprehensive loss for the three months ended December 31, 2015 is an exchange gain on the translation of foreign operations of $6,553,363 compared to a gain of $1,677,211 for the same period of The U.S dollar strengthened approximately 4 basis points during both quarters however the increase in mineral interests in US subsidiaries with a functional currency of US dollars contributed to the significance of the change. 11 Page 17

20 Year ended December 31, 2015 and 2014 Income for the year ended December 31, 2015 was $24,789,599 compared to a restated loss of $63,373,442 for 2014 for a variance of $88,163,041. The variances for the year ended December 31, 2015 compared to 2014 are: Increase YTD Q4 YTD Q4 (Decrease) As restated $ $ $ EXPENSES Depreciation and impairment loss on property, plant and equipment 265,178 32,501,775 (32,236,597) Share-based payments 3,717,277 3,331, ,402 General and administrative 8,090,492 4,381,438 3,709,054 Exploration, evaluation and pre-development 27,144,627 26,283, ,426 Property maintenance 724, , ,884 Long term debt accretion 601, ,355 (15,834) Environmental rehabilitation accretion 76,132 82,760 (6,628) Loss from operating activities 40,619,251 67,701,544 (27,082,293) Investment and other income 485, ,253 (104,042) Unrealized gain on investments 685,864 20,015,816 (19,329,952) Unrealized foreign exchange gain 268, ,942 Realized foreign exchange gain / (loss) 1,518,599 (51,512) 1,570,111 Loss on sale of investments (1,406,079) (15,962,732) 14,556,653 Gain on divestment of mineral property interests 45,886,656-45,886,656 Gain attributable to Greenstone Gold development commitment 12,643,620-12,643,620 Other income 60,082,813 4,590,825 55,491,988 Income / (loss) before income taxes 19,463,562 (63,110,719) 82,574,281 Current tax expense - (608) 608 Deferred tax recovery / (expense) 5,326,037 (262,115) 5,588,152 Income / (loss) for the year 24,789,599 (63,373,442) 88,163,041 Exchange difference on translation of foreign operations 18,445,332 4,281,310 14,164,022 Deferred tax expense (5,346,782) (2,188,764) (3,158,018) Other comprehensive income 13,098,550 2,092,546 11,006,004 Comprehensive income / (loss) for the year 37,888,149 (61,280,896) 99,169,045 The significant items with variances include: A decrease of $32,236,597 in depreciation and impairment loss on property, plant and equipment A restated impairment of $29,473,463 was taken in 2014 due to the transfer of the Saddle and Blue Sage properties in Nevada as part of the acquisition of the McCoy-Cove property as described in Note 8 to the audited consolidated financial statements. The original impairment of $42,908,371 was restated to reflect the reduced book value of the properties as a result of the change in accounting policy to expense rather than capitalize exploration expenditures. An impairment of $500,000 was taken in 2014 to write down the balance on non-core assets Page

21 An impairment of $2,409,171 was taken in 2014 to write down the Northern Empire mill. Impairment assessments for 2015 indicate that the remaining mineral property and other assets have no indicators of impairment requiring an adjustment. For 2014 and 2015 the flow through interest penalty and professional fees previously shown separately in the statement of income / (loss) have been reclassified to general and administration costs. The increase in general and administrative expense of $3,709,055 mainly due to the administrative costs associated with Premier s share of South Arturo for $1,727,534 and of the Greenstone Gold partnership of $524,068. In addition, 2015 includes an increase in professional fees of $911,199 for legal fees incurred as a result of the lawsuit discussed in Note 21 to the audited consolidated financial statements. An increase in exploration, evaluation and pre-development expenditures for this year compared to the restated amounts for 2014 of $861,426 For the year ended December 31, Variance $ $ $ Rahill Bonanza, Ontario 921, ,466 65,135 East Bay, Ontario 19, ,354 (197,589) Hasaga, Ontario 6,995,050-6,995,050 Greenstone Gold, Ontario 13,657,426 18,062,204 (4,404,778) McCoy-Cove, Nevada 4,809,160 7,080,994 (2,271,834) Saddle, Nevada - 13,164 (13,164) South Arturo, Nevada 727, ,042 Other areas 14,583 53,019 (38,436) 27,144,627 26,283, ,426 Hasaga spending for the year ended December 31, 2015 was $6,995,050. The property was acquired in the first quarter of 2015 and expenditures since that time include: $5,135,106 for approximately 58,000 meters of drilling related costs $385,158 in geological costs for exploration including wages and salaries $807,519 in analytical and sampling costs $667,267 in operations support and property work including wages and salaries Attributable Greenstone Gold expenditures (50%) relating to the Hardrock and Brookbank projects prior to the partnership are $13,657,426 for the year. Expenditures include: $38,019 in drilling related costs $42,606 in geological costs including wages and salaries $178,946 in analytical and sampling costs $98,302 in operations support including wages and salaries $1,051,153 in pre-development costs, mainly feasibility test work Greenstone Gold pre-development expenditures post partnership for the year were $12,248,400 (50% of $24,496,799) from the agreed date of February 5, 2015 recorded by Premier. Total expenditures (100%) in this period include: $3,086,083 in pre-development drilling $1,437,646 in exploration $6,763,845 in environmental permitting and social impact assessment $2,665,346 in geology, mine development and metallurgy feasibility test work $8,278,030 in pre-development infrastructure 13 Page 19

22 $2,265,849 in pre-development management and administration McCoy-Cove spending for the year ended December 31, 2015 was $4,809,160, a $2,271,834 reduction from last year and are generally related to the reduction in drilling by 9,658 meters this year compared to last year. Expenditures for the year include: $2,355,825 in drilling related costs $975,959 in geological costs including wages and salaries $325,218 in analytical and sampling costs $772,324 in operations support including wages and salaries $379,834 in pre-development and environmental permitting costs A combined increase in the total realized and unrealized net investment losses for this year compared to last year of $4,773, included the sale of Premier Royalty and resulting unrealized losses on the subsequent investment, during 2014, the investment was being liquidated (approximately 84% to date), and the unrealized losses reversed and were replaced with realized losses for a positive net gain, volume in 2015 was significantly decreased as a result. The increase in deferred tax recoveries of $5,588,152 is due to: $3,158,018 of the increase is due to a reversal of temporary timing differences related to loss carryforwards applied to the exchange gain included in other comprehensive income in the amount of $5,346,782 in 2015 versus $2,188,784 in A deferred tax recovery of $2,487,518 was recorded in 2014 on the utilization of losses as a result of the completion of a tax reorganization whereby tax benefit moved to the Canadian Development Expenditure pool from loss carry forwards offset by $2,544,661 of the recovery charged to equity rather than operations related to share issue costs included in the losses used. As the deferred tax recovery was eliminated as a result of the restatement of 2014 timing differences, the share issue cost reallocation to equity remained. Other comprehensive income (loss) Included in the comprehensive loss for the year ended December 31, 2015 is an exchange gain on the translation of foreign operations of $18,445,332, compared to $4,281,310 for the year ended December 31, 2014 as a result of the strengthening of the U.S. dollar by an average of 17 basis points during the year. The increase in mineral interests in US subsidiaries with a functional currency of US dollars contributed to the significance of the change. The exchange gain has been offset by a related deferred tax expense of $5,346,782 where the use of operating losses would be utilized to offset the gain. Financial position at December 31, 2015 and 2014 Total assets increased by $88,283,562 to $313,182,570 from $224,899,008 for the period December 31, 2015 to December 31, 2014 as restated: Current assets increased by $43,402,683 due to: An increase in cash and cash equivalents of $40,915,804 (see Liquidity and Capital Resources ). Restricted cash and cash equivalents increased $249,642, due to additional bond security required during the year for the McCoy-Cove project as well as exchange rate differences on restricted cash held in the US. Property, plant and equipment, as restated to include mineral property acquisition and mine development costs, increased by $44,631,237 including: $129,771 increase in the Rahill-Bonanza property for the acquisition of additional claims. $49,858,051 decrease related to the 50% divestment of the Hardrock and Brookbank properties. $80,942,965 increase for the acquisition of the 40% interest in the South Arturo property, $28,188,464 for mineral property assets initially acquired and $41,067,215 for mine development costs, $5,031,380 for Page

23 capitalized reclamation liability costs and $6,655,906 in currency adjustments. $12,644,363 acquisition costs on the Hasaga mineral interest acquired as a result of a swap of properties and $4,500,000 for the purchase of additional claims, offset by a decrease of $7,897,852 in the East Bay and PQ North mineral properties exchanged in the swap. $10,616,020 increase due to a foreign currency exchange difference on the McCoy-Cove property. The balance relates to additional legal costs incurred on the Hasaga property swap in 2015 and the McCoy acquisition in Total liabilities increased by $10,168,549 including $2,051,960 increase in payables due to introduction of the South Arturo operation, $1,770,378 related to exchange differences and accretion on the McCoy-Cove debt and $5,031,380 increase in the provision for addition of the South Arturo asset retirement obligation. Liquidity and capital resources At December 31, 2015, the Corporation had cash and cash equivalents of $73,056,817 ($32,141,013 at December 31, 2014). The change in cash and cash equivalents of $40,915,804 from the period ended December 31, 2014 was due to the following: $19,611,652 cash used in operating activities. $96,009,681 cash received for the divestment of a 50% interest in the Greenstone Gold property less related costs of $3,119,688. $64,810,882 of cash used for property, plant and equipment including: o 40% interest in the South Arturo property which includes cash of $14,876,394 included in acquisition cost of the mineral interest ($11,969,348 USD) o 40% of mine development costs including $16,147,710 of construction in progress ($12,827,353 USD) and $33,262,375 of capitalized mine development costs ($26,006,548 USD) o o $2,000,000 cash the Buffalo claims purchased from Pure Gold added to the Hasaga mineral property $119,141 for equipment and software additions $27,130,677 in cash was received from the private placement financing in June and $7,799,724 from the flowthrough share financing completed in December. Premier is funding the current exploration, evaluation, pre-development and development expenditures through financings and liquidation of investments. The Corporation anticipates that it will have sufficient funds to manage current projects through 2016 and is actively managing the ongoing pre-development activities at the Greenstone Gold property through its partnership agreement with Centerra. The South Arturo project will be funded with existing cash until production commences during The Corporation also funds a portion of its Canadian exploration activities via flow-through share issuances. Resource expenditure deductions for income tax purposes related to exploration and development activities funded by flow-through share issuances are renounced to investors in accordance with income tax legislation. A flow through financing for $7,799,724 was completed on December 4, 2015 of which $7,062,214 remains to be spent on exploration activities during As at December 31, 2015 the financial instruments of the Corporation consisted of cash and cash equivalents, accounts receivable, investments, accounts payable and accrued liabilities and long term debt. 15 Page 21

24 The Corporation is authorized to issue an unlimited number of common shares of which 175,589,161 were outstanding as of March 28, As at March 28, 2016 the Corporation had outstanding options to purchase an aggregate of 13,350,967 common shares under its share incentive plan with exercise prices ranging from $1.40 to $7.45 per share, and expiry dates ranging from June 24, 2016 to March 21, As of December 31, 2015 there were 595,000 unvested stock options. As at December 31, 2015 the Corporation had no warrants outstanding. Commitments Contractual Obligations The following is a summary of the commitments of the Corporation as at December 31, 2015: Total $ $ $ $ Promissary notes 8,373,200 69,200 69,200 8,511,600 Contracts and operating leases 345, ,669 64, ,362 Exploration expenditure commitment from the issuance of flow through shares Surety Bonds At December 31, 2015, the corporation has outstanding surety bonds in the amount of US$4,417,691 in favour of the United States Department of the Interior, Bureau of Land Management (BLM) as financial support for environmental reclamation and exploration permitting. The surety bonds are secured by a US$250,000 deposit and are subject to fees competitively determined in the market place. The obligations associated with these instruments are generally related to performance requirements that the Corporation addresses through its ongoing operations. As specific requirements are met, the BLM as beneficiary of the instrument will return the instrument to the issuing entity. As these instruments are associated with operating sites with long-lived assets, they will remain outstanding until closure. Environmental rehabilitation provision 7,062, ,062,214 The Corporation has four environmental rehabilitation obligations related to properties acquired as a result of the 2011 Goldstone acquisition, the McCoy-Cove acquisition in 2014 and the more recent South Arturo acquisition in 2015 as follows: December 31, 2015 December 31, 2014 $ $ Northern Empire Mill, Ontario 2,473,590 2,430,402 Faymar-Deloro, Ontario 1,419,447 1,388,561 McCoy-Cove, Nevada 1,195,140 1,011,539 South Arturo, Nevada 5,031,380-10,119,557 4,830,502 The new obligation recorded in 2015 related to the purchase of the 40% interest in the South Arturo property as discussed in Note 8 to the audited consolidated financial statements. As the obligation formed part of the Page

25 consideration for the property, it was recorded as acquisition cost on the property. Additional details on activity for the year are discussed in Note 10 to the audited consolidated financial statements. Transactions with related parties Transactions are as disclosed in Note 17 to the December 31, 2015 audited consolidated financial statements with no significant changes for the quarter or the year. Contingency The contingency is as disclosed in Note 21 to the December 31, 2015 audited consolidated financial statements with no significant changes for the quarter or the year. Subsequent events On March 21, 2016, the Corporation granted options to purchase up to 1,625,800 common shares of the Corporation at an exercise price of $3.18 per share and expiring on March 21, Financial instruments and related risks For full details on the financial instruments and related risks affecting the Corporation, please refer to the Corporation s audited annual consolidated financial statements and notes and annual information form for the year ended December 31, Management of capital The Corporation manages its share capital, equity settled employee benefits reserve, warrant reserve and contributed capital as capital. The Corporation's objectives when managing capital are to safeguard the Corporation's ability to continue as a going-concern in order to pursue the exploration and development of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Corporation manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Corporation may attempt to issue new shares, acquire or dispose of assets or acquire new debt. In order to maximize ongoing exploration and development efforts, the Corporation does not pay out dividends. The Corporation's investment policy is to invest its short-term excess cash in highly liquid short-term interestbearing investments with short-term maturities, selected with regard to the expected timing of expenditures from continuing operations. The Corporation expects its current capital resources will be sufficient to carry out its exploration and development plans and operations through Off-Balance Sheet Arrangements The Corporation has not participated in any off-balance sheet or income statement arrangements other than the surety bonds discussed on page Page 23

26 Changes in Internal Control Over Financial Reporting ( ICFR ) No changes occurred in the current period of the Corporation s ICFR that have materially affected, or are reasonably likely to materially affect the Corporation s ICFR. Controls and Procedures In accordance with the requirements of National Instrument Certification of Disclosure in Issuer s Annual and Interim Filings, the Corporation s management, including Chief Executive Officer (CEO) and Chief Financial Officer (CFO), have evaluated the operating effectiveness of the Corporation s internal control over financial reporting. Management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under, the supervision of, the CEO and CFO and effected by management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with international financial reporting standards. Management assessed the effectiveness of the Corporation s internal control over financial reporting as of December 31, Based on this assessment, management believes that, as of December 31, 2015, the Corporation s internal control over financial reporting is designed and is operating effectively. Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the CEO and CFO, on a timely basis so that appropriate decisions can be made regarding annual and interim financial statement disclosure. Management believes these disclosure controls and procedures have been effective during the year ended December 31, Additional Information Additional information relating to the Corporation can be found on SEDAR at or on the Corporation s web-site at Steve Filipovic (Signed) Steve Filipovic Chief Financial Officer Thunder Bay, Canada March 28, Page

27 Consolidated Financial Statements December 31,

28 Independent auditorʼs report Grant Thornton LLP 11th Floor 200 King Street West, Box 11 Toronto, ON M5H 3T4 T F To the Shareholders of Premier Gold Mines Limited We have audited the accompanying consolidated financial statements of Premier Gold Mines Limited, which comprise the consolidated statements of financial position as at December 31, 2015 and December 31, 2014, and the consolidated statements of income/(loss) and comprehensive income/(loss), consolidated statements of changes in equity and consolidated statements of cash flows for the years ended December 31, 2015 and December 31, 2014, and a summary of significant accounting policies and other explanatory information. Managementʼs responsibility for the financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditorʼs responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Premier Gold Mines Limited as at December 31, 2015 and December 31, 2014, and its financial performance and its cash flows for the years ended December 31, 2015 and December 31, 2014 in accordance with International Financial Reporting Standards. Toronto, Canada March 30, 2016 Chartered Professional Accountants Licensed Public Accountants 26

29 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31, 2015 December 31, 2014 January 1, 2014 (restated - Note 2(e)) (restated - Note 2(e)) Note $ $ $ ASSETS Current assets Cash and cash equivalents 4 73,056,817 32,141,013 52,552,321 Accounts receivable 1,167, ,804 1,285,757 Prepaid and deposits 861, , ,630 Other assets 5 5,932,812 3,777,233 17,516,690 Total current assets 81,018,374 37,615,691 71,606,398 Non-current assets Restricted cash and cash equivalents 6 4,244,632 3,994,990 3,935,272 Property, plant and equipment 7 227,919, ,288, ,072,780 Total non-current assets 232,164, ,283, ,008,052 Total assets 313,182, ,899, ,614,450 LIABILITIES Current liabilities Accounts payable and accrued liabilities 5,859,702 3,807,742 3,094,360 Current portion of long term debt 8 8,237,115 44,331 9,627,200 Deferred premium on flow-through shares 876, ,857 - Total current liabilities 14,973,506 4,319,930 12,721,560 Non-current liabilities Deferred taxes 16 7,661,549 7,081,394 7,116,667 Long term debt 8 112,500 6,466, ,828 Provision for environmental rehabilitation 9 10,119,557 4,830,502 3,703,380 Total non-current liabilities 17,893,606 18,378,633 10,971,875 Total liabilities 32,867,112 22,698,563 23,693,435 EQUITY Share capital ,146, ,946, ,211,022 Reserves 10 55,786,311 39,660,989 36,743,261 Deficit (252,617,110) (277,406,709) (214,033,268) Total equity 280,315, ,200, ,921,015 Total liabilities and equity 313,182, ,899, ,614,450 Commitments [note 18] Contingencies [note 21] Subsequent events [note 22] See accompanying notes to the consolidated financial statements Approved by the Board of Directors and authorized for issue on March 28, 2016 "John Seaman" Director "Ewan Downie" Director 1 27

30 CONSOLIDATED STATEMENTS OF INCOME / (LOSS) AND COMPREHENSIVE INCOME / (LOSS) For the years ended December 31, (restated - Note 2(e)) Note $ $ EXPENSES Depreciation and impairment loss on property, plant 7 265,178 32,501,775 and equipment Share-based payments 3,717,277 3,331,875 General and administrative 13 8,090,492 4,381,438 Exploration, evaluation, and pre-development 14 27,144,627 26,283,201 Property maintenance 724, ,140 Long term debt accretion 8 601, ,355 Environmental rehabilitation accretion 9 76,132 82,760 Loss before the following (40,619,251) (67,701,544) Investment and other income 485, ,253 Unrealized gain on investments 685,864 20,015,816 Unrealized foreign exchange gain / (loss) 268,942 (51,512) Realized foreign exchange gain 1,518,599 - Loss on sale of investments (1,406,079) (15,962,732) Gain on divestment of mineral property interests 7 45,886,656 - Gain attributable to Greenstone Gold development 7 12,643,620 - commitment Other income 60,082,813 4,590,825 Income / (loss) before income taxes 19,463,562 (63,110,719) Current tax expense 16 - (608) Deferred tax recovery / (expense) 16 5,326,037 (262,115) Income / (loss) for the year 24,789,599 (63,373,442) Other comprehensive income / (loss) Exchange difference on translation of foreign 18,445,332 4,281,310 operations Deferred tax expense 16 (5,346,782) (2,188,764) Total comprehensive income / (loss) for the year 37,888,149 (61,280,896) Basic and diluted income / (loss) per share (0.41) See accompanying notes to the consolidated financial statements 2 28

31 CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, (restated - Note 2(e)) Note $ $ OPERATING ACTIVITIES Income / (loss) for the year 24,789,599 (63,373,442) Items not affecting cash Depreciation and impairment loss on property, plant 7 265,178 32,501,775 and equipment Greenstone Gold non-cash operating expenses 7 12,643,620 - Environmental rehabilitation accretion 9 76,132 82,760 Long term debt accretion 8 601, ,355 Share-based payments 3,717,277 3,331,875 Unrealized gain on investments (685,864) (20,015,816) Unrealized foreign exchange gain / (loss) (268,942) 51,512 Loss on sale of investments 1,406,079 15,962,732 Deferred tax expense / (recovery) 16 (5,326,037) 262,115 Gain on divestment of mineral property interests 7 (45,886,656) - Gain attributable to Greenstone Gold development commitment 7 (12,643,620) - Change in non-cash working capital balances related to operations Accounts receivable (273,395) 391,953 Prepaids and deposits (39,164) (552,010) Accounts payable 2,012, ,740 Cash used in operating activities (19,611,652) (30,299,451) INVESTMENT ACTIVITIES Proceeds from the sale of investments 97,016 17,792,541 Purchase of investments (512,809) - Purchase of derivative investments (2,367,102) - Net change in restricted cash and cash equivalents (29,458) 41,116 Acquisition and development of property, plant and 7 (64,810,882) (16,998,233) equipment Proceeds from divestment of 50% interest in 7 96,009,680 - Greenstone Gold assets Transaction costs on divestment 7 (3,119,688) - Reclamation expenditures charged to asset retirement (193,466) - obligation Cash provided by investment activities 25,073, ,424 FINANCING ACTIVITIES Repayment of long term debt (63,004) (5,054,500) Proceeds from the exercise of stock options 889,800 4,398,370 Share issue costs (842,370) (377,081) Shares issued in private placements 10 34,930,401 9,187,500 Cash provided by financing activities 34,914,827 8,154,289 Increase / (decrease) in cash during period 40,376,466 (21,309,738) Cash and cash equivalents, beginning of the period 32,141,013 52,552,321 Effect of exchange rate changes on cash held 539, ,430 Cash and cash equivalents, for the year 73,056,817 32,141,013 Supplemental cash flow information [Note 12] See accompanying notes to the consolidated financial statements 3 29

32 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Share Capital Reserves Issued and outstanding: Note Number of shares Share capital Warrants Equity settled employee benefits Contributed surplus Foreign currency translation Deficit Equity attributable to owners of the parent Balance as at December 31, 2013 (restated - Note 2 (e)) 151,496, ,211, ,933 28,463,472 7,539,763 (10,907) (214,033,268) 239,921,015 Private placements 10 3,750,000 9,187, ,187,500 Exercise of stock options 10 1,686,390 6,905,063 - (2,506,693) ,398,370 Shares issued for Cove debt repayment 10 2,204,488 5,000, ,000,000 Deferred tax recovery on share issue costs - - 2,544, ,544,661 Share-based payments ,331, ,331,875 Share issue costs - - (377,081) (377,081) Deferred flow-through premium - - (525,000) (525,000) Comprehensive loss for the year ,092,546 (63,373,441) (61,280,895) Balance as at December 31, 2014 (restated - Note 2 (e)) 159,137, ,946, ,933 29,288,654 7,539,763 2,081,639 (277,406,709) 202,200,445 Private placement 10 14,234,529 34,930, ,930,401 Exercise of stock options ,000 1,369,533 - (479,733) ,800 Shares issued for mineral property 10 1,001,721 2,500, ,500,000 Restricted share units issued 10 84, , ,770 Share issue costs - - (842,370) (842,370) Share-based payments ,506, ,506,505 Deferred flow-through premium - - (968,242) (968,242) Comprehensive income for the year ,098,550 24,789,599 37,888,149 Balance as at December 31, ,867, ,146, ,933 32,315,426 7,539,763 15,180,189 (252,617,110) 280,315,458 See accompanying notes to the consolidated financial statements 30 4

33 1. NATURE OF BUSINESS Premier Gold Mines Limited (the Corporation ), a Canadian based mineral exploration company publicly listed on the Toronto Stock Exchange, is focused on exploring for and development of gold deposits in Canada and the United States of America. The Corporation s principal assets in Canada include a 50% interest in the Greenstone Gold property located along the Trans-Canada highway, a 44% interest in Rahill-Bonanza and a 100% interest in the Hasaga properties in the Red Lake mining district within Northwestern Ontario. The Corporation's principal assets in the United States of America include a 40% interest in the South Arturo and a 100% interest in the McCoy-Cove properties located in Nevada. Premier Gold Mines Limited's head office is located at Suite 200, 1100 Russell Street, Thunder Bay, Ontario, P7B 5N2. 2. SIGNIFICANT ACCOUNT POLICIES (a) Statement of compliance The consolidated financial statements of the Corporation have been prepared in accordance with accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Accounting policies are consistently applied to all years presented, unless otherwise stated. Certain items within the statement of income have been reclassified in the current year. The prior periods have been restated to reflect the change in presentation. The consolidated financial statements of the Corporation for the year ended December 31, 2015 were approved and authorized for issue by the Board of Directors on March 28, (b) Basis of presentation The consolidated annual financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. Measurement bases are more fully described in the accounting policies below. The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. 5 31

34 (c) Basis of consolidation The Corporation's audited consolidated financial statements consolidate those of the parent Corporation and all of its subsidiary undertakings drawn up to December 31, Subsidiaries are all entities over which the Corporation has the power to control the financial and operating policies. The Corporation obtains and exercises control through more than half of the voting rights. All subsidiaries have a year end of December 31. The Corporation's subsidiaries are: Subsidiary Percentage of Jurisdiction Principal activity ownership Premier Gold Mines USA Inc. 100% United States Mineral exploration Premier Gold Mines Nevada Inc. 100% United States Mineral exploration Au-reka Gold Corporation 100% United States Mineral exploration Goldcorp Dee LLC 100% United States Development Goldstone Resources Inc. 100% Canada Mineral exploration Premier Gold Mines Hardrock Inc. 100% Canada Pre-development Premier Gold Mines NWO Inc. 100% Canada Mineral exploration Cherbourg Gold Inc. 85.7% Canada Mineral exploration Barraute Gold Inc. 100% Canada Mineral exploration Oro Premier de Mexico S.A. de C.V. 100% Mexico Mineral exploration On February 1, 2015, Premier Gold Mines Brookbank Inc. was amalgamated with and is continuing as Premier Gold Mines Hardrock Inc. All transactions and balances between the Corporation and its subsidiaries are eliminated on consolidation, including unrealized gains and losses on transactions between the companies. Where unrealized losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Corporation. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. On March 9, 2015, Centerra Gold Inc. ("Centerra") and the Corporation announced the formation of a 50/50 partnership (TCP GP Corporation and TCP Limited Partnership) for the purpose of the joint ownership, exploration and development of the Trans-Canada Property including the Hardrock Gold Project located in the Geraldton- Beardmore Greenstone belt in Ontario, Canada. On July 20, 2015, the Board of the general managing partner ((TCP GP Corporation) approved a name change of the corporation and the partnership (TCP Limited Partnership) to Greenstone Gold Mines GP Inc. and Greenstone Gold Mines LP respectively, collectively to be referred to as Greenstone Gold Mines ("Greenstone Gold"). On June 2, 2015, the Corporation acquired 100% of the limited liability company membership interest in Goldcorp Dee LLC, a Nevada limited liability company ("Dee LLC"), which holds a 40% interest in respect of the South Arturo Project between Barrick Gold Exploration Inc., an indirect wholly owned subsidiary of Barrick Gold Corporation, and Dee LLC. (d) Joint and co-ownership arrangements A joint arrangement is defined as one over which two or more parties have joint control, which is the contractually agreed sharing of control over an arrangement. This exists only when the decisions about the relevant activities (being those that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control. There are two types of joint arrangements, joint operations ( JO ) and joint ventures ( JV ). A JO is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. In relation to our interests in joint operations, we recognize our share of any assets, liabilities, revenues and expenses of the JO. 6 32

35 A JV is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Our investments in JVs are accounted for using the equity method. The Corporation also participates in co-ownership agreements with other parties which are labelled joint venture agreements. These agreements do not constitute joint arrangements for purposes of applying IFRS 11 in that the percentage ownership in the jointly held property is such that control resides with the majority ownership interest. In that case, the Corporation records their share of the assets, liabilities, income and the expenses related to the venture. Amounts reported in the financial statements for joint operations have been adjusted where necessary to ensure consistency with the accounting policies of the Corporation. Outlined below is information related to our joint arrangements and entities other than 100% owned subsidiaries of the Corporation at December 31, 2015: Property Entity type Economic interest (i) Method (ii) Rahill-Bonanza, Ontario (iii) Co-ownership 44% ( %) Our share Greenstone Gold, Ontario (iv) Joint operation 50% Our share South Arturo, Nevada Co-ownership 40% Our share (i) Unless otherwise noted, all of our joint arrangements are funded by contributions made by their partners in proportion to their economic interest. (ii) For our JOs, we recognize our share of any assets, liabilities, revenues and expenses of the JO. (iii) The Corporation divested 5% of our interest during the year as discussed in note 7. (iv) The Corporation has joint control given that decisions about relevant activities require unanimous consent of the parties to the joint operation. (e) Change in accounting policy The financial statements have been prepared on the basis of a retrospective application of a voluntary change in accounting policy relating to property, plant and equipment including exploration and evaluation assets. The new policy covers the following areas within property, plant and equipment. General Exploration, evaluation and pre-development expenditure Development properties (underground and open pit) Mine properties Deferred stripping costs Depreciation and depletion Property, plant and equipment General The general policy for property, plant and equipment states that all direct costs related to the acquisition of mineral property interests are capitalized at the date of acquisition and are included in property, plant and equipment on the financial statements. The general policy is that management annually reviews the estimated useful lives, residual values and depreciation methods of the Corporation s property, plant and equipment and also when circumstances indicate that such a review should be made. Changes to estimated useful lives, residual values or depreciation methods resulting from such a review are accounted for prospectively. The methods are more fully described in the section under Depreciation and depletion and include the change from recognizing depreciation on certain assets using the declining balance method to the straight line method. The new accounting policy for depreciation of general property, plant and equipment other than mineral property interests, was adopted January 1, 2015 and has not been applied retroactively as the amounts reported would 7 33

36 change by a minimal amount only. Exploration, evaluation and pre-development expenditure The new exploration, evaluation and pre-development expenditure policy is to charge exploration and evaluation expenditures within an area of interest as expense until management concludes that the technical feasibility and commercial viability of extracting a mineral resource are demonstrable and that future economic benefits are probable. In making this determination, the extent of exploration, as well as the degree of confidence in the mineral resource is considered. Once a project has been established as commercially viable and technically feasible, further expenditures are capitalized and classified as development properties. The previous accounting policy was to capitalize all costs related to the acquisition of, exploration for and evaluation of mineral claims. The new accounting policy was adopted on January 1, 2015 and has been applied retrospectively. The Corporation believes the change in accounting policy results in the financial statements providing more relevant information and are more comparable to its peer companies and strategic partners. The impact of the change in accounting policy on the Corporation s consolidated statements of financial position, and the statements of income / (loss) and comprehensive income / (loss) and statements of cash flows for the year ended December 31, 2014 and January 1, 2014 are as follows: Consolidated statements of financial position Reported at December 31, 2014 Cumulative adjustment to December 31, Adjustment Restated balance December 31, 2014 ASSETS Non-current assets Property, plant and equipment 779, ,825,234 (2,316,285) 183,288,327 Exploration and evaluation assets 341,824,780 (329,703,082) (12,121,698) - Total assets 384,214,839 (144,877,848) (14,437,983) 224,899,008 LIABILITIES Non-current liabilities Deferred taxes 30,713,770 (26,997,096) 3,364,720 7,081,394 EQUITY Deficit (144,819,560) (116,687,692) (15,899,457) (277,406,709) Exchange difference on translation of foreign operations 5,177,945 (1,193,060) (1,903,246) 2,081,639 Total liabilities and equity 384,214,839 (144,877,848) (14,437,983) 224,899,

37 Reported at December 31, 2013 Cumulative adjustment to December 31, 2013 Restated balance January 1, 2014 ASSETS Non-current assets Property, plant and equipment 3,247, ,825, ,072,780 Exploration and evaluation assets 329,703,082 (329,703,082) - Total assets 408,492,298 (144,877,848) 263,614,450 LIABILITIES Non-current liabilities Deferred taxes 34,113,763 (26,997,096) 7,116,667 EQUITY Deficit (97,345,576) (116,687,692) (214,033,268) Exchange difference on translation of foreign operations 1,182,153 (1,193,060) (10,907) Total liabilities and equity 408,492,298 (144,877,848) 263,614,450 Consolidated statement of loss and comprehensive loss For the year ended December 31, 2014 As reported Adjustments As restated Expenses Depreciation and impairment loss on property, plant and 45,990,011 (13,488,236) 32,501,775 equipment Exploration and development expenses 260,228 26,022,973 26,283,201 Loss before income taxes (50,575,981) (12,534,737) (63,110,718) Deferred income taxes (recovery) / expense (3,102,605) 3,364, ,115 Loss for the year (47,473,984) (15,899,457) (63,373,441) Exchange loss through comprehensive income 6,184,556 (1,903,246) 4,281,310 Loss and comprehensive loss for the year (43,478,192) (17,802,703) (61,280,895) Consolidated statement of cash flows For the year ended December 31, 2014 As reported Adjustments As restated Loss for the year from operations (47,473,984) (15,899,457) (63,373,441) Cash used in operating activities (4,276,478) (26,022,972) (30,299,450) Investing activities Additions to exploration and evaluation assets (43,001,908) 26,003,675 (16,998,233) Development properties (underground and open pit) A property, either open pit or underground, is classified as a development property when a mine plan has been prepared, a permit has been obtained and a decision is made to commercially develop the property. Development expenditure is accumulated separately for each area of interest for which economically recoverable mineral reserves and resources have been identified. 9 35

38 All expenditures incurred prior to the commencement of commercial levels of production from each development property are capitalized. In addition, capitalized costs are assessed for impairment when there is an indicator of impairment. Development properties are not amortized until they are reclassified as mine property assets following the achievement of commercial levels of production. As the Corporation previously had no development properties that fell under this category, this change in accounting policy did not result in a restatement. Mine properties After a mine property has been brought into commercial production, costs of any additional mining, in-pit drilling and related work on that property are expensed as incurred. Mine development costs incurred to expand operating capacity, develop new ore bodies or develop mine areas in advance of current production, including the stripping of waste material, are deferred and then amortized on a unit-of-production basis. As the Corporation previously had no mine properties that fell under this category, this change in accounting policy did not result in a restatement. Deferred stripping costs Stripping costs incurred in the production phase of a mining operation are accounted for as variable production costs and are included in the costs of inventory produced. Stripping activity that improves access to ore in a future period is accounted for as an addition to or enhancement of an existing asset. The Corporation recognizes stripping activity assets when it is probable that the future economic benefit associated with the stripping activity will flow to the Corporation; the component of the ore body for which access has been improved can be identified; and the costs relating to the stripping activity associated with that component can be measured reliably. Stripping activity assets are amortized on a unit of production basis in subsequent periods over the proven and probable reserves to which they relate. As the Corporation previously had no deferred stripping costs, this change in accounting policy did not result in a restatement. Depreciation and depletion The carrying amounts of mine properties, plant and equipment are depreciated or depleted to their estimated residual value over the estimated economic life of the specific assets to which they relate, using the depreciation methods or depletion rates as indicated below. Estimates of residual values or useful lives and depreciation methods are reassessed annually and any change in estimate is taken into account in the determination of the remaining depreciation or depletion rate. Depreciation or depletion commences on the date the asset is available for its use as intended by management

39 Depreciation or depletion is computed using the following rates: Item Methods Rates Mine properties Units of production Estimated proven and probable mineral reserves Equipment, facilities under finance leases, leasehold improvements Furniture, office equipment and software Straight line Straight line Lesser of lease term and estimated useful life 2 5 years Plant and equipment Straight line, units of production 4 10 years, Estimated proven and probable mineral reserves Deferred stripping costs Units of production Estimated proven and probable mineral reserves accessible due to stripping activity (f) Business combinations The consideration transferred by the Corporation to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Corporation, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Corporation recognizes identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognized in the acquiree's financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognized amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognized as profit immediately. (g) Foreign currency translation Functional and presentation currency The consolidated financial statements are presented in Canadian dollars ("CAD"), which is also the functional currency of the parent Corporation. Foreign currency transactions Foreign currency transactions are translated into the functional currency of the respective Corporation, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at period-end exchange rates are recognized in profit or loss. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined. Foreign currency translations The functional currency of the Corporation, each subsidiary and joint arrangement of the Corporation is determined 11 37

40 after consideration of the primary economic environment in which it operates. In the Corporation s consolidated financial statements, all assets, liabilities and transactions of the Corporation s subsidiaries with a functional currency other than CAD (the Corporation s presentation currency) are translated into CAD upon consolidation. Entities with a functional currency other than CAD are: Entity Premier Gold Mines USA Inc. Premier Gold Mines Nevada Inc. Au-reka Gold Corporation Goldcorp Dee LLC Oro Premier de Mexico S.A. de C.V. Functional Currency US Dollars US Dollars US Dollars US Dollars Mexican Pesos On consolidation, assets and liabilities have been translated into CAD at the closing rate at the reporting date. Income and expenses have been translated into the Corporation's presentation currency at the average rate over the reporting period. Exchange differences are charged/credited to other comprehensive income and recognized in the currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognized in equity are reclassified to profit or loss and recognized as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated into CAD at the closing rate. (h) Financial instruments Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires. Financial assets and financial liabilities are measured initially at fair value adjusted by transactions costs, and subsequently accounted for at amortized cost, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Financial assets and financial liabilities are measured subsequently as described below

41 (i) Financial assets For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: loans and receivables financial assets at fair value through profit or loss derivative Instruments held-to-maturity investments available-for-sale financial assets The category determines subsequent measurement and whether any resulting income and expense is recognized in profit or loss or in other comprehensive income. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that the recoverable amount of a financial asset or a group of financial assets exceeds its carrying amount. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognized in profit or loss are presented within 'investment income' or 'other income'. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortized cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Corporation's cash and cash equivalents, accounts receivables and restricted cash and cash equivalents fall into this category of financial instruments. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or that meet certain conditions and are designated at fair value through profit or loss upon initial recognition. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply. The Corporation's investments fall into this category of financial instruments. Assets in this category are measured at fair value with gains or losses recognized in profit or loss. The fair values of derivative financial instruments are determined by reference to active market transactions or using a valuation technique where no active market exists. Derivative instruments Derivatives arising from gold contracts are intended to manage the Company s risk management objectives associated with changing market values, but they do not meet the strict hedge effectiveness criteria designated in a hedge accounting relationship. Accordingly, these derivatives have been classified as non-hedge derivatives. Changes in the fair value of the gold contracts are recognized at fair value through profit or loss. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity other than loans and receivables. Investments are classified as held-to-maturity if the Corporation has the intention and ability to hold them until maturity. The Corporation currently does not hold any investments designated into this category. Held-to-maturity investments are measured subsequently at amortized cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings, the 13 39

42 financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in profit or loss. Available-for-sale financial assets Available-for-sale ("AFS") financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. All other available-for-sale financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognized in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognized in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the effective interest method and dividends are recognized in profit or loss within 'finance income'. The corporation currently does not hold any investments designated into this category. Reversals of impairment losses are recognized in other comprehensive income, except for financial assets that are debt securities which are recognized in profit or loss only if the reversal can be objectively related to an event occurring after the impairment loss was recognized. (j) Financial liabilities The Corporation's financial liabilities include borrowings and accounts payable and accrued liabilities. Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses recognized in profit or loss. All derivative financial instruments that are not designated and effective as hedging instruments are accounted for at fair value through profit or loss. All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within 'general and administrative costs'. (k) Impairment of non-financial assets At each financial position reporting date the carrying amounts of the Corporation's non-financial assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs of disposal and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less that its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss

43 (l) Share capital Share capital represents the fair value of consideration received. Equity instruments are contracts that give a residual interest in the net assets of the Corporation. Financial instruments issued by the Corporation are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Corporation s common shares, stock options, and share warrants are classified as equity instruments. Incremental costs directly attributable to the issue of new shares, options or warrants are also shown in equity as a deduction. The Corporation periodically issues units to investors consisting of common shares and warrants in non-brokered private placements. Each whole warrant issued entitles the holder to acquire a common share of the Corporation, at a fixed Canadian dollar price over a specified term. These warrants are not transferable from the original investor to a new investor. The Corporation s investor warrants are equity instruments and not financial liabilities or financial derivatives. Accordingly, gross investor proceeds received from the issuance of units are accounted for as an increase in share capital. No separate valuation (i.e. bifurcation ) of investor warrants is made for accounting purposes at the time of issuance or at any time thereafter. When investor or other warrants are exercised, the proceeds received are added to share capital. When investor or other warrants expire unexercised, no accounting entry is recorded. (m) Share-based compensation The Corporation has three share-based compensation plans: The Share option plan, Deferred share unit plan and Restricted share unit plan, which are all described in note 10. Share Option Plan Stock options are equity-settled share-based compensation awards. The fair value of stock options at the grant date is estimated using the Black-Scholes option pricing model. Compensation expense is recognized over the stock option vesting period based on the number of units estimated to vest. This expense is recognized as share-based compensation expense with a corresponding increase in contributed surplus. When options are exercised, the proceeds received by the Corporation, together with the amount in contributed surplus, are credited to common shares. Deferred Share Unit Plan Deferred share units ("DSU") granted to eligible members of the Board of Directors are settled in cash or shares at the discretion of the Corporation, and are accounted for under the liability method. The DSUs are subject on grant to terms and conditions set out in a Deferred Share Unit Grant letter that will determine the vesting conditions. DSUs are paid in full in the form of a lump sum payment no later than December 31 of the calendar year immediately following the calendar year of termination of service. The Corporation may issue shares in lieu of a cash payment. Restricted Share Unit Plan Restricted share units ("RSU") are granted to eligible members of the Board of Directors, eligible employees and eligible contractors. The RSUs are settled in cash or equity at the option of the Corporation. The RSUs vest subject to a RSU award letter but no later than December 31, of the third calendar year following the service year determined based on date of grant. The RSUs granted are accounted for under the equity method where the RSU grant letter specifies settlement in shares, and the liability method where the settlement can be in cash or shares. Under the equity method, the restricted share units are recorded in equity at fair value on the grant date over the period of vesting. Under the liability method, a liability is recorded at grant date equal to the fair value of the RSU. The liability is adjusted to fair value at each reporting period and any resulting adjustment to the accrued obligation is recognized as an expense or, if negative, a recovery. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is determined at the grant date

44 All share-based remuneration is ultimately recognized as an expense in profit or loss with a corresponding credit to 'reserves'. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior periods if share options ultimately exercised are fewer than that estimated on vesting. (n) Income taxes Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit or other current tax activities, which differs from profit or loss in the financial statements. Calculation of current tax expense is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and co-ownership is not provided if reversal of these temporary differences can be controlled by the Corporation and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilised against future taxable income. To the extent that the Corporation does not consider it probable that a future tax asset will be recovered, it is not recognized in the financial statements. Deferred tax assets and liabilities are offset only when the Corporation has a right and intention to offset current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognized as a component of taxable income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively. (o) Provisions Environmental rehabilitation Provisions for environmental rehabilitation are made in respect of the estimated future costs of closure and restoration and for environmental rehabilitation costs (which include the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the accounting period when the related environmental disturbance occurs. The provision is discounted using a pre-tax rate, and the unwinding of the discount is included in finance costs. At the time of establishing the provision, a corresponding asset is capitalized and is depreciated over future production from the mining property to which it relates. The provision is reviewed each reporting period for changes in cost estimates, discount rates and operating lives. Changes to estimated future costs are recognized in the statement of financial position by adjusting the rehabilitation asset and liability. If, for mature mines, the revised mine assets net of rehabilitation provisions exceeds the carrying value, that portion of the 16 42

45 increase is charged directly to expenses. For closed sites, changes to estimated costs are recognized immediately in profit and loss. (p) Income / (loss) per share The Corporation presents basic income / (loss) per share data for its common shares, calculated by dividing the income / (loss) attributable to common shareholders of the Corporation by the weighted average number of common shares outstanding during the period. Diluted income per share is determined by adjusting the profit attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares. (q) Segment reporting An operating segment is a component of an entity (i) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), (ii) whose operating results are regularly reviewed by the entity's management, and (iii) for which discrete financial information is available. The Corporation has identified its reportable segments on the basis of their geographic location. As a result the Corporation discloses information geographically based on the location of each of its operations. (r) Interest Interest income and expenses are reported on an accrual basis using the effective interest method. (s) Operating expenses Operating expenses are recognized in profit or loss upon utilization of the service or at the date of their origin. (t) Flow-through shares Under Canadian income tax legislation, a company is permitted to issue flow-through shares whereby the company agrees to incur qualifying expenditures and renounce the related income tax deductions to the investors. The Corporation allocates the proceeds from the issuance of these shares between the offering of shares and the sale of tax benefits. The allocation is made based on the difference between the quoted price of the shares and the amount the investor pays for the shares. A deferred flow-through premium liability is recognized for the difference. The liability is reversed when the expenditures are made and is recorded in deferred tax expense. The spending also gives rise to a deferred tax timing difference between the carrying value and tax value of the qualifying expenditure. (u) Significant accounting judgements and estimates The preparation of consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities, disclosure of commitments and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience, current and expected economic conditions. Actual results could differ from these estimates. Management s estimates and underlying assumptions are reviewed on an ongoing basis. The impact of such estimates are pervasive throughout the consolidated financial statements and may require accounting judgements based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods

46 The significant judgements and estimates used in the preparation of these consolidated financial statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities and earnings within the next financial year include: Significant judgements in applying the Corporation's accounting policies Functional currency of foreign subsidiaries A significant judgement that members of management have made in the process of applying the Corporation s accounting policies and that have a significant effect on the amounts recognized in the consolidated financial statements is the policy on functional currency of foreign subsidiaries. Management uses its judgement to determine the functional currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. As part of this approach, management gives priority to indicators like the currency that mainly influences costs and the currency in which those costs will be settled and the currency in which funds from financing activities are generated. Management also assesses the degree of autonomy the foreign operation has with respect to operating activities. Significant estimates Impairment and reversal of impairment for non-current assets Non-current assets are tested for impairment at the end of each reporting period if in management s judgement there is an indicator of impairment. If there are indicators, management performs an impairment test on the major assets within this balance. In the case of mineral property assets, recoverability is dependent on a number of factors common to the natural resource sector. These include the extent to which the Corporation can continue to renew its exploration and future development licenses with local or other authorities, establish economically recoverable reserves on its properties, the availability of the Corporation to obtain necessary financing to complete the development of such reserves and future profitable production or proceeds from the disposition thereof. The Corporation will use the evaluation work of professional geologists, geophysicists and engineers for estimates in determining whether to commence or continue mining and processing. These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct, and could result in the expenditure of substantial amounts of money on a deposit before it can be determined whether or not the deposit contains economically recoverable mineralisation. Asset retirement obligations Management assesses the asset retirement obligations on an annual basis or when new information becomes available. This assessment includes the estimation of the future rehabilitation costs required based on the existing laws and regulations in each jurisdiction the Corporation operates in, the timing of these expenditures, and the impact of changes in the discount rate. The actual future expenditures may differ from the amounts currently provided if the estimates made are significantly different than actual results or if there are significant changes in environmental and / or regulatory requirements in the future. Deferred income taxes The Corporation operates in several tax jurisdictions and is required to estimate the income tax provision in each of these jurisdictions in preparing its financial statements. The provision for income taxes which is included in the consolidated statements of income (loss) and comprehensive income (loss) and composition of deferred income tax liabilities included in the consolidated statements of financial position is based on factors such as tax rates in the different jurisdictions, changes in tax law and management s assessment of future results and have not yet been confirmed by the taxation authorities. The Corporation does not recognize deferred tax assets where management does not expect such assets to be realized based on current forecasts

47 In the event that actual results differ from these estimates, adjustments are made in future periods and changes in the amount of amount of deferred tax assets recognized may be required. These adjustments could materially impact the financial position and income or loss for the period. Other estimates Other significant estimates which could materially impact the financial statements include: the inputs used in accounting for share purchase option expense in the consolidated statements of income / (loss) the estimated useful lives of property, plant and equipment which are included in the consolidated statements of financial position and the related depreciation included in the consolidated statements of loss and comprehensive loss the discount rate used to determine the carrying value of long term debt 3. RECENT ACCOUNTING PRONOUNCEMENTS Accounting standards issued and effective January 1, 2016 The Corporation is currently assessing the impact that the changes to the following standards may have on the consolidated financial statements: amendment to IFRS 11, Joint Arrangements which requires an acquirer of a joint operation in which the activity constitutes a business to apply all of the business combinations accounting principles and disclosures in IFRS 3 and IFRSs, except for those principles that conflict with the guidance in IFRS 11, to be applied prospectively amendments to IAS 16, Property, Plant and Equipment and IAS 38, Intangible Assets prohibiting entities from using a revenue-based depreciation method for items of property, plant and equipment as well as intangible assets except in limited circumstances, to be applied prospectively amendment to IAS 27, Separate Financial Statements to permit investments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method in separate financial statements amendments to IFRS 10, Consolidated Financial Statements and IAS 28, Investments in Associates and Joint Ventures (2011) to clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture At present, the Corporation does not anticipate that the application of these amendments would have a significant impact on the consolidated financial statements. Accounting standards issued and effective January 1, 2018 In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations when it becomes effective. As the Corporation is presently in the exploration and development stage of operations and currently has no revenue producing properties, the application of IFRS 15 would not have a material impact on the amounts reported and disclosures made in the consolidated financial statements at this time. The Corporation will reassess the application of this standard when circumstances dictate. The Corporation continues to assess the impact that the changes to IFRS 9, Financial Instruments may have on the consolidated financial statements. The changes to IFRS 9 introduce new requirements for the classification and measurement of financial assets and liabilities. The IASB has tentatively decided to require an entity to apply IFRS 9 for annual periods beginning on or after January 1, 2018 although early adoption is permitted

48 4. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand and in banks including money market savings accounts and short term deposits that have a one year maturity but that are cashable after 30 days or less into a known amount of cash $ $ Cash 30,741,147 17,698,585 Short-term money market investments 42,315,670 14,442,428 73,056,817 32,141, OTHER ASSETS $ $ Canadian equity investments (i) 3,582,182 3,777,233 Derivative investments (ii) 2,350,630-5,932,812 3,777,233 (i) (ii) The Corporation's investments consist of common shares held in Canadian publicly traded corporations. Fair values of equities are determined as the closing price at December 31, Investments that are held for short term trading are classified as held for trading. During the year ended December 31, 2015, the Corporation hedged a total of 30,000 ounces of gold sales expiring between July 1, 2016 and December 31, The derivative instruments entered into were in the form of puts with a floor price ranging from $1,000USD per ounce of gold to $1,100USD per ounce of gold. These derivative instruments have not been designated as accounting hedges by the Corporation and are therefore marked to their market values at each reporting date. An adjustment of $135,034 for a loss on mark to market is included in unrealized gain on investments and a $118,562 gain on currency is included in unrealized foreign exchange gain / (loss) in the consolidated statements of income / (loss) and comprehensive income / (loss)

49 6. RESTRICTED CASH AND CASH EQUIVALENTS Property $ $ Hardrock, Ontario (i) 316, ,089 Northern Empire Mill, Ontario (ii) 2,230,488 2,228,973 McCoy-Cove, Nevada (iii) 1,697,600 1,132,928 4,244,632 3,994,990 (i) (ii) (iii) The Corporation has a $633,089 standby letter of credit outstanding in favour of the Ontario Ministry of Northern Development and Mines relating to potential reclamation obligations of the Greenstone Gold property in Ontario. Security, in the form of a guaranteed investment certificate, for the standby letter of credit is held with the Royal Bank of Canada. As a result of the 50% divestment of the interest in the Greenstone Gold properties only $316,544 is recorded on the books of the Corporation. Upon discharge of all reclamation related obligations 100% of the funds held as security will be returned to the Corporation. The Corporation has a total of $2,230,488 in restricted cash and cash equivalents relating to reclamation obligations associated with the Northern Empire mill in Ontario including: a $150,000 standby letter of credit with the Toronto Dominion Bank in the name of the Corporations' wholly owned subsidiary, Goldstone Resources Inc., and payable in favour of the Ontario Ministry of Northern Development and Mines (MNDM) a $1,678,494 standby letter of credit with the Royal Bank of Canada and payable in favour of the MNDM $401,994 in financial assurance held directly by the MNDM The Corporation's wholly owned subsidiary, Au-reka Gold Corporation has a total of $1,226,584USD ($1,697,600CAD) in restricted cash related to reclamation obligations associated with the McCoy-Cove property in Nevada including: $976,584USD ($1,351,599CAD) held in trust with the United States Department of the Interior, Bureau of Land Management $250,000USD ($346,001CAD) held in trust with Lexon Surety Group as security for the surety bond described in Note

50 7. PROPERTY, PLANT AND EQUIPMENT Building and equipment Mill and mining equipment Mineral properties (non-depletable) Costs $ $ $ $ Balance, December 31, ,151,024 4,762, ,258, ,172,293 (restated - Note 2 (e)) Additions 49,558-23,695,165 23,744,723 Disposals - - (29,973,463) (29,973,463) Foreign currency adjustment 13,464-4,445,012 4,458,476 Balance, December 31, ,214,046 4,762, ,425, ,402,029 (restated - Note 2 (e)) Additions 172,181-87,248,406 87,420,587 Disposals (328,587) - (59,786,374) (60,114,961) Foreign currency adjustment 37,581-17,271,926 17,309,507 Balance, December 31, ,095,221 4,762, ,158, ,017,162 Accumulated depreciation and impairment $ $ $ $ Balance, December 31, ,649 2,353,776 2,433,086 5,099,511 (restated - Note 2 (e)) Depreciation for the year 119, ,141 Impairment - 2,409,171 29,973,463 32,382,634 Disposals - - (29,473,463) (29,473,463) Foreign currency adjustment 2,878 - (16,999) (14,121) Balance, December 31, ,668 4,762,947 2,916,087 8,113,702 (restated - Note 2 (e)) Depreciation for the period 265, ,178 Disposals (238,069) - - (238,069) Foreign currency adjustment (43,213) - - (43,213) Balance, December 31, ,564 4,762,947 2,916,087 8,097,598 Carrying amounts $ $ $ $ Balance, December 31, , ,508, ,288,327 (restated - Note 2 (e)) Balance, December 31, , ,242, ,919,564 Building and equipment During the year ended December 31, 2015 the Corporation disposed of 50% of buildings and leasehold improvements related to the Greenstone Gold property with a net book value of $81,511, the Corporation also wrote off a fully depreciated mining camp held by Goldstone Resources which had a net book $106,402 and other buildings and equipment assets with a net book value of $9,007. Mill and mining equipment The Corporation had previously assessed the carrying value of the mill and mining equipment based on facts and circumstances existing at the time which resulted in an impairment charge in 2013 of $2,353,776. An additional impairment of $2,409,171 was taken in 2014 as a potential sale of these assets did not materialize resulting in a revaluation of the recoverable amount of the assets. Total 22 48

51 Mineral properties Property December 31, 2014 (restated - Note 2 (e)) Additions Transfers / Disposal Currency Adjustment December 31, 2015 $ $ $ $ $ Rahill-Bonanza, Ontario 19,898, ,771 (2,030,471) - 17,997,912 East Bay, Ontario 6,308,379 - (6,308,379) - - PQ North, Ontario 1,589,473 - (1,589,473) - - Hasaga, Ontario - 12,644, ,644,362 Hardrock, Ontario 84,719,118 - (84,719,118) - - Brookbank, Ontario 14,996,984 - (14,996,984) - - Greenstone Gold, Ontario ,858,051-49,858,051 McCoy-Cove, Nevada 54,996, ,214-10,616,020 65,799,617 South Arturo, Nevada - 74,287,059-6,655,906 80,942, ,508,949 87,248,406 (59,786,374) 17,271, ,242,907 Property December 31, 2013 Additions Disposal / Impairment Currency Adjustment December 31, 2014 (restated - Note 2 (e)) (restated - Note 2 (e)) (restated - Note 2 (e)) (restated - Note 2 (e)) (restated - Note 2 (e)) $ $ $ $ $ Rahill-Bonanza, Ontario 19,898, ,898,612 East Bay, Ontario 6,308, ,308,379 PQ North, Ontario 1,589, ,589,473 Hardrock, Ontario 84,715,656 3, ,719,118 Brookbank, Ontario 14,996, ,996,984 McCoy-Cove, Nevada 27,764,965 23,691,460-3,539,958 54,996,383 Saddle, Nevada 26,897,423 - (26,819,476) (77,947) - Other areas 2,653,987 - (2,653,987) ,825,234 23,695,167 (29,473,463) 3,462, ,508,949 All mineral properties are in the exploration, evaluation, pre-development or development stage and are not subject to depletion at this time. Impairment and disposal on mineral properties The Corporation regularly reviews the carrying amount if its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. Mineral property interests are tested for impairment when facts and circumstances suggest that the carrying amount of the mineral property interests exceed their recoverable amount. In the absence of other factors, a mineral property that has not been actively explored within the past three years and for which no future exploration plans exist will be considered to be impaired Saddle As a result of the transfer of the Saddle property in Nevada in the acquisition discussed below, the Corporation recognized an impairment loss of $26,819,476 as adjusted per Note 2 (e). Other areas As a result of the transfer of the Blue Sage property in Nevada in the acquisition discussed below, the Corporation recognized an impairment loss of $2,153,463 as adjusted per Note 2 (e) on the related mineral properties. An additional impairment of $500,000 as adjusted per Note 2 (e) was taken in September, 2014 on non-core assets

52 Acquisitions and disposals 2015 Acquisition of Red Lake land package for Hasaga On December 30, 2015 the Corporation acquired 26 patented claims known as the Buffalo Claims and the Newman Madsen Claims from Pure Gold Mining Inc. The claims are subject to a 1% to 3.5% Net Smelter Royalty ( NSR ). The property is located immediately west of and contiguous with the Hasaga property. The Corporation acquired the land for $4,500,000 of which $2,500,000 was paid in cash with the remainder in shares. The Corporation has an additional agreement in place with Pure Gold Mining Inc. to purchase an additional 2 mining claims for an additional $500,000 in Acquisition of Grandview Gold mining claims for Rahill-Bonanza On August 5, 2015 the Corporation acquired Grandview Gold claims from Ontario Inc. The claims are located in the Dome Township of the Red Lake Mining District. The Corporation acquired the Grandview Gold claims for a payment of $120,000 cash. Goldcorp Inc. ("Goldcorp") has exercised its right to acquire a 56% interest in the Grandview Gold claims by funding 56% of the acquisition costs under the terms of the Rahill-Bonanza agreement. Acquisition of 40% interest in South Arturo Mine On June 2, 2015 the Corporation acquired Goldcorp Dee LLC from Goldcorp which owns a 40% interest in the South Arturo Mine project, located 8 kilometres northwest and along strike from Barrick Goldstrike Operations, within the Carlin Trend in Nevada. Pursuant to the terms of the transaction, the Corporation paid Goldcorp $20,000,000USD ($24,846,000CAD) at closing and transferred 5% of a 49% interest in the Rahill-Bonanza partnership in Red Lake. Concurrent with the acquisition, Goldcorp completed a private placement with the Corporation in the amount of $12,500,000. As the South Arturo acquisition did not meet the definition of a business under IFRS, the acquisition has been accounted for as an asset acquisition whereby the assets acquired and liabilities assumed are recorded at fair value based on the 40% interest. The following table summarizes the net assets acquired: Purchase Price USD CAD Cash 20,000,000 24,846,000 Fair value of 5% interest in Rahill-Bonanza 4,000,000 4,969,200 Transaction costs 188, ,001 24,188,464 30,056,201 Purchase Price Allocation Cash and cash equivalents 2,268,171 2,817,749 Prepaids 23,982 29,793 Construction in progress 7,042,900 8,749,394 Mineral interest 15,969,348 19,845,594 Advanced royalty payments 80,000 99,384 Accounts payable and accrued liabilities (1,195,937) (1,485,713) 24,188,464 30,056,201 The Corporation has determined that the arrangement is a joint operation not structured through a separate entity and for which we do not have control. As a result we are accounting for our share of the assets, liabilities, revenues and expenses related to the operation. South Arturo is considered a development property as a mine plan has been prepared, a permit has been obtained and the decision to commercially develop the property has been made

53 Divestment of 5% interest in Rahill-Bonanza As a result of the transaction described in the acquisition of the 40% interest in the South Arturo Mine project, the Corporation divested 5% of a 49% interest in Rahill-Bonanza valued at $4,000,000USD ($4,969,200CAD). A gain of $2,938,729 was recorded on the divestment and is included in the gain on divestment of mineral property interests. Divestment of 50% interest in Greenstone Gold On March 9, 2015, the Corporation formed a general partnership, Greenstone Gold, through its wholly owned subsidiary Premier Gold Mines Hardrock Inc. to facilitate the joint ownership and development of the Corporation s Greenstone Gold property including the Hardrock and Brookbank projects located in the Geraldton-Beardmore Greenstone Belt in Ontario. Centerra acquired a 50% interest in the new company for cash consideration of $85,000,000. Further details of the agreement include the following: The Corporation, through its wholly owned subsidiary, contributed all property, assets and rights it held in respect of the Greenstone Gold property in consideration for its 50% interest in the partnership, while Centerra made an initial cash contribution of $85,000,000 for its 50% limited partner interest. The Corporation, in accordance with the contractual arrangements with Centerra, subsequently withdrew $85,000,000 from the partnership in recognition of the property contribution Centerra has also agreed to make capital contributions to the partnership in the aggregate amount of $185,000,000 half of which is on behalf of the Corporation. A portion of these funds will initially be used to complete a comprehensive technical and economic feasibility study including an updated mineral resource calculation for the Hardrock project at the Greenstone Gold property. Subject to the satisfaction of certain feasibility and project advancement criteria the remainder of the funds will be used towards the construction and development of the Hardrock project. The Corporation will not be required to make any contributions to the partnership until Centerra has provided the full amount of the capital contributions, following which cash calls will be satisfied by each of Centerra and the Corporation on a 50/50 basis pursuant to approved annual programs and budgets. The partnership agreement contains customary dilution mechanisms for failures to meet cash calls and certain other events. Centerra has agreed to make an additional contingent capital contribution to the partnership not to exceed $30,000,000 based on the results of the updated mineral resource calculation in respect of the Greenstone gold property which was settled on September 17, 2015 for $11,009,681 and which was distributed to the Corporation in accordance with the agreement. Following completion of the formation of Greenstone Gold, the Corporation and Centerra have formed a joint board of directors to oversee future exploration, development and operations by the partnership. The joint arrangement was determined to be a joint operation under IFRS 11 Joint Arrangements. The factors the Corporation considered in making this determination include the terms and conditions of the partnership agreement, the purpose and design of the joint arrangement including the legal form of the entity which holds the assets and liabilities. As the joint arrangement is structured though a separate entity, Greenstone Gold, of which Premier Gold Mines Hardrock Inc., a 100% fully owned subsidiary of the Corporation, is a 50% shareholder and of which confers rights to assets and obligations for the liabilities relating to the operation and does not confer separation between the parties and the separate vehicle, the arrangement is classified as a joint operation. The Corporation recognized its interest in the assets, liabilities, revenues and expenses of the partnership in accordance with the Corporation s rights and obligations prescribed by the terms of the partnership agreement

54 The gain on divestiture of the 50% interest in the Greenstone Gold property has been recorded as follows and is included in the gain on divestment of mineral property interests: $ Proceeds on divestment of 50% interest 85,000,000 Additional contingent capital contribution 11,009,681 Total proceeds 96,009,681 Costs: Mineral properties (49,858,051) Property, plant, and equipment (84,015) Transaction costs (3,119,688) 42,947,927 For the year ended December 31, 2015, the Greenstone Gold partnership incurred a total of $25,287,240 for expenditures from the agreed date of February 5, The Corporation s share is 50% of these expenditures and is included in the income / (loss) for the period. As 100% of expenditures are funded by Centerra (joint operator) under the terms of the agreement, the recovery of $12,643,620 for the year ended December 31, 2015 is shown as a gain attributable to the Greenstone Gold development commitment. Red Lake property transfer agreement related to Hasaga, East Bay and PQ North On February 11, 2015, the Corporation entered into an agreement to obtain a 100% interest in the past-producing Hasaga property, located in Red Lake, Ontario, from Goldcorp. In exchange, the Corporation assigned to Goldcorp its 35% participating interest in the East Bay property in Red Lake, Ontario and its 100% interest in the PQ North property located near Goldcorp's Musselwhite Mine in Ontario. Given the nature of the assets involved in the agreement, there is no gain or loss recognized on the exchange of properties. As a result of the transfer, the Hasaga property will be recorded with an acquisition cost of $7,897,852 which was the combined acquisition cost of the East Bay property, $6,308,379, and the PQ North property, $1,589,473, exchanged in the deal. The Corporation will retain a 2% NSR in the PQ North property Nevada property transfer and acquisition McCoy-Cove and Saddle On September 11, 2014, the Corporation acquired a 100% ownership interest in the McCoy gold property adjacent to the Cove property and located along the Eureka-Battle Mountain Trend in Nevada from Newmont Mining Corporation ("Newmont") for a total of $21,153,088USD ($23,691,459CAD). The Corporation paid $15,000,000USD on closing, will pay an additional $6,000,000USD within 18 months or on publishing a resource and transferred all land sections that comprise its South Carlin project, including the Saddle and Blue Sage properties as discussed below. In addition, the Corporation assumed existing reclamation and environmental liabilities associated with the property of $877,272USD ($1,017,717CAD) and replaced the existing financial surety with the United States Bureau of Land Management in the amount of $4,417,691USD. The acquisition includes the following: 100% interest in the consolidated McCoy-Cove property package (now totaling 31,000 acres or 48 square miles) elimination of back-in rights previously held by Newmont as well as a revision of the royalty terms held by Newmont from a potential 5.0% NSR to a 1.5% NSR the potential to define near-surface heap leachable mineralization at McCoy that could be prioritized towards development existing infrastructure, including lined heap leach pads that could potentially be utilized under a renewed development scenario a good faith efforts processing arrangement with Newmont over a 10-year period within a 12-year window for ores mined at McCoy-Cove 26 52

55 the Corporation will retain a 1.5% NSR in the South Carlin property interests As a result of the transfer of the Saddle property in Nevada in the acquisition, the Corporation recognized an impairment loss of $29,473,463 as adjusted per Note 2 (e). Summary of Mineral Property NSRs (at December 31, 2015) Property Status NSR Rahill Bonanza, Ontario Active 2% NSR Marathon Canada Ltd. 3% NSR William, Michael and the estate of Steve Kostynuk 3% NSR Dave Meunier 0.5% NSR Cypress/Skyharbour 2% underlying NSR owed to a third party Hasaga, Ontario Active 3% NSR Lac Properties 1% NSR Pure Gold Mining Inc. 3% NSR Camp McMann Red Lake Gold Mine Ltd. 0.5% NSR Sandstorm Gold Ltd. Greenstone Gold Mines, Ontario Active 3% NSR Argonaut Gold Inc. 2% NSR Algoma Steel Inc. 1% NSR on the first 350,000 tons of production from the property payable to Griffin Mining Limited (formerly European Mining Limited) 3% NSR Franco-Nevada Corporation. 5% NSR Algoma Steel Inc. 1% NSR Metalore Resources McCoy-Cove, Nevada Active 1.5% NSR Newmont Other areas Northern Empire, Ontario Inactive 3% NSR Shirley Lafontaine, Amede Lafontaine, Stewart Robertson, Geneva Nichols Sand River Leitch, Ontario Inactive 1-2% NSR Osisko Gold Royalties 3% NSR Franco-Nevada Corporation Nortoba-Tyson, Ontario Inactive 1% NSR Wayne Gorrie Faymar, Ontario Inactive 0.2% NSR Marion Howes Santa Teresa, Mexico Inactive 1.5-3% NSR Grupo Alamo S.A. de C.V. 8. LONG TERM DEBT $ $ Promissory note payable (i) 207, ,020 Newmont payable (ii) 8,304,000 6,960,557 Total obligation 8,511,600 7,192,577 Less interest to be accreted (161,985) (681,509) Present value of the obligation 8,349,615 6,511,068 Less current portion of long term debt 8,237,115 44,331 Long term debt 112,500 6,466,

56 The estimated future minimum payment obligations are as follows $ ,373, , ,200 8,511,600 (i) The Corporation, through its wholly owned subsidiary, Premier Gold Mines Nevada Inc. holds a noninterest bearing promissory note secured by a deed of trust on the Blue Sage property. The outstanding principal of the promissory note at December 31, 2015 is $150,000USD ($207,600CAD) and at December 31, 2014 $200,000USD ($232,020CAD) repayable at $50,000USD annually on July 19 th until The note is discounted at a rate of 15% for a discounted balance of $121,859USD ($168,653CAD) at December 31, 2015 and $152,375USD ($203,344CAD) at December 31, The current portion of the discounted note is $56,154CAD ($44,331CAD at December 31, 2014) with a remaining long term balance of $112,500CAD ($132,437CAD at December 31, 2014). The value of the debt is being accreted to the face value of the promissory note at its maturity date, with the charge to the statement of income / (loss) and comprehensive income / (loss) as a form of interest expense over the term of the note. (ii) As a result of the 2014 acquisition of the McCoy-Cove Property described in Note 7, the Corporation agreed to an additional payable in favour of Newmont, through its wholly owned subsidiary, Au-reka Gold Corporation in the amount of $6,000,000USD. The payable is due within 30 days of the earlier of: a published one million ounce mineral resource estimate or the completion of a positive feasibility study. In accordance with the purchase agreement the Corporation shall make reasonable effort to complete a mineral resource estimate within 18 months of September 11, 2014 and as such, the present value of the debt over the eighteen months and using a discount rate of 8%, is $8,180,960CAD ($6,334,300CAD at December 31, 2014). At December 31, 2015 and December 31, 2014, the outstanding principal of the payable is $6,000,000USD. At December 31, 2015 the current portion of the payable is $6,000,000USD discounted at a rate of 8%, $8,304,000CAD and the long term portion is nil. At December 31, 2014 the current portion of the payable was nil and the long term portion was $6,000,000USD ($6,960,557CAD). The value of the debt is being accreted to the face value of the payable at its maturity date, with the charge to the statement of income / (loss) and comprehensive income / (loss) as a form of interest expense over the term of the debt. 9. PROVISION FOR ENVIRONMENTAL REHABILITATION The Corporation's provision for environmental rehabilitation results from an ownership interest in a mill, mining equipment and previously mined property interests. The provision consists primarily of costs associated with mine reclamation and closure activities. These activities, which tend to be site specific, generally include costs for decommissioning the mill complex and related infrastructure, physical and chemical stability of the tailings area and post-closure site security and monitoring costs. In determining the estimated costs, the Corporation considers such factors as changes in laws and regulations and requirements under existing permits. Such analysis is performed on an ongoing basis

57 The Corporation estimates that the future value of the cash flows required to settle the provision is $4,093,509 for the Northern Empire Mill and the Faymar Deloro property in Canada and $9,425,746USD ($13,045,293CAD) for the McCoy-Cove property and South Arturo Mine project in the United States. In calculating the best estimate of the Corporation's provision, management used risk free interest rates ranging from 1.295% to 7.5%. A reconciliation of the discounted provision is provided below: Northern Empire Mill Faymar Deloro property 2015 McCoy-Cove property South Arturo property $ $ $ $ $ Balance, January 1, ,430,402 1,388,561 1,011,539-4,830,502 New obligation ,031,380 5,031,380 Change in estimate 11,562 5, , ,098 Accretion expense 31,626 25,040 19,466-76,132 Reclamation expenditures - - (193,478) - (193,478) Currency adjustment , ,923 Balance, December 31, ,473,590 1,419,447 1,195,140 5,031,380 10,119,557 Northern Faymar Deloro McCoy-Cove Total Empire Mill property property $ $ $ $ Balance, January 1, ,351,185 1,352,195-3,703,380 New obligation - - 1,017,717 1,017,717 Accretion expense 47,615 30,061 5,084 82,760 Adjustment due to change in interest 31,602 6,305-37,907 rate Reclamation expenditures - - (10,967) (10,967) Currency adjustment - - (295) (295) Balance, December 31, ,430,402 1,388,561 1,011,539 4,830,502 The additional obligation accounted for in 2014 is related to the McCoy-Cove mineral property interest acquired on September 11, 2014 as described in Note 7. The additional obligation accounted for in 2015 is related to the South Arturo Mine project interest acquired on April 6, 2015 as described in Note CAPITAL Authorized The Corporation is authorized to issue an unlimited number of common shares. Details of share issuances 2015 Shares issued as payment On December 30, 2015, the Corporation issued 1,001,721 common shares, valued at $2,500,000 for a 513 hectare land package located west of the Hasaga property. Purchase details are described in Note Total 29 55

58 Issuance of Restricted Share Units On December 22, 2015 the Corporation granted 84,308 RSU's that vested and settled immediately in shares only, valued at $210,770. Private Placements On December 4, 2015 the Corporation issued 2,689,560 flow-through common shares, on a "bought deal" basis, at a price of $2.90 per common share for gross proceeds of $7,799,724. In consideration of the agents' services in connection with the offering, the agents were paid an aggregate cash fee totalling $398,712, equal to approximately 5 per cent of the gross proceeds raised in the offering. On June 3, 2015 the Corporation issued 11,544,969 common shares, on a "bought deal" basis, at a price of $2.35 per common share for gross proceeds of $27,130,677. In consideration of the agents' services in connection with a portion of the offering, the agents were paid an aggregate cash fee totalling $413,269, representing between 3 and 5 per cent of the gross proceeds they raised in the offering Private Placement On November 25, 2014 the Corporation issued 3,750,000 flow-through common shares, on a "bought deal" basis, at a price of $2.45 per common share for gross proceeds of $9,187,500. In consideration of the agents' services in connection with the offering, the agents were paid an aggregate cash fee totalling $377,081, equal to approximately 5 per cent of the gross proceeds raised in the offering. Shares issued as payment On June 13, 2014, the Corporation issued 2,204,488 common shares, valued at $5,000,000 on behalf of it's wholly owned subsidiary Au-reka Gold Corporation for partial repayment of the promissory note pursuant to the Cove property acquisition completed in Share option plan The Corporation has a share purchase compensation plan (the "Plan") which is restricted to directors, officers, key employees and consultants of the Corporation. The number of common shares subject to options granted under the Plan (and under all other management options and employee stock purchase plans) is limited to 10% in the aggregate and 1% with respect to any one optionee of the number of issued and outstanding common shares of the Corporation at the date of the grant of the option. Options issued under the Plan may be exercised during a period determined by the Board of Directors which cannot exceed ten years

59 The following table reflects the stock options outstanding as at December 31, 2015: Expiry date Exercise price Opening balance Granted Exercised Expired / cancelled Closing balance $ # # # # # April 13, 2015 (i) ,648, (2,648,000) - September 17, 2015 (i) , (48,003) - October 5, 2015 (i) , (22,401) - October 16, 2015 (i) , (20,001) - December 8, 2015 (i) , (60,000) - June 24, , ,001 July 28, ,327, ,327,000 August 10, , ,000 August 25, , ,666 October 19, , ,000 December 20, , ,000 March 5, , ,000 May 2, , ,000 May 8, , ,000 June 13, , ,000 August 13, , ,000 October 24, , ,000 January 28, , ,000 February 22, , ,000 March 6, , ,000 March 18, , ,000 April 8, , ,000 April 15, , ,000 August 8, ,280,250 - (95,000) - 1,185,250 August 13, ,000 - (150,000) - - September 20, ,000 - (100,000) - 50,000 September 24, , ,000 October 22, , ,000 December 18, , ,000 March 7, , ,000 May 2, ,000 - (45,000) - 105,000 August 29, 2019 (ii) ,682, (45,000) 1,637,500 September 22, , ,000 March 9, , ,000 April 10, 2020 (ii) ,000 (20,000) (40,000) 190,000 July 15, ,740, ,740,000 12,674,822 3,115,000 (410,000) (2,883,405) 12,496, (i) (ii) Expired options Cancelled options 31 57

60 Total vested stock options at December 31, 2015 were 11,901,417 with a weighted average exercise price of $3.54 (12,239,822 at December 31, 2014 with a weighted average exercise price of $3.96). The Corporation applies the fair value method of accounting for all stock based compensation awards and accordingly, $3,506,505 was recorded for options and shares issued as compensation during the year December 31, 2015 ($3,331,875 at December 31, 2014). As of December 31, 2015 there were 595,000 unvested stock options (435,000 at December 31, 2014). For purposes of the options granted, the fair value of each option was estimated on the date of grant using the Black- Scholes option pricing model, with the following assumptions: Risk-free interest rate 0.75% % 1.58% % Annualized volatility based on historical volatility 64% 61% - 66% Expected dividend Nil Nil Expected option life 5 years years Deferred Share Unit Plan Effective June 25, 2015, the Corporation introduced a DSU plan for eligible directors. The DSUs are paid in full in the form of a lump sum payment no later than December 31 of the calendar year immediately following the calendar year of termination of service. The Corporation may issue shares in lieu of cash payment. The aggregate maximum number of shares available for issuance from treasury under this plan is 500,000 shares and are subject to the maximums of 10% in total and 1% per optionee. During the year the Corporation did not issue any DSUs. Restricted Share Unit Plan Effective June 25, 2015, the Corporation introduced a RSU plan for eligible members of the Board of Directors, eligible employees and eligible contractors. The aggregate maximum number of shares available for issuance from treasury under this plan is 1,100,000 shares and are subject to the maximums of 10% in total and 1% per optionee. The restricted share units can be settled in cash or equity at the option of the Corporation. The RSUs vest subject to a RSU award letter but no later than December 31 of the third calendar year following the service year determined based on date of grant. The RSU share plan transactions during the year were as follows: # $ # $ Balance, January Granted 84, , Redeemed (84,308) (210,770) - - Balance, December

61 11. INCOME / (LOSS) PER SHARE Basic income / (loss) per share is calculated based on the weighted average number of common shares and common share equivalents outstanding during the year ended December 31, 2015 and Diluted income per share is based on the assumption that stock options that have an exercise price less than the average market price of the Corporation's common shares during the period have been exercised on the later of the beginning of the year and the date granted. Net income / (loss) and basic weighted average shares outstanding are reconciled to diluted net income / (loss) and diluted weighted average shares outstanding, respectively, as follows: For the year ended December 31, (restated - Note 2 (e)) $ $ Net income / (loss) for the period 24,789,599 (63,373,442) Basic weighted average shares outstanding 165,482, ,727,702 Dilution adjustment for stock options 1,265,949 - Diluted weighted average shares outstanding 166,748, ,727,702 Basic and diluted income / (loss) per share 0.15 (0.41) 12. SUPPLEMENTAL CASH FLOW INFORMATION The significant non-cash activities during the period are as follows: For the year ended December 31, Note $ $ Fair value of mineral property interest exchanged in property acquisition 7 4,969,200 - Fair value of debt issued for the purchase of mineral properties 7-5,987,367 Fair value of stock options allocated to share capital upon exercise 479,733 2,506,693 Fair value of shares issued for the purchase of mineral property interest 2,500,000 - Fair value of shares issued for repayment of promissory note 10-5,000, GENERAL AND ADMINISTRATIVE For the year ended December 31, $ $ Corporate administration 1,534,463 1,627,417 Flow-through interest penalty 36,309 (139,364) Corporate salaries and benefits 2,871,958 2,365,731 Professional fees 1,520, ,654 Project administration (i) 2,127,637-8,090,492 4,381,438 (i) Management fees and other administrative costs related to the projects included in the joint arrangement and co-ownerships

62 14. EXPLORATION, EVALUATION AND PRE-DEVELOPMENT For the year ended December 31, (restated - Note 2 (e)) $ $ Rahill-Bonanza, Ontario 921, ,466 East Bay, Ontario 19, ,354 PQ North, Ontario Hasaga, Ontario 6,995,050 - Brookbank, Ontario (i) - 27,219 Hardrock, Ontario (i) - 18,034,985 Greenstone Gold, Ontario (i) 13,657,426 - McCoy-Cove, Nevada 4,809,160 7,080,994 Saddle, Nevada - 13,164 South Arturo 727,042 - Other areas 14,583 52,863 27,144,627 26,283,201 (i) In 2015 Greenstone Gold includes the Hardrock, Brookbank, and Key Lake projects. 15. SEGMENTED INFORMATION The Corporation s significant segments, that are represented by its separately identifiable mineral properties as described in Note 7, operate in three distinct geographic areas. The Canadian operations, which are located in Ontario, are managed from the Corporation s head office in Thunder Bay. The United States of America (U.S.A.) operations are managed from an office in Nevada. The Mexican operations are managed from an office in Mexico City. For the year ended December 31, 2015 Canada U.S.A. Mexico Total $ $ $ $ Depreciation and impairment loss on property, plant (178,369) (86,809) - (265,178) and equipment Long term debt accretion - (601,521) - (601,521) Overhead costs (9,692,933) (407,885) (26,873) (10,127,691) Exploration, maintenance and rehabilitation (22,209,022) (7,389,911) (25,928) (29,624,861) Other income 60,082, ,082,813 Income / (loss) before income taxes 28,002,489 (8,486,126) (52,801) 19,463,562 Current tax Deferred tax (20,745) 5,346,782-5,326,037 Income / (loss) for the year 27,981,744 (3,139,344) (52,801) 24,789,

63 For the year ended December 31, 2014 Canada U.S.A. Mexico Total (restated - Note 2 (e)) (restated - Note 2 (e)) (restated - Note 2 (e)) (restated - Note 2 (e)) $ $ $ $ Depreciation and impairment loss on property, plant (28,064,837) (4,436,938) - (32,501,775) and equipment Long term debt accretion - (617,355) - (617,355) Overhead costs (7,652,374) (40,051) (20,887) (7,713,312) Exploration, maintenance and rehabilitation (19,694,820) (7,134,035) (40,244) (26,869,099) Other income 4,580,252 10,571-4,590,823 Income / (loss) before income taxes (50,831,779) (12,217,808) (61,131) (63,110,718) Current tax (582) (26) - (608) Deferred tax (2,487,518) 2,225,403 - (262,115) Income / (loss) for the year (53,319,879) (9,992,431) (61,131) (63,373,441) As at December 31, 2015 Canada U.S.A. Mexico Total $ $ $ $ Mineral properties 80,500, ,742, ,242,907 Total assets 151,422, ,752,564 7, ,182,570 Total liabilities 18,096,804 14,769, ,867,111 As at December 31, 2014 Canada U.S.A. Mexico Total (restated - Note 2 (e)) (restated - Note 2 (e)) (restated - Note 2 (e)) (restated - Note 2 (e)) $ $ $ $ Mineral properties 127,512,567 54,996, ,508,949 Total assets 167,687,130 57,185,186 26, ,899,008 Total liabilities 14,883,163 7,808,610 6,790 22,698, INCOME TAXES (a) The major components of income tax (recovery) / expense are as follows: $ $ Current income tax Origination and reversal of temporary differences (100,874) 4,783,456 Effect of change in tax rates 38, Deferred tax liability incurred on renouncement expenses 265, ,000 Reversal of deferred flow-through premium (559,410) (57,143) Recognition of previously unrecognized tax assets from the renouncement of flow-through expenditures (3,453,204) - Recognition of previously unrecognized tax assets from the use of loss carryforwards - (4,761,710) Impact of the use of loss carryforwards related to share issue costs charged to equity - 2,544,661 Other (1,516,317) (2,512,760) Income tax (recovery) / expense (5,326,037) 262,

64 (b) The Corporation's income tax expense (benefit) differs from the amount computed by applying the combined Canadian federal and provincial income tax rates to loss before income taxes as a result of the following: $ $ Income / (loss) for the year 19,463,562 (63,110,719) Statutory rates (i) 26.50% 26.50% Income tax recovery computed at statutory rates 5,157,844 (16,724,340) Difference in foreign tax rates 1,698,465 (1,027,836) Increase in deferred tax assets not recognized 4,531,891 14,054,045 Non-taxable items (11,489,073) 8,481,588 Effect of change in tax rates 38, Impact of attributes renounced to shareholders (flow-through shares) 265, ,000 Impact of flow-through share premium (559,410) (57,143) Recognition of previously unrecognized tax assets from the use of loss carryforwards (3,453,204) (4,761,710) Impact of the use of loss carryforwards related to share issue costs charged to equity - 2,544,661 Other (1,516,318) (2,512,153) Deferred tax (recovery) / expense (5,326,037) 262, $ $ Exchange difference on translation of foreign operations through other 18,445,332 4,281,310 comprehensive income (ii) Statutory tax rates 35% 35% Income tax expense computed at statutory rates 6,455,866 1,498,459 Exchange difference not subject to income tax (1,109,084) 690,305 Other comprehensive income deferred tax expense 5,346,782 2,188,764 (i) The Corporation operates in multiple industries and jurisdictions, and the related income is subject to varying rates of taxation. The combined Canadian federal and provincial tax rate reflects the tax rate of 26.5% in effect in Ontario, Canada for each applicable tax year. The corporation operates in Mexico, which reflects a 30% tax rate for the current year. As well, the corporation operates in Nevada, USA and reflects a 35% tax rate for each applicable tax year. (ii) A tax rate of 35% is applicable to the exchange difference on translation of foreign operations as it relates to timing differences originating from the subsidiaries' operations in Nevada, USA

65 (c) The deferred income tax liabilities reported on the balance sheet are comprised of temporary differences as presented below: As at December 31, $ $ Deferred income tax assets Non-capital losses 9,682,790 3,267,631 Deferred tax assets set off against deferred tax liabilities (9,682,790) (3,267,631) Deferred tax asset - - Deferred income tax liabilities Exploration and evaluation (7,661,549) (7,159,558) Investments (9,682,790) (3,265,468) Other - 76,001 Gross deferred tax liabilities (17,344,339) (10,349,025) Deferred tax assets set off against deferred tax liabilities 9,682,790 3,267,631 Deferred tax liabilities per balance sheet (7,661,549) (7,081,394) Balance at the beginning of the year (7,081,394) (7,116,667) Recognized in loss 5,326,037 (262,115) Deferred premium on flow-through shares (559,410) (57,143) Deferred tax recovery recognized on share issue costs charged to equity - 2,544,661 Deferred tax liability recognized on exchange difference on translation of foreign operations (5,346,782) (2,188,764) Other - (1,366) Balance at the end of the year (7,661,549) (7,081,394) 37 63

66 (d) Deferred tax assets not recognized Management believes that it is not probable that sufficient taxable profits will be available in future years to allow the benefit of the following deferred tax assets to be utilized: $ $ Deferred tax assets not recognized Non-capital losses 14,635,788 14,825,388 Common share issue costs 602, ,744 Exploration and evaluation 29,602,023 22,715,286 Investments 1,164,046 1,272,815 Pre-production ITC 1,045,718 1,073,473 Other - 6,360 47,049,591 40,802,066 Unused operating tax losses (i) Canada 28,410,454 22,195,733 U.S.A 47,970,878 36,879,656 Mexico - 121,904 76,381,332 59,197,293 Total unused operating tax losses not recognized Potential tax benefit at tax rate between 26.5% and 35% 24,318,578 18,093,019 Operating tax losses set off against deferred tax liabilities (9,682,790) (3,267,631) Total unused operating tax losses not recognized 14,635,788 14,825,388 (i) Unused operating tax losses totaled $76,381,332 as of December 31, Canadian tax losses will expire between 2023 and 2035; U.S. losses will expire between 2028 and 2035; and Mexican losses will expire between 2021 and RELATED PARTY TRANSACTIONS The Corporation's related parties include key management personnel and entities over which they have control or significant influence as described in Note 2 (c) and below. Nature of transactions DSA Filing Services Filing services DRAX Services Limited Corporate secretarial services The Alyris Group Corporate accounting and IT services Alyris Leasing Inc. Facilities rental Mega Precious Metals Inc. Facilities rental Wolfden Resources Corp Facilities rental Alyris Vineyards Limited Special events Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash. The following are the related party transactions, recorded at the exchange amount as agreed to by the parties. (a) Included in general and administrative expenses are amounts totalling $44,000 ( $84,271) for corporate secretarial and filing services provided by DSA Filing Services and DRAX Services Limited, all of which are or have been related to the Corporation through Shaun Drake, Corporate Secretary of the Corporation

67 (b) Included in general and administrative expenditures are amounts totalling $92,546 ( $108,394) for IT consulting, and accounting services provided by Ontario Inc., O/A The Alyris Group, a company related to the Corporation through Ewan Downie, Director, President and Chief Executive Officer of the Corporation, and Steve Filipovic, Chief Financial Officer of the Corporation. (c) Included in general and administrative expenditures are amounts totalling $152,511 ( $160,949) for rental charges paid to Alyris Leasing Inc., a company related to the Corporation through Ewan Downie, Director, President and Chief Executive Officer of the Corporation, and Steve Filipovic, Chief Financial Officer of the Corporation. (d) Included in other income are amounts totaling $nil ( $2,650) for rental of a core shack paid by Mega Precious Metals Inc., a company related to the Corporation through Ewan Downie, Director, President and Chief Executive Officer of the Corporation, who is also a director of Mega Precious Metals Inc. (e) Included in general and administrative are amounts totaling $7,200 ( $7,200) for rental of office space paid by Wolfden Resources Corporation, a company related to the Corporation through Ewan Downie, Director, President and Chief Executive Officer of the Corporation, who is also a Director of Wolfden Resources Corporation. (f) Included in general and administrative expenditures are amounts totaling $17,895 ( $nil) for marketing and investor relations events held at Alyris Vineyards Limited, a company related to the Corporation through Ewan Downie, Director, President and Chief Executive Officer of the Corporation. Transactions with key management personnel Key management personnel remuneration includes the following amounts: For the year ended December 31, $ $ Salary, wages and benefits 1,895,957 1,494,382 Share-based payments 2,004, ,170 3,900,257 2,378, COMMITMENTS (a) Contractual obligations The Corporation has commitments relating to facilities and other operating leases extending to The minimum annual contractual and lease payments for the three years are as follows: $ , , , ,362 (b) Flow-through commitments The Corporation has $7,062,214 in remaining flow-through obligations to be spent by December 31, (c) Surety Bonds At December 31, 2015, the Corporation has outstanding surety bonds in the amount of $4,417,691USD ($6,114,084CAD) in favour of the United States Department of the Interior, Bureau of Land Management (BLM) as financial support for environmental reclamation and exploration permitting. The surety bonds are secured by a $250,000USD ($346,001CAD) deposit and are subject to fees competitively determined in the market place. The obligations associated with these instruments are generally related to performance requirements that the Corporation 39 65

68 addresses through its ongoing operations. As specific requirements are met, the BLM as beneficiary of the instrument will return the instrument to the issuing entity. As these instruments are associated with operating sites with long-lived assets, they will remain outstanding until closure. 19. FINANCIAL INSTRUMENTS AND RELATED RISKS The Corporation's operations include the acquisition and exploration of mineral properties in Canada, the United States of America and Mexico. The Corporation examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other risks. Where material, these risks are reviewed and monitored by the Board of Directors. (a) Credit Risk Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Corporation by those counterparties, less any amounts owed to the counterparty by the Corporation where a legal right of set-off exists and also includes the fair values of contracts with individual counterparties which are recorded in the financial statements. (i) (ii) (iii) Trade credit risk The Corporation is in the exploration and development stage and has not yet commenced commercial production or sales. Therefore, the Corporation is not exposed to significant credit risk and overall the Corporation's credit risk has not changed significantly from the prior period. Cash and cash equivalents In order to manage credit and liquidity risk the Corporation invests only in highly rated investment grade instruments that have maturities of 90 days or less and which are cashable after 30 days or less into a known amount of cash. Limits are also established based on the type of investment, the counterparty and the credit rate. The credit risk on cash and cash equivalents is therefore negligible. Derivative financial instruments As a way of managing commodity risk, the Corporation has invested in derivative financial instruments. The derivative financial instruments are with highly rated investment grade counterparties. These derivatives have allowed the Corporation to reduce the down side risk on commodity markets. Given the nature of the derivatives the Corporation is not exposed to significant credit risk. (b) Liquidity risk Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation manages liquidity risk through the management of its capital structure. As at December 31, 2015 the Corporation's liabilities that have contractual maturities are as follows: Total $ $ $ $ $ Accounts payable and accrued liabilities 5,859, ,859,702 Long term debt - 8,373,200 69,200 69,200 8,511,600 5,859,702 8,373,200 69,200 69,200 14,371,302 (c) Market risk (i) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Corporation will realize a significant loss as a result of a decline in the fair market value of investments and other items held within cash and cash equivalents is limited given that the majority of investments have a relatively short maturity. The Corporation manages its interest rate risk with investments by investing the majority of funds in short 40 66

69 term investments and therefore is not exposed to significant fluctuations in interest rates. (ii) Currency risk Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the Corporation s functional currency. The Corporation s management monitors the exchange rate fluctuations on a continuous basis and acts accordingly. The functional currency and presentation currency of the Corporation is the Canadian dollar. The Corporation s capitalized mineral properties and expenses also include amounts incurred in U.S. dollars and to a lesser extent, the Mexican peso which are the functional currencies of these operations. The Corporation s exchange risk is therefore related to movement between these currencies. Changes in the currency exchange rates between the Canadian dollar relative to the U.S. dollar and the Mexican peso have an effect on the Corporation s results of operations through comprehensive income (loss), financial position or cash flows. The Corporation has mitigated this risk by diversifying its cash resources in the U.S. dollar and Mexican peso roughly in proportion to expected future expenditure over the following twelve months. The carrying amounts of the Company s U.S. dollar denominated monetary assets and monetary liabilities in Canadian dollars at the end of the reporting period are as follows: $ $ Cash and cash equivalents 16,880,819 2,794,550 Restricted cash and cash equivalents 1,697,592 1,132,935 Accounts receivable & prepaids 328,950 97,103 Accounts payable and accrued liabilities 263, ,004 Promissory note 8,349,576 6,511,109 There are no significant financial instruments in Mexican pesos. For the year ended December 31, 2015, the Corporation recognized an unrealized foreign exchange gain of $268,942 ( $51,512) and an exchange gain on the translation of foreign operations in comprehensive income of $18,445,332 ( $6,184,556) respectively. As of December 31, 2015, if the Canadian dollar to the U.S. dollar exchange rate increases or decreases by 10%, the Corporation s net income or loss will increase or decrease by $1,621,933 ( $198,375) and the Corporation s other comprehensive income (loss) will increase or decrease by $592,507 ( $535,918). (iii) Security price risk Security price risk is the risk that the fair value or future cash flow of the Corporation's financial instruments will fluctuate because of the changes in the market price. The Corporation only takes a position in the securities of another entity where it has a strategic objective; or as a result of a purchase or sale transaction. In situations where the Corporation has taken a position in the securities of another entity, the Corporation manages its exposure to price risk by monitoring the market(s) where the entity's securities trade and planning the divestiture accordingly. The fair value of available for sale securities at December 31, 2015 and 2014 was $3,582,182 and $3,777,233 respectively, representing the maximum potential losses from changes in prices of equity investments. (iv) Commodity price risk Commodity price risk is the risk that the fair value or future cash flow of the Corporation's derivative financial instruments will fluctuate because of the changes in the commodity price. The Corporation has entered into put options in order to reduce the down side risk on the gold commodity market. The fair value of derivative financial instruments at December 31, 2015 and 2014 was $2,350,630 and nil respectively, representing the maximum potential losses from changes in the related commodity price

70 (d) Fair value IFRS 13 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). The following table sets forth the Corporation's financial assets measured at fair value by level within the fair value hierarchy: Level 1 Level 2 Total $ $ $ $ $ $ Investments 3,582,182 3,777, ,582,182 3,777,233 Derivative investments - - 2,350,630-2,350,630-3,582,182 3,777,233 2,350,630-5,932,812 3,777,233 Set out below are the Corporation's financial assets by category: Fair value through profit or loss Loans and receivables Total $ $ $ $ $ $ Cash and cash equivalents ,056,817 52,552,321 73,056,817 52,552,321 Accounts receivable - - 1,167,199 1,285,757 1,167,199 1,285,757 Investments held for sale 5,932,812 17,516, ,932,812 17,516,690 Derivative investments 2,350, ,350,630 - Restricted cash and cash - - 4,244,632 3,935,272 4,244,632 3,935,272 equivalents Investments ,283,442 17,516,690 78,468,648 57,773,350 86,752,090 75,290,040 Set out below are the Corporation's financial liabilities by category: Fair value through profit or loss Other financial liabilities Total $ $ $ $ $ $ Accounts payable and accrued - - 5,859,702 3,094,360 5,859,702 3,094,360 liabilities Long term debt - - 8,349,615 9,779,028 8,349,615 9,779, ,209,317 12,873,388 14,209,317 12,873,388 The fair value of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying value due to their short term nature. The fair value of the Corporation's long term debt is approximated by its carrying value

71 20. MANAGEMENT OF CAPITAL RISK The Corporation manages its share capital, equity settled employee benefits reserve, warrant reserve and contributed surplus as capital. The Corporation's objectives when managing capital are to safeguard the Corporation's ability to continue as a going-concern in order to pursue the exploration and development of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Corporation manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Corporation may attempt to issue new shares, acquire or dispose of assets or acquire new debt. In order to maximize ongoing exploration efforts, the Corporation does not pay out dividends. The Corporation's investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with short-term maturities, selected with regard to the expected timing of expenditures from continuing operations. To effectively manage its capital requirements, the Corporation has in place a planning and budgeting process to help determine the funds required to ensure the Corporation has the appropriate liquidity to meet its operating and growth objectives. The Corporation expects its current capital resources will be sufficient to carry out its exploration and evaluation plans through CONTINGENCIES Legal claims: In October 2010, prior to the Goldstone Arrangement, Patrick Sheridan, the former President and Chief Executive Officer and a director of Goldstone, and Gary Conn, a former senior officer and director of Goldstone, together with their respective management companies, commenced legal actions against Goldstone. Mr. Sheridan alleged breach of contract and sought damages of up to $1,400,000, including punitive damages, plus costs and interest (the Sheridan Action ). Mr. Conn alleged breach of a consulting agreement or, alternatively, wrongful dismissal and other causes of action and is seeking damages of up to approximately $3,400,000, plus costs and interest (the Conn Action ). With respect to the Sheridan Action, the parties have agreed to a settlement. Pursuant to such settlement, Goldstone paid a sum to Mr. Sheridan, which was included in general and administrative expenses in Goldstone had also commenced third party claims against Mr. Conn and three former directors in order to seek contribution and indemnity for any amounts that it may be found liable to pay Mr. Sheridan and his management company in the Sheridan Action - which third party claims have been dismissed. Goldstone dismissed Mr. Conn for cause on October 1, The allegations forming the basis for Goldstone s just cause termination were also the basis for the initiation of a proceeding (the Conn Counterclaim ) in which Goldstone sought damages, plus costs and interest. In January 2011, Mr. Conn commenced a legal action (the Defamation Claim ) against Goldstone, four of its directors, and other individuals, seeking damages of $2,500,000 based on alleged conspiracy, libel, defamation and intentional infliction of mental suffering arising from alleged improper publication of certain allegations contained in the Conn Counterclaim. On May 24, 2011, the Superior Court of Justice (Ontario) granted Goldstone s motion for summary judgment. The summary judgment concluded that the allegations in the Conn Counterclaim which, in Goldstone s view justified Mr. Conn s termination for cause, but which according to Mr. Conn were allegedly defamatory, were true. Mr. Conn sought to appeal the judgment, but the Ontario Court of Appeal dismissed his appeal on November 18, With respect to the Conn Action, Goldstone launched a summary judgment motion on the basis that certain allegations which were relied upon to justify cause for Mr. Conn s dismissal have already been proven in a related proceeding, being the Defamation Claim. Goldstone s motion for summary judgment was unsuccessful and the parties therefore continued with the Conn Action and related Conn Counterclaim. In February 2014, Mr. Conn first informed Goldstone that he would seek advancement of expenses and indemnification from Goldstone relating to his defence of the Conn Counterclaim, and commenced an application for such relief. Goldstone and Mr. Conn have 43 69

72 agreed to the terms of an order that provide for the advancement of expenses by Goldstone with respect to the Conn Counterclaim. Goldstone has sought to discontinue the Conn Counterclaim, in part, because of the terms of that agreement. A judge has refused to discontinue the Conn Counterclaim, although Goldstone is seeking leave to appeal that decision. A judge has determined that remaining indemnity amounts related to the Conn Counterclaim should be decided by the judge at trial. Goldstone expects that the Conn Action will be tried in or after April SUBSEQUENT EVENTS Granting of Stock Options On March 21, 2016, the Corporation granted options to purchase up to 1,625,800 common shares of the Corporation at an exercise price of $3.18 per share and expiring on March 21,

73 Cautionary Note Regarding Forward-Looking Statements This annual report contains forward-looking information (within the meaning of applicable Canadian securities laws). Forward-looking information is prospective and by its nature requires the Corporation to make certain assumptions and is subject to inherent risks and uncertainties. There can be no assurance that forward-looking information will prove to be accurate, and readers are cautioned not to place undue reliance on the forward-looking information contained in this report. All statements, other than statements of historical fact, constitute forward-looking information. Generally, but not always, forward-looking information is identifiable by use of the words continue, expect, anticipate, estimate, forecast, believe, intend, schedule, budget, plan or project or the negative or other variations of these words or comparable terminology, or states that certain actions, events or results may, could, should, would, might or will be taken, occur or be achieved. Forward-looking information in this annual report includes, but is not limited to, statements with respect to: future financial and operating performance, strategic plans, future operations, cost estimates, estimation of mineral resources (including the timing and completion thereof), realization of mineral resources, results of exploration, future work programs, capital expenditures and objectives, timing of exploration and development projects, costs, timing and location of future drilling, timing and completion of geological and/or technical reports and/or economic studies, exploration budgets and targets, continuity of a favourable gold market, contractual commitments, potential sales of non-core assets, environmental and reclamation expenses, continuous availability of required manpower and continuous access to capital markets. In order to give such forward-looking information, the Corporation has made certain assumptions about the Corporation s business, the economy and the mineral exploration industry in general and has also assumed that contracted parties provide goods and services on agreed timeframes, plant and equipment work as anticipated, required regulatory approvals are received, no unusual geological or technical problems occur, no material adverse change in the price of gold occurs and no significant events occur outside of the Corporation s normal course of business. Although the assumptions were considered reasonable by management of the Corporation at the time the forward-looking information is given, there can be no assurance that such assumptions will prove to be accurate. In addition, the following are material factors that could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking information in this annual report: the inability of the Corporation to maintain its interest in its mineral projects or to obtain or comply with all required permits and licences, risks normally incidental to exploration and development of mineral properties, uncertainties in the interpretation of drill results, the possibility that future exploration, development or mining results will not be consistent with expectations, uncertainty of mineral resource estimates, joint venture risk, changes in governmental regulation adverse to the Corporation, First Nations consultations, environmental risks, economic uncertainties, the inability of the Corporation to obtain additional financing when and as needed, dependence on a small number of key personnel, competition from other mining businesses, the future price of gold and other metals and commodities, title defects and other related matters. Although the Corporation has attempted to identify material factors that could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking information, there may be other factors that could cause results to differ from what is anticipated, estimated or intended. Additional risks and uncertainties not presently known to the Corporation or that the Corporation currently deems immaterial may also impair the Corporation s business operations. All forward-looking information contained in this annual report is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. The Corporation undertakes no obligation to update or revise the forward-looking information contained in this report, whether as a result of new information, future events or otherwise, except as required by applicable laws. 71

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75 CORPORATE DIRECTORY HEAD OFFICE Suite 200, 1100 Russell Street Thunder Bay, ON P7B 5N2 Telephone: (807) Fax: (807) Website: INVESTOR RELATIONS Matthew Gollat (888) DIRECTORS John Begeman (Chairman) Ewan S. Downie Henry J. Knowles, Q.C. Claude Lemasson Ron Little John W. Seaman Michael S. Vitton OFFICERS Ewan S. Downie President & CEO Stephen McGibbon Executive VP Steve Filipovic CFO Shaun Drake Secretary AUDITORS Grant Thornton LLP Chartered Accountants Thunder Bay, Ontario LEGAL ADVISORS Bennett Jones LLP Toronto, Ontario Carrel & Partners LLP Thunder Bay, Ontario TRANSFER AGENT Equity Transfer & Trust Company 200 University Avenue, Suite 400 Toronto, ON M5H 4H1 BANKERS Royal Bank of Canada Toronto, Ontario STOCK LISTINGS PG:TSX P2O:FSX PIRGF:OTO [USA]

76 Russell Street Thunder Bay, Ontario, Canada, P7B 5N2 t. (807) tf. (888) Set a Strategy, Execute! Ewan Downie President and CEO Premier Gold Mines Limited PG:TSX